UPDATE 2-CIBC profit beats on capital markets strength, takes C$339 mln severance charge

(Adds details throughout)

By C Nivedita and Nichola Saminather

Feb 26 (Reuters) – Canadian Imperial Bank of Commerce reported better-than-expected quarterly profit on Wednesday, becoming the latest domestic bank to exceed estimates thanks to a boost from its capital markets business.

Canada’s fifth-largest lender also recorded an employee severance charge of C$339 million ($255.16 million), related to its drive to cut costs and become more efficient.

CIBC is the fourth of Canada’s six biggest lenders to have reported better earnings than expected for the three months ended Jan. 31, after posting the worst profit growth since the financial crisis last year, as trading and advisory revenues grew strongly.

It also benefitted from a nearly 23% decline in loan-loss provisions, contributed largely by a drop in provisions in its capital markets unit, where net income surged 63%.

Excluding items, the bank earned C$3.24 per share, beating analyst expectations for C$3.00 per share. Still, net income of C$2.63 a share, which included the impact of the restructuring charge, missed estimates based on Refinitiv IBES data.

Chief Executive Officer Victor Dodig flagged layoffs late last month and told staff that CIBC needs to challenge itself to be “a more efficient bank by focusing on continuous improvement and keeping a careful eye on costs.”

The Globe and Mail newspaper reported last week that the bank would cut about 2,000 jobs. CIBC did not say on Wednesday how many jobs would be eliminated.

Even so, growth in CIBC’s non-interest expenses outpaced its increase in revenue, and its adjusted efficiency ratio also rose from a year earlier. Its workforce grew 3% from a year earlier.

The bank announced a raft of senior executive changes, including a new head of personal and business banking and a new chief risk officer.

Source: Read Full Article