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A CIBC sign is seen in Toronto, on Jan. 30, 2020.Christopher Katsarov/The Globe and Mail

Canadian Imperial Bank of Commerce is taking a $339-million restructuring charge, cutting nearly 5 per cent of its staff and moving top executives to new roles, even as it posted a 3-per-cent rise in quarterly profit.

Most of the charge will go to severance pay for more than 2,000 staff who will lose their jobs. That is expected to save the bank more than $260-million a year, starting in 2021, as executives try to narrow the gap between tepid revenue growth and elevated costs.

The bank senior executive team is being reshuffled, as previously reported by The Globe and Mail, changing the heads of retail banking and risk management starting March 2, and giving other executives new and expanded roles. The sharpest focus will be on the retail arm, which has underperformed after growth in the mortgage portfolio stalled last year.

Five and a half years after Victor Dodig took over as chief executive, CIBC is still remaking itself. Costs are growing faster than at some other banks – at 11 per cent in the first quarter, to more than $3-billion, and an expected rate of 4 per cent to 5 per cent for the rest of the fiscal year – as the bank hires front-line staff and invests in technology. Wednesday’s restructuring is, in part, an effort to rein in spending and make CIBC more efficient. But it is also meant to streamline decision-making, according to Mr. Dodig.

The CEO did not signal a shift in strategy. Rather, he told analysts the executive changes are needed to “accelerate the ongoing renewal of CIBC," on a Wednesday conference call.

“I think that if you actually lift up the hood and look at what we’re doing, look at how we’re positioned, look at some of the growth trajectory in those areas where we exhibited some softness last year, things are heading in the right direction," Mr. Dodig said. "Now, as you all know, it takes time, right?”

For the three months that ended Jan. 31, CIBC reported profit of $1.21-billion, or $2.63 a share, compared with $1.18-billion, or $2.60 a share, a year ago.

After adjusting to exclude the restructuring charge and other items, CIBC said profit rose 9 per cent to $1.48-billion, or $3.24 a share. Analysts expected adjusted earnings a share of $3.00, according to Refinitiv.

The bank also raised its quarterly dividend by two cents to $1.46 a share.

CIBC’s share price rose about 1 per cent to $107.07 on the Toronto Stock Exchange Wednesday, but the stock’s valuation still trails the industry average.

“We think a meaningful recovery in the relative performance of the shares has to be underpinned by stronger trends in the Canadian Personal & Small Business Banking unit and that is not yet the case,” Scotia Capital Inc. analyst Sumit Malhotra said in a research note.

As expected, chief risk officer Laura Dottori-Attanasio is taking over as head of personal and business banking, in charge of core retail banking operations. She succeeds Christina Kramer, who is moving to a new role as head of technology, infrastructure and innovation. Kevin Patterson, the current head of technology and operations, previously announced he will retire on May 1.

“Laura’s a strategic and passionate leader who brings a disciplined approach, which will be important as we continue to modernize our retail banking platform," Mr. Dodig said.

Profit from Canadian personal and small-business banking was $617-million in the quarter, up 34 per cent. But adjusted profit fell 2 per cent, year over year, as higher spending eclipsed gains from better lending margins. Residential mortgage lending increased 1 per cent.

“We continue to see retail recovering more towards its potential,” said Hratch Panossian, CIBC’s chief financial officer, in an interview.

The new chief risk officer will be Shawn Beber, currently general counsel and head of corporate development, who will keep his existing duties on an interim basis. CIBC’s credit portfolio was a notable bright spot in the first quarter, with provisions for credit losses – the money banks set aside to cover bad loans – falling 23 per cent from a year ago, to $261-million.

But CIBC added extra provisions to cover losses from alleged fraud at an Ontario-based client in the trucking services business. In December, the bank disclosed that it expected to lose about $52-million. Now, CIBC expects to write down more than three quarters of what it is owed, or more than $80-million.

Capital markets had a particularly strong quarter, with profit up 63 per cent year over year to $335-million, continuing a trend of sky-high returns from trading and investment banking among banks that have reported first-quarter results.

Head of capital markets Harry Culham is staying put. But he is adding oversight of CIBC’s Caribbean banking arm and asset servicing business CIBC Mellon, as well as direct banking functions including CIBC-owned Simplii Financial.

Human resources and communications head Sandy Sharman also has a new role in charge of people, culture and brand, with responsibility for the bank’s real estate.

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