CIBC said today that its diluted earnings per share for the third quarter ended July 31 are expected to be approximately $2.30, compared with $1.86 for the third quarter ended July 31, 2006. These expected results are above previous analyst expectations, the bank said.

CIBC’s Q3 results will be announced on August 30.

The bank said its expected third quarter results include good revenue, expense and loan loss performance in most business groups, as well as higher than normal gains on securities and credit derivative hedges, and reversals of litigation and income tax accruals.

CIBC’s expected third quarter results include mark-to-market write-downs, net of gains on related hedges, of approximately $290 million ($190 million after tax) in CIBC’s structured credit business, on collateralized debt obligations (CDO) and residential mortgage-backed securities (RMBS) related to the U.S. residential mortgage market.

“With the exception of our structured credit business we are pleased with our performance in the third quarter”, said president and CEO, Gerry McCaughey, in a release. “We had positive financial results in many areas which more than offset the structured credit write-downs.”

CIBC’s exposure to the U.S. residential mortgage market before write-downs is approximately US$1.7 billion (excluding exposure directly hedged with other counterparties). CIBC estimates that less than 60% of this exposure relates to underlying subprime mortgages, while the remainder is midprime and higher grade assets. The majority of the US$1.7 billion exposure continues to be AAA-rated, the highest rating category. The exposure has been mitigated by subprime index hedges of approximately US$300 million.