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Canadian Imperial (CM) Stock Up 4.3% as Q2 Earnings Rise Y/Y
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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.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
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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Canadian Imperial (CM) Stock Up 4.3% as Q2 Earnings Rise Y/Y
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.
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 #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.
Time to Invest in Legal Marijuana
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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