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CIBC Announces Second Quarter 2014 Results

Corporate News Releases

TORONTO, May 29, 2014 – CIBC (TSX: CM) (NYSE: CM) today announced its financial results for the second quarter ended April 30, 2014.

Second quarter highlights:

  • Reported net income was $306 million, compared with $862 million for the second quarter a year ago, and $1,177 million for the prior quarter.
  • Adjusted net income(1) was $887 million, compared with $862 million for the second quarter a year ago, and $951 million for the prior quarter.
  • Reported diluted earnings per share (EPS) was $0.73, compared with $2.09 for the second quarter a year ago, and $2.88 for the prior quarter.
  • Adjusted diluted EPS(1) was $2.17, compared with $2.09 for the second quarter a year ago, and $2.31 for the prior quarter.
  • Reported return on common shareholders’ equity (ROE) was 7.0% and adjusted ROE(1) was 20.6%.

Results for the second quarter of 2014 were affected by the following items of note aggregating to a negative impact of $1.44 per share:

  • $543 million ($543 million after-tax, or $1.34 per share) of charges relating to FirstCaribbean International Bank Limited (CIBC FirstCaribbean), comprising a non-cash goodwill impairment charge of $420 million ($420 million after-tax) and loan losses of $123 million ($123 million after-tax), reflecting revised expectations on the extent and timing of the anticipated economic recovery in the Caribbean region;
  • $22 million ($16 million after-tax, or $0.04 per share) expenses relating to the development of our enhanced travel rewards program and in respect of the Aeroplan transactions with Aimia Canada Inc. (Aimia) and The Toronto-Dominion Bank (TD);
  • $22 million ($12 million after-tax, or $0.03 per share) loan losses in our exited U.S. leveraged finance portfolio;
  • $9 million ($7 million after-tax, or $0.02 per share) amortization of intangible assets; and
  • $4 million ($3 million after-tax, or $0.01 per share) loss from the structured credit run-off business.

CIBC’s Basel III Common Equity Tier 1 ratio at April 30, 2014 was 10.0%, and our Tier 1 and Total capital ratios were 12.1% and 14.9%, respectively, on an all-in basis compared with Basel III Common Equity Tier 1 ratio of 9.5%, Tier 1 capital ratio of 11.5% and Total capital ratio of 14.2% in the prior quarter.

CIBC announced a quarterly dividend increase of 2 cents per common share to $1.00 per share.

“In the quarter, CIBC’s core businesses delivered solid results, reflecting our strong focus on clients,” says Gerald T. McCaughey, CIBC President and Chief Executive Officer. “The strength of our underlying fundamentals allows us to generate strong and consistent returns for our shareholders.”

Core business performance

Retail and Business Banking reported net income of $546 million for the second quarter, down $26 million or 5% from the second quarter a year ago. Adjusting for the items of note shown above, adjusted net income(1) was $563 million, down $10 million or 2% from the second quarter a year ago as a result of lower cards revenue due to the Aeroplan transactions with Aimia and TD, partially offset by volume growth across most products and lower loan losses.

During the second quarter of 2014, Retail and Business Banking continued to make progress against our objectives of accelerating profitable revenue growth and enhancing the client experience:

  • We were the first bank in Canada to launch eDeposit™ for business banking clients, enabling them to quickly scan, securely upload and deposit a large number of cheques in a single transaction using a desktop cheque scanner;
  • We opened our first CIBC location at Pearson Airport – part of an innovative new partnership with the Greater Toronto Airports Authority as the exclusive Financial Institution sponsor at Canada’s largest airport; and
  • Sales of CIBC’s Aventura® Travel rewards credit cards remained strong and have already exceeded expectations for the full year.

Wealth Management reported net income of $117 million for the second quarter, up $26 million or 29% from the second quarter a year ago.

Revenue of $548 million was up $105 million or 24% compared with the second quarter of 2013. This was primarily due to higher client assets under management driven by market appreciation and net sales of long-term mutual funds, higher fee-based and commission revenue, the acquisition of Atlantic Trust and higher contribution from our stake in American Century Investments.

During the second quarter of 2014, Wealth Management continued its progress in support of our strategic priority to build our wealth management platform:

  • We achieved our 21st consecutive quarter of positive net retail sales of long-term mutual funds;
  • CIBC Wood Gundy client satisfaction continued to strengthen with an overall rating of 91%, which is among the industry leaders; and
  • The Atlantic Trust integration has progressed well and overall net flows continue to be solid.

Wholesale Banking reported net income of $213 million for the second quarter, down $51 million or 19% from the prior quarter. Excluding items of note, adjusted net income(1) was $228 million, up $13 million or 6% from the prior quarter.

Read More: http://micro.newswire.ca/release.cgi?rkey=2205299296&view=14730-0&Start=&htm=0

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