CIBC Climbs After Profit Tops Estimates, Bank Raises Dividend

Updated on
  • Adjusted net income increases 13% on capital markets gains
  • Bank has lifted dividend nine times in past 10 quarters

CIBC Shares Climb After Profit Tops Estimates

Canadian Imperial Bank of Commerce climbed in Toronto trading after posting fiscal first-quarter profit that beat analysts’ estimates and raising its dividend for the ninth time in 10 quarters.

CIBC shares advanced 2.1 percent to C$120.62 at 9:52 a.m., the best performance in the eight-company S&P/TSX Composite Commercial Banks Index, which gained 0.4 percent. The stock is trading at a record high.

Canada’s fifth-largest lender by assets said net income for the period ended Jan. 31 rose 43 percent to C$1.41 billion ($1.07 billion) or C$3.50 a share, from C$982 million, or C$2.43, a year earlier. Profit excluding some items was C$2.89 a share, beating the C$2.57 average estimate of 15 analysts surveyed by Bloomberg.

“What was particularly good this quarter was consistent, stable growth from all of our businesses," Chief Financial Officer Kevin Glass said Thursday in a telephone interview. “Capital markets was particularly strong this quarter, and a lot of that was market driven."

A 52 percent increase in capital-markets profit and a C$245 million gain from selling 89 retail sites, mainly in Ontario and British Columbia helped earnings. CIBC said adjusted earnings, which exclude the gain, rose 13 percent to C$1.17 billion. The bank lifted its dividend 2.4 percent to C$1.27 a share, and said it plans to buy back as many as 8 million shares, or 2 percent of its outstanding stock.

PrivateBancorp Deal

“Although the beat is not necessarily the highest quality, we believe that the magnitude, as well as the increase in the dividend, will allow investors to continue to cheer on its valuation,” John Aiken, a Barclays Plc analyst, said in a note.

CIBC said it continues to seek regulatory approvals and work on integration plans for its $4.17 billion bid to buy Chicago-based PrivateBancorp Inc. The Canadian bank’s offer, which is now at an 8 percent discount to PrivateBancorp’s share price, still needs approval from the target company’s shareholders.

“Our U.S. strategy continues to remain intact, and that is to grow our footprint," Chief Executive Officer Victor Dodig said on a conference call with analysts, adding that PrivateBancorp “is a better bank under CIBC’s ownership because we will be providing the resources necessary to allow them to grow."

CIBC is the first Canadian lender to report quarterly results. The country’s eight largest banks are expected to lift per-share operating profit by an average of 7 percent from a year earlier, according to Scotia Capital analyst Sumit Malhotra. Royal Bank of Canada is scheduled to post results Friday, with the remaining lenders reporting next week.