(Bloomberg) — Canadian Imperial Bank of Commerce benefited from growth in its domestic retail business even as it set aside more money than analysts expected for potentially sour loans amid a worsening outlook for credit.
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Provisions for credit losses totaled C$585 million ($431 million), the Toronto-based bank said in a statement Thursday, slightly more than the C$583.4 million analysts had forecast. Revenue climbed 10% at the company’s Canadian business, and net interest income — the difference between what the bank makes from lending and what it pays for deposits — was up 13%.
CIBC joined competitors Bank of Montreal and Bank of Nova Scotia in reporting first-quarter results marred by higher provisions for loan losses as elevated interest rates continue to hurt credit quality and missed payments begin to mount. BMO and Scotiabank also reported provisions that exceeded estimates when they reported earnings earlier this week.
At CIBC, earnings came in at C$1.81 per share on an adjusted basis in the three months through January, compared with C$1.94 a year earlier.
The lender has been an outlier among its rivals in terms of keeping costs down, according to analysts. CIBC said Thursday that non-interest expenses for the first quarter totaled C$3.47 billion, down 22% from a year earlier.
Still, CIBC has a higher exposure to the US office space than its peers, and analysts have been closely watching that part of its loan book for signs of weakness.
While the average loan to value at origination in the US office market was 60%, “values have dropped significantly due to sector headwinds,” CIBC said in a shareholder report Thursday. “We are closely monitoring this portfolio as conditions evolve.”
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