TORONTO - Profits at Canadian Imperial Bank of Commerce (TSX:CM) rose six per cent to $811 million in the second quarter, beating analyst estimates by a wide margin as CIBC's retail banking operations gained strength.
The bank said Thursday it earned $1.90 per diluted share. The results are up from $767 million or $1.80 a share in the comparable period last year.
On an adjusted basis, CIBC's earnings were $2 per share, well above analyst expectations of $1.88 per share, according to figures compiled by Thomson Reuters.
Shares of the bank rose $1.33 to $71.66 in late morning trading at the Toronto Stock Exchange.
CIBC's total revenue increased two per cent to just under $3.1 billion, including $2 billion from its core retail and business banking operations.
"CIBC has delivered a solid quarter of consistent and sustainable earnings growth," CIBC chief executive Gerry McCaughey told analysts in a conference call.
"We experienced strong results in each of our business units, generated positive operating leverage and underpinned our performance with strong fundamentals, particularly capital."
CIBC's core business in retail and business banking provided $556 million of the net profit, up from $496 million a year earlier, as more Canadians secured new mortgages.
Provisions for credit losses, or money set aside for bad loans, increased to $308 million, up by $63 million from a year ago.
In its outlook for 2012, the bank warned that its retail and business banking operations could face "slightly slower growth in demand for mortgages, while consumer credit demand could continue to see limited growth."
The bank's wealth management operations also showed a higher profit, which rose to $79 million from $73 million.
Wholesale banking profits were down to $131 million, a drop of $9 million over a year ago, partly on a higher provision for credit losses.
Barclays analyst John Aiken said in a note that CIBC's results were "well ahead of expectations."
"While a myriad of charges marred reported earnings once again, the core earnings beat appears to be a result of very strong cost containment," Aiken wrote.
"This is a strong performance and has been a consistent theme for CIBC for several quarters."
The bank also said it continues to shop around its FirstLine mortgage-broker unit, a plan it announced in March, noting that it was exiting the broken business in favour of selling CIBC-branded mortgages, which have better margins.
It is also secured a sale of its private wealth management business in Hong Kong and Singapore, with assets under management of $2 billion, under a transaction is expects to close by early 2013.
CIBC has more than 42,000 employees across its operations, including retail and wholesale banking and financial services.
What Canada's Bank CEOs Earned Last Year
6. Louis Vachon, National - $7.5 Mln
<strong>Profit per dollar earned by the CEO: $162.27</strong> National Bank's Louis Vachon took home $7.5 million, the lowest total of any of the six major banks, but the most in terms of the bank's net income.
5. Gerry McCaughey, CIBC - $9.5 Million
<strong>Profit per dollar earned by the CEO: $326.32</strong> Gerry McCaughey's total compensation grew 12 per cent, to $9.5 million, in 2011. Source: <a href="https://www.cibc.com/ca/pdf/investor/proxy2012.pdf" target="_hplink">CIBC Management Proxy Circular</a>
4. Bill Downe, BMO - $9.9 Million
<strong>Profit per dollar earned by the CEO: $330.81</strong> Bill Downe's total compensation for 2011 was up 4.2 per cent from his 2010 pay of $9.5 million. Source: <a href="http://ca.reuters.com/article/businessNews/idCATRE81Q1W320120227" target="_hplink">Reuters</a>
3. Gordon Nixon, RBC - $10.1 Million
<strong>Profit per dollar earned by the CEO: $480.40</strong> Gordon Nixon's total compensation fell 8 per cent in 2011, to $11 million. Source: <a href="http://www.rbc.com/newsroom/2012/0206-proxy.html" target="_hplink">RBC Management Proxy Circular</a>
2. Rick Waugh, Scotiabank - $10.6 Mln
<strong>Profit per dollar earned by the CEO: $501.71</strong> Waugh's total earnings for 2011, at $10.6 million, were down slightly from the $10.66 million he earned in 2010. Source: <a href="http://www.thestar.com/business/article/1137400--scotiabank-ceo-s-pay-down-slightly-from-2010" target="_hplink">Toronto Star</a>
1. Ed Clark, TD Bank - $11.3 Million
<strong>Profit per dollar earned by the CEO: $517.45</strong> Ed Clark's total compensation for 2011 was meant to be around $12 million, but the bank's board scaled it back to $11.3 million -- roughly the same as in 2010. Source: <a href="http://www.thestar.com/business/article/1135817--td-bank-ceo-ed-clark-s-pay-down-to-11-3-million-in-2011" target="_hplink">Toronto Star</a>