CIBC reported on Thursday net income of $662 million for the third quarter ended July 31 compared with a net loss of $1.9 billion a year ago. Diluted earnings per share were $1.86, compared with a diluted loss per share of $5.77 a year ago.

Diluted EPS of $1.86 for the third quarter of 2006 were increased by:
– $50 million (net) after-tax of significant tax-related adjustments ($0.14 per share);
– $13 million ($8 million after-tax, or $0.03 per share) due to the impact of changes in credit spreads on the mark to market of its corporate loan credit derivatives under the Canadian Institute of Chartered Accountants’ Accounting Guideline 13.

The diluted loss per share of $5.77 for the third quarter of 2005 included a $2.83 billion ($2.53 billion after-tax, or $7.45 per share) Enron-related litigation provision.

CIBC’s net income and diluted EPS for the third quarter of 2006 were up from $585 million and $1.63, respectively, for the prior quarter, which included several items of note aggregating to earnings of $0.10 per share.

Return on equity was 27.2% for the third quarter, up from 25.7% for the prior quarter.

“Our third quarter results reflect a strong quarterly performance and underline the steady progress we have made throughout the year on our priorities,” said Gerald T. McCaughey, president and CEO.

CIBC Retail Markets reported revenue of $2.04 billion, compared with $1.96 billion for the prior quarter and $2.02 billion for the same period last year.

Net income for the third quarter was $487 million, up $83 million or 21% from a year ago on higher revenue and lower expenses, lower loan losses and taxes.

Although the domestic environment remains competitive, CIBC’s retail businesses continue to perform well overall and remain strongly positioned in the market.

Volume growth remains solid and reasonably consistent across most of the core retail businesses. In cards, CIBC’s sequential quarter growth rate in loans administered of 3.6% was the highest in recent years.

Growth in balances has been offset by the impact of competitive pricing, the continued shift in customer preference from variable to fixed rate mortgages, and CIBC’s focus on secured lending.

CIBC’s primary challenge has been in the area of retail credit, where CIBC has taken steps to increase new origination of secured loans to improve the overall asset quality of its portfolio. During the quarter, CIBC continued to shift the mix of its personal loan portfolio to a higher proportion of secured loans (55% at July 31, 2006 vs. 47% at Oct. 31, 2005).

Client satisfaction remains an important measure of CIBC’s progress. During the quarter, CIBC Wood Gundy achieved a satisfaction rating of 83% in an independent client opinion survey. This rating is up from 2004.

CIBC World Markets reported revenue of $677 million, compared with $607 million in the prior quarter and $929 million for the same period last year, which included strong merchant banking revenues.

Investment banking and credit products revenue was up significantly from the prior quarter primarily due to higher levels of M&A activity.

Merchant banking revenue was up somewhat from the second quarter but down significantly from the same period last year.

Last year, CIBC set an objective to achieve $250 million of annual cost reductions by the end of 2006.

During the third quarter, CIBC continued to make progress against its objective. Non-interest expenses were $1.89 billion, slightly higher than in the second quarter due mainly to higher compensation from three more days in the third quarter.

CIBC’s expense level remains within range of its fourth quarter target of $1.89 billion and CIBC says it remains confident that it will achieve its objective again in the fourth quarter.

In related news, CIBC’s board of directors declared a dividend of 70¢ per share on common shares for the quarter ending Oct. 31 payable on Oct. 27 to shareholders of record at the close of business on Sept. 28.