Canadian Imperial Bank of Commerce (CM), Canada’s fifth-largest bank, announced Thursday that it has become the exclusive issuer of Costco (COST) Mastercard (MA) cards in Canada.
CIBC will also acquire the Canadian portfolio of Costco credit cards, which has overdue balances of over C$3 billion. (See Canadian Imperial Bank of Commerce stock charts on TipRanks)
Laura Dottori-Attanasio, group head, Personal and Business Banking, CIBC, said, “This relationship enables us to diversify our credit card portfolio in everyday rewards, grow our market share in payments, and provides a meaningful opportunity to deepen relationships by meeting the financial needs of Costco members.”
Capital One (COF) Costco Mastercard cardholders can continue to use their current card until they receive their new CIBC Costco Mastercard, which should be early next year.
The new CIBC Costco Mastercard will provide rewards for purchases at Canadian Costco warehouses, and on Costco.ca, and will serve as a Costco membership card.
On August 30, National Bank analyst Gabriel Dechaine kept a Buy rating on CM, with a price target of C$168. This implies 15.4% upside potential.
Dechaine stated, “We’re seeing CIBC keep pace with peers in the key mortgage category, (and) exceed many of them in the commercial category.”
He added that the bank is also showing progress in products “such as cards and personal loans that have lagged the economic recovery.”
The rest of the Street is bullish on CM with a Strong Buy consensus rating, based on eight Buys and two Holds. The average Canadian Imperial Bank of Commerce price target of C$161.66 implies 11.1% upside potential to current levels.
TipRanks’ Smart Score
CM scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the overall market.
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