A CIBC sign is shown in the financial district in Toronto. File photo by THE CANADIAN PRESS

A CIBC sign is shown in the financial district in Toronto. File photo by THE CANADIAN PRESS

CIBC, TD close bleak Q4 earning season with lower profit, higher loss provisions

TORONTO — Canada’s banking sector closed out its fourth-quarter earnings season Thursday with CIBC and TD providing more evidence of a challenging economic environment.

Canadian Imperial Bank of Commerce reported $1.19 billion of net profit in the fourth quarter, down six per cent from the comparable period of 2018, while its adjusted earnings of $2.84 per share came in below analyst estimates.

CIBC’s revenue for the three months ended Oct. 31 was $4.77 billion, up from $4.45 billion in last year’s fourth quarter, when it had $1.27 billion of net income, or $2.80 per share, and $3 per share of adjusted earnings.

TD Bank Group’s adjusted earnings also missed analyst estimates as net profit slipped three per cent to $2.86 billion, or $1.54 per share, in the quarter ending Oct. 31, down from $2.96 billion or $1.58 per share a year earlier

Among other things, the banks increased their provisions for credit losses substantially compared with last year, when PCLs were historically low.

At TD, PCL for the quarter was $891 million, an increase of $221 million or 33 per cent, compared with the fourth quarter last year. At CIBC, PCL rose 52 per cent to $402 million from $264 million a year earlier.

CIBC’s quarter was also negatively affected by a $135-million goodwill impairment charge related to the expected sale of its controlling interest in FirstCaribbean International Bank Ltd.

CIBC’s net profit amounted to $2.58 per share while adjusted earnings were $2.84 per share.

Analysts had estimated $3.06 per share of adjusted profit, according to financial markets data firm Refinitiv.

“Our core businesses delivered pre-provision earnings growth of four per cent. However, our higher provisions for credit losses this quarter affected our bottom line results,” CIBC chief executive Victor Dodig told analysts.

“While provisions have increased, we remain confident in the quality of our loan portfolio going forward.”

Laura Dottori-Attanasio, the bank’s chief risk officer, said that the quarter’s PCLs included $330 million of provisions for impaired loans and $72 million of provisions for performing loans.

The higher provision for impaired loans was primarily due to one fraud-related impairment that amounted to $52 million in CIBC’s business-government portfolio. The higher provision for performing loans was primarily due to changes in forward-looking indicators amid an increase in delinquency rates at its Canadian consumer portfolios.

“The increase is mainly in insured mortgages and secured lines of credit within personal lending that have conservative collateral coverage. As such, we do not expect them to translate into notable losses,” she said.

Dodig concluded the CIBC call by saying the bank is focused on improving the performance of its businesses.

“We did not deliver what we wanted to deliver to our shareholders and we’re focused on getting the bank back to earnings growth in 2020. That’s the preliminary occupation of the leadership team.”

In answer to an analyst question, Dodig said there are opportunities for CIBC to simplify its operations and improve efficiencies.

“And while we prefer to execute this gradually over the normal course. We continue to review all our options, and that could potentially require a charge down the line in order to accelerate our progress.”

Bank of Montreal, which also reported lower fourth quarter profit and higher provisions for credit losses on Tuesday, said it took a $357-million restructuring charge — mostly severance for about five per cent of its global workforce — as a result of a decision to accelerate digitization initiatives and simplification of its business.

For TD, its fourth quarter included about $114 million of restructuring charges after taxes, or about six cents per share. Its chief financial officer described it Thursday afternoon as an “optimization exercise” within a growing bank, noting that TD had added the equivalent of 3,500 full-time front-line, technology and corporate jobs over the year.

CIBC shares closed down $5.95 or 5.2 per cent at $108.89. TD shares fell $2.65 or 3.5 per cent to $73.02.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer city council gave initial approval for more mixed-use developments in Riverside Light Industrial Park. (File photo by Advocate staff)
More industrial landowners in Red Deer are pursuing mixed-use zoning

A third of Riverside Light could become a commercial/industrial district

Central Alberta man facing second-degree murder in connection with December death.
Advocate file photo
Central Alberta man facing second-degree murder in connection with December death

Maskwacis RCMP said female found dead in Ermineskin Cree Nation residence last December

Red Deer College has been working towards obtaining university status for a couple of years. (File photo by Advocate staff)
Red Deer College’s university status back in question

Red Deer College should be worried that its university dreams could be… Continue reading

The Mountain Cree Traditional Band headquarters in Mirror, Alta. has been the target of theft and vandalism. (Photo submitted)
Vandals strike: Artifacts worth $1M gone from central Alberta museum

AWNTB says not enough been done to deter crime in Mirror, Alta.

Justin Kripps of Summerland and his team have competed in Olympic action and World Cup competitions in bobsleigh. (Jason Ransom-Canadian Olympic Comittee).
QUIZ: Are you ready for some winter sports?

It’s cold outside, but there are plenty of recreation opportunities in the winter months

Johnny Gaudreau’s goal and assist paces Flames to 5-2 victory over Canucks

Johnny Gaudreau’s goal and assist paces Flames to 5-2 victory over Canucks

Conservative Leader Erin O'Toole holds a press conference on Parliament Hill, in Ottawa, on Dec. 10, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Tory MP Sloan accuses party of hypocrisy over efforts to have him expelled

Tory MP Sloan accuses party of hypocrisy over efforts to have him expelled

FILE - In this Tuesday, Jan. 15, 2019 file photo Britain's Andy Murray reacts during a press conference following his first round loss to Spain's Roberto Bautista Agut at the Australian Open tennis championships in Melbourne, Australia. Former world number one Murray's participation at the upcoming Australian Open is in doubt after the Briton tested positive for COVID-19. (AP Photo/Kin Cheung, File)
Australian Open arrivals hit by 3 COVID-19 positive tests

Australian Open arrivals hit by 3 COVID-19 positive tests

Toronto Maple Leafs right wing Mitchell Marner (16) scores on an empty net and takes a hit from Winnipeg Jets defenceman Neal Pionk (4) during third period of action in Toronto on Monday, January 18, 2021. THE CANADIAN PRESS/Nathan Denette
Toronto Maple Leafs ride dominant second period to down Winnipeg Jets 3-1

Toronto Maple Leafs ride dominant second period to down Winnipeg Jets 3-1

Roman Sadovsky wins the Challenge, his only event of the figure skating season

Roman Sadovsky wins the Challenge, his only event of the figure skating season

Belarusian President Alexander Lukashenko, left, speaks with International Ice Hockey Federation President Rene Fasel during their meeting in Minsk, Belarus, Monday, Jan. 11, 2021. (Nikolai Petrov/BelTA Pool Photo via AP)
IIHF pulls hockey worlds from Belarus, seeks new host

IIHF pulls hockey worlds from Belarus, seeks new host

Former Buffalo Bills head coach Marv Levy, left, speaks to current head coach Sean McDermott, right, before an NFL football game between the Bills and the New England Patriots, Sunday, Sept. 29, 2019, in Orchard Park, N.Y. He's coached in both Kansas City and Buffalo but Levy will firmly be behind the Bills in the AFC championship game Sunday. THE CANADIAN PRESS/AP/Adrian Kraus
Former Buffalo and Montreal coach Marv Levy behind Buffalo Bills during playoff march

Former Buffalo and Montreal coach Marv Levy behind Buffalo Bills during playoff march

Hamilton Tiger-Cats wide receiver Jalen Saunders (89) is upended after getting hit by Calgary Stampeders defensive back Ciante Evans (0) during first half CFL football action in Hamilton, Ont., on Friday, October 13, 2017. The Ottawa Redblacks have re-signed linebacker Jerod Fernandez, Saunders and running back Timothy Flanders.THE CANADIAN PRESS/Peter Power
Ottawa Redblacks re-sign LB Fernandez, WR Saunders and RB Flanders

Ottawa Redblacks re-sign LB Fernandez, WR Saunders and RB Flanders

Most Read