Canadian Imperial Bank of Commerce (CIBC) (TSX:CM) posted a strong earnings report for the fiscal second quarter of 2025, with both revenue and profit exceeding market expectations.
For the quarter, adjusted earnings per share of $2.05 beat estimates of $1.88.
Revenue of C$7.02 billion topped estimates of C$6.9 billion.
Provision for credit losses was $605 million, up $91 million from the year-ago quarter, driven by an unfavorable change in the bank’s economic outlook affecting performing loans.
The bank was less conservative than its peers in reserving against performing loans, analysts at Jefferies highlighted.
“That decision directly benefited its bottom line but, relative to its peers, impedes future earnings; it will either have to provide more in future quarters or, alternatively, have lower releases,” they wrote. “That said, the underlying operations appear to be firing on all cylinders under challenging conditions.”
The analysts believe the underlying improvements in profitability can be sustained by CIBC, underpinned by growth and expense management.
“We are encouraged by the progress that CIBC is making on its stated strategy,” they wrote. “However, CIBC's call on its credit reserving leaves it as a bit of an outlier (even if it is simply on sentiment), which investors may need some time to get comfortable with.”
The analysts have a ‘Hold’ rating but upped their price target to $94 from $89, to reflect the switch to 2026 as their valuation year.
Shares of CIBC were flat late morning on Thursday, trading hands at $94.