Higher credit loss provisions contributed to the weaker year-over-year results
Canadian Imperial Bank of Commerce (CIBC) said its adjusted net income was down by 15% year over year in 2023’s third quarter as higher loan loss provisions cut into its profits.
The banking giant announced adjusted net income of $1.47 billion for Q3, down from $1.72 billion the same time last year, with adjusted diluted earnings per share (EPS) falling by 18% on an annual basis to $1.52.
Provision for credit losses spiked by $493 million over Q3 2022, hitting $736 million, thanks to a “more unfavourable change” in the economic environment, CIBC said in a press release.
CIBC’s personal and business banking division saw net income slip by nearly $100 million compared with 2022’s third quarter, with those credit loss provisions and lower card fees attributed as the main reasons for that decline.
Higher revenue spurred by higher net interest margin and volume growth helped partially offset that weaker performance, while on the commercial banking and wealth management side net income was down 4% year over year.
Volume growth and higher deposit margins in commercial banking, and higher fee-based revenue from wealth management market appreciation, boosted overall revenue on the commercial side, but increased spending on strategic initiatives contributed to higher expenses.
South of the border, CIBC’s commercial banking and wealth management division saw net income plummet by 64% as credit loss provisions, lower fee income and growing employee-related costs impacted profitability.
