03 December 2010

CIBC Q4 2010 Earnings

TD Securities, 3 December 2010

Q4/10: Another Good Quarter; See More Upside in Retail

Yesterday before the open, the bank reported Core Cash FD-EPS of C$1.68 versus TD Newcrest at C$1.57 and Consensus at C$1.63.


Positive. The bank reported better than expected numbers on the back of good Retail and good Credit; earning through some weakness in Wholesale and elevated expenses. We are very comfortable with the earnings power here and we nudged up our estimates. The stock has had a very good run (roughly 20%+ returns on 5-months), but we think there is some more to go on our upwardly revised Target Price. Reiterate BUY.


Retail is contributing nicely, with some more to come. NI was better than we expected despite higher expenses and with less help from Treasury versus Q3. Volumes are building and the MasterCard portfolio has yet to fully contribute. We are comfortable with the earnings power here and the prospects of reaching the bank’s C$3 billion 2013 earnings objective.

No help from Wholesale, but it should be back. The quarter earned through a largely absent Wholesale segment. It should bounce back and contribute to the run rate going forward.

Further leverage from improving credit should be more modest. PCLs were surprisingly good, supported by strong underlying trends. From here, we should see modest improvement in PCL rates.