May 27, 2010 / 1:35 PM / in 8 years

UPDATE 2-CIBC posts profit, but misses Wall St expectations

* Q2 adj cash EPS C$1.46 vs est C$1.50

* Revenue up 35 pct

* Loan loss provisions down 20 pct to C$334 mln (Adds details from conference call, analyst comment)

TORONTO, May 27 (Reuters) - Canadian Imperial Bank of Commerce (CM.TO) posted a lower-than-expected quarterly profit on Thursday and said it would focus on beefing up domestic business banking.

Canada’s No. 5 bank said it had earned C$660 million ($620 million), or C$1.59 a share, in the second quarter ended April 30, compared with a year-earlier loss of C$51 million, or C$0.24 a share.

Revenue rose 35 percent, due largely to a sharp rebound in the wholesale banking division, which took losses associated with structured credit investments a year earlier.

Excluding certain items, the company earned C$1.46 per share, compared with the analysts’ average estimate of C$1.50, according to Thomson Reuters I/B/E/S.

Stronger-than-expected results from rival Bank of Montreal (BMO.TO) on Wednesday had raised expectations that other Canadian banks might follow with their own stellar financial reports.

“When compared against what Bank of Montreal reported yesterday, CIBC’s earnings will likely disappoint the market, in our view,” Barclays Capital analyst John Aiken said in a research note.

He attributed CIBC’s miss to weaker-than-expected trading revenues and advisory fees.

CIBC said quarterly provisions for credit losses, or the amount of money set aside to cover bad loans, fell C$78 million to C$334 million. Its Tier 1 capital, a key measure of the capital adequacy of a bank, was 13.7 percent.

Once a high-flying Wall Street player, Toronto-based CIBC has reduced its U.S. operations over the past decade and turned its focus on its domestic business.

Speaking on a conference call, Chief Executive Officer Jerry McCoughey said the bank would target reinvestment in its domestic corporate lending and business banking divisions, which have fallen behind those of Canadian rivals.

“Both of those areas, when the economy is recovering and hopefully transitions into expansion, should provide opportunities for us to deploy capital in Canada,” he said.

Shares of CIBC closed at C$75.29 Wednesday on the Toronto Stock Exchange. ($1=$1.06 Canadian) (Reporting by Cameron French, additional reporting by Sakthi Prasad in Bangalore; Editing by Lisa Von Ahn)

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