CIBC Q3 earnings reflect higher interest rates, bigger reserve for loan losses (NYSE:CM)

CIBC bank.

Eli Unger/iStock Editorial via Getty Images

Canadian Imperial Bank of Commerce (NYSE:CM) (TSX:CM:CA), better known as CIBC, posted better-than-expected fiscal Q3 adjusted EPS as the bank benefited from higher interest rates even as it increased its provision for credit losses to prepare for an increasingly uncertain economic outlook.

Q3 adjusted EPS of C$1.85 (US$1.43), beating the C$1.81 consensus, fell from C$1.96 in Q2 and increased from C$1.77 in Q3 2021.

Provision for credit losses were C$243M vs. C$303M in Q2 2022 and a reversal of C$99M in Q3 2021.

“As the economic environment continues to evolve, we remain focused on delivering shareholder value by taking a disciplined approach to capital allocation to execute our strategy, focusing on key client segments, further enhancing client experience, and investing in future differentiators for our bank,” said President and CEO Victor G. Dodig.

Net interest income of C$3.24B rose 5% Q/Q and 10% Y/Y.

Q3 adjusted return on equity of 14.6% dropped from 17.1% in the prior quarter and increased from 14.0% in the year-ago period.

Net income for its Canadian Commercial Banking and Wealth Management segment was C$484M in Q3, up 3% from the year-ago quarter, driven by higher revenue, partly offset by higher expenses and a provision for credit losses in the quarter compared with a provision reversal in the year-ago period. Compared with Q2 2022, the unit’s net income rose slightly from C$480M.

U.S. Commercial Banking and Wealth Management net income of C$193M (US$152M) fell from C$266M in the year-ago quarter on higher provision for credit losses and higher expense, partly offset by higher revenue. Compares with C$180M in Q2.

Capital Markets net income of C$447M fell 9% Y/Y on higher expenses and lower provision reversal in the current quarter, partly offset by higher revenue. Compares with C$540M in the prior quarter.

Canadian Personal and Business banking unit net income of C$595M declined 7% from the year-ago quarter, primarily due to a higher provision for credit losses and higher expenses, partly offset by higher revenue; compares with C$496M in Q2 2022.

Conference call at 8:00 AM ET.

Earlier, Canadian Imperial Bank (CM) non-GAAP EPS of C$1.85 beats by C$0.02, revenue of C$5.57B in line.

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