Canadian Imperial Bank of Commerce’s pace of mortgage growth shows no signs of slowing.
Average mortgage balances at the country’s fifth-largest lender by assets soared 13 percent in fiscal third quarter, the biggest year-over-year increase since 2007.
CIBC has been an outlier among Canada’s largest lenders recently for the rate at which its home loan portfolio has expanded. The Toronto-based bank has pointed to a decision to beef up its mobile sales force to about 1,200 advisers after exiting its FirstLine mortgage broker business in 2012 as a reason for the jump. A diminishing run-off of FirstLine mortgages — now less than a 10th of what was once a C$50 billion ($40 billion) mortgage book — has also helped, the company has said.
CIBC’s domestic mortgage growth in the previous three quarters was double the rate of larger rivals Royal Bank of Canada and Bank of Montreal and more than triple that of Toronto-Dominion Bank and Bank of Nova Scotia. CIBC reported increases of 12 percent in the second quarter and 9.5 percent a year ago.
CIBC has boosted exposure to mortgages even as Canada’s average home price fell 1.5 percent in June — the most in nearly a decade — led by Toronto’s 4.7 percent decline. Ontario’s government introduced measures in April that included a foreign buyer’s tax to cool what officials called unsustainable price gains, following similar measures enacted last year in Vancouver.
Average mortgage balances climbed to C$194.6 billion in the three months ended July 31 from C$188.6 billion at the end of the second quarter and C$172 billion a year earlier, CIBC said Thursday in its financial disclosures.
Mortgages contributed to an 8 percent increase in profit at CIBC’s Canadian retail and business banking division, its largest operation. That helped offset a 10 percent earnings decline in capital markets, which had lower revenue from trading and equity underwriting.
Net income for the period fell 24 percent to C$1.1 billion, or C$2.60 a share, from C$1.44 billion, or C$3.61, a year earlier, when it had a gain from selling its stake in U.S. money manager American Century Investments, according to the statement. Profit excluding some items was C$2.77 a share, beating the C$2.66 average estimate of 13 analysts surveyed by Bloomberg. CIBC raised its dividend 2.4 percent to C$1.30 a share, its 10th increase in 12 quarters.
CIBC’s $5-billion takeover of Chicago-based PrivateBancorp added C$23 million to profit in the quarter, the bank said, even though the deal closed just five weeks before the end of the period.
© Bloomberg L.P.