Mining & Metals
Update: CIBC Now Down In US Premarket As Reports Q2 Adjusted Earnings Beat; Moved To Sell CIBC Caribbean and Announces NCIB
(updates share price in first paragraph and headlines, and also updates on performance across business units from paragraph 13)CIBC (CM.TO, CM) has turned negative in pre-market trade on Thursday even after reporting an increase in adjusted net earnings for the second quarter, beating expectations, while it declared an unchanged dividend, moved to sell its interest in CIBC Caribbean and announced an intention to repurchase up to 30 million common shares.For the second quarter, CIBC's adjusted net income jumped 23% year-on-year to $2,471 million, up from $2,016 million in the same period of 2025. Adjusted diluted earnings per share stood at $2.54 compared with $2.05 a year earlier. FactSet had forecasted $2.46.Reported net income stood at $2,465 million, up 23% from $2,007 million in the second quarter of 2025. CIBC posted reported EPS of $2.53 versus $2.04 a year ago.Results for the second quarter of 2026 were negatively impacted by $8 million ($6 million after tax), or $0.01 per share, related to the amortization of acquisition-related intangible assets.It had revenues of $8,006 million compared to $7,022 million. FactSet had forecast $7,959.7 million.Provision for credit losses was $605 million, comparable with $568 million in the first quarter of this fiscal. PCL on performing loans was down due to a "less unfavourable change in our economic outlook, partially offset by less favourable credit migration in the current quarter", the bank said. PCL on impaired loans was up mainly due to higher provisions in Canadian commercial banking and wealth management, and Canadian personal and business banking, it added.The bank also declared a dividend of $1.07 per share on common shares for the quarter ending July 31, 2026 payable on July 28, 2026 to shareholders of record at the close of business on June 29, 2026. It was unchanged from the dividend announced in Feb, 2026.The bank said the return on equity, a measure of profitability and efficiency, widened to 16.4% on an adjusted basis from 13.9% in the same period last year. Its CET1 ratio was 13.6% at April 30, 2026, compared with 13.4% at the end of the prior quarter."In the second quarter of 2026, we delivered strong financial results through the disciplined execution of our client-focused strategy, including double-digit growth in net income and a higher return on equity compared to a year ago, driven by robust results across all of our business units," said Harry Culham, CIBC CEO."Our team is delivering for our clients every day as we accelerate the execution of our strategy, supported by our strong capital position, prudent risk management and resilient balance sheet. As we look ahead, we are committed to creating value for our stakeholders by helping our clients achieve their ambitions, enabling growth for key industries across the economy and being there for our communities," Culham said.Additionally, CIBC also announced an agreement to sell its 91.67% interest in CIBC Caribbean to The Bank of N.T. Butterfield & Son (Butterfield) for a total consideration of approximately US$1.6 billion.The lender noted "proceeds will be comprised of US$1 billion in cash and 52,100,024 Butterfield common shares, currently valued at US$645 million, representing a minority interest of approximately 22% at closing". This transaction will allow the bank to reallocate capital toward strategic growth priorities in North America, it added. The transaction is expected to close in the first half of 2027, subject to Butterfield shareholder and regulatory approvals and other closing conditions.The bank also announced its intention to purchase for cancellation up to 30 million common shares under a normal course issuer bid, subject to the approval of the Toronto Stock Exchange. Common shares that may be purchased for cancellation represent approximately 3.3% of outstanding common shares as at April 30, 2026.On operations, Canadian Personal and Business Banking reported second-quarter net income of $846 million, up $112 million, or 15%, from a year earlier, reflecting higher revenue, partially offset by higher non-interest expenses and a higher provision for credit losses. Adjusted pre-provision, pre-tax earnings were $1,610 million, up $223 million from the second quarter a year ago, as higher revenue was partially offset by higher adjusted non-interest expenses. The higher revenue was mainly driven by a higher net interest margin and loan growth, the bank said.Canadian Commercial Banking and Wealth Management posted second-quarter net income of $614 million, up $65 million, or 12%, year-on-year, primarily due to higher revenue, partially offset by higher non-interest expenses and a higher provision for credit losses. Adjusted pre-provision, pre-tax earnings were $958 million, up $151 million from the second quarter a year ago, as higher revenue was partially offset by higher non-interest expenses.U.S. Commercial Banking and Wealth Management reported net income of $260 million, up $87 million from a year earlier, driven by lower provision for credit losses, and higher revenue, partially offset by higher non-interest expenses. Adjusted pre-provision, pre-tax earnings were $353 million, up $20 million from the second quarter a year ago, as higher revenue was partially offset by higher adjusted(1) non-interest expenses.Capital Markets reported first-quarter net income of $792 million, up $226 million, or 40%, from a year earlier, reflecting higher revenue and a provision reversal in the current quarter compared to a provision for credit losses in the same quarter last year, partially offset by higher non-interest expenses. Adjusted pre-provision, pre-tax earnings were up $235 million or 28% from the second quarter a year ago as higher revenue was partially offset by higher non-interest expenses, CIBC noted.Shares of the bank were last up US$0.56 to US$116 in pre-market trading on the NYSE on Thursday. They closed $0.33 down at C$159.54 in Toronto on Thursday.
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