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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Canadian Imperial Bank of Commerce    CM   CA1360691010

CANADIAN IMPERIAL BANK OF COMMERCE

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Canadian Imperial Bank of Commerce : Economic, trade uncertainty clouds outlook for Canadian banks

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11/29/2018 | 02:34pm EDT
A pedestrian walks past the CIBC ATM machines in  Montreal

TORONTO (Reuters) - Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, two of Canada's biggest lenders, said on Wednesday that global economic uncertainty and trade tensions could hurt their performances next year.

Executives at the banks, which also have large businesses in the United States, were speaking after CIBC reported fourth-quarter earnings that missed market forecasts for the first time in four years while TD marginally beat analysts forecasts.

Shares in CIBC were down 3.7 percent in mid-afternoon trading with TD shares down 0.7 percent.

CIBC, Canada's fifth-biggest lender, warned earnings growth could come in toward the bottom of its target range of 5 percent and 10 percent next year, citing geopolitical tensions and slowing economic growth north and south of the border.

"If the political headwinds continue we'll still be within our range, but probably to the lower end," Chief Executive Officer Victor Dodig told analysts on a conference call.

The bank said earnings per share rose by 7 percent to C$3.00, short of analysts' forecasts for earnings of C$3.04, according to IBES data from Refinitiv.

CIBC's results suffered from an increase in funds set aside to cover bad loans, lower margins in its U.S. commercial banking and wealth management business and softer growth at its investment bank, said Eight Capital analyst Steve Theriault.

TD, Canada's second-biggest lender, said earnings per share increased by 20 percent to C$1.63 in the quarter, ended Oct. 31. Analysts had, on average, forecast earnings of C$1.62, according to IBES data from Refinitiv.

The bank reiterated its expectation of earnings growth between 7 percent and 10 percent next year but Chief Executive Officer Bharat Masrani said that could change if macroeconomic conditions deteriorate. The bank was also watching strains in the energy and automotive manufacturing sectors, along with the U.S.-China trade war which could affect customers worldwide.

"We are watching market macroeconomic and geopolitical uncertainty," he said. "If these factors intensify, they could impact our view of the year ahead."

Interest rate hikes in the United States and Canada have helped boost TD's net interest margin (NIM), the difference between the interest it gets from borrowers and what it pays to savers.

TD's NIM rose by two basis points to 1.68 percent in the year to Oct. 31. Ahmed said he expected further improvement in 2019 despite rising competition for customer deposits.

The bank's U.S. retail business saw a 44 percent increase in net income to C$1.14 billion, reflecting higher margins and beneficial tax reforms.

Ahmed said TD planned to issue the bank's first bail-in bonds in the first quarter of its fiscal year.

(Reporting by Matt Scuffham; Editing by Adrian Croft, Kirsten Donovan and David Gregorio)

By Matt Scuffham

Stocks mentioned in the article
ChangeLast1st jan.
CANADIAN IMPERIAL BANK OF COMMERCE 0.57% 110.87 Delayed Quote.8.39%
THE TORONTO-DOMINION BANK 0.46% 74.67 Delayed Quote.8.69%
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Financials (CAD)
Sales 2019 18 678 M
EBIT 2019 8 094 M
Net income 2019 5 223 M
Debt 2019 -
Yield 2019 5,10%
P/E ratio 2019 9,48x
P/E ratio 2020 9,07x
Capi. / Sales2019 2,62x
Capi. / Sales2020 2,55x
Capitalization 49 030 M
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Technical analysis trends CANADIAN IMPERIAL BANK OF
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Income Statement Evolution
Consensus
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Mean consensus HOLD
Number of Analysts 16
Average target price 111,31  CAD
Last Close Price 110,21  CAD
Spread / Highest target 13,4%
Spread / Average Target 1,00%
Spread / Lowest Target -13,8%
EPS Revisions
Managers
NameTitle
Victor Dodig President, Chief Executive Officer & Director
John Paul Manley Chairman
Kevin Patterson Senior EVP & Group Head-Technology & Operations
Kevin A. Glass Chief Financial Officer & Senior Executive VP
Brent Stanley Belzberg Independent Director
Sector and Competitors