Financial Results
Sale Of Stake In Investment Firm Lifts CIBC's Third-Quarter Profit
Net income at Canadian Imperial Bank of Commerce rose sharply both year-on-year and sequentially at the end of July, thanks largely to its sale of a minority stake in American Century Investments.
Net income at CIBC jumped 47 per cent to C$1.4 billion at the end of its third quarter from C$978 million a year ago, aided by a C$383 million gain from selling its minority stake in American Century Investments.
Within wealth management, net income stood at C$506 million at end-July, including the gain of the sale of CIBC’s investment in ACI. Excluding this, adjusted net income was C$126 million, down C$17 million (or 12 per cent) from Q3 2015, as the firm ceased recognizing income from ACI following the announcement of the sale in December 2015.
Total retail brokerage revenue was also lower as a result of a decline in transaction volume, CIBC said. “These factors were partly offset by higher revenue due to growth in average assets under management and seed capital gains in asset management.”
Of note in the third quarter, CIBC said it is to acquire PrivateBancorp, the $17.7 billion Chicago-based commercial bank with strong wealth management capabilities, in a cash and stock deal valued at $3.8 billion. Reuters described the move at the time as CIBC's “biggest ever acquisition and a long-awaited expansion in US wealth management.”
Indeed CIBC said the acquisition, which includes PrivateBancorp's subsidiary The PrivateBank, will create a platform for the firm to deliver US banking services to existing Canadian personal and business banking clients, as well as accept deposits in the US and provide commercial and private banking services to the clients of Atlantic Trust, the private wealth business it bought in 2014 for $210 million. The transaction is expected to close in Q1 2017.
“Our strong results this quarter were broad based, as each of our retail and business banking, wealth management and Capital Markets business units performed well,” said Victor Dodig, CIBC's president and chief executive.
Other Canadian banks that reported their third quarter results this week included RBC, BMO and Toronto Dominion Bank.
