Canadian Imperial Bank of Commerce NYSE: CM reported higher third-quarter earnings and revenue, citing broad-based growth across its businesses, improved margins and continued positive operating leverage, while management said it remains cautious about trade, geopolitical and macroeconomic uncertainty.
For the third quarter of fiscal 2026, CIBC reported adjusted earnings per share of C$2.73, up 26% from a year earlier. Reported earnings per share were C$2.47 and included a C$232 million after-tax charge related to the bank's Caribbean operations. Adjusted net income rose to C$2.6 billion, while pre-provision, pre-tax earnings increased 20% to C$4 billion.
Revenue rose 15% year over year to C$8 billion. Expenses increased 11%, driven by revenue-linked compensation, business activity and investments in technology, people, branding and strategic initiatives. The result marked CIBC's 12th consecutive quarter of positive operating leverage, according to President and Chief Executive Officer Harry Culham.
“The connectivity of our platform and deep client relationships are translating into high-quality earnings and broad-based growth,” Culham said during the bank's quarterly conference call.
Capital, margins and shareholder returns
CIBC ended the quarter with a common equity tier 1, or CET1, capital ratio of 13.4%, down 19 basis points sequentially. Chief Financial Officer Rob Sedran said organic capital generation was offset by the Caribbean-related charge, the closing of a minority investment in & Partners, and share repurchases. The bank repurchased 7.5 million shares during the quarter.
The bank's liquidity coverage ratio averaged 127% in the quarter. Adjusted return on equity was 16.8%, up 260 basis points from the year-earlier period.
Excluding trading, net interest income increased 14%, supported by balance-sheet growth and margin expansion. CIBC's all-bank net interest margin excluding trading rose 13 basis points from a year earlier and 2 basis points sequentially. Sedran reiterated management's expectation for a stable to gradually positive bias in net interest margin over time.
In Canadian personal and business banking, net interest margin was 3.04%, up 3 basis points sequentially. In the U.S. segment, margin was 3.76%, down 14 basis points from the prior quarter as loans grew faster than deposits and product margins declined. Sedran and U.S. Region head Kevin Li said roughly half of the U.S. margin decline was related to loan and deposit mix, with the remainder tied to pricing.
Li said some pricing pressure reflected loans being repriced lower as clients improved their credit profiles. He added that CIBC expects a seasonal reversion in U.S. deposits in coming quarters.
Business-line performance
Canadian Personal and Business Banking posted adjusted net income growth of 17% and revenue growth of 9%. Revenue benefited from a 25-basis-point year-over-year margin expansion and loan growth. Expenses rose 8%, primarily due to technology investments, strategic initiatives and employee-related costs.
Hratch Panossian, CIBC's group head of Canadian personal and business banking, said the bank is prioritizing profitable client relationships and market-share gains in everyday banking, credit cards and mass-affluent clients. He said demand deposits grew in the mid-single digits, while guaranteed investment certificate balances fell about 10% year over year as some clients shifted into managed investment products.
Canadian Commercial Banking and Wealth Management revenue increased 18%. Commercial banking revenue rose 11% on higher margins and volume growth, with commercial loans and deposits increasing 7% and 8%, respectively. Wealth management revenue climbed 23%, driven by higher average fee-based assets and client activity. Assets under administration and assets under management both increased more than 20% from a year ago.
U.S. Commercial Banking and Wealth Management net income rose 22%, supported by a 7% increase in revenue and lower loan-loss provisions. Capital Markets net income increased 34% as revenue rose 22%, helped by strong equity trading and financing activity. Corporate and transaction banking revenue also increased, though lower advisory and equity underwriting activity partly offset those gains.
Christian Exshaw, CIBC's head of Capital Markets, said the business had benefited from three quarters of “exceptional constructive markets.” He said CIBC expects year-over-year growth in the fourth quarter, though with some quarter-over-quarter moderation due to macroeconomic uncertainty.
Credit outlook remains cautious
Total provision for credit losses was C$564 million in the third quarter, down from C$605 million in the prior quarter. Provisions on impaired loans were C$612 million, up C$64 million sequentially, primarily due to higher provisions in Canadian commercial banking and capital markets.
Chief Risk Officer Frank Guse said elevated impaired losses reflected a small number of specific events in the Canadian commercial banking and capital markets portfolios rather than a broader deterioration in credit conditions. The bank's gross impaired loan ratio was 65 basis points, down 1 basis point from the prior quarter.
CIBC's allowance coverage rose to 81 basis points from 80 basis points in the prior quarter. Guse said the bank continued building reserves in Canadian consumer and commercial banking for tariff-related and macroeconomic risks, while releases in U.S. and capital-markets allowances were primarily related to a U.S. commercial real estate loan portfolio sale and portfolio migrations.
Guse said impaired losses were running somewhat above the bank's initial expectations for the year, reflecting factors including trade tensions, Middle East conflict and oil-price shocks. However, he said management remains comfortable with portfolio resilience and expects impaired-loss rates to remain around current levels through the rest of the fiscal year.
Culham said CIBC will hold its next Investor Day on Dec. 9, when it plans to provide additional detail on its strategy, business mix and priorities for long-term growth.
About Canadian Imperial Bank of Commerce (NYSE:CM)
Canadian Imperial Bank of Commerce NYSE: CM, commonly known as CIBC, is a major Canadian financial institution headquartered in Toronto. Formed in 1961 through the merger of the Canadian Bank of Commerce and the Imperial Bank of Canada, CIBC is one of Canada's largest banks and provides a broad range of banking and financial services to retail, small business, commercial and institutional clients.
CIBC's activities span personal and business banking, wealth management, capital markets and corporate banking.
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