CIBC hikes dividend as profit beats expectations

TORONTO — Canadian Imperial Bank of Commerce’s fiscal first-quarter earnings beat expectations, with net profit of $1.4 billion driven in large part by a 52 per cent jump in capital markets.

For the quarter ended Jan. 31, CIBC reported earnings per share of $2.89, beating the consensus analyst estimate of $2.57, according to Bloomberg data. Net profit came in ahead of the $1 billion expected by analysts, and was up 43 per cent from $982 million in the year earlier period.

“We’re off to a very good start in 2017,” said Victor G. Dodig, CIBC president and chief executive officer, on a conference call Thursday.

The bank also announced it was increasing its dividend by three cents to $1.27.

“Core earnings came in well ahead of expectations on the back of a strong recovery in trading as well as better than expected credit losses,” said John Aiken, an analyst with Barclays in Toronto, in a note before the conference call. “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.”

All CIBC divisions beat estimates, and earnings per share was also helped by a $0.62 gain from the sale and leaseback of branches, said Doug Young, an analyst with Desjardins Capital Markets in a note before the conference call. The widest margin between estimates was from capital markets, he noted, which saw net profit of $371 million, up $127 million from a year earlier.

“For perspective, $0.30 of the EPS beat was driven by capital markets,” Young said in a note to clients.

Dodig also said Thursday that CIBC remained committed to pursuing its acquisition of Chicago-based PrivateBancorp Inc., which it announced last June.

A special meeting of stockholders to vote on the transaction scheduled for Dec. 8 had been postponed as U.S. bank shares soared in the wake of the U.S. election (and President Donald Trump’s plan to cut banking regulations and the corporate tax rate).

CIBC’s strategy to grow its footprint in the U.S. “continues to remain intact” and it aims to “have exposure in a market that we see growth in the long-term,” Dodig said.