CIBC earnings get boost from U.S. success
Bank reports 25% bump after PrivateBank rebrand boasts ‘strong performance’
TORONTO— The Canadian Imperial Bank of Commerce’s latest quarterly profit got a 25-per-cent bump, helped by better-than-expected performance in the U.S., while TorontoDominion Bank saw a retracement in its earnings south of the border and fell short of market expectations.
CIBC reported net income of $1.16 billion in the three months ended Oct. 31, up from $931 million during the same time in 2016. On an adjusted basis, CIBC’s profit amounted to $2.81 per share in the fourth quarter, up 8 per cent from $2.60 per share in the fourth quarter of 2016, beating the $2.59 in adjusted earnings per share expected by analysts surveyed by Thomson Reuters.
The country’s fifth-largest bank said its Canadian personal and small business banking division saw net income of $551million, down $8 million, or 1.4 per cent, from the fourth quarter of 2016. On an adjusted basis, the bank’s net income was $623 million, up $63 million or 11.3 per cent from the same quarter a year earlier.
But CIBC’s U.S. commercial banking and wealth management unit saw a major bump in profit, with net income of $107 million for the quarter — more than four times the $23 million it saw during the same quarter a year earlier. That reflected a full quarter of “strong performance” from The PrivateBank, after CIBC purchased its parent PrivateBancorp for roughly $5 billion (U.S.) in June and rebranded it in September as CIBC Bank USA.
“U.S. commercial banking and wealth management continue to exceed our expectations . . . The former PrivateBank showed one of its best quarters ever,” CIBC president and chief executive Victor Dodig told analysts on a conference call Thursday.
Meanwhile, TD earned $2.71billion in its latest quarter, up from $2.30 billion a year ago, boosted by its Canadian and U.S. retail banking business. Canada’s biggest lender by assets said Thursday the profit amounted to $1.42 per diluted share for the quarter ended Oct. 31, up from $1.20 per diluted share in the same quarter last year.
On an adjusted basis, TD says it earned $1.36 per diluted share, compared with $1.22 per diluted share a year ago. Analysts had expected an adjusted profit of $1.39 per diluted share, according to those surveyed by Thomson Reuters.
Barclays analyst John Aiken said in a research note that CIBC came in “well ahead of expectations on the back of exceptionally strong domestic retail and a better than forecast contribution from its new U.S. platform, including PrivateBank.”
TD, meanwhile, “disappointed on the back of a retracement in earnings in its U.S. retail segment,” he told clients.
“While the domestic platform managed to shake off most of the annual Q4 uptick in expenses, this legacy appears to continue to affect the U.S. platform . . . While far from a disaster, we are concerned that, with the strength of TD’s valuation over the past few months, the results today could lead to some relative weakness as expectations become reset somewhat heading into 2018,” Aiken said in a separate note.
Shares of TD were down 2.6 per cent in morning trading to $73.10 in Toronto, while CIBC shares were up more than two per cent to $117.24.