TORONTO, May 25, 2017 /CNW/ - CIBC (TSX: CM)
(NYSE: CM) today announced its financial results for the second
quarter ended April 30, 2017.
Second quarter highlights
- Reported net income was $1,050
million, compared with $941
million for the second quarter a year ago, and $1,407 million for the prior quarter.
- Adjusted net income(1) was $1,070 million, compared with $962 million for the second quarter a year ago,
and $1,166 million for the prior
quarter.
- Reported diluted earnings per share (EPS) was $2.59, compared with $2.35 for the second quarter a year ago, and
$3.50 for the prior quarter.
- Adjusted diluted EPS(1) was $2.64, compared with $2.40 for the second quarter a year ago, and
$2.89 for the prior quarter.
- Reported return on common shareholders' equity (ROE) was
17.7% and adjusted ROE(1) was 18.1%.
"In the second quarter, each of our business units performed
well," says Victor G. Dodig, CIBC
President and Chief Executive Officer. "We delivered robust growth
with continued progress on CIBC's integrated bank-wide priorities
to deepen client relationships, foster innovation that our clients
want and simplify our bank. In addition, after the end of the
quarter, we marked an important milestone with PrivateBancorp, Inc.
shareholders voting overwhelmingly in favour of our proposed
merger. We are now focused on obtaining the remaining regulatory
approvals and finalizing our integration plans as we work toward
closing the deal in June."
Results for the second quarter of 2017 were affected by the
following items of note aggregating to a negative impact of
$0.05 per share:
- $20 million ($15 million after-tax) in transaction and
integration-related costs associated with the acquisition of
PrivateBank; and
- $6 million ($5 million after-tax) amortization of intangible
assets.
At April 30, 2017, CIBC's Basel
III Common Equity Tier 1, Tier 1 and Total capital ratios were
12.2%, 13.5% and 15.4%, respectively, on an all-in basis compared
with 11.9%, 13.2% and 15.2%, respectively, at the end of the prior
quarter. CIBC's Basel III leverage ratio at April 30, 2017 was 4.1% on an all-in basis.
Core business performance
Retail and Business
Banking reported net income of $647
million for the second quarter, down $5 million or 1% from the second quarter a year
ago. Excluding items of note, adjusted net income(1) was
$648 million, up $25 million or 4% from the second quarter a year
ago. Solid volume growth and higher fees were partially offset by
narrower spreads and higher spending on strategic initiatives.
Retail and Business Banking continued to make progress against
our objectives of leadership in profitable revenue growth and
client experience.
- We completed the transformation of 30 banking centre locations
in the first two quarters of 2017, reflecting shifting client
behaviours to leverage digital channels for routine transactions
while increasing our focus on advice in these centres;
- In the second quarter we earned the highest score for mobile
banking functionality among the five largest retail banks in
Canada in Forrester Research
Inc.'s 2017 Canadian Mobile Banking Functionality Benchmark report,
reflecting the investments made in client experience through
digital channels; and
- In the second quarter we introduced a voice-enabled search
feature on CIBC's Mobile Banking App, offering a more personalized
and convenient solution for clients — a first-to-market Canadian
banking functionality.
Wealth Management reported net income of $154 million for the second quarter, up
$41 million or 36% from the second
quarter a year ago. Excluding items of note, adjusted net
income(1) was $155
million, up $40 million or 35%
from the second quarter a year ago, driven by higher revenue,
partially offset by higher expenses. The higher revenue was driven
by growth in assets under administration.
During the second quarter of 2017, Wealth Management continued
its progress in support of our strategic focus to enhance client
experience, drive asset growth, and simplify our business
platform:
- We completed eight co-locations of CIBC Private Banking and
Wood Gundy teams in select locations across the country, delivering
a more integrated offer for our high-net-worth clients; and
- CIBC Atlantic Trust Private Wealth Management was recognized
with two Private Asset Management awards for our industry-leading
performance.
Earlier this month, we launched the CIBC Private Wealth
Management brand campaign, to build awareness of our integrated
offer and elevate our focus on the high-net-worth segment.
Capital Markets reported net income of $292 million for the second quarter, up
$40 million or 16% from the second
quarter a year ago. Excluding items of note, adjusted net
income(1) was $292
million, up $32 million or
12%, primarily due to a reversal of credit losses compared with a
provision for credit losses in the same quarter last year,
partially offset by lower revenue. Revenue was lower primarily due
to lower interest rate and foreign exchange trading and lower
equity underwriting activity, partially offset by higher investment
portfolio gains.
As a leading capital markets franchise in Canada serving clients around the world,
Capital Markets acted during the second quarter of 2017 as:
- Joint bookrunner and co-lead arranger on a US$3.5 billion credit facility for CPPIB Capital
Inc.;
- Joint bookrunner on a $1.5
billion bond offering for Bell
Canada;
- Joint bookrunner on a US$500
million and $325 million dual
tranche bond offering for TELUS Corporation;
- Joint bookrunner on a $750
million bond offering for Husky Energy Inc.;
- Lead manager on a $700 million
30-year bond offering for the Province of Alberta; and
- Lead manager and joint bookrunner on a $390 million Initial Public Offering for Canada
Goose Holdings Inc.
(1)
|
For additional
information, see the "Non-GAAP measures" section.
|
Credit quality
Provision for credit losses was
$179 million. Excluding the increase
in the collective allowance of $40
million in the second quarter a year ago reported as an item
of note, the provision for credit losses was down $105 million or 37% from the same quarter last
year. This decrease was primarily driven by better performance in
the oil and gas sector.
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 analyzing financial performance. For a more
detailed discussion on our non-GAAP measures, see page 13 of our
2016 Annual Report. The following table provides a reconciliation
of non-GAAP to GAAP measures related to CIBC on a consolidated
basis.
|
|
For the three
|
|
|
For the
six
|
|
|
|
months
ended
|
|
|
months
ended
|
|
|
|
|
2017
|
|
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
$ millions
|
|
|
Apr.
30
|
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
|
Apr.
30
|
|
|
Apr. 30
|
|
Reported and
adjusted diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income
attributable to common shareholders
|
A
|
$
|
1,035
|
|
$
|
1,393
|
|
$
|
926
|
|
|
$
|
2,428
|
|
$
|
1,894
|
|
After-tax impact of
items of note (1)
|
|
|
20
|
|
|
(241)
|
|
|
21
|
|
|
|
(221)
|
|
|
68
|
|
Adjusted net income
attributable to common shareholders (2)
|
B
|
$
|
1,055
|
|
$
|
1,152
|
|
$
|
947
|
|
|
$
|
2,207
|
|
$
|
1,962
|
|
Diluted
weighted-average common shares outstanding (thousands)
|
C
|
|
400,577
|
|
|
398,311
|
|
|
395,150
|
|
|
|
399,413
|
|
|
396,302
|
|
Reported diluted EPS
($)
|
A/C
|
$
|
2.59
|
|
$
|
3.50
|
|
$
|
2.35
|
|
|
$
|
6.08
|
|
$
|
4.78
|
|
Adjusted diluted EPS
($) (2)
|
B/C
|
|
2.64
|
|
|
2.89
|
|
|
2.40
|
|
|
|
5.53
|
|
|
4.95
|
|
Reported and
adjusted return on common shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
D
|
$
|
23,932
|
|
$
|
22,674
|
|
$
|
20,899
|
|
|
$
|
23,293
|
|
$
|
21,068
|
|
Reported return on
common shareholders' equity
|
A/D(3)
|
|
17.7
|
%
|
|
24.4
|
%
|
|
18.0
|
%
|
|
|
21.0
|
%
|
|
18.1
|
%
|
Adjusted return on
common shareholders' equity (2)
|
B/D(3)
|
|
18.1
|
%
|
|
20.1
|
%
|
|
18.4
|
%
|
|
|
19.1
|
%
|
|
18.7
|
%
|
|
|
|
Retail and
|
|
|
|
|
|
|
|
|
|
|
|
Business
|
|
Wealth
|
|
Capital
|
|
Corporate
|
|
CIBC
|
$ millions, for the
three months ended
|
|
|
Banking
|
Management
|
|
Markets
|
|
and Other
|
|
Total
|
2017
|
Reported net
income (loss)
|
|
$
|
647
|
$
|
154
|
$
|
292
|
$
|
(43)
|
$
|
1,050
|
Apr.
30
|
After-tax impact
of items of note (1)
|
|
|
1
|
|
1
|
|
-
|
|
18
|
|
20
|
|
Adjusted net
income (loss) (2)
|
|
$
|
648
|
$
|
155
|
$
|
292
|
$
|
(25)
|
$
|
1,070
|
2017
|
Reported net income
(loss)
|
|
$
|
953
|
$
|
133
|
$
|
371
|
$
|
(50)
|
$
|
1,407
|
Jan. 31
|
After-tax impact of
items of note (1)
|
|
|
(244)
|
|
2
|
|
-
|
|
1
|
|
(241)
|
|
Adjusted net income
(loss) (2)
|
|
$
|
709
|
$
|
135
|
$
|
371
|
$
|
(49)
|
$
|
1,166
|
2016
|
Reported net income
(loss)
|
|
$
|
652
|
$
|
113
|
$
|
252
|
$
|
(76)
|
$
|
941
|
Apr. 30
|
After-tax impact of
items of note (1)
|
|
|
(29)
|
|
2
|
|
8
|
|
40
|
|
21
|
|
Adjusted net income
(loss) (2)
|
|
$
|
623
|
$
|
115
|
$
|
260
|
$
|
(36)
|
$
|
962
|
|
|
|
|
|
|
|
|
|
|
|
|
$ millions, for the
six months ended
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
Reported net
income (loss)
|
|
$
|
1,600
|
$
|
287
|
$
|
663
|
$
|
(93)
|
$
|
2,457
|
Apr.
30
|
After-tax impact
of items of note (1)
|
|
|
(243)
|
|
3
|
|
-
|
|
19
|
|
(221)
|
|
Adjusted net
income (loss) (2)
|
|
$
|
1,357
|
$
|
290
|
$
|
663
|
$
|
(74)
|
$
|
2,236
|
2016
|
Reported net income
(loss)
|
|
$
|
1,336
|
$
|
232
|
$
|
496
|
$
|
(141)
|
$
|
1,923
|
Apr. 30
|
After-tax impact of
items of note (1)
|
|
|
(27)
|
|
5
|
|
12
|
|
78
|
|
68
|
|
Adjusted net income
(loss) (2)
|
|
$
|
1,309
|
$
|
237
|
$
|
508
|
$
|
(63)
|
$
|
1,991
|
(1)
Reflects impact of items of note
below.
|
(2)
Non-GAAP measure.
|
(3)
Annualized
|
Items of
note
|
|
|
|
|
For the
three
|
|
For the
six
|
|
months
ended
|
|
months
ended
|
|
|
2017
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
$ millions
|
|
Apr.
30
|
|
Jan. 31
|
|
Apr. 30
|
|
|
Apr.
30
|
|
Apr. 30
|
Gain on the sale and
lease back of certain retail properties
|
$
|
-
|
$
|
(299)
|
$
|
-
|
|
$
|
(299)
|
$
|
-
|
Gain, net of related
transaction and severance costs, on the sale of a processing
centre
|
|
-
|
|
-
|
|
(53)
|
|
|
-
|
|
(53)
|
Loss from the
structured credit run-off business (1)
|
|
-
|
|
-
|
|
11
|
|
|
-
|
|
16
|
Amortization of
intangible assets
|
|
6
|
|
6
|
|
7
|
|
|
12
|
|
16
|
Transaction and
integration-related costs associated with the acquisition of
PrivateBank (2)
|
|
20
|
|
-
|
|
-
|
|
|
20
|
|
-
|
Increase in legal
provisions
|
|
-
|
|
-
|
|
77
|
|
|
-
|
|
77
|
Increase in
collective allowance recognized in Corporate and Other
(3)
|
|
-
|
|
-
|
|
40
|
|
|
-
|
|
109
|
Pre-tax impact of
items of note on net income
|
|
26
|
|
(293)
|
|
82
|
|
|
(267)
|
|
165
|
|
Income tax impact on
above items of note
|
|
(6)
|
|
52
|
|
(31)
|
|
|
46
|
|
(52)
|
|
Income tax recovery
due to the settlement of transfer pricing-related
matters
|
|
-
|
|
-
|
|
(30)
|
|
|
-
|
|
(30)
|
|
Income tax recovery
arising from a change in our expected utilization of tax loss
carryforwards
|
|
-
|
|
-
|
|
-
|
|
|
-
|
|
(15)
|
After-tax impact of
items of note on net income
|
$
|
20
|
$
|
(241)
|
$
|
21
|
|
$
|
(221)
|
$
|
68
|
(1)
|
Shown as an item of
note through to October 31, 2016.
|
(2)
|
Transaction costs
include legal and other advisory fees, as well as financing costs
associated with pre-funding the cash component of the merger
consideration.
Integration costs are comprised of direct and incremental costs
incurred as part of planning for integrating the businesses of
PrivateBank with CIBC, including
enabling cross-sell opportunities and expansion of services in
the U.S. market, the upgrade and conversion of systems and
processes, project management,
integration-related travel, consulting fees and marketing costs
related to rebranding activities.
|
(3)
|
Relates to the
collective allowance, except for: (i) residential mortgages greater
than 90 days delinquent; (ii) personal loans and scored small
business loans
greater than 30 days delinquent; and (iii) net write-offs for the
card portfolio, which are all reported in the respective strategic
business units.
|
Making a difference in our Communities
CIBC is
committed to building a bank that is relevant to our clients, our
team members and our communities. During the quarter we:
- Announced special partnerships in celebration of our
150th anniversary with Immigration Refugees and
Citizenship Canada, Parks Canada, and Marielle Thompson as our newest CIBC150
Ambassador; and
- Invested $700,000 in support of
volunteer programs at Princess Margaret Cancer Centre and Northern
Cancer Foundation, in recognition of the critical role volunteers
play in the lives of those affected by cancer.
Since last quarter, CIBC was:
- Named the North American Customer Experience Diamond Award
winner by Clarabridge; and
- Recognized as one of Canada's Best Diversity Employers by
Mediacorp.
The Board of Directors of CIBC reviewed this news release prior
to it being issued. CIBC's controls and procedures support the
ability of the President and Chief Executive Officer (CEO) and the
Chief Financial Officer (CFO) of CIBC to certify CIBC's second
quarter financial report and controls and procedures. CIBC's CEO
and CFO will voluntarily provide to the U.S. Securities and
Exchange Commission a certification relating to CIBC's second
quarter financial information, including the unaudited interim
consolidated financial statements, and will provide the same
certification to the Canadian Securities Administrators.
All amounts are in Canadian dollars and are based on financial
statements prepared in compliance with International Accounting
Standard 34 Interim Financial Reporting, unless otherwise
noted.
A NOTE ABOUT FORWARD-LOOKING STATEMENTS
From time to
time, we make written or oral forward-looking statements within the
meaning of certain securities laws, including in this news release,
in other filings with Canadian securities regulators or the U.S.
Securities and Exchange Commission and in other communications. All
such statements are made pursuant to the "safe harbour" provisions
of, and are intended to be forward-looking statements under
applicable Canadian and U.S. securities legislation, including the
U.S. Private Securities Litigation Reform Act of 1995. These
statements include, but are not limited to, statements made in the
"Core business performance" and "Making a difference in our
Communities" sections of this news release, and the Management's
Discussion and Analysis in our 2016 Annual Report under the heading
"Financial performance overview – Outlook for calendar year 2017"
and other statements about our operations, business lines,
financial condition, risk management, priorities, targets, ongoing
objectives, strategies, the regulatory environment in which we
operate and outlook for calendar year 2017 and subsequent periods.
Forward-looking statements are typically identified by the words
"believe", "expect", "anticipate", "intend", "estimate",
"forecast", "target", "objective" and other similar expressions or
future or conditional verbs such as "will", "should", "would" and
"could". By their nature, these statements require us to make
assumptions, including the economic assumptions set out in the
"Financial performance overview – Outlook for calendar year 2017"
section of our 2016 Annual Report, as updated by quarterly reports,
and are subject to inherent risks and uncertainties that may be
general or specific. A variety of factors, many of which are beyond
our control, affect our operations, performance and results, and
could cause actual results to differ materially from the
expectations expressed in any of our forward-looking statements.
These factors include: credit, market, liquidity, strategic,
insurance, operational, reputation and legal, regulatory and
environmental risk; the effectiveness and adequacy of our risk
management and valuation models and processes; legislative or
regulatory developments in the jurisdictions where we operate,
including the Dodd-Frank Wall Street Reform and Consumer Protection
Act and the regulations issued and to be issued thereunder, the
Organisation for Economic Co-operation and Development Common
Reporting Standard, and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking
Supervision's global standards for capital and liquidity reform,
and those relating to the payments system in Canada; amendments to, and interpretations of,
risk-based capital guidelines and reporting instructions, and
interest rate and liquidity regulatory guidance; the resolution of
legal and regulatory proceedings and related matters; the effect of
changes to accounting standards, rules and interpretations; changes
in our estimates of reserves and allowances; changes in tax laws;
changes to our credit ratings; political conditions and
developments, including changes relating to economic or trade
matters; the possible effect on our business of international
conflicts and the war on terror; natural disasters, public health
emergencies, disruptions to public infrastructure and other
catastrophic events; reliance on third parties to provide
components of our business infrastructure; potential disruptions to
our information technology systems and services; increasing cyber
security risks which may include theft of assets, unauthorized
access to sensitive information, or operational disruption; social
media risk; losses incurred as a result of internal or external
fraud; anti-money laundering; the accuracy and completeness of
information provided to us concerning clients and counterparties;
the failure of third parties to comply with their obligations to us
and our affiliates or associates; intensifying competition from
established competitors and new entrants in the financial services
industry including through internet and mobile banking;
technological change; global capital market activity; changes in
monetary and economic policy; currency value and interest rate
fluctuations, including as a result of market and oil price
volatility; general business and economic conditions worldwide, as
well as in Canada, the U.S. and
other countries where we have operations, including increasing
Canadian household debt levels and global credit risks; our success
in developing and introducing new products and services, expanding
existing distribution channels, developing new distribution
channels and realizing increased revenue from these channels;
changes in client spending and saving habits; our ability to
attract and retain key employees and executives; our ability to
successfully execute our strategies and complete and integrate
acquisitions and joint ventures; the risk that expected synergies
and benefits of the acquisition of PrivateBancorp, Inc. will not be
realized within the expected time frame or at all or the
possibility that the acquisition does not close when expected or at
all because all of the required approvals are not received or other
conditions to the closing are not satisfied on a timely basis or at
all; and our ability to anticipate and manage the risks associated
with these factors. This list is not exhaustive of the factors that
may affect any of our forward-looking statements. These and other
factors should be considered carefully and readers should not place
undue reliance on our forward-looking statements. Additional
information about these factors can be found in the "Management of
risk" section starting on page 40 of our 2016 Annual Report. Any
forward-looking statements contained in this news release represent
the views of management only as of the date hereof and are
presented for the purpose of assisting our shareholders and
financial analysts in understanding our financial position,
objectives and priorities and anticipated financial performance as
at and for the periods ended on the dates presented, and may not be
appropriate for other purposes. We do not undertake to update any
forward-looking statement that is contained in this news release or
in other communications except as required by law.
Conference Call/Webcast
The conference call will be
held at 8:30 a.m. (ET) and is
available in English (416-340-2217, or toll-free 1-866-696-5910,
passcode 8668706#) and French (514-861-2255, or toll-free
1-877-405-9213, passcode 9084131#). Participants are asked to dial
in 10 minutes before the call. Immediately following the formal
presentations, CIBC executives will be available to answer
questions.
A live audio webcast of the conference call will also be
available in English and French at
www.cibc.com/ca/investor-relations/quarterly-results.html.
Details of CIBC's fiscal 2017 second quarter results, as well as
a presentation to investors, will be available in English and
French at www.cibc.com, Investor Relations section, prior to the
conference call/webcast. We are not incorporating information
contained on the website in this news release.
A telephone replay will be available in English (905-694-9451 or
1-800-408-3053, passcode 4049998#) and French (514-861-2272 or
1-800-408-3053, passcode 2130318#) until 11:59 p.m. (ET) June 1,
2017. The audio webcast will be archived at
www.cibc.com/ca/investor-relations/quarterly-results.html.
About CIBC
CIBC is a leading Canadian-based global
financial institution with 11 million personal banking and business
clients. Through our three major business units - Retail and
Business Banking, Wealth Management and Capital Markets - CIBC
offers a full range of products and services through its
comprehensive electronic banking network, banking centres and
offices across Canada with offices in the
United States and around the world. Ongoing news releases
and more information about CIBC can be found at
www.cibc.com/ca/media-centre/ or by following on Twitter @CIBC,
Facebook (www.facebook.com/CIBC) and Instagram @CIBCNow.
SOURCE CIBC - Investor Relations