CIBC kicks off first-quarter Canadian bank earnings with big profit beat

FILE PHOTO: The Canadian Imperial Bank of Commerce (CIBC) logo is seen on a building in Toronto

By Mehnaz Yasmin and Jaiveer Shekhawat

(Reuters) -Canadian Imperial Bank of Commerce (CIBC) trounced quarterly profit estimates on Friday, powered by strong trading and global markets revenue that helped counter a decline in lending growth.

Shares of the Toronto-based lender, which kicked off the first-quarter earnings season for major Canadian banks, rose 1% in a weak broader market.

Total trading revenue surged 82% from the fourth quarter to C$610 million($447 million), while revenue from global markets grew 17% from a year earlier.

Its personal and business banking unit, however, reported a 14% decline in net income, while its advisory and underwriting segment was weighed down by market conditions.

"While our pipelines remain stable, we've seen slower lending growth due to both reduced client demand and from our prudent risk posture in this environment," Chief Executive Officer Victor Dodig told analysts on a post-earnings call.

Overall revenue rose 8% to C$5.93 billion, while the bank earned C$1.94 per share on an adjusted basis, comfortably beating estimates of C$1.70, according to data from Refinitiv.

Canada's central bank over the past 11 months has lifted interest rates at a record pace to 4.5% to tame stubbornly high inflation.

The company set aside C$295 million in provisions for credit losses, up C$220 million from a year-ago period, as it braces for increased odds of more loan defaults in a rising interest rate environment.

Overall net profit plunged 77% to C$432 million from a year-ago levels, after the company recorded a pretax charge of C$1.17 billion in connection with a lawsuit tied to the 2008 global financial crisis.

Last week, CIBC said it would pay $770 million to a vehicle controlled by private-equity firm Cerberus Capital Management to resolve the dispute.

Rivals Bank of Montreal and Bank of Nova Scotia will report on Tuesday while Royal Bank of Canada and National Bank of Canada will post earnings on Wednesday.

($1 = 1.3588 Canadian dollars)

(Reporting by Mehnaz Yasmin and Jaiveer Shekhawat in Bengaluru; Editing by Sherry Jacob-Phillips and Sriraj Kalluvila)