Prediction: This TSX Bank Will Surprise Investors in 2026

Canada’s Big Six banks aren’t exactly known for surprises, and I like it that way if I’m honest. There’s a reason these companies have been around through two World Wars and in some cases even before Canada’s was designated its own country separate from the United Kingdom.

Even so, there can be some surprises that Canadian banks have up their sleeves. In fact, one of these banks might seem too Canada-focused, too boring, or too much housing exposure. However, that narrative can shift fast. So, let’s get into this bank stock.

CM

Yes, we’re talking about Canadian Imperial Bank of Commerce (TSX:CM), Canada’s fifth-largest bank with about 14 million clients across both Canada and the United States. Despite those numbers, it historically trades at a discount to its peers due to its larger Canadian mortgage exposure.

Yet in the last year, management focused heavily on wealth management, U.S. commercial banking, and capital markets growth. Furthermore, CIBC’s U.S. business continued expanding, helping diversify earnings away from Canadian housing.

In fact, its capital markets division posted especially strong momentum entering 2026. This helped lead to an increase in its quarterly dividend by 10.3% to $1.07 per share quarterly, leading CIBC stock to hold a yield at 2.84% at writing. And earnings back that up.

Into earnings

Yep, CIBC stock recently delivered one of the biggest earnings beats among Canada’s large banks in Q1 2026. Adjusted earnings per share (EPS) came in at $2.76 versus analyst expectations around $2.40. Plus, Q1 2026 revenue climbed 15% year over year to $8.4 billion, while net income rose 43% to $3.1 billion, and reported EPS jumped 47% to $3.21.

But it didn’t stop there. Return on equity reached 17.4%, showing much stronger profitability than many investors expected. In fact, all four major business segments delivered strong results. Canadian personal and business banking net income climbed 25% year over year to $960 million, with Canadian commercial banking and wealth management revenue climbed 13%.

Despite the stellar results, CIBC stock still trades at a lower valuation compared to its peers. Recently, it traded at just 15.7 times earnings, with a market cap of $138.3 billion, and yet investors are still cautious.

Looking ahead

That caution could be an investor win. CIBC stock looks as though it has a bright future ahead, as lower interest rates in 2026 could help loan growth rebound across mortgages and commercial lending. Furthermore, improving capital markets activity could continue boosting trading and investment banking revenue.

CIBC stock’s wealth management business could also benefit if markets stay strong. All while management returned 78% of earnings to shareholders through dividends and buybacks in Q1. Therefore, investors may have underestimated how quickly earnings growth could accelerate once provisions stabilize.

Of course, housing weakness in Canada still holds risks as CIBC stock holds a larger domestic exposure than some peers. Credit losses could rise if unemployment increases sharply, and capital markets revenue can also become volatile if markets weaken again. Still, that current valuation already prices in a fair amount of caution.

Bottom line

CIBC entered 2026 looking stronger, more diversified, and more profitable than many investors expected. Rising earnings, stronger margins, aggressive shareholder returns, and improving sentiment could all combine to surprise the market. All while investors receive stellar income with even just $7,000.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTCM$149.8946$4.28$196.88Quarterly$6,894.94

So, yes, CIBC stock isn’t the most exciting pick, but that’s why it works! If investors start viewing CIBC less as a slow-growth mortgage bank and more as a diversified earnings machine, CIBC stock could have far more upside left than many expect.

The post Prediction: This TSX Bank Will Surprise Investors in 2026 appeared first on The Motley Fool Canada.

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More reading

• 3 TSX Stocks Built for Higher-for-Longer Interest Rates
• 3 Canadian Blue-Chip Stocks I’d Buy in Any Market
• 2 Canadian Stocks Worth Buying Today and Holding for 5 Years
• 2 High-Quality Canadian Stocks I’d Buy in This Uncertain Market
• Top Stocks to Double Up on Right Now

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.