CIBC and TD’s revenues in Canada are higher than estimates, but credit growth rates differ.

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Photo from file: TD Bank, CIBC and Bank of Montreal will be found on June 24, 2020 in the financial district of Toronto, Ontario, Canada. REUTERS / Carlos Osorio / Photo from file

August 26, 2021

Nikola Suminaza

Toronto (Reuters) – Toronto-Dominion Bank (TD) and Canadian Imperial Commercial Bank (CIBC) beat their third-quarter earnings forecast Thursday. This was primarily due to the release of reserves to cover problem loans, but avoidance of TDs a year before strong growth in CIBC loans.

CIBC lending increased 8% as of July, while TD lending fell 0.5% year-on-year as contraction in US lending offset strong lending growth in Canada. This reduced TD’s revenue and increased CIBC by 7%.

CIBC, the fifth-largest bank, reported that adjusted revenue before tax and provisions (PTPP) increased 7% year-on-year, while TD’s revenue declined 2.7%.

“In the United States, consumer and corporate support programs are very important,” said Riaz Ahmed, chief financial officer of TD, Canada’s second largest lender by market capitalization, in an interview. “The accumulation of liquidity between clients and business owners is very important and credit growth has become weak.”

According to him, credit growth in the US is expected to recover as liquidity decreases.

According to banks, the increase in CIBC lending offset the impact of exchange rates and low interest rates.

Both banks have benefited from significant growth in capital management income over the previous year. This increased the Canadian retail TD’s non-interest revenue by 13% and CIBC’s revenue by 25%.

This helped mitigate the impact of the 1% decline in CIBC profits in the capital markets sector. The 22% drop in TD was driven by a weaker trading environment in which higher consulting fees could not be offset.

TD posted adjusted earnings of CAD 1.96 per share. This is due to the recovery in doubtful account provision of $ 37 million from the previous year’s estimate of $ 1.25 and $ 1.92 per analyst share.

CIBC reported adjusted revenue of C $ 3.93 versus C $ 2.71, beating expectations of C $ 3.41. The announcement of a $ 99 million reserve for doubtful accounts, which requires a $ 151.6 million reserve compared to analysts’ expectations.

(Report by Nikola Suminazare, supplementary report by Niket Nishant and Nur Zainab Hussein, edited by Chizu Nomiyama)

CIBC and TD’s revenues in Canada are higher than estimates, but credit growth rates differ.

Link to source CIBC and TD’s revenues in Canada are higher than estimates, but credit growth rates differ.



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