CIBC Profit Rises 50% on Retail and Investment Banking

Canadian Imperial Bank of Commerce, the country’s fifth-biggest lender, posted profit that beat analysts’ estimates on lower loan losses, growth in wealth management and a gain from selling part of its credit-card arm.

Net income for the fiscal first quarter ended Jan. 31 climbed 50 percent to a record C$1.18 billion ($1.06 billion), or C$2.88 a share, the Toronto-based bank said today. Earnings excluding some items were C$2.31 a share, beating the C$2.14 average estimate of 12 analysts surveyed by Bloomberg News.

CIBC posted higher profit across its three main business units compared to a year earlier, when a $150 million payment to settle a lawsuit with Lehman Brothers Holdings Inc.’s estate eroded earnings. The lender also benefited from a C$239 million gain from selling half of its Aerogold Visa credit-card portfolio to Toronto-Dominion (TD) Bank.

“Our record results this quarter reflect the progress we continue to make in executing our client-focused strategy,” Chief Executive Officer Gerald McCaughey, 57, said in a statement. “Each of our core businesses delivered strong results.”

The lender raised its dividend 2 cents to 98 cents.

Consumer Banking

CIBC shares have climbed about 8 percent in the past 12 months, trailing the 12 percent advance by the six-company Standard & Poor’s/TSX Commercial Banks Index.

Revenue rose 15 percent to C$3.64 billion from a year ago, the lender said. CIBC set aside C$218 million for bad loans, down from C$265 million a year ago.

Consumer and business-banking earnings surged 29 percent to C$746 million, helped by the credit-card sale. Excluding those items, earnings from the consumer bank climbed 11 percent, helped in part by lower loan losses, CIBC said.

Wealth-management profit rose 28 percent to C$114 million from a year earlier amid growth in assets under management and contributions from acquisitions including Atlantic Trust Private Wealth Management. CIBC has said its goal is to earn 15 percent of its profit from wealth management, compared with about 11 percent last year.

CIBC’s investment bank posted profit of C$264 million, up from C$86 million a year earlier when its results were hurt by the Lehman settlement. Underwriting and advisory fees fell to C$78 million from C$106 million, while trading revenue slid to C$156 million from C$161 million a year earlier.

Toronto-Dominion, Canada’s largest lender, also reports today.

(CIBC will hold a conference call to discuss results at +1-416-340-2217 or +1-888-789-9572, passcode 400010# at 8 a.m. or at www.cibc.com)

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net; David Scanlan at dscanlan@bloomberg.net

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