UPDATE 2-Canada's CIBC warns of higher loan losses due to oil slump

Thu Feb 25, 2016 9:57am EST
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* Expects increased loan-loss provisions going forward

* Q1 profit beats market expectations

* Impaired loans in oil and gas sector climb (Recasts with executive comments from conference call)

By John Tilak and Matt Scuffham

TORONTO, Feb 25 (Reuters) - Canadian Imperial Bank of Commerce said on Thursday it expects loan losses to increase as the oil price slump impacts energy clients, and warned they could double if Canada went into recession.

Chief Risk Officer Laura Dottori-Attanasio made the forecast after CIBC posted a first-quarter profit that topped market expectations, with growth in retail and business banking offsetting losses from oil sector loans that turned sour.

"If we went into a recessionary-type environment we could see ourselves doubling our loan losses," Dottori-Attanasio told analysts on a conference call on Thursday.

CIBC joined rivals Royal Bank of Canada and Bank of Montreal in reporting increased losses from impaired loans in the oil and gas sector. Dottori-Attanasio said that trend was likely to continue.

"We are seeing this quarter a lot of downgrades in the oil and gas space, an increase in delinquencies. Our expectation would be to see increased loan loss provisions on a go-forward basis," she said.   Continued...