(Bloomberg) -- Canadian Imperial Bank of Commerce came ahead of analyst expectations with gains across all segments, particularly with strength in the capital markets business.
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The Toronto-based lender reported adjusted earnings of C$2.20 per share for the fiscal first quarter ending Jan. 31, compared to the C$1.97 average estimate of analysts in a Bloomberg survey. The earnings beat the highest estimate on the street, which was C$2.08 per share.
Capital markets profit clocked in at C$619 million ($431.7 million), up 19% from a year earlier, boosted by higher equity derivatives trading and debt underwriting activity. Expenses in this segment grew 19% with higher performance-based compensation, volume expenses and more costs associated with building out infrastructure.
CIBC set aside less money for loans potentially going sour, booking C$573 million in provisions for credit losses. That’s down C$12 million from a year earlier. Analysts were expecting the bank to set aside nearly C$548 million.
Provisions for losses on performing loans were higher largely due to a worsening economic outlook, including uncertainty around tariffs President Donald Trump has promised to impose on imports from Canada, the lender said.
“Our diversified business platform, robust capital position and strong credit quality give us the foundation to deliver for stakeholders in the year ahead, including support for our clients as we navigate the expected volatility in the cross-border business environment,” said Chief Executive Officer Victor Dodig in a statement.
The bank plans to focus on affluent households and build on its private wealth franchise as one of the key goals in achieving its return-on-equity targets. In an investor presentation, management said the mass affluent household segment represents 80% of total investable assets and that segment is growing over four times faster than the rest of the client base.
Canada’s fifth-largest bank has more domestic exposure than its peers, which prompted National Bank of Canada analyst Gabriel Dechaine to argue that it could face more pressure as the banks contend with a potential trade war between Canada and the US.
(Updates with capital markets expenses in third graf, private wealth information in graf 7)