Canadian Imperial Bank of Commerce CM-T posted lower second-quarter tax earnings and increased its quarterly dividend as weaker retail banking results, higher loan loss provisions and higher expenses they dragged the gains.
After two rival banks reported profit increases on Wednesday, CIBC’s earnings per share were weaker than analysts expected, although revenue rose 9 percent year-over-year.
Canada’s fifth-largest bank earned $ 1.52 billion, or $ 1.62 a share, in the quarter ended April 30. That’s compared to $ 1.65 billion, or $ 3.55 per share, in the same quarter last year, before CIBC completed a two for a split share earlier this month.
After adjusting for special items, including costs related to CIBC’s acquisition of Costco retailer’s credit card portfolio, CIBC said it earned $ 1.77 per share. On average, analysts expected a tight earnings of $ 1.80 per share.
The bank increased its quarterly dividend by 2.5 cents per share to 83 cents.
The acquisition of Costco also increased provisions for credit losses (funds that banks set aside to cover loans that could be defaulted), which were $ 303 million during the quarter. This rose from an unusually low $ 32 million in the previous year and included a $ 94 million increase in the Costco card portfolio.
Bank costs also rose nearly 13 percent to $ 3.1 billion, driven by higher yield-based pay, as well as business investments and inflationary pressures.
CIBC’s main Canadian personal and business banking division was $ 496 million, 18% less than the previous year, driven by higher provisions and expenses for credit losses.
Canadian commercial banking and asset management profits of $ 480 million increased 20 percent as revenue increased, but U.S. wealth and trade gains fell 17 percent to $ 180 million.
The bank’s capital markets division had a strong quarter, with profits of $ 540 million, driven by higher revenues from global markets and direct financial services business.
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