CIBC Rises Most Since May on Earnings Beat While TD Falls

(Bloomberg) -- Canadian Imperial Bank of Commerce rose the most in six months after posting fourth-quarter profit that beat analysts' expectations, while larger rival Toronto-Dominion Bank fell as earnings disappointed investors.

CIBC, Canada's fifth-largest lender by assets, gained 2.3 percent at 10:06 a.m. in Toronto, the biggest intraday gain since May 29, making it the best performing Canadian bank stock on Thursday. Toronto-Dominion, the nation's largest lender, fell as much as 3.5 percent, the most intraday since March 10.

“CIBC came in well ahead of expectations on the back of exceptionally strong domestic retail and a better than forecast contribution from its new U.S. platform," Barclays Plc analyst John Aiken said in a note. Given the negative sentiment on the stock, including short sellers, one would expect to see solid outperformance on CIBC as the market begins to rerate the stock, he said.

CIBC net income for the quarter ended Oct. 31 rose 25 percent to C$1.16 billion ($900 million) from a year earlier, the Toronto-based bank said in a statement. Gains in commercial banking and wealth management, along with added contributions from its U.S. acquisitions of PrivateBank and Geneva Advisors LLC, helped lift earnings. Adjusted earnings, which exclude some items, were C$2.81 a share, beating the C$2.61 average estimate of 12 analysts surveyed by Bloomberg.

Credit Losses

“We had particularly strong performance in our personal and business banking segment, they had good revenue growth and very, very good operating leverage," CIBC Chief Financial Officer Kevin Glass said in a phone interview.

In contrast, Toronto-Dominion missed analysts' expectations after posting an 18 percent jump in quarterly profit to C$2.7 billion from a year earlier. Adjusted profit was C$1.36 a share, missing the average estimate of 11 analysts surveyed by Bloomberg by two cents.

“Overall, we have a negative view on Q4 results," RBC Capital Markets analyst Darko Mihelic said in a note on TD, citing weaker revenues and higher provision for credit losses, although efficiency was better than forecast.

Analysts may be seeing a loss of momentum from the third quarter, Toronto-Dominion CFO Riaz Ahmed said. “But from my perspective, I look at the year-over-year results and feel very good about the performance."

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net.

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Scanlan at dscanlan@bloomberg.net, Steven Crabill, Jacqueline Thorpe

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