CIBC(US:CM)2022-08-24 16:00Financial Performance - CIBC reported a significant increase in financial performance for the third quarter, with a net income of CAD 1.5 billion, representing a 10% increase year-over-year[2]. - The bank's total revenue for the quarter reached CAD 4.5 billion, up 8% compared to the same period last year[2]. - Net income attributable to common shareholders was $1,660 million in Q3 2022, up from $1,518 million in Q2 2022 and $1,725 million in Q3 2021[10]. - Total revenue for Q3 2022 reached $5,571 million, compared to $5,376 million in Q2 2022 and $5,056 million in Q3 2021, reflecting a year-over-year growth of 3.7%[10]. - Reported net income for the quarter was $1,666 million, a decrease from $1,730 million in the same quarter last year[16]. - Adjusted net income for the quarter was $1,724 million, compared to $1,808 million for the same quarter last year[16]. Customer Growth and Engagement - User data indicated a growth in customer accounts by 5%, totaling 15 million active accounts[2]. - The bank has launched new digital banking features, enhancing user experience and aiming to increase customer engagement by 20%[3]. Economic Outlook - CIBC anticipates a continued positive economic outlook, projecting a GDP growth of 3% for the upcoming year[3]. - The economic growth forecast for Canada is approximately 3.5% for calendar 2022, with a slowdown expected in the second half[12]. - The unemployment rate in Canada is projected to average 5.3% for calendar 2022[12]. Capital Management and Investments - The bank's capital management strategy remains robust, with a Tier 1 capital ratio of 13.5%, exceeding regulatory requirements[4]. - CIBC is investing CAD 200 million in technology upgrades to improve operational efficiency and cybersecurity measures[4]. - CIBC is expanding its market presence through strategic acquisitions, targeting a 15% increase in market share over the next two years[4]. Risk Management - The bank has identified emerging risks related to inflation and geopolitical tensions, which may impact future performance[4]. - CIBC is closely monitoring the macroeconomic environment, particularly the impact of high inflation and geopolitical risks, which could affect future growth[148][149]. - The ongoing COVID-19 pandemic continues to disrupt global economic conditions, with potential adverse impacts on CIBC's operations and market performance[150]. Credit Losses and Provisions - Provision for credit losses was $243 million, compared to a reversal of $99 million in the same quarter last year[20]. - Provision for credit losses increased in Q2 and Q3 2022 due to rising interest rates, high inflation, and supply chain disruptions, despite a moderate improvement in economic conditions in previous quarters[27]. - The provision for (reversal of) credit losses was reported at $(94) million, indicating a positive adjustment in credit quality[44]. Non-Interest Income and Expenses - Non-interest income rose by $172 million or 8% from the same quarter last year, primarily due to higher trading income and credit fees[19]. - Non-interest expenses increased by $265 million or 9% year-over-year, mainly due to higher spending on strategic initiatives and employee compensation[21]. - Non-interest expenses fluctuated due to changes in employee compensation, strategic investments, and foreign exchange rates, with notable charges related to goodwill impairment and legal provisions[27]. Shareholder Returns - CIBC's dividend payout ratio remains stable at 40%, reflecting a commitment to returning value to shareholders[4]. - The dividend yield based on the closing share price was 5.1% in Q3 2022, compared to 4.6% in Q2 2022[10]. - CIBC's Board of Directors approved a quarterly common share dividend increase from $0.805 to $0.830 per share for the quarter ending July 31, 2022[129]. Workforce and Employment - Full-time equivalent employees increased to 49,505 in Q3 2022 from 47,814 in Q2 2022, indicating growth in workforce[10]. - Full-time equivalent employees increased to 13,576, up from 12,872 in the same quarter last year[53]. Market Capitalization and Assets - The market capitalization at the end of Q3 2022 was $904,691 million, slightly up from $903,155 million in Q2 2022[10]. - Total assets as of Q3 2022 were $896,790 million, an increase from $894,148 million in Q2 2022[10]. Regulatory Compliance and Capital Ratios - The CET1 ratio decreased by 0.6% to 11.8% as of July 31, 2022, primarily due to an increase in risk-weighted assets (RWA)[116]. - The Tier 1 capital ratio decreased by 0.9% to 13.2% as of July 31, 2022, influenced by factors affecting the CET1 ratio[118]. - The Total capital ratio also decreased by 0.9% to 15.3% due to the phase-out of non-qualifying capital instruments[119]. Liquidity Management - The average Liquidity Coverage Ratio (LCR) as of July 31, 2022, decreased to 123% from 125% in the prior quarter, attributed to a decrease in high-quality liquid assets (HQLA) and lower net cash outflows[194]. - CIBC maintains compliance with the minimum LCR requirement of 100% set by OSFI, ensuring adequate unencumbered high-quality liquid resources to meet liquidity needs in a 30-day acute stress scenario[192]. Legal and Tax Matters - The Canadian Federal government proposed a one-time 15% Canadian Recovery Dividend tax, which could result in a charge of approximately $550 million upon enactment[23]. - CIBC is currently involved in litigation regarding a reassessment of approximately $1,602 million of additional income tax by the CRA related to certain corporate dividends[22].