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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.

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Canada’s fifth-largest bank is facing pressure from investors to cut costs, as it grapples with an underperforming retail division and mounting expenses, according to sources who spoke to The Globe and Mail. Christina Kramer, head of personal and small-business banking, is expected to replace Kevin Patterson as head of technology and operations; Patterson plans to retire this year. Laura Dottori-Attanasio, current chief risk officer, will reportedly replace Kramer. (The Globe and Mail)

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Talking point: The cuts—if the board approves them—will follow mass layoffs at BMO, which, in December 2019, announced 2,300 employees would lose their jobs in what amounted to the deepest cuts any Canadian bank had experienced in over 15 years. The financial institutions are the latest to join a global trend of banks shedding revenues and employees. HSBC said this week it would cut 35,000 jobs and US$4.5 billion in spending by 2022. European and U.S. banks cut 30,000 people in summer 2019, after revenues at 12 of the top banks in those markets dropped 11 per cent in the first half of that year. RBC, which reported first-quarter earnings on Friday, appears to be bucking the trend: it announced an 11 per cent rise in quarterly profit, driven largely by 35 per cent growth in its capital markets division compared to the same quarter last year and a seven per cent jump in retail banking.

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CEO Victor Dodig sent a memo to staff Thursday warning of an undisclosed number of job cuts in the coming months. (The Globe and Mail)

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Talking point: CIBC cited a desire to improve its efficiency ratio, a measure of expenses relative to revenue, for the cuts. The bank had wanted to hit 55 per cent by the start of this year, but fell short, at 55.6 per cent. CIBC is the fourth major Canadian bank to report layoffs recently. Last year, BMO cut five per cent of its workforce and took a $484-million pre-tax restructuring charge. RBC and TD Bank took restructuring charges of US$83 million and $154 million, respectively, in their most recent quarters. Earlier this month, BMO and RBC said they weren’t planning more cuts this year, but CIBC and TD Bank did not rule out further restructuring charges. The Canadian layoffs follow significant cuts at global banks, which exceeded 75,000 staff.

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TD reported $2.86 billion in net income for the fourth quarter, down about four per cent from last year. CIBC earned $1.19 billion, a six per cent drop. (The Logic)

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Talking point: The big banks are facing a series of macroeconomic challenges, including a growing number of potentially sour loans—something both CIBC and TD cited as partially responsible for their income dips. Banks are looking at cutting costs in response. TD reported a $154-million restructuring charge Thursday; earlier this week, RBC said it spent $113 million on severance and BMO reported a $484-million charge as part of a five per cent staff cut. CIBC did not report a restructuring charge Thursday, but CEO Victor Dodig said the bank is looking at improving efficiencies and simplify operations, which “could potentially require a charge down the line in order to accelerate our progress.”

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The bank’s profit rose 2.1 per cent overall to $1.4 billion, and it raised quarterly dividends to $1.44 per share. Its strongest divisional performer was its U.S. operations, where profit jumped 6.2 per cent to $172 million. Share earnings also grew to $3.10 per share, beating analyst expectations by four cents. These results helped counter a 13 per cent decline in capital markets. (The Logic)

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Talking point: CIBC CEO Victor Dodig told investors in May that he expected earnings per share to be relatively flat this year, citing a slowdown in domestic mortgages, which dampened second-quarter results. But the bank has been pushing into the U.S. to reduce its dependence on domestic lending, including a $US5-billion acquisition of Chicago-based PrivateBancorp in 2017. These results—in which the U.S. commercial and wealth-management division was the quarter’s strongest performer—show the push is paying off. Quarterly profits in 2018 for that division saw significant growth following the acquisition—including a 431 per cent jump in the second quarter of 2018, relative to the same period in 2017. The bank’s overseas commercial banking is also helping CIBC weather uncertain market conditions amid global trade tensions, a factor RBC cited when it posted a 6.4 per cent capital markets decline Wednesday.

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CIBC’s exchange-traded funds (ETF) begin selling on the Toronto Stock Exchange today. Scotiabank started offering its own ETFs last year while the National Bank of Canada filed with regulators last year for its own funds. RBC recently partnered with BlackRock, the world’s largest ETF provider, to bring a combined $60 billion in assets under management. (Bloomberg)

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Talking point: Canada’s banks have been late to the ETF space compared to the U.S. They’ve been leaving money on the table—Canadian ETFs saw $20 billion of inflows last year lifting assets in the industry to $156.6 billion and outselling mutual funds for the first time since 2009, the Financial Post reports. The banks are following the lead of fintech startups: Coinsquare launched two ETFs last year, and Wealthsimple offers access to third-party ETFs within its portfolios.

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The two major banks are joined by wholesale bank Concentra in loaning $80 million to the joint venture part-owned by Canopy Rivers Inc., the venture investment arm of Canopy Growth Corp. The funds will let PharmaHouse purchase a 1.3-million-square-foot glass greenhouse growing facility in Leamington, Ont. (Financial Post)

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Talking point: This is the second time both BMO and CIBC have backed a cannabis company. BMO co-led financing in Canopy’s $175 million raise last January, and CIBC led Canopy Rivers’ $104-million funding round in June 2018. Despite legalization, traditional banks are wary of financing cannabis companies. Canopy—both Rivers and Growth—can perhaps thank its ties with the banks for earning the institutions’ trust: Bruce Linton, CEO of Canopy Growth and its VC branch, said, “The entire team at Canopy Rivers has great pedigree. They come from CIBC, TD, OMERS, and so it wasn’t difficult for us to convince the big banks that we have something great going at PharmHouse.”

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The Loblaw subsidiary launched a no-monthly-fee bank account linked to its loyalty program. It marks PC Financial’s first move back to everyday banking since it and CIBC severed ties in 2017. (The Globe and Mail)

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Talking point: The new account links to Loblaw’s PC Optimum loyalty program. The retailer merged two existing programs—Shoppers Optimum and PC Plus—in 2018, and it’s since grown it to some 18 million consumers. The new bank accounts will allow customers to earn loyalty points on every dollar they spend, online bill payments over $50, setting up direct deposit and other moves. PC Financial president Barry Columb said consumer research has shown customers want “rewards.” Building loyalty helps Loblaw retain customers and boost profits. It can also mine the data to deliver targeted ads, among other things.