CEO highlights why clients are holding back
The threat of escalating tariffs is making businesses and consumers more cautious, according to Canadian Imperial Bank of Commerce (CIBC) CEO Victor Dodig. Speaking Thursday, Dodig emphasized the need for political leaders to strengthen North America’s economic stability amid trade uncertainty.
“Clients across the board, across the country, are feeling a little more tentative in terms of commitments going forward until there’s more certainty,” Dodig said during a conference call. “Businesses and personal clients like certainty to move forward, so the sooner we can get that certainty, the better.”
Despite concerns, CIBC posted a 26% increase in quarterly profit for its fiscal first quarter, reporting net earnings of $2.17 billion, or $2.19 per share, compared with $1.73 billion, or $1.77 per share, a year ago. Adjusted earnings stood at $2.20 per share, surpassing analyst projections of $1.96 per share.
Provisions for credit losses rose to $573 million, an increase from the previous quarter, though 2% lower than last year. Of this, $127 million accounted for potential risks tied to uncertain economic conditions, including possible US tariffs.
While sectors such as forestry, auto parts, aluminum and steel, and agriculture could face significant disruption, Dodig noted CIBC’s lending exposure to these industries is relatively low compared to other major banks. Commercial loans grew 8% in Canada and 4% in the US during the quarter.
CIBC’s Canadian commercial banking and wealth management unit reported a $68 million profit increase to $591 million, while its US commercial and wealth division rebounded with $256 million in earnings. Capital markets profit surged 19% to $619 million, driven by strong trading revenues.
Dodig stressed policy actions are needed to counter trade risks, specifically addressing the digital services tax on foreign technology companies and US concerns over steel dumping in Canada. He said that if aluminum and steel “is indeed getting dumped through Canada, we should definitely halt it,” adding that resolving these issues could ease tensions with the US.
CIBC and Canada’s five other major banks exceeded profit expectations, aided by strong capital markets revenues. However, banks remain cautious, citing the potential for slower loan growth and rising credit losses amid tariff pressures.
Maintaining a quarterly dividend at 97 cents per share, CIBC repurchased 3.5 million shares and ended the quarter with a common equity Tier 1 (CET1) ratio of 13.5%, up from 13.3% in the prior quarter.
Despite ongoing challenges, Dodig highlighted CIBC’s resilience, stating, “We go into this feeling what our clients are feeling, but as a strong bank and a well-built portfolio.”
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