* Sees broader market opportunity in corporate lending
* Says Tier 1 capital at high end of what is required
TORONTO, Sept 16 (Reuters) - Canadian Imperial Bank of Commerce (CM.TO) is well positioned to expand its retail business, taking advantage of strong capital levels and global rivals battered by the economic crisis, the chief executive of Canada’s fifth-largest bank said on Wednesday.
CEO Gerry McCaughey told a conference hosted by Scotia Capital in Toronto that, while CIBC’s capital levels were higher than necessary, he preferred to use the cushion to fund business growth rather than give money back to investors in the form of share repurchases or dividend hikes.
“Our Tier 1 is at the high end of what we think is required given the current environment, but unless we have a good usage for it from the viewpoint of normal business growth, we would not be engaging in activities such as dividend increases or share buybacks in order to bring the Tier 1 down,” McCaughey said.
Tier 1 capital is a key measure of a bank’s financial strength and reflects core capital.
CIBC reported a lower-than-expected quarterly profit in August as it set aside more money to cover bad loans.
It also reported a 12 percent Tier 1 capital ratio, among the highest of Canadian banks — which are some of the world’s healthiest, despite the financial crisis — and well above capital levels held by international competitors.
McCaughey said he saw capital strength as a key advantage over rivals bruised by the global crisis, and said there was opportunity for CIBC in corporate lending as rivals pull back.
“What we would do, if the Tier 1 came down naturally as a result of well-priced, well-risked activities within the Canadian marketplace, then we would use some of our Tier 1 ratio for some of the items I talked about — supporting our retail clients or the corporate lending business,” McCaughey said.
In August, CIBC reported a third-quarter profit of C$434 million ($402 million). It was the only Canadian bank to underperform analysts’ estimates.
$1=$1.08 Canadian Reporting by Andrea Hopkins and Pav Jordan; editing by Rob Wilson