CIBC Q2 Profit More Than Triples, Tops Expectations; Shares Pop 3%

Shares of Canadian Imperial Bank of Commerce (CM) jumped 3% in early trading Thursday after Canada’s fifth-largest bank posted strong Q2 profits, driven by falling loan loss provisions and strong capital market results.

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Total revenue increased 7.6% to C$4.93 billion and beat estimates of C$4.76 billion. Profit came in at C$1.65 billion (C$3.55 per share) in the second quarter of 2021, up from C$392 million (C$0.83 per share), in the same quarter a year ago. CIBC earned C$3.59 per share on an adjusted basis, which was much higher than the consensus estimate of C$3.01 per share.

The most significant change for CIBC in the quarter was in provisions for credit losses. Indeed, the Canadian bank only allocated C$32 million to new provisions in Q2, down from C$1.4 billion a year ago.

Profits at CIBC’s core retail banking unit returned to pre-pandemic levels at C$603 million, up 270% from a year earlier.

In the Canadian commercial banking and wealth management unit, profit increased 94% year-on-year to C$399 million, as provisions for credit losses fell.

Profits from U.S. commercial banking and wealth management reached C$216 million, from C$15 million a year earlier, due to a sharp reversal in bad debt provisions.

Capital markets profit climbed to C$495 million from C$177 million in the same quarter last year. (See Canadian Imperial Bank of Commerce stock analysis on TipRanks)

CIBC President and CEO Victor G. Dodig said, “Our strong performance in the second quarter of 2021 is a result of executing on our client-focused growth strategy. We are delivering results by building on the momentum we have established in our Canadian consumer franchise, further accelerating our performance in areas where we have strength, and simplifying and transforming our bank to enable reinvestment for growth.”

Dodig expects Canada to experience an economic boost in the second half of the year, which will be a tailwind for Canadian banks.

Following the results, Canaccord Genuity analyst Scott Chan maintained a Buy rating on the stock and a C$138.00 price target, for 2% downside potential.

The rest of the Street is bullish on CM with a Strong Buy consensus rating based on 7 Buys and 2 Holds. The average analyst price target of C$140.32 implies shares are fully priced at current levels.

TipRanks’ Smart Score

CM scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the overall market.