Canadian banks suffer from economic slowdown

Source: Exec Digital Canada

Date :2/29/2008 4:24:43 AM

CIBC reports a net loss of C$1.46 billion in costs linked to subprime mortgages; the second biggest loss in its 141 year history.

The fifth biggest bank, Canadian Imperial Bank of Commerce, suffered its slowest profit growth in four quarters.

Shareholders were angry at the increasing losses resulting from its "hedged" subprime exposure that could potentially reach $5.1 billion.

``Our losses related to the U.S. residential mortgage market are a significant disappointment and are not aligned with our strategic imperative of consistent and sustainable performance,'' said Chief Executive Officer Gerald McCaughey.

Canadian Imperial was expected to earn C$2.05 a share, but missed estimates by eleven cents, earning only C$2.

Improvement

The bank sold C$2.94 billion in stock in January to investors including Manulife Financial Corp and Hong Kong billionaire Li Ka-Shing, in an attempt to improve its balance sheet.

Despite a more challenging environment during the first quarter, CIBC's retail businesses continued to perform well overall.

CIBC Retail Markets reported revenue of $2,371 million, up $98 million or four percent from the same quarter last year.

CIBC's board of directors also declared a dividend of 87 cents per share on common shares for the quarter ending April 30, 2008.

February 29, 2008