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Canadian Imperial (CM) Q4 Earnings Disappoint, Stock Up 2.6%
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Canadian Imperial Bank of Commerce (CM - Free Report) reported fourth-quarter fiscal 2020 (ended Oct 31) results. Adjusted earnings per share came in at C$2.79 ($2.11), down 2% from the prior-year quarter reported figure.
Results were unfavorably impacted by lower revenues. However, fall in provisions, controlled expenses and strong balance-sheet position acted as tailwinds, pushing shares of Canadian Imperial 2.6% higher on the NYSE, following the release.
After considering several non-recurring items, net income was C$1.02 billion ($0.77 billion), reflecting a decline of 15% year over year.
Low Adjusted Revenues Partly Offset by Fall in Costs
Adjusted total revenues declined 4.2% year over year to C$4.6 billion ($3.48 billion). The decrease resulted from lower non-interest and net interest income.
Net interest income was C$2.8 billion ($2.1 billion), down slightly from the year-ago quarter. Non-interest income fell 8.1% year over year to C$1.81 billion ($1.37 billion).
Adjusted non-interest expenses totaled C$2.6 billion ($1.97 billion), down 2.3% from the year-ago quarter.
Adjusted efficiency ratio was 56.4% at the end of the reported quarter, up from 56% as of Oct 31, 2019. A rise in the efficiency ratio indicates a fall in profitability.
Total provision for credit losses declined 27.6% year over year to C$291 million ($220 million).
Strong Balance Sheet & Capital Ratios
Total assets were C$770 billion ($578 billion) as of Oct 31, 2020, slightly up from the prior-quarter level. Net loans and acceptances increased marginally to C$416.4 billion ($312.5 billion), while deposits climbed slightly to C$570.7 billion ($428.3 billion), on a sequential basis.
As of Oct 31, 2020, Common Equity Tier 1 ratio was 12.1%, up from the prior-year quarter reported figure of 11.6%. Furthermore, Tier 1 capital ratio was 13.6% compared with 12.9% as of Oct 31, 2019. Total capital ratio was 16.1%, up from the prior-year quarter’s 15%.
Adjusted return on common shareholders’ equity was 13.5% at the end of the fiscal fourth quarter, down from the prior year’s 14.2%.
Our Viewpoint
Given anticipations of an improving economy and loan growth, Canadian Imperial will likely witness a steady improvement in revenues. However, lower revenues and a challenging operating backdrop are major concerns.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Bank of Montreal’s (BMO - Free Report) fourth-quarter fiscal 2020 (ended Oct 31) adjusted net income came in at C$1.61 billion ($1.22 billion), slightly up year over year. The results reflected a significant rise in revenues. Nonetheless, elevated provisions and expenses were on the downside. Moreover, loan and deposit balances declined.
Barclays (BCS - Free Report) reported third-quarter net income attributable to ordinary equity holders of £611 million ($789 million) against the net loss recorded in the prior-year quarter. Results were primarily hurt by an increase in credit impairment charges as well as lower revenues. Also, a rise in operating expenses was a major headwind.
Royal Bank of Canada (RY - Free Report) delivered fourth-quarter fiscal 2020 (ended Oct 31, 2020) net income of C$3.2 billion ($2.4 billion), up 1% from the prior-year quarter’s reported tally. The bank witnessed fall in expenses and provisions. Yet, lower revenues, along with decline in loans and deposit balances, were deterrents.
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Canadian Imperial (CM) Q4 Earnings Disappoint, Stock Up 2.6%
Canadian Imperial Bank of Commerce (CM - Free Report) reported fourth-quarter fiscal 2020 (ended Oct 31) results. Adjusted earnings per share came in at C$2.79 ($2.11), down 2% from the prior-year quarter reported figure.
Results were unfavorably impacted by lower revenues. However, fall in provisions, controlled expenses and strong balance-sheet position acted as tailwinds, pushing shares of Canadian Imperial 2.6% higher on the NYSE, following the release.
After considering several non-recurring items, net income was C$1.02 billion ($0.77 billion), reflecting a decline of 15% year over year.
Low Adjusted Revenues Partly Offset by Fall in Costs
Adjusted total revenues declined 4.2% year over year to C$4.6 billion ($3.48 billion). The decrease resulted from lower non-interest and net interest income.
Net interest income was C$2.8 billion ($2.1 billion), down slightly from the year-ago quarter. Non-interest income fell 8.1% year over year to C$1.81 billion ($1.37 billion).
Adjusted non-interest expenses totaled C$2.6 billion ($1.97 billion), down 2.3% from the year-ago quarter.
Adjusted efficiency ratio was 56.4% at the end of the reported quarter, up from 56% as of Oct 31, 2019. A rise in the efficiency ratio indicates a fall in profitability.
Total provision for credit losses declined 27.6% year over year to C$291 million ($220 million).
Strong Balance Sheet & Capital Ratios
Total assets were C$770 billion ($578 billion) as of Oct 31, 2020, slightly up from the prior-quarter level. Net loans and acceptances increased marginally to C$416.4 billion ($312.5 billion), while deposits climbed slightly to C$570.7 billion ($428.3 billion), on a sequential basis.
As of Oct 31, 2020, Common Equity Tier 1 ratio was 12.1%, up from the prior-year quarter reported figure of 11.6%. Furthermore, Tier 1 capital ratio was 13.6% compared with 12.9% as of Oct 31, 2019. Total capital ratio was 16.1%, up from the prior-year quarter’s 15%.
Adjusted return on common shareholders’ equity was 13.5% at the end of the fiscal fourth quarter, down from the prior year’s 14.2%.
Our Viewpoint
Given anticipations of an improving economy and loan growth, Canadian Imperial will likely witness a steady improvement in revenues. However, lower revenues and a challenging operating backdrop are major 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.
Competitive Landscape
Bank of Montreal’s (BMO - Free Report) fourth-quarter fiscal 2020 (ended Oct 31) adjusted net income came in at C$1.61 billion ($1.22 billion), slightly up year over year. The results reflected a significant rise in revenues. Nonetheless, elevated provisions and expenses were on the downside. Moreover, loan and deposit balances declined.
Barclays (BCS - Free Report) reported third-quarter net income attributable to ordinary equity holders of £611 million ($789 million) against the net loss recorded in the prior-year quarter. Results were primarily hurt by an increase in credit impairment charges as well as lower revenues. Also, a rise in operating expenses was a major headwind.
Royal Bank of Canada (RY - Free Report) delivered fourth-quarter fiscal 2020 (ended Oct 31, 2020) net income of C$3.2 billion ($2.4 billion), up 1% from the prior-year quarter’s reported tally. The bank witnessed fall in expenses and provisions. Yet, lower revenues, along with decline in loans and deposit balances, were deterrents.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>