CIBC's CEO Plans to Keep the Dividend Flowing
Canadian Imperial Bank of Commerce (CM) CEO Victor Dodig was interviewed by BNN Bloomberg this afternoon and gave a strong vote of confidence to the bank's dividend:
We've never cut a dividend since 1868. Our goal is to make sure those dividends are flowing...
The Canadian investors that invest in our banks rely on those dividends for income. And every source of reliable income that we can provide Canadians and Americans and our other shareholders that are investing in our banks is incredibly important at this moment in time where cash flow reduces anxiety.
Talk is cheap and the worst of the economic slump is likely ahead of us, but Mr. Dodig's comments suggest that Canadian banks and their regulators continue to have a strong commitment to dividends during this unprecedented period of uncertainty.
Mr. Dodig went on to state that the bank is receiving about 20,000 requests a day from consumers asking to defer payments on their mortgages and credit card bills. CIBC's small business clients are making similar requests while also drawing down their lines of credit.
During this crisis, CIBC and other banks play an especially essential role in helping businesses and households build a financial bridge that can last until normal economic conditions eventually return.
As we discussed in our March 29 note, this has potential to increase the amount of financial and political pressure on banks' dividends since shareholder distributions reduce the amount of capital a bank can lend out.
For now, CIBC believes it can continue helping both clients and its income-oriented shareholders. We maintain our Safe Dividend Safety Score on CIBC and will continue monitoring the situation.
