$CM.TO

CIBC Provision For Credit Losses $605 Million, Comparable With Same Quarter Last Year

CIBC Also Announced Agreement to Sell its 91.67% interest in CIBC Caribbean to Butterfield For a Total Near US$1.6 Billion

CIBC Q2 Revenue $8,006M

CIBC Q2 Adjusted Diluted EPS $2.54

TSX Closer: The Index Falls for a Second Day After Monday's Record Close Amid Rise In Canadian Credit Stress

The Toronto Stock Exchange closed lower on Wednesday, falling for a second session following Monday's record close, on more profit taking and weak commodity prices, while one analyst said Bank of Nova Scotia's (BNS.TO) credit outlook "becomes more cautious" after it reported fiscal second-quarter earnings and a pair of economists noted credit stress is "rising, not breaking" in Canada.The resources-heavy S&P/TSX Composite Index closed down 241.82 points, or 0.7%, to 34,412.05, adding to the near 170 points lost Tuesday. Most sectors were lower, led by Energy, down 2.35% on lower oil. Base Metals eased about 0.2%, not helped by a drop in the gold price. Among gainers, both Industrials and Telecom rose by about 0.7%, respectively.The Financial sector lost near 0.3% on a day when the trio of Scotiabank, Bank of Montreal (BMO.TO) and National Bank (NA.TO) each reported their respective fiscal Q2 results. Canadian Imperial Bank of Commerce (CM.TO), Royal Bank of Canada (RY.TO) and Toronto-Dominion Bank (TD.TO) will each report theirs Thursday.On Scotiabank, National Bank noted it reported Q2 core cash EPS of $2.02 versus a National Bank estimate of $1.87 and consensus of $1.93. Among key takeaways, National Bank said although Scotiabank beat its, and consensus, expectations, it has a "mixed view" of the quarter. On the positive side, National Bank said the Canadian P&C business delivered its best quarter in a long time, an important "deliverable" vis-a-vis Scotiabank's double-digit EPS growth target for the year. But on the negative side, National Bank said Capital Markets results missed consensus expectations and the bank's guidance range. More importantly, it added, credit losses were higher than expected, which resulted in the adoption of more conservative second half credit performance guidance. National Bank has kept a sector-perform rating and C$106 target on Scotiabank's shares.Still on credit stress in Canada, the National Bank Economics and Strategy Group noted total debt in insolvency reached its highest level since the 2009 financial crisis in the first quarter, according to data from Equifax. Economists Daren King and Matthieu Arseneau said this increase may seem alarming and raises concerns about the financial health of Canadian households. But, they asked, is the situation really as concerning as it seems?To gain a clearer picture, the National Bank duo analyzed data from the Office of the Superintendent of Bankruptcy, which tracks the total number of insolvency filings (bankruptcies and consumer proposals) across the country. They noted this data also shows that the number of insolvencies reached its highest level since the financial crisis in the first quarter. However, King and Arseneau said, two adjustments are necessary to correctly interpret the trend in insolvencies. The first concerns seasonality, since the first half of the year is historically associated with a higher volume of insolvencies. The second involves accounting for the strong population growth observed since 2009, as the Canadian population has increased by approximately 25% over this period.According to the pair, once the data is seasonally adjusted and expressed on a per capita basis, the insolvency rate remains well below the peak reached in the wake of the financial crisis and is even below its pre-pandemic level of 2019. They said the upward trend observed since 2022 therefore reflects a normalization from an exceptionally low pandemic trough rather than a widespread breakdown in household credit. This does not mean, however, that the situation should be downplayed, they added."The rise in the insolvency rate over the past year reflects a more fragile labour market, high interest rates, and a still-high cost of living, particularly for housing, food, and energy, which continue to put pressure on many households. However, the data does not support the narrative of systemic credit risk suggested by some media headlines. The most accurate interpretation remains more nuanced: financial strains are increasing, but their magnitude remains moderate by historical standards for now," King and Arseneau said.Of commodities, West Texas Intermediate crude oil plunged 5.6% on expectations the United States and Iran are nearing a deal to reopen the Strait of Hormuz and end the largest-ever energy supply shock. WTI crude oil for July delivery closed down US$5.21 to settle at US$88.68 per barrel, the lowest since April 20, while July Brent oil was down US$5.30 to US$94.28.Also, gold fell to a two-month low, even as the dollar dipped and oil prices weakened ahead of an expected peace deal to end the war on Iran, easing inflation worries. Gold for July delivery was down US$52.60 to US$4,482.40 per ounce, the lowest since March 26.

TSX Closer: The Index Falls From a Record Close Ahead of Canada's Banks Earnings Season

The resources-heavy Toronto Stock Exchange closed lower on Tuesday, falling off the record high set a day earlier on some profit taking and weaker commodity prices, while nagging economic concerns continue to weigh, with Canada's big banks facing rising insolvencies amid a weak housing market and National Bank saying Ottawa's trade-diversification target has a scale problem.The S&P/TSX Composite Index fell 177.02 points, or 0.5%, to 34,653.87. Most sectors were higher, led by the Battery Metals Index, up 5.5%, and Base Metals, up 2%, despite a lower gold price. Decliners were led by Info Tech, down 1.6%, and Health Care, down 1.3%.Financials was also down 0.5% ahead of the start of bank earnings season on Wednesday.Profits at Canada's largest banks are expected to have increased despite trade tensions, the Middle East conflict and broader economic uncertainty, but now face tougher tests as more consumers struggle to pay debts and a subdued housing market weighs on their core domestic business, according to a Reuters preview.The big banks; Royal Bank of Canada (RY.TO), Toronto-Dominion Bank (TD.TO), Bank of Montreal (BMO.TO), Bank of Nova Scotia (BNS.TO), Canadian Imperial Bank of Commerce (CM.TO) and National Bank of Canada (NA.TO), which together control more than 90% of the market, are expected to report strong second-quarter earnings starting on Wednesday, helped by trading revenue and their capital markets businesses, Reuters said."Banks have been beating expectations consistently for the past two years, With credit losses stubbornly elevated and margin expansion potentially stalling this quarter, the onus falls on the capital markets business to deliver, yet again," National Bank analyst Gabriel Dechaine is cited as saying.On the economy, National Bank said Statistics Canada's 2025 goods exporter data underscore the scale problem embedded in Ottawa's ambition to double non-U.S. exports within the next decade. The bank cited a chart that shows Canada counts nearly 48,000 goods exporting enterprises, but 82% of them employ fewer than 50 workers despite accounting for only 14.3% of total goods exports, while firms with 500 or more employees represent a tiny fraction of exporters but close to 60% of export value."This is not a marginal complication. Diversification is not simply a matter of redirecting shipments away from the U.S. market; it requires financing, compliance capacity, distribution networks, foreign-market intelligence, currency-risk management and the ability to withstand a long sales cycle before new relationships become profitable," National Bank said."For smaller firms, the constraint is structural because many are embedded in North American supply chains built around proximity, recurring customer relationships, integrated logistics and production specifications that are not easily replicated overseas."National Bank added: "The irony is that Ottawa's target may be easier to meet in aggregate than in substance. Canada can raise non-U.S. export values through commodities and other scale-intensive sectors where global demand is deep and output is more readily redirected across markets. But that path does less for the employment-intensive parts of the export base, where supply-chain links are stickier and diversification costs are proportionally higher. The result is a policy tension that could be masked by headline GDP. A resource-led export pivot may improve the arithmetic of diversification while smaller exporters face higher costs, thinner margins and greater risk of lost capacity. If building scale is part of the desired outcome, then trade policy cannot be separated from the domestic incentives that shape firm size, including the small-business tax kink highlighted in our MCIA/RBI work."Of commodities, gold edged lower by midafternoon Tuesday even as the dollar and yields fell as fresh U.S. strikes on Iran heightened concerns over the progress of peace talks between the two countries. Gold for July delivery was down US$16.90 to US$4,539.50 per ounce.Also, West Texas Intermediate crude oil closed lower on uncertainty around geopolitical tensions across the Middle East. WTI crude oil for July delivery closed down US$2.71 to settle at US$93.89 per barrel, while July Brent oil was last seen up US$3.40 to US$99.54.

CIBC On the Week Ahead In Canada Economics

According to Avery Shenfeld, Canada has told a "one-step-forward, one-step-backward story" for quarterly GDP going back to the spring of 2025, and he said we're due for a "respectable gain" in Q1 data next Friday on the heels of the decline posted in Q4. While CIBC's 1.7% forecast on quarterly annualized is a bit above consensus for 1.4%, that will be offset by a flat reading for March GDP that will signal a softer, but not negative, quarterly growth rate for Q2, Shenfeld said. CIBC sees 0.0% for March GDP versus a consensus 0.1%.On the current account deficit, Shenfeld said it will "look a lot better" in Q2, but he added the first quarter data due out next Thursday won't pick up enough of the benefit from higher oil prices that will show up in the spring data. CIBC sees a deficit of $4.7 billion compared to a consensus deficit of $2.5 billion.Also on the CIBC diary for next week, Nicolas Vincent, External Deputy Governor at the Bank of Canada, will deliver a speech in CIRANO, Montreal, Quebec, at 8.30am on Tuesday. Then there will be the auction of $5 billion in 10-YR CANADAS on Wednesday.Thursday also sees the release of March Payrolls data and the BoC's Financial Stability Report and Financial System Survey, an assessment of potential risks to the stability of Canada's financial system. The Governor and Senior Deputy Governor will hold a press conference at 11am ET to discuss the contents of the Report.Note: US markets are closed Monday for the Memorial Day holiday.Price: $160.20, Change: $+1.93, Percent Change: +1.22%

Canadian Banks Still Priced For Positive EPS Surprises, National Bank Says in a Q2 Preview

Bank stocks are up 13% so far this year, outperforming the S&P/TSX by 550 basis points, notes National Bank in its second-quarter earnings preview of the sector.Analyst Gabriel Dechaine writes that since the end of the first-quarter reporting season, Canadian banks have outperformed the market by 800 bps."Betting against the banks has been unwise, with them consistently beating expectations over the past two years," he warns, adding that, trading at 14x on forward EPS, the group is priced for positive EPS surprises or revisions. Barring a margin or credit surprise, the onus falls on the Capital Markets to deliver this outcome, which isn't impossible considering several favorable market conditions.Dechaine's top picks are Royal Bank of Canada (RY.TO) and Toronto-Dominion Bank (TD.TO).The U.S. loan growth factor would also be supportive of BMO (BMO.TO), considering the importance of its U.S. P&C segment's top-line expansion towards achieving the 12% ROE mark sometime in 2027, Dechaine adds.Price: $251.72, Change: $-0.71, Percent Change: -0.28%

CIBC Says Strong Earnings From Banks Due to Capital Markets in Q2 Preview, Downgrades National Bank

CIBC recommends investors rotate money out of banks into lifecos, even as it expects a strong second-quarter earnings from the sector when it starts reporting on May 27. Analyst Paul Holden, who notes that the strong earnings will be predominately based on capital markets activity, has also downgraded National Bank (NA.TO) to neutral.Holden says the credit outlook is incrementally worse and he is getting more cautious on credit losses given the weakness in Canadian unemployment, a soft housing market in the GTA, and industry credit metrics. Loan growth is expected to remain muted and net interest margin is also likely to be less of a tailwind this quarter. "We would not be surprised to see the banks report EPS beats again this quarter, but perhaps like the U.S. banks, capital markets-driven beats will no longer be good enough to drive the stocks higher."National Bank is downgraded to neutral from outperform, with Holden pointing out that "two years' worth of returns were delivered in three months". The stock is up ~20% in the past three months and is now trading at the highest multiple in the group (9% premium on F2027 consensus). Fiscal 2028 consensus estimates are giving full credit for ROE expansion, Holden adds.BMO (BMO.TO) is Holden's only outperformer-rated bank as there is still upside potential to consensus estimates relative to its 15% ROE target. "With the recovery in U.S. commercial loan growth, there is also a possibility that U.S. balance sheet growth comes in higher than expected. We also think the relative skew to the U.S. can help with impaired PCLs in the near term."BMO is trading at a 5% discount to the group average P/E and a strong quarter that demonstrates continued progress towards ROE targets should help the stock.Price: $203.95, Change: $-0.69, Percent Change: -0.34%

TD Bank Upgraded, Royal Bank Downgraded at Raymond James

Toronto-Dominion Bank (TD.TO) was upgraded to Outperform from Market Perform, and Royal Bank of Canada (RY.TO) was downgraded to Market Perform from Outperform at Raymond James.Analyst Stephen Boland raised his price target on TD to $152.50 from $141, and on Royal Bank to $265.50 from $248.Boland increased his targets on Bank of Montreal (BMO.TO) to $227 from $214 (Outperform), Bank of Nova Scotia (BNS.TO) to $120 from $117 (Outperform), CIBC (CM.TO) to $157.50 from $148.50 (Market Perform), and National Bank of Canada (NA.TO) to $206.50 from $200 (Market Perform)."We believe TD is reasonably valued relative to improving fundamentals and have increased confidence in management's ability to execute on its strategic priorities," the analyst said in a note to clients."TD also benefits from above-average US exposure, where the NIM and loan growth outlook are more favourable than in Canada," Boland said."We continue to view RBC as a scaled, diversified franchise with a lower-volatility earnings profile," the analyst said. "However, those same attributes may limit relative upside this quarter.""In a stronger trading revenue environment, RBC's greater exposure to rates and credit trading may benefit less than peers with higher exposure to equities, currencies, and commodities," Boland said."With RY trading at roughly a one-turn P/E premium to the peer group (excl. RY), we believe the stock is priced to execute, and the absence of a larger trading revenue uplift could limit near-term upside."

TSX Closer: A Lower Close Amid Uncertainty Over Peace Talks; Rosenberg Research On Canadian Banks

The Toronto Stock Exchange was back in negative territory Thursday with both the Base Metals and Energy sectors lower, and amid reports Iran is still reviewing a peace proposal put forward by the United States, while the two nations wrestle over talks to end the war.The S&P/TSX Composite Index closed down 125.2 points to 33,856.62, as Base Metals, down 1.7%, and Energy, down 1.4%, led decliners. In contrast, the Battery Metals Index led gainers, rising 7.8%.Reflecting the overall negative tone to the market, the Financial sector lost 0.4% even as Rosenberg Research published a note entitled 'Canadian Banks: Quality at a Premium Price' in which it said secular market themes continue to support Canadian banks' premium valuations, as the sector benefits from rising global interest in non-U.S.-dollar, commodity-based economies.Key takeaways from the note written by Mehmet Beceren, Senior Markets Strategist at Rosenberg, include the idea that Canadian banks are benefiting from more than bank fundamentals. As heavyweights in the Canadian equity index, the Big Six are getting a side benefit from global flows into Canada as investors seek exposure to hard assets, commodities, oil, gold, and non-U.S.-dollar markets, Beceren said.Another takeaway is that the quality premium is defensible. "Valuations are not cheap relative to history, but high profitability and supportive thematic tailwinds justify higher multiples in a market that continues to re-rate quality earnings," Beceren added.Of commodities, West Texas Intermediate crude oil fell for a third-straight session, but rose off the day's low on uncertain prospects for a potential peace deal between the United States and Iran. WTI crude oil for June delivery closed down $0.27 to settle at US$94.81 per barrel, after earlier touching US$89.85. July Brent oil was down $0.67 to US$100.60Gold had risen for a third-straight session by midafternoon Thursday on optimism a deal to end the war on Iran may be near, cutting into oil prices and pushing the dollar lower amid easing fears the supply shock around the war would boost inflation and force higher interest rates. Gold for June delivery was up $20.60 to US$4,714.00 per ounce, after rising by US$125,80 on Wednesday.

CIBC Now Has a Total of 131 CDRs, Spanning Six Countries

CIBC Announcing 15 New U.S. Canadian Depositary Receipts, Now Listed on TSX and Available For Trading

TSX Closer: Index Down In All But 1 of the Last 8 Sessions; Morningstar Cites 10 Top-Performing Dividend Stocks

The Toronto Stock Exchange has closed lower in all but one of the last eight sessions, with the latest losses on this Tuesday coming as U.S. Defense Secretary Pete Hegseth said the US-Iran ceasefire "is not over" despite attacks in the Strait of Hormuz yesterday.The S&P/TSX Composite Index closed down 71.96 points, or 0.2%, at 33.566.91, even as most sectors were higher, led by Health Care, up 2.5%, followed By Base Metals, up 2%, and Energy, up 1.4%. Information Technology was down near 4.2% and the Battery Metals Index was down 2.6%.Among individual stocks, BNN Bloomberg TV cited Ero Copper, up more than 5% today and up just short of 100% over one year. The company reported first-quarter results earlier Tuesday. BNN also cited Parex Resources (PXT.TO), up near 5% as Frontera (FEC.TO) obtained a final order approving their plan of arrangement.On the negative side, BNN cited Shopify (SHOP.TO), down more than 15% after its Q1 results, and Keyera (KEY.TO), which lost more than 7% as the Competition Bureau moved to block its $5.15-billion acquisition of Plains All American Pipelines Canadian natural-gas liquids business.Still on individual stocks, Morningstar Canada said the top performing dividend payers in April included engineering and construction company Aecon (ARE.TO), Canadian Imperial Bank of Commerce (CM.TO), and asset management firm IGM Financial (IGM.TO). Morningstar noted dividend-paying stocks that "combine healthy balance sheets with hefty yields" can provide investors with "steady incomes, cushion against market downturns, and grow investments at a healthy clip".A screening of the Morningstar Canada Index, which measures the performance of Canada's broad regional markets, targeting the top 97% of stocks by market capitalization, for companies with a forward dividend yield of at least 1.5%, excluding real estate investment trusts, showed the best performing Canadian dividend stocks last month. This included the aforementioned Aecon, CIBC and IGM. The list also included National Bank of Canada (NA.TO), TD Bank Group (TD.TO), Industrial Alliance Insurance and Financial Services (IAG.TO), Power Corporation of Canada (POW.TO), TMX Group (X.TO), Sun Life Financial (SLF.TO) and Superior Plus (SPB.TO).Of commodities, gold traded higher by midafternoon, rising off a five-week low as treasury yields weakened. Gold for June delivery was up US$35.60 to US$4,568.90 per ounce.But West Texas Intermediate crude oil fell 3.9% with the ceasefire between the United States and Iran seen holding, calming Monday's gains as violence in the Persian Gulf eased. WTI crude oil for June delivery closed down US$4.15 to settle at US$102.27 per barrel, after rising 4.4% on Monday, while July Brent oil was down US$4.24 to US$110.20.

CIBC Sees Canadian Consumer Spending Slowing or Even Stalling In Near Term, Rates On Hold

"Wherever the consumer goes, interest rates will typically follow," writes Andrew Grantham in this week's 'The Week Ahead' column from CIBC.That is especially the case in the current environment, as strength in spending would enable more companies to pass cost increases through to consumers, threatening the sort of broadening in inflationary pressures that would warrant a response from the Bank of Canada, Grantham says. Judging by recent retail sales figures, consumer spending on goods had its best quarter since late 2024 in Q1, and in per-capita terms it was the strongest performance since 2021, he adds.However, CIBC suspects that it is more likely that consumer spending will slow or even stall in the near term, which will make this pass through of inflationary pressure less likely and enable interest rates to remain on hold through 2026."For a start," Grantham says, "the recent surge appears to have been built on shaky foundations, raising the possibility that spending cools again or that past strength was simply statistical noise. Even before the recent surge in gasoline prices drove inflation higher, real disposable incomes had fallen during the final quarter of 2025 thanks to the effect that a weak labour market had on nominal incomes. Evidence so far this year, suggesting little job growth and a broadly sideways trend in unemployment, doesn't inspire confidence for a pick-up in aggregate incomes. Energy prices will likely have to remain high for an extended period to boost hiring and wages in that sector."But we already have to factor in the negative impact of the recent surge in gasoline prices, and on average since the start of March that surge has cost households the equivalent of roughly 0.7% of annualized aggregate incomes. While the temporary pause for the federal fuel excise tax is helping, it won't fully offset the squeeze from global oil prices unless we return to WTI at around US$75/bbl -- a long way from where we are today."There is another helping hand coming, with the federal government enhancing its benefit to low and modest-income households (and renaming it the Canada Groceries and Essentials Benefit) as well as providing a one-time payment in early June. For the households receiving this payment, it could well offset the damage that higher pump prices have caused to their pocketbooks so far. However, the aggregate figure, worth approximately 0.3% of disposable income, would fall short of offsetting the negative impact that higher gasoline prices are currently having on spending power."So overall, it appears more likely that household spending will slow again rather than continue its recent uptrend, and a quicker reduction in gasoline prices and/or further support measures from either the federal or provincial governments would be needed to take a more positive view. The advance estimate for March retail sales released today could already be the first indication of this slowing. While the 0.6% figure looked solid in nominal terms, it would likely represent little growth or even a modest decline in volume terms."For the upcoming week, the Bank of Canada will be in no rush to reach a definitive judgement regarding whether higher gasoline prices will flow through into broader inflationary pressure. The accompanying Monetary Policy Report will likely mimic the tone from March's meeting, forecasting a near-term spike in headline inflation but a much smaller and more gradual pick up in core inflation. Any improvement in the forecast for consumer spending will likely just reflect the upside surprise seen in Q1, rather than a more positive view regarding what lies ahead. And if what lies ahead turns out to be a much flatter trend in spending, interest rates likely won't need to go anywhere in 2026."

CIBC On the Week Ahead In Canada Economics

The Bank of Canada is expected to leave interest rates on hold next Wednesday and reiterate messaging that interest rate increases would only be needed if there was sufficient evidence that higher oil prices are passing through into wider inflationary pressures, Katherine Judge and Andrew Grantham write. That still seems unlikely in their book. The CIBC duo expect data later in the week [February GDP and payrolls on Thursday] will likely show the economy continuing to grow at only a modest pace that would reduce slack in the economy only very slowly.The Federal government's fiscal update on Tuesday will likely show little change in deficit projections, with positive developments on the revenue side likely offset by already announced measures such as the fuel tax holiday and enhanced tax credits for households, Judge and Grantham say.CIBC sees February GDP rising 0.2%, in line with consensus.Also on the calendar for next week is the auction of $5 billion in 5-YR CANADAS on Thursday.

OSFI's Annual Risk Outlook Flags Key Risks For Financial Sector, Regulator's Response

The Office of the Superintendent of Financial Institutions (OSFI) on Tuesday said it will focus on achieving "resilience in stress" for the Canadian banking sector.In its 2026-2027 Annual Risk Outlook, released on Tuesday, the regulator flagged real-estate secured lending risks, non-bank financial institution risks, liquidity and funding as the key issues facing the financial sector.Housing and mortgage pressures have increased in some parts of the country. Risks outside the traditional banking system have also expanded, including in areas where non-bank lenders and investment funds are taking on more borrowing. Global uncertainty may also impact confidence in funding markets."Although cost and availability of funding have remained stable, the speed at which a liquidity event could unfold remains a key concern," the report noted.To mitigate these risks, OSFI's supervisory work will include reviewing contingency funding and recovery plans at banks. "We will assess how internationally active institutions consider geopolitical shocks in their plans. We will also focus on the ability of institutions to report liquidity and funding positions under short timelines, including cross-border exposures," the agency said.OSFI will continue to advance work on liquidity-risk guidance for deposit-taking institutions throughout 2026. The most recent revisions to liquidity adequacy requirements will take effect on May 1, 2026, targeting specific retail deposit categories. The regulator will release further updates to liquidity adequacy requirements for consultation as part of the second quarterly release on May 21.OSFI also plans to release a draft internal liquidity adequacy assessment process guidance for consultation as part of the May quarterly release.Price: $202.70, Change: $+1.16, Percent Change: +0.58%

CIBC On the Week Ahead In Economics

In Canada, CIBC says, the release Wednesday of both Manufacturing and Wholesale data for February should confirm the sharp rebounds already signaled by the advance estimates. For Manufacturing Shipments, CIBC is forecasting a 3.5% monthly gain, compared to a consensus 3.8%. For Wholesale Sales ex-petroleum CIBC sees a 2.5% rise.However, CIBC adds, housing starts figures for March on Friday are likely to show building activity stilltracking a lower level than the 2025 average. CIBC estimates 204k versus a consensus 250k.Also on the CIBC calendar for next week are the release of Building Permits for February on Monday and then the auction of $3 billion in 30-YR CANADAS on Wednesday and auction of $5.5 billion in 2-YR CANADAS on Thursday.Thursday will see the release of March Existing Home Sales and Friday will bring February Int'l Security Transactions.Price: $143.21, Change: $+1.62, Percent Change: +1.14%