CIBC Earnings Beat Expectations After PrivateBancorp Purchase -- Update

By Cara Lombardo Features Dow Jones Newswires

Canadian Imperial Bank of Commerce beat revenue and earnings estimates in its latest quarter as it completed its $5 billion acquisition of PrivateBancorp Inc.

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Toronto-based CIBC said Thursday net income dropped from a year ago to 1.1 billion Canadian dollars ($880 million) from C$1.44 billion. But excluding one-time items such as purchase costs and legal fees, CIBC's net income rose 9% year-over-year.

CIBC reported adjusted earnings per share of C$2.77, compared with C$2.67 a share a year ago. The bank's adjusted revenue rose 8% to C$4.13 billion ($3.3 billion), while unadjusted revenue dropped 1%. Analysts polled by Thomson Reuters were expecting C$2.66 in adjusted earnings per share on C$3.98 billion in revenue.

The beat can be primarily tied to lower-than-expected loan losses, said Gabriel Dechaine, an analyst with the National Bank Financial.

Still, losses in the bank's U.S. real estate finance portfolio prompted CIBC to increase its provision for credit losses to C$209 million in its latest quarter, a 3% rise from a year ago when adjusted for nonrecurring items.

Net interest income grew 8% to C$2.28 billion and fee-based income dropped 10% to C$1.83 billion.

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In the latest period, earnings from retail and business banking rose 8% as the bank increased volume, especially on residential mortgages, and charged higher fees.

Canadian wealth-management profit rose 10%, driven by growing asset balances and higher commissions, when adjusted to exclude the impacts of a C$383 million gain from an investment sale a year ago.

Capital-markets adjusted earnings dropped 13% due to lower trading revenues and lower equity underwriting revenue.

U.S. commercial banking and wealth-management net income rose 74% from a year ago as the bank integrated Chicago-based PrivateBank's results into the quarter.

The acquisition is a "pivotal milestone as we create a strong cross-border platform," CIBC Chief Executive Victor Dodig said.

CIBC's takeover of PrivateBancorp closed in late June, ending a turbulent monthslong pursuit. The bank incurred a C$38 million charge in the quarter related to transaction and integration costs.

The bank also plans to buy Geneva Advisors, a wealth-management firm based in Chicago, in a deal expected to close in its fourth quarter. CIBC will pay up to $200 million, depending on performance.

The bank also raised its quarterly dividend 2% to C$1.30.

Write to Cara Lombardo at cara.lombardo@wsj.com

(END) Dow Jones Newswires

August 24, 2017 09:08 ET (13:08 GMT)