By Nichola Saminather
TORONTO (Reuters) -Canadian Imperial Bank of Commerce (CIBC) and National Bank of Canada (OTC:NTIOF) both comfortably beat analysts' estimates for quarterly earnings on Friday, driven by loan and fee growth, as well as strength in their capital markets businesses.
The lenders join Royal Bank of Canada in posting positive earnings surprises in a quarter in which analysts had expected some challenges, particularly higher expenses and a lower contribution from trading businesses following a record quarter a year earlier.
CIBC shares jumped 4% to C$161.09, while National Bank added 1.5% to C$102.27 in early trading, compared with 0.2% rise in the benchmark Toronto stock benchmark.
CIBC, Canada's No. 5 lender, announced a two-for-one share split, subject to approval at its annual shareholder meeting scheduled for April. It reported adjusted profit that rose 14% from a year earlier in the three months to Jan. 31, better than analysts had expected.
About two-thirds of CIBC's revenue beat was due to trading activities and the rest due to "core banking outperformance," Gabriel Dechaine, an analyst at National Bank Financial, wrote in a note.
CIBC posted a 11% jump in expenses during the quarter, the same increase as revenue growth, from a year ago, although they were down from the previous quarter, when the bank saw the increase in costs outpace revenue expansion. National Bank had expense growth of 8% versus revenue that grew 11% from a year earlier
CIBC expects expense growth in the high single digits percentage wise if revenues keep rising, but remains confident the latter will outpace cost expansion, executives said on an analyst call.
National Bank, the smallest of the country's Big Six banks, said net income excluding one-off items increased to C$2.65 per share from C$2.15 a year earlier, beating estimates of C$2.23.
Both banks saw 11% growth in their capital markets revenues from a year earlier. They also reported strength in their Canadian commercial loan books, highlighting the return of business borrowers who had pulled back for most of the pandemic, although deposits have also continued to climb.
About 40% of CIBC's loan growth came from new clients, and the bank's pipeline for future increases is the strongest it has been since 2019, executives said on an analyst call.
Higher loan volumes overall helped mitigate declines in net interest margins across both banks' lending units.
Separately, National Bank said it had appointed Marie Chantal Gringas chief financial officer.