CIBC's Dodig favours small wealth acquisitions over big deals

financialpost.com:

After years of lagging returns and more recent concerns over U.S. office loans, Canadian Imperial Bank of Commerce has turned a corner with investors. Chief executive Victor Dodig says he won’t put that at risk with acquisitions that reduce shareholder value.

“The investor sentiment fundamentally says that CIBC is a changed bank,” Dodig said in an interview with Bloomberg News. This, he said, comes after a steady focus on courting affluent Canadians as clients, investing in technology and digitization and targeting privately owned businesses and entrepreneurs in the U.S.

Dodig, 59, who has led Canada’s fifth-largest bank for more than a decade, laid out the bank’s relatively straightforward strategy at CIBC’s most recent investor day in June 2022.

“We don’t want to be doing something large that would make us take a step back,” Dodig said last week, adding that he remains open to an “interesting” acquisition that improves return on equity.

“But it really is focused on organic growth and tuck-in acquisitions, particularly in the wealth-management space, which are capital light and would strengthen our hand in a business that we’re very good at,” he said.

CIBC’s revamped strategy wasn’t an immediate success. The lender was initially dogged by a reputation for costly mistakes in the past — it was caught up in Enron Corp.’s bankruptcy and took big writedowns on securities linked to U.S. subprime mortgages during the financial crisis. By the middle of 2023, signs of distress emerged in its U.S. commercial lending book.

The lender had a higher exposure to the troubled U.S. office space than its peers and took a series of large provisions against potentially bad loans in the sector.

But after taking steps to reduce its exposure