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Canadian Imperial Bank of Commerce (CIBC)
Symbol CM
Shares Issued 904,692,428
Close 2022-08-24 C$ 65.51
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CIBC earnings fall to $1.66-billion in Q3 2022

2022-08-25 09:21 ET - News Release

Mr. Victor Dodig reports

CIBC ANNOUNCES THIRD QUARTER 2022 RESULTS

Canadian Imperial Bank of Commerce (CIBC) has released its financial results for the third quarter ended July 31, 2022.

Third quarter highlights

"In the third quarter, we continued to deliver strong growth across our business through the execution of our client-focused strategy, leveraging the strategic investments we're making in our bank to attract new clients and deepen existing relationships," said Victor G. Dodig, president and chief executive officer, CIBC. "As the economic environment continues to evolve, we remain focused on delivering shareholder value by taking a disciplined approach to capital allocation to execute our strategy, focusing on key client segments, further enhancing client experience, and investing in future differentiators for our bank. Our highly-connected and purpose-driven team will continue to move our bank forward as we create positive change and help make ambitions a reality."

Results for the third quarter of 2022 were affected by the following items of note aggregating to a negative impact of seven cents per share:

  • $50-million ($38-million after-tax) in acquisition and integration-related costs, as well as purchase accounting adjustments associated with the acquisition of the Canadian Costco credit card portfolio;
  • $27-million ($20-million after-tax) amortization of acquisition-related intangible assets.

The bank's CET1 ratio was 11.8 per cent at July 31, 2022, compared with 11.7 per cent at the end of the prior quarter. CIBC's leverage ratio at July 31, 2022, was 4.3 per cent.

Core business performance

Canadian personal and business banking reported net income of $595-million for the third quarter, down $47-million, or 7 per cent, from the third quarter a year ago, primarily due to a higher provision for credit losses and higher expenses, partially offset by higher revenue. Adjusted preprovision, pretax earnings were $1,065-million, up $127-million from the third quarter a year ago, mainly due to higher revenue driven by volume growth, including the acquisition of the Canadian Costco credit card portfolio and higher net product spreads that benefited from the rising interest rate environment, partially offset by higher expenses. Expenses were higher due to continuing spending on strategic initiatives, including the Canadian Costco credit card portfolio and employee-related compensation.

Canadian commercial banking and wealth management reported net income of $484-million for the third quarter, up $14-million, or 3 per cent, from the third quarter a year ago, primarily due to higher revenue, partially offset by higher expenses and a provision for credit losses this quarter compared with a provision reversal in the prior year. Adjusted preprovision, pretax earnings were $668-million, up $78-million from the third quarter a year ago, primarily due to strong volume growth, higher fee revenue and higher net product spreads that benefited from the rising interest rate environment in commercial banking. Higher expenses were primarily driven by revenue-based variable compensation reflecting favourable business results and spending on strategic initiatives.

U.S. commercial banking and wealth management reported net income of $193-million ($152-million (U.S.)) for the third quarter, down $73-million (down $64-million (U.S.)) from the third quarter a year ago, primarily due to a higher provision for credit losses and higher expenses, partially offset by higher revenue. Adjusted preprovision, pretax earnings were $287-million ($225-million (U.S.)), up $5-million (down $3-million (U.S.)) from the third quarter a year ago due to higher revenue, primarily driven by volume growth, partially offset by higher employee-related compensation and higher spending on strategic initiatives.

Capital markets reported net income of $447-million for the third quarter, down $44-million, or 9 per cent, from the third quarter a year ago, primarily due to higher expenses and a lower provision reversal in the current quarter, partially offset by higher revenue. Adjusted preprovision, pretax earnings were down $5-million, or 1 per cent, from the third quarter a year ago, as higher revenue from the bank's direct financial services, global markets, and corporate and investment banking businesses was offset by higher expenses. Expenses were up due to continued higher spending on strategic initiatives and higher employee-related compensation.

Credit quality

Provision for credit losses in the current quarter was $243-million, compared with a provision reversal of $99-million in the same quarter of the previous year. The current quarter included a provision for credit losses on performing loans due to an unfavourable change in the bank's economic outlook and unfavourable credit migration, while the same quarter in the previous year included a provision reversal reflective of a favourable change in the bank's economic outlook. Provision for credit losses on impaired loans was up, mainly attributable to Canadian personal and business banking, including from the acquired Canadian Costco credit card portfolio.

Making a difference in the bank's communities

At CIBC, the bank believes there should be no limits to ambition. The bank invests its time and resources to remove barriers to ambitions and demonstrates that, when the bank comes together, positive change happens that helps the bank's communities thrive. This quarter:

  • The bank renewed its support to the McGill University Health Centre Foundation with a $1-million donation aligned to the expansion of its innovative app, Opal, and its ambition to provide exceptional and integrated patient-centric care for those living with cancer.
  • The bank approved the first round of new, incremental financing from the CIBC Foundation. In total, nearly $700,000 were committed to community-based organizations to help create greater social and economic inclusion for underserved communities. This was the first part of a commitment of $3.5-million in financing distributions that the CIBC Foundation will make this year.
  • Together with the BlackNorth Initiative, the bank recognized the first-ever recipients of the Youth Accelerator Program with BGC Canada. Thirty students from BGC clubs across Canada have been selected to receive $50,000 over four years for tuition, mentorship, financial education and opportunities to secure paid internships or co-ops with other signatories to the BlackNorth chief executive officer pledge.
  • The bank participated in the 26th edition of Tour CIBC Charles-Bruneau, raising over $900,000 to support pediatric cancer research at the Charles-Bruneau Foundation. This year marked CIBC's 16th year as title partner of the tour, with the bank having now raised over $10-million since 2006.

The board of directors of CIBC reviewed this news release prior to it being issued. CIBC's controls and procedures support the ability of the president and chief executive officer (CEO) and the chief financial officer (CFO) of CIBC to certify CIBC's third quarter financial report and controls and procedures. CIBC's CEO and CFO will voluntarily provide to the United States (U.S.) Securities and Exchange Commission a certification relating to CIBC's third quarter financial information, including the unaudited interim consolidated financial statements, and will provide the same certification to the Canadian Securities Administrators.

Conference call/webcast

The conference call will be held at 8 a.m. (ET) and is available in English (416-340-2217, or toll-free 800-806-5484, passcode 3749444, followed by the number symbol) and French (514-392-1587, or toll-free 800-898-3989, passcode 9216905, followed by the number symbol). Participants are asked to dial in 10 minutes before the call. Immediately following the formal presentations, CIBC executives will be available to answer questions.

A live audio webcast of the conference call will also be available in English and French.

Details of CIBC's fiscal 2022 third quarter results, as well as a presentation to investors, will be available in English and French prior to the conference call/webcast. The bank is not incorporating information contained on the website in this news release.

A telephone replay will be available in English (905-694-9451 or 800-408-3053, passcode 2580988, followed by the number symbol) and French (514-861-2272 or 800-408-3053, passcode 3673851, followed by the number symbol) until 11:59 p.m. (ET) Sept. 25, 2022. The audio webcast will be archived.

About Canadian Imperial Bank of Commerce

CIBC is a leading North American financial institution with 13-million personal banking, business, public sector and institutional clients. Across personal and business banking, commercial banking and wealth management, and capital markets businesses, CIBC offers a full range of advice, solutions and services through its leading digital banking network, and locations across Canada, in the United States and around the world.

We seek Safe Harbor.

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