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Canadian Imperial (CM) Q3 Earnings Disappoint, Stock Up 2.4%
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Canadian Imperial Bank of Commerce (CM - Free Report) reported third-quarter fiscal 2020 (ended Jul 31) results. Adjusted earnings per share were C$2.71 ($1.98), down 13% from the prior-year quarter reported figure.
Results were impacted by higher provisions and lower non-interest income. However, an increase in net interest income, controlled expenses and strong balance-sheet position acted as tailwinds, pushing shares of Canadian Imperial 2.4% higher on the NYSE, following the release.
After considering several non-recurring items, net income was C$1.17 billion ($0.86 billion), reflecting a slump of 16% year over year.
Low Adjusted Revenues Partly Offset by Fall in Costs
Adjusted total revenues slightly declined year over year to C$4.71 billion ($3.44 billion). The decrease was driven by lower non-interest income, mostly muted by higher net interest income.
Net interest income was C$2.73 billion ($2 billion), up 1.5% from the year-ago quarter. Non-interest income decreased 2.9% year over year to C$1.98 billion ($1.45 billion).
Adjusted non-interest expenses totaled C$2.61 billion ($1.91 billion), down 1.1% from the year-ago quarter.
Adjusted efficiency ratio was 54.8% at the end of the reported quarter, down from 55.4% as of Jul 31, 2019. A fall in the efficiency ratio indicates a rise in profitability.
Total provision for credit losses rose significantly year over year to C$525 million ($383.7million) on the coronavirus concerns and continued pressure on oil prices.
Strong Balance Sheet & Capital Ratios
Total assets were C$768.5 billion ($572.8 billion) as of Jul 31, 2020, up 1.2% from the prior quarter. Net loans and acceptances decreased 1.5% sequentially to C$414.5 billion ($309 billion), while deposits climbed 4.1% sequentially to C$566.1 billion ($422 billion).
As of Jul 31, 2020, Common Equity Tier 1 ratio was 11.8%, up from the prior-year quarter reported figure of 11.4%. Furthermore, Tier 1 capital ratio was 13% compared with 12.7% as of Jul 31, 2019. Total capital ratio was 15.4%, up from 15.2% in the prior-year quarter.
Adjusted return on common shareholders’ equity was 12.9% at the end of the fiscal third quarter, down from the prior year’s 15.6%.
Our Viewpoint
Given an expectation of improving economy and loan growth, Canadian Imperial is anticipated to witness a steady improvement in revenues. However, elevated provisions and a challenging operating backdrop remain major concerns.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2020 (ended Jul 31) adjusted net income was C$1.26 billion ($0.92 billion), down 20% year over year. The results reflected a significant rise in credit costs and lower loan balance. However, an increase in revenues, lower expenses and improvement in deposit balance offered some support.
The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2020 (ended Jul 31) adjusted net income of C$1.31 billion ($0.96 billion), down 47% year over year. The results excluded certain one-time items.
Royal Bank of Canada (RY - Free Report) reported third-quarter fiscal 2020 (ended Jul 31, 2020) net income of C$3.2 billion ($2.3 billion), down 2% from the prior-year quarter’s reported figure. The bank witnessed escalating expenses and provisions. However, higher revenues along with elevated loans and deposit balances were positives.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Canadian Imperial (CM) Q3 Earnings Disappoint, Stock Up 2.4%
Canadian Imperial Bank of Commerce (CM - Free Report) reported third-quarter fiscal 2020 (ended Jul 31) results. Adjusted earnings per share were C$2.71 ($1.98), down 13% from the prior-year quarter reported figure.
Results were impacted by higher provisions and lower non-interest income. However, an increase in net interest income, controlled expenses and strong balance-sheet position acted as tailwinds, pushing shares of Canadian Imperial 2.4% higher on the NYSE, following the release.
After considering several non-recurring items, net income was C$1.17 billion ($0.86 billion), reflecting a slump of 16% year over year.
Low Adjusted Revenues Partly Offset by Fall in Costs
Adjusted total revenues slightly declined year over year to C$4.71 billion ($3.44 billion). The decrease was driven by lower non-interest income, mostly muted by higher net interest income.
Net interest income was C$2.73 billion ($2 billion), up 1.5% from the year-ago quarter. Non-interest income decreased 2.9% year over year to C$1.98 billion ($1.45 billion).
Adjusted non-interest expenses totaled C$2.61 billion ($1.91 billion), down 1.1% from the year-ago quarter.
Adjusted efficiency ratio was 54.8% at the end of the reported quarter, down from 55.4% as of Jul 31, 2019. A fall in the efficiency ratio indicates a rise in profitability.
Total provision for credit losses rose significantly year over year to C$525 million ($383.7million) on the coronavirus concerns and continued pressure on oil prices.
Strong Balance Sheet & Capital Ratios
Total assets were C$768.5 billion ($572.8 billion) as of Jul 31, 2020, up 1.2% from the prior quarter. Net loans and acceptances decreased 1.5% sequentially to C$414.5 billion ($309 billion), while deposits climbed 4.1% sequentially to C$566.1 billion ($422 billion).
As of Jul 31, 2020, Common Equity Tier 1 ratio was 11.8%, up from the prior-year quarter reported figure of 11.4%. Furthermore, Tier 1 capital ratio was 13% compared with 12.7% as of Jul 31, 2019. Total capital ratio was 15.4%, up from 15.2% in the prior-year quarter.
Adjusted return on common shareholders’ equity was 12.9% at the end of the fiscal third quarter, down from the prior year’s 15.6%.
Our Viewpoint
Given an expectation of improving economy and loan growth, Canadian Imperial is anticipated to witness a steady improvement in revenues. However, elevated provisions and a challenging operating backdrop remain major concerns.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Canadian Imperial Bank of Commerce price-consensus-eps-surprise-chart | Canadian Imperial Bank of Commerce Quote
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2020 (ended Jul 31) adjusted net income was C$1.26 billion ($0.92 billion), down 20% year over year. The results reflected a significant rise in credit costs and lower loan balance. However, an increase in revenues, lower expenses and improvement in deposit balance offered some support.
The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2020 (ended Jul 31) adjusted net income of C$1.31 billion ($0.96 billion), down 47% year over year. The results excluded certain one-time items.
Royal Bank of Canada (RY - Free Report) reported third-quarter fiscal 2020 (ended Jul 31, 2020) net income of C$3.2 billion ($2.3 billion), down 2% from the prior-year quarter’s reported figure. The bank witnessed escalating expenses and provisions. However, higher revenues along with elevated loans and deposit balances were positives.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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