Briefing

CIBC cuts almost five per cent of its workforce after beating analyst expectations

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The bank reported a $339-million restructuring charge mainly to pay for severance packages for the 2,200-plus employees it’s laying off, its biggest round in two decades. CIBC still beat analysts’ expectations for its first-quarter financial results: it reported a $1.2-billion quarterly profit, a nine per cent increase in adjusted net income to about $1.5 billion, and 63 per cent year-over-year net income growth in its capital markets business. (Financial Post)

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Talking point: CIBC follows RBC, BMO and Scotiabank in defying what analysts thought would be a soft quarter for Canada’s financial institutions. Positive earnings were in part driven by growth in the banks’ capital markets businesses, which largely speaks to the strength of the stock markets at the time. With concerns about an economic slowdown on the horizon, however, banks may not be able to keep relying on the division to pad their balance sheets. CIBC’s layoffs, along with BMO’s cuts in December 2019, could signal longer-term challenges down the road, as banks struggle to grow revenues while also facing pressure to spend more on technology to compete with rising fintech competitors.