Topic: How To Invest

The Successful Investor Hotline – Friday, December 9, 2022

Article Excerpt

CANADIAN IMPERIAL BANK OF COMMERCE, $58.52, Toronto symbol CM, remains a buy for long-term gains. The stock has dropped 10% since the start of December, mainly due to concerns that rising interest rates will slow demand for new residential mortgages and refinancing. Those loans account for 55% of its total loan portfolio. As well, rising interest rates and inflation are prompting CIBC to set aside more funds for potential future loan losses. In its fiscal 2022 fourth quarter, ended October 31, 2022, those provisions jumped to $436 million from $78 million a year earlier. CIBC’s recent acquisition of the credit card business of Costco’s Canadian stores also contributed to the higher provisions. As a result, earnings before unusual items in the quarter declined 17.3%, to $1.39 a share (or a total of $1.30 billion) from $1.68 a share (or $1.57 billion) a year earlier. That missed the consensus estimate of $1.72. (Note—All per-share amounts adjusted for a 2-for-1 stock split in May 2022.) Earnings…