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Canadian Imperial (CM) Up on Improved Q1 Earnings, Revenues
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Canadian Imperial Bank of Commerce (CM - Free Report) gained nearly 1% on the NYSE following the release of its first-quarter fiscal 2017 earnings (ended Jan 31) last week. Adjusted earnings per share for the quarter came in at C$2.89, up from C$2.55 in the prior-year quarter.
Results improved due to growth in revenues and a fall in provision for credit losses. Further, a strong balance sheet position supported the results. However, an increase in expenses was an undermining factor.
After considering several non-recurring items, net income in the quarter jumped 43% year over year to C$1.41 billion ($1.06 billion).
Improved Revenues Offset a Rise in Costs
Adjusted total revenue grew 9% year over year to C$4.03 billion ($3.02 billion). On a reported basis, total revenue was C$4.21 billion ($3.16 billion), up 17% from the prior-year quarter.
Net interest income was C$2.14 billion ($1.60 billion), up 2% from the year-ago quarter. The improvement reflected a rise in interest income, partly offset by higher interest expenses.
Non-interest income increased 40% year over year to C$2.07 billion ($1.55 billion). The upside was due to growth in all fee income components, except income from equity-accounted associates and joint ventures.
Adjusted non-interest expenses totaled C$2.27 billion ($1.70 billion), up 5% from the year-ago quarter.
Total provision for credit losses declined 19% year over year to C$212 million ($158.9 million).
Improving Balance Sheet; Capital Ratios Reflect Strength
Total assets came in at C$513.29 billion ($390.8 billion) as of Jan 31, 2017, up 2% from the prior quarter. Loans and acceptances (net of allowance) inched up nearly 1% sequentially to C$322.10 billion ($245.3 billion), while deposits grew 4% to C$409.75 billion ($312 billion).
Adjusted return on common shareholders’ equity was 20.1% at the end of the quarter, up from 19.0% in the year-ago quarter.
As of Jan 31, 2017, Basel III Common Equity Tier 1 ratio came in at 11.9% compared with 10.6% as of Jan 31, 2016. Further, Tier 1 capital ratio was 13.2% compared with 12.1% as of Jan 31, 2016. Total capital ratio was 15.2%, up from 14.2% in the prior-year quarter.
Dividend Hike
Concurrently, Canadian Imperial announced a 2.4% rise in quarterly dividend to C$1.27 per share. The dividend will be paid on Apr 28 to the shareholders on record as of Mar 28.
Our Viewpoint
Canadian Imperial delivered a decent performance at a time when banks in Canada are encountering a number of challenges, including a low rate environment, stressed energy sector and a weak economy. Also, the company’s deal to acquire PrivateBancorp, Inc. is likely to expand its private banking and wealth management capabilities in the U.S.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Barclays PLC’s (BCS - Free Report) fourth-quarter 2016 net income from continuing operations was £380 million ($472.3 million) against a net loss of £2.24 billion recorded in the prior-year quarter. Improved bond trading, rebound in equity trading and encouraging investment banking performance were the main reasons for the improved results. However, lower net interest income and a rise in credit impairment charges were the undermining factors.
HSBC Holdings plc (HSBC - Free Report) reported a net loss attributable to shareholders of $4.2 billion, compared with net loss of $1.3 billion in the year-ago quarter. Despite witnessing steady success in its cost-saving initiatives, HSBC's results were hampered by streamlining operations and several one-time write downs. Further, lower revenues acted as a headwind.
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Canadian Imperial (CM) Up on Improved Q1 Earnings, Revenues
Canadian Imperial Bank of Commerce (CM - Free Report) gained nearly 1% on the NYSE following the release of its first-quarter fiscal 2017 earnings (ended Jan 31) last week. Adjusted earnings per share for the quarter came in at C$2.89, up from C$2.55 in the prior-year quarter.
Results improved due to growth in revenues and a fall in provision for credit losses. Further, a strong balance sheet position supported the results. However, an increase in expenses was an undermining factor.
After considering several non-recurring items, net income in the quarter jumped 43% year over year to C$1.41 billion ($1.06 billion).
Improved Revenues Offset a Rise in Costs
Adjusted total revenue grew 9% year over year to C$4.03 billion ($3.02 billion). On a reported basis, total revenue was C$4.21 billion ($3.16 billion), up 17% from the prior-year quarter.
Net interest income was C$2.14 billion ($1.60 billion), up 2% from the year-ago quarter. The improvement reflected a rise in interest income, partly offset by higher interest expenses.
Non-interest income increased 40% year over year to C$2.07 billion ($1.55 billion). The upside was due to growth in all fee income components, except income from equity-accounted associates and joint ventures.
Adjusted non-interest expenses totaled C$2.27 billion ($1.70 billion), up 5% from the year-ago quarter.
Total provision for credit losses declined 19% year over year to C$212 million ($158.9 million).
Improving Balance Sheet; Capital Ratios Reflect Strength
Total assets came in at C$513.29 billion ($390.8 billion) as of Jan 31, 2017, up 2% from the prior quarter. Loans and acceptances (net of allowance) inched up nearly 1% sequentially to C$322.10 billion ($245.3 billion), while deposits grew 4% to C$409.75 billion ($312 billion).
Adjusted return on common shareholders’ equity was 20.1% at the end of the quarter, up from 19.0% in the year-ago quarter.
As of Jan 31, 2017, Basel III Common Equity Tier 1 ratio came in at 11.9% compared with 10.6% as of Jan 31, 2016. Further, Tier 1 capital ratio was 13.2% compared with 12.1% as of Jan 31, 2016. Total capital ratio was 15.2%, up from 14.2% in the prior-year quarter.
Dividend Hike
Concurrently, Canadian Imperial announced a 2.4% rise in quarterly dividend to C$1.27 per share. The dividend will be paid on Apr 28 to the shareholders on record as of Mar 28.
Our Viewpoint
Canadian Imperial delivered a decent performance at a time when banks in Canada are encountering a number of challenges, including a low rate environment, stressed energy sector and a weak economy. Also, the company’s deal to acquire PrivateBancorp, Inc. is likely to expand its private banking and wealth management capabilities in the U.S.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise | Canadian Imperial Bank of Commerce Quote
Canadian Imperial currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Foreign Banks
Barclays PLC’s (BCS - Free Report) fourth-quarter 2016 net income from continuing operations was £380 million ($472.3 million) against a net loss of £2.24 billion recorded in the prior-year quarter. Improved bond trading, rebound in equity trading and encouraging investment banking performance were the main reasons for the improved results. However, lower net interest income and a rise in credit impairment charges were the undermining factors.
HSBC Holdings plc (HSBC - Free Report) reported a net loss attributable to shareholders of $4.2 billion, compared with net loss of $1.3 billion in the year-ago quarter. Despite witnessing steady success in its cost-saving initiatives, HSBC's results were hampered by streamlining operations and several one-time write downs. Further, lower revenues acted as a headwind.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>