CIBC announces first quarter 2004 earnings
TORONTO, Feb. 26 /CNW/ - CIBC announced net income for the first quarter
ended January 31, 2004 of $609 million, or $1.54 per share, diluted, compared
with $510 million, or $1.28 per share, diluted, for the previous quarter and
net income of $445 million, or $1.11 per share, diluted, for the same period a
year ago.
These results reflect a reduction in income tax expenses of $50 million
($0.14 per share, diluted), related to an increase in CIBC's future income tax
asset.
The first quarter also includes a reserve of $50 million, ($0.14 per
share, diluted) relating to matters involving CIBC's dealings with certain
hedge funds in the U.S.
Towards sustainable growth - excellent progress
"CIBC delivered another quarter of strong results," said John S. Hunkin,
President and Chief Executive Officer. "We continued to make excellent
progress in our four key business strategies, and remained focused on building
a model for sustained, long-term growth."
Reducing risk
CIBC's large corporate credit risk continues to fall. In Q3 2003, CIBC
transferred $855 million of business and government loans to a held for sale
portfolio to accelerate its non-core corporate loan sale program, and has been
successful in selling approximately 90% of this portfolio. In Q4 2003, a
further $1.24 billion was transferred to the held for sale portfolio, of which
approximately 5% has been sold. CIBC continues to work towards reducing hold
and concentration levels in its corporate loan portfolio. Economic capital
allocated to the large corporate loan portfolio has been reduced by 52%,
surpassing the original target of one-third established in Q2 2002. Gross
impaired loans fell in the quarter to $1.27 billion, compared with
$1.38 billion at October 31, 2003.
The merchant banking portfolio has decreased by 21% since the second
quarter of 2002, and market risk remains low.
During the quarter, CIBC repurchased and cancelled approximately
2.1 million common shares under its normal course issuer bid. Notwithstanding
these repurchases, through internally generated capital and balance sheet
discipline, the important Tier 1 capital ratio strengthened to 11.1%. Total
capital ratio remained at 13.0%.
In recent months, managing and reducing reputation and legal risk has
received increased focus at CIBC. Work has been ongoing to ensure that the
processes and procedures that support these activities are as robust as those
that have successfully supported the reduction in business risk.
Improving productivity
A number of expense reduction initiatives are underway throughout CIBC,
including the introduction of online purchasing and expense reporting tools to
reduce paper utilization and improve efficiency, reduced spending on external
consultants, and consolidation of technology spending with selected vendors.
These initiatives seek to generate a sustained reduction in CIBC's expense to
revenue ratio.
Shifting the business mix
Economic capital supporting retail businesses has increased to 65%. The
target is 70%. This goal is expected to be achieved by reducing balance sheet
resources allocated to businesses that generate lower returns, such as large
corporate loans, while increasing balance sheet resources to those businesses
where there is a sustainable competitive advantage.
Growth in Core Businesses
Volume growth in most lines of business drove strong results for CIBC
Retail Markets. The Cards business, ranked No. 1 in market share in purchase
volumes and outstandings, produced record revenue for the quarter. CIBC
continues to implement programs and technology tools throughout CIBC Retail
Markets to improve customer satisfaction and drive sales performance.
CIBC Wealth Management also delivered strong results, as equity markets
improved, and trading activity increased as investor confidence returned. The
investments made in the Wealth platform have positioned CIBC well to
capitalize on improving market conditions.
In 2002, CIBC World Markets committed to reducing economic capital
allocated to large corporate loans; rationalizing operations in the U.S.; and
building upon the strength of its Canadian franchise. First quarter earnings
reflect the strong progress on all these fronts.
Subsequent to the end of the quarter, Gerry McCaughey was named Vice
Chair, CIBC Wealth Management and Chairman and Chief Executive Officer of CIBC
World Markets. Under his leadership, CIBC World Markets will continue to
actively manage its capital, focus on profitable growth in the U.S., Europe
and Asia, and seek to further build on its strength in Canada, where CIBC is
recognized as the leading Canadian investment bank. |
