Canadian Imperial Bank of Commerce

(CIBC) eclipsed expectations in the first quarter, mainly driven by strong growth in its capital markets segment, continuing a two-year winning streak.

The bank said net income for the three months ending Jan. 31 was about $3.1 billion, up 30 per cent from $2.17 billion during the same period a year earlier. Profit was $3.21 per diluted share, up 47 per cent from $2.19 a year ago.

On an adjusted basis, which excludes the impact of nonrecurring items,

CIBC earned

$2.76 per diluted share, up from $2.20 a year ago and above the average analyst estimate of $2.40, according to LSEG Data & Analytics.

While CIBC reported record revenues across all business units, its

capital markets division’s

net income was $877 million, up $258 million or 42 per cent from a year ago.

“This quarter, our capital markets platform captured elevated volume from client-driven demand complemented by healthy referral activity from our commercial and wealth businesses,” chief executive Harry Culham, who succeeded long-time CEO

Victor Dodig

in November, said during the

earnings call

.

The bank’s return on equity (ROE) was 20.2 per cent, up 500 basis points from the prior year. Its adjusted ROE was 17.4 per cent, up 210 basis points from a year ago. Expenses were up 12 per cent from a year ago.

CIBC’s operating leverage was 3.6 per cent in the first quarter, marking the 10th consecutive quarter for positive operating leverage.

“It’s nice to have a 10-quarter winning streak, for sure, and we intend to continue it,” Culham said.

Its Canadian personal and business banking segment had adjusted net income growth of 25 per cent and pre-provisioned earnings growth of 19 per cent, which were driven by margin expansion, loan growth and higher fee-based revenue, chief financial officer Robert Sedran said.

He said expenses were up seven per cent due to higher spending on technology and other strategic initiatives, plus employee compensation.

Culham said CIBC is investing in technology, data and artificial intelligence to “drive operational excellence and further modernize our bank” through increasing operational efficiency and risk mitigation.

Adjusted net income growth for Canadian commercial banking and wealth management was up nine per cent, while its pre-provisioned earnings growth was up 16 per cent.

Canadian commercial banking

revenues grew nine per cent, due to loan volume growth and margin expansion, and wealth management revenue growth of 16 per cent was propelled by higher average fee-based assets and higher commissions from increased client activity, Sedran said.

CIBC reported 90-plus-day delinquency rates rose quarter over quarter, mainly driven by the credit card portfolio. Frank Guse, CIBC’s chief risk officer, said these rates reflect some seasonality as well as the ongoing macroeconomic environment.

Impaired provisions for credit losses (PCLs),

the money banks set aside to cover loans that might default,

were in line with expectations, according to a note to investors from TD Cowen analysts. It said consumer credit continues to soften, with consumer and mortgage delinquencies higher.

Guse said the bank is still seeing some softness in the economy, including higher unemployment and Canada-United States–Mexico Agreement negotiations on the horizon.

“There’s some uncertainty still ahead of us, but I’m not overly concerned with those numbers,” he said. “We have the right strategies underneath, both from a business perspective and from a risk management perspective, to manage those portfolios very proactively.”

• Email: slouis@postmedia.com

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