TORONTO – Canadian Imperial Bank of Commerce said on Thursday it expects loan losses to improve because the oil price slump impacts energy clients, and warned they may double if Canada went into recession.
Chief Risk Officer Laura Dottori-Attanasio made the forecast after CIBC posted a first-quarter profit that topped market expectations, with development in retail and business banking offsetting losses from oil sector loans that turned sour.
“If we entered a recessionary-type environment we’re able to see ourselves doubling our loan losses,” Dottori-Attanasio told analysts round the business ask Thursday.
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CIBC joined rivals Royal Bank of Canada and Bank of Montreal in reporting increased losses from impaired loans within the gas and oil sector. Dottori-Attanasio asserted trend was vulnerable to continue.
“We are seeing this quarter plenty of downgrades inside the coal and oil space, a lift in delinquencies. Our expectation should be to see increased loan loss provisions on the go-forward basis,” she said.
CIBC’s gross impaired loans within the coal and oil sector climbed to $128 million within the first quarter, from $125 million inside the fourth quarter and zero within the year-earlier period.
Net income for that quarter ended Jan. 31 was $982 million, or $2.43 per share, in contrast to $923 million, or $2.28 per share, a year ago. Excluding special items, earnings rose to $2.55 per share.
Analysts typically had expected earnings of $2.41 a share, based on Thomson Reuters I/B/E/S.
CIBC recorded a 6 % rise in earnings at its retail and business banking division. Net gain slipped 7 percent at its wealth management unit and was down 10 % in capital markets.
It also raised its quarterly dividend.
? Thomson Reuters 2016
