CIBC boosts dividend on better-than-expected earnings

CIBC increased its quarterly dividend Thursday as it reported a first-quarter profit of $923 million, higher than analysts had expected.

In a surprise move, the bank said it will now pay a quarterly dividend of $1.06 per share, up by three cents, in line with its plan to boost the payout to shareholders.

CIBC said the profit for the quarter ending Jan. 31 amounted to $2.28 per share, down 23 per cent from the $1.2 billion or $2.88 per share a year ago, when the bank benefited from the sale of half its Aeroplan credit card portfolio.

But minus the impact of the Aeroplan deal, CIBC's earnings were slightly higher and ahead of analysts expectations of $907 million for the quarter. Adjusted income in the first quarter came in at $956 million, up from adjusted income of $951 million a year ago. 

"CIBC reported solid results, capped off with a surprise dividend increase in what could be interpreted as a signal from the board that its outlook is nowhere near as negative as what is being priced into CM's shares at present," Barclays analyst John Aiken said in a note to clients.

CIBC's retail and business banking segment accounted for $650 million of its net income, down 13 per cent from the first quarter of 2014, which included a one-time $123-million gain the Aeroplan deal.

Adjusted net income at CIBC's retail and business banking dropped four per cent or $25 million to $618 million.

The Wall Street Journal reported previously that CIBC cut 500 jobs in January. The bank didn't confirm the figure at the time but did say it was realigning its resources.

CIBC has been looking to expand its wealth management and private banking business in the U.S. through an acquisition in the realm of $1 billion to $2 billion.

However, chief executive Victor Dodig said the bank has yet to find any attractive targets.

"To date, while we have been actively assessing opportunities, we have not identified anything that meets our acquisition criteria," Dodig said.

"We will be patient and remain disciplined ... as we seek to deploy capital to grow our CIBC franchise."