CIBC Announces Third Quarter 2021 Results

Press Release

TORONTO, Aug. 26, 2021 – CIBC (TSX: CM) (NYSE: CM) today announced its financial results for the third quarter ended July 31, 2021.

Third quarter highlights

	Q3/21	Q3/20	Q2/21	YoY Variance	QoQ Variance
Reported Net Income	$1,730 million	$1,172 million	$1,651 million	+48%	+5%
Adjusted Net Income (1)	$1,808 million	$1,243 million	$1,666 million	+45%	+9%
Reported Diluted Earnings Per Share (EPS)	$3.76	$2.55	$3.55	+47%	+6%
Adjusted Diluted EPS (1)	$3.93	$2.71	$3.59	+45%	+9%
Reported Return on Common Shareholders’ Equity (ROE)	17.1%	12.1%	17.1%
Adjusted ROE (1)	17.9%	12.9%	17.3%
Common Equity Tier 1 Ratio	12.3%	11.8%	12.4%

“We continue to deliver purpose-driven growth across all of our business units as we work with our clients to help them achieve their ambitions. This quarter’s record top-line revenue and earnings per share underscore the breadth and quality of the growth we have across all of our key business units, as we continue to successfully navigate an uncertain environment by staying focused on our clients and on the wellbeing of our team,” said Victor Dodig, President and CEO, CIBC. “This quarter we continued to make strategic investments in our future growth as we have throughout the pandemic.”

Results for the third quarter of 2021 were affected by the following items of note aggregating to a negative impact of $0.17 per share:

• $85 million ($63 million after-tax) increase in legal provisions; and
• $20 million ($15 million after-tax) amortization of acquisition-related intangible assets.

Our Common Equity Tier 1 ratio was 12.3% at July 31, 2021 compared with 12.4% at the end of the prior quarter. CIBC’s leverage ratio at July 31, 2021 was 4.6%.

Core business performance
Canadian Personal and Business Banking reported net income of $642 million for the third quarter, up $185 million or 40% from the third quarter a year ago mainly due to lower provisions for credit losses and higher revenue, partially offset by higher expenses. Adjusted pre-provision, pre-tax earnings⁽¹⁾ were up $98 million or 12% from the third quarter a year ago mainly due to higher revenue driven by robust volume growth and higher fee income, partially offset by higher expenses.

Canadian Commercial Banking and Wealth Management reported net income of $470 million for the third quarter, up $150 million or 47% from the third quarter a year ago, primarily due to higher revenue and a reversal of loan loss provisions in the current quarter, partially offset by higher expenses. Pre-provision, pre-tax earnings⁽¹⁾ were up $96 million or 19% compared with the third quarter a year ago, primarily due to higher fee revenue and strong volume growth in commercial banking, while wealth management revenue benefitted from significant growth in asset balances driven by market appreciation, record mutual fund sales, and an increased level of investment activity by clients. Higher expenses were primarily driven by revenue-based variable compensation reflecting favourable business results.

U.S. Commercial Banking and Wealth Management reported net income of $266 million for the third quarter, up $206 million or 343% from the third quarter a year ago. Excluding items of note, adjusted net income⁽¹⁾ was $279 million, up $204 million or 272% from the third quarter a year ago, due to a reversal of loan loss provisions in the current quarter and higher U.S. dollar revenue, partially offset by the impact of foreign exchange translation. In U.S. dollars, adjusted pre-provision, pre-tax earnings⁽¹⁾ of US$228 million were up US$32 million or 16% from the third quarter a year ago due to higher revenue, primarily driven by volume growth and higher fees, partially offset by higher employee-related expenses.

Capital Markets reported net income of $491 million for the third quarter, up $48 million or 11% from the third quarter a year ago, primarily due to a reversal of provision for credit losses, partially offset by higher expenses. Pre-provision, pre-tax earnings⁽¹⁾ were down $48 million or 7% from the third quarter a year ago, due to lower global markets trading revenue and higher expenses, partially offset by higher revenue from corporate and investment banking and our direct financial services business.

Credit quality
Provision for credit losses was a reversal of $99 million, compared with a provision for credit losses of $525 million from the third quarter a year ago. Provision reversals on performing loans were recognized across all strategic business units (SBUs) in the current quarter mainly resulting from an improvement in our economic outlook, while the same quarter last year included a provision for credit losses across all SBUs due to an unfavourable change in our economic outlook relating to the early stages of the COVID-19 pandemic. Provision for credit losses on impaired loans was also down compared with the third quarter a year ago, due to lower impairments net of reversals in all SBUs except Corporate and Other.

(1)	For additional information, see the “Non-GAAP measures” section. Pre-provision, pre-tax earnings is revenue net of non-interest expenses and is a non-GAAP measure. Adjusted pre-provision, pre-tax earnings is revenue net of non-interest expenses adjusted for items of note and is a non-GAAP measure.

Non-GAAP measures
We use a number of financial measures to assess the performance of our business lines. Some measures are calculated in accordance with GAAP (IFRS), while other measures do not have a standardized meaning under GAAP, and accordingly, these measures may not be comparable to similar measures used by other companies. Investors may find these non-GAAP measures useful in understanding how management views underlying business performance.

Management assesses results on a reported and adjusted basis and considers both as useful measures of performance. Adjusted results remove items of note from reported results and are used to calculate our adjusted measures. Adjusted measures represent non-GAAP measures.

For a more detailed discussion on our non-GAAP measures, see page 16 of the 2020 Annual Report.

The following table provides a reconciliation of GAAP (reported) results to non-GAAP (adjusted) results.

Read More: https://cibc.mediaroom.com/2021-08-26-CIBC-Announces-Third-Quarter-2021-Results

IBF4