CIBC’s profits soar on wealth management, one-time gains

Canadian Imperial Bank of Commerce beat analysts’ estimates after posting higher first-quarter profit led by gains in capital markets.

Meanwhile, CIBC provided no updates on its $4.17 billion bid to buy Chicago-based PrivateBancorp in the earnings report. The bank’s offer, which is now at a 10% discount to PrivateBancorp’s share price, still needs approval from PrivateBancorp shareholders.

CIBC marquee
Canadian Imperial Bank of Commerce (CIBC) signage is displayed outside of the company's office near Bay Street in Toronto, Ontario, Canada, on Monday, Aug. 29, 2011. Bay Street is the center of Toronto's Financial District and is often used as a metaphor to refer to Canada's financial industry. Photographer: Brent Lewin/Bloomberg

CIBC is the first Canadian bank to report quarterly results. The country’s eight largest lenders are expected to lift per-share operating profit by an average of 7% from a year earlier, according to Scotia Capital analyst Sumit Malhotra. Royal Bank of Canada is scheduled to post results Friday, with the remaining lenders reporting next week.

CIBC’s net income for the period ended Jan. 31 climbed 43% to C$1.41 billion ($1.07 billion) or C$3.50 a share, from C$982 million, or C$2.43, a year earlier, the Toronto-based firm said Thursday in a statement. Profit excluding some items was C$2.89 a share, beating the C$2.57 average estimate of 15 analysts surveyed by Bloomberg.

“CIBC delivered strong performance across retail and business banking, wealth management and capital markets," CEO Victor Dodig, 51, said in the statement.

Earnings were led by a 52% profit surge from its capital-markets operation and helped by a C$245 million gain from selling 89 retail sites mainly in Ontario and British Columbia, which the bank disclosed in December. CIBC said adjusted earnings, which exclude the gain, rose 13% to C$1.17 billion.

The firm raised its quarterly dividend 2.4% to C$1.27 a share. The dividend increase is the ninth in the past 10 quarters.

CIBC set aside C$212 million for bad loans, down from C$262 million a year earlier, the company said. Revenue rose 17% to C$4.21 billion, beating analysts’ expectations.

Earnings from retail and business banking, CIBC’s largest division, rose 39% to C$953 million, helped by the gain on selling properties. Wealth management climbed 12% to C$133 million.

The lender’s capital-markets division had C$371 million in profit, up from C$244 million on higher trading revenue and lower loan losses.

CIBC reached a record high of C$118.20 in Toronto trading Wednesday and the stock has risen 7.9% this year, compared with the 7.5% gain of the eight-company S&P/TSX Commercial Banks Index.

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