CIBC beats analysts' expectations as it reports lower loan loss provisions

financialpost.com:

The Canadian Imperial Bank of Commerce beat analysts’ expectations and reported higher profits this quarter compared to last year as the bank set aside a lower amount of money for potential bad loans and posted gains in most of its business segments.

The Toronto-based firm’s adjusted net income was $1.8 billion for the three-month period that ended on July 31, up 28 per cent from the same period last year. On a per share basis, the bank earned $1.93, up from $1.52 last year and higher than the analysts’ estimate of $1.74.

The bank’s provision for credit losses (PCL), or the amount of money that a bank keeps aside for potential bad loans, was $483 million, down $253 million from the same quarter last year. This was lower than the $553 million that analysts expected.

PCL on impaired loans was down mainly due to lower provisions in U.S. Commercial Banking and Wealth Management and was partially offset by higher provisions in the Canadian Personal and Business Banking and Capital Markets segments.

The bank’s reported net income was $1.79 billion, up 25 per cent from last year. On a per share basis, the bank earned $1.82, up from $1.47 last year.

“CIBC reported a strong quarter and was one of three banks to come in well ahead of consensus’ expectations,” Jefferies Financial Group Inc. analyst John Aiken said in a note. “The enthusiasm may be moderated by some concerns that the precipitous drop in provisions enjoyed by its U.S. segment may be transitory.”