Winnipeg Free Press

TORONTO - Canadian Imperial Bank of Commerce (TSX:CM) profits were halved in the fourth quarter to $436 million from a year earlier as continuing fallout from the credit crisis ate away at its bottom line.

CIBC, which has been the Canadian bank hardest hit by credit writedowns, said the lower earnings compared to $884 million in the same period last year.

Cash earnings amounted to $1.09 per share, down from $2.55 a share in the same period last year, with one-time items taking a 48 cent per share bite out of the fourth-quarter profit.

However, the bank left its 87 cent per share dividend untouched despite speculation that the sector might have to slash its shareholder payouts to combat the troubled economy.

The loss for the quarter ended Oct. 31 included increased provisions for credit losses of $222 million, compared with $132 million in the year-ago period.

Total revenue dropped to $2.2 billion from a year-ago $2.9 billion.

Shares in the bank jumped four per cent on the Toronto Stock Exchange, gaining $1.90 to $47.20.

Dundee Capital Markets analyst John Aiken reducing his rating on CIBC's stock to"sell" due to what he described as a lack of clarity on future writedowns.

"Although this could come as soon as the conference call scheduled for this afternoon, it will more likely take better visibility on the structured credit markets," he wrote in a note.

And "no one is forecasting this to occur any time soon."

CIBC executives were scheduled to discuss the results on a call slated for 4:30 p.m. ET.

For the full fiscal year, CIBC reported a loss of $2.1 billion, including one-time losses related to its structured credit run-off business of $4.9 billion. For all of last year, CIBC had reported a profit of $3.3 billion and diluted EPS of $9.21.

"While conditions across the financial services industry were challenging in 2008, we took broad-based actions across CIBC to manage through the environment," president and CEO Gerry McCaughey said in a statement.

"As a result of the actions we took to reduce risk and strengthen our capital position, we are heading into 2009 with the strongest capital position among the major commercial banks in North America.

"Our capital strength, combined with our client focus and the strength of our Canadian concentrated core retail and wholesale businesses, positions CIBC well in this uncertain environment," he added.

In the fourth quarter, the consumer banking division saw profits of $523 million, down from $960 million a year earlier when it took a $381 million after-tax gain on the worldwide restructuring of Visa's credit card operations. Revenue was $2.2 billion from $1.78 billion.

CIBC World Markets investment banking logged $133 million in profits over a loss of $112 million in the comparable period last year.

Corporate banking, which also includes "other" banking results, posted a loss of $220 million on higher tax expenses from capital outside the country, compared to a profit of $36 million a year earlier.

CIBC reported this quarter using some new valuation methodology which drew some concern from Aiken who suggested the new calculations would "smooth the charges and make them more digestible."

"A change in classification of certain securities allowed CIBC to avoid recognizing fair-value adjustments of over $600 million in the income statement," he said.

Instead of the $400 million total for fair value adjustments that was reported, Aiken estimates the gross charges would be closer to $1.3 billion.

"All we are trying to illustrate is that significant, material economic losses and write-downs are still a potential for CIBC, regardless of accounting treatment," he wrote.

In other developments, CIBC named company director Charles Sirois as the new chairman of its board, to replace William Etherington who is completing a five-year term as chairman and retiring from the board. Sirois will take the position Feb. 26.