By Robb M. Stewart
Canadian Imperial Bank of Commerce is selling its Caribbean banking arm for roughly $1.6 billion as it looks to shift capital toward growth efforts in North America.
The bank, one of Canada's largest lenders, also unveiled plans to launch a share buyback program alongside quarterly financial results that included a 23% jump in net income and expansion in return on equity from a year ago.
CIBC said it has agreed to sell its 91.7% interest in CIBC Caribbean to Bank of N.T. Butterfield & Son for $1 billion in cash and 52.1 million Butterfield shares, currently valued at $645 million. The deal will see CIBC secure a minority stake in Butterfield of about 22% when the deal closes.
The big bank said its capital position will strengthen as a result of the sale, with its common equity Tier 1 ratio expected to increase by 0.24 percentage points on top of a buffer than already sits well above the regulatory minimum. The sale is set to close in the first half of 2027, subject to approval from regulators and Butterfield's shareholders.
CIBC said it plans to buy back up to 30 million of its shares, about 3.3% of the outstanding number. It will file a notice of its intention to launch a normal course issuer bid with the Toronto Stock Exchange, which would allow it to buy back stock over a one-year period.
The bank recorded second-quarter net income of 2.47 billion Canadian dollars ($1.78 billion), or C$2.53 a share, for the three months ended April 30, against C$2.01 billion, or C$2.04, a year earlier. On an adjusted basis, per-share earnings rose to C$2.54, beating the C$2.46 mean estimate of analysts polled by FactSet.
Return on equity, a measure of profitability and efficiency, widened to 16.4% from 13.8% in the same period last year.
Total revenue increased 14% at C$8.01 billion, ahead of the C$7.96 billion analysts anticipated.
The rise in net income was driven by growth in CIBC's capital markets arm, as well as strength in U.S. commercial banking and wealth management. Income was also up in its Canadian personal and business banking arm, and Canadian commercial banking and wealth management operations.
CIBC's provision for credit losses stood at C$605 million in the latest quarter, steady on a year ago but up by C$37 million from the prior quarter. Year-over-year, its provision for credit losses on performing loans was down due to what it said was a less unfavorable change in its economic outlook, while the provision on impaired loans rose with increased provisions for its Canadian operations.
The bank's common equity Tier 1 capital ratio stood at 13.6% for the three-month period. The country's banking regulator requires the big banks to hold a capital ratio of no less than 11.5% of risk-weighted assets.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
May 28, 2026 06:18 ET (10:18 GMT)
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