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Canadian Imperial Profit Rises 42% on Consumer Lending

Canadian Imperial Bank of Commerce, the country’s fifth-biggest bank, said third-quarter profit rose 42 percent on consumer lending, beating analysts’ estimates. The bank raised its dividend for the first time in a year.

Net income for the quarter ended July 31 was C$841 million ($848 million), or C$2 a share, compared with C$591 million, or C$1.33, a year earlier, the Toronto-based bank said today in a statement. Revenue rose 0.6 percent to C$3.15 billion.

Consumer lending and business banking earnings rose 7.8 percent to C$594 million. CIBC was aided by contributions from its August 2011 purchase of 41 percent of American Century Investments, which added to wealth management profit of C$76 million, an 8.6 percent increase from a year ago.

The bank is countering a consumer lending slowdown by expanding in wealth management with takeovers including this month’s agreement to buy MFS McLean Budden’s private wealth business.

“This segment has flown under the radar but constitutes a major component of the bank’s growth strategy,” National Bank Financial analyst Peter Routledge said in an Aug. 16 note.

CIBC said it had adjusted earnings of C$2.06 a share, beating the C$1.96 a share average estimate of 15 analysts surveyed by Bloomberg News.

CIBC is reorganizing its retail-banking business to shift away from using mortgage brokers in favor of selling home loans and other financial products through branches. CIBC said June 20 it’s closing its FirstLine Mortgages origination business after failing to sell the operation. CIBC said it’ll stop issuing FirstLine mortgages as of July 31.

CIBC agreed Aug. 7 to buy the private-wealth business of MFS McLean Budden, a unit of Sun Life Financial Inc., to bolster its wealth-management operations. McLean Budden manages about C$1.4 billion in assets for wealthy individuals and families, endowments and foundations.

Canadian Imperial is the first of four lenders disclosing quarterly results today, following reports by larger competitors Bank of Nova Scotia and Bank of Montreal on Aug. 28 that beat analysts’ estimates. The other lenders reporting today are Royal Bank of Canada, Toronto-Dominion Bank and National Bank of Canada.

Canadian Imperial raised its quarterly payout 4.4 percent to 94 cents.

(CIBC will hold a conference call to discuss results at +1-416-340-2217 or +1-866-696-5910 passcode 3201624 starting at 8:30 a.m. Toronto time.)

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