Canadian Imperial Bank of Commerce (CM,CM.TO) on Wednesday reported a sharp increase in third-quarter net income as revenues for the latest quarter increased significantly on gains in the structured credit run-off business this year.
The company's third quarter net income surged to C$434 million from C$71 million reported for the same period last year. Earnings per share were C$1.02, compared with C$0.11 in the previous year.
Cash net income applicable to common shares, a non-GAAP measure, increased to C$397 million from C$49 million in the previous year. Cash earnings per share were C$1.04, compared with C$0.13 in the same quarter last year.
Results of the latest period were hurt by a C$0.27 per share loss on mark-to-market credit derivatives, a C$0.15 per share of loan losses within the leveraged loan and other run-off portfolios, a C$0.07 per share provision for credit losses as well as a C$0.17 per share gain on structured credit run-off activities.
Total revenues for the quarter increased to C$2.857 billion from C$1.91 billion in the prior year quarter. Net interest income increased to C$1.369 billion from C$1.327 billion in the prior year, principally due to volume growth in most personal banking products and higher interest income from corporate credit products.
Non-interest income surged to C$1.488 billion from C$578 million in the prior year owing to higher underwriting and advisory fees and trading revenue of C$328 million. In the year-ago period, the company recorded a loss of C$794 million in trading revenue.
Third-quarter revenue from CIBC Retail Markets was C$2.339 billion, compared to C$2.371 billion last year. Wholesale banking generated C$531 million, compared to a loss of C$598 million last year. Corporate and other revenues were a negative C$13 million, in comparison with revenues of C$132 million last year.
Provision for credit losses increased to C$547 million from C$203 million in the previous year period, mainly because of higher losses in the cards and personal lending portfolios driven by higher delinquencies and bankruptcies, higher losses in the leveraged loans, other run-off and U.S. real estate finance businesses, and an increase in allowances. The company has a significant exposure to cards.
Non-interest expenses slipped to C$1.699 billion from C$1.725 billion in the prior year. CIBC's Tier 1 and total capital ratios at July 31, 2009 were 12% and 16.5%, respectively.
For the nine-month-period, the company reported net income of C$530 million or C$1.08 per share, compared to C$2.496 billion or C$7.05 per share in the previous year. Total revenue advanced to C$7.040 billion from C$1.510 billion.
Commenting on the results, Gerald McCaughey, president and chief executive officer of CIBC, said, ''CIBC's third quarter performance was solid, driven by good performances in our core retail and wholesale banking businesses, continued expense discipline and a gain from run-off activities following several quarters of losses. In addition, while growing our businesses, we further enhanced our strong capital position which continues to be a clear strategic advantage for CIBC."
CIBC also announced that its board of directors declared a dividend of 87 cents per share on common shares for the quarter ending October 31, 2009. It is payable on October 28 to shareholders of record at the close of business on September 28.
Looking ahead, CIBC Retail Markets is expected to benefit from continued healthy household credit demand. For Wholesale Banking, provisions for credit losses are likely to increase as a result of continued weakness in the business climate, the company added.
In May, the company said its second quarter net loss narrowed to C$51 million or C$0.24 per share from C$1.11 billion or C$3 per share in the same quarter a year ago. Total revenue for the quarter surged to C$2.16 billion from C$126 million in the comparable quarter last year.
CM closed Tuesday's regular trade at $63.22, up from the previous close of $60.93, on 584,000 shares.
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