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CIBC and BMO Q4 bank earnings

Q4 Earnings Mortgage Morsels: CIBC & BMO

CIBC and BMO closed out this year’s fourth-quarter earnings season for the Big 6 banks, with both following the lead of their peers by hiking dividends and drawing down on credit-loss provisions.

CIBC announced a 15-cent hike to its quarterly dividends for shareholders, while BMO raised its dividend by 27 cents.

Meanwhile, CIBC recovered $78 million that it had previously set aside for potential credit losses, while BMO drew-down its provisions by $127 million.

We’ve picked through the banks’ quarterly earnings presentations and conference calls and compiled all the mortgage notables below. Key details are highlighted in blue.



Q4 net income: $1.57 billion (+23% Y/Y)
Earnings per share: $3.37
Fiscal Year 2021: $6.7 billion (+45%)

  • CIBC’s residential mortgage portfolio rose to $242 billion in Q4, up 15% from $212 billion in Q4 2020.
  • Of the portfolio, $32 billion is from the Greater Vancouver Area (up from $27 billion), and $79 billion is from the Greater Toronto Area (up from $67 billion a year ago).
  • Of the uninsured portfolio, the loan-to-value LTV was 49%, down from 53% a year ago.
  • The bank’s HELOC portfolio ended the quarter at $18.8 billion, down from $19.5 billion a year ago.
  • 90+ day delinquencies in the residential mortgage portfolio fell to 0.17% (0.29% for the insured portfolio and 0.17% for the uninsured) from 0.19% last quarter and 0.29% in Q4 2020.
  • Net interest margin in Q3 was 217 bps, down from 234 bps in Q4 2020, due to “the impact of lower interest rates and the change in asset mix due to robust mortgage growth,” said Chief Financial Officer Hratch Panossian.
  • The bank noted that an “immediate and sustained 100-bps increase would have a $404-million positive impact on net interest income over a 12month period. “Total interest rate sensitivity has not changed materially from the prior quarter,” the bank reported.
  • CIBC released $78 million from funds that had been set aside for bad loans.
  • CIBC raised its dividend to $1.61 from $1.46, and said it would buy back up to 10 million shares, which is roughly 2.2% of outstanding common shares.

Source: CIBC Q4 Investor Presentation

Conference Call

  • “During the year, we returned to market level growth in our mortgage business,” said President and CEO Victor Dodig.”We also continue to invest in technology to meet the evolving needs of our clients.”
  • Net interest margin was down 17 bps from last year due to “the impact of lower interest rates and the change in asset mix due to robust mortgage growth,” said Chief Financial Officer Hratch Panossian. “Going forward, we expect [Personal and Commercial] NIMs to stabilize on the back of an improving rate environment and the resumption of growth in higher-margin unsecured lending and credit card products.”
  • “We continue to expect the benefits from loan prepayment activity to subside over the next few quarters, causing margins in this business to stabilize,” Panossian added.
  • Asked about the return of the bank’s mortgage growth that’s more in line with its peers, and whether it will try to outpace the other big banks in mortgage growth next year, Laura Dottori-Attanasio, Senior Executive VP and Group Head, Personal & Business Banking, Canada, said this: “We’re really pleased with what we’ve managed to do from a growth perspective. And we continue to have a really good pipeline of activity. But never pleased, there’s always more to do. So our intention is to continue to deliver, I’d say, really broad-based quality client growth…not only did we perform incredibly well when it came to new client acquisition, we did better on client retention and we did better on client franchising. And so we’ve made a lot of really good progress, and we see a lot of great opportunity ahead of us to continue to deliver strong market-leading growth.”

Source: CIBC Conference Call


Bank of MontrealBMO

Q4 net income: $2.16 billion (+36% Y/Y)
Earnings per share: $3.33
Fiscal Year 2021: $7.75 billion (+52%)

  • BMO’s residential mortgage portfolio rose 18% to $128 billion, up from $108.1 billion a year earlier.
  • The HELOC portfolio—70% of which is amortizing (up from 63%)—rose to $42 billion from $35.9 billion a year ago.
  • Residential mortgage and amortizing HELOC volumes are up 13% year-over-year.
  • 34% of BMO’s residential mortgage portfolio is insured, down from 48% a year ago.
  • The loan-to-value on the uninsured portfolio is 51%, down from 54% a year ago.
  • 78% of the portfolio has an effective remaining amortization of 25 years or less, down from 80% a year ago.
  • Net interest margin (NIM) in the quarter was 2.63%, up from 2.60% in Q4 2020.
  • The bank recovered another $126 million that had previously been set aside as part of its credit loss provisions.
  • BMO said a 100-basis point rate shock would benefit its net interest income by $384 million over the next 12 months. The impact of a 25-basis point increase in short-term rates would add approximately $95 million to revenue over the next 12 months.
  • The 90-day delinquency rate fell to 13 bps from 19 bps a year ago, with the loss rate for the trailing four-quarter period at 1 bp (unchanged).
  • BMO’s board approved a 25% increase to the bank’s quarterly dividend, taking it to $1.33 a share. BMO also announced its intention to repurchase up to 22.5 million shares.

Source: BMO Q4 Investor Presentation

Conference Call

  • Asked about anticipated rule changes coming from policymakers that could relate to HELOCs, Ernie Johannson, Group Head, North American Personal and Business Banking, said this: “We’re very supportive of initiatives that are going to stabilize the mortgage market, keep it healthy and strong in Canada. And we work closely with the regulator dossier, in particular, on these topics. And as they come up with new developments and new insights and policies, we work with them accordingly. As things emerge on this file, we’ll continue to stay abreast of it. Our HELOC book, as you probably know, is small relative to the rest of our portfolio, but we continue to monitor and we’ll adjust accordingly and ensure that our customers are able to get financing for houses and renovations accordingly.”
  • Pressed on whether he expects forthcoming changes, Johannson replied, “At this point, too early to tell. So, we’re waiting.”

Source: BMO Conference Call

Note: Transcripts are provided as-is from the companies and/or third-party sources, and their accuracy cannot be 100% assured.