UPDATE 2-CIBC profit rises but lending performance spurs concern

Thu Dec 6, 2012 1:43pm EST
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* Fourth-quarter results exceed estimates

* Wholesale banking income jumps

* Retail banking weaker

* Shares down 0.5 pct

By Cameron French

TORONTO, Dec 6 (Reuters) - Canadian Imperial Bank of Commerce reported a 13 percent increase in quarterly earnings on Thursday, slightly ahead of estimates, but the bank's shares declined on concerns the profit gain will be difficult to replicate in coming quarters.

The increase was fueled by stronger capital markets-related profit, while retail banking weakened due to CIBC's decision earlier this year to wind down its FirstLine mortgage division, which sold inexpensive mortgages through brokerages.

Analysts said CIBC's move to raise average interest margins on its loans could make it a challenge for it to show significant loan growth next year, when Canadian mortgage and consumer loan growth is expected to stall.

"(CIBC's) decision to exit the mortgage broker network and its impact on fourth-quarter domestic retail loan growth could lead the market to conclude that its earnings growth could be one of the slowest of the (Canadian banks) next year," Barclays Capital analyst John Aiken said in a note.   Continued...