CIBC said today its third-quarter net profit fell 21%, due to a tax break that boosted earnings a year ago.

Canada’s third-largest bank by assets said net income for the quarter ended July 31 was $620 million, or $1.60 per share, down from $788 million, or $2.02 per share, in the year-ago period.

The year-ago profit was boosted by a one-time tax break.

Return on equity was 21.3%, down from 29.9% in the year-earlier period, which benefited from a $475 million recovery of a U.S. income tax overpayment.

Total revenue rose 2% to $2.9 billion.

Diluted earnings per share were $1.60, down from $2.02.

Strong credit quality allowed the bank to release $50 million that it had previously allocated as loan loss provisions. Provisions for the quarter were $91 million, down from $425 million in the year-ago quarter.

“Strong third quarter results reflect continued progress against our four key business strategies,” said John Hunkin, president and CEO, in a news release.

The bank said CIBC Retail Markets delivered strong results, driven primarily by loan and deposit volume growth and higher fee income, partially offset by lower spreads. CIBC Retail Markets net income for the third quarter was $253 million, compared with $247 million in Q3 2003, and $205 million in the prior quarter.

CIBC Wealth Management revenue declined due to lower trading volumes and new issue activity in retail brokerage. Imperial Service continued to benefit from growth in loans and deposit volume. However, because of lower costs net income was higher in the third quarter, at $106 million, compared with $87 million in Q3 2003, and $99 million in the prior quarter.

Lower trading and new issues volume also affected results in CIBC World Markets. Overall, net income remained stable, however, with higher net merchant banking gains and recovery of credit losses. CIBC World Markets net income for the third quarter was $257 million, compared with $3 million in Q3 2003, and $259 million in the prior quarter.

The bank declared a dividend of 60¢ per share on its common shares.

As well, the bank amended its share-buyback program to increase the number of common shares that may be purchased for cancellation to 32 million common shares (approximately 8.9% of the public float at Dec. 15, 2003).

During the third-quarter, CIBC repurchased and cancelled approximately 5.4 million common shares under its normal course issuer bid.