02.26
CIBC (CM): $69.95 – Q1/10 EPS ahead of expectations on credit and wholesale revenues
Sector Perform, Average Risk, Price Target: $82.00
CIBC’s Q1/10 EPS were ahead of expectations on lower loan losses and better than expected wholesale revenues. Capital ratios were higher than our forecast as risk weighted assets declined. Q1/10 cash EPS were $1.60 compared to RBC CM estimate of $1.58, and core cash EPS were approximately $1.65 versus RBC CM estimate of $1.44 and consensus of $1.42. Core retail banking income of $528 million was slightly below our estimate driven by lower than expected revenues, offset by lower than expected expenses. The Tier 1 ratio of 13.0% was above RBC CM 12.2% estimate and up from 12.1% in Q4/09RBC CM increased its 2010 and 2011 core cash EPS forecasts by $0.39 and $0.25, respectively, to $6.20 and $7.20 to reflect lower than previously anticipated credit losses. RBC CM will review its ratings and estimates for all banks it covers as part of the industry review we will publish once all banks have reported.
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