CIBC's Profit Jumps 20%, and It Increases Dividend

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Canadian Imperial Bank of Commerce on Thursday raised its dividend and posted a nearly 20% increase in fiscal fourth-quarter earnings, beating analyst expectations on improved results across its key operations.

Canada's fifth-largest lender by assets, which earlier this year agreed to buy Chicago-based PrivateBancorp Inc. for about $3.8 billion in cash and stock, reported revenue and earnings improvements in each of its retail and business banking, wealth-management and capital-markets divisions in the quarter ended Oct. 31.

"In the face of weak commodity prices, low economic growth, political uncertainty and regulatory change, we achieved our financial targets," said Chief Executive Victor Dodig on a conference call.

The bank said results in its latest quarter included items that reduced earnings by 28 Canadian cents a share overall, the largest being a 25-Canadian-cent-a-share restructuring charge related to employee severance. In total, restructuring charges amounted to C$98 million in the quarter after taxes, the bank said.

Adjusted to exclude items, CIBC said it earned C$2.60 a share, easily beating the C$2.48 a share analysts were expecting, according to Thomson Reuters.

Revenue rose almost 6% to C$3.68 billion.

Loan-loss provisions, or the funds set aside to cover soured loans, increased to C$222 million from C$198 million a year earlier, but were down from C$243 million in the previous quarter. However, CIBC said the delinquency rate for its Canadian credit card business increased in the quarter, driven in part by a higher unemployment in oil-rich provinces.

In the latest period, earnings from retail and business banking rose 2%, while wealth management and capital markets earnings were up 3% and 52%, respectively. The bank noted that loan-loss provisions in its capital-markets division were nil in the quarter, compared with C$22 million a year earlier, largely due to lower losses in the oil and gas sector.

CIBC raised its quarterly payout by 3 Canadian cents a share, to C$1.24 a share.

Residential mortgage loan growth was up 10% in the quarter, driven largely by increased housing activity in the Greater Vancouver and Toronto areas, two of Canada's hottest markets. Despite the rise in mortgage-related activity in those markets, Cormark Securities says growth risk is being managed well despite overly cautious investor sentiment.

CIBC also reiterated its outlook for medium-term earnings-per-share growth of at least 5%. The bank earned C$10.70 a share for 2016 as a whole.

In June, CIBC agreed to buy Chicago-based PrivateBancorp Inc. in what would be its biggest purchase to date. The bank has said it expects to close the deal early next year.

Separately on Thursday, PrivateBancorp said two independent proxy advisory firms are recommending shareholders vote in favor of the CIBC offer. A special meeting of PrivateBancorp shareholders is scheduled for Dec. 8, it noted.

Judy McKinnon contributed to this article.

Write to David George-Cosh at

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