Canadian Imperial Bank of Commerce (CM,CM.TO) reported Thursday an increase in fourth-quarter profit, reflecting higher revenues as well as increased interest margins. The company said it maintains medium-term performance targets and still expects earnings per share growth of 5%-10% per annum, on average, over the next 3-5 years. In addition, the board declared a dividend for the quarter ending January 31, 2010.
The Toronto, Canada-based company's net income for the fourth quarter increased to $644 million or $1.56 per share from $436 million or $1.06 per share in the same period previous year.
Cash earnings per share were $1.59, up from $1.09 per share in the same quarter last year.
Results for the quarter included items aggregating to a positive impact of $0.18 per share, while the prior year had a negative impact of $0.48 per share.
Recent quarter results include $58 million after-tax, or $0.15 per share gain on structured credit run-off activities, $62 million or $0.16 per share of favorable tax-related items, $27 million after-tax, or $0.07 per share of negative valuation adjustments, and $25 million after-tax, or $0.06 per share related to mark-to-market losses on credit derivatives in CIBC's corporate loan hedging program as a result of the narrowing of credit spreads during the quarter.
Total revenues for the quarter grew to $2.89 billion from $2.2 billion in the comparable quarter a year ago. CIBC Retail Markets reported revenues of $2.38 billion, an increase of $15 million from the fourth quarter of 2008, mainly due to volume growth and higher lending spreads, while Wholesale Banking revenues were $483 million for the fourth quarter. Corporate and Others segment reported revenues of $29 million.
Net interest income was $1.42 billion, up $42 million, from the prior-year quarter, mainly due to volume growth in retail products and lower trading-related interest expenses. Non-interest income was $1.47 billion, an increase of $642 million from the year-ago quarter, due to gains in the current quarter in structured credit run-off business, compared to losses in the fourth quarter of 2008, as well as lower merchant banking losses/write-downs.
Net interest margin was 1.66%, compared to 1.6% in the prior-year quarter. Non-interest expenses were $1.67 billion, compared to $1.93 billion in the prior-year quarter. The prior-year quarter had higher severance accruals.
Quarterly provision for credit losses increased to $424 million from $222 million in the year earlier, mainly due to higher losses in the cards, unsecured personal lending and corporate lending portfolios.
Return on equity for the fourth quarter ended October 31 was 22.2%, up from 14.8% inthe same period year ago. As at October 31 CIBC's Tier 1 and total capital ratios strengthened to 12.1% and 16.1% from 10.5% and 15.4% in the same period last year. At a level of 12.1%, the company said its Tier 1 ratio is well above its target and represents one of the highest levels of capital strength among North American banks.
For the full year, the company posted net income of $1.17 billion or $2.65 per share, compared to a net loss of $2.06 billion or $5.89 per share in the prior year. Cash earnings per share were $2.73, compared to a loss of $5.8 per share in the previous year. Annual revenues surged to $9.93 billion from $3.71 billion in the preceding year.
Gerry McCaughey, president and chief executive officer said, "2009 was a year of progress for CIBC on many fronts. Against the backdrop of a recessionary economy, our core businesses performed well, we managed down our structured credit and other run-off portfolios, our capital position at year-end is as strong as it has ever been and we continued to exercise expense discipline."
"As a result of our progress, we are well positioned heading into 2010 where our focus will continue to be on bringing value to all of our clients and furthering our strategic imperative of delivering consistent and sustainable performance for all of our stakeholders," added McCaughey.
According to the company, the economic data for calendar 2009 from both Canada and the United States is likely to show an improving trend, with the majority of economists and central banks expecting a continuation of that trend through 2010.
Looking ahead, the company said it maintains its medium-term performance targets and still expects earnings per share growth of 5%-10%, per annum, on average over the next 3-5 years and Tier 1 ratio and total capital ratio of 8.5% and 11.5%, respectively. In addition, the board declared a dividend of 87 cents per share for the quarter ending January 31, 2010, to shareholders of record on December 29, 2009, payable on January 28, 2010. CM closed Wednesday's regular trading at $65.22. In the past 52 weeks, the shares have been trading in a range of $28.03-$66.57 on the NYSE.
CM.TO ended on Wednesday at C$68.48. In the past year, the shares have been trading between C$36.51 and C$70.08 on the Toronto exchange.
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