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Canadian Imperial (CM) Q3 Earnings Rise on Higher Revenues
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Canadian Imperial Bank of Commerce (CM - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted earnings per share came in at C$3.93, up 45% from the prior-year quarter.
Results benefited from rise in revenues and provision benefits. A strong balance sheet position and rise in loan demand during the quarter supported the results. However, higher expenses posed a headwind.
After considering several non-recurring items, net income was C$1.73 billion ($1.41 billion), reflecting a 48% year-over-year jump.
Revenues & Costs Rise
Adjusted total revenues rose 7% year over year to C$5.06 billion ($4.12 billion). The improvement was driven by higher net interest income and non-interest income.
Net interest income was C$2.89 billion ($2.35 billion), growing 6% from the year-ago quarter. Non-interest income increased 9% to C$2.16 billion ($1.76 billion).
Adjusted non-interest expenses totaled C$2.81 billion ($2.29 billion), up 8%.
Adjusted efficiency ratio was 55.1% at the end of the reported quarter, rising from 54.8% as of Jul 31, 2020. An increase in the efficiency ratio indicates deterioration in profitability.
Provision for credit losses was a reversal of C$99 million ($80.6 million) against a provision of $525 million in the prior-year quarter.
Strong Balance Sheet & Capital Ratios
Total assets were C$806.1 billion ($645.8 billion) as of Jul 31, 2021, up 3% sequentially. Net loans and acceptances increased 4% to C$449.2 billion ($359.9 billion), while deposits climbed 5% to C$603 billion ($483.1 billion).
As of Jul 31, 2021, Common Equity Tier 1 ratio was 12.3%, up from 11.8% in the prior-year quarter. Tier 1 capital ratio was 13.7% compared with 13% as of Jul 31, 2020. Total capital ratio was 16%, up from 15.4%.
Adjusted return on common shareholders’ equity was 17.9% at the end of the fiscal third quarter, up from the prior year’s 12.9%.
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 and EPS Surprise
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income of C$2.29 billion ($1.86 billion) increased 82% year over year.
Royal Bank of Canada’s (RY - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income was C$4.28 billion ($3.48 billion), up 34.6% from the prior-year quarter’s figure.
Barclays (BCS - Free Report) reported second-quarter 2021 net income attributable to ordinary equity holders of £2.11 billion ($2.95 billion), up significantly from the prior-year quarter.
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Canadian Imperial (CM) Q3 Earnings Rise on Higher Revenues
Canadian Imperial Bank of Commerce (CM - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted earnings per share came in at C$3.93, up 45% from the prior-year quarter.
Results benefited from rise in revenues and provision benefits. A strong balance sheet position and rise in loan demand during the quarter supported the results. However, higher expenses posed a headwind.
After considering several non-recurring items, net income was C$1.73 billion ($1.41 billion), reflecting a 48% year-over-year jump.
Revenues & Costs Rise
Adjusted total revenues rose 7% year over year to C$5.06 billion ($4.12 billion). The improvement was driven by higher net interest income and non-interest income.
Net interest income was C$2.89 billion ($2.35 billion), growing 6% from the year-ago quarter. Non-interest income increased 9% to C$2.16 billion ($1.76 billion).
Adjusted non-interest expenses totaled C$2.81 billion ($2.29 billion), up 8%.
Adjusted efficiency ratio was 55.1% at the end of the reported quarter, rising from 54.8% as of Jul 31, 2020. An increase in the efficiency ratio indicates deterioration in profitability.
Provision for credit losses was a reversal of C$99 million ($80.6 million) against a provision of $525 million in the prior-year quarter.
Strong Balance Sheet & Capital Ratios
Total assets were C$806.1 billion ($645.8 billion) as of Jul 31, 2021, up 3% sequentially. Net loans and acceptances increased 4% to C$449.2 billion ($359.9 billion), while deposits climbed 5% to C$603 billion ($483.1 billion).
As of Jul 31, 2021, Common Equity Tier 1 ratio was 12.3%, up from 11.8% in the prior-year quarter. Tier 1 capital ratio was 13.7% compared with 13% as of Jul 31, 2020. Total capital ratio was 16%, up from 15.4%.
Adjusted return on common shareholders’ equity was 17.9% at the end of the fiscal third quarter, up from the prior year’s 12.9%.
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 and EPS Surprise
Canadian Imperial Bank of Commerce price-eps-surprise | Canadian Imperial Bank of Commerce Quote
The company 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
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income of C$2.29 billion ($1.86 billion) increased 82% year over year.
Royal Bank of Canada’s (RY - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income was C$4.28 billion ($3.48 billion), up 34.6% from the prior-year quarter’s figure.
Barclays (BCS - Free Report) reported second-quarter 2021 net income attributable to ordinary equity holders of £2.11 billion ($2.95 billion), up significantly from the prior-year quarter.