CANADIAN IMPERIAL BANK OF COMMERCE $93 - Toronto symbol CM

CANADIAN IMPERIAL BANK OF COMMERCE $93 (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 397.2 million; Market cap: $36.9 billion; Price-to-sales ratio: 3.0; Dividend yield: 4.6%; TSINetwork Rating: Above Average; www.cibc.com) sold half of its Aeroplan accounts to TD Bank (see page 31) when TD took over the plan at the start of 2014.

The sale cut CIBC’s revenue by 4.7% in the three months ended January 31, 2015, to $3.5 billion from $3.6 billion a year earlier.

Excluding a gain on the Aeroplan sale and other unusual items, earnings improved 0.5%, to $956 million from $951 million. Per-share profits rose 2.2%, to $2.36 from $2.31, on fewer shares outstanding.

CIBC’s main Canadian retail banking operations (61% of the total) reported that its earnings fell 3.9%. Lower interest income from credit cards following the Aeroplan sale offset higher consumer and business loan volumes.

Earnings from securities trading (27%) jumped 26.0% on stronger equity and foreign exchange trading volumes, higher fees from underwriting and a gain on the sale of an investment. Wealth management earnings (13%) gained 12.8%, as rising stock markets increased the value of the assets this business administers.

Loan-loss provisions fell 14.2%, to $187 million from $218 million a year earlier. That’s due to the Aeroplan sale and better credit management, which offset higher provisions on U.S. real estate loans.

The stock trades at a low 10.1 times the $9.23 a share that CIBC will probably earn in 2015. The bank also raised its dividend by 2.9%. The new annual rate of $4.24 a share yields 4.6%.

CIBC is a buy.

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