Canadian Imperial Bank of Commerce is having a harder time keeping costs in check as inflation picks up and the lender invests in its domestic consumer franchise.
Noninterest expenses rose 7.4% from the third quarter to C$3.14 billion ($2.5 billion), the Toronto-based bank said Thursday. That’s an acceleration from the previous 5.9% quarter-over-quarter gain it reported in August.
Overall profit trailed analysts’ estimates. CIBC has been spending on its Canadian personal and business banking unit to sustain the growth in mortgages and client retention it has seen in recent quarters. But those investments haven’t been cheap as labor costs rise and banks battle to retain talent.
The lender also raised its quarterly dividend 10% to C$1.61 a share, and announced a plan to buy back 10 million shares, or about 2.2% of outstanding shares. At the current share price, that would cost about C$1.4 billion. Canada’s banks last month were released from restrictions on dividend increases and share buybacks that regulators put in place early in the pandemic to protect the financial system.
CIBC shares have advanced 30% this year, compared with a 26% gain for the S&P/TSX Commercial Banks Index.
Net income rose 42% to C$1.44 billion, or C$3.07 a share, in the three months through Oct. 31. Excluding some items, profit was C$3.37 a share. Analysts estimated C$3.54, on average.
CIBC took C$78 million in provisions for credit losses. Analysts estimated C$125.4 million, on average.
Canadian banking profit rose 1.2% from a year earlier to C$597 million.
