(Toronto) CIBC’s second-quarter results showed profits up from last year as the bank’s share of bad loans benefited from efforts to reduce its exposure to the US office segment -United.
The bank announced Thursday that it made a profit of 1.75 billion, or $1.79 per share, for the quarter ended April 30, up from 1.69 billion, or $1.76 per share, in same quarter of last year.
Revenues totaled $6.16 billion in the quarter, up from $5.70 billion a year ago.
Profits were also helped by provisions for credit losses which, although up compared to last year, fell from the previous quarter, avoiding the steady rise seen at most other banks.
CIBC’s allowance for credit losses in the quarter was $514 million, up from $438 million a year earlier, but down 12% from the previous quarter.
The improvement came as the bank worked to reduce its U.S. commercial loan portfolio, which was struggling as labor trends reduced demand for office space.
“We continue to de-emphasize certain segments of our institutional and commercial real estate businesses,” President and CEO Victor Dodig said during an earnings conference call Thursday.
The bank has reduced its U.S. commercial loan balance by nearly $1 billion since the second quarter of last year, while its gross impaired loan ratio fell to 10.3% in the second quarter, compared to 19.7% in the first quarter.
The sector, however, remains an area of increased risk for the bank. The ratio of provisions to total loans stands at 1.2% for the U.S. commercial sector, compared to 0.34% for the bank as a whole and for its Canadian personal and commercial segment.
The Canadian banking sector saw a slight decline from the previous quarter, but the bank expects provisions to increase this year due to continued high interest rates.
“We continue to expect (provisions for credit losses) to increase a little more in the second half,” Frank Guse, chief risk officer, said on the conference call.
“This was to be expected given the macroeconomic environment, but overall we remain very satisfied with our performance and credit quality in the Canadian consumer portfolio,” he added.
On an adjusted basis, CIBC says it earned $1.75 per share in its most recent quarter, up from adjusted earnings of $1.70 per share in the same quarter last year.
Analysts on average expected earnings of $1.65 per share, according to LSEG Data & Analytics.
CIBC’s weaker-than-expected credit provisions were a key reason for the positive balance sheet, while analysts also pointed to higher revenues and lower taxes as other factors.
The bank said its personal and commercial banking operations in Canada brought in $649 million in the second quarter, up from $638 million a year earlier. The segment was helped by higher revenue due to higher net interest margin, volume growth and the impact of an additional day in the current quarter.
The Canadian commercial banking and wealth management business generated $456 million in its latest quarter, up from $452 million in the same quarter last year.
Meanwhile, CIBC’s U.S. commercial banking and wealth management business generated a profit of $93 million, up from $55 million a year ago.
CIBC’s Capital Markets and Direct Financial Services unit raised $560 million, compared to $497 million in the same quarter last year.
The bank’s corporate and other group reported a loss of 9 million in its latest quarter, compared with a profit of 47 million a year ago.