CIBC, along with its peers, posts a sharp rise in provisions. CIBC Q2 2023 provisions for credit losses of C$438m ($321.9m) compare with C$135m in the year ago quarter. But unlike its peers, CIBC second quarter earnings beat analyst forecasts. And CIBC is also able to post a rise in net income, up by 10% to C$1.69bn for the three months to end April.

“We continued to execute on our client-focused strategy. We delivered solid financial results in the second quarter by leveraging the investments we’ve made in high-touch, high-growth markets and furthering our strengths in talent and technology,” said Victor Dodig, President and CEO, CIBC.

“In a more fluid economic environment we remain well capitalised. Our well-diversified business provides resilience, as we help make ambitions real in the second half of the fiscal year.”

CIBC Q2 2023 highlights

Revenue is ahead by 6% y-o-y to C$5.7bn. Net interest income rises by 3% y-o-y, non-interest income by 10% y-o-y.

The bank’s net interest margin in the second quarter increases by 5 basis points from the previous quarter to 1.54%. The bank’s capital equity tier 1 ratio, of 11.9% this quarter is up from 11.6% in the previous quarter. Successful cost control results in expenses rising by just 1% y-o-y. Deposits are ahead by 5.8% with loans ahead by 8.6%. CIBC reports net new client growth of 375,000 customers.

CIBC increases its quarterly dividend from $0.85 to $0.87 per share for the quarter ending 31 July.

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Canadian Personal and Business Banking

The unit reports net income of C$637m million, up 28% from the second quarter a year ago. This is primarily due to higher revenue and a lower provision for credit losses. This is partially offset by higher non-interest expenses.

Adjusted pre-provision, pre-tax earnings of C$1.01bn increase by C$50m from the year ago quarter. Higher revenues are primarily driven by higher net interest margin. Volume growth is partially offset by higher expenses. Expenses are higher mainly due to employee-related costs.

Canadian Commercial Banking and Wealth Management

The unit reports net income of C$452m, down 6% y-o-y. The reduction is primarily due to a provision for credit losses in the current quarter. This compares with a provision reversal in the prior year quarter and higher non-interest expenses. This is partially offset by higher revenue. Adjusted pre-provision, pre-tax earnings of C$663m are up C$15m y-o-y. This is primarily due to volume growth, higher net interest income from improved margins, and higher fees in commercial banking. Expenses increased primarily driven by the timing of expenditures. But this is partially offset by lower performance-based compensation.

US Commercial Banking and Wealth Management

The unit posts net income of C$55m, down by 72% y-o-y. This is primarily due to a higher provision for credit losses and higher non-interest expenses. This is partially offset by higher revenue and the impact of foreign currency translation. Adjusted pre-provision, pre-tax earnings are C$312m, ($229m), up C$24m y-o-y. This is due to higher revenue, primarily driven by volume growth and higher net interest margin, and the impact of foreign currency translation, partially offset by lower asset management fees and higher employee-related costs.

Capital markets profit also dips, down by 8% y-o-y to C$497m.