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Canadian Imperial's (CM) Stock Up as Q4 Earnings Improve Y/Y
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Shares of Canadian Imperial Bank of Commerce (CM - Free Report) gained nearly 2.8% following the release of the company’s fourth-quarter fiscal (ended Oct 31) and 2017 results. Adjusted earnings per share (EPS) came in at C$2.81 for the quarter, increasing from C$2.60 in the prior-year quarter.
Results improved due to growth in both net interest income and non-interest income. Further, a strong balance sheet position supported the results. However, an increase in expenses and higher provisions were the undermining factors.
After considering several non-recurring items, net income came in at C$1.16 billion ($0.93 billion), reflecting an increase of 25% year over year.
Revenues Improve, Costs Increase
Adjusted total revenues for the quarter grew 13.3% year over year to C$4.29 billion ($3.43 billion). On a reported basis, total revenues came in at C$4.27 billion ($3.42 billion), reflecting an increase of 16% from the prior-year quarter.
Net interest income was C$2.46 billion ($1.97 billion), increasing 16.8% from the year-ago quarter. The improvement reflected a rise in interest income, partly offset by higher interest expenses.
Non-interest income increased 14.9% year over year to C$1.81 billion ($1.45 billion).
Non-interest expenses totaled C$2.57 billion ($2.06 billion), increasing 9.5% from the year-ago quarter.
Total provision for credit losses increased 3.2% year over year to C$229 million ($183.23 million).
Improving Balance Sheet, Capital Ratios Weakened
Total assets came in at C$565.26 billion ($439.33 billion) as of Oct 31, 2017, up nearly 1% from the prior quarter. Loans and acceptances (net of allowance) increased 1.8% sequentially to C$365.56 billion ($284.12 billion), while deposits grew marginally to C$439.71 billion ($341.75 billion).
As of Oct 31, 2017, Basel III Common Equity Tier 1 ratio came in at 10.6% compared with 11.3% as of Oct 31, 2016. Further, Tier 1 capital ratio was 12.1% compared with 12.8% as of Oct 31, 2016. Total capital ratio was 13.8%, declining from 14.8% in the prior-year quarter.
Adjusted return on common shareholders’ equity was 17.2% at the end of the quarter, reflecting a decline from 18.8% in the year-ago quarter.
Our Viewpoint
Canadian Imperial’s continuously rising expenses remain a major concern for the company in the near term. Also, limited avenues for earning fee income keep us apprehensive about the company’s near-term performance. However, the company’s acquisition of PrivateBancorp is likely to expand its private banking and wealth management capabilities in the United States.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Barclays PLC’s (BCS - Free Report) third-quarter 2017 net income attributable to ordinary equity holders was £583 million ($763.1 million), reflecting a significant improvement from £190 million in the prior-year quarter.
HSBC Holdings plc (HSBC - Free Report) reported third-quarter 2017 results wherein it registered net profit attributable to shareholders of $3 billion, which improved from a loss of $617 million in the year-ago quarter.
Deutsche Bank AG (DB - Free Report) reported net income of €649 million ($762.6 million) in third-quarter 2017, significantly up on a year-over-year basis. Income before income taxes grew 50.7% year over year to €933 million ($1.1 billion).
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Canadian Imperial's (CM) Stock Up as Q4 Earnings Improve Y/Y
Shares of Canadian Imperial Bank of Commerce (CM - Free Report) gained nearly 2.8% following the release of the company’s fourth-quarter fiscal (ended Oct 31) and 2017 results. Adjusted earnings per share (EPS) came in at C$2.81 for the quarter, increasing from C$2.60 in the prior-year quarter.
Results improved due to growth in both net interest income and non-interest income. Further, a strong balance sheet position supported the results. However, an increase in expenses and higher provisions were the undermining factors.
After considering several non-recurring items, net income came in at C$1.16 billion ($0.93 billion), reflecting an increase of 25% year over year.
Revenues Improve, Costs Increase
Adjusted total revenues for the quarter grew 13.3% year over year to C$4.29 billion ($3.43 billion). On a reported basis, total revenues came in at C$4.27 billion ($3.42 billion), reflecting an increase of 16% from the prior-year quarter.
Net interest income was C$2.46 billion ($1.97 billion), increasing 16.8% from the year-ago quarter. The improvement reflected a rise in interest income, partly offset by higher interest expenses.
Non-interest income increased 14.9% year over year to C$1.81 billion ($1.45 billion).
Non-interest expenses totaled C$2.57 billion ($2.06 billion), increasing 9.5% from the year-ago quarter.
Total provision for credit losses increased 3.2% year over year to C$229 million ($183.23 million).
Improving Balance Sheet, Capital Ratios Weakened
Total assets came in at C$565.26 billion ($439.33 billion) as of Oct 31, 2017, up nearly 1% from the prior quarter. Loans and acceptances (net of allowance) increased 1.8% sequentially to C$365.56 billion ($284.12 billion), while deposits grew marginally to C$439.71 billion ($341.75 billion).
As of Oct 31, 2017, Basel III Common Equity Tier 1 ratio came in at 10.6% compared with 11.3% as of Oct 31, 2016. Further, Tier 1 capital ratio was 12.1% compared with 12.8% as of Oct 31, 2016. Total capital ratio was 13.8%, declining from 14.8% in the prior-year quarter.
Adjusted return on common shareholders’ equity was 17.2% at the end of the quarter, reflecting a decline from 18.8% in the year-ago quarter.
Our Viewpoint
Canadian Imperial’s continuously rising expenses remain a major concern for the company in the near term. Also, limited avenues for earning fee income keep us apprehensive about the company’s near-term performance. However, the company’s acquisition of PrivateBancorp is likely to expand its private banking and wealth management capabilities in the United States.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise | Canadian Imperial Bank of Commerce Quote
Canadian Imperial currently 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 Foreign Banks
Barclays PLC’s (BCS - Free Report) third-quarter 2017 net income attributable to ordinary equity holders was £583 million ($763.1 million), reflecting a significant improvement from £190 million in the prior-year quarter.
HSBC Holdings plc (HSBC - Free Report) reported third-quarter 2017 results wherein it registered net profit attributable to shareholders of $3 billion, which improved from a loss of $617 million in the year-ago quarter.
Deutsche Bank AG (DB - Free Report) reported net income of €649 million ($762.6 million) in third-quarter 2017, significantly up on a year-over-year basis. Income before income taxes grew 50.7% year over year to €933 million ($1.1 billion).
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>