CIBC Surpasses Scotiabank – What Now?

The Canadian Imperial Bank of Commerce (CIBC) has overtaken the Bank of Nova Scotia (Scotiabank) in market capitalization, becoming Canada’s fourth-most valuable bank as investor interest shifts toward lenders with stronger domestic ties.

CIBC’s stock has surged 47% over the past year, making it the best-performing major Canadian bank and boosting its market value to C$94.6 billion as of Friday’s close. This marks the first time since the early 2000s that CIBC has ranked ahead of Scotiabank.

Read Also: AI tech stocks Canada

In contrast, Scotiabank has lagged behind its peers, with its shares rising just 17% over the past 12 months. Its performance has been weighed down by weaker earnings as it continues to scale back its investments in Latin America — a region that has struggled with inflation and political instability — as part of a long-term strategic shift.

“There’s been a meaningful culture change at CIBC,” said Dan Rohinton, a portfolio manager at iA Global Asset Management. “It’s been consistent long enough now that they deserve credit for the progress and stability they’ve shown.”

Read Also: Best long term Canadian stocks

With borrowing costs stabilizing and Canada’s housing market showing resilience, investors are gravitating toward banks with strong domestic retail exposure. CIBC has become a relative safe haven amid global uncertainty, with 63% of its earnings in the first half of its fiscal year coming from Canadian personal, business, commercial banking, and wealth management.

Analysts also point to CIBC’s advances in technology, cost management, and productivity as key drivers of its outperformance.

Scotiabank, now under CEO Scott Thomson since 2023, is working to grow its presence in the Canadian market. However, it remains in the middle of a strategic overhaul aimed at reducing its Latin American exposure in favor of investments in Canada, the U.S., and Mexico.

“Scotiabank’s focus on international markets — particularly Latin America — has become a liability given the region’s recent underperformance,” said John Aiken, an analyst at Jefferies.

Following the bank’s latest earnings report, RBC Capital Markets analyst Darko Mihelic noted that Scotiabank’s international operations are still in a “transition phase,” and the stock continues to trade at a discounted valuation due to ongoing challenges in expanding its Canadian business.