After BMO's earnings knocked the wind out of some investors, CIBC's solid numbers put some colour back in their cheeks. Now there isn't nearly as much worry heading into Thursday when Royal Bank of Canada and National Bank of Canada report.
CIBC benefited from capital markets revenues that weren't nearly as bad as they could have been. Specifically, trading revenue fell 17 per cent year over year while Bank of Montreal's plummeted 63 per cent. For that, Mario Mendonca at Canaccord Genuity wrote "BMO's results should not be directly connected to the other banks."
However, there is some caution because CIBC's earnings were boosted by a lower tax rate and accounting gains from stronger than expected loan loss recovery. But John Aiken at Barclays Capital still sees a lot of upside.
"While both of these may not necessarily be viewed as sustainable, we note that CIBC was still able to meet expectations even excluding these positives," he wrote in a note. "It is hard to deny the fact that CIBC's credit is recovering faster than we and the market had been anticipating."
There's even talk of how strong the bank will be in the future. "[CIBC's]low relative valuation is at odds with the underlying strength of, and weighting towards, the bank's domestic commercial banking and wealth management operations," Peter Routledge at National Bank Financial wrote.
Mr. Mendonca agrees. "Looking forward, we are counting on better wealth management results, stable margins, higher treasury allocations, growth in personal loans (offset by lower mortgage growth), as well as lower credit card losses to drive better year-over-year comparisons in retail in 2011."