CIBC beats first quarter as capital markets drive profits

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The uncertainty stemming from United States President Donald Trump’s tariff threats remains a concern, but the head of Canadian Imperial Bank of Commerce says its clients possess the ability to be resilient in such unpredictable situations.

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Victor Dodig said businesses have faced a surge in interest rates, currency volatility, supply chain disruptions and labour supply issues during the past decade and yet managed through them all.

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“Clients are more resilient than one gives them credit for,” he said on a call with analysts to discuss the bank’s first-quarter results on Thursday.

Trump was supposed to impose a 25 per cent tariff on Canadian goods on Feb. 4, but the move has since been delayed amid negotiations between the two nations. If the tariffs are eventually imposed, it could trigger a recession in Canada, economists say, a risk that has led to a decline in financial activity among Canadian banking clients on both sides of the border.

The Canadian government was responding well to the U.S.’s border protection and security concerns, Dodig said, but in the long term, Canada needs to “engineer the great Canadian comeback.”

The CEO didn’t elaborate on the steps needed to achieve that goal Thursday, but he has previously referred to the need to boost Canada’s struggling productivity levels by focusing on specific industries.

CIBC posted higher first-quarter profits Thursday, due to better performance in each of its business streams.

Net income for the three months ending Jan. 31 increased 26 per cent compared to the same period last year to $2.17 billion, resulting in net earnings per share of $2.19.

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The bank’s adjusted earnings were $2.18 billion, up 23 per cent from a year ago, resulting in adjusted earnings per share of $2.20. Analysts had expected CIBC to earn $1.97 per share.

CIBC’s total provisions for credit losses (PCLs) — the amount of money banks keep aside to tackle potentially bad loans — was $573 million, down two per cent compared to last year but up 37 per cent from the fourth quarter of 2024.

The year-over-year increase in PCLs was primarily due to a worsening economic outlook, including the uncertainty linked to the tariffs, the bank said.

The Bank of Montreal and Bank of Nova Scotia also added a slight monetary cushion in response to the uncertainty of Trump’s taxes. But executives from both banks said on Tuesday that they expect to increase their PCLs further if Trump goes through with his threat.

CIBC had net income of $765 million in its Canadian personal and business banking segment, up $51 million from the same quarter a year ago, primarily due to higher revenues that were mainly driven by volume growth, higher net interest margin and higher fees. But the segment also reported higher expenses and a higher PCL.

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It also reported higher profits in its commercial banking and wealth management, U.S. businesses and capital markets segments.

Meny Grauman, an analyst at the Bank of Nova Scotia, said CIBC’s results were impressive despite the macro fears linked to the tariffs.

“Unlike what we saw in Q4, CIBC shares came into this reporting season under quite a bit of pressure despite expectations for a strong quarter,” he said in a note to clients on Thursday. “In our view, this speaks to the larger tariff question. That said, (the) results impressed us, and deserve to drive outperformance today.”

John Aiken, an analyst at Jefferies Inc., said CIBC’s “underlying growth remains impressive” despite some deterioration in its customers’ credit quality and higher-than-expected provisions.

• Email: nkarim@postmedia.com

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