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Canadian Imperial Stock Up 5.5% as Lower Provisions Aid Q3 Earnings
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Shares of Canadian Imperial Bank of Commerce (CM - Free Report) gained 5.5% following the release of its third-quarter fiscal 2024 (ended July 30) results. Adjusted earnings per share of C$1.93 increased 27% from the prior-year quarter.
Results benefited from an improvement in revenues and lower provisions. Also, loans and deposit balances increased in the quarter. However, higher expenses were an undermining factor.
After considering non-recurring items, net income was C$1.8 billion ($1.31 billion), reflecting a 25% year-over-year jump.
CM’s Revenues Improve, Costs Increase
Total revenues were C$6.6 billion ($4.82 billion), up 13% year over year. The improvement was driven by higher net interest income and non-interest income.
Net interest income came in at C$3.53 billion ($2.58 billion), up 9% year over year. Non-interest income increased 17% to C$3.07 billion ($2.24 billion).
Non-interest expenses totaled C$3.68 billion ($2.69 billion), rising 11% year over year.
The adjusted efficiency ratio was 55.5% at the end of the reported quarter, down from 56.8% in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability.
Provision for credit losses was C$483 million ($352.7 million), down 35% from the prior-year quarter.
As of July 31, 2024, total assets were C$1.02 trillion ($738.7 billion), up 2% from the prior quarter. Net loans and acceptances increased 1% to C$550.15 billion ($397.9 billion), while deposits grew 2% to C$743.45 billion ($537.7 billion).
CM’s Capital & Profitability Ratios Improve
As of July 31, 2024, the Common Equity Tier 1 ratio was 13.3% compared with 12.2% in the prior-year quarter. The Tier 1 capital ratio was 14.8% compared with 13.7% in the prior-year period. The total capital ratio was 17.1%, up from 15.9%.
Adjusted return on common shareholders’ equity was 14% at the end of the fiscal third quarter, up from the prior year’s 12%.
Our Take on Canadian Imperial
Given high interest rates and decent loan demand, Canadian Imperial is likely to witness an improvement in revenues. However, a challenging operating backdrop and steadily increasing expenses remain near-term concerns.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Toronto-Dominion Bank (TD - Free Report) incurred a loss on a GAAP basis in the third quarter of fiscal 2024 (ended July 31). The quarterly loss was due to provisions for the penalties related to investigations concerning its anti-money laundering practices by the U.S. regulators.
The net loss (GAAP basis) was C$181 million ($132.2 million) against the net income of $2.88 billion in the prior-year quarter.
Huge increases in provisions for credit losses and higher expenses acted as undermining factors for TD. Meanwhile, growth in net interest income and non-interest income and higher loan balance offered much-needed support to TD’s quarterly performance.
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2024 (ended July 31) adjusted earnings per share of C$2.64 declined 10.2% year over year.
A significant jump in provision for credit losses and lower net interest income (NII) hurt BMO’s results. However, an increase in non-interest income, higher loans and deposit balance and lower expenses acted as a tailwind.
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Canadian Imperial Stock Up 5.5% as Lower Provisions Aid Q3 Earnings
Shares of Canadian Imperial Bank of Commerce (CM - Free Report) gained 5.5% following the release of its third-quarter fiscal 2024 (ended July 30) results. Adjusted earnings per share of C$1.93 increased 27% from the prior-year quarter.
Results benefited from an improvement in revenues and lower provisions. Also, loans and deposit balances increased in the quarter. However, higher expenses were an undermining factor.
After considering non-recurring items, net income was C$1.8 billion ($1.31 billion), reflecting a 25% year-over-year jump.
CM’s Revenues Improve, Costs Increase
Total revenues were C$6.6 billion ($4.82 billion), up 13% year over year. The improvement was driven by higher net interest income and non-interest income.
Net interest income came in at C$3.53 billion ($2.58 billion), up 9% year over year. Non-interest income increased 17% to C$3.07 billion ($2.24 billion).
Non-interest expenses totaled C$3.68 billion ($2.69 billion), rising 11% year over year.
The adjusted efficiency ratio was 55.5% at the end of the reported quarter, down from 56.8% in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability.
Provision for credit losses was C$483 million ($352.7 million), down 35% from the prior-year quarter.
As of July 31, 2024, total assets were C$1.02 trillion ($738.7 billion), up 2% from the prior quarter. Net loans and acceptances increased 1% to C$550.15 billion ($397.9 billion), while deposits grew 2% to C$743.45 billion ($537.7 billion).
CM’s Capital & Profitability Ratios Improve
As of July 31, 2024, the Common Equity Tier 1 ratio was 13.3% compared with 12.2% in the prior-year quarter. The Tier 1 capital ratio was 14.8% compared with 13.7% in the prior-year period. The total capital ratio was 17.1%, up from 15.9%.
Adjusted return on common shareholders’ equity was 14% at the end of the fiscal third quarter, up from the prior year’s 12%.
Our Take on Canadian Imperial
Given high interest rates and decent loan demand, Canadian Imperial is likely to witness an improvement in revenues. However, a challenging operating backdrop and steadily increasing 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
Currently, CM carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Canadian Banks
Toronto-Dominion Bank (TD - Free Report) incurred a loss on a GAAP basis in the third quarter of fiscal 2024 (ended July 31). The quarterly loss was due to provisions for the penalties related to investigations concerning its anti-money laundering practices by the U.S. regulators.
The net loss (GAAP basis) was C$181 million ($132.2 million) against the net income of $2.88 billion in the prior-year quarter.
Huge increases in provisions for credit losses and higher expenses acted as undermining factors for TD. Meanwhile, growth in net interest income and non-interest income and higher loan balance offered much-needed support to TD’s quarterly performance.
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2024 (ended July 31) adjusted earnings per share of C$2.64 declined 10.2% year over year.
A significant jump in provision for credit losses and lower net interest income (NII) hurt BMO’s results. However, an increase in non-interest income, higher loans and deposit balance and lower expenses acted as a tailwind.