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Canadian Imperial (CM) Q3 Earnings Rise on Higher Revenues
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Canadian Imperial Bank of Commerce’s (CM - Free Report) third-quarter fiscal 2018 (ended Jul 31) adjusted earnings per share came in at C$3.08, up 11% from the prior-year quarter.
Results improved driven by growth in both net interest income and non-interest income. Furthermore, a strong balance-sheet position supported the results. However, an increase in expenses and higher provisions were the undermining factors.
After considering several non-recurring items, net income came in at C$1.37 billion ($1.05 billion), reflecting an increase of 25% year over year.
Revenues Improve, Costs Rise
Adjusted total revenues grew 11% year over year to C$4.58 billion ($3.51 billion). On a reported basis, total revenues came in at C$4.55 billion ($3.49 billion), indicating an increase of 11% from the prior-year quarter.
Net interest income was C$2.58 billion ($1.98 billion), up 13% from the year-ago quarter. The improvement reflected a rise in interest income, partly offset by higher interest expenses.
Non-interest income increased 8% year over year to C$1.97 billion ($1.51 billion).
Adjusted non-interest expenses totaled C$2.52 billion ($1.93 billion), rising 6% from the year-ago quarter.
Total provision for credit losses rose 15% year over year to C$241 million ($184.8 million).
Improving Balance Sheet & Capital Ratios
Total assets came in at C$595.02 billion ($457 billion) as of Jul 31, 2018, up nearly 1% from the prior quarter. Net loans and acceptances grew 1% sequentially to C$377.31 billion ($289.78 billion) while deposits rose 2.4% to C$459.77 billion ($353.11 billion).
As of Jul 31, 2018, Common Equity Tier 1 ratio came in at 11.3% compared with 10.4% as of Jul 31, 2017. Further, Tier 1 capital ratio was 12.8% compared with 11.9% as of Jul 31, 2017. Total capital ratio was 14.8%, improving from 13.7% in the prior-year quarter.
Adjusted return on common shareholders’ equity was 17.1% at the end of the quarter, down from 17.3% a year ago.
Our Viewpoint
Given the improving economy and loan growth, Canadian Imperial is expected to witness a steady rise in revenues. Additionally, the acquisition of PrivateBancorp expanded its private banking and wealth management capabilities in the United States. However, persistently rising expenses remain a major near-term concern for the company.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
ItauUnibanco Holding S.A. (ITUB - Free Report) posted recurring earnings of R$6.4 billion ($1.78 billion) in the June-end quarter, up 3.2% year over year. Results displayed higher revenues, lower provisions and a solid balance-sheet position. Nevertheless, elevated expenses and reduced managerial financial margin were headwinds.
UBS Group AG (UBS - Free Report) reported second-quarter 2018 net profit attributable to shareholders of CHF 1.28 billion ($1.30 billion), up around 9% from the prior-year quarter. Results marked a rise in net fee and commission income (up 2% year over year) and strong capital position. However, the quarter reflected elevated expenses and lower net interest income (down 30%).
Deutsche Bank AG (DB - Free Report) reported net income of €401 million ($467 million) in second-quarter 2018, which tanked 13.7% from year-ago quarter. Lower revenues and higher expenses were the key undermining factors. Also, provisions for credit losses increased. Notably, net asset outflows were recorded during the quarter. Nonetheless, strong capital position was a positive.
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Canadian Imperial (CM) Q3 Earnings Rise on Higher Revenues
Canadian Imperial Bank of Commerce’s (CM - Free Report) third-quarter fiscal 2018 (ended Jul 31) adjusted earnings per share came in at C$3.08, up 11% from the prior-year quarter.
Results improved driven by growth in both net interest income and non-interest income. Furthermore, a strong balance-sheet position supported the results. However, an increase in expenses and higher provisions were the undermining factors.
After considering several non-recurring items, net income came in at C$1.37 billion ($1.05 billion), reflecting an increase of 25% year over year.
Revenues Improve, Costs Rise
Adjusted total revenues grew 11% year over year to C$4.58 billion ($3.51 billion). On a reported basis, total revenues came in at C$4.55 billion ($3.49 billion), indicating an increase of 11% from the prior-year quarter.
Net interest income was C$2.58 billion ($1.98 billion), up 13% from the year-ago quarter. The improvement reflected a rise in interest income, partly offset by higher interest expenses.
Non-interest income increased 8% year over year to C$1.97 billion ($1.51 billion).
Adjusted non-interest expenses totaled C$2.52 billion ($1.93 billion), rising 6% from the year-ago quarter.
Total provision for credit losses rose 15% year over year to C$241 million ($184.8 million).
Improving Balance Sheet & Capital Ratios
Total assets came in at C$595.02 billion ($457 billion) as of Jul 31, 2018, up nearly 1% from the prior quarter. Net loans and acceptances grew 1% sequentially to C$377.31 billion ($289.78 billion) while deposits rose 2.4% to C$459.77 billion ($353.11 billion).
As of Jul 31, 2018, Common Equity Tier 1 ratio came in at 11.3% compared with 10.4% as of Jul 31, 2017. Further, Tier 1 capital ratio was 12.8% compared with 11.9% as of Jul 31, 2017. Total capital ratio was 14.8%, improving from 13.7% in the prior-year quarter.
Adjusted return on common shareholders’ equity was 17.1% at the end of the quarter, down from 17.3% a year ago.
Our Viewpoint
Given the improving economy and loan growth, Canadian Imperial is expected to witness a steady rise in revenues. Additionally, the acquisition of PrivateBancorp expanded its private banking and wealth management capabilities in the United States. However, persistently rising expenses remain a major near-term concern for the company.
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 carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
ItauUnibanco Holding S.A. (ITUB - Free Report) posted recurring earnings of R$6.4 billion ($1.78 billion) in the June-end quarter, up 3.2% year over year. Results displayed higher revenues, lower provisions and a solid balance-sheet position. Nevertheless, elevated expenses and reduced managerial financial margin were headwinds.
UBS Group AG (UBS - Free Report) reported second-quarter 2018 net profit attributable to shareholders of CHF 1.28 billion ($1.30 billion), up around 9% from the prior-year quarter. Results marked a rise in net fee and commission income (up 2% year over year) and strong capital position. However, the quarter reflected elevated expenses and lower net interest income (down 30%).
Deutsche Bank AG (DB - Free Report) reported net income of €401 million ($467 million) in second-quarter 2018, which tanked 13.7% from year-ago quarter. Lower revenues and higher expenses were the key undermining factors. Also, provisions for credit losses increased. Notably, net asset outflows were recorded during the quarter. Nonetheless, strong capital position was a positive.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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