Canadian Imperial (CM) Stock Up 5.2% as Q4 Earnings Rise Y/Y
Canadian Imperial Bank of Commerce’s CM shares gained 5.2% in response to solid fourth-quarter fiscal 2023 (ended Oct 31) results. Adjusted earnings per share of C$1.57 grew 13% from the prior-year quarter.
Results benefited from a rise in revenues, lower expenses, robust loan balance and a strong balance sheet position. However, a substantial rise in provisions acted as a headwind.
After considering several non-recurring items, net income was C$1.48 billion ($1.09 billion), reflecting a year-over-year jump of 25%.
Revenues Improve, Costs Down
Total revenues were C$5.84 billion ($4.3 billion), up 8% year over year. The improvement was driven by higher non-interest income.
Net interest income came in at C$3.2 billion ($2.36 billion), stable year over year. Non-interest income increased 20% to C$2.65 billion ($1.95 billion).
Non-interest expenses totaled C$3.44 billion ($2.53 billion), decreasing 1%.
The adjusted efficiency ratio was 57.5% at the end of the reported quarter, down from 60.9% in the prior-year quarter.
Provision for credit losses was C$541 million ($398.4 million), up 24% from the prior-year quarter.
Balance Sheet Strong
As of Oct 31, 2023, total assets were C$975.7 billion ($704.3 billion), up 3% from the prior quarter. Net loans and acceptances were up marginally to C$540.2 billion ($389.9 billion), while deposits grew 3% to C$723.4 billion ($522.2 billion).
Capital & Profitability Ratios Improve
As of Oct 31, 2023, the Common Equity Tier 1 ratio was 12.4% compared with 11.7% in the prior-year quarter. The Tier 1 capital ratio was 13.9% compared with 13.3% in the prior-year period. The total capital ratio was 16%, up from 15.3%.
Adjusted return on common shareholders’ equity was 12.1% at the end of the fiscal fourth quarter, up from the prior year’s 11.2%.
Our Take
Given higher interest rates and solid loan balance, Canadian Imperial is likely to witness steady improvement in revenues. However, a challenging operating backdrop, steadily increasing provisions and elevated expenses remain near-term concerns.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Canadian Imperial Bank of Commerce price-consensus-eps-surprise-chart | Canadian Imperial Bank of Commerce Quote
CM currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Canadian Banks
Toronto-Dominion Bank’s TD fourth-quarter fiscal 2023 (ended Oct 31) adjusted net income of C$3.51 billion ($2.58 billion) decreased 13.8% from the prior-year quarter.
TD’s results were adversely impacted by higher expenses and a rise in provision for credit losses. Yet, a rise in adjusted revenues and a strong balance-sheet position acted as tailwinds.
The Bank of Nova Scotia BNS reported a fourth-quarter fiscal 2023 (ended Oct 31) adjusted net income of C$1.67 billion ($1.23 billion), which declined 36% year over year. Results excluded certain one-time items.
A rise in expenses, a significant surge in provisions for credit losses and a lower loan balance hurt the results. However, higher non-interest income, net interest income and solid capital ratios were tailwinds for BNS.
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