The institution reduced its provisions for credit losses despite the COVID-19 pandemic. (Photo: 123RF)
The big boss of CIBC (CM) attributed the stronger-than-expected growth in first quarter profits to the strong mortgage market and new cash-back credit cards as the bank slashed its first quarter profits. provisions for credit losses despite the COVID-19 pandemic.
CEO Victor Dodig also said Thursday that his bank had recorded record activity in its mutual fund sales. In the end, CIBC exceeded analysts’ expectations, and posted a first quarter profit up from a year ago, before the start of the pandemic.
On an adjusted basis, CIBC made a profit of $ 3.58 per share, up from $ 3.24 per share in the same quarter last year. Analysts on average expected adjusted earnings of $ 2.81 per share, according to forecasts gathered by financial data firm Refinitiv.
Provisions for credit losses were $ 147 million, down from $ 261 million a year ago as the bank improved its economic outlook. Other major Canadian banks this week announced similar cuts after increasing amounts set aside for bad debts last year, in case the pandemic prevents borrowers from repaying their loans.
“Overall, government assistance programs continue to help mitigate the economic impact of the pandemic, and our clients continue to exercise discipline in the face of economic uncertainty,” said the chief. Bank risk management Shawn Beber on a conference call with analysts.
Almost two-thirds of the bank’s loans were made to consumers, mostly for mortgages, the bank said. Beber observed a decline in insolvency cases over the past two quarters, thanks to government support and bank assistance programs, but said he saw a slight increase from fourth quarter lows. The bank expects some customers who delayed payments for their credit card accounts or personal loans last year to find themselves in trouble this year, which could lead to losses in the second quarter, Mr. . Beber.
Dodig noted that the faster reopening of the economy in the United States had benefited CIBC’s commercial lending business there, and the bank hoped for a similar recovery in Canada.
Overall, CIBC says it achieved net income of $ 1.63 billion, or $ 3.55 per share, for the quarter ended Jan. 31, compared to a profit of $ 1.21 billion, or 2, $ 63 per share, for the same period a year earlier.
Revenue totaled $ 4.96 billion, up from $ 4.86 billion last year.
Mr. Dodig said the bank has focused over the past five years on streamlining operations and “eliminating inefficiencies” to reduce costs. But he also noted that the bank was reinvesting its cost savings to give more resources to the “revenue-generating workforce”, support customer relationships and add new leaders to the Canadian branch team at the UK. bank detail.
“We know the economic recovery will not go in a straight line,” Dodig said on the conference call. “We remain very connected to how the pandemic is affecting the lives of our customers and our team. Their well-being remains our top priority. “