Lending markets

Canadian CIBC and National Bank earnings beat estimates on loans and market units

The new logo of the Canadian Imperial Bank of Commerce (CIBC) is seen on a building in Toronto, Ontario, Canada September 27, 2021. REUTERS/Chris Helgren/File Photo/File Photo

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TORONTO, Feb 25 (Reuters) – The Canadian Imperial Bank of Commerce (CIBC) (CM.TO) and National Bank of Canada (NA.TO) comfortably beat analysts’ estimates for quarterly profit on Friday, helped by growth loans and fees, and the strength of their capital markets operations.

The lenders join Royal Bank of Canada (RY.TO) in posting positive earnings surprises in a quarter in which analysts expected some challenges, in particular higher spending and a lower contribution from commercial activities after a record quarter a year earlier. Read more

CIBC shares jumped 4% to C$161.09, while National Bank added 1.5% to C$102.27 in early trading, compared to a 0.2% rise in the index Toronto Stock Benchmark (.GSPTSE).

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CIBC, Canada’s fifth-largest lender, announced a two-for-one stock split, subject to approval at its annual meeting of shareholders scheduled for April. It reported adjusted earnings that rose 14% year-on-year in the three months to Jan. 31, better than analysts had expected. Read more

About two-thirds of CIBC’s revenue overshoot was due to trading activities and the rest to “core banking outperformance,” National Bank Financial analyst Gabriel Dechaine wrote in a note.

CIBC posted an 11% increase in expenses in the quarter, the same increase as revenue growth, compared to a year ago, although they were down from the previous quarter, when the bank has seen cost increases outpace revenue expansion. National Bank recorded 8% growth in expenses compared to revenues that increased by 11% compared to the previous year find out more

CIBC expects high-single-digit expense growth if revenue continues to rise, but remains confident the latter will outpace cost expansion, executives said on a call with analysts .

National Bank, the smallest of the nation’s Big Six banks, said its net profit excluding special items rose to C$2.65 per share from C$2.15 a year earlier, beating estimates of 2. $23 CAD. Read more

Both banks recorded an 11% growth in their capital markets revenues compared to the previous year. They also reported the strength of their Canadian commercial loan books, underscoring the return of commercial borrowers who had been in decline for most of the pandemic, although deposits also continued to climb.

About 40% of CIBC’s loan growth came from new customers, and the bank’s pipeline for future increases is the strongest since 2019, executives said on a call with analysts.

Overall, higher lending volumes helped to mitigate lower net interest margins in both banks’ lending units.

In addition, the National Bank has announced that it has appointed Marie Chantal Gringas as Chief Financial Officer.

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Reporting by Nichola Saminather in Toronto; Additional reporting by Sohini Podder and Manya Saini in Bengaluru; Editing by Sherry Jacob-Phillips, Susan Fenton, Chizu Nomiyama and Marguerita Choy

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