CIBC‘s profit boosted by PrivateBancorp acquisition

CIBC‘s profit boosted by PrivateBancorp acquisition

TORONTO, May 23 (Reuters) – Canadian Imperial Bank of Commerce on Wednesday reported second quarter earnings that were ahead of market expectations, helped by a strong performance by all its businesses and expansion in the United States.

CIBC acquired Chicago-based PrivateBancorp for $5 billion last June and has forecast the U.S. contribution to its earnings will nearly double in the next three years.

Prior to the PrivateBancorp acquisition, CIBC had derived a higher proportion of its earnings from its home market than other large Canadian banks. Analysts had said this left it exposed amid concerns that red-hot housing markets in Toronto and Vancouver could decline.

Canada‘s fifth biggest lender said earnings per share, excluding one-off items, totaled C$2.95, compared with C$2.64 a year earlier. Analysts had on average forecast earnings of C$2.80 per share, Thomson Reuters I/B/E/S data showed.

The bank reported net income, excluding one-off items, of C$1.35 billion, up from $1.07 billion a year earlier. Net income from its U.S. business was C$142 million, compared with C$27 million a year earlier.

Net income at the bank‘s Canadian retail business grew to C$584 million from C$503 million. Net income at its commercial banking and wealth management business increased to C$310 million, from C$284 million.

The bank‘s residential mortgage book has been growing faster than those of its rivals, and CIBC has seen its home loan portfolio as a means through which it could cross-sell other products. However, the pace of growth has been slowing since last summer and the bank expects that trend to continue.

Canada introduced stricter mortgage rules in January, part of a range of measures that have led to a cooling of the housing markets in Toronto and Vancouver. (Reporting by Matt Scuffham; Editing by Jason Neely and Mark Potter)

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