Key Morningstar Metrics for Canadian Imperial Bank of Commerce
Canadian Imperial Bank of Commerce’s CM capital markets segment had a strong performance in fiscal 2025, driven by impressive results from its trading and advisory businesses.
The bottom line: We are increasing our fair value estimate for narrow-moat CIBC to C$100 per share from C$83. After the increase, we still view the shares as overvalued, as we believe the market is over-extrapolating the bank’s strong trading-income performance.
- Approximately C$1 of the increase reflects the time value of money, C$14 comes from a higher near-term profitability forecast, and C$2 comes from a higher midterm profitability forecast.
- Our normalized efficiency ratio forecast is now 56.1%, compared with 58.0% prior. We also project a higher normalized return on tangible common equity of 15.3%, up 120 basis points from 14.1%.
Long view: While we expect the bank’s investment in capital markets to support some growth in revenue, we view 2025 trading results and underwriting fee income as both above midcycle levels. We expect trading income and advisory income to decline by 20% and 15% respectively, in 2026.
- For context, trading income surged to C$2.35 billion in 2023 from less than C$1.17 billion in 2022, and further increased to C$3.23 billion in 2024 and C$4.02 billion in 2025.
- Underwriting and advisory fee income grew by 36% in 2024 and 29% in 2025. The bank’s 2025 underwriting and advisory fee income of C$915 million is almost twice the level of C$468 million in 2020.
Key stats: We have increased our normalized net interest margin by 9 bps to 1.60%, as we are encouraged to see the bank’s progress in growing its demand deposits in Canada. Excluding trading and advisory fee income, we expect the bank to grow its adjusted fee income at a CAGR of 3.1% over the next five years.
- We project expenses to grow by 5.7% in 2026, driven by investments in personnel and technology, and expect growth to slow to an average of around 3.4% thereafter.
Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
The author or authors do not own shares in any securities mentioned in this article. Find out about
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