Challenges in the energy sector comprise many of the significant risks
Despite seeing good profit growth during the second quarter, Canadian Imperial Bank of Commerce said that it is bolstering its resources to ensure its ability to respond to possible impaired loans.
During Q2 2019, the bank’s net income was almost $1.4 billion, growing by 2% year-over-year. In the same period, its provisions for loan losses also increased to $18 million, “primarily due to higher provisions on impaired loans in the oil and gas sector.”
CIBC’s overall provisions for credit losses were $291 million for the third quarter, compared to the $241 during the same time last year.
“While our provision for credit losses increased modestly this quarter to $291 million, the quality of our book remained relatively stable, and we remain comfortable with the outlook,” CIBC president and CEO Victor Dodig said late last week, as quoted by the Financial Post.
Some of the more serious risks from the energy sector are brought about by the immense pressure from low natural gas prices and various pipeline challenges.
The bank’s provisions for performing loans went up to $24 million, “primarily due to an increase in the oil and gas sector to reflect expectations of potentially higher losses resulting from low natural gas prices.”
Furthermore, CIBC’s Q2 profits suffered a bit from the 13% annual decline in its capital-markets unit, with income falling to $231 million.
