Home » Posts tagged 'cibc'

Tag Archives: cibc

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

CIBC: Gold is still going towards $2,000 and silver to $31

June 30, 2021

Photo by Jingming Pan

CIBC: Gold is still going towards $2,000 and silver to $31

Despite the selloff that caused gold to drop by more than 5% within a week, Canadian bank CIBC is still optimistic on both gold and silver’s prospects over the next few years. While the bank downgraded their average 2021 forecast for gold to $1,925, they expect the metal to average $2,100 in 2022.

Likewise, CIBC’s analysts downgraded their average silver forecast for 2021 to $28 from $29, but said that the metal will nonetheless head onwards to $31 next year. Interestingly, the analysts emphasized that physical precious metals will dominate demand:

We expect demand for physical gold and silver will remain elevated, not only from traditional investors but also from a wider array of investors seeking a safe-haven option to hedge against market volatility.

Regarding the recent fall in prices, CIBC’s analysts explored the specific causes and concluded prices aren’t likely to stay suppressed for much longer. The Federal Reserve clearly wants to ruffle its feathers and assume a hawkish stance to subdue inflationary threats. Frankly, the Fed’s options are limited. Money printing has slowed in recent months. However, President Biden’s $6 trillion spending plan would place the annual deficit at more than $1.3 trillion over the next decade.

In general, CIBC fully expects the overall environment of monetary stimulus and loose-money policies will last for a good, long while.

Furthermore, CIBC sees “real interest rates” (Treasury rates minus inflation) as an even bigger driver for gold. When real rates are negative, bond buyers lose money even after their bond matures. The analysts noted that gold has historically posted great performances regardless of headline interest rates, so long as real (inflation-adjusted) rates remain low. At the moment, the five-year real interest rate sits at -1.54% compared to an all-time low of -1.86% in May 2021. That is low.

…click on the above link to read the rest of the article…

Soaring Canadian Insolvencies Cripple Local Banks

March 2, 2019

Soaring Canadian Insolvencies Cripple Local Banks

Banks in Canada are starting to feel the pain of deteriorating credit quality, just weeks after we reported that insolvency filings had skyrocketed in almost all Canadian provinces. 

Toronto-Dominion Bank and Canadian Imperial Bank of Canada both just posted ugly first quarter results that included higher provisions for loan losses as a key contributor to missing analyst expectations. TD Bank saw its provision for loan losses move to C$850 million, which was up 23% from the year prior. It also marked the highest level for such provisions in at least two years, mainly split between the bank’s U.S. and Canadian retail divisions (36% each), followed by the bank’s corporate division. 

Toronto-Dominion’s Chief Financial Officer Riaz Ahmed told Bloomberg that bankruptcies were part of the issue in Canada: 

“The fourth quarter and the first quarter of the year always tend to have elevated provisions because of the holiday spending season, so we tend to see that seasonality in cards and auto. In Canada, bankruptcies are up a little bitand we do see a little bit of rise in delinquency in our retail cards in the U.S. None of them would rise to the level of being of particular concern for us.”

CIBC also saw its provisions rise – more than doubling across the bank to C$338 million, which also marked the highest level in at least two years. Most came as a result of Canadian personal and small business banking, with the latter experiencing a a 41% jump in provisions to C$208 million.

CIBC Chief Risk Officer Laura Dottori-Attanasio was quick to make excuses on the bank’s call Thursday:

 “A lot of the impairments that took place this quarter felt like unique events which I’d like to think won’t transpire again. We’re not seeing any systemic or any trends of concern in our book. We continue to have strong credit quality.”

Sure you do, Laura.

 …click on the above link to read the rest of the article…

CIBC CEO explains why bank is replacing Canadian staff with workers from India

April 1, 2017

CIBC CEO explains why bank is replacing Canadian staff with workers from India

CEO Victor Dodig acknowledges that ‘outsourcing isn’t a popular decision’

CIBC CEO Victor Dodig sent a memo to staff on Friday to explain why the bank sometimes needs to outsource work to other countries.

CIBC CEO Victor Dodig sent a memo to staff on Friday to explain why the bank sometimes needs to outsource work to other countries. (Jeff McIntosh/Canadian Press)

CIBC’s CEO issued an internal staff memo Friday to address a CBC News story revealing that the bank is eliminating up to 130 Toronto finance jobs and outsourcing the work to India.

The article, which ran on Thursday, generated more than 2,000 comments on the CBC News site — many of them taking a negative view of CIBC’s decision to send the jobs overseas.

“I understand that outsourcing isn’t a popular decision,” wrote CEO Victor Dodig in the memo to employees. “It’s an emotional topic that I don’t want to shy away from because that’s not the culture that we have.”

The story only came to light because some CIBC workers facing layoffs complained to CBC News. They were particularly upset that they have to train other local CIBC employees who then train the workers in India who will be taking over the jobs.

“It feels like no one cares for us,” said one employee.

It’s not about the money

In his memo, Dodig laid out why the bank sometimes outsources jobs to other countries. Some affected employees said they believe CIBC is doing it in this case to save money — at a time when the bank had pulled in $1.4 billion in profit in the last quarter.

“It’s not as simple as you may read that it’s about cutting jobs or costs,” wrote Dodig. He said that outsourcing complements the work done by CIBC staff by helping manage peaks in demand, ensuring work can be done around the clock and helping the bank adapt to changing business needs.

…click on the above link to read the rest of the article…

Bank watch lists early warning sign of trouble for oil and gas industry

March 6, 2016

Bank watch lists early warning sign of trouble for oil and gas industry

Royal Bank, CIBC and Scotiabank each added 9 oil and gas firms to watch lists in recent quarterly earnings

In releasing their latest quarterly earnings, Royal Bank, CIBC and Scotiabank each added nine oil and gas firms to their loan watch lists, the latest sign of trouble in the oilpatch.

In releasing their latest quarterly earnings, Royal Bank, CIBC and Scotiabank each added nine oil and gas firms to their loan watch lists, the latest sign of trouble in the oilpatch. (Larry MacDougal/Canadian Press)

They are the early warning signs that a company may struggle to repay its debts: watch lists.

In releasing their latest quarterly earnings, Royal Bank, CIBC and Scotiabank each added nine oil and gas firms to their loan watch lists, the latest sign of trouble in the oilpatch. The names of those companies are kept confidential.

Gordon Sick, a finance professor at the Haskayne School of Business at the University of Calgary, said many energy companies are struggling and likely behind in their loans.

“There’s a lot of them who are potentially in default,” said Sick. “The banks in Canada are potentially looking at some hits.”

Royal Bank’s watch list grew after it did a name-by-name stress test on its oil and gas portfolio, said chief risk officer Mark Hughes.

“Following this stress test, we’ve seen a small increase to our oil & gas watch list for closer monitoring,” Hughes said in an email.

One step before ‘impaired’

The watch list has the banks keeping a close eye on the companies, and is one step before impaired status when a bank considers the loan at risk of default.

Scotiabank said five per cent of its energy portfolio was on the watch list and it moved four loans to impaired status in the first quarter. CIBC said it impaired one loan.

…click on the above link to read the rest of the article…

These Are The Two Canadian Banks Most Exposed To A Severe Oil Shock According To Moody’s

February 22, 2016

These Are The Two Canadian Banks Most Exposed To A Severe Oil Shock According To Moody’s

Two weeks ago we asked if, in the aftermath of the dramatic selloff suffered by European banks over commodity exposure concerns, whether Canadian banks would not be next in line. The reason was that according to an RBC report, while US banks had already taken significant reserves against future oil and gas loans, roughly amounting to 7% of their exposure, Canadian banks were stuck in denial.

As RBC grudgingly noted, “The small negative moves in credit would normally not even “register” were it not for plenty of evidence of issues surround the oil and gas sector and the impact it could have on the oil producing provinces in Canada.” Yes, well, China already advised its media to stick to “positive reporting” – sadly for the energy-rich or rather energy-por province of Alberta it is now too late.

As for ths reason for this surprising reserve complacency, RBC said the following:

Canadian banks like to wait for impairment events to book PCLs rather than build reserves (called sectoral reserves in the past) for problematic industries.

In other words, let’s just wait with the reserves until the losses are already on the book: hardly the most prudent approach which may be why today, with its usual several week delay, Moodys opined on which Canadian banks it views as most susceptible to a “severe oil slump.”

As quoted by to Bloomberg, Moody’s said that “Canadian Imperial Bank of Commerce and Bank of Nova Scotia would be nation’s hardest hit lenders if the oil slump became sharply worse, while Toronto-Dominion Bank would best be able weather a worsening rout.”

“The prolonged slump in oil prices will increase the financial stress on oil producers and the drillers and service companies that support them, as well as on consumers in oil-producing provinces,” Moody’s said.

…click on the above link to read the rest of the article…

Younger workers more likely to see less income in retirement, CIBC says Average person born in ’80s and after may see only 70% of pre-retirement income, economist Benjamin Tal says

June 3, 2015

Younger workers more likely to see less income in retirement, CIBC says

Average person born in ’80s and after may see only 70% of pre-retirement income, economist Benjamin Tal says

Urgent attention needs to be given to what Canadians can expect to get in retirement income — something that’s become a real divide along generational lines, a prominent Canadian economist says.

In a note to clients this week, Benjamin Tal at CIBC waded into the ongoing debate over Canada’s looming pension and retirement crisis.

While falling well short of endorsing any of the myriad proposals out there to fix the problem, including beefing up the Canada Pension Plan, encouraging more individual savings by expanding RRSPs and TFSAs or something else, Tal is unequivocal in his view that declining retirement income is a problem needing a solution — and soon.

After running a simulation of pension income across a wide variety of age ranges, Tal found a clear deliniation between those in retirement now or approaching it, and those who won’t get there for several years or decades.

In today’s economy, few people rely on any one source of retirement income, with most people drawing on a combination of their own investments such as RRSPs, TFSAs and real estate, government programs such as CPP and things like pension plans that they may have accrued from employers over a lifetime of work.

In general, Tal says, “the typical 70-year-old today has enough income to maintain his or her pre-retirement standard of living, taking into account the typical drop in expenses in one’s post-working years.”

Generational gap

But while millions of Canadians 65 and up are on a path to the retirement of their dreams, the data show that millions of others are headed for a steep decline in living standards in the decades ahead, particularly people who are younger and are in middle-income brackets.

 

 

…click on the above link to read the rest of the article…

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress