TORONTO — CIBC (TSX:CM) reported Thursday that profits were up 48 per cent in the fourth quarter, but its chief executive has warned that higher loan losses are likely to continue into the new year as the Canadian jobs market remains weak.
The Toronto-based bank reported net income of $644 million or $1.56 per share for the quarter ended October 31, despite coming at the tail end of a recession. That was up from year-ago profit of $436 million or $1.06 per share.
Provisions for its loan losses, or bad loans, were $424 million which as more than double the $222 million booked a year earlier. The increase was caused by higher losses from its credit cards, as well as its unsecured personal lending and corporate lending portfolios.
“We do expect our loan losses to remain elevated as long as higher unemployment levels prevail,” president and CEO Gerry McCaughey told analysts in a conference call.
Canada’s unemployment rate sits at 8.6 per cent, after 43,000 more jobs were shed in October, which has left economists predicting that the sluggish economic recovery will be slowed further as people scour the sparse jobs market.
CIBC executives noted they predict losses from credit cards will remain relatively stable in the new year, which is good news for the bank since it has the largest portfolio of credit cards compared to its peers.
Revenues totalled $2.9 billion for the quarter, compared to $2.2 billion last year. The figures were in line with analysts expectations for revenue, according to estimates compiled by Thomson Reuters.