The Canadian Imperial Bank of Commerce is a leading financial institution in North America. It was created in 1961 from the merger of the Canadian Bank of Commerce and the Imperial Bank of Canada.

The bank operates through its four strategic business units Canadian Personal and Small Business Banking (35% of net income), Canadian Commercial Banking and Wealth Management (23%), US Commercial Banking and Wealth Management (13%) and Capital Markets (29th) %).

CIBC serves 10 million individual, corporate, commercial, corporate and institutional clients in Canada, the US and around the world.

The bank operates through a broad network of 1000+ banking centers, 3000+ ATMs, and direct, mobile and remote channels. CIBC gets ~ 69% of its net income from Canada, followed by 20% from the US and 11% from others.

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Plant data

Sales growth & market presence

CIBC is a leading North American financial institution with a market capitalization of $ 57 billion. The bank offers a wide range of financial products and services, ranging from private, commercial and commercial banks to asset management and capital markets businesses. It also has a strong credit card portfolio that offers both value and choice to its customers.

With a 153 years of historyCIBC has successfully developed a strong customer-centric culture and operational efficiencies that support value creation for shareholders. Strong customer relationships should support growth on multiple platforms.

CIBC invests in technology and digital platforms to meet the changing needs of its customers and has seen significant growth in digital adoption rates and active mobile users over the quarters. CIBC’s Smart Business for Banking, Smart Banking for Business, is designed to help companies integrate their banking, accounting and payroll functions.

Improvements in fundamentals in retail, corporate and wealth management in the US and Canada drove the bank’s performance. CIBC is focused on diversified earnings growth and investing in new markets and customer development to deliver strong credit growth.

It estimates that it will increase its share of net income from the USA from currently 20% to 25% in the medium term. CIBC is well positioned to build on the positive momentum in its North American Commercial Banking, Capital Markets and US Private Wealth Management businesses.

Consistent investments in its business to improve its capabilities, as well as in platform modernization, continue to result in strong sales growth in Commercial Banking across North America. She is in a good position to use her capital market expertise to offer advice and solutions across the bank.

At CIBC, as a dual-listed stock on the TSX and NYSE, you can choose to hold it in a Canadian or US account.

Dividends

CIBC is a dividend aristocrat and most recently increased its annual dividend by 1.4%. It has a dividend yield of 3.5% and a payout ratio of 49%. As one of the 6 major banks, CIBC has maintained a dividend payout ratio of between 40% and 50%.

The bank has increased its dividend by 6% + CAGR annually for the past five years. The goal is to distribute 40-50% of your profits as dividends and grow your profits by 5-10% annually. CIBC has stopped share buybacks and dividend increases in response to the COVID-19 pandemic.

A CET1 capital ratio of 12.4% offers flexibility in using capital to invest in companies while allowing dividend growth in line with earnings. Over 70% of CIBC’s assets under management have outperformed over the past five years. The bank is focused on increasing chargeable revenue as well as retail and institutional net sales by enhancing customer loyalty with a differentiated, solution-based, full-service approach.

CIBC is well positioned to deepen client relationships through cross-referencing in wealth management, personal banking and capital markets. CIBC aims to expand its coverage in the mid-market segment and to scale its global capacities in the capital markets area. Capital allocation will focus on helping customers and maintaining dividends.

The bank does not expect any significant M&A activity in the USA in the short term. CIBC continues to introduce new programs and solutions to conveniently meet the financial needs of its customers.

CIBC (CM) historical return
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competition

Canada’s private and commercial banking segments are highly competitive. CIBC competes with other leading Canadian banks such as TD Bank, Royal Bank, Scotiabank, Bank of Montreal and National Bank.

TD Bank is one of the ten largest financial services companies in North America. The National Bank is one of the six largest commercial banks in Canada, while Scotiabank is a leading international financial services company with a rich history of 185 years, and the Bank of Montreal is the eighth largest bank in North America by assets.

As the fifth largest bank in Canada, CIBC is in a good position to capitalize on improving fundamentals in the Canadian real estate market.

Bottom line

Investing in a customer-centric culture and in cross-border and digital banking platforms should help Canadian Imperial Bank consistently generate high quality returns.

The bank will prioritize growth in segments that are expected to outperform and maintain its focus on asset quality and the diversification of loan and deposit portfolios. CIBC has good chances of taking advantage of organic growth opportunities by deepening relationships in its core markets and expanding its presence in new markets.

CIBC continues to strengthen its customer-centric culture and connectivity to support its customers. She is in a good position to use her capital market expertise to offer advice and solutions across the bank.

CIBC (CM) Historical PE
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