File photo of a Canadian Imperial Bank of Commerce location in a Toronto suburb.Deborah Baic/The Globe and Mail
Canadian Imperial Bank of Commerce booked a 42-per-cent jump in third-quarter profit, as the bank bounced back from a significant charge that depressed its earnings a year ago.
Canada's fifth-largest bank made $841-million, or $2 a share in the third quarter, compared to $591-million, or 1.33 a share a year ago, beating analysts' expectations.
Revenue rose less than 1 per cent to $3.15-billion.
CIBC boosted its quarterly dividend 4 cents to 94 cents, an increase of 4.4 per cent. The bank also said it plans to buy back as many as 8.1 million shares, or roughly 2 per cent of its outstanding common shares.
The increase in profit was magnified when compared to the charge CIBC took against its earnings in 2011. In the third quarter last year, CIBC booked an impairment charge of $203-million at its FirstCaribbean banking operations, which was the result of changing that business over to new international accounting standards.
With that issue no longer hanging over the bank's earnings, CIBC posted higher profit at its retail and business banking operations, as well as its investment banking division.
Adjusted to exclude unusual items, CIBC made $2.06 a share. That beat analysts' estimates of about $1.96 a share for the quarter. The writedown of the bank's structured credit run off business was among the one-time items that shaved six cents off the bank's earnings.
CIBC chief executive officer Gerry McCaughey called the results "solid," adding that several of the bank's core divisions performed well.
"The dividend increase announced today, and our intention to repurchase common shares, reflects our confidence" Mr. McCaughey said in a statement.
CIBC's provisions for credit losses, or the amount of money banks set aside to cover bad loans, rose to $317-million, from $310-million a year ago. The increase was due to higher losses in U.S. real estate finance, as well as Canadian wholesale banking. CIBC said it had lower loan losses in its credit card portfolio in the quarter, a sign that Canadians are keeping up with their debt payments.
Profit rose 8 per cent at the bank's retail and business banking division, which includes its network of Canadian branches, to $594-million. Those earnings were helped by a boost in loan volumes and fees, which was partly offset by slimmer margins, CIBC said.
Wealth management profits rose 9 per cent to $76-million, while wholesale banking, which includes the bank's capital markets and investment banking operations, made $156-million, an 11 per cent increase.
CIBC's corporate segment, which includes technology and a variety of other operations including its treasury and finance divisions, reported a profit of $15-million, compared to a loss a year ago of $171-million, due to the $203-million goodwill impairment at FirstCaribbean.
Grant Robertson