Aeroplan credit card deal helps push CIBC Q1 net profit to $1.177 billion
TORONTO - CIBC (TSX:CM) is reporting $1.177 billion of net income in the first quarter, up nearly 50 per cent from last year, as it books a gain from the sale of half its Aeroplan credit card business and other items.
CIBC's adjusted net income, which excludes unusual times such as the Aeroplan deal, also grew â€” a less dramatic but still substantial increase to $951 million, up 6.3 per cent from $882 million a year earlier.
Excluding certain items, CIBC's adjusted diluted earnings were $2.31 per share, up from $2.12 per share in the first quarter of 2013 â€” 15 cents above the Thomson Reuters estimate of $2.16 per share.
"Our record results this quarter reflect the progress we continue to make in executing our client-focused strategy," CIBC chief executive Gerald McCaughey said in a statement.
"Each of our core businesses delivered strong results. The strength of our underlying fundamentals allows us to generate high returns for our shareholders."
The bank says its dividend will rise by two cents or two per cent to 98 cents per common share, payable April 28.
Under standard accounting, CIBC's net income was $2.88 per share. The bank said the Aeroplan deal accounted for 48 cents per share of the net income.
CIBC's net earnings also included several other unusual items including a gain of 14 cents per share from the sale of its stake in a European finance portfolio, mostly offset by several negative items.
During the quarter, TD became the primary issuer of new Aeroplan Visa cards for the next 10 years â€” replacing CIBC, which had filled that role for more than two decades.
However, the banks and Aeroplan's operator â€” Montreal-based Aimia Inc. (TSX:AIM) â€” reached a compromise that allowed CIBC to keep half its Aerogold Visa customers and sell the other half to TD.
In addition, CIBC will continue to process the accounts until new TD cards are issued and both banks will have the right to sign up new customers under their respective Aeroplan loyalty programs.
CIBC is also offering other credit cards that offer loyalty points that can be exchanged for travel on other airlines besides Air Canada, which began Aeroplan as a frequent flyer reward system.
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