May 31, 2012 / 10:31 AM / in 5 years

UPDATE 2-Consumer loan growth drives CIBC profit gain

* Ex-items EPS C$2.00 vs est C$1.88

* Retail loan volumes offset narrow margins, weaker wholesale

* Exploring strategic options for FirstLine

May 31 (Reuters) - Canadian Imperial Bank of Commerce reported a 6 percent increase in quarterly income, topping estimates, on higher volumes at its retail and business banking operations.

Second-quarter net income rose to C$811 million ($787.61 million), or C$1.90 per share, from C$767 million, or C$1.80 per share, a year earlier, Canada’s No. 5 bank said on Thursday.

Excluding items, it earned C$2.00 per share, topping analysts’ estimates of a profit of C$1.88 a share.

Retail and business banking income jumped 12 percent to C$556 million, as higher lending volumes more than offset the impact of narrower margins.

CIBC is the fifth of six large Canadian banks to report results for the quarter.

Results have been largely positive for the sector, driven by continued growth in domestic lending, although signs are emerging that the segment’s growth is slowing as Canadians curtail their borrowing habits.

As with its rivals, acquisitions helped support CIBC’s profit, as its 2011 acquisition of a minority stake in U.S. asset manager American Century Investments helped drive wealth management income up 8 percent to C$79 million.

Canada’s banks have been active international acquirers in the wake of the 2008 financial crisis.

Wholesale banking income, which includes investment banking, advisory and trading, fell 6 percent to C$131 million, hurt by a hedge accounting loss and higher provisions for credit losses.

Total revenue for the bank rose 2 percent to C$3.1 billion.

The bank said it continues to explore strategic options for its FirstLine discount mortgage unit.

CIBC said last quarter it was thinking of selling the unit, spurred by narrower loan margins which made its discount mortgages and broker network less profitable. The bank has said it plans to retain the loans when it sells the business.

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