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CIBC Outperforms Expectations as Rising Interest Rates Drive Lending Profit Margin

Published 2023-05-25, 12:05 p/m
Updated 2023-05-25, 12:05 p/m
© Reuters

© Reuters

By Ketki Saxena

Investing.com -- Canadian Imperial Bank of Commerce ( CIBC (TSX:CM)) exceeded estimates as it reported an increase in its profit margin from loans in Q2 2023. The bank has benefited from rising interest rates, with its net interest margin expanding to 1.54% in the three months through April, up from 1.49% in the previous quarter. This figure represents the difference between what the bank earns on loans and how much it pays depositors.

CIBC's provisions for potentially souring loans grew significantly to CAD438 million ($322 million) in the three months through April, compared to CAD295 million in the previous quarter. Despite this increase, the bank managed to report a Q2 profit of CAD1.69 billion ($1.38 billion), up from CAD1.52 billion during the same period last year.

On an adjusted basis, CIBC reported earnings of CAD1.70 per diluted share in Q2 2023, down slightly from CAD1.77 per diluted share during the same period last year.

The bank's revenue also experienced growth, reaching CAD5.7 billion, up from CAD5.38 billion in Q2 2022. Meanwhile, its provision for credit losses rose to CAD438 million, an increase from CAD303 million during the same period last year.

The bank also raised its quarterly dividend to CAD 87 cents per share, up from CAD 85 cents previously. 

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