CIBC Sees Earnings Growth Despite Rising Mortgage Delinquencies in Toronto and Vancouver
A Strong Quarter Clouded by Housing Market Stress
Canadian Imperial Bank of Commerce (CIBC) reported a robust increase in third-quarter earnings for 2025, driven by strong performance in its capital markets and personal banking segments. However, rising mortgage delinquencies in the Greater Toronto Area (GTA) and Greater Vancouver Area (GVA) signal growing financial strain in Canada’s priciest housing markets, raising concerns about the broader economic outlook.
CIBC’s Financial Performance
Earnings Highlights
CIBC posted adjusted net income of $1.93 billion for Q3 2025 (ending July 31), up 16.2% from $1.66 billion a year earlier, beating analyst expectations of $1.75 billion. Key drivers included:
- Capital Markets Strength: A 32% jump in adjusted revenue from market volatility, with trading revenue up 48% year-over-year.
- Personal and Business Banking: Revenue rose 10.7% to $2.4 billion, fueled by a 20% increase in mortgage margins and deeper client relationships, with 80% of mortgage clients holding a chequing account.
- Overall Revenue: Total revenue reached $7.02 billion, up from $6.16 billion in Q3 2024, supported by growth across all segments despite a 9% rise in expenses from technology investments and severance costs.
Credit Provisions and Losses
CIBC set aside $559 million for credit loss provisions, down from $605 million in Q2 but up from $514 million a year ago, reflecting cautious optimism. Impaired losses remained at the low end of guidance, with mortgage net write-offs below 0.01%, indicating minimal actual losses despite rising delinquencies.
Rising Mortgage Delinquencies
GTA and GVA Trends
Mortgage arrears edged higher in Q3 2025, with CIBC’s 90-day delinquency rate rising to 0.36% from 0.33% in Q2 and 0.30% a year earlier. Uninsured mortgage arrears were slightly higher at 0.37%, with:
- Greater Toronto Area (GTA): Delinquency rate of 0.44%, up from 0.23% in Q1 2025, the highest in a decade per Equifax data.
- Greater Vancouver Area (GVA): Delinquency rate of 0.36%, up from 0.16% in Q3 2020, a multi-year high.
These increases align with broader trends, as Toronto’s delinquency rate surged 71.4% year-over-year in Q4 2024, driven by economic uncertainty and higher interest rates.
Why the Uptick?
Several factors are driving delinquencies:
- Higher Interest Rates: Mortgage renewals at rates up to 6% from pandemic-era lows (1–2%) have increased payment burdens, with CIBC projecting average monthly payment hikes of $125 in 2025 and $98 in 2026.
- Economic Pressures: Rising unemployment (6.4% nationally in July 2025) and tariff-related trade disruptions have strained household finances, particularly in the GTA, where condo market softening adds pressure.
- Investor Vulnerabilities: Amateur investors, heavily leveraged in Toronto’s condo market, face cash flow issues, contributing to delinquency spikes.
Despite these trends, CIBC’s Chief Risk Officer Frank Guse emphasized portfolio resilience, citing strong equity buffers (average uninsured LTV in the mid-50% range, lower in Vancouver) and low write-offs. “We remain comfortable with the exposure and overall health of our clients,” Guse told analysts.
Impact on Canadians
Homeowners and Borrowers
- Payment Shock: With 60% of CIBC’s $236 billion mortgage portfolio ($77 billion in GTA, $31 billion in GVA) facing renewals by 2026, borrowers could see significant payment increases, particularly in high-cost regions.
- Affordability Squeeze: Rising delinquencies reflect broader affordability challenges, with Toronto’s delinquency rate hitting 0.23% in Q1 2025, the highest since 2013.
- Mitigating Factors: Strong underwriting (OSFI’s Guideline B-20) and high home equity cushion borrowers, preventing widespread defaults. Only 1% of renewing clients are deemed “higher risk.”
Economic Implications
CIBC’s earnings growth signals banking sector stability, but rising delinquencies highlight risks in Canada’s housing market, which accounts for 10% of CIBC’s revenue. A slowing economy, with GDP contracting 1.6% annualized in Q2 2025, and U.S. tariffs could exacerbate financial stress, particularly in export-reliant Ontario.
Consumer Sentiment
Posts on X reflect growing concern, with @ShaziGoalie noting Toronto’s housing market “imploding” as homeowners face losses, though @CdnMortgageNews counters that CIBC’s low loss rates and equity buffers keep risks contained.
Expert Perspectives
CIBC’s outgoing CEO Victor Dodig emphasized client relationships, with 93% of mortgage clients holding additional products, enhancing stability. Analysts like Darko Mihelic of RBC Capital Markets view CIBC’s performance as a sign of banking resilience, but warn that persistent delinquency increases could strain provisions if economic conditions worsen. Peter Routledge of OSFI, speaking on September 3, 2025, underscored that Canada’s low delinquency rates (0.15% nationally) reflect strong underwriting, mitigating systemic risks.
Future Outlook
CIBC expects continued earnings growth, supported by its diversified revenue streams and relationship-focused strategy. However, rising delinquencies in the GTA and GVA could intensify if:
- Interest Rates Persist: Bank of Canada’s key rate, steady at 4.5% in September 2025, may keep pressure on renewals.
- Economic Slowdown Deepens: Tariff impacts and a 1% labour productivity drop in Q2 2025 could further weaken household finances.
- Condo Market Weakens: Toronto’s oversupply of condos risks further delinquency spikes among investors.
CIBC’s strong capital position (CET1 ratio of 13.1%) and low write-offs provide a buffer, but proactive monitoring and potential B-20 adjustments by OSFI will be critical to maintaining stability.
Conclusion
CIBC’s Q3 2025 earnings reflect a resilient banking sector, buoyed by capital markets and personal banking strength. However, rising mortgage delinquencies in the GTA (0.44%) and GVA (0.36%) highlight pockets of stress in Canada’s housing market, driven by higher rates and economic uncertainty. While strong underwriting and equity buffers limit immediate risks, CIBC and regulators must stay vigilant to prevent broader fallout, ensuring Canada’s housing market remains a pillar of economic stability.