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Canadian Imperial (CM) Stock Down 3.1% as Q3 Earnings Decline
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Canadian Imperial Bank of Commerce (CM - Free Report) shares lost 3.1% in response to disappointing third-quarter fiscal 2023 (ended Jul 31) results. Adjusted earnings per share of C$1.52 declined 18% from the prior-year quarter.
Results were adversely impacted by higher expenses and a substantial rise in provisions. However, a rise in revenues, robust loan balance and a strong balance sheet position were the supporting factors.
After considering several non-recurring items, net income was C$1.43 billion ($1.07 billion), reflecting a year-over-year fall of 14%.
Revenues Improve, Costs Rise
Total revenues were C$5.85 billion ($4.38 billion), up 5% year over year. The improvement was driven by higher non-interest income.
Net interest income came in at C$3.24 billion ($2.43 billion), stable year over year. Non-interest income increased 12% to C$2.61 billion ($1.96 billion).
The adjusted efficiency ratio was 55.2% at the end of the reported quarter, stable from the prior-year quarter.
Provision for credit losses was C$736 million ($551.5 million), up significantly from the prior-year quarter.
Balance Sheet Strong
As of Jul 31, 2023, total assets were C$943 billion ($713.7 billion), up almost 1% from the prior quarter. Net loans and acceptances were relatively stable at C$538.2 billion ($407.4 billion), while deposits fell marginally to C$704.5 billion ($533.2 billion).
Capital Ratios Improve, Profitability Ratio Weakens
As of Jul 31, 2023, the Common Equity Tier 1 ratio was 12.2% compared with 11.8% in the prior-year quarter. The Tier 1 capital ratio was 13.7% compared with 13.2% in the prior-year period. The total capital ratio was 15.9%, up from 15.3%.
Adjusted return on common shareholders’ equity was 11.9% at the end of the fiscal third quarter, down from the prior year’s 15.1%.
Our Take
Given higher interest rates and solid loan balance, Canadian Imperial is likely to witness steady improvement in revenues. However, a challenging operating backdrop, steadily increasing provisions and rising expenses remain near-term concerns.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Toronto-Dominion Bank’s (TD - Free Report) third-quarter fiscal 2023 (ended Jul 31) adjusted net income of C$3.73 billion ($2.80 billion) decreased 2.2% from the prior-year quarter.
TD recorded a rise in net interest income on the back of higher interest rates and decent loan demand. Also, the company’s capital ratios were solid in the quarter. However, an increase in expenses and higher provision for credit losses were major headwinds.
Royal Bank of Canada (RY - Free Report) reported a third-quarter fiscal 2023 (ended Jul 31) adjusted net income of C$4.02 billion ($3.01 billion), which increased 10.9% from the prior-year quarter.
Results were aided by an improvement in revenues. However, higher expenses and provisions were the undermining factors. In the reported quarter, RY’s capital ratios improved.
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Canadian Imperial (CM) Stock Down 3.1% as Q3 Earnings Decline
Canadian Imperial Bank of Commerce (CM - Free Report) shares lost 3.1% in response to disappointing third-quarter fiscal 2023 (ended Jul 31) results. Adjusted earnings per share of C$1.52 declined 18% from the prior-year quarter.
Results were adversely impacted by higher expenses and a substantial rise in provisions. However, a rise in revenues, robust loan balance and a strong balance sheet position were the supporting factors.
After considering several non-recurring items, net income was C$1.43 billion ($1.07 billion), reflecting a year-over-year fall of 14%.
Revenues Improve, Costs Rise
Total revenues were C$5.85 billion ($4.38 billion), up 5% year over year. The improvement was driven by higher non-interest income.
Net interest income came in at C$3.24 billion ($2.43 billion), stable year over year. Non-interest income increased 12% to C$2.61 billion ($1.96 billion).
Non-interest expenses totaled C$3.31 billion ($2.48 billion), increasing 4%.
The adjusted efficiency ratio was 55.2% at the end of the reported quarter, stable from the prior-year quarter.
Provision for credit losses was C$736 million ($551.5 million), up significantly from the prior-year quarter.
Balance Sheet Strong
As of Jul 31, 2023, total assets were C$943 billion ($713.7 billion), up almost 1% from the prior quarter. Net loans and acceptances were relatively stable at C$538.2 billion ($407.4 billion), while deposits fell marginally to C$704.5 billion ($533.2 billion).
Capital Ratios Improve, Profitability Ratio Weakens
As of Jul 31, 2023, the Common Equity Tier 1 ratio was 12.2% compared with 11.8% in the prior-year quarter. The Tier 1 capital ratio was 13.7% compared with 13.2% in the prior-year period. The total capital ratio was 15.9%, up from 15.3%.
Adjusted return on common shareholders’ equity was 11.9% at the end of the fiscal third quarter, down from the prior year’s 15.1%.
Our Take
Given higher interest rates and solid loan balance, Canadian Imperial is likely to witness steady improvement in revenues. However, a challenging operating backdrop, steadily increasing provisions and rising expenses remain 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
CM 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 Canadian Banks
Toronto-Dominion Bank’s (TD - Free Report) third-quarter fiscal 2023 (ended Jul 31) adjusted net income of C$3.73 billion ($2.80 billion) decreased 2.2% from the prior-year quarter.
TD recorded a rise in net interest income on the back of higher interest rates and decent loan demand. Also, the company’s capital ratios were solid in the quarter. However, an increase in expenses and higher provision for credit losses were major headwinds.
Royal Bank of Canada (RY - Free Report) reported a third-quarter fiscal 2023 (ended Jul 31) adjusted net income of C$4.02 billion ($3.01 billion), which increased 10.9% from the prior-year quarter.
Results were aided by an improvement in revenues. However, higher expenses and provisions were the undermining factors. In the reported quarter, RY’s capital ratios improved.