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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 and EPS Surprise
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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