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WRAPUP 1-TD Bank, CIBC post profit beats as capital markets offset weakness elsewhere

TORONTO, Aug 27 (Reuters) – Toronto-Dominion Bank and Canadian Imperial Bank of Commerce beat analyst expectations for third-quarter profit on Thursday as strong earnings growth in their capital markets businesses helped offset weakness in almost every other unit.

TD Bank’s 81% growth in its wholesale banking unit and CIBC’s 67% rise in capital markets profit were in stark contrast to the performance of their Canadian personal and commercial banking businesses, which saw earnings slide.

Higher loan-loss provisions in these units, albeit improving from the prior quarter’s highs, and lower net interest margins amid decade-low interest rates eroded gains from increased loan and deposit volumes.

Total provisions for credit losses (PCL) at TD rose to C$2.2 billion from C$655 million a year earlier, although they were down from C$3.2 billion in the previous quarter. Estimates had called for PCL of C$2 billion.

CIBC’s PCL climbed to C$525 million from C$291 million a year earlier, although they were down from C$1.4 billion in the previous quarter. That was better than estimates of C$715.7 million.

With pandemic-driven loan deferral programs starting to wind down, CIBC said its Canadian loan balances in deferral now totaled C$38.9 billion in Canada, down from C$48.2 billion in the prior quarter.

TD said total balances in deferral fell to 6% from 8% in the previous quarter.

TD and CIBC followed most of their rivals, which also reported profits that were buoyed by the recovery in financial markets following their slump in March, early in the coronavirus pandemic.

($1 = 1.3144 Canadian dollars) (Reporting by Nichola Saminather; editing by Jason Neely and Steve Orlofsky)

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