CIBC Rakes in Record Revenue for 2024 Amid Margin Declines And Cost Control
The Canadian Imperial Bank of Commerce (TSX: CM) released its financial results for the fourth quarter and fiscal year ending October 31, 2024, reporting $6.617 billion in revenue for Q4 2024, a 13% increase compared to $5.847 billion in the same period last year and a slight improvement from $6.604 billion in the prior quarter.
Reported net income reached $1.882 billion, up 27% year-over-year and 5% sequentially. Adjusted net income stood at $1.889 billion, reflecting a 24% year-over-year growth but was flat quarter-over-quarter. Diluted earnings per share grew to $1.90 on a reported basis, a 24% increase year-over-year, but showed only marginal growth from $1.82 in the prior quarter.
CIBC CEO Victor Dodig touted that the company “delivered record financial performance in 2024.” For the full fiscal year, revenue reached $25.606 billion, up from $23.332 billion in 2023, representing a year-over-year growth rate of 9.7%. While this performance was strong, it fell short of the bank’s medium-term target of 7%-10% annual EPS growth. Adjusted EPS for the year was $7.40, a marked improvement from $6.73 in 2023 but reflected a modest five-year compound annual growth rate of 4.4%.
The bank’s Canadian Personal and Business Banking segment contributed $2.67 billion in revenue in the fourth quarter, an 8.6% increase year-over-year and a 2.8% rise from the previous quarter. Net income for this segment was $743 million, up from $637 million in the same quarter last year and $628 million in the prior quarter, driven by higher deposit margins and loan volume increases.
Canadian Commercial Banking and Wealth Management delivered $1.523 billion in revenue in the fourth quarter, up 11.5% year-over-year and 5.1% sequentially. Wealth management revenue showed robust growth, driven by higher assets under administration and assets under management, which rose to $3.6 trillion and $383 billion, respectively. Net income in this segment reached $516 million, a modest improvement from $490 million in the same quarter last year and $468 million in the prior quarter. However, the net interest margin for commercial banking declined sharply by 74 basis points compared to the prior year, reflecting challenges associated with the transition from the Canadian Dollar Offered Rate to the Canadian Overnight Repo Rate Average.
In the U.S. Commercial Banking and Wealth Management segment, revenue increased to $732 million, a 9% rise from $672 million in the same quarter last year and a marginal 0.8% growth from $726 million in the prior quarter. Net income soared to $202 million, a remarkable recovery from $50 million in the fourth quarter of 2023 but down from $215 million in the previous quarter. For this segment, provision for credit losses decreased significantly from $249 million a year ago to $83 million.
Capital Markets and Direct Financial Services generated $1.407 billion in revenue in the fourth quarter, up from $1.290 billion in the same period last year and $1.348 billion in the prior quarter. Net income in this segment rose to $428 million, compared to $383 million a year ago and $388 million in the previous quarter. However, provisions for credit losses in this segment increased dramatically from $4 million a year ago to $46 million, primarily due to higher provisions on both performing and impaired loans.
Credit quality across the bank improved overall, with total provisions for credit losses declining by 23% year-over-year to $419 million, primarily due to favorable credit migration and paydowns. The loan loss ratio remained stable at 32 basis points compared to 30 basis points last year, a sign of disciplined risk management.
CIBC’s capital position remained robust, with a Common Equity Tier 1 (CET1) ratio of 13.3%, unchanged from the prior quarter but up from 12.4% a year ago. The bank’s liquidity coverage ratio stood at 129%, well above regulatory requirements, and its leverage ratio was stable at 4.3%. These metrics underscore the bank’s ability to absorb shocks and continue its strategic investments, including a dividend increase to $0.97 per share for the first quarter of fiscal 2025.
The bank’s expense trajectory, particularly in compensation and technology investments, is outpacing revenue growth in several segments, leading to modest operating leverage improvements. Additionally, margin pressures in both Canadian and U.S. commercial banking segments highlight structural issues that could weigh on future profitability. The bank’s reliance on fee-based income to offset these pressures is a strength but also exposes it to market volatility.
“We enter the new fiscal year focused on our strategic priorities of driving growth in the mass affluent and high-net-worth client segments, building on our strength in digital to serve consumers, leveraging our connected platform to grow our wealth management, commercial banking and capital markets businesses, and enabling, simplifying and protecting our bank,” said Dodig.
CIBC last traded at $89.57 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
