CIBC The Latest Bank To Raise Its Quarterly Dividend

Canadian Imperial Bank of Commerce (CM) has become the latest of Canada’s big six banks to raise its dividend, lifting the quarterly payout by 3% to $0.83 a share going forward.

CIBC raised its dividend despite a drop in profit during its latest quarter. The Toronto-based lender said that its net income fell 8% year-over-year to $1.52 billion in its fiscal second quarter, which ended April 30.

On an adjusted basis, the bank earned $1.77 per share. Analysts had anticipated $1.78 in per-share profit. While CIBC posted profit growth in its capital markets division during the quarter, its overall profitability declined as credit quality deteriorated.

Across the entire institution, CIBC booked $303 million in loan loss provisions during the fiscal second quarter. That's almost a 10-fold increase from a year earlier when it had $32 million in provisions.

In a news release, CIBC said its acquisition of Costco's Canadian credit card portfolio was one of the reasons for the surge in money set aside for loans that could go bad. That deal with Costco was announced last September.

The profit deterioration was most pronounced in CIBC's core Canadian personal and business banking unit, where net income slid 18% year-over-year to $496 million. Loan loss provisions in the division almost tripled to $273 million from $98 million in the fiscal first quarter.

In addition to the downturn in credit quality in the latest quarter, CIBC also saw its non-interest expenses jump 13% year-over-year to $3.11 billion. CIBC also said that its Common Equity Tier 1 capital ratio dipped to 11.7% from 12.2% in the previous quarter.

CIBC followed Scotiabank and Bank of Montreal in announcing that it is raising its quarterly dividend. CIBC said its dividend will increase to $0.83 per share from $0.805 as of the July 28 payment date. BMO and Scotiabank announced dividend hikes earlier this week when they released their latest financial results.