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Key Morningstar Metrics for Canadian Imperial Bank of Commerce
What We Thought of Canadian Imperial Bank of Commerce’s Earnings
Canadian Imperial Bank of Commerce CM reported decent fiscal first-quarter earnings that were largely in line with our expectations, with strong trading results and net interest income growth helping lift total revenue. Adjusted net income increased by 23% from a year ago to C$2.2 billion. Given that first-quarter results and management’s outlook all largely align with our previous views of CIBC, we maintain our current fair value estimate of C$77 per share, and we view the stock as slightly overvalued.
Similarly to the last quarter, credit costs were better than some of its peers, as CIBC’s provisioning expense decreased 2% year over year but increased 37% from a quarter ago to C$573 million. The year-over-year decrease in provisioning was helped by an elevated base in the first quarter of the prior year. The sequential increase in provisioning was mostly driven by a C$125 million increase in performing loan provisioning, which is often driven by changes in projections or economic assumptions.
Provisioning on impaired loans increased 7% sequentially to C$446 million, mostly driven by US office commercial real estate loans and Canadian mortgages. The bank’s Canadian mortgage 90-plus day delinquency ratio continued to increase and is worth monitoring, given CIBC’s relatively large exposure here.
Total net write-offs decreased 15% sequentially to C$352 million. Gross impaired loans increased 12% from a quarter ago and net formations went up 8% sequentially. We expect credit costs to remain elevated in the near term. That said, the bank has a strong balance sheet with a common equity Tier 1 ratio of 13.5%.
Fee revenue increased 17% from a year ago to C$3.5 billion, mostly driven by the 37% increase in trading income. We view first-quarter trading results at a seasonally high level, and we caution investors not to read too much from these results.
Canadian Imperial Bank of Commerce Stock vs. Morningstar Fair Value Estimate
Source: Morningstar Direct. Latest price as of 03:12 PM EST. Data as of Feb. 27, 2025.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
