By Matt Scuffham
TORONTO (Reuters) - Canadian Imperial Bank of Commerce (TO:CM) on Thursday reported quarterly earnings which missed market expectations for the first time in four years, sending its shares lower, while larger rival Toronto-Dominion Bank (TO:TD) marginally beat forecasts.
Shares in CIBC were down 3.1 percent in mid-morning trading with TD shares up 0.1 percent.
CIBC, Canada's fifth-biggest lender, also warned earnings growth could come in toward the bottom of its target range of 5 percent and 10 percent next year, citing geopolitical tensions and slowing economic growth north and south of the border.
The bank said earnings per share rose by 7 percent to C$3.00, short of analysts' forecasts for earnings of C$3.04, according to IBES data from Refinitiv.
CIBC's results suffered from an increase in funds set aside to cover bad loans, lower margins in its U.S. commercial banking and wealth management business and softer growth at its investment bank, said Eight Capital analyst Steve Theriault.
"We'd expect near-term underperformance in CIBC's shares," Theriault said.
CIBC reported a 10 percent rise in earnings for the full-year but Chief Executive Officer Victor Dodig told analysts on a conference call that could fall to closer to 5 percent in 2019.
"If the political headwinds continue we'll still be within our range, but probably to the lower end," he said.
TD, Canada's second-biggest lender which also has substantial U.S. operations, said earnings per share increased by 20 percent to C$1.63 in the quarter, ended Oct. 31. Analysts had, on average, forecast earnings of C$1.62, according to IBES data from Refinitiv.
Interest rate hikes in the U.S. and Canada have helped boost TD's net interest margin (NIM), the difference between the interest it gets from borrowers and what it pays to savers.
In an interview, Chief Financial Officer Riaz Ahmed said rising rates gave the bank confidence it would deliver earnings within its previously stated target of 7 to 10 percent next year.
The bank's NIM rose by two basis points to 1.68 percent in the year to Oct. 31 and Ahmed said he expected further improvement in 2019 despite rising competition for customer deposits.
TD's U.S. retail business saw a 44 percent increase in net income to C$1.14 billion, reflecting higher margins and beneficial tax reforms.
For the full year, TD reported net income of C$12.2 billion, up 15 percent.