(Toronto) CIBC has invested in various growth opportunities, such as its rebranding and the acquisition of the Costco credit card portfolio, and both the costs of these transactions and their benefits are starting to show on its balance sheet.
The bank said on Thursday that its revenue rose 10% in the fourth quarter, from a year ago to $ 5.06 billion, thanks to growth in lending volume, transaction fees and adding clients to its capital markets division.
However, costs also increased, 7% from the previous quarter and 8% from a year ago, mainly due to higher employee compensation, but also strategic initiatives.
CIBC CEO Victor Dodig said the bank is investing for future growth in all aspects of the organization, from its new head office in Toronto to bank branches and new technologies.
“The general theme of our bank and our strategic objective as a management team is to continue to invest to increase our market share at the expense of our competitors,” he explained during a conference call with analysts to discuss the most recent quarterly results.
The bank posted fourth-quarter earnings of $ 1.4 billion, or $ 3.07 per share, for the quarter ended Oct. 31, which compares to earnings of $ 1 billion, or $ 2.20 per share, in the same quarter of last year.
Excluding one-time items, CIBC achieved an adjusted profit of $ 3.37 per share, up from $ 2.79 per share in the same quarter last year.
Analysts on average expected the bank to make adjusted earnings of $ 3.53 per share, according to forecasts collected by financial data firm Refinitiv.
This delay compared to forecasts is mainly attributable to higher than expected expenses, as well as an increase of $ 78 million in provisions for credit losses, while analysts expected a decrease in this chapter.
Scotiabank analyst Meny Grauman said in a note that the details of those financial results were better than key data might suggest, as the increase in the bad debt allowance was tied to a change in metrics. banking rather than the risk environment, while spending climbed in part due to the bank’s rebranding.
“The bank’s message about its spending continues to insist on further reinvestment in the business, but despite the headwind of inflation for fiscal 2022, management continues to expect leverage. Positive operating performance for the full year thanks to continued strong revenue growth. ”
Barclays analyst John Aiken noted in a note that the bank’s lending growth was strong in Canada and the United States, and operating leverage could remain positive despite the bank’s investments.
The bank announced Thursday that it will now pay a quarterly dividend of $ 1.61 per share, down from $ 1.46 previously. CIBC has also indicated that it intends to repurchase up to 10 million of its shares.
The Office of the Superintendent of Financial Institutions (OSFI) last month lifted restrictions put in place at the start of the pandemic, which prohibited banks and insurers from raising their dividends, repurchasing their shares, or increasing their compensation. leaders.
Annual profit of 6.4 billion
CIBC said its Canadian personal and business banking operations made a profit of $ 597 million, up from $ 590 million a year ago, while commercial banking and management wealth in Canada rose $ 442 million, up from $ 340 million in the same quarter last year.
In the United States, commercial banking and wealth management posted profits of $ 256 million, up from $ 135 million a year ago.
CIBC’s capital markets operations increased $ 378 million, up from $ 310 million in the same quarter last year.
For its full year, CIBC made a profit of 6.4 billion, or $ 13.93 per share, compared to a profit of 3.8 billion, or $ 8.22 per share, a year earlier. Its revenues totaled 20 billion, against 18.7 billion in the previous fiscal year.