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Canadian Imperial (CM) Stock Dips as Q4 Earnings Decline Y/Y
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Shares of Canadian Imperial Bank of Commerce (CM - Free Report) lost 7.6% following the release of its fourth-quarter (ended Oct 31) and fiscal 2022 results. Quarterly adjusted earnings per share of C$1.39 were down 17% from the prior-year quarter.
Results were adversely impacted by higher expenses and a significant rise in provisions. However, a rise in revenues, an improvement in loan demand and a strong balance sheet position were tailwinds.
After considering several non-recurring items, net income was C$1.19 billion ($0.89 billion), reflecting a year-over-year decline of 18%.
Revenues Improve, Costs Rise
Total revenues for the quarter under review were C$5.39 billion ($4.05 billion), up 6% year over year. The improvement was driven by higher net interest income and non-interest income.
Net interest income was C$3.19 billion ($2.40 billion), growing 7% year over year. Non-interest income increased 6% to C$2.20 billion ($1.65 billion).
Non-interest expenses totaled C$3.48 billion ($2.62 billion), up 11% year over year.
The adjusted efficiency ratio was 60.9% at the end of the reported quarter, rising from 57.8% as of Oct 31, 2021. An increase in the efficiency ratio indicates a deterioration in profitability.
Provision for credit losses was C$436 million ($327.7 million), up significantly from the prior-year quarter.
Balance Sheet Strong
As of Oct 31, 2022, total assets were C$943.6 billion ($692 billion), up 5% from the prior quarter. Net loans and acceptances increased 2% sequentially to C$528.7 billion ($387.8 billion), while deposits grew 3% to C$697.6 billion ($511.6 billion).
As of Oct 31, 2022, the Common Equity Tier 1 ratio was 11.7% compared with 12.4% in the prior-year quarter. The Tier 1 capital ratio was 13.3% compared with 14.1% in the prior-year period. The total capital ratio was 15.3%, down from 16.2%.
Adjusted return on common shareholders’ equity was 11.2% at the end of the fiscal fourth quarter, down from the prior year’s 14.7%.
Our Take
Given the improving economy, rising rates and loan growth, Canadian Imperial is likely to witness steady improvement in revenues. However, a challenging operating backdrop, steadily increasing provisions and rising expenses remain near-term concerns.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
HSBC Holdings (HSBC - Free Report) reported a third-quarter 2022 (ended Sep 30) pre-tax profit of $3.1 billion, down 41.8% from the prior-year quarter.
Results reflected a rise in adjusted revenues. However, adjusted expenses increased from the year-ago quarter, which was a headwind for HSBC. Expected credit losses and other credit impairment charges were a net charge in the quarter under review against a release in the prior-year quarter.
UBS Group AG (UBS - Free Report) reported a third-quarter 2022 (ended Sep 30) net profit attributable to shareholders of $1.73 billion, down 37.6% from the prior-year quarter.
UBS’ performance was affected by a fall in revenues and a decline in total net credit loss releases. Nonetheless, operating expenses decreased from the prior-year quarter.
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Canadian Imperial (CM) Stock Dips as Q4 Earnings Decline Y/Y
Shares of Canadian Imperial Bank of Commerce (CM - Free Report) lost 7.6% following the release of its fourth-quarter (ended Oct 31) and fiscal 2022 results. Quarterly adjusted earnings per share of C$1.39 were down 17% from the prior-year quarter.
Results were adversely impacted by higher expenses and a significant rise in provisions. However, a rise in revenues, an improvement in loan demand and a strong balance sheet position were tailwinds.
After considering several non-recurring items, net income was C$1.19 billion ($0.89 billion), reflecting a year-over-year decline of 18%.
Revenues Improve, Costs Rise
Total revenues for the quarter under review were C$5.39 billion ($4.05 billion), up 6% year over year. The improvement was driven by higher net interest income and non-interest income.
Net interest income was C$3.19 billion ($2.40 billion), growing 7% year over year. Non-interest income increased 6% to C$2.20 billion ($1.65 billion).
Non-interest expenses totaled C$3.48 billion ($2.62 billion), up 11% year over year.
The adjusted efficiency ratio was 60.9% at the end of the reported quarter, rising from 57.8% as of Oct 31, 2021. An increase in the efficiency ratio indicates a deterioration in profitability.
Provision for credit losses was C$436 million ($327.7 million), up significantly from the prior-year quarter.
Balance Sheet Strong
As of Oct 31, 2022, total assets were C$943.6 billion ($692 billion), up 5% from the prior quarter. Net loans and acceptances increased 2% sequentially to C$528.7 billion ($387.8 billion), while deposits grew 3% to C$697.6 billion ($511.6 billion).
As of Oct 31, 2022, the Common Equity Tier 1 ratio was 11.7% compared with 12.4% in the prior-year quarter. The Tier 1 capital ratio was 13.3% compared with 14.1% in the prior-year period. The total capital ratio was 15.3%, down from 16.2%.
Adjusted return on common shareholders’ equity was 11.2% at the end of the fiscal fourth quarter, down from the prior year’s 14.7%.
Our Take
Given the improving economy, rising rates and loan growth, Canadian Imperial is likely to witness steady improvement in revenues. However, a challenging operating backdrop, steadily increasing provisions and rising expenses remain near-term 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
CM currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
HSBC Holdings (HSBC - Free Report) reported a third-quarter 2022 (ended Sep 30) pre-tax profit of $3.1 billion, down 41.8% from the prior-year quarter.
Results reflected a rise in adjusted revenues. However, adjusted expenses increased from the year-ago quarter, which was a headwind for HSBC. Expected credit losses and other credit impairment charges were a net charge in the quarter under review against a release in the prior-year quarter.
UBS Group AG (UBS - Free Report) reported a third-quarter 2022 (ended Sep 30) net profit attributable to shareholders of $1.73 billion, down 37.6% from the prior-year quarter.
UBS’ performance was affected by a fall in revenues and a decline in total net credit loss releases. Nonetheless, operating expenses decreased from the prior-year quarter.