CIBC is reporting lower profits for the third quarter ended July 31. The bank blamed weak capital markets in the United States, and a higher tax rate for the drop. CIBC is the second bank to report Q3 earnings.

CIBC said net income for the quarter was $193 million, or 41¢ a share, down from $460 million, or $1.13 a share diluted in the prior-year period.

Adjusted earnings, which excludes unusual items, was $222 million, down from $470 million a year ago.

The bank’s provisions for bad loans stood at $290 million, down from $390 million in the second quarter. Return on equity fell to 6.2% from 17.4% in the prior-year period. On an adjusted basis, it was 7.4%, down from 17.8% last year.

Revenue in the quarter was $2.6 billion, down $338 million from the third quarter of 2001.

“Overall, our performance in the third quarter continued to be affected by the challenging economic environment in North America,” chairman and CEO John Hunkin said in a release. “A further weakening in capital markets, diminished new origination activity, primarily in the U.S., merchant banking writedowns, and fewer opportunities for merchant banking asset sales, led to reduced earnings in our wholesale business. We also experienced a higher tax rate during the quarter as a result of lower loan losses and higher net income in our Canadian operations,” he added.