CIBC Announces First Quarter 2024 Results

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TORONTO, Feb. 29, 2024 /CNW/ – CIBC (TSX:CM) (NYSE:CM) today announced its financial results for the first quarter ended January 31, 2024.

First quarter highlights

Q1/24

Q1/23 (1)

Q4/23 (1)

YoY

Variance

QoQ
Variance

Revenue

$6,221 million

$5,929 million

$5,847 million

+5 %

+6 %

Reported Net Income

$1,728 million

$433 million

$1,485 million

+299 %

+16 %

Adjusted Net Income (2)

$1,770 million

$1,842 million

$1,522 million

-4 %

+16 %

Adjusted pre-provision, pre-tax earnings (2)

$2,862 million

$2,662 million

$2,452 million

+8 %

+17 %

Reported Diluted Earnings Per Share (EPS)

$1.77

$0.39

$1.53

+354 %

+16 %

Adjusted Diluted EPS (2)

$1.81

$1.94

$1.57

-7 %

+15 %

Reported Return on Common Shareholders’ Equity (ROE) (3)

13.5 %

3.1 %

11.8 %

Adjusted ROE (2)

13.8 %

15.5 %

12.2 %

Net interest margin on average interest-earnings assets (3)(4)

1.43 %

1.49 %

1.44 %

Net interest margin on average interest-earnings assets (excluding trading) (3)(4)

1.72 %

1.66 %

1.66 %

Common Equity Tier 1 (CET1) Ratio (5)

13.0 %

11.6 %

12.4 %

“These first quarter results demonstrate our success in executing on our client-focused strategy which is delivering results for our stakeholders,” said Victor G. Dodig, CIBC President and Chief Executive Officer. “We have clear momentum in attracting and deepening client relationships, underpinned by continued expense discipline, a robust capital position, and strong credit quality, giving us a strong foundation as we continue to proactively manage our bank to further our progress and momentum in 2024.”

Results for the first quarter of 2024 were affected by the following items of note aggregating to a negative impact of $0.04 per share:

$91 million ($68 million after-tax) charge related to the special assessment imposed by the Federal Deposit Insurance Corporation (FDIC) on U.S. depository institutions, which impacted CIBC Bank USA (U.S. Commercial Banking and Wealth Management);
$37 million recovery to income tax that would be eliminated by a Federal proposal, if enacted in its current form(6) ($52 million tax equivalent basis (TEB) revenue and tax expense in Capital Markets and Direct Financial Services with offsets in Corporate and Other; $37 million tax recovery in Capital Markets and Direct Financial Services); and
$15 million ($11 million after-tax) amortization of acquisition-related intangible assets.

Our CET1 ratio(5) was 13.0% at January 31, 2024, compared with 12.4% at the end of the prior quarter. CIBC’s leverage ratio(5)(7) and liquidity coverage ratio(5) at January 31, 2024 were 4.3% and 137%, respectively.

Core business performance

Canadian Personal and Business Banking reported net income of $650 million for the first quarter, up $60 million or 10% from the first quarter a year ago, primarily due to higher revenue driven by higher net interest margin and volume growth and lower expenses, partially offset by a higher provision for credit losses. Adjusted pre-provision, pre-tax earnings(2) were $1,224 million, up $245 million from the first quarter a year ago, from higher revenue and lower adjusted(1) non-interest expenses mainly due to timing of spend on strategic initiatives.

Canadian Commercial Banking and Wealth Management reported net income of $498 million for the first quarter, up $29 million or 6% from the first quarter a year ago, primarily due to a lower provision for credit losses and higher revenue. The increase in revenue was primarily due to higher fee-based revenue from market appreciation and higher commission revenue from increased client activity in wealth management. Commercial banking revenue was comparable with the prior year as volume growth and higher fees were offset by lower loan and deposit margins. Expenses increased primarily due to higher performance-based compensation. Adjusted pre-provision, pre-tax earnings(2) were $705 million, up $19 million from the first quarter a year ago, primarily due to higher revenue in wealth management.

(1)

Certain information has been restated to reflect the adoption of IFRS 17. For additional information, see Note 1 to the interim consolidated financial statements of our Report to Shareholders for the first quarter of 2024 available on SEDAR+ at www.sedarplus.com.

(2)

This measure is a non-GAAP measure. For additional information, see the “Non-GAAP measures” section, including the quantitative reconciliations of reported GAAP measures to: adjusted non-interest expenses and adjusted net income on pages 3 and 4; and adjusted pre-provision, pre-tax earnings on page 5.

(3)

Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found in the “Glossary” section of our Report to Shareholders for the first quarter of 2024 available on SEDAR+ at www.sedarplus.com.

(4)

Average balances are calculated as a weighted average of daily closing balances.

(5)

Our capital ratios are calculated pursuant to the Office of the Superintendent of Financial Institution’s (OSFI’s) Capital Adequacy Requirements (CAR) Guideline and the leverage ratio is calculated pursuant to OSFI’s Leverage Requirements Guideline, all of which are based on the Basel Committee on Banking Supervision (BCBS) standards. The January 31, 2024 results reflect the impacts from the implementation of Basel III reforms related to market risk and credit valuation adjustments that became effective as of November 1, 2023. The first quarter of 2024 and the fourth quarter of 2023 reflected the impacts from the implementation of Basel III reforms that became effective as of February 1, 2023. For additional information, see the “Capital management” and “Liquidity risk” sections of our Report to Shareholders for the first quarter of 2024 available on SEDAR+ at www.sedarplus.com.

(6)

This item of note reports the impact on consolidated income tax expense that could be subject to an adjustment to our reported results in future periods if a Federal tax proposal were to be substantively enacted in its current form. The corresponding impact on TEB in Capital Markets and Direct Financial Services and Corporate and Other is also included in this item of note with no impact on the consolidated item of note.

(7)

The temporary exclusion of Central bank reserves from the leverage ratio exposure measure in response to the onset of the COVID-19 pandemic was no longer applicable beginning in the second quarter of 2023.

U.S. Commercial Banking and Wealth Management reported a net loss of $9 million (US$7 million) for the first quarter, down $210 million (US$157 million or 105%) from the first quarter a year ago, primarily due to higher expenses including a $91 million (US$67 million) charge related to the special assessment imposed by the FDIC, higher provision for credit losses, lower annual performance-based mutual fund fees, lower net interest income due to higher cost of deposits partially offset by higher loan margins, and higher employee-related compensation. Adjusted pre-provision, pre-tax earnings(1) were $302 million (US$224 million), down $40 million (US$31 million) from the first quarter a year ago, due to lower revenue and higher expenses.

Capital Markets and Direct Financial Services reported net income of $612 million for the first quarter, which was comparable with the first quarter a year ago, primarily due to higher revenue, offset by higher non-interest expenses and a higher provision for credit losses. Higher revenue from our global markets, investment banking and direct financial services businesses was partially offset by lower corporate banking revenue. Expenses were up due to higher spending on strategic initiatives and higher performance-based and employee-related compensation. Adjusted pre-provision, pre-tax earnings(1) were down $34 million or 4% from the first quarter a year ago as higher revenue was more than offset by higher expenses.

Credit quality

Provision for credit losses was $585 million, up $290 million from the same quarter last year. Provision for credit losses on performing loans was up as the same quarter last year included a favourable change in our economic outlook partially offset by a higher level of unfavourable credit migration. Provision for credit losses on impaired loans was up mainly due to higher provisions in Canadian Personal and Business Banking, and U.S. Commercial Banking and Wealth Management.

(1)

This measure is a non-GAAP measure. For additional information and a reconciliation of reported results to adjusted results, where applicable, see the “Non-GAAP measures” section.

Non-GAAP measures

We use a number of financial measures to assess the performance of our business lines as described below. Some measures are calculated in accordance with GAAP (International Financial Reporting Standards), 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, which include non-GAAP financial measures and non-GAAP ratios as defined in National Instrument 52-112 “Non-GAAP and Other Financial Measures Disclosure”, useful in understanding how management views underlying business performance.

Management assesses results on a reported and adjusted basis and considers both as useful measures of performance. Adjusted measures, which include adjusted total revenue, adjusted provision for credit losses, adjusted non-interest expenses, adjusted income before income taxes, adjusted income taxes, adjusted net income and adjusted pre-provision, pre-tax earnings, remove items of note from reported results to calculate our adjusted results. Adjusted measures represent non-GAAP measures. Non-GAAP ratios include an adjusted measure as one or more of their components. Non-GAAP ratios include adjusted diluted EPS, adjusted efficiency ratio, adjusted operating leverage, adjusted dividend payout ratio, adjusted return on common shareholders’ equity and adjusted effective tax rate.

Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found in the “Non-GAAP measures” section of our Report to Shareholders for the first quarter of 2024 available on SEDAR+ at www.sedarplus.com.

The following table provides a reconciliation of GAAP (reported) results to non-GAAP (adjusted) results on a segmented basis.

U.S.

Canadian

U.S.

Capital

Commercial

Canadian

Commercial

Commercial

Markets

Banking

Personal

Banking

Banking

and Direct

and Wealth

and Business

and Wealth

and Wealth

Financial

Corporate

CIBC

Management

$ millions, for the three months ended January 31, 2024

Banking

Management

Management

Services

and Other

Total

(US$ millions)

Operating results – reported

Total revenue

$

2,497

$

1,374

$

681

$

1,561

$

108

$

6,221

$

507

Provision for (reversal of) credit losses

329

20

244

8

(16)

585

182

Non-interest expenses

1,280

669

478

712

326

3,465

356

Income (loss) before income taxes

888

685

(41)

841

(202)

2,171

(31)

Income taxes

238

187

(32)

229

(179)

443

(24)

Net income (loss)

650

498

(9)

612

(23)

1,728

(7)

Net income attributable to non-controlling interests

12

12

Net income (loss) attributable to equity shareholders

650

498

(9)

612

(35)

1,716

(7)

Diluted EPS ($)

$

1.77

Impact of items of note (1)

Revenue

Recovery to income tax that would be eliminated by a Federal

   proposal, if enacted in its current form (2)

$

$

$

$

(52)

$

52

$

$

Impact of items of note on revenue

(52)

52

Non-interest expenses

Amortization of acquisition-related intangible assets

(7)

(8)

(15)

(6)

Charge related to the special assessment imposed by the FDIC

(91)

(91)

(67)

Impact of items of note on non-interest expenses

(7)

(99)

(106)

(73)

Total pre-tax impact of items of note on net income

7

99

(52)

52

106

73

Income taxes

Amortization of acquisition-related intangible assets

2

2

4

1

Recovery to income tax that would be eliminated by a Federal

   proposal, if enacted in its current form (2)

(15)

52

37

Charge related to the special assessment imposed by the FDIC

23

23

17

Impact of items of note on income taxes

2

25

(15)

52

64

18

Total after-tax impact of items of note on net income

$

5

$

$

74

$

(37)

$

$

42

$

55

Impact of items of note on diluted EPS ($)

$

0.04

Operating results – adjusted (3)

Total revenue – adjusted (4)

$

2,497

$

1,374

$

681

$

1,509

$

160

$

6,221

$

507

Provision for (reversal of) credit losses – adjusted

329

20

244

8

(16)

585

182

Non-interest expenses – adjusted

1,273

669

379

712

Full story available on Benzinga.com


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