Shares of Canadian Imperial Bank of Commerce (CM - Free Report) have rallied 4.3% on the NYSE since the release of second-quarter fiscal 2021 (ended Apr 30) results. The company’s adjusted earnings per share came in at C$3.59, up substantially from the prior-year quarter.
Results benefited from rise in non-interest income and substantial fall in provisions. Further, a strong balance sheet position during the quarter supported the results. However, higher costs and fall in net interest income were headwinds.
After considering several non-recurring items, net income was C$1.65 billion ($1.31 billion), reflecting a significant year-over-year jump.
Revenues & Costs Rise
Adjusted total revenues rose 8% year over year to C$4.93 billion ($3.92 billion). The improvement was driven by higher non-interest income.
Net interest income was C$2.74 billion ($2.18 billion), declining marginally from the year-ago quarter. Non-interest income jumped 20% to C$2.19 billion ($1.74 billion).
Adjusted non-interest expenses totaled C$2.76 billion ($2.19 billion), up 2%.
Adjusted efficiency ratio was 54.9% at the end of the reported quarter, down from 57.2% as of Apr 30, 2020. A fall in the efficiency ratio indicates an improvement in profitability.
Total provision for credit losses declined substantially year over year to C$32 million ($25.4 million).
Strong Balance Sheet & Capital Ratios
Total assets were C$782.9 billion ($637.4 billion) as of Apr 30, 2021, relatively stable sequentially. Net loans and acceptances increased 3% to C$432.1 billion ($351.8 billion), while deposits climbed slightly to C$576.6 billion ($469.4 billion) from the prior quarter.
As of Apr 30, 2021, Common Equity Tier 1 ratio was 12.4%, up from 11.3% in the prior-year quarter. Further, Tier 1 capital ratio was 13.9% compared with 12.5% as of Apr 30, 2020. Total capital ratio was 16.2%, up from 14.5%.
Adjusted return on common shareholders’ equity was 17.3% at the end of the fiscal second quarter, up from the prior year’s 4.5%.
Our View
Given anticipations of an improving economy and loan growth, Canadian Imperial is likely to witness steady improvement in revenues. However, low interest rates and a challenging operating backdrop are major near-term concerns.
The company currently carries a Zacks Rank #2 (Buy). 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 first-quarter 2021 pre-tax profit of $5.8 billion, up 79% from the prior-year quarter. Results benefited from net reserve releases. However, lower revenues and rise in expenses were the undermining factors.
Bank of Montreal’s (BMO - Free Report) second-quarter fiscal 2021 (ended Apr 30) adjusted net income of C$2.10 billion ($1.67 billion) increased significantly year over year. The company recorded an improvement in revenues and lower provisions, which supported results to an extent. However, an increase in expenses was a headwind.
Barclays (BCS - Free Report) reported first-quarter 2021 net income attributable to ordinary equity holders of £1.70 billion ($2.34 billion), up significantly from the prior-year quarter. Results reflect a rise in revenues along with higher operating expenses. A significant decline in credit impairment charges was a major tailwind.
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Shares of Canadian Imperial Bank of Commerce (CM - Free Report) have rallied 4.3% on the NYSE since the release of second-quarter fiscal 2021 (ended Apr 30) results. The company’s adjusted earnings per share came in at C$3.59, up substantially from the prior-year quarter.
Results benefited from rise in non-interest income and substantial fall in provisions. Further, a strong balance sheet position during the quarter supported the results. However, higher costs and fall in net interest income were headwinds.
After considering several non-recurring items, net income was C$1.65 billion ($1.31 billion), reflecting a significant year-over-year jump.
Revenues & Costs Rise
Adjusted total revenues rose 8% year over year to C$4.93 billion ($3.92 billion). The improvement was driven by higher non-interest income.
Net interest income was C$2.74 billion ($2.18 billion), declining marginally from the year-ago quarter. Non-interest income jumped 20% to C$2.19 billion ($1.74 billion).
Adjusted non-interest expenses totaled C$2.76 billion ($2.19 billion), up 2%.
Adjusted efficiency ratio was 54.9% at the end of the reported quarter, down from 57.2% as of Apr 30, 2020. A fall in the efficiency ratio indicates an improvement in profitability.
Total provision for credit losses declined substantially year over year to C$32 million ($25.4 million).
Strong Balance Sheet & Capital Ratios
Total assets were C$782.9 billion ($637.4 billion) as of Apr 30, 2021, relatively stable sequentially. Net loans and acceptances increased 3% to C$432.1 billion ($351.8 billion), while deposits climbed slightly to C$576.6 billion ($469.4 billion) from the prior quarter.
As of Apr 30, 2021, Common Equity Tier 1 ratio was 12.4%, up from 11.3% in the prior-year quarter. Further, Tier 1 capital ratio was 13.9% compared with 12.5% as of Apr 30, 2020. Total capital ratio was 16.2%, up from 14.5%.
Adjusted return on common shareholders’ equity was 17.3% at the end of the fiscal second quarter, up from the prior year’s 4.5%.
Our View
Given anticipations of an improving economy and loan growth, Canadian Imperial is likely to witness steady improvement in revenues. However, low interest rates and a challenging operating backdrop are major near-term concerns.
The company currently carries a Zacks Rank #2 (Buy). 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 first-quarter 2021 pre-tax profit of $5.8 billion, up 79% from the prior-year quarter. Results benefited from net reserve releases. However, lower revenues and rise in expenses were the undermining factors.
Bank of Montreal’s (BMO - Free Report) second-quarter fiscal 2021 (ended Apr 30) adjusted net income of C$2.10 billion ($1.67 billion) increased significantly year over year. The company recorded an improvement in revenues and lower provisions, which supported results to an extent. However, an increase in expenses was a headwind.
Barclays (BCS - Free Report) reported first-quarter 2021 net income attributable to ordinary equity holders of £1.70 billion ($2.34 billion), up significantly from the prior-year quarter. Results reflect a rise in revenues along with higher operating expenses. A significant decline in credit impairment charges was a major tailwind.
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If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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