Canadian Imperial Bank of Commerce
) reported its fiscal fourth quarter 2012 (ended October 31)
adjusted earnings per share of C$2.04. This was up nearly 15%
from the prior-quarter earnings of C$1.78.
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For fiscal 2012, Canadian Imperial's adjusted earning were C$8.07
per share compared with C$7.57 recorded last year.
Improved net interest income and robust asset position were the
primary earnings drivers. However, rising operating expenses and
decline in non-interest revenue partially marred the results.
After considering certain non-recurring items, net income for
fiscal fourth quarter came in at C$852 million ($863.7 million),
up 1.3% sequentially and 12.5% year over year.
Behind the Headlines
Canadian Imperial reported total revenue of C$3.16 billion ($3.2
billion), up 0.3% from the prior quarter. Yet, adjusted revenue
came in at C$3.20 billion ($3.2 billion), down 1.4% from the last
For the reported quarter, net interest income grew 7.1%
sequentially to C$2.02 billion ($2.0 billion). The increase was
mainly due to escalated trading related net interest income.
Non-interest revenue came in at C$1.14 billion ($1.2 billion),
declining 9.7% from the previous quarter. The fall was mainly
attributable to higher trading losses.
Non-interest expenses were C$1.83 billion ($1.9 billion), almost
at par sequentially. Adjusted efficiency ratio stood at 56.5% as
against 56.1% as of July 31, 2012 and 58.7% as of October 31,
Total provision for credit losses were C$328 million ($332.5
million), up 3.5% from the last quarter. The marginal rise was
primarily due to higher losses in the exited U.S. leveraged
finance portfolio, partially offset by lower losses in U.S. real
estate finance and lower write-offs and bankruptcies in cards
Balance Sheet and Ratios
Total assets came in at C$393.4 billion ($393.2 billion) as of
October 31, 2012, surging 2.5% from the prior-year period. Return
on common shareholders' equity was 21.7% in the reported quarter
as against 21.8% in the prior quarter and 22.6% in the year-ago
As of October 31, 2012, tier 1 capital ratio was 13.8% compared
with 14.1% as of July 31, 2012 and 14.7% as of October 31, 2011.
Further, total capital ratio stood at 17.3% versus 17.7% in the
previous quarter and 18.4% in prior-year quarter.
Concurrent with the earnings release, Canadian Imperial declared
a quarterly cash dividend of C$0.94 per share. The dividend is
payable on January 28, 2013 to shareholders of record as of
December 28, 2012.
Royal Bank of Canada
) reported net income from continuing operations of C$1.9 billion
($1.9 billion) for fiscal fourth quarter 2012 (ended on October
31), up 19% from C$1.6 billion ($1.6 billion) recorded in the
year-ago period. Results reflect a rise in revenue, improved
capital position and lower interest expenses. Yet, the key
negatives were deteriorating credit quality and elevated
We expect Canadian Imperial's acquisition activities to
positively impact its financials in the long run. Further, the
company's strong business model, diversified product mix and
sturdy capital position will boost its bottom line. However, a
persistent low interest rate environment, weak economic recovery
and stringent regulatory requirements will remain a drag on its
Canadian Imperial currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating.