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CIBC today reported net income of $799 million for the first quarter ended January 31, 2011, compared with net income of $652 million for the same period last year. Diluted earnings per share (EPS) were $1.92, compared with diluted EPS of $1.58 a year ago. Cash diluted EPS were $1.94(1), compared with cash diluted EPS of $1.60(1) a year ago. Return on equity for the first quarter was 23.3%.
Results for the first quarter of 2011 were affected by the following two items netting to a negative impact of $0.03 per share:
- $68 million ($49 million after-tax, or $0.12 per share) loss from the structured credit run-off business; and
- $43 million ($37 million after-tax, or $0.09 per share) gain on the sale of CIBC Mellon Trust Company’s (CMT) Issuer Services business.
Net income of $799 million for the first quarter compared with net income of $500 million for the prior quarter. Diluted EPS and cash diluted EPS of $1.92 and $1.94(1), respectively, for the first quarter compared with diluted EPS and cash diluted EPS of $1.17 and $1.19(1), respectively, for the prior quarter, which included items of note aggregating to a negative impact of $0.49 per share.
CIBC’s Tier 1 and Tangible Common Equity ratios at January 31, 2011 were 14.3% and 10.2%, respectively, up from 13.9% and 9.9%, respectively, at October 31, 2010.
In December 2010, the Basel Committee on Banking Supervision (BCBS) announced new regulatory capital requirements for global banks. In February 2011, Canada’s regulator, the Office of the Superintendent of Financial Institutions (OSFI), issued advisories confirming the adoption of these requirements in Canada and clarifying the treatment of non-qualifying capital instruments.
Based on CIBC’s understanding of the OSFI advisories, CIBC expects to exceed the new requirements ahead of the implementation timelines that have been proposed by the BCBS and confirmed by OSFI, while continuing to invest for future growth.
“CIBC delivered strong results this quarter, with broad-based performance across our core businesses in Retail Markets and Wholesale Banking,” says Gerry McCaughey, CIBC President and Chief Executive Officer. “Our strong earnings growth contributed to the further strengthening of our capital position.”
Core business performance
CIBC Retail Markets reported net income of $627 million for the first quarter, up $100 million from the same quarter last year.
Revenue of $2.5 billion was up 6% from the first quarter of 2010, primarily due to volume growth in all of our Canadian businesses – personal banking, business banking and wealth management.
Provision for credit losses of $275 million was down from $367 million in the same quarter last year due to lower write-offs in the cards and personal lending portfolios and lower provisions in commercial banking.
During the first quarter of 2011, our retail business continued to make progress against our strategy to become the primary financial institution for more of our 11 million clients, by providing strong financial advice and increased access and choice through investments across our franchise:
- Continuing our innovation in mobile banking, we launched the CIBC Home Advisor App for Canadian homebuyers;
- We implemented full-service Saturday hours at an additional 36 branches across Canada, enabling CIBC clients to bank at least six days a week at close to 500 branches;
- We announced our presenting sponsorship of the 2011 International Indian Film Academy Awards (IIFA) which are being held in Canada for the first time in June; and
- We partnered with CTV to present The Marilyn Denis Show. CIBC’s sponsorship includes regular monthly appearances by CIBC experts providing investment, financial and tax tips.
Wholesale Banking reported net income of $136 million for the first quarter, up $192 million from the prior quarter.
Revenue of $471 million was up from $238 million in the prior quarter, primarily driven by higher capital markets and corporate and investment banking revenue, as well as lower losses from the structured credit run-off business.
Credit quality in our corporate loan portfolios remained strong. A net loan loss reversal of $2 million in the first quarter was driven by reversals in our U.S. leveraged finance portfolio that more than offset losses in our U.S. commercial real estate portfolio. Losses in our U.S. commercial real estate portfolio were $5 million, down from $8 million in the prior quarter.
Wholesale Banking had several notable achievements during the first quarter:
- We acted as financial advisor to Inmet Mining Corporation on a proposed merger with Lundin Mining Corporation valued at $9.0 billion;
- We led a $4.2 billion, 2-tranche offering by Canada Housing Trust No. 1;
- We co-led and were joint bookrunner for Husky Energy Inc.’s $1.0 billion offering of common shares;
- We co-led the underwriting of $1.0 billion of Senior Notes for Bell Canada;
- We co-led and were joint bookrunner for Shoppers Drug Mart’s $750 million revolving credit facility;
- We acted as the exclusive financial advisor to Baffinland Iron Mines Corporation on its proposed sale to Arcelor-Mittal and Nunavut Iron Ore Holdings for $590 million;
- We co-led and were joint bookrunner for a $578 million common share offering by Brookfield Asset Management; and
- We co-led and were joint bookrunner for the $345 million Initial Public Offering of Whistler Blackcomb Holdings Inc.
Structured credit run-off progress
While delivering a strong quarter of results in our core businesses, we continued to reduce exposures in our structured credit run-off business, completing several transactions that in aggregate reduced the notional amount of underlying positions by approximately $2 billion (US$2 billion) with a minimal impact on earnings.
As at January 31, 2011, the fair value net of credit valuation adjustments of purchased protection from financial guarantor counterparties was $0.6 billion (US$0.6 billion), of which $0.4 billion (US$0.4 billion) was receivable from financial guarantors with investment grade ratings from the major credit rating agencies. While we have taken steps to reduce our exposure, further significant losses could result, depending on the performance of both the underlying assets and the financial guarantors.
“CIBC delivered another solid performance during the first quarter,” says Mr. McCaughey. “The investments we are making in our retail and wholesale businesses are furthering our strength in Canada and positioning us well for the future.”
CIBC in our communities
CIBC is committed to supporting causes that matter to our clients, our employees and our communities. During the quarter:
- CIBC’s 2010 United Way campaign raised more than $7.9 million. Of the total amount raised, $4.7 million was raised by CIBC employees and retirees through personal donations, hundreds of volunteer fundraising events and participation in United Way Days of Caring across Canada;
- On December 1, 2010, CIBC Wood Gundy investment advisors and Wholesale Banking sales and trading staff combined to raise a record $4.1 million on CIBC Miracle Day. The proceeds from this annual event are invested in children’s charities in communities across Canada;
- CIBC completed the third year in its five-year, $1 million sponsorship of ReConnect: Career Renewal for Returning Professional Women(TM). Another 16 women graduated from the seven-day immersion program at the Richard Ivey School of Business, bringing the total number of graduates to date to 50; and
- In November, CIBC employees raised more than $320,000 in support of Prostate Cancer Canada through the 2010 Movember campaign. CIBC was named the top Canadian fundraising team for the third consecutive year and was named the No. 2 fundraising team in the world for the second consecutive year.
For further information: Investor and analyst inquiries should be directed to Geoff Weiss, Vice-President, Investor Relations, at 416-980-5093; Media inquiries should be directed to Rob McLeod, Senior Director, Communications and Public Affairs, at 416-980-3714, or to Mary Lou Frazer, Senior Director, Investor & Financial Communications, at 416-980-4111
