TORONTO, Feb. 22, 2018 /CNW/ - CIBC (TSX: CM)
(NYSE: CM) today announced its financial results for the first
quarter ended January 31, 2018.
First quarter highlights
- Reported net income was $1,328
million, compared with $1,407
million for the first quarter a year ago, and $1,164 million for the prior quarter.
- Adjusted net income(1) was $1,433 million, compared with $1,166 million for the first quarter a year ago,
and $1,263 million for the prior
quarter.
- Reported diluted earnings per share (EPS) was $2.95, compared with $3.50 for the first quarter a year ago, and
$2.59 for the prior quarter.
- Adjusted diluted EPS(1) was $3.18, compared with $2.89 for the first quarter a year ago, and
$2.81 for the prior quarter.
- Reported return on common shareholders' equity (ROE) was
17.4% and adjusted ROE(1) was 18.8%.
"In the quarter, CIBC delivered strong results across all four
strategic business units," says Victor G.
Dodig, CIBC President and Chief Executive Officer. "We are
creating value for shareholders by building a relationship-focused
bank, diversifying our earnings growth in the U.S. region,
improving operational efficiencies and maintaining disciplined
capital deployment."
Results for the first quarter of 2018 were affected by the
following items of note aggregating to a negative impact of
$0.23 per share:
- $88 million charge from net tax
adjustments resulting from the U.S. tax reforms enacted in the
first quarter of 2018;
- $32 million ($24 million after-tax) amortization of intangible
assets; and
- $10 million ($7 million after-tax net positive impact) in
purchase accounting adjustments net of transaction and
integration-related costs associated with the acquisitions of The
PrivateBank and Geneva Advisors.
We maintained strong Basel III Common Equity Tier 1, Tier 1 and
Total capital ratios of 10.8%, 12.4% and 14.1%, respectively,
compared with 10.6%, 12.1% and 13.8%, respectively, at the end of
the prior quarter. CIBC's Basel III leverage ratio at January 31, 2018 was 4.0%.
CIBC announced an increase in its quarterly common share
dividend from $1.30 per share to
$1.33 per share.
Core business performance
Canadian Personal and
Small Business Banking reported net income of $656 million for the first quarter, down
$149 million or 19% from the first
quarter a year ago. Excluding items of note, adjusted net
income(1) was $658
million, up $97 million or 17%
from the first quarter a year ago. Solid volume growth, higher fees
and strong credit performance were partially offset by higher
spending on strategic initiatives.
Canadian Commercial Banking and Wealth Management
reported net income of $314 million
for the first quarter, up $38 million
or 14% from the first quarter a year ago, driven by higher revenue,
partially offset by higher expenses. The higher revenue was driven
primarily by volume growth, wider spreads and higher fees in
commercial banking and higher fee-based client assets in wealth
management.
U.S. Commercial Banking and Wealth Management reported
net income of $134 million for the
first quarter, up $105 million or
362% from the first quarter a year ago. Excluding items of note,
adjusted net income(1) was $140
million, up $109 million or
352% from the first quarter a year ago, primarily due to the
inclusion of the results of CIBC Bank USA beginning in the third quarter of
2017.
Capital Markets reported net income of $322 million for the first quarter, down
$25 million or 7% from the first
quarter a year ago. Net income was down primarily due to lower
interest rate and commodities trading revenue and lower equity and
debt underwriting revenue, partially offset by higher equity
derivatives trading revenue and higher corporate banking
revenue.
(1)
|
For additional
information, see the "Non-GAAP measures" section.
|
Credit quality
Provision for credit losses was
$153 million, down $59 million or 28% from the first quarter a year
ago. The decrease was primarily due to a reduction in allowance for
non-impaired loans, reflecting an economic outlook that improved in
the quarter. In addition, provision for credit losses on impaired
loans was down primarily due to lower bankruptcies and write-offs
in the card and personal lending portfolios.
Non-GAAP measures
We use a number of financial
measures to assess the performance of our business lines. Some
measures are calculated in accordance with GAAP (IFRS), while other
measures do not have a standardized meaning under GAAP, and
accordingly, these measures may not be comparable to similar
measures used by other companies. Investors may find these non-GAAP
measures useful in analyzing financial performance. For a more
detailed discussion on our non-GAAP measures, see page 14 of our
2017 Annual Report. The following table provides a reconciliation
of non-GAAP to GAAP measures related to CIBC on a consolidated
basis.
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|
|
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2018
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2017
|
|
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2017
|
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$ millions, for the
three months ended
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|
|
|
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Jan.
31
|
|
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Oct. 31
|
|
|
Jan. 31
|
|
Reported and
adjusted diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income
attributable to common shareholders
|
|
A
|
|
$
|
1,305
|
|
$
|
1,135
|
|
$
|
1,393
|
|
After-tax impact of
items of note (1)
|
|
|
|
|
105
|
|
|
99
|
|
|
(241)
|
|
Adjusted net income
attributable to common shareholders (2)
|
|
B
|
|
$
|
1,410
|
|
$
|
1,234
|
|
$
|
1,152
|
|
Diluted
weighted-average common shares outstanding (thousands)
|
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C
|
|
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442,852
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|
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438,556
|
|
|
398,311
|
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Reported diluted EPS
($)
|
|
A/C
|
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$
|
2.95
|
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$
|
2.59
|
|
$
|
3.50
|
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Adjusted diluted EPS
($) (2)
|
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B/C
|
|
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3.18
|
|
|
2.81
|
|
|
2.89
|
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Reported and
adjusted return on common shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
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Average common
shareholders' equity
|
|
D
|
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$
|
29,677
|
|
$
|
28,471
|
|
$
|
22,674
|
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Reported return on
common shareholders' equity
|
|
A/D
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(3)
|
|
17.4
|
%
|
|
15.8
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%
|
|
24.4
|
%
|
Adjusted return on
common shareholders' equity (2)
|
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B/D
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(3)
|
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18.8
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%
|
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17.2
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%
|
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20.1
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%
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|
|
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Canadian
|
Canadian
|
U.S.
|
|
|
|
|
|
|
|
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Personal
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Commercial
|
Commercial
|
|
|
|
|
|
|
|
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and Small
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Banking
|
Banking
|
|
|
|
|
|
|
|
|
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Business
|
and Wealth
|
and Wealth
|
Capital
|
Corporate
|
CIBC
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$ millions, for the
three months ended
|
|
Banking
|
Management
|
Management
|
Markets
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and Other
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Total
|
2018
|
Reported net
income (loss)
|
|
$
|
656
|
$
|
314
|
$
|
134
|
$
|
322
|
$
|
(98)
|
$
|
1,328
|
Jan.
31
|
After-tax impact
of items of note (1)
|
|
|
2
|
|
-
|
|
6
|
|
-
|
|
97
|
|
105
|
|
Adjusted net
income (loss) (2)
|
|
$
|
658
|
$
|
314
|
$
|
140
|
$
|
322
|
$
|
(1)
|
$
|
1,433
|
2017
|
Reported net income
(loss)
|
|
$
|
551
|
$
|
287
|
$
|
107
|
$
|
222
|
$
|
(3)
|
$
|
1,164
|
Oct. 31
|
After-tax impact of
items of note (1)
|
|
|
72
|
|
1
|
|
12
|
|
-
|
|
14
|
|
99
|
|
Adjusted net income
(2)
|
|
$
|
623
|
$
|
288
|
$
|
119
|
$
|
222
|
$
|
11
|
$
|
1,263
|
2017
|
Reported net income
(loss)
|
|
$
|
805
|
$
|
276
|
$
|
29
|
$
|
347
|
$
|
(50)
|
$
|
1,407
|
Jan. 31
|
After-tax impact of
items of note (1)
|
|
|
(244)
|
|
-
|
|
2
|
|
-
|
|
1
|
|
(241)
|
|
Adjusted net income
(loss) (2)
|
|
$
|
561
|
$
|
276
|
$
|
31
|
$
|
347
|
$
|
(49)
|
$
|
1,166
|
(1)
|
Reflects impact of
items of note below.
|
(2)
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Non-GAAP
measure.
|
(3)
|
Annualized.
|
Items of note
|
|
2018
|
|
2017
|
|
2017
|
$ millions, for the
three months ended
|
|
Jan.
31
|
|
Oct. 31
|
|
Jan. 31
|
Gain on the sale and
lease back of certain retail properties
|
$
|
-
|
$
|
-
|
$
|
(299)
|
Amortization of
intangible assets
|
|
32
|
|
19
|
|
6
|
Fees and charges
related to the launch of Simplii Financial and the related
wind-down of
|
|
|
|
|
|
|
|
President's Choice
Financial
|
|
-
|
|
98
|
|
-
|
Transaction and
integration-related costs as well as purchase accounting
adjustments associated
|
|
|
|
|
|
|
|
with the acquisitions
of The PrivateBank and Geneva Advisors
(1)
|
|
(10)
|
|
46
|
|
-
|
Increase (decrease)
in collective allowance recognized in Corporate and Other
(2)
|
|
-
|
|
(18)
|
|
-
|
Pre-tax impact of
items of note on net income
|
|
22
|
|
145
|
|
(293)
|
|
Income tax impact on
above items of note
|
|
(5)
|
|
(46)
|
|
52
|
|
Charge from net tax
adjustments resulting from U.S. tax reforms
|
|
88
|
|
-
|
|
-
|
After-tax impact of
items of note on net income
|
$
|
105
|
$
|
99
|
$
|
(241)
|
(1)
|
Transaction costs
include legal and other advisory fees, financing costs associated
with pre-funding the cash component of the merger consideration,
and interest adjustments relating to the obligation payable to
dissenting shareholders. Integration costs are comprised of direct
and incremental costs incurred as part of planning for and
executing the integration of the businesses of The PrivateBank
(subsequently rebranded as CIBC Bank USA) and Geneva Advisors 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,
severance, consulting fees and marketing costs related to
rebranding activities. Purchase accounting adjustments, included as
items of note beginning in the fourth quarter of 2017, include the
accretion of the acquisition date fair value discount on the
acquired loans of The PrivateBank, the collective allowance
established for new loan originations and renewals of acquired
loans (prior to the adoption of IFRS 9 in the first quarter of
2018), and changes in the fair value of contingent consideration
relating to the Geneva Advisors acquisition.
|
(2)
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Relates to collective
allowance (prior to the adoption of IFRS 9), except for: (i)
residential mortgages greater than 90 days delinquent; (ii)
personal loans and scored small business loans greater than 30 days
delinquent; (iii) net write-offs for the card portfolio; and (iv)
the collective allowance related to CIBC Bank USA, 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 raised $15 million from our
Employee Giving Campaign through the generosity of CIBC
employees;
- CIBC Miracle Day raised more than $5
million to benefit kids in need around the globe; and
- We were the #1 fundraising organization in the world for
Movember raising $327,000.
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 first
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 first
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 2017 Annual Report under the heading
"Financial performance overview – Outlook for calendar year 2018"
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 2018 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 2018"
section of our 2017 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 bank recapitalization legislation and 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; 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 41 of our 2017 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 8:00 a.m. (ET) and is
available in English (416-340-2217, or toll-free 1-800-806-5484,
passcode 8660945#) and French (514-861-2255, or toll-free
1-877-405-9213, passcode 1105464#). 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 2018 first 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 6527164#) and French (514-861-2272 or
1-800-408-3053, passcode 9609900#) until 11:59 p.m. (ET) March 2,
2018. 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, business,
public sector and institutional clients. Across Personal and Small
Business Banking, Commercial Banking and Wealth Management, and
Capital Markets businesses, CIBC offers a full range of advice,
solutions and services through its leading digital banking network,
and locations across Canada, 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/.
SOURCE CIBC - Investor Relations