CIBC wealth management segment earnings up 34% in 3Q

CIBC wealth management segment earnings up 34% in 3Q

CIBC wealth management segment earnings up 34% in 3Q

Strong gains in the wealth segment helped CIBC bring in its highest net earnings to date. It reported net income was $890 million, up from $841 million a year earlier and $876 million in the prior quarter.  Adjusted net income was $943 million, compared with $866 million for in 3Q2012 and $876 million in the prior quarter.

In the wealth segment, net income for the quarter was up 34% year on year at $102 million and up 11% from the prior quarter. Revenue of $458 million was up $57 million or 14% compared to the third quarter of 2012.

The bank said the gains stemmed from higher client assets under management driven by market appreciation, higher net sales of long-term mutual funds, a stronger contribution from its investment in American Century Investments (AIC) and higher fee-based and commission revenue.

"CIBC delivered solid results this quarter across our core businesses in retail and business banking, wealth management and wholesale banking," says Gerald McCaughey, president and chief executive. "These results reflect our strong focus on our clients as well as our underlying business fundamentals."

Tha bank said it achieved its 18th consecutive quarter of growth in retail sales of long-term mutual funds and a year-to-date record of $4.6 billion. It said it is on track with our transition plans for the acquisition of Atlantic Trust Private Wealth Management, announced in the second quarter, and it expects the deal to be complete in early fiscal 2014 following regulatory approvals.

Wealth Management should see an improvement in demand for equities and other higher risk assets over the remainder of the year as global uncertainties are gradually resolved.

On the retail brokerage side, revenue was up $21 million due to higher fee-based and commission revenue. Asset management revenue was up $29 million, primarily due to higher client assets under management driven by market appreciation and higher net sales of long-term mutual funds, and higher contribution from our equity-accounted investment in AIC.

The bank said private wealth management revenue was up $7 million, mainly due to higher assets under management driven by client growth, including the impact of the acquisition of the MFS McLean Budden private wealth management business in September 2012.

"The investments we are making in our retail and business banking, wealth management and wholesale banking businesses are furthering our strength and positioning us well for the future," says McCaughey.

CIBC also announced its intention to purchase for cancellation up to a maximum of 8 million or approximately 2% of outstanding common shares, subject to the approval of the Toronto Stock Exchange, under a normal course issuer bid over the next 12 months.