Canadian Imperial Bank of Commerce (CM,CM.TO) Thursday said its second quarter loss narrowed from the prior year on higher revenues, reflecting lower structured credit losses as well as foreign exchange gain from repatriation activities. The company also expects to return to profitability in the final quarter of the calendar year, amid deepening global slowdown. Separately, the company said it has amended its shareholders investment plan, enabling shareholders resident in Canada or the United States to get their dividends reinvested in its additional common shares.
Second quarter net loss of Canadian Imperial Bank narrowed to C$51 million or C$0.24 per share from C$1.11 billion or C$3.00 per share in the same quarter a year ago.
Net loss applicable to common shares was C$90 million, compared to a loss of C$1.41 billion in the corresponding quarter last year. Cash net loss applicable to common shares was C$81 million, compared to a loss of C$1.13 billion in the year-earlier quarter. Cash loss per share was C$0.21, compared with C$2.98 a year ago.
Results for the quarter include higher provision for credit loss amounting to C$394 million, compared to C$176 million recorded in the prior-year quarter, primarily due to higher losses in the cards and personal lending portfolios. Loan loss provision also included a net increase to the allowance for loan losses of C$90 million.
The current quarter also included a tax expense related to the foreign exchange gain on repatriation activities and the write-off of future tax assets. The structured credit losses in the last year quarter resulted in a higher tax benefit in that quarter.
Comprehensive loss for the quarter was C$21 million compared to comprehensive loss of C$1.07 billion in the year-earlier quarter.
Total revenue for the quarter surged to C$2.16 billion from C$126 million in the comparable quarter last year.
Segment wise, revenue from CIBC retail markets dropped marginally to C$2.25 billion, while loss from Wholesale banking narrowed to C$241 million from C$2.17 billion in the corresponding quarter last year. Corporate and other revenues surged to C$150 million from C$8 million in the prior-year quarter.
The bank said its revenues were primarily driven by lower structured credit losses and due to the foreign exchange gain on repatriation activities compared to a foreign exchange loss in the prior year quarter. Influence of higher volume growth in retail products, higher fixed income and equity trading revenue and higher revenue from U.S. real estate finance is also evident in revenue growth, company said. These factors, however, were partially offset by the negative impact of the MTM of credit derivatives in corporate loan hedging programs.
In the sequentially preceding first quarter, Canadian Imperial Bank reported a profit of C$147 million or C$0.29 per share, reversing a loss last year. Revenue for the quarter was C$2.02 billion.
Gerald McCaughey, President and Chief Executive Officer said, "Our core businesses performed well this quarter. Retail Markets continued to deliver solid results against a backdrop of a challenging market environment and Wholesale Banking generated good revenue momentum while making further progress in the area of risk and maintaining discipline around expenses."
Hurt by lower treasury revenue and spread compression on retail products, net interest income decreased 6% to C$1.27 billion, while non-interest income was up C$2.11 billion from the same quarter last year. Non-interest expenses were down C$76 million or 6% from the same quarter last year.
For the six-month period, net income was C$96 million or C$0.05 per share, compared to a net loss of C$2.57 billion or C$7.31 per share in the prior-year period. Revenue for the period was $4.19 billion, compared to negative revenues of $395 million in the same period a year ago.
Looking ahead to fiscal 2009, the company said it expects growth to return in the final quarter of the calendar year in response to low interest rates and fiscal stimulus in Canada and abroad.
On February 27, 2009, brokerage BMO Capital Markets downgraded Canadian Imperial Bank shares to 'Market Perform' from 'Outperform,' with a mean target range of C$39.35.
In a separate release, CIBC announced today that its board of directors declared a dividend of 87 cents per share on common shares for the quarter ending July 31, 2009 payable on July 28, 2009 to shareholders of record at the close of business on June 29, 2009.
In another development, CIBC announced amendments to its Shareholder Investment Plan, allowing shareholders resident in Canada or the United States to elect to have dividends reinvested in additional common shares of CIBC.
Canadian Imperial Bank also said that it has decided to issue shares from treasury at a 3% discount from the Average Market Price until such time as CIBC elects otherwise. The discount applies to the distribution of common shares under the "dividend Reinvestment Option" or "Stock dividend Option" portions of the Plan, however, will not apply to shares purchased under the "Share Purchase Option" of the Plan. The changes will be effective starting with the dividend payable on July 28, 2009 to common and preferred shareholders of record on June 29, 2009.
CM is currently trading at $48.89, down $2.19 or 4.25%, on a volume of 0.48 million shares on the NYSE. In the last 52-week period, the stock traded in the range of $28.03 to $72.62, on a three-month average volume of 0.90 million shares.
CM.TO is currently trading at C$54.35, down C$2.68 or 4.70%, on a volume of 2.52 million shares on the Toronto Stock Exchange.
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