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    CM   CA1360691010

CANADIAN IMPERIAL BANK OF COMMERCE

(CM)
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Delayed Toronto Stock Exchange  -  04:00 2022-08-15 pm EDT
67.24 CAD   +0.30%
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Canadian banks post mixed results as RBC, TD beat estimates, CIBC misses

05/26/2022 | 07:39am EDT
FILE PHOTO: FILE PHOTO: A Toronto-Dominion Bank sign is seen outside of a branch in Ottawa

TORONTO, May 26 (Reuters) - Royal Bank of Canada and Toronto-Dominion Bank on Thursday reported second-quarter profits that beat estimates, as provisions for credit losses (PCLs) improve at most Canadian banks, while Canadian Imperial Bank of Commerce (CIBC) posted the lone miss on the earnings front as its PCLs rose.

Royal Bank, Canada's largest lender, reported higher profit in the three months ended April 30 from a year earlier, exceeding estimates. TD, the second-biggest Canadian bank, posted lower profit but still beat expectations.

CIBC's profit fell and it slightly missed estimates, with the bank attributing its 847% surge in PCLs to both its acquisition of the Canadian Costco credit card portfolio as well as unfavorable changes in the economic outlook.

TD shares were up 2.7% at C$96.32 in morning trading in Toronto. Royal Bank shares rose 0.5% to C$129.14. CIBC fell 1.3% to C$69.24. The broader Toronto share index rose 1%.

Canadian banks' broad improvements in PCLs have raised questions from analysts concerned about their seemingly sanguine response to the emergence of economic uncertainties, high inflation and geopolitical risks.

Royal Bank executives said the bank has increased the severity and likelihood of its downside economic scenarios.

But "given low unemployment, rising wages and elevated liquidity, we believe the key ingredients are in place to help mitigate any sustained slowdown," said Dave McKay, chief executive officer at Royal Bank, which recovered C$342 million of PCLs in the quarter.

TD took provisions of C$27 million, versus the expected C$237 million. Excluding that impact, its adjusted earnings were almost 11% higher than a year earlier.

TD Chief Financial Officer Kelvin Tran told Reuters that while the risk of an economic slowdown has increased, customers continue to pay down loans and deposits continue to grow, albeit at a slower rate than during the coronavirus pandemic.

On Wednesday, Bank of Nova Scotia and Bank of Montreal also reported better-than-expected profits driven by lower PCLs.

HIGHER EXPENSES

Alongside improving provisions, strength in lending books and fees has continued to lift Canadian lenders' earnings, but they are also seeing increased expenses due to tight labor markets and inflation.

Loan growth helped CIBC post a 7% increase in adjusted earnings excluding taxes and provisions from a year earlier. Executives said consumers remain prudent in managing debt despite higher costs.

At RBC, excluding the impact of taxes and loan-loss provision releases, earnings fell 2% as lower revenues from its capital markets business outweighed strength in wealth management and lending.

That weighed on revenue, which dropped 3%, even as expenses excluding variable compensation rose 7%.

CIBC's adjusted expense growth of 11% outpaced a revenue increase of 9%. Its capital markets business also faced challenges, although that was driven more by a decline in investment banking fees while trading remained strong.

While TD had an adjusted expense increase of 5% from a year ago, its revenue rose 8% thanks to higher loan volumes and fees.

($1 = 1.2818 Canadian dollars) (Reporting By Nichola Saminather in Toronto; Additional reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Shailesh Kuber, Chizu Nomiyama and Paul Simao)


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
BANK OF MONTREAL 0.50% 133.36 Delayed Quote.-2.56%
CANADIAN IMPERIAL BANK OF COMMERCE 0.30% 67.24 Delayed Quote.-9.07%
COSTCO WHOLESALE CORPORATION 1.59% 545.75 Delayed Quote.-3.87%
ROYAL BANK OF CANADA 0.33% 128.45 Delayed Quote.-4.63%
THE BANK OF NOVA SCOTIA 0.91% 81.12 Delayed Quote.-10.23%
THE TORONTO-DOMINION BANK 0.79% 87.13 Delayed Quote.-10.86%
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Financials
Sales 2022 22 083 M 17 120 M 17 120 M
Net income 2022 6 475 M 5 019 M 5 019 M
Net Debt 2022 - - -
P/E ratio 2022 9,50x
Yield 2022 4,89%
Capitalization 60 727 M 47 077 M 47 077 M
Capi. / Sales 2022 2,75x
Capi. / Sales 2023 2,60x
Nbr of Employees 47 814
Free-Float 100,0%
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Number of Analysts 16
Last Close Price 67,24 CAD
Average target price 77,94 CAD
Spread / Average Target 15,9%
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Managers and Directors
Victor Dodig President, Chief Executive Officer & Director
Hratch Panossian Executive Vice President & Global Controller
Katharine Berghuis Stevenson Chairman
Christina Kramer Senior EVP-Technology, Infrastructure & Innovation
Nicholas D. Le Pan Independent Director
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