The latest data from Edward Jones Investments revealed that CIBC’s uninsured mortgage and home equity loans book is 5.4 times greater than its regulatory capital, which has left the bank more exposed to residential mortgage market risk.
This represented a significant rise from the levels seen during the same time last year, where the bank’s loan portfolio stood at 4.7 times its regulatory capital, Edward Jones analyst Jim Shanahan told The Canadian Press
CIBC’s levels stood far above the average (3.3 times regulatory capital) of the four banks that have reported so far—namely, CIBC, Scotiabank, Royal Bank
, and TD Bank.
“It’s clear that they’re more exposed to a sharp reduction in real estate values in Canada than any of the other major banks,” Shanahan said. “They’ve continued to layer on more risk at a time when there are a lot of warning bells going off and regulators are expressing concern.”
Despite this, however, CIBC stated that its loan delinquencies (including in Vancouver and Toronto) remained at low and manageable levels. The bank grew its Q4 net income by 20 per cent, up to $931 million.
CIBC chief risk officer Laura Dottori-Attanasio noted that most of the bank’s uninsured residential mortgage loans are held by consumers with high credit scores and low loan-to-value ratios.
“We continued to be very pleased with the credit profile and quality of our uninsured mortgage portfolio,” Dottori-Attanasio told analysts during a conference call Thursday (December 1).
Group head of retail and business banking David Williamson stated that the bank remains confident of its prospects amid its increased exposure to the residential mortgage market.
“If you look at the loan to value for uninsured mortgages originated in BC over the last 12 months, of the four banks that have reported so far, ours is the lowest,” Williamson said.
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