Canada’s CIBC reins in mortgage growth

Bloomberg

Canadian Imperial Bank of Commerce is no longer an outlier on mortgages. CIBC has scaled back its rapid expansion of Canadian home loans, bringing it more in line with the industry and ending a two-year streak of outpacing the nation’s other big banks. Mortgage balances rose 6 percent to C$208.2 billion ($161.6 billion) in the fiscal second quarter from a year earlier, the Toronto-based bank said on Wednesday in announcing earnings that beat analysts’ estimates. That’s the slowest growth in three years.
Canada’s fifth-largest lender has eased a build up of its mobile-mortgage sales force after years of growth as the nation’s housing markets cool. Canadian home sales have softened in the wake of government measures to cool the market, including tougher mortgage qualification rules imposed in January.
CIBC is the first Canadian bank to post results for the period ended April 30. The nation’s biggest lenders are predicted to post average earnings growth of 8 percent for the period, lifted by gains in US and international operations, wealth management and domestic banking.
Chief Executive Officer Victor Dodig has sought to diversify CIBC following criticisms that the bank is “too Canadian focused.”
The lender has the greatest relative exposure to Canada’s housing market, with a higher percentage of earnings coming from domestic personal-and-commercial banking than its bigger rivals. Net income for the quarter rose 26 percent to C$1.32 billion, or C$2.89 a share, from C$1.05 billion, or C$2.59, a year earlier, CIBC said in a statement. Adjusted earnings were C$2.95 a share, compared with the C$2.81 estimate of 13 analysts surveyed by Bloomberg.