CIBC shakeup creates $339M hit
TORONTO The Canadian Imperial Bank of Commerce on Wednesday officially unveiled a sweeping and costly shakeup of its operations, as the lender aims to increase sales and bring costs in line.
Toronto-based CIBC signalled its bank-wide restructuring efforts will affect about 2,200 positions, for which it took a $339-million charge that was mostly related to employee severance costs. In addition to job cuts, CIBC is shuffling its executive ranks, something CIBC president and CEO Victor Dodig told analysts was “in support of our growth goals.”
“When it comes to costs, we also need to continue to challenge ourselves to be a more modern bank by focusing on continuous improvement and keeping a careful eye on our resources,” Dodig added during a conference call. “While we’ve made steady progress in starting this journey, we have more work to do.”
CIBC announced the restructuring plans along with its first-quarter financial results, with the lender reporting a profit of $1.2 billion for the three months ended Jan. 31, up three per cent from a year earlier.
CIBC’S first quarter included a strong performance from its capital markets division. That business reported net income rose 63 per cent from a year ago, to $335 million, driven by a drop in loan-loss expenses and revenue growth from sources such as trading and underwriting.
Excluding the $339-million hit and a $27-million item, CIBC’S net income for the quarter rose nine per cent year-overyear, to $1.48 billion. Adjusted earnings per share were $3.24 for the period, up eight per cent from a year earlier.
The restructuring will affect nearly five per cent of CIBC’S workforce, said chief financial officer Hratch Panossian.
Dodig said the bank is committed to “re-skilling and up-skilling ” staff as it becomes more reliant on digital efforts.