CIBC Announces Second Quarter 2012 Results

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May 31, 2012, 05:50 ET

TORONTO, May 31, 2012 /CNW/ - CIBC (TSX: CM) (NYSE: CM) reported today net income of $811 million for the second quarter ended April 30, 2012, compared with net income of $767 million for the same period last year. Reported diluted earnings per share (EPS) were $1.90, compared with reported diluted EPS of $1.80 a year ago. Adjusted diluted EPS were $2.00⁽¹⁾, compared with adjusted diluted EPS of $1.83⁽¹⁾ a year ago. Return on common shareholders' equity for the second quarter was 22.1%.

Results for the second quarter of 2012 were affected by the following items of note, netting to a negative impact of $0.10 per share:

$28 million ($16 million after-tax or $0.04 per share) hedge accounting loss on leveraged leases;
$12 million ($0.03 per share) premium paid on preferred share redemptions;
$10 million ($7 million after-tax or $0.02 per share) loss from the structured credit run-off business; and
$7 million ($6 million after-tax or $0.01 per share) amortization of intangible assets.

Reported net income of $811 million for the second quarter compared with reported net income of $835 million for the prior quarter. Reported diluted EPS and adjusted diluted EPS of $1.90 and $2.00⁽¹⁾, respectively,for the second quarter compared with reported diluted EPS and adjusted diluted EPS of $1.93 and $1.97⁽¹⁾, respectively, for the prior quarter.

CIBC's Tier 1 and Tangible Common Equity ratios at April 30, 2012 were 14.1% and 11.0%⁽¹⁾, respectively, compared to 14.3% and 10.8%⁽¹⁾, respectively, at January 31, 2012. CIBC currently exceeds the minimum requirements as proposed by the Basel Committee on Banking Supervision, while continuing to invest for future growth.

"CIBC's solid results in the second quarter reflect our strong focus on our clients as well as our underlying business fundamentals," says Gerry McCaughey, President and Chief Executive Officer. "CIBC was ranked as the strongest bank in North America and the third strongest bank in the world by Bloomberg Markets Magazine, the second year we have been recognized among the world's strongest banks."

Core business performance

Retail and Business Banking reported net income of $556 million for the second quarter, up from $496 million for the same quarter last year.

Revenue of $2.0 billion was up 4% from the second quarter of 2011, primarily due to strong volume growth and higher treasury allocations, partly offset by narrower spreads in personal banking.

Provision for credit losses of $271 million was up slightly from $267 million in the same quarter last year due to higher losses in the personal lending portfolio, partially offset by lower write-offs net of recoveries in the cards portfolio.

During the second quarter of 2012, our retail business continued to make progress against our strategy to strengthen our focus as a client-centric organization, by building deeper relationships with our clients, improving our sales and service capabilities and acquiring and retaining clients who seek deeper and more rewarding relationships:

We launched the CIBC Total Banking Rebate to attract new clients and deepen our relationships with existing clients by rewarding them with discounts on their monthly account fees when they hold certain CIBC products;
We continue to invest in our strong distribution platform, adding 11 new or renovated branches in the first half of fiscal 2012;
To provide our clients with increased opportunities to do their banking, we are expanding hours of operation in our branches with many more open later on weekdays and more of our branches open on Saturdays and Sundays;
Demonstrating our continued commitment to Business Banking clients, we implemented inter-branch banking capabilities for Small Business clients and launched the new cash management solution, CIBC Cash Management Online, to enhance the client experience; and
We continued our leadership in the mobile banking space with the launch of a mobile banking App designed for the iPad that makes it easier for clients to manage their finances by offering rich interactive graphics and visuals.

"Continuing our leadership in mobile financial services innovations, we announced post quarter-end, in partnership with Rogers Communications, our plans to become the first bank in Canada to offer mobile payments functionality for our clients later this year," says David Williamson, Senior Executive Vice-President and Group Head, Retail and Business Banking. "This new functionality will allow our clients to use their existing CIBC credit card through their smartphone and pay at the checkout."

Wealth Management reported net income of $79 million for the second quarter, up from $73 million or 8% for the same quarter last year.

Revenue of $418 million was comparable to the second quarter of 2011. Lower commissions from equity trading and new issuance activity were offset by income from our investment in American Century Investments included in the current quarter.

During the second quarter of 2012, our wealth management business continued to make progress in support of our strategic priority of building our wealth management platform:

We set a new quarterly record this quarter with net sales of long-term retail mutual funds of $1.5 billion; and
We were presented with the 'Deal of the Year' award at the 19th Annual Mutual Fund Industry Awards for our acquisition of an equity stake in American Century Investments. This award recognizes a merger and acquisition deal that most changed the landscape of the mutual fund industry in 2011.

Wholesale Banking reported net income of $131 million for the second quarter, which was comparable to the prior quarter. Lower capital markets and corporate and investment banking revenue were largely offset by a lower effective tax rate, lower non-interest expenses, and a lower provision for credit losses.

Revenue of $402 million was down from $438 million in the prior quarter, primarily due to lower revenue from equity derivatives and commodities trading, debt issuance activity, foreign exchange trading, and lower merchant banking gains, partially offset by higher treasury allocations. The hedge accounting loss on leveraged leases noted above was mostly offset by higher revenue from our structured credit run-off business.

Wholesale Banking had several notable achievements during the second quarter that supported its objective to be the premier client-focused wholesale bank centred in Canada:

CIBC acted as co-lead arranger, joint bookrunner and syndication agent for the pro rata portion of Telesat Canada's $2.5 billion credit facilities;
CIBC acted as joint bookrunner on Wells Fargo Canada Corporation's $1.5 billion bond offering;
CIBC acted as exclusive financial advisor to Pan American Silver Corp. on its $1.5 billion acquisition of Minefinders Corp.;
CIBC acted as co-lead manager and joint bookrunner on a $604 million common share financing for Crescent Point Energy Corp.;
CIBC acted as sole agent on a $300 million, 5-year floating rate note offering for the Province of Manitoba; and
CIBC acted as joint lead agent and joint bookrunner for $225 million of senior secured bonds for Lower Mattagami Energy Limited Partnership.

CIBC delivered strong performance during the second quarter. "The investments we are making in our retail and business banking, wealth management and wholesale banking businesses are furthering our strength and positioning us well for the future," says Mr. McCaughey.

CIBC in our communities

CIBC is committed to supporting causes that matter to our clients, our employees and our communities. During the quarter:

As part of our lead sponsorship of the 2015 Pan/Parapan Am Games, we unveiled the CIBC Pan and Parapan Games Athletes' Village and introduced the CIBC Youthvision Scholarship Athlete Award - a $1 million investment in young people and amateur sport in Canada over 10 years.
CIBC celebrated Daffodil Month in April with several donations to cancer treatment and research at hospitals across the country and the launch of cancer-related fundraising campaigns for the BC Children's Hospital, CIBC Charles-Bruneau, Weekend to End Women's Cancers and Minor Hockey Fights Cancer.
CIBC marked its 15^th anniversary as National partner of Canada's 50 Best Managed Companies, the country's leading business awards program recognizing excellence in domestically-owned and -managed private companies with revenues over $10 million.
The CIBC Children's Foundation announced $500,000 in funding for an innovative clinical research study in robotic therapy for children with cerebral palsy at Holland Bloorview Kids Rehabilitation Hospital.

⁽¹⁾ For additional information, see the "Non-GAAP measures" section.

The information on the following pages forms a part of this press release.

(The board of directors of CIBC reviewed this press release prior to it being issued. CIBC's controls and procedures support the ability of the President and Chief Executive Officer and the Chief Financial Officer of CIBC to certify CIBC's second quarter financial report and controls and procedures. CIBC's CEO and CFO will voluntarily provide to the Securities and Exchange Commission a certification relating to CIBC's second quarter financial information, including the attached unaudited interim consolidated financial statements, and will provide the same certification to the Canadian Securities Administrators.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's discussion and analysis (MD&A) is provided to enable readers to assess CIBC's results of operations and financial condition for the quarter ended April 30, 2012, compared with prior quarters. The MD&A should be read in conjunction with our 2011 Annual Report and the unaudited interim consolidated financial statements included in this report. Unless otherwise indicated, all financial information in this MD&A has been prepared in accordance with International Financial Reporting Standards (IFRS or GAAP) and all amounts are expressed in Canadian dollars. This MD&A is current as of May 30, 2012. Additional information relating to CIBC is available on SEDAR at www.sedar.com and on the U.S. Securities and Exchange Commission's (SEC) website at www.sec.gov. No information on CIBC's website (www.cibc.com) should be considered incorporated herein by reference. A glossary of terms used throughout this quarterly report can be found on pages 230 to 234 of our 2011 Annual Report.

External Reporting Changes

Adoption of IFRS
We adopted IFRS commencing November 1, 2011 as a replacement of prior Canadian generally accepted accounting principles (Canadian GAAP). Accordingly, the interim consolidated financial statements are prepared under IFRS and include corresponding comparative information for 2011. The details on the impact of transition to IFRS are provided in Note 12 to our interim consolidated financial statements.

A NOTE ABOUT FORWARD-LOOKING STATEMENTS: From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this report, in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission and in other communications. These statements include, but are not limited to, statements made in the "Overview of results", "Structured credit run-off progress", "Overview - Income Taxes", "Overview - Significant Event", "Overview - Outlook for calendar year 2012", "Wholesale Banking - Structured credit run-off business", "Capital Resources", and "Accounting and Control Matters" sections of this report and other statements about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies and outlook for 2012 and subsequent periods. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate" and other similar expressions or future or conditional verbs such as "will", "should", "would" and "could". By their nature, these statements require us to make assumptions, including the economic assumptions set out in the "Overview - Outlook for calendar year 2012" section of this report, and are subject to inherent risks and uncertainties that may be general or specific. A variety of factors, many of which are beyond our control, affect our operations, performance and results, and could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements. These factors include: credit, market, liquidity, strategic, operational, reputation and legal, regulatory and environmental risk; legislative or regulatory developments in the jurisdictions where we operate; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions; the resolution of legal proceedings and related matters; the effect of changes to accounting standards, rules and interpretations; changes in our estimates of reserves and allowances; changes in tax laws; changes to our credit ratings; political conditions and developments; the possible effect on our business of international conflicts and the war on terror; natural disasters, public health emergencies, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; the accuracy and completeness of information provided to us by clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates; intensifying competition from established competitors and new entrants in the financial services industry; technological change; global capital market activity; changes in monetary and economic policy; currency value fluctuations; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations; changes in market rates and prices which may adversely affect the value of financial products; our success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels; changes in client spending and saving habits; our ability to attract and retain key employees and executives; and our ability to anticipate and manage the risks associated with these factors. This list is not exhaustive of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. We do not undertake to update any forward-looking statement that is contained in this report or in other communications except as required by law.

SECOND QUARTER FINANCIAL HIGHLIGHTS


						As at or for the							As at or for the
						three months ended							six months ended
				2012			2012			2011			2012			2011
Unaudited				Apr. 30			Jan. 31			Apr. 30			Apr. 30			Apr. 30
Financial results ($ millions)
Net interest income			$	1,753		$	1,842		$	1,731		$	3,595	$		3,501
Non-interest income				1,331			1,315			1,284			2,646			2,608
Total revenue				3,084			3,157			3,015			6,241			6,109
Provision for credit losses				308			338			245			646			528
Non-interest expenses				1,764			1,791			1,756			3,555			3,561
Income before taxes				1,012			1,028			1,014			2,040			2,020
Income taxes				201			193			247			394			490
Net income			$	811		$	835		$	767		$	1,646		$	1,530
Net income attributable to non-controlling interests			$	1		$	3		$	3		$	4		$	6
	Preferred shareholders			44			56			42			100			84
	Common shareholders			766			776			722			1,542			1,440
Net income attributable to equity shareholders			$	810		$	832		$	764		$	1,642		$	1,524
Financial measures
Reported efficiency ratio				57.2	%		56.7	%		58.2	%		57.0	%		58.3	%
Adjusted efficiency ratio ⁽¹⁾				55.1	%		55.3	%		56.0	%		55.2	%		55.4	%
Loan loss ratio ⁽²⁾				0.53	%		0.54	%		0.51	%		0.53	%		0.50	%
Return on common shareholders' equity				22.1	%		22.4	%		24.9	%		22.2	%		24.7	%
Net interest margin				1.82	%		1.85	%		1.79	%		1.84	%		1.81	%
Net interest margin on average interest-earning assets ⁽³⁾				2.11	%		2.16	%		2.00	%		2.13	%		2.05	%
Return on average assets ⁽⁴⁾				0.84	%		0.84	%		0.79	%		0.84	%		0.79	%
Return on average interest-earning assets ⁽³⁾⁽⁴⁾				0.98	%		0.98	%		0.89	%		0.98	%		0.89	%
Total shareholder return				(1.12)	%		2.78	%		8.52	%		1.63	%		6.96	%
Common share information
Per share ($)		- basic earnings	$	1.90		$	1.94		$	1.83		$	3.84		$	3.65
		- reported diluted earnings		1.90			1.93			1.80			3.83			3.60
		- adjusted diluted earnings ⁽¹⁾		2.00			1.97			1.83			3.97			3.87
		- dividends		0.90			0.90			0.87			1.80			1.74
		- book value		35.22			34.31			30.70			35.22			30.70
Share price ($)		- high		78.00			78.00			85.49			78.00			85.49
		- low		73.27			68.43			76.75			68.43			75.12
		- closing		74.53			76.25			81.91			74.53			81.91
Shares outstanding (thousands)		- weighted-average basic		403,058			401,099			395,373			402,068			394,265
		- weighted-average diluted		403,587			401,613			407,957			402,590			407,137
		- end of period		404,945			402,728			396,978			404,945			396,978
Market capitalization ($ millions)			$	30,181		$	30,708		$	32,516		$	30,181		$	32,516
Value measures
Dividend yield (based on closing share price)				4.9	%		4.7	%		4.4	%		4.9	%		4.3	%
Reported dividend payout ratio				47.4	%		46.5	%		47.7	%		46.9	%		47.7	%
Adjusted dividend payout ratio⁽¹⁾				45.0	%		45.5	%		47.4	%		45.3	%		44.9	%
Market value to book value ratio				2.12			2.22			2.67			2.12			2.67
On- and off-balance sheet information ($ millions)
Cash, deposits with banks and securities			$	68,695		$	71,065		$	99,474		$	68,695		$	99,474
Loans and acceptances, net of allowance				251,487			250,719			240,316			251,487			240,316
Total assets				387,458			391,449			413,282			387,458			413,282
Deposits				244,207			243,169			264,890			244,207			264,890
Secured borrowings				52,904			52,968			46,562			52,904			46,562
Common shareholders' equity				14,260			13,817			12,186			14,260			12,186
Average assets				391,646			396,122			396,575			393,909			389,114
Average interest-earning assets ⁽³⁾				337,852			339,567			354,148			338,718			344,951
Average common shareholders' equity				14,095			13,826			11,876			13,959			11,769
Assets under administration⁽⁵⁾				1,397,624			1,364,509			1,294,029			1,397,624			1,294,029
Balance sheet quality measures
Risk-weighted assets ($ billions) ⁽⁶⁾			$	113.3	$		111.5		$	106.3		$	113.3		$	106.3
Tangible common equity ratio ⁽¹⁾⁽⁶⁾				11.0	%		10.8	%		10.6	%		11.0	%		10.6	%
Tier 1 capital ratio ⁽⁶⁾				14.1	%		14.3	%		14.7	%		14.1	%		14.7	%
Total capital ratio ⁽⁶⁾				17.7	%		18.1	%		18.9	%		17.7	%		18.9	%
Other information
Retail / wholesale ratio ⁽¹⁾⁽⁷⁾				76 % / 24	%		78 % / 22	%		76 % / 24	%		76 % / 24	%		76 % /24	%
Full-time equivalent employees				42,267			42,181			41,928	%		42,267			41,928

(1)	For additional information, see the "Non-GAAP measures" section.
(2)	Commencing in the second quarter of 2012, the ratio is calculated as the provision for credit losses on impaired loans to average loans and acceptances, net of allowance for credit losses. The provision for credit losses on impaired loans includes provision for: individual allowance; collective allowance on personal, scored small business loans and mortgages that are greater than 90 days delinquent; and net credit card write-offs. Prior period information has been restated accordingly.
(3)	Average interest-earning assets include interest-bearing deposits with banks, securities, securities borrowed or purchased under resale agreements, and loans net of allowances.
(4)	Net income expressed as a percentage of average assets or average interest-earning assets.
(5)	Includes the full contract amount of assets under administration or custody of CIBC Mellon Global Securities Services Company, which is a 50/50 joint venture between CIBC and The Bank of New York Mellon.
(6)	Capital measures for fiscal year 2011 are under Canadian GAAP and have not been restated for IFRS.
(7)	For the purposes of calculating this ratio, Retail includes Retail and Business Banking, Wealth Management, and International banking operations (reported as part of Corporate and Other). The ratio represents the amount of economic capital attributed to these businesses as at the end of the period.

OVERVIEW

Financial results
Reported net income for the quarter was $811 million, compared to $767 million for the same quarter last year and $835 million for the prior quarter. Net income for the six months ended April 30, 2012 was $1,646 million, compared to $1,530 million for the same period in 2011.

Reported diluted earnings per share (EPS) for the quarter was $1.90, compared to $1.80 for the same quarter last year and $1.93 for the prior quarter. Reported diluted EPS for the six months ended April 30, 2012 was $3.83, compared to $3.60 for the same period in 2011.

Adjusted diluted EPS⁽¹⁾ for the quarter was $2.00, compared to $1.83 for the same quarter last year and $1.97 for the prior quarter. Adjusted diluted EPS⁽¹⁾ for the six months ended April 30, 2012 was $3.97, compared to $3.87 for the same period in 2011.

Adjusted diluted EPS⁽¹⁾ for the current quarter was affected by the following items of note:

$28 million ($16 million after-tax) hedge accounting loss on leveraged leases;
$12 million premium paid on preferred share redemptions;
$10 million ($7 million after-tax) loss from the structured credit run-off business; and
$7 million ($6 million after-tax) amortization of intangible assets.

(1) For additional information, see the "Non-GAAP measures" section.

Net interest income
Net interest income was up $22 million or 1% from the same quarter last year, largely due to higher trading-related net interest income and volume growth across most retail products, partially offset by narrower spreads and the hedge accounting loss on leveraged leases noted above.

Net interest income was down $89 million or 5% from the prior quarter, largely due to lower treasury-related net interest income and fewer days in the quarter, partially offset by wider spreads. The current quarter included the hedge accounting loss on leveraged leases noted above.

Net interest income for the six months ended April 30, 2012 was up $94 million or 3% from the same period in 2011, primarily due to higher treasury-related and trading-related net interest income and volume growth across most retail products, partially offset by narrower spreads. The current period also included the hedge accounting loss on leveraged leases and lower net interest income from the structured credit run-off business.

Non-interest income
Non-interest income was up $47 million or 4% from the same quarter last year, primarily due to higher gains net of write-downs on available-for-sale (AFS) securities, higher income from equity-accounted investments, and higher fees, partially offset by lower commissions on securities transactions.

Non-interest income was up $16 million or 1% from the prior quarter, mainly due to higher gains net of write-downs on AFS securities and higher mutual fund and underwriting and advisory fees. The prior quarter benefitted from an item of note relating to an equity-accounted investment noted on the following page.

Non-interest income for the six months ended April 30, 2012 was up $38 million or 1% from the same period in 2011. Lower underwriting and advisory fees and commissions on securities transactions were mostly offset by lower losses from the structured credit run-off business and higher gains net of write-downs on AFS securities. The current year period benefitted from an item of note relating to an equity-accounted investment, while the prior year period included items of note relating to accounting hedges and CIBC Mellon Trust Company's (CMT) issuer service business noted on the following page.

Provision for credit losses
Provision for credit losses was up $63 million or 26% from the same quarter last year. In Retail and Business Banking, higher losses in the personal lending portfolio were partially offset by lower write-offs net of recoveries in the cards portfolio. In Wholesale Banking, provisions were up mainly due to higher losses in the U.S. real estate finance portfolio. In Corporate and Other, provisions were higher mainly due to higher provisions in FirstCaribbean International Bank (CIBC FirstCaribbean). Provisions related to the collective allowance reported in Corporate and Other were also higher mainly due to net lower reversals in the quarter as compared to the same quarter last year.

Provision for credit losses was down $30 million or 9% from the prior quarter. In Retail and Business Banking, provisions were lower due to lower write-offs and bankruptcies in the cards portfolio, partially offset by lower recoveries in business lending. In Wholesale Banking, provisions were down mainly due to lower losses in the U.S. real estate finance portfolio. Provisions related to the collective allowance reported in Corporate and Other were lower mainly due to net higher reversals in the quarter as compared to the prior quarter.

Provision for credit losses for the six months ended April 30, 2012 was up $118 million or 22% from the same period in 2011. In Retail and Business Banking, provisions were higher due to higher losses in the acquired MasterCard portfolio as expected, and higher losses in the personal lending portfolio, partially offset by lower bankruptcies in the other cards portfolios and higher recoveries in business lending portfolio. In Wholesale Banking, provisions were up mainly due to higher losses in the U.S. real estate finance portfolio. In Corporate and Other, provisions were higher mainly due to higher provisions in CIBC FirstCaribbean. Provisions related to the collective allowance reported in Corporate and Other were also higher mainly due to net lower reversals in the first six months ended April 30, 2012 compared to the same period in 2011.

Non-interest expenses
Non-interest expenses were up $8 million compared to the same quarter last year, primarily due to higher performance-based compensation, partially offset by cost savings from operational efficiencies.

Non-interest expenses were down $27 million or 2% from the prior quarter, primarily due to lower commodity tax and performance-based compensation, partially offset by higher computer and office equipment expenses.

Non-interest expenses for the six months ended April 30, 2012 were down $6 million from the same period in 2011. Cost savings from operational efficiencies were largely offset by higher occupancy costs and employee salaries and benefits.

Income taxes
Income tax expense was down $46 million or 19% from the same quarter last year, primarily due to a lower statutory tax rate, higher tax-exempt income, and an increase in the relative proportion of income subject to lower tax rates.

Income tax expense was up $8 million or 4% from the prior quarter, mainly due to a lower tax rate on the item of note in the prior quarter relating to an equity-accounted investment noted below.

Income tax expense for the six months ended April 30, 2012 was down $96 million or 20%, from the same period in 2011, primarily due to a lower statutory tax rate, higher tax-exempt income, an increase in the relative proportion of income subject to lower income tax rates, and higher income from an equity-accounted investment.

In prior years, the Canada Revenue Agency issued reassessments disallowing the deduction of approximately $3.0 billion of the 2005 Enron settlement payments and related legal expenses. The matter is currently in litigation and on December 21, 2011, in connection with a motion by CIBC to strike the Crown's replies, the Tax Court of Canada struck certain portions of the replies and directed the Crown to submit amended replies. The Crown and CIBC have both appealed the ruling.

Should we successfully defend our tax filing position in its entirety, we would recognize an additional accounting tax benefit of $214 million and taxable refund interest of approximately $180 million. Should we fail to defend our position in its entirety, we would incur an additional tax expense of approximately $865 million and non-deductible interest of approximately $124 million.

Foreign exchange
The estimated impact of U.S. dollar translation on key lines of our interim consolidated statement of income, as a result of changes in average exchange rates, are as follows:


					For the three		For the six
					months ended		months ended
			Apr. 30, 2012		Apr. 30, 2012		Apr. 30, 2012
			vs.		vs.		vs.
$ millions			Apr. 30, 2011		Jan. 31, 2012		Apr. 30, 2011
Estimated increase (decrease) in:
	Total revenue	$	10	$	(7)	$	12
	Provision for credit losses		1		(1)		2
	Non-interest expense		5		(3)		6
	Net income		4		(3)		4
C$ vs. US$ - average depreciation (appreciation)			3%		(2)%		2%

Impact of items of note in prior periods
Our adjusted diluted EPS⁽¹⁾ for the prior quarters was affected by the following items of note:

(1) For additional information, see the "Non-GAAP measures" section.

Q1, 2012

$37 million ($35 million after-tax) gain relating to an equity-accounted investment in our Wealth Management strategic business unit (SBU);
$35 million ($26 million after-tax) loss from the structured credit run-off business;
$18 million premium paid on preferred share redemptions; and
$9 million ($7 million after-tax) amortization of intangible assets.

Q2, 2011

$50 million ($36 million after-tax) reduction in the collective allowance recognized in Corporate and Other;
$46 million ($33 million after-tax) loss from the structured credit run-off business; and
$9 million ($7 million after-tax) amortization of intangible assets.

Q1, 2011

$90 million ($65 million after-tax) loss from mark-to-market (MTM) volatility prior to the establishment of accounting hedges on securitized mortgages and funding liabilities;
$70 million ($50 million after-tax) loss from the structured credit run-off business;
$37 million after-tax gain on the sale of CMT issuer service business; and
$9 million ($7 million after-tax) amortization of intangible assets.

Significant events
FirstLine mortgages
We continue to explore strategic options, including a potential sale, of our broker mortgage brand called FirstLine. This strategic direction is consistent with Retail and Business Banking's client-centric strategy, which has now put greater emphasis on branch mortgage originations.

Private wealth management (Asia)
CIBC entered into a definitive agreement in the second quarter to sell our stand alone Hong Kong and Singapore based private wealth management business. This niche advisory and brokerage business, included in International banking within Corporate and Other, provides private banking services to high net worth individuals in the Asia-Pacific region and had assets under management of under $2 billion as at April 30, 2012. The deal is subject to certain closing conditions and regulatory approvals and is expected to close by early 2013. CIBC's other businesses in Asia are unaffected by this transaction.

Outlook for calendar year 2012
Economic growth is likely to stay relatively modest in both Canada and the U.S. in 2012. Real GDP gains are likely to be in the vicinity of 2% in Canada and slightly above that pace in the U.S. in the face of a deceleration in economic activity overseas, including a likely recession in Europe and slower growth in China. We expect European governments will show further resolve in preventing sovereign debt troubles from spilling over into a larger Eurozone banking crisis and a deeper recession, but uncertainties there could still weigh on global capital market sentiment. In the U.S., economic growth decelerated in the first half of the year, but better household credit fundamentals and ongoing job gains should support second half growth.

Canada's economy faces a deceleration in global demand due to a likely recession in Europe, a slower pace of growth in emerging markets, and the challenges of competing in the U.S. market at a near-par exchange rate. Government spending will remain a slight negative for growth as fiscal tightening continues. Although consumer credit growth has slowed, moderate growth in consumer spending will be sustained by continued low interest rates, with the Bank of Canada limiting interest rate increases through 2012 as growth comes in below its latest forecast.

Retail and Business Banking is expected to face slightly slower growth in demand for mortgages, while consumer credit demand could continue to see limited growth. Demand for business credit should decelerate to a still healthy growth rate. Slightly slower economic growth is unlikely to result in deterioration in household credit quality, with the unemployment rate holding nearly steady.

Wealth Management should see continued investor interest in safer, yield-bearing assets, given current global uncertainties. Equity activity should pick up as the year progresses, assuming governments successfully deal with sovereign debt troubles in Europe.

Wholesale Banking should benefit from a healthy pace of bond issuance with governments remaining heavy borrowers and businesses taking advantage of low interest rates. A lack of volatility in foreign exchange rates could weigh on trading activity in that segment. Equity issuance looks poised to pick up over the remainder of the year after a slower start, with merger activity also likely to improve. Corporate credit demand should be supported by growth in capital spending, although the public debt market and internal cash flows will be a competitive source of funding.

Review of quarterly financial information


						2012								2011				2010
$ millions, except per share amounts,			IFRS												Canadian GAAP
for the three months ended				Apr. 30		Jan. 31		Oct. 31		Jul. 31		Apr. 30		Jan. 31		Oct. 31		Jul. 31
Revenue
	Retail and Business Banking		$	2,004	$	2,029	$	2,076	$	2,035	$	1,932	$	2,002	$	1,961	$	1,962
	Wealth Management			418		435		396		404		420		416		378		360
	Wholesale Banking			402		438		505		454		432		478		238		315
	Corporate and Other			260		255		218		238		231		198		677		212
Total revenue				3,084		3,157		3,195		3,131		3,015		3,094		3,254		2,849
Net interest income				1,753		1,842		1,776		1,785		1,731		1,770		1,645		1,548
Non-interest income				1,331		1,315		1,419		1,346		1,284		1,324		1,609		1,301
Total revenue				3,084		3,157		3,195		3,131		3,015		3,094		3,254		2,849
Provision for credit losses				308		338		306		310		245		283		150		221
Non-interest expenses				1,764		1,791		1,920		2,005		1,756		1,805		1,860		1,741
				1,012		1,028		969		816		1,014		1,006		1,244		887
Income taxes				201		193		212		225		247		243		742		244
Non-controlling interests				n/a		n/a		n/a		n/a		n/a		n/a		2		3
Net income			$	811	$	835	$	757	$	591	$	767	$	763	$	500	$	640
Net income attributable to:
	Non-controlling interests		$	1	$	3	$	3	$	2	$	3	$	3		n/a		n/a
	Equity shareholders			810		832		754		589		764		760		500		640
Earnings per share		- basic	$	1.90	$	1.94	$	1.80	$	1.35	$	1.83	$	1.82	$	1.17	$	1.54
		- diluted		1.90		1.93		1.79		1.33		1.80		1.80		1.17		1.53

n/a Not applicable.

Our quarterly results are modestly affected by seasonal factors. The first quarter is normally characterized by increased credit card purchases over the holiday period. The second quarter has fewer days as compared with the other quarters, generally leading to lower earnings. The summer months (July - third quarter and August - fourth quarter) typically experience lower levels of capital markets activity, which affects our brokerage, investment management, and wholesale banking activities.

Retail and Business Banking revenue was up over the period in the table above reflecting volume growth, offset to some extent by spread compression. The acquisition of the MasterCard portfolio in September 2010 benefited revenue starting in the fourth quarter of 2010. Commencing in the first quarter of 2011 under IFRS, revenue was affected by (i) changes in accounting for self-managed customer loyalty programs which increased revenues with an offsetting increase to non-interest expenses; and (ii) the recognition of interest on impaired loans (from the unwinding of the time value of money) in interest revenue rather than as a reduction in provision for credit losses which increased revenue with an offsetting increase to provision for credit losses.

Wealth Management revenue has grown over the period on improved capital market conditions and higher net sales of long-term mutual funds. The prior quarter included an item of note relating to an equity-accounted investment. Income from our proportionate share in American Century Investments (ACI) is included from September 1, 2011.

Wholesale Banking revenue is influenced to a large extent by capital market conditions. Revenue has been adversely affected by losses in the structured credit run-off business. The current quarter included the hedge accounting loss on leveraged leases.

Corporate and Other revenue included foreign exchange gains on capital repatriation activities in the fourth quarter of 2010. The gain on the sale of CMT's Issuer Services business was included in the first quarter of 2011. The first quarter of 2011 also included losses from MTM volatility prior to the establishment of accounting hedges on securitized mortgages and funding liabilities. Commencing in the first quarter of 2011 under IFRS, revenue was affected by a number of accounting differences including (i) the consolidation of certain special purpose entities (SPEs), which increased revenues with a partially offsetting increase in provision for credit losses and on-balance sheet accounting treatment for residential mortgage pools underlying transferred mortgage-backed securities (MBS); and (ii) equity-accounting treatment for CIBC Mellon joint ventures as compared to proportionate consolidation under Canadian GAAP.

The provision for credit losses is dependent upon the credit cycle in general and on the credit performance of the loan portfolios. Losses in the cards and personal lending portfolios improved in 2010 and 2011. While the losses in the cards portfolio improved in the first half of 2012, the losses related to personal lending portfolio have stabilized. Starting in the fourth quarter of 2010, we had losses on the acquired MasterCard portfolio. Wholesale Banking provisions declined in 2010 and first three quarters of 2011, while the fourth quarter of 2011 had higher European leveraged loan losses and the first half of 2012 had higher losses in the U.S. real estate finance portfolio. Commencing in the first quarter of 2011 under IFRS, provision for credit losses include the impact of the recognition of the unwinding of the time value of money on impaired loans in interest revenue rather than as a reduction in provision for credit losses and the consolidation of certain SPEs as discussed above.

Non-interest expenses have fluctuated over the period largely due to changes in employee compensation and benefits, and pension expense. Commencing in the first quarter of 2011 under IFRS, non-interest expenses were affected by a number of accounting differences including (i) lower net actuarial loss amortization expense as a result of the "fresh-start" election to recognize net unamortized actuarial losses from our post-employment benefit plans existing as at the November 1, 2010 transition to IFRS into retained earnings; and (ii) an impairment loss relating to CIBC FirstCaribbean goodwill that was recognized in the third quarter of 2011.

Income taxes vary with changes in income subject to tax, and the jurisdictions in which the income is earned. Taxes can also be affected by the impact of significant items. Tax-exempt income has been trending higher since the fourth quarter of 2010. Income tax expense on capital repatriation activities was included in the fourth quarter of 2010.

NON-GAAP MEASURES

We use a number of financial measures to assess the performance of our business lines as described below. Some measures are calculated in accordance with GAAP (IFRS), while other measures do not have a standardized meaning under GAAP, and accordingly, these measures may not be comparable to similar measures used by other companies. Investors may find these non-GAAP measures useful in analyzing financial performance.

Net interest income, taxable equivalent basis
We evaluate net interest income on an equivalent pre-tax basis. In order to arrive at the taxable equivalent basis (TEB) amount, we gross up tax-exempt income on certain securities to the equivalent level that would have incurred tax at the statutory rate. Meanwhile the corresponding entry is made in income tax expense. This measure enables comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income (TEB) is used to calculate the adjusted efficiency ratio and trading income (TEB). We believe that these measures permit uniform measurement, which may enable users of our financial information to make comparisons more readily.

Adjusted measures
Management assesses results on a reported basis and on an adjusted basis and considers both to be useful in the assessment of underlying performance. Adjusted results remove items of note from reported results. We believe that the inclusion of adjusted results provide the reader with a better understanding of how management assesses performance. We also believe that these measures provide greater consistency and comparability between our results and those of some of our Canadian peer banks who make similar adjustments in their public disclosure.

Adjusted diluted EPS
We adjust our reported diluted EPS to remove the impact of items of note, net of taxes, and any other item specified in the table on the following page.

Adjusted efficiency ratio
We adjust our reported revenue and non-interest expenses to remove the impact of items of note. We also adjust net interest income to be on an equivalent TEB basis (see above for further details).

Adjusted dividend payout ratio
We adjust our reported net income attributable to common shareholders to remove the impact of items of note, net of taxes, to calculate adjusted dividend payout ratio.

Economic capital
Economic capital provides the financial framework to evaluate the returns of each SBU, commensurate with the risk taken.

Economic capital is an estimate of the amount of equity capital required by the businesses to absorb losses consistent with our targeted risk rating over a one-year horizon. Economic capital comprises a number of key risk types including credit, strategic, operational, investment, and market. The economic capital methodologies that we employ quantify the level of inherent risk within our products, clients, and business lines, as required. The difference between our total equity capital and economic capital is held in Corporate and Other.

There is no comparable GAAP measure for economic capital.

Economic profit
Net income attributable to equity shareholders, adjusted for a charge on economic capital, determines economic profit. This measures the return generated by each SBU in excess of our cost of capital, thus enabling users of our financial information to identify relative contributions to shareholder value.

Segmented return on equity
We use return on equity (ROE) on a segmented basis as one of the measures for performance evaluation and resource allocation decisions. While ROE for total CIBC provides a measure of return on common equity, ROE on a segmented basis provides a similar metric relating to the economic capital allocated to the segments. As a result, segmented ROE is a non-GAAP measure.

Tangible common equity
Tangible common equity (TCE) comprises the sum of common share capital excluding short trading positions in our own shares, retained earnings, contributed surplus, non-controlling interests, and accumulated other comprehensive income (AOCI), less goodwill and intangible assets other than software. The TCE ratio is calculated by dividing TCE by risk-weighted assets (RWAs).

The following table provides a reconciliation of non-GAAP to GAAP measures related to CIBC on a consolidated basis. The reconciliations of the non-GAAP measures of our SBUs are provided in their respective sections.


			As at or for the three months ended										As at or for the six months ended
				2012			2012			2011			2012			2011
$ millions, except number of shares, per share amounts and dividend payout ratio				Apr. 30			Jan. 31			Apr. 30			Apr. 30			Apr. 30

Reported and adjusted diluted EPS
Reported net income attributable to diluted common shareholders		A	$	766		$	776		$	734		$	1,542		$	1,464
Adjusting items:
	After-tax impact of items of note ⁽¹⁾			41			16			4			57			89
	Dividends on convertible preferred shares ⁽²⁾			-			-			(12)			-			(24)
Adjusted net income attributable to diluted common shareholders⁽³⁾		B	$	807		$	792		$	726		$	1,599		$	1,529

Reported diluted weighted-average common shares outstanding (thousands)		C		403,587			401,613			407,957			402,590			407,137
Removal of impact of convertible preferred shares (thousands) ⁽²⁾				-			-			(11,591)			-			(11,902)
Adjusted diluted weighted-average shares outstanding (thousands) ⁽³⁾		D		403,587			401,613			396,366			402,590			395,235

Reported diluted EPS ($)		A/C	$	1.90		$	1.93		$	1.80		$	3.83		$	3.60
Adjusted diluted EPS ($) ⁽³⁾		B/D		2.00			1.97			1.83			3.97			3.87

Reported and adjusted efficiency ratio
Reported total revenue		E	$	3,084		$	3,157		$	3,015		$	6,241		$	6,109
Adjusting items:
	Pre-tax impact of items of note ⁽¹⁾			29			(10)			26			19			129
	TEB			61			57			45			118			84
Adjusted total revenue ⁽³⁾		F	$	3,174		$	3,204		$	3,086		$	6,378		$	6,322

Reported non-interest expenses		G	$	1,764		$	1,791		$	1,756		$	3,555		$	3,561
Adjusting items:
	Pre-tax impact of items of note ⁽¹⁾			(16)			(17)			(29)			(33)			(58)
Adjusted non-interest expenses ⁽³⁾		H	$	1,748		$	1,774		$	1,727		$	3,522		$	3,503

Reported efficiency ratio		G/E		57.2	%		56.7	%		58.2	%		57.0	%		58.3	%
Adjusted efficiency ratio ⁽³⁾		H/F		55.1	%		55.3	%		56.0	%		55.2	%		55.4	%

Reported and adjusted dividend payout ratio
Reported net income attributable to common shareholders		I	$	766		$	776		$	722		$	1,542		$	1,440
Adjusting items:
	After-tax impact of items of note ⁽¹⁾			41			16			4			57			89
Adjusted net income attributable to common shareholders ⁽³⁾		J	$	807		$	792		$	726		$	1,599		$	1,529
Dividends paid to common shares		K	$	364		$	360		$	344		$	724		$	686
Reported dividend payout ratio		K/I		47.4	%		46.5	%		47.7	%		46.9	%		47.7	%
Adjusted dividend payout ratio ⁽³⁾		K/J		45.0	%		45.5	%		47.4	%		45.3	%		44.9	%
Trading revenue (TEB)
Reported trading revenue			$	172		$	167		$	146		$	339		$	298
TEB adjustment				60			57			44			117			83
Trading revenue (TEB) ⁽³⁾			$	232		$	224		$	190		$	456		$	381

(1) Reflects revenue and non-interest expense impact of items of note under "Financial results" section.
(2) We have irrevocably renounced by way of a deed poll, our right to convert the series 26, 27, and 29 non-cumulative Class A Preferred Shares (the Convertible Preferred Shares) into CIBC common shares, except in circumstances that would be a "Trigger Event" as described in the August 2011 non-viable contingent capital Advisory issued by the Office of the Superintendent of Financial Institutions (OSFI). By renouncing our conversion rights, the Convertible Preferred Shares are no longer dilutive subsequent to August 16, 2011, the date the conversion rights were renounced by CIBC. The impact of dilution prior to August 17, 2011 has been removed for the purposes of calculation of the adjusted diluted EPS.
(3) Non-GAAP measure.

Strategic business units overview

The key methodologies and assumptions used in reporting financial results of our SBUs are provided on page 41 of the 2011 Annual Report. The individual allowances and related provisions are reported in the respective SBUs. The collective allowances and related provisions are reported in Corporate and Other except for (i) residential mortgages greater than 90 days delinquent; (ii) personal loans and scored small business loans greater than 30 days delinquent; and (iii) net write-offs for the cards portfolio, which are all reported in the respective SBUs. All allowances and related provisions for CIBC FirstCaribbean are reported in Corporate and Other.

RETAIL AND BUSINESS BANKING

Retail and Business Banking provides clients across Canada with financial advice, products and services through a strong team of advisors and nearly 1,100 branches, as well as our ABMs, mobile sales force, telephone banking, online and mobile banking.

Results ⁽¹⁾


		For the three months ended									For the six months ended
			2012			2012			2011			2012			2011
$ millions			Apr. 30			Jan. 31			Apr. 30			Apr. 30			Apr. 30
Revenue
	Personal banking	$	1,590		$	1,606		$	1,594		$	3,196		$	3,251
	Business banking		368			373			342			741			693
	Other		46			50			(4)			96			(10)
Total revenue			2,004			2,029			1,932			4,033			3,934
Provision for credit losses			271			281			267			552			539
Non-interest expenses			998			996			995			1,994			1,998
Income before taxes			735			752			670			1,487			1,397
Income taxes			179			185			174			364			361
Net income		$	556		$	567		$	496		$	1,123		$	1,036
Net income attributable to:
	Equity shareholders (a)	$	556		$	567		$	496		$	1,123		$	1,036
Efficiency ratio			49.8	%		49.1	%		51.5	%		49.4	%		50.8	%
Return on equity ⁽²⁾			57.9	%		58.2	%		61.3	%		58.0	%		63.7	%
Charge for economic capital ⁽²⁾ (b)		$	(125)		$	(130)		$	(111)		$	(255)		$	(224)
Economic profit ⁽²⁾ (a+b)		$	431		$	437		$	385		$	868		$	812
Full-time equivalent employees			21,733			21,706			21,581			21,733			21,581

(1) For additional segmented information, see the notes to the interim consolidated financial statements.
(2) For additional information, see the "Non-GAAP measures" section.

Financial overview
Net income for the quarter was $556 million, an increase of $60 million or 12% from the same quarter last year. Revenue increased as a result of volume growth across most products, higher treasury allocations and fees, partially offset by narrower spreads.

Net income was down $11 million or 2% compared to the prior quarter. Revenue decreased due to fewer days in the quarter and lower card fees, partially offset by higher net mortgage prepayment penalty fees.

Net income for the six months ended April 30, 2012 was $1,123 million, an increase of $87 million or 8% from the same period in 2011. Revenue increased due to higher treasury allocations, volume growth across most products and higher fees, partially offset by narrower spreads.

Revenue
Revenue was up $72 million or 4% from the same quarter last year.

Personal banking revenue was down $4 million primarily due to narrower spreads, partially offset by volume growth across most products and higher fees.

Business banking revenue was up $26 million primarily due to strong volume growth.

Other revenue was up $50 million mainly due to higher treasury allocations.

Revenue was down $25 million or 1% from the prior quarter.

Personal banking revenue was down $16 million primarily due to fewer days and lower card fees, partially offset by higher net mortgage prepayment penalty fees.

Business banking revenue was down $5 million primarily due to fewer days.

Other revenue was down $4 million.

Revenue for the six months ended April 30, 2012 was up $99 million or 3% from the same period in 2011.

Personal banking revenue was down $55 million, primarily due to narrower spreads, partially offset by volume growth across most products and higher fees.

Business banking revenue was up $48 million, primarily due to volume growth and higher fees, partially offset by narrower spreads.

Other revenue was up $106 million mainly due to higher treasury allocations.

Provision for credit losses
Provision for credit losses was up $4 million or 1% from the same quarter last year due to higher losses in the personal lending portfolio, partially offset by lower write-offs net of recoveries in the cards portfolio.

Provision for credit losses was down $10 million or 4% from the prior quarter. The decrease was mainly driven by lower write-offs and bankruptcies in the cards portfolio, partially offset by lower recoveries in business lending.

Provision for credit losses for the six months ended April 30, 2012 was up $13 million or 2% from the same period in 2011, primarily due to higher losses in the acquired MasterCard portfolio as expected and higher losses in the personal lending portfolio, partially offset by lower bankruptcies in the other cards portfolio and higher recoveries in business lending.

Non-interest expenses
Non-interest expenses were up $3 million from the same quarter last year, primarily due to increased spending on strategic business initiatives, partially offset by operational efficiencies.

Non-interest expenses were up $2 million from the prior quarter, primarily due to increased spending on strategic business initiatives, partially offset by lower commodity tax.

Non-interest expenses for the six months ended April 30, 2012 were down $4 million from the same period in 2011, primarily due to operational efficiencies, partially offset by increased spending on strategic business initiatives.

Income taxes
Income taxes were up $5 million and $3 million from the same quarter and the same six month period last year, respectively. The impact of higher income was offset by a lower Canadian statutory tax rate.

Income taxes were down $6 million from the prior quarter due to lower income.

WEALTH MANAGEMENT

Wealth Management comprises asset management, retail brokerage and private wealth management businesses. Combined, these businesses offer an extensive suite of leading investment and relationship-based advisory services to meet the needs of institutional, retail, and high net worth clients.

Results ⁽¹⁾


		For the three months ended									For the six months ended
			2012			2012			2011			2012			2011
$ millions			Apr. 30			Jan. 31			Apr. 30			Apr. 30			Apr. 30
Revenue
	Retail brokerage	$	263		$	249		$	282		$	512		$	563
	Asset management		130			162			114			292			225
	Private wealth management		25			24			24			49			48
Total revenue			418			435			420			853			836
Provision for credit losses			-			-			3			-			3
Non-interest expenses			313			312			314			625			638
Income before taxes			105			123			103			228			195
Income taxes			26			23			30			49			56
Net income		$	79		$	100		$	73		$	179		$	139
Net income attributable to:
	Equity shareholders (a)	$	79		$	100		$	73		$	179		$	139
Efficiency ratio			74.8	%		71.7	%		74.8	%		73.3	%		76.3	%
Return on equity ⁽²⁾			18.8	%		24.5	%		34.9	%		21.6	%		32.4	%
Charge for economic capital ⁽²⁾ (b)		$	(52)		$	(52)		$	(28)		$	(104)		$	(57)
Economic profit ⁽²⁾ (a+b)		$	27		$	48		$	45		$	75		$	82
Full-time equivalent employees			3,756			3,721			3,614			3,756			3,614

(1) For additional segmented information, see the notes to the interim consolidated financial statements.
(2) For additional information, see the "Non-GAAP measures" section.

Financial overview
Net income for the quarter was $79 million, an increase of $6 million or 8% from the same quarter last year driven by higher revenue from asset management and a lower effective tax rate, partially offset by lower revenue in retail brokerage.

Net income was down $21 million or 21% compared with the prior quarter, primarily due to a gain relating to an equity-accounted investment included as an item of note in the first quarter of 2012 (see "Financial results" section for additional details), partially offset by higher retail brokerage revenue.

Net income for the six months ended April 30, 2012 was $179 million, an increase of $40 million or 29% from the same period in 2011, primarily due to higher revenue from asset management including the item of note discussed above, and lower non-interest expenses, partially offset by lower revenue in retail brokerage.

Revenue
Revenue was comparable to the same quarter last year.

Retail brokerage revenue was down $19 million or 7%, primarily due to lower commissions from equity trading and new issuance activity.

Asset management revenue was up $16 million or 14%, primarily due to income from our proportionate share in ACI from September 1, 2011.

Private wealth management revenue was comparable to the same quarter last year.

Revenue was down $17 million or 4% from the prior quarter.

Retail brokerage revenue was up $14 million or 6%, primarily due to higher commissions from equity trading, new issuance activity and higher fee-based revenues.

Asset management revenue was down $32 million or 20%, primarily due to the item of note discussed above.

Private wealth management revenue was comparable to the prior quarter.

Revenue for the six months ended April 30, 2012 was up $17 million or 2% from the same period in 2011.

Retail brokerage revenue was down $51 million or 9%, primarily due to lower commissions related to equity trading and new issuance activity.

Asset management revenue was up $67 million or 30%, primarily due to the income from ACI including the item of note discussed above.

Private wealth management revenue was comparable to the prior year period.

Non-interest expenses
Non-interest expenses were comparable to the same quarter last year and prior quarter.

Non-interest expenses for the six months ended April 30, 2012 were down $13 million or 2% from the same period in 2011 primarily due to lower performance-based compensation partially offset by higher employee salaries.

Income taxes
Income taxes were down $4 million from the same quarter last year, mainly due to a lower effective tax rate.

Income taxes were up $3 million from the prior quarter. The prior quarter had a lower tax rate on the item of note discussed above.

Income taxes for the six months ended April 30, 2012 were down $7 million from the same period in 2011, primarily due to the lower tax rate on the item of note discussed above.

WHOLESALE BANKING

Wholesale Banking provides a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and in key markets around the world.

Results ⁽¹⁾


		For the three months ended									For the six months ended
			2012			2012			2011			2012			2011
$ millions			Apr. 30			Jan. 31			Apr. 30			Apr. 30			Apr. 30
Revenue (TEB) ⁽²⁾
	Capital markets	$	285		$	307		$	293		$	592		$	610
	Corporate and investment banking		175			197			164			372			388
	Other		3			(9)			20			(6)			(4)
Total revenue (TEB) ⁽²⁾			463			495			477			958			994
TEB adjustment			61			57			45			118			84
Total revenue			402			438			432			840			910
Provision for credit losses			16			26			4			42			6
Non-interest expenses			279			289			271			568			574
Income before taxes			107			123			157			230			330
Income taxes			(24)			(10)			17			(34)			50
Net income		$	131		$	133		$	140		$	264		$	280
Net income attributable to:
	Non-controlling interests	$	-		$	-		$	-		$	-		$	1
	Equity shareholders (a)		131			133			140			264			279
Efficiency ratio			69.6	%		66.0	%		62.7	%		67.7	%		63.1	%
Return on equity ⁽²⁾			25.0	%		26.5	%		32.9	%		25.7	%		31.5	%
Charge for economic capital ⁽²⁾ (b)		$	(66)		$	(65)		$	(57)		$	(131)		$	(119)
Economic profit ⁽²⁾(a+b)		$	65		$	68		$	83		$	133		$	160
Full-time equivalent employees			1,222			1,214			1,144			1,222			1,144

(1) For additional segmented information, see the notes to the interim consolidated financial statements.
(2) For additional information, see the "Non-GAAP measures" section.

Financial overview
Net income for the quarter was $131 million, down $9 million from the same quarter last year, mainly due to the hedge accounting loss on leveraged leases and a higher provision for credit losses. These factors were partially offset by a lower effective tax rate and lower net losses in our structured credit run-off business and other exited portfolios.

Net income was down $2 million from the prior quarter, mainly due to lower capital markets and corporate and investment banking revenue, largely offset by a lower effective tax rate, lower non-interest expenses, and a lower provision for credit losses.

Net income for the six months ended April 30, 2012 was $264 million, a decrease of $16 million or 6% from the same period in 2011 due to lower revenue and a higher provision for credit losses, partially offset by a lower effective tax rate.

Revenue (TEB) ⁽²⁾
Revenue was down $14 million or 3% from the same quarter last year.

Capital markets revenue was down $8 million, primarily due to lower revenue from foreign exchange, equity new issuances and equity trading, partially offset by higher revenue from equity derivatives trading. The prior year quarter included credit valuation adjustment (CVA) charges against credit exposure to derivative counterparties (other than financial guarantors).

Corporate and investment banking revenue was up $11 million, mainly due to higher revenue from corporate credit products and U.S. real estate finance, partially offset by lower merchant banking gains and equity new issuances revenue.

Other revenue was down $17 million, primarily due to the hedge accounting loss on leveraged leases noted above, partially offset by higher treasury allocations and lower net losses in our structured credit run-off business and other exited portfolios.

Revenue was down $32 million or 6% from the prior quarter.

Capital markets revenue was down $22 million, mainly due to lower revenue from derivatives trading, debt issuance activity, and foreign exchange trading, partially offset by higher equity new issuances revenue. The prior quarter included a reversal of CVA charges.

Corporate and investment banking revenue was down $22 million, primarily due to lower merchant banking gains, and lower revenue from U.S. real estate finance and advisory, partially offset by higher revenue from corporate credit products.

Other revenue was up $12 million from the prior quarter, primarily due to higher treasury allocations. The hedge accounting loss on leveraged leases noted above was mostly offset by higher revenue from our structured credit run-off business.

Revenue for the six months ended April 30, 2012 was down $36 million or 4% from the same period in 2011.

Capital markets revenue was down $18 million, mainly due to lower revenue from equity new issuances and sales, partially offset by higher equity derivatives and commodities trading revenue.

Corporate and investment banking revenue was down $16 million, primarily due to lower revenue from equity new issuances and advisory, and lower merchant banking gains, partially offset by higher revenue from U.S. real estate finance and corporate credit products.

Other revenue was down $2 million, as the hedge accounting loss on leveraged leases noted above and lower revenue in exited portfolios were mostly offset by lower losses in the structured credit run-off business and higher treasury allocations.

Provision for credit losses
Provision for credit losses was up $12 million and $36 million from the same quarter and same six month period last year, respectively, mainly due to higher losses in the U.S. real estate finance portfolio.

Provision for credit losses was down $10 million from the prior quarter due to lower losses in the U.S. real estate finance portfolio.

Non-interest expenses
Non-interest expenses were up $8 million or 3% from the same quarter last year due to higher employee-related and communication expenses, partially offset by lower expenses in the structured credit run-off business.

Non-interest expenses were down $10 million or 3% from the prior quarter, primarily due to lower performance-based compensation.

Non-interest expenses for the six months ended April 30, 2012 were down $6 million or 1% from the same period in 2011, primarily due to lower expenses in the structured credit run-off business, partially offset by higher employee salaries and benefits and communication expenses.

Income taxes
Income tax recovery for the quarter was $24 million compared with an income tax expense of $17 million in the same quarter last year, primarily due to the impact of higher tax-exempt income, lower other income, and the lower effective tax rate in the current quarter.

Income tax recovery was $14 million higher than the prior quarter, primarily due to lower income.

Income tax recovery for the six months ended April 30, 2012 was $34 million compared to income tax expense of $50 million in the same period last year, primarily due to higher tax-exempt income and lower other income in the current year period.

Structured credit run-off business

The results of the structured credit run-off business are included in the Wholesale Banking SBU.

Results


	For the three months ended						For the six months ended
		2012		2012		2011		2012		2011
$ millions		Apr. 30		Jan. 31		Apr. 30		Apr. 30		Apr. 30
Net interest income (expense)	$	(17)	$	(15)	$	(7)	$	(32)	$	(12)
Trading income		37		8		2		45		22
Designated at fair value (FVO) gains (losses)		(22)		(21)		(31)		(43)		(81)
Other income (loss)		1		1		10		2		(4)
Total revenue		(1)		(27)		(26)		(28)		(75)
Provision for credit losses		-		-		-		-		1
Non-interest expenses		9		8		20		17		40
Loss before taxes		(10)		(35)		(46)		(45)		(116)
Income taxes		(3)		(9)		(13)		(12)		(33)
Net loss	$	(7)	$	(26)	$	(33)		$ (33)	$	(83)

The net loss for the quarter was $7 million (US$7 million), compared to $33 million (US$32 million) for the same quarter last year and $26 million (US$26 million) for the prior quarter. The net loss for the six months ended April 30, 2012 was $33 million (US$33 million) compared to $83 million (US$82 million) for the same period in 2011.

The net loss for the quarter was mainly due to a decrease in the value of receivables related to protection purchased from financial guarantors (on loan assets that are carried at amortized cost), resulting from an increase in the MTM of the underlying positions, net interest expense and non-interest expenses. These were partially offset by a CVA gain of $28 million (US$29 million) relating to financial guarantors, resulting from a decrease in the value of purchased protection receivables and narrowing of credit spreads, as well as a gain on unhedged positions.

Position summary
The following table summarizes our positions within our structured credit run-off business:


									Written credit
US$ millions, as at									derivatives, liquidity					Credit protection purchased from
April 30, 2012	Investments and loans ⁽¹⁾								and credit facilities					Financial guarantors				Other counterparties
	Notional		Fair value of trading, AFS and FVO securities		Fair value of securities classified as loans		Carrying value of securities classified as loans			Notional		Fair value of written credit derivatives		Notional		Fair value net of CVA		Notional		Fair value net of CVA
USRMM - CDO	$	-	$	-	$	-	$	-		$	350	$	327	$	-	$	-	$	350	$	327
CLO		3,968		-		3,763		3,813			3,246		119		6,256		172		317		16
Corporate debt		-		-		-		-			5,024		84		-		-		5,024		87
Other		1,058		599		77		82			676		86		399		64		25		3
Unmatched		-		-		-		-			-		-		343		117		374		-
	$	5,026	$	599	$	3,840	$	3,895		$	9,296	$	616	$	6,998	$	353	$	6,090	$	433
Oct. 31, 2011	$	5,258	$	581	$	3,947	$	4,044		$	9,404	$	765	$	7,260	$	479	$	8,306	$	536

(1) Excluded from the table above are equity and surplus note AFS securities that we obtained in consideration for commutation of our U.S. residential mortgage market (USRMM) contracts with financial guarantors. The equity securities had a carrying value of US$7 million (October 31, 2011: US$1 million) and the surplus notes had a notional value of US$239 million (October 31, 2011: US$239 million) and a carrying value of US$32 million (October 31, 2011: US$32 million).

USRMM - collateralized debt obligation (CDO)
Our net USRMM position, consisting of a written credit derivative, amounted to US$23 million. This position was hedged through protection purchased from a large U.S.-based diversified multinational insurance and financial services company with which we have market-standard collateral arrangements.

Collateralized loan obligation (CLO)
CLO positions consist of super senior tranches of CLOs backed by diversified pools of primarily U.S. (62%) and European-based (35%) senior secured leveraged loans. As at April 30, 2012, approximately 11% of the total notional amount of the CLO tranches was rated equivalent to AAA, 83% was rated between the equivalent of AA+ and AA-, and the remainder was equivalent of A+. As at April 30, 2012, approximately 16% of the underlying collateral was rated equivalent to BB- or higher, 51% was rated between the equivalent of B+ and B-, 6% was rated equivalent to CCC+ or lower, with the remainder unrated. The CLO positions have a weighted-average life of 3.0 years and average subordination of 30%.

Corporate debt
Corporate debt exposure consists of a large matched super senior derivative, where CIBC has purchased and sold credit protection on the same reference portfolio. The reference portfolio consists of highly diversified, predominantly investment grade corporate credit. Claims on these contracts do not occur until cumulative credit default losses from the reference portfolio exceed 30% during the 56 month term of the contract. On this reference portfolio, we have sold protection to an investment dealer.

Other
Our significant positions in Other, as at April 30, 2012, include:

US$320 million notional value of CDOs consisting of trust preferred securities (TruPs) collateral, which are Tier I Innovative Capital Instruments issued by U.S. regional banks and insurers. These securities are classified as FVO securities and had a fair value of US$205 million;
US$202 million notional value of trading securities with a fair value of US$151 million, and US$319 million notional value of written protection with a fair value of US$84 million, on inflation-linked notes, and CDO tranches with collateral consisting of high-yield corporate debt portfolios, TruPs and non-U.S. residential mortgage-backed securities, with 51% rated the equivalent of AA- or higher and the majority of the remaining rated equivalent of BBB or lower;
US$71 million notional value of an asset-backed security (ABS) classified as a loan, with fair value of US$58 million and carrying value of US$63 million;
Variable rate Class A-1/A-2 notes classified as trading securities with a notional value of US$293 million and a fair value of US$233 million, tracking notes classified as AFS with a notional value of US$17 million and a fair value of US$2 million, and loans with a notional value of US$62 million and fair value and carrying value of nil. These notes were originally received in exchange for our non-bank sponsored asset-backed commercial paper (ABCP) in January 2009, upon the ratification of the Montreal Accord restructuring; and
US$304 million of undrawn Margin Funding Facility related to the Montreal Accord restructuring.

Unmatched
The underlyings in our unmatched positions are a reference portfolio of corporate debt, a loan backed by film receivables and a CLO tranche.

Credit protection purchased from financial guarantors and other counterparties
The following table presents the notional amounts and fair values of credit protection purchased from financial guarantors and other counterparties by counterparty credit quality, based on external credit ratings (Standard & Poor's (S&P) and/or Moody's Investors Service (Moody's)), and the underlying referenced assets. Excluded from the table below are certain performing loans and tranched securities positions in our continuing businesses, with a total notional amount of approximately US$61 million, which are partly secured by direct guarantees from financial guarantors or by bonds guaranteed by financial guarantors.


		Notional amounts of referenced assets												Credit protection purchased from financial guarantors and other counterparties
US$ millions, as at				Corporate		CDO -						Total		Fair value				Fair value
April 30, 2012		CLO		debt		USRMM		Other		Unmatched		notional		before CVA		CVA		net of CVA
Financial guarantors ⁽¹⁾
	Investment grade	$	3,757	$	-	$	-	$	75	$	143	$	3,975	$	318	$	(59)	$	259
	Non-investment grade		75		-		-		231		-		306		78		(39)		39
	Unrated		2,424		-		-		93		200		2,717		109		(54)		55
			6,256		-		-		399		343		6,998		505		(152)		353
Other counterparties ⁽¹⁾
	Investment grade		317		20		350		25		-		712		346		1		347
	Unrated		-		5,004		-		-		374		5,378		87		(1)		86
			317		5,024		350		25		374		6,090		433		-		433
Total		$	6,573	$	5,024	$	350	$	424	$	717	$	13,088	$	938	$	(152)	$	786
Oct. 31, 2011		$	6,777	$	4,980	$	361	$	453	$	2,995	$	15,566	$	1,222	$	(207)	$	1,015

(1) In cases where one credit rating agency does not provide a rating, the classification in the table is based on the rating provided by the other agency. Where ratings differ between agencies, we use the lower rating.

The unrated other counterparties are primarily two Canadian conduits. These conduits are in compliance with their collateral posting arrangements and have posted collateral exceeding current market exposure. The fair value of the collateral as at April 30, 2012 was US$367 million relative to US$86 million of net exposure.

Gain on reduction of unfunded commitment on a variable funding note
In 2008, we recognized a gain of $895 million (US$841 million), resulting from the reduction to zero of our unfunded commitment on a variable funding note (VFN) issued by a CDO. Refer to "Provisions and contingent liabilities" section for additional details.

CORPORATE AND OTHER

Corporate and Other includes the six functional groups - Technology and Operations; Corporate Development; Finance; Treasury; Administration; and Risk Management - that support CIBC's SBUs. The revenue, expenses and balance sheet resources of these functional groups are generally allocated to the business lines within the SBUs. Corporate and Other also includes our International banking operations comprising mainly CIBC FirstCaribbean; strategic investments in the CIBC Mellon joint ventures and The Bank of N.T. Butterfield & Son Limited; and other income statement and balance sheet items not directly attributable to the business lines.

Results ⁽¹⁾


							For the three months ended				For the six months ended
			2012		2012		2011		2012		2011
$ millions			Apr. 30		Jan. 31		Apr. 30		Apr. 30		Apr. 30
Revenue
	International banking	$	139	$	148	$	142	$	287	$	287
	Other		121		107		89		228		142
Total revenue			260		255		231		515		429
Provision for (reversal of) credit losses			21		31		(29)		52		(20)
Non-interest expenses			174		194		176		368		351
Income before taxes			65		30		84		95		98
Income taxes			20		(5)		26		15		23
Net income		$	45	$	35	$	58	$	80	$	75
Net income attributable to:
	Non-controlling interests	$	1	$	3	$	3	$	4	$	5
	Equity shareholders		44		32		55		76		70
Full-time equivalent employees			15,556		15,540		15,589		15,556		15,589

(1) For additional segmented information, see the notes to the interim consolidated financial statements.

Financial overview
Net income for the quarter was down $13 million from the same quarter last year, mainly due to a provision for credit losses in the current quarter compared to reversal of credit losses in the prior year quarter, partially offset by higher unallocated treasury revenue.

Net income was up $10 million from the prior quarter, mainly due to higher unallocated treasury revenue and lower non-interest expenses. The current quarter had an income tax expense compared to an income tax recovery in the prior quarter.

Net income for the six months ended April 30, 2012 was $80 million, an increase of $5 million from the same period in 2011, mainly due to higher unallocated treasury revenue as the same period last year included losses from MTM volatility prior to the establishment of accounting hedges on securitized mortgages and funding liabilities. This was partially offset by a provision for credit losses in the current period compared to reversal of credit losses in the prior year period, and higher non-interest expenses. The prior year period included a gain on sale of CMT's Issuer Services business and interest income on tax reassessments.

Revenue
Revenue was up $29 million and $5 million from the same quarter last year and prior quarter, respectively.

International banking revenue was comparable to the same quarter last year and prior quarter.

Other revenue was up $32 million and $14 million from the same quarter last year and prior quarter, respectively, mainly due to higher unallocated treasury revenue.

Revenue for the six months ended April 30, 2012 was up $86 million from the same period in 2011.

International banking revenue was comparable to the prior year period.

Other revenue was up $86 million mainly due to higher unallocated treasury revenue as the prior year period included the loss from MTM volatility prior to the establishment of accounting hedges on securitized mortgages and funding liabilities. The prior year period also included the gain on sale of CMT's Issuer Services business and interest income on tax reassessments.

Provision for credit losses
Provision for credit losses was $21 million and $52 million for the quarter and six months ended April 30, 2012, respectively, compared with a reversal of credit losses of $29 million and $20 million in the quarter and six months ended April 30, 2011, respectively, mainly due to a higher provision for credit losses in CIBC FirstCaribbean and net lower reversal of collectively assessed credit losses relating to business and government, small business and commercial banking portfolios.

Provision for credit losses was down $10 million from the prior quarter mainly due to net higher reversal of collectively assessed credit losses relating to the cards portfolio.

Non-interest expenses
Non-interest expenses were down $2 million from the same quarter last year, and down $20 million from the prior quarter mainly due to lower unallocated corporate support costs.

Non-interest expenses for the six months ended April 30, 2012 were up $17 million, mainly due to higher unallocated corporate support costs.

Income taxes
Income taxes were down $6 million from the same quarter last year and down $8 million for the six months ended April 30, 2012 from the same period in 2011 primarily due to lower write-offs of deferred tax assets as a result of a lower decline in tax rates.

Income tax expense was $20 million in the current quarter, compared with an income tax benefit of $5 million in the prior quarter primarily due to an increase in the relative proportion of income subject to higher tax rates.

FINANCIAL CONDITION

Review of condensed consolidated balance sheet


		2012		2011
$ millions, as at		Apr. 30		Oct. 31
Assets
Cash and deposits with banks	$	6,157	$	5,142
Securities		62,538		60,295
Securities borrowed or purchased under resale agreements		26,560		27,479
Loans and acceptances, net of allowance		251,487		248,409
Derivative instruments		25,911		28,270
Other assets		14,805		14,163
Total assets	$	387,458	$	383,758
Liabilities and equity
Deposits	$	244,207	$	237,912
Secured borrowings		52,904		51,308
Obligations related to securities lent or sold short or under repurchase agreements		20,735		21,730
Derivative instruments		26,166		28,792
Other liabilities		21,905		22,787
Subordinated indebtedness		5,112		5,138
Equity		16,429		16,091
Total liabilities and equity	$	387,458	$	383,758

Assets
As at April 30, 2012, total assets were up $3.7 billion or 1% from October 31, 2011.

Cash and deposits with banks increased by $1.0 billion or 20% mostly due to higher treasury deposit placements.

Securities increased by $2.2 billion or 4%, due to an increase in trading securities, partially offset by a decrease in AFS securities. Trading securities increased mainly in the equity portfolios and government-issued or guaranteed securities. AFS securities decreased largely in government-issued or guaranteed securities.

Securities borrowed or purchased under resale agreements decreased by $919 million or 3%, primarily due to a reduction in client demand and our funding requirements.

Net loans and acceptances increased by $3.1 billion or 1%. Residential mortgages were up $584 million due to mortgage originations, partially offset by principal repayments, and liquidations. Personal loans were up $276 million due to volume growth. Credit card loans were down $230 million mostly due to net repayments. Business and government loans were up $2.4 billion primarily due to growth in our domestic and international loan portfolios.

Derivative instruments decreased by $2.4 billion or 8% largely driven by valuation of interest rate and foreign exchange derivatives.

Other assets increased by $642 million or 5%, mainly due to a higher current income tax receivable as a result of payments made in the period.

Liabilities
As at April 30, 2012, total liabilities were up $3.4 billion or 1% from October 31, 2011.

Deposits increased by $6.3 billion or 3% driven by funding and retail volume growth.

Secured borrowings were up $1.6 billion or 3%, primarily due to the issuance of covered bonds.

Obligations related to securities lent or sold short or under repurchase agreements decreased by $1.0 billion or 5%, reflecting our funding requirements and client-driven activities.

Derivative instruments decreased by $2.6 billion or 9% due to the reasons noted above for derivative assets.

Other liabilities decreased by $882 million or 4%, mainly due to lower acceptances, accrued expenses and interest payable.

Equity
Equity increased by $338 million or 2%, primarily due to a net increase in retained earnings, and the issuance of common shares pursuant to the stock option, shareholder investment, and employee share purchase plans (ESPP). These were offset in part by preferred share redemptions, as explained in the "Significant capital management activity" section below.

Capital resources
We actively manage our capital to maintain a strong and efficient capital base, to maximize risk-adjusted returns to shareholders, and to meet regulatory requirements. For additional details on capital resources, see pages 53 to 55 of the 2011 Annual Report.

Recent revisions to regulatory capital requirements
Our regulatory capital requirements are determined in accordance with guidelines issued by OSFI.

In order to promote a more resilient banking sector and strengthen global capital standards, the Basel Committee on Banking Supervision (BCBS) has proposed significant enhancements and capital reforms to the current framework. The revised framework, referred to as Basel III, will be effective January 1, 2013 and provides lengthy periods for transitioning numerous new requirements, including new minimum capital ratios. For additional details on the Basel III revisions, see pages 55 to 56 of the 2011 Annual Report.

Based on our current understanding of the revised capital requirements, we expect to exceed the minimum requirements as proposed by BCBS while continuing to invest for future growth. OSFI has confirmed that it intends to incorporate the Basel III revisions into its guidelines for capital adequacy in Canada, and will issue its own domestic Basel III guidance during 2012.

Basel II changes
Commencing in the first quarter of 2012, we implemented changes to the capital requirements for securitization transactions outlined in the BCBS "Enhancements to the Basel II Framework" and changes to the trading book capital rules outlined in BCBS "Revisions to the Basel II Market Risk Framework", commonly referred to as Basel 2.5.

Securitization
We generally use a ratings-based approach for the risk weighting of non-trading securitization exposures, except liquidity facilities provided to certain SPEs for which we apply an internal assessment approach. The mapping of our internal ratings with the ratings used by external ratings agencies and our internal ratings development process is discussed in the "Credit risk" section of our 2011 Annual Report. Trading securitization exposures are risk-weighted following the internal ratings-based (IRB) approach for rated positions.

Our resecuritization exposures relate to our third-party structured vehicles and are comprised of investments, loans, and written credit derivatives.

Our credit risk-mitigation process reduces the credit risk in our overall credit exposures including securitizations and resecuritization activities. We monitor credit and market risks within the securitization and resecuritization exposures in the same way as we monitor our other credit and market risk exposures.

We usually have some pipeline exposures consisting of insured prime mortgages and uninsured Near-Prime/Alt-A mortgages which are originated in a SPE for securitization in the future.

Market risk
Changes relating to the "Revisions to the Basel II Market Risk Framework" are disclosed in detail in the "Market risk" section.

Regulatory capital
The following table presents our regulatory capital measures:


		2012			2011
$ millions, as at		Apr. 30			Oct. 31	⁽¹⁾
Capital
Tier 1 capital	$	15,921	⁽²⁾	$	16,208
Total regulatory capital		20,010	⁽²⁾⁽³⁾		20,287
Risk-weighted assets
Credit risk	$	92,151		$	90,110
Market risk		2,772			1,646
Operational risk		18,332			18,212
Total risk-weighted assets	$	113,255		$	109,968
Capital ratios
Tier 1 capital ratio		14.1	%		14.7	%
Total capital ratio		17.7	%		18.4	%
Assets-to-capital multiple		17.0	x		16.0	x

(1) Capital measures for fiscal year 2011 are under Canadian GAAP and have not been restated for IFRS.
(2) The Tier 1 capital and Total capital incorporate OSFI's IFRS transitional relief election (see discussion that follows for further details).
(3) Excludes $262 million (€200 million) of our floating rate Debentures (subordinated indebtedness) due June 22, 2017. CIBC has notified holders of its intention to redeem the Debentures at 100% of their principal value, and accrued but unpaid interest, on June 22, 2012.

Tier 1 capital ratio was down 0.6% and the Total capital ratio was down 0.7% from October 31, 2011. The capital ratios were negatively impacted by a decrease in both Tier 1 capital and Total regulatory capital, along with an increase in RWAs. The increase in Tier 1 capital from October 31, 2011 due to internal capital generation and the issuance of common shares was more than offset by the impact of transition to IFRS, including the effect of adopting OSFI's IFRS transitional election, and the redemption of preferred shares (see below for details). Total regulatory capital was also impacted by the removal of our floating rate Debentures (subordinated indebtedness) due June 22, 2017 (see below for details), partially offset by an increase in net after-tax unrealized holding gains on AFS equity securities. RWAs were up from year-end mainly due to higher corporate exposures and the implementation of Basel 2.5 changes noted above which resulted in higher market risk and securitization RWAs.

Assets-to-capital multiple (ACM) was up 1.0x from October 31, 2011 primarily due to higher on- and off-balance sheet assets and changes to total regulatory capital noted above.

Impact of OSFI's IFRS transitional relief election
On conversion to IFRS, we excluded mortgage securitizations sold through Canada Mortgage and Housing Corporation (CMHC) programs up to and including March 31, 2010, from total assets for the purpose of calculating ACM, as permitted under OSFI's Capital Adequacy Guidelines. In addition, as permitted under the guidelines, financial institutions can elect to phase in the impact of transitioning to IFRS on their regulatory capital over five quarters starting November 1, 2011. For the six months ended April 30, 2012, we phased in $549 million of the negative IFRS transitional impact on Tier 1 capital, representing two-fifths of the aggregate $1.37 billion negative impact of our IFRS transition on Tier 1 capital. In accordance with the guidelines, the amount eligible for phase in was primarily comprised of retained earnings adjustments and a change from proportionate accounting to equity accounting for our joint ventures.

If we had not made the election to phase in the Tier 1 capital impact of transition to IFRS, our capital ratios and ACM as at April 30, 2012 would have been as follows:

Tier 1 capital ratio				13.3%
Total capital ratio				16.9%
ACM				17.7x

Common shares
Effective April 26, 2012, the Board of Directors and CIBC common shareholders approved removing the cap on the maximum aggregate consideration for which CIBC's common shares may be issued. Accordingly, CIBC's authorized capital now consists of an unlimited number of common shares, without nominal or par value. Previously, CIBC was authorized to issue an unlimited number of common shares without nominal or par value, provided that, the maximum aggregate consideration for all outstanding common shares at any time did not exceed $15 billion.

Significant capital management activity
On January 31, 2012, we redeemed all of our 18 million Non-cumulative Class A Series 31 Preferred Shares with a par value of $25.00 each at a redemption price of $26.00 per share for cash.

On April 25, 2012, we notified holders of our intention to redeem all $262 million (€200 million) of our floating rate Debentures (subordinated indebtedness) due June 22, 2017. In accordance with their terms, the Debentures will be redeemed at 100% of their principal value, and accrued but unpaid interest, on June 22, 2012.

On April 30, 2012, we redeemed all of our 12 million Non-cumulative Class A Series 32 Preferred Shares with a par value of $25.00 each at a redemption price of $26.00 per share for cash.

Off-balance sheet arrangements
We enter into off-balance sheet arrangements in the normal course of our business. Upon adoption of IFRS, we consolidated all of our previously non-consolidated sponsored trusts that securitized our own assets with the exception of the commercial mortgage securitization trust.

CIBC-sponsored conduits
We sponsor a single-seller conduit and several multi-seller conduits (collectively, the conduits) in Canada. Our multi-seller conduits purchase pools of financial assets from our clients and finance the purchases by issuing ABCP to investors. Our single-seller conduit purchases pools of financial assets from our client and finances these purchases through a credit facility provided by a syndication of financial institutions. The sellers to the conduits may continue to service the assets and may be exposed to credit losses realized on these assets, typically through the provision of overcollateralization or another form of retained interest. The conduits may obtain credit enhancement from third-party providers.

We generally provide the conduits with commercial paper backstop liquidity facilities, securities distribution, accounting, cash management, and operations services. The liquidity facilities for our sponsored multi-seller programs offered to external investors require us to provide funding, subject to the satisfaction of certain conditions with respect to the conduits, to purchase non-defaulted assets.

We are subject to maintaining certain short-term and/or long-term debt ratings with respect to the liquidity facilities provided to our own sponsored conduits. If we are downgraded below the specified level, and we fail to make alternative arrangements that meet the requirements of the rating agencies that rate the ABCP issued by the conduits, we could be required to provide funding into an escrow account in respect of our liquidity commitments.

We may also act as the counterparty to derivative contracts entered into by a conduit in order to convert the yield of the underlying assets to match the needs of the conduit's investors or to mitigate the interest rate risk within the conduit.

All fees earned in respect of activities with the conduits are on a market basis.

As at April 30, 2012, the underlying collateral for various asset types in our multi-seller conduits amounted to $1.4 billion (October 31, 2011: $1.3 billion). The estimated weighted-average life of these assets was 1 year (October 31, 2011: 1 year). Our holdings of commercial paper issued by our non-consolidated sponsored multi-seller conduits that offer commercial paper to external investors were $5 million (October 31, 2011: $3 million). Our committed backstop liquidity facilities to these conduits were $2.0 billion (October 31, 2011: $1.8 billion). We also provided credit facilities of $35 million (October 31, 2011: $40 million) to these conduits as at April 30, 2012.

We participated in a syndicated facility for a 3-year commitment of $475 million to our single-seller conduit that provides funding to franchisees of a major Canadian retailer. Our portion of the commitment was $95 million. As at April 30, 2012, we funded $82 million (October 31, 2011: $77 million) through the issuance of bankers' acceptances and prime rate loans.

We engage one or more of the four major rating agencies, Moody's, Dominion Bond Rating Service (DBRS), S&P, and Fitch Ratings (Fitch), to opine on the credit ratings of ABS issued by our sponsored securitization vehicles. In the event that ratings differ between rating agencies we use the more conservative rating.

CIBC structured CDO vehicles
We hold exposures to structured CDO vehicles through investments in, or written credit derivatives referencing, these structured vehicles. We may also provide liquidity facilities or other credit facilities. The structured vehicles are funded through the issuance of senior and subordinated tranches. We may hold a portion of those senior and/or subordinated tranches.

We have curtailed our business activity in structuring CDO vehicles within our structured credit run-off portfolio. Our exposures to CDO vehicles mainly arose through our previous involvement in acting as structuring and placement agent for the CDO vehicles.

Third-party structured vehicles - structured credit run-off
Similar to our structured CDO activities, we also curtailed our business activities in third-party structured vehicles, within our structured credit run-off portfolio. These positions were initially traded as intermediation, correlation and flow trading which earned us a spread on matching positions.

Third-party structured vehicles - continuing
Similar to our third-party structured vehicles - structured credit run-off, we have investments in and liquidity facilities with third-party securitization conduits through our Treasury and trading activities.

Pass-through investment structures
We have exposure to units of, or equity-linked notes referencing, third-party or CIBC managed funds. We enter into equity derivative transactions with third-party investment funds to pass-through the return of these referenced funds. These transactions provide the investors of the third-party investment fund with the desired exposure to the referenced fund in a tax efficient manner.

Commercial mortgage securitization trust
We sold commercial mortgages through a pass-through arrangement with a trust that securitized these mortgages into ownership certificates held by various external investors. We continue to perform special servicing of the mortgages in exchange for a market-based fee.

The following table summarizes our exposures to off-balance sheet structured entities. Investment and loans are stated at carrying value. Undrawn liquidity and credit facilities are notional amounts net of any investment and loans to the entities. Written credit derivatives are notional amounts of written credit default swap (CDS) contracts and total return swaps under which we assume exposures.


$ millions, as at					2012 Apr. 30					2011 Oct. 31
		Investment and loans	⁽¹⁾	Undrawn liquidity and credit facilities	Written credit derivatives	⁽²⁾	Investment and loans	⁽¹⁾	Undrawn liquidity and credit facilities	Written credit derivatives	⁽²⁾
CIBC sponsored conduits		$ 87		$ 1,377	$ -		$ 80		$ 1,297	$ -
CIBC structured CDO vehicles		270		40	248		292		42	284
Third-party structured vehicles
	Structured credit run-off	4,359		334	4,566		4,497		391	4,830
	Continuing	1,112		23	-		1,626		16	-
Pass-through investment structures		1,703		-	-		520		-	-
Commercial mortgage securitization trust		5		-	-		5		-	-

(1) Excludes securities issued by, retained in, and derivatives with entities established by CMHC, Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Government National Mortgage Association (Ginnie Mae), Federal Home Loan Banks, Federal Farm Credit Bank, and Student Loan Marketing Association (Sallie Mae). $3.8 billion (October 31, 2011: $3.9 billion) of the exposures related to CIBC-structured vehicles and third-party structured vehicles - structured credit run-off were hedged.
(2) The negative fair value recorded on the interim consolidated balance sheet was $1.4 billion (October 31, 2011: $1.6 billion). Notional of $3.4 billion (October 31, 2011: $3.6 billion) were hedged with credit derivatives protection from third parties. The fair value of these hedges net of CVA was $0.4 billion (October 31, 2011: $0.5 billion). Accumulated fair value losses were $42 million (October 31, 2011: $46 million) on unhedged written credit derivatives.

Additional details of our structured entities are provided in Note 5 to the interim consolidated financial statements. Details of our other off-balance sheet arrangements are provided on pages 61 to 62 of the 2011 Annual Report.

MANAGEMENT OF RISK

Our approach to management of risk has not changed significantly from that described on pages 63 to 87 of the 2011 Annual Report. Certain disclosures in this section have been shaded as they are required under IFRS 7 "Financial Instruments - Disclosures" and form an integral part of the interim consolidated financial statements. In addition to the risk disclosures provided below, refer to Note 13 to our interim consolidated financial statements, which provides additional IFRS annual risk disclosures for the year ended October 31, 2011.

Risk overview
We manage risk and related balance sheet resources within tolerance levels established by our management committees and approved by the Board of Directors and its committees. Key risk management policies are approved or renewed by the applicable Board and management committees annually. Further details on the Board and management committees, as applicable to the management of risk, are provided on pages 63 and 64 of the 2011 Annual Report.

The five key groups within Risk Management, independent of the originating businesses, contribute to our management of risk:

Capital Markets Risk Management - This unit provides independent oversight of the measurement, monitoring and control of market risks (both trading and non-trading), trading credit risk and trading operational risk across CIBC's portfolios;
Card Products Risk Management - This unit oversees the management of credit risk in the card products portfolio, including the optimization of lending profitability;
Retail Lending and Wealth Risk Management - This unit primarily oversees the management of credit and fraud risk in the retail lines of credit and loans, residential mortgage, and small business loan portfolios, including the optimization of lending profitability. This unit is also responsible for overall risk management oversight of wealth management activities;
Wholesale Credit and Investment Risk Management - This unit is responsible for the adjudication and oversight of credit risks associated with our commercial and wholesale lending activities globally, management of the risks of our investment portfolios, as well as management of the special loans portfolios; and
Risk Services - This unit is responsible for regulatory and economic capital reporting, operational risk management, and enterprise-wide risk and stress analysis and reporting. Risk Services is also responsible for policies associated with credit and operational risks, including reputation and legal risks.

Liquidity and funding risks are managed by Treasury. The measurement, monitoring and control of liquidity and funding risk is addressed in collaboration with Risk Management with oversight provided by the Asset Liability Committee.

Credit risk
Credit risk primarily arises from our direct lending activities, and from our trading, investment and hedging activities. Credit risk is defined as the risk of financial loss due to a borrower or counterparty failing to meet its obligations in accordance with contractual terms.

Exposure to credit risk


		2012		2011
$ millions, as at		Apr. 30		Oct. 31
Business and government portfolios-advanced internal ratings-based (AIRB) approach
Drawn	$	74,438	$	73,022
Undrawn commitments		32,031		29,707
Repo-style transactions		51,528		55,290
Other off-balance sheet		56,946		49,439
Over-the-counter (OTC) derivatives		14,999		14,429
Gross exposure at default (EAD) on business and government portfolios		229,942		221,887
Less: repo collateral		45,506		50,106
Net EAD on business and government portfolios		184,436		171,781
Retail portfolios-AIRB approach
Drawn		194,802		194,010
Undrawn commitments		70,506		69,881
Other off-balance sheet		420		428
Gross EAD on retail portfolios		265,728		264,319
Standardized portfolios		12,022		12,164
Securitization exposures		19,116		19,488
Gross EAD	$	526,808	$	517,858
Net EAD	$	481,302	$	467,752

In Canada, banks are limited to making residential real estate loans of no more than 80% of the collateral value by the Bank Act. All loans with a higher loan-to-value (LTV) ratio must be insured by either the Government of Canada or a private insurer. As of April 30, 2012, 78% (October 31, 2011: 77%) of our domestic residential mortgage portfolio was insured and 22% (October 31, 2011: 23%) was uninsured. Of this insurance, 93% is provided by the Government of Canada and 7% by two private Canadian insurers, both rated AA (low) by DBRS. While all insurers are well capitalized at the moment and private insurers claims are substantially covered by the Government of Canada in the event of a bankruptcy, there is a possibility that losses could be incurred if private insurers become bankrupt or both the private insurers and the Government of Canada deny claims under certain terms and conditions. Based on latest available industry house price estimates from Teranet (February 29, 2012) the LTV of our total domestic residential mortgage portfolio was 49.5% and that of our uninsured domestic residential mortgage portfolio was 49.4%. No material losses are expected in the mortgage portfolio.

Our real estate secured personal lending portfolio is a low risk portfolio, where we have a first charge on the majority of the properties, and second lien on only a small portion of the portfolio. We use the same scoring model and lending criteria in the adjudication of both first lien and second lien loans; however, our credit policies are designed to ensure that the value of both the first and second liens does not exceed 80% of the collateral value at origination.

Counterparty credit exposure
We have counterparty credit exposure that arises from our interest rate, foreign exchange, equity, commodity, and credit derivatives trading, hedging, and portfolio management activities, as explained in Note 14 to the consolidated financial statements in our 2011 Annual Report.

We establish a CVA for expected future credit losses from each of our derivative counterparties. As at April 30, 2012, the CVA for all derivative counterparties was $188 million (October 31, 2011: $243 million).

The following tables show the rating profile of derivative MTM receivables (after CVA and derivative master netting agreements but before any collateral), impaired loans, and allowance for credit losses.


				2012				2011
$ billions, as at				Apr. 30				Oct. 31
		Exposure
Standard & Poor's
rating equivalent
	AAA to BBB-	$	5.86	82.3	%	$	5.72	79.3	%
	BB+ to B-		1.23	17.4			1.46	20.3
	CCC+ to CCC-		0.00	0.1			0.01	0.1
	Below CCC-		0.01	0.1			0.01	0.2
	Unrated		0.00	0.1			0.01	0.1
		$	7.10	100.0	%	$	7.21	100.0	%


		2012		2011
$ millions, as at		Apr. 30		Oct. 31
Gross impaired loans
Consumer	$	789	$	815
Business and government		1,153		1,102
Total gross impaired loans	$	1,942	$	1,917
Allowance for credit losses
Consumer	$	1,151	$	1,167
Business and government		705		636
Total allowance for credit losses	$	1,856	$	1,803
Comprises:
Individual allowance for loans	$	437	$	366
Collective allowance for loans⁽¹⁾		1,419		1,437
Total allowance for credit losses	$	1,856	$	1,803

(1) Excludes allowance on undrawn credit facilities of $48 million (October 31, 2011: $48 million).

Gross impaired loans (GIL) were up $25 million or 1% from October 31, 2011. Consumer GIL were down $26 million, mainly due to lower classifications in residential mortgages and personal lending. Business and Government GIL were up $51 million or 5%, attributable to an increase in real estate and construction, partially offset by a decrease in the telecommunication and cable sector.

The total allowance for credit losses was up $53 million or 3% from October 31, 2011. Canadian and U.S. allowances for credit losses make up 74% and 9%, respectively, of the total allowance. The individually assessed allowance was up $71 million or 19% from October 31, 2011, mainly driven by the real estate and construction, and non-residential mortgages. The collectively assessed allowance was down $18 million from October 31, 2011, largely driven by an improvement in the cards portfolio.

For details on the provision for credit losses, see the "Overview" section.

Stress testing
As part of our regular credit portfolio management process, we conduct regular stress testing and scenario analysis on our portfolio to quantitatively assess the impact of various historical, as well as hypothetical, stressed conditions, versus limits determined in accordance with our risk appetite. Scenarios are selected to test our exposures to specific industries (e.g., oil and gas and real estate), products (e.g., mortgages and cards), or geographic regions (e.g., Europe and Caribbean). Results from stress testing are a key input into management decision making, including the determination of limits and strategies for managing our credit exposure.

Exposure to certain countries and regions
Several European countries, especially Greece, Ireland, Italy, Portugal, and Spain, have continued to experience credit concerns. The following tables provide our exposure to these and other European countries, both within and outside the Eurozone, and selected countries in the Middle East and North Africa that have either experienced or may be at risk of unrest. Except as noted in our indirect exposures section below, we do not have any other exposure through our SPEs to the countries included in the tables below.

Direct exposures to certain countries and regions
Our direct exposures presented in the tables below comprise (A) funded - on-balance sheet loans (stated at amortized cost net of allowances, if any), deposits with banks (stated at amortized cost net of allowances, if any) and securities (stated at fair value); (B) unfunded - unutilized credit commitments, letters of credit, and guarantees (stated at notional amount net of allowances, if any) and sold CDS contracts where we do not benefit from subordination (stated at notional amount less fair value); and (C) derivative MTM receivables (stated at fair value) and repo-style transactions ⁽¹⁾ (stated at fair value).

Of our total direct exposures to Europe, approximately 99% (October 31, 2011: 98%) is to entities in countries with Aaa/AAA ratings from at least one of Moody's or S&P.


	Direct exposures
	Funded								Unfunded
$ millions, as at April 30, 2012	Corporate		Sovereign		Bank		Total funded (A)		Corporate			Bank		Total unfunded (B)

Austria	$	-	$	75	$	-	$	75	$	-		$	-	$	-
Belgium		-		4		2		6		-			1		1
Finland		1		-		1		2		-			-		-
France		52		13		22		87		12			6		18
Germany		128		65		23		216		35			2		37
Greece		-		-		-		-		-			-		-
Ireland		-		-		10		10		-			2		2
Italy		1		-		1		2		-			1		1
Luxembourg		-		-		105		105		-			-		-
Netherlands		8		218		58		284		13			45		58
Portugal		-		-		-		-		-			-		-
Slovenia		-		-		-		-		-			3		3
Spain		-		-		-		-		-			-		-
Total Eurozone	$	190	$	375	$	222	$	787	$	60		$	60	$	120

Denmark	$	-	$	50	$	125	$	175	$	-		$	9	$	9
Guernsey		-		-		2		2		-			-		-
Norway		-		90		120		210		-			-		-
Russia		-		-		-		-		-			-		-
Sweden		153		106		250		509		18			-		18
Switzerland		28		-		95		123		546			-		546
Turkey		-		-		4		4		-			3		3
United Kingdom		476		918		1,022		2,416		471	⁽²⁾		280		751
Total non-Eurozone	$	657	$	1,164	$	1,618	$	3,439	$	1,035		$	292	$	1,327
Total Europe	$	847	$	1,539	$	1,840	$	4,226	$	1,095		$	352	$	1,447
Middle East and North Africa⁽³⁾	$	-	$	-	$	5	$	5	$	-		$	4	$	4
Total exposure	$	847	$	1,539	$	1,845	$	4,231	$	1,095		$	356	$	1,451
October 31, 2011	$	906	$	3,078	$	1,656	$	5,640	$	683		$	117	$	800

(1) Comprises securities purchased and sold under repurchase agreements for cash collateral; securities borrowed and lent for cash collateral; and securities borrowed and lent for securities collateral.
(2) Includes $143 million of exposure (notional value of $181 million and fair value of $38 million) on a CDS sold on a bond issue of a U.K. corporate entity, which is guaranteed by a financial guarantor. We currently hold the CDS sold as part of our structured-credit run-off business. A payout on the CDS sold would be triggered by the bankruptcy of the reference entity, or a failure of the entity to make a principal or interest payment as it is due; as well as failure of the financial guarantor to meet its obligation under the guarantee.
(3) Comprises Algeria, Bahrain, Egypt, Jordan, Lebanon, Libya, Morocco, Oman, Saudi Arabia, Syria, Tunisia, and Yemen.

Direct exposures to certain countries and regions (continued)


	Direct exposures (continued)
	Derivative MTM receivables and repo-style transactions															Total
	Corporate		Sovereign		Bank		Gross		Collateral			Net				direct
							exposure		held		⁽¹⁾	exposure				exposure
$ millions, as at April 30, 2012												(C)		⁽²⁾		(A)+(B)+(C)

Austria	$	-	$	-	$	32	$	32	$	32		$	-		$	75
Belgium		-		-		53		53		50			3			10
Finland		-		-		13		13		6			7			9
France		-		-		2,244		2,244		2,215			29			134
Germany		-		-		2,443		2,443		2,248			195			448
Greece		-		-		-		-		-			-			-
Ireland		-		-		186		186		184			2			14
Italy		-		-		28		28		23			5			8
Luxembourg		-		-		-		-		-			-			105
Netherlands		-		-		474		474		447			27			369
Portugal		-		-		-		-		-			-			-
Slovenia		-		-		-		-		-			-			3
Spain		-		-		6		6		4			2			2
Total Eurozone	$	-	$	-	$	5,479	$	5,479	$	5,209		$	270		$	1,177
								-
Denmark	$	-	$	-	$	21	$	21	$	21		$	-		$	184
Guernsey		-		-		-		-		-			-			2
Norway		-		-		-		-		-			-			210
Russia		-		-		-		-		-			-			-
Sweden		1		-		1		2		1			1			528
Switzerland		-		-		1,261		1,261		1,247			14			683
Turkey		-		-		-		-		-			-			7
United Kingdom		53		-		2,014		2,067		1,976			91			3,258
Total non-Eurozone	$	54	$	-	$	3,297	$	3,351	$	3,245		$	106		$	4,872
Total Europe	$	54	$	-	$	8,776	$	8,830	$	8,454		$	376		$	6,049
Middle East and North Africa⁽³⁾	$	-	$	-	$	-	$	-	$	-		$	-		$	9
Total exposure	$	54	$	-	$	8,776	$	8,830	$	8,454		$	376		$	6,058
October 31, 2011	$	32	$	7	$	8,569	$	8,608	$	8,125		$	483		$	6,923

(1) Collateral on derivative MTM receivables was $2.2 billion (October 31, 2011: $1.9 billion), and was all in the form of cash. Collateral on repo-style transactions was $6.3 billion (October 31, 2011: $6.2 billion), and is comprised of cash and investment-grade debt securities.
(2) The amounts shown are before CVA. The CVA for European counterparties was $24 million (October 31, 2011: $20 million).
(3) Comprises Algeria, Bahrain, Egypt, Jordan, Lebanon, Libya, Morocco, Oman, Saudi Arabia, Syria, Tunisia, and Yemen.

Indirect exposures to certain countries and regions
Our indirect exposures comprise securities (primarily CLOs classified as loans on our consolidated balance sheet), and written credit protection on securities in our structured credit run-off business where we benefit from subordination to our position. Our gross exposure before subordination is stated as carrying value for securities and notional less fair value for derivatives where we have written protection. We have no indirect exposures to Portugal, Slovenia, Guernsey, Turkey, Russia and selected countries in the Middle East and North Africa.


$ millions, as at April 30, 2012	Total indirect exposure

Austria	$	14
Belgium		39
Finland		13
France		522
Germany		377
Greece		14
Ireland		79
Italy		85
Luxembourg		56
Netherlands		345
Spain		154
Total Eurozone	$	1,698

Denmark	$	54
Norway		9
Sweden		68
Switzerland		5
United Kingdom		658
Total non-Eurozone	$	794
Total exposure	$	2,492
October 31, 2011	$	2,559

Selected exposures in certain activities
This section provides information on our other selected activities within our continuing and exited businesses that may be of particular interest to investors based on their risk characteristics and the current market environment. For additional information on these selected exposures, refer to pages 75 to 76 of the 2011 Annual Report.

U.S. real estate finance
The following table provides a summary of our positions in this business:


$ millions, as at April 30, 2012		Drawn		Undrawn
Construction program		$	156	$	64
Interim program			3,571		353
Joint venture			417		192
Exposure, net of allowance		$	4,144	$	609
Of the above:
	Net impaired	$	184	$	2
	On credit watch list		258		3
Net exposure as at October 31, 2011		$	3,379	$	629

As at April 30, 2012, the allowance for credit losses for this portfolio was $116 million (October 31, 2011: $86 million). During the quarter and six months ended April 30, 2012, we recorded the provision for credit losses of $15 million and $41 million, respectively (provision for credit losses of $4 million and $8 million for the quarter and six months ended April 30, 2011, respectively).

The business also maintains commercial mortgage-backed securities (CMBS) trading and distribution capabilities. As at April 30, 2012, we had CMBS inventory with a notional amount of $9 million and a fair value of less than $1 million (October 31, 2011: notional of $9 million and fair value of less than $1 million).

European leveraged finance
The following table provides a summary of our positions in this exited business:


$ millions, as at April 30, 2012		Drawn		Undrawn
Manufacturing		$	340	$	69
Publishing and printing			37		2
Utilities			10		-
Business services			7		13
Transportation			7		9
Exposure, net of allowance		$	401	$	93
Of the above:
	Net impaired	$	8	$	-
	On credit watch list		319		44
Net exposure as at October 31, 2011		$	437	$	91

As at April 30, 2012, the allowance for credit losses for this portfolio was $42 million (October 31, 2011: $43 million). During the quarter and six months ended April 30, 2012, the provision for credit losses were nil (net reversal of credit losses of $2 million and $3 million for the quarter and six months ended April 30, 2011, respectively).

U.S. leveraged finance
The following table provides a summary of our positions in this business:


$ millions, as at April 30, 2012		Drawn		Undrawn
Transportation		$	111	$	17
Gaming and lodging			2		-
Healthcare			2		16
Media and advertising			9		-
Manufacturing			9		13
Other			6		3
Exposure, net of allowance		$	139	$	49
Of the above:
	Net impaired	$	4	$	2
	On credit watch list		116		18
Net exposure as at October 31, 2011		$	111	$	179

As at April 30, 2012, the allowance for credit losses for this portfolio was $13 million (October 31, 2011: $13 million). During the quarter and six months ended April 30, 2012, the provision for credit losses were nil (net reversal of credit losses of $1 million and $6 million for the quarter and six months ended April 30, 2011 respectively).

Market risk
Market risk arises from positions in currencies, securities and derivatives held in our trading portfolios, and from our retail banking business, investment portfolios, and other non-trading activities. Market risk is defined as the potential for financial loss from adverse changes in underlying market factors, including interest and foreign exchange rates, credit spreads, and equity and commodity prices.

In the first quarter of 2012, we implemented the market risk amendment (MRA) which includes stressed value-at-risk (VaR) and the incremental risk charge (IRC) as required by OSFI under the BCBS "Revisions to the Basel II Market Risk Framework".

Stressed value-at-risk
The stressed VaR measure is intended to replicate the VaR calculation that would be generated for our current portfolio if the values of the relevant market risk factors were sourced from a period of stressed market conditions. The model inputs are calibrated to historical data from a continuous 12-month period of significant financial stress relevant to our current portfolio over the last five years. Our current stressed VaR period is from October 6, 2008 to October 5, 2009.

Incremental risk charge
IRC is a default and migration risk charge for issuer credit risk held in the trading portfolios. Our IRC methodology is a statistical technique that measures the risk of issuer migration and default over a period of one year by simulating changes in issuer credit rating. Validation of the model included testing of the liquidity horizon, recovery rate, correlation, and probability of default and migration.

Trading activities
The following three tables show VaR, stressed VaR and IRC for our trading activities based on risk type under an internal models-based approach, for which we have been granted approval by OSFI.

Trading revenue for the purposes of these tables relates to portfolios that are treated as trading for regulatory capital purposes and excludes certain items, which may result in it being different than trading revenue for accounting purposes. In addition, the VaR measures exclude positions described in the "Structured credit run-off business" section of the MD&A.

Total average VaR for the three months ended April 30, 2012 was up 15% from the last quarter, driven mainly by an increase in our equity and interest rate risk, offset by an increase in the diversification effect.

VaR by risk type - trading portfolio


								As at or for the three months ended										For the six months ended
				2012						2012				2011			2012		2011
				Apr. 30						Jan. 31				Apr. 30			Apr. 30		Apr. 30
$ millions	High		Low		As at		Average		As at		Average		As at		Average		Average		Average
Interest rate risk	$	5.3	$	1.1	$	1.3	$	2.4	$	1.9	$	1.9	$	4.8	$	4.3	$	2.1	$	3.9
Credit spread risk		2.4		0.8		1.7		1.4		0.9		1.1		1.1		1.1		1.3		1.0
Equity risk		3.8		1.5		3.8		2.4		1.8		1.8		3.5		4.4		2.1		4.1
Foreign exchange risk		1.7		0.3		0.7		0.7		0.5		0.7		0.5		1.2		0.7		1.2
Commodity risk		1.7		1.0		1.2		1.3		1.4		1.0		1.4		1.4		1.2		1.1
Debt specific risk		3.0		1.9		2.4		2.4		2.0		2.5		2.4		2.5		2.4		2.4
Diversification effect ⁽¹⁾		n/m		n/m		(6.2)		(6.0)		(5.0)		(5.0)		(6.4)		(7.2)		(5.5)		(6.1)
Total VaR (one-day measure)	$	7.0	$	3.3	$	4.9	$	4.6	$	3.5	$	4.0	$	7.3	$	7.7	$	4.3	$	7.6

(1) Total VaR is less than the sum of the VaR of the different market risk types due to risk offsets resulting from portfolio diversification effect.
n/m Not meaningful. It is not meaningful to compute a diversification effect because the high and low may occur on different days for different risk types.

Stressed VaR by risk type - trading portfolio

As at or for the
three months ended

For the six
months ended

$ millions

2012
Apr. 30

2012
Jan. 31

2012
Apr. 30

High

Low

As at

Average

As at

Average

Interest rate risk

13.4

1.5

4.3

6.0

4.7

6.8

6.4

Credit spread risk

7.2

0.8

5.4

3.7

1.7

2.5

3.1

Equity risk

5.5

0.9

1.4

2.0

1.4

1.9

1.9

Foreign exchange risk

9.4

0.3

2.3

1.6

2.1

1.8

1.7

Commodity risk

1.5

0.4

0.9

0.9

1.1

1.0

Debt specific risk

1.1

0.6

0.8

1.0

1.1

1.0

Diversification effect ⁽¹⁾

n/m

n/m

(9.5)

(8.8)

(7.7)

(9.1)

(8.9)

Total stressed VaR (one-day measure)

13.0

2.0

5.6

6.2

4.1

6.1

6.2

(1) Total stressed VaR is less than the sum of the VaR of the different market risk types due to risk offsets resulting from portfolio diversification effect.
n/m Not meaningful. It is not meaningful to compute a diversification effect because the high and low may occur on different days for different risk types.

Incremental risk charge - trading portfolio


						As at or for the							For the six
						three months ended							months ended
				2012						2012			2012
$ millions				Apr. 30						Jan. 31			Apr. 30
	High		Low		As at		Average		As at		Average		Average
Default risk	$	52.4	$	24.1	$	27.9	$	38.0	$	28.6	$	27.8	$	33.0
Migration risk		37.0		18.4		31.2		28.0		26.9		44.4		36.6
Incremental risk charge (one-year measure)	$	81.9	$	53.6	$	59.1	$	66.0	$	55.5	$	72.2	$	69.6

Trading revenue
The trading revenue (TEB)⁽¹⁾ and VaR graph below compares the current quarter and the three previous quarters' actual daily trading revenue (TEB)⁽¹⁾ with the previous day's VaR measures. As discussed previously, trading revenue disclosed in the graph is on a regulatory capital basis.

Trading revenue (TEB)⁽¹⁾was positive for 98% of the days in the quarter. Trading losses did not exceed VaR during the quarter. Average daily trading revenue (TEB)⁽¹⁾ was $3.2 million during the quarter. During the quarter, the largest loss occurred on April 9, 2012, totalling $1.6 million. The loss was mainly driven by changes in interest rates and funding costs. During the quarter, the largest gain occurred on April 23, 2012, totalling $16.7 million and it was driven by revenue associated with the client index facilitation business.

Trading revenue (TEB)⁽¹⁾ versus VaR

http://files.newswire.ca/256/TradingRevenueVaR.pdf

(1) For additional information, see the "Non-GAAP measures" section.

Non-trading activities
Interest rate risk
Non-trading interest rate risk consists primarily of risk inherent in Asset Liability Management (ALM) activities and the activities of domestic and foreign subsidiaries. Interest rate risk results from differences in the maturities or repricing dates of assets and liabilities, both on- and off-balance sheet, as well as from embedded optionality in retail products. A variety of cash instruments and derivatives, principally interest rate swaps, futures and options, are used to manage and control these risks.

The following table shows the potential impact over the next 12 months, adjusted for estimated prepayments, of an immediate 100 and 200 basis points increase or decrease in interest rates. In addition, we have a floor in place in the downward shock to accommodate for the current low interest rate environment.

Interest rate sensitivity - non-trading (after-tax)


				2012						2012						2011
$ millions, as at			Apr. 30						Jan. 31						Apr. 30
	C$		US$		Other		C$		US$		Other		C$		US$		Other
100 basis points increase in interest rates
Increase (decrease) in net income attributable to equity shareholders	$	78	$	(30)	$	3	$	145	$	(11)	$	2	$	181	$	(2)	$	5
Decrease in present value of shareholders' equity		(123)		(169)		(38)		(47)		(63)		(38)		(12)		(154)		(30)
100 basis points decrease in interest rates
Increase (decrease) in net income attributable to equity shareholders		(171)		19		(3)		(209)		6		(2)		(198)		10		(5)
Decrease (increase) in present value of shareholders' equity		(5)		130		38		(53)		41		38		(28)		148		30
200 basis points increase in interest rates
Increase (decrease) in net income attributable to equity shareholders	$	137	$	(51)	$	6	$	308	$	(22)	$	5	$	358	$	(5)	$	10
Decrease in present value of shareholders' equity		(285)		(337)		(76)		(132)		(127)		(75)		(33)		(308)		(59)
200 basis points decrease in interest rates
Increase (decrease) in net income attributable to equity shareholders		(245)		16		(7)		(324)		5		(5)		(345)		21		(10)
Decrease (increase) in present value of shareholders' equity		(120)		129		61		(213)		38		56		(77)		288		49

Liquidity risk
Liquidity risk is the risk of having insufficient cash resources to meet financial obligations as they fall due, in their full amount and stipulated currencies, without raising funds at adverse rates or selling assets on a forced basis.

Our liquidity risk management strategies seek to maintain sufficient liquid and diversified funding sources to continually fund our balance sheet and contingent obligations under both normal and stressed market environments.

Strategies for managing liquidity risk include maintaining diversified sources of wholesale term funding, asset securitization initiatives, and maintenance of segregated pools of high-quality liquid assets that can be sold or pledged as security to provide a ready source of cash. Collectively, these strategies result in lower dependency on short-term wholesale funding.

Balance sheet liquid assets are summarized in the following table:


	2012		2011
$ billions, as at	Apr. 30		Oct. 31
Cash⁽¹⁾	$	1.1	$	1.1
Deposits with banks ⁽¹⁾		4.5		3.5
Securities issued by Canadian governments⁽²⁾		7.8		9.2
Other securities ⁽³⁾		42.4		42.5
Cash collateral on securities borrowed		3.1		1.8
Securities purchased under resale agreements		23.4		25.6
	$	82.3	$	83.7

(1) Commencing in the second quarter of 2012, excludes restricted balances. Prior period information has been restated to conform to the presentation in the current period.
(2) Represent government-issued or guaranteed securities with residual term to contractual maturity of more than one year.
(3) Comprises AFS and FVO securities with residual term to contractual maturity within one year and trading securities.

In the course of our regular business activities, certain assets are pledged as part of collateral management, including those necessary for day-to-day clearing and settlement of payments and securities. Pledged assets, including those for covered bonds and securities borrowed or financed through repurchase agreements, as at April 30, 2012 totalled $65.7 billion (October 31, 2011: $65.2 billion).

We obtain funding through both wholesale and retail sources. Consistent with our liquidity risk-mitigation strategies, we continue to source term funding in the wholesale markets from a variety of clients and geographic locations, borrowing across a range of maturities, using a mix of funding instruments.

Core personal deposits remain a primary source of retail funding and totalled $112.6 billion as at April 30, 2012 (October 31, 2011: $111.8 billion).

During the quarter and six months ended April 30, 2012, we raised $1.2 billion and $4.3 billion, respectively, of secured term funding in U.S. and Canadian dollars. We also raised $1.4 billion and $4.6 billion in term funding through the issuance of unsecured U.S. and Canadian deposit notes for the quarter and six months ended April 30, 2012, respectively.

Access to wholesale funding sources and the cost of funds are dependent on various factors including credit ratings. Our funding and liquidity levels remained stable and sound over the period and we do not anticipate any events, commitments or demands that will materially impact our liquidity risk position.

Contractual obligations
Contractual obligations give rise to commitments of future payments affecting our short- and long-term liquidity and capital resource needs. These obligations include credit and liquidity commitments and other contractual obligations.

Details of our contractual obligations are provided on pages 84 to 85 of the 2011 Annual Report.

Other risks
We also have policies and processes to measure, monitor and control other risks, including strategic, operational, reputation and legal, regulatory, and environmental risks.

For additional details, see pages 85 to 87 of the 2011 Annual Report.

ACCOUNTING AND CONTROL MATTERS

Critical accounting policies and estimates
A summary of significant accounting policies is presented in Note 1 to the interim consolidated financial statements. Certain accounting policies require us to make judgments and estimates, some of which may relate to matters that are uncertain. Changes in the judgments and estimates required in the critical accounting policies discussed below could have a material impact on our financial results. We have established control procedures to ensure accounting policies are applied consistently and processes for changing methodologies are well controlled.

Valuation of financial instruments
Debt and equity trading securities, trading business and government loans, obligations related to securities sold short, derivative contracts, AFS securities and FVO financial instruments are carried at fair value. FVO financial instruments include certain debt securities, structured retail deposits and business and government deposits. Retail mortgage interest rate commitments are also designated as FVO financial instruments.

The determination of fair value requires judgment and is based on market information, where available and appropriate. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability at the measurement date in an orderly arm's length transaction between knowledgeable and willing market participants motivated by normal business considerations. Fair value measurements are categorized into levels within a fair value hierarchy based on the nature of the valuation inputs (Level 1, 2 or 3) as outlined below. Fair value is best evidenced by an independent quoted market price for the same instrument in an active market (Level 1).

If a market price in an active market is not available, the fair value is estimated on the basis of valuation models.

Observable market inputs are utilized for valuation purposes to the extent possible and appropriate.

Valuation models may utilize predominantly observable market inputs (Level 2), including: interest rates, foreign currency rates, equity and equivalent synthetic instrument prices, index levels, credit spreads, counterparty credit quality, corresponding market volatility levels, and other market-based pricing factors, as well as any appropriate, highly correlated proxy market valuation data. Valuation models may also utilize predominantly non-observable market inputs (Level 3).

If the fair value of a financial instrument is not determinable based upon quoted market prices in an active market, and a suitable market proxy is not available, the transaction price would be considered to be the best indicator of market value on the transaction date. When the fair value of a financial instrument is determined using a valuation technique that incorporates significant non-observable market inputs, no inception profit or loss (difference between the determined fair value and the transaction price) is recognized at the time the financial instrument is first recorded. Any gains or losses at inception would be recognized only in future periods over the term of the instrument, or when market quotes or data become observable.

In inactive markets, quotes obtained from brokers are indicative quotes, meaning that they are not binding, and are mainly derived from the brokers' internal valuation models.

Due to the inherent limitations of the indicative broker quotes in estimating fair value, we also consider the values provided by our internal models, where appropriate, utilizing observable market inputs to the extent possible.

To ensure that valuations are appropriate, a number of policies and controls are put in place. Independent validation of fair value is performed at least on a monthly basis.

Valuations are verified to external sources such as exchange quotes, broker quotes or other management-approved independent pricing sources. Key model inputs, such as yield curves and volatilities, are independently verified. Valuation models used, including analytics for the construction of yield curves and volatility surfaces, are vetted and approved, consistent with our model risk policy.

The following table presents amounts, in each category of financial instruments, which are fair valued using valuation techniques based on predominantly non-observable market inputs (Level 3), for the structured credit run-off business and total consolidated CIBC:


			2012 Apr. 30							2011 Oct. 31
$ millions, as at	Structured credit run-off business		Total CIBC		Total CIBC		⁽¹⁾	Structured credit run-off business		Total CIBC		Total CIBC
Assets
Trading securities and loans	$	575	$	591		1.5	%	$	559	$	570		1.7	%
AFS securities		2		1,660		6.8			2		2,052		7.6
FVO securities		203		203		56.9			198		198		42.7
Derivative instruments		782		876		3.4			1,020		1,109		3.9
Liabilities
Deposits ⁽²⁾	$	382	$	549		24.7	%	$	389	$	583		33.3	%
Secured borrowings - FVO		-		345		94.8			-		372		100.0
Derivative instruments		1,537		1,629		6.2			1,788		1,937		6.7

(1) Represents percentage of Level 3 assets and liabilities in each reported category on our interim consolidated balance sheet.
(2) Includes FVO deposits and bifurcated embedded derivatives.

Sensitivity of Level 3 financial assets and liabilities
Much of our structured credit run-off business requires the application of valuation techniques using predominantly non-observable market inputs. In an inactive market, indicative broker quotes, proxy valuation from comparable financial instruments, and other internal models using our own assumptions of how market participants would price a market transaction on the measurement date (all of which we consider to be non-observable market inputs), are predominantly used for the valuation of these positions. We also consider whether a CVA is required to recognize the risk that any given counterparty to which we are exposed may not ultimately be able to fulfill its obligations.

For credit derivatives purchased from financial guarantors, our CVA is driven off market-observed credit spreads, where available and appropriate. For financial guarantors that do not have observable credit spreads or where observable credit spreads are available but do not reflect an orderly market (i.e., not representative of fair value), a proxy market credit spread is used. The proxy market credit spread is based on our internal credit rating for the particular financial guarantor. Credit spreads contain information on market (or proxy market) expectations of probability of default (PD) as well as loss given default (LGD). The credit spreads are applied in relation to the weighted-average life of our exposure to the counterparties. For financial guarantor counterparties where a proxy market credit spread is used, we also make an adjustment to reflect additional financial guarantor risk over equivalently rated non-financial guarantor counterparties. The amount of the adjustment is dependent on all available internal and external market information for financial guarantors. The final CVA takes into account the expected correlation between the future performance of the underlying reference assets and that of the counterparties, except for high-quality reference assets where we have neither experienced nor expect future credit losses.

Where appropriate, on certain financial guarantors, we determined the CVA based on estimated recoverable amounts.

ABS are sensitive to credit and liquidity spreads, which we consider to be non-observable market inputs.

AFS privately issued equity securities are sensitive to non-observable assumptions and inputs such as projected cash flows and earning multiples.

FVO deposits that are not managed as part of our structured credit run-off business are sensitive to non-observable credit spreads, which are derived using extrapolation and correlation assumptions.

Certain FVO notes (classified as Secured borrowings) issued by a securitization trust that we consolidate are sensitive to non-observable credit spreads, which are implied from similar ABS issuances.

Certain bifurcated embedded derivatives, due to the complexity and unique structure of the instruments, require significant assumptions and judgment to be applied to both the inputs and valuation techniques, which we consider to be non-observable.

The effect of changing one or more of the assumptions to fair value these instruments to reasonably possible alternatives would impact net income or other comprehensive income (OCI) as described below.

Our unhedged non-USRMM structured credit positions are sensitive to changes in MTM, generally as derived from indicative broker quotes and internal models. A 10% adverse change in MTM of the underlyings would result in losses of approximately $72 million, excluding unhedged non-USRMM positions classified as loans which are carried at amortized cost.

For our hedged positions, there are two categories of sensitivities; the first relates to our hedged loan portfolio and the second relates to our hedged fair valued exposures. Since on-balance sheet hedged loans are carried at amortized cost whereas the related credit derivatives are fair valued, a 10% increase in the MTM of credit derivatives in our hedged structured credit positions would result in a net gain of approximately $10 million, assuming current CVA ratios remain unchanged. A 10% reduction in the MTM of our on-balance sheet fair valued exposures and a 10% increase in the MTM of all credit derivatives in our hedged structured credit positions would result in a net loss of approximately $22 million, assuming current CVA ratios remain unchanged.

The impact of a 10% increase in the MTM of unmatched credit derivatives, where we have purchased protection but do not have exposure to the underlying, would not result in a significant net gain or loss, assuming current CVA ratios remain unchanged.

The impact of a 10% reduction in receivables, net of CVA from financial guarantors, would result in a net loss of approximately $35 million.

A 10% reduction in the MTM of our on-balance sheet ABS that are valued using non-observable credit and liquidity spreads would result in a decrease in OCI of approximately $95 million.

A 10% reduction in the MTM of our AFS privately issued equity securities that are valued using non-observable inputs such as projected cash flows and earnings multiples, would result in a decrease in OCI of approximately $67 million.

A 10% reduction in the MTM of certain FVO deposits which are not managed as part of our structured credit run-off business and are valued using non-observable inputs, including correlation and extrapolated credit spreads, would result in a gain of approximately $4 million.

A 10% reduction in the MTM of certain FVO notes (classified as Secured borrowings) issued by a securitization trust that we consolidate and are valued using non-observable credit spreads would result in a gain of approximately $35 million.

A 10% reduction in the MTM of certain bifurcated embedded derivatives, valued using internally vetted valuation techniques, would result in a gain of approximately $12 million.

Net gains of $69 million and $92 million for the quarter and six months ended April 30, 2012 ($21 million and $22 million for the quarter and six months ended April 30, 2011) were recognized in the interim consolidated statement of income, on the financial instruments for which fair value was estimated using valuation techniques requiring predominantly non-observable market parameters. We apply judgment in establishing valuation adjustments that take into account various factors that may have an impact on the valuation. Such factors include, but are not limited to, the bid-offer spread, illiquidity due to lack of market depth, parameter uncertainty and other market risk, model risk, credit risk, and future administration costs. We have not reflected any valuation adjustments in respect of the use of an overnight index swap (OIS) curve that some counterparties may be employing to value our collateralized derivative contracts. Market practices continue to evolve in this area and a valuation adjustment may be required in the future. We do not believe that any adjustments resulting from the use of the OIS curve to value our collateralized derivative contracts would be material to our April 30, 2012 interim consolidated financial statements.

The following table summarizes our valuation adjustments:


		2012		2011
$ millions, as at		Apr. 30		Oct. 31
Securities
	Market risk	$	2	$	4
Derivatives
	Market risk		53		51
	Credit risk		188		243
	Administration costs		5		6
Total valuation adjustments		$	248	$	304

Risk factors related to fair value adjustments
We believe that we have made appropriate fair value adjustments and have taken appropriate write-downs to date.

The establishment of fair value adjustments and the determination of the amount of write-downs involve estimates that are based on accounting processes and judgments by management. We evaluate the adequacy of the fair value adjustments and the amount of write-downs on an ongoing basis. The levels of fair value adjustments and the amount of the write-downs could be changed as events warrant and may not reflect ultimate realizable amounts.

Impairment of AFS securities
AFS securities include debt and equity securities.

AFS securities, other than equities that have a fair value which is not reliably measurable, are stated at fair value, whereby the difference between the fair value and the amortized cost is included in AOCI. Only equities that do not have a fair value which is reliably measurable are carried at cost. We have determined that all of our equity securities have reliable fair values.

AFS securities are subject to periodic reviews to assess whether or not there is an impairment. The assessment of impairment depends on whether the instrument is debt or equity in nature. AFS debt securities are identified as impaired when there is objective observable evidence concerning the inability to collect the contractual principal or interest. Factors that are reviewed for impairment assessment include, but are not limited to, operating performance and future expectations, liquidity and capital adequacy, external credit ratings, underlying asset quality deterioration, industry valuation levels for comparable entities, and any changes in market and economic outlook.

For AFS equity instruments, objective evidence of impairment exists if there has been a significant or prolonged decline in the fair value of the investment below its cost. In making the impairment assessment we also consider whether there have been significant adverse changes in the technological, market, economic, or legal environments in which the issuer operates or if the issuer is experiencing significant financial difficulty.

Realized gains and losses on disposal and write-downs to reflect impairment in the value of AFS securities are recorded in the consolidated statement of income. Previously recognized impairment losses for debt securities (but not equity securities) are reversed if a subsequent increase in fair value can be objectively identified and is related to an event occurring after the impairment loss was recognized. Once an AFS equity security is impaired, all subsequent declines in fair value are charged directly to income.

Allowance for credit losses
We establish and maintain an allowance for credit losses that is considered the best estimate of probable credit-related losses existing in our portfolio of on- and off-balance sheet financial instruments, giving due regard to current conditions.

The allowance for credit losses consists of individual and collective components.

Individual allowances
The majority of our business and government loan portfolios are assessed on an individual loan basis. Individual allowances are established when impaired loans are identified within the individually assessed portfolios. A loan is classified as impaired when we are of the opinion that there is no longer a reasonable assurance of the full and timely collection of principal and interest. The individual allowance is the amount required to reduce the carrying value of an impaired loan to its estimated realizable amount. This is determined by discounting the expected future cash flows at the effective interest rate inherent in the loan.

Individual allowances are not established for portfolios that are collectively assessed including most retail portfolios.

Collective allowances
Consumer and certain small business allowances
Residential mortgages, credit card loans, personal loans, and certain small business loan portfolios consist of large numbers of homogeneous balances of relatively small amounts, for which we take a portfolio approach to establish the collective allowance. As it is not practical to review each individual loan, we utilize a formula basis, by reference to historical ratios of write-offs to current accounts and balances in arrears. We also consider estimates of the time periods over which losses that are present would be identified and a provision taken, our view of current economic and portfolio trends, and evidence of credit quality improvements or deterioration. On a regular basis, the parameters that affect the allowance calculation are updated, based on our experience and the economic environment.

Business and government allowances
For groups of individually assessed loans for which no objective evidence of impairment has been identified on an individual basis, a collective allowance is provided for losses which we estimate are inherent in the portfolio at the reporting date, but not yet specifically identified from an individual assessment of the loan.

The methodology for determining the appropriate level of the collective allowance incorporates a number of factors, including the size of the portfolios, expected loss rates, and relative risk profiles. We also consider estimates of the time periods over which losses that are present would be identified and a provision taken, our view of current economic and portfolio trends, and evidence of credit quality improvements or deterioration. On a regular basis, the parameters that affect the general allowance calculation are updated, based on our experience and the economic environment.

Expected loss rates for business loan portfolios are based on the risk rating of each credit facility and on the PD factors associated with each risk rating, as well as estimates of LGD. The PD factors reflect our historical experience over an economic cycle, and are supplemented by data derived from defaults in the public debt markets. LGD estimates are based on our historical experience.

Securitizations and SPEs
Securitization of our own assets
SIC Interpretation 12 (SIC-12), "Consolidation-Special Purpose Entities" provides guidance on applying consolidation principles to certain entities that are subject to control on a basis other than ownership of voting interests. In assessing and determining whether we control a SPE, judgment is exercised to determine whether the activities of the SPE are being conducted on our behalf to obtain benefits from the SPE's operation; whether we have the decision-making powers to control or to obtain control of the SPE or its assets; whether we have rights to obtain the majority of the benefits of the SPE's activities; and whether we retain the majority of the residual risks related to the SPE or its assets in order to obtain benefits from its activities. We sponsor several SPEs that purchase and securitize our own assets including the Cards II Trust, Broadway Trust and Crisp Trust, which we currently consolidate.

We also securitize our own mortgage assets through a government-sponsored securitization program. We sell these securitized assets to a government-sponsored securitization vehicle, that we do not consolidate, as well as to other third parties. IAS 39, "Financial Instrument Recognition and Measurement" provides guidance on when to derecognize financial assets. A financial asset is derecognized when the contractual rights to receive cash flows from the asset have expired; or when we have transferred the rights to receive cash flows from the asset such that:

we have transferred substantially all the risks and rewards of the asset, or
we have neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the asset.

We have determined that our securitization activities are accounted for as secured borrowing transactions because we have not met the aforementioned criteria.

For additional information on our securitizations see the "Off-balance sheet arrangements" section and Note 5 to the interim consolidated financial statements.

Securitization of third-party assets
We also sponsor several SPEs that purchase pools of third-party assets. We monitor the extent to which we support these SPEs through direct investment in the debt issued by the SPEs and through the provision of liquidity protection to the other debt holders, to assess whether we should consolidate these entities.

Where we consider that CIBC should consolidate a SPE, IAS 27 "Consolidated and Separate Financial Statements" requires that we reconsider this assessment in the following circumstances: (i) when there is a change in the contractual arrangements between the parties to the SPE; or (ii) when any of the parties take steps to strengthen its position and, in doing so, acquires a greater level of control. Specifically, in relation to our multi-seller conduits, we reconsider our consolidation assessment whenever our level of interest in the ABCP issued by the conduits changes significantly, or in the rare event that the liquidity facility we provide to the conduits is drawn or amended.

A significant increase in our holdings of the outstanding commercial paper by the conduits would become more likely in a scenario in which the market for bank-sponsored ABCP suffered a significant deterioration such that the conduits were unable to roll their ABCP.

Asset impairment
Goodwill, other intangible assets and long-lived assets
As at April 30, 2012, we had goodwill of $1,671 million (October 31, 2011: $1,677 million) and other intangible assets with an indefinite life of $135 million (October 31, 2011: $136 million). Goodwill is not amortized, but is assessed, at least annually, for impairment by comparing the recoverable amount of the cash-generating unit (CGU) to which goodwill has been allocated, with the carrying amount of the CGU including goodwill, with any deficiency recognized as impairment to goodwill. The recoverable amount of a CGU is defined as the higher of its estimated fair value less cost to sell or value in use.

Acquired intangible assets are separately recognized if the benefits of the intangible assets are obtained through contractual or other legal rights, or if the intangible assets can be sold, transferred, licensed, rented, or exchanged. Determining the useful lives of intangible assets requires judgment and fact-based analysis. Intangibles with an indefinite life are not amortized but are assessed for impairment by comparing the recoverable amount to the carrying amount.

Long-lived assets and other identifiable intangibles with a definite life are amortized over their estimated useful lives. These assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount is higher than the recoverable amount. The recoverable amount is defined as the higher of its estimated fair value less cost to sell and value in use. In performing the review for recoverability, we estimate the future cash flows expected to result from the use of the asset and its eventual disposition.

We use judgment to estimate the recoverable amounts of our CGUs and other intangible assets with an indefinite life. The recoverable amount of CGUs and other intangible assets with an indefinite life are derived from internally developed valuation models, using market or discounted cash flow approaches. Under a market approach, the estimates assume that entities operating in the same industry will share similar characteristics and that entity value will correlate to those characteristics. Therefore a comparison of a CGU to similar entities whose financial information is publicly available may provide a reasonable basis to estimate fair value. These models may incorporate various key assumptions, including projected earnings and price earnings multiples. Under a discounted cash flow approach, which is often used to estimate value in use, the estimates are predicated upon the value of the future cash flows that a business will generate going forward. The discounted cash flow method involves projecting cash flows and converting them into a present value equivalent through discounting. The discounting process uses a rate of return that is commensurate with the risk associated with the business. These models may include various key assumptions including projected cash flows, levels of required capital, growth rates, terminal growth rates and discount rates. The valuations determined by all of these models are sensitive to the underlying business conditions in the markets in which the CGUs operate. As a result, changes in estimated recoverable amounts could result in the future, depending on various factors including changes in expected economic conditions in these markets.

In the third quarter of 2011, we recognized an impairment charge of $203 million in respect of goodwill relating to CIBC FirstCaribbean, which is recorded in Corporate and Other. The impairment was primarily driven by changes in expected future cash flows which were impacted by the challenging economic environment in the Caribbean and our outlook for the region. Should there be further reductions in the estimated recoverable amount of our CIBC FirstCaribbean CGU, this would result in additional goodwill impairment charges. Reductions in estimated recoverable amounts could arise from various factors such as reductions in forecast cash flows, an increase in the assumed level of required capital, and any negative change to the discount rate or the terminal growth rate either in isolation or jointly.

For additional details, see Note 13 to the interim consolidated financial statements.

Income taxes
We use judgment in the estimation of income taxes and deferred income tax assets and liabilities. As part of the process of preparing our consolidated financial statements, we are required to estimate income taxes in each of the jurisdictions where we operate.

This process involves estimating actual current tax exposure, together with assessing temporary differences that result from the different treatments of items for tax and accounting purposes, and any tax loss carryforwards.

We are also required to establish a deferred income tax asset in respect of expenses recorded currently for which a tax deduction will be available in a future period, such as all or a portion of the collective allowance for credit losses and loss carryforwards.

As at April 30, 2012, we had available gross deferred income tax assets of $701 million (October 31, 2011: $676 million) before a valuation allowance of $32 million (October 31, 2011: $32 million), and gross deferred income tax liabilities of $37 million (October 31, 2011: $51 million). We are required to assess whether it is probable that our deferred income tax assets will be realized prior to their expiration and, based on all the available evidence, determine if a valuation allowance is required on all or a portion of our deferred income tax assets. The factors used to assess the probability of realization are our past experience of income and capital gains, forecast of future net income before taxes, available tax planning strategies that could be implemented to realize the deferred income tax assets, and the remaining expiration period of tax loss carryforwards.

Although realization is not assured, we believe, based on all the available evidence, it is probable that the remaining deferred income tax assets, net of the valuation allowance, will be realized.

Income tax accounting impacts all our reporting segments.

For further details of our income taxes, see Notes 8 and 13 to the interim consolidated financial statements.

Provisions and contingent liabilities
In the ordinary course of its business, CIBC is a party to a number of legal proceedings, including regulatory investigations, in which claims for substantial monetary damages are asserted against CIBC and its subsidiaries. While there is inherent difficulty in predicting the outcome of legal proceedings, based on current knowledge and in consultation with legal counsel, we do not expect that the outcome of these matters, individually or in aggregate, to have a material adverse effect on our consolidated financial statements. However, the outcome of these matters, individually or in aggregate, may be material to our operating results for a particular reporting period.

Amounts are accrued if, in the opinion of management, it is both probable that an outflow of economic benefits will be required to resolve the matter, and a reliable estimate can be made of the amount of the obligation. If the reliable estimate of probable loss involves a range of potential outcomes within which a specific amount within the range appears to be a better estimate, that amount is accrued. If no specific amount within the range of potential outcomes appears to be a better estimate than any other amount, the mid-point in the range is accrued. In some instances, however, it is not possible either to determine whether an obligation is probable or to reliably estimate the amount of loss, in which case no accrual can be made. We regularly assess the adequacy of CIBC's litigation accruals and make the necessary adjustments to incorporate new information as it becomes available.

A description of significant ongoing matters to which CIBC is a party can be found in Notes 24 and 31 to our 2011 annual consolidated financial statements. In April 2012, the Ontario Superior Court of Justice denied the plaintiffs' motion for certification of the Brown v. Canadian Imperial Bank of Commerce and CIBC World Markets Inc. matter as a class action. The proposed class action sought an unspecified amount for unpaid overtime on behalf of investment advisors and analysts employed in Ontario. There were no further significant developments in the other matters, and no significant new matters arose during the quarter ended April 30, 2012.

Gain on reduction of unfunded commitment on a variable funding note
In the fourth quarter of 2008, we recognized a gain of $895 million (US$841 million), resulting from the reduction to zero of our unfunded commitment on a VFN issued by a CDO. This reduction followed certain actions of the indenture trustee for the CDO following the September 15, 2008 bankruptcy filing of Lehman Brothers Holdings, Inc. (Lehman), the guarantor of a related CDS agreement with the CDO.

In September 2010, just prior to the expiration of a statute of limitations, the Lehman Estate instituted an adversary proceeding against numerous financial institutions, indenture trustees and note-holders, including CIBC, related to this and more than 40 other CDOs. The Lehman Estate seeks a declaration that the indenture trustee's actions were improper and that CIBC remains obligated to fund the VFN. At the request of the Lehman Estate, the bankruptcy court issued an order staying all proceedings in the action until July 20, 2012. Although there can be no certainty regarding any eventual outcome, we believe that the CDO indenture trustee's actions in reducing the unfunded commitment on our VFN to zero, were fully supported by the terms of the governing contracts and the relevant legal standards and CIBC intends to vigorously contest the adversary proceeding.

Post-employment and other long-term benefit plan assumptions
We are the sponsor of defined benefit pension plans including post-employment pension (pension plans) and post-employment medical and dental (other post-employment plans) for eligible employees. We also continue to sponsor a long-term disability income replacement benefit (LTD) plan and associated medical and dental benefits (collectively, other long-term benefit plans). The LTD plan was closed to new claims effective June 1, 2004.

The expense and obligations of the pension, other post-employment, and other long-term benefit plans, which impact all of our reporting segments, are dependent upon assumptions used in calculating such amounts. These assumptions include discount rates, projected salary increases, expected returns on assets, health-care cost trend rates, turnover of employees, retirement age, and mortality rates. These assumptions are reviewed annually in accordance with accepted actuarial practice and are approved by management.

The discount rate assumption used in determining pension, other post-employment, and other long-term benefit obligations and net benefit expense reflects the market yields, as of the measurement date, on high-quality debt instruments with a currency and term to maturity that match the currency and expected timing of benefit payments.

Our discount rate is estimated by developing a yield curve based on high-quality corporate bonds. While there is a deep market of high-quality corporate bonds denominated in Canadian dollars with short and medium terms to maturity, there is not a deep market in bonds with terms to maturity that match the timing of all of the expected benefits payments for our Canadian plans. As a result, for our Canadian pension plans and other post-employment plans, we estimate the yields of high-quality corporate bonds with longer term maturities by extrapolating current yields on bonds with short and medium term durations along the yield curve. Judgment is required in constructing the yield curve, and, as a result, different methodologies applied in constructing the yield curve can give rise to different discount rates.

The expected rate of return on plan assets assumption is based on expected returns for the various asset classes, weighted by portfolio allocation. Anticipated future long-term performance of individual asset categories is considered, reflecting expected future inflation and expected real yields on fixed-income securities and equities. Other assumptions are based on actual plan experience and our best estimates.

Actual results that differ from the assumptions are accumulated and amortized over future periods to the extent they exceed the threshold established by the corridor method and, therefore, generally affect recognized expense and the recorded obligation in future periods. As at October 31, 2011, the net amount of unamortized actuarial losses was $257 million in respect of pension plans and $23 million in respect of other post-employment benefit plans.

Our pension plans are funded to or above the amounts required by relevant legislation or plan terms. During 2011, we contributed $281 million to the defined benefit pension plans, which included $108 million above the minimum required. Our 2011 funding contributions to our principal Canadian pension plan was the maximum amount allowed by the Income Tax Act (Canada).

Our principal other post-employment benefit plan is unfunded. We fund benefit payments for this post-employment plan as incurred. During 2011, these benefit payments totalled $27 million. Our LTD plan is a funded plan. During 2011, we contributed $15 million to the trust.

Management has approved assumptions that are being used for the 2012 expense calculation. The approved weighted-average discount rate for defined benefit plans and weighted-average expected long-term rate of return on plan assets for the funded defined benefit plans are unchanged from those used for the 2011 expense calculations.

For further details of our annual pension and other post-employment expense and liability, see Note 13 to the interim consolidated financial statements.

Financial instruments
As a financial institution, our assets and liabilities primarily comprise financial instruments, which include deposits, securities, loans, derivatives, acceptances, repurchase agreements, secured borrowings, subordinated debt, and preferred shares.

We use these financial instruments for both trading and non-trading activities. Trading activities include the purchase and sale of securities, transacting in foreign exchange and derivative instruments in the course of facilitating client trades, and taking proprietary trading positions with the objective of income generation. Non-trading activities generally include the business of lending, investing, funding, and ALM.

The use of financial instruments may either introduce or mitigate exposures to market, credit and/or liquidity risks. See the "Management of risk" section for details on how these risks are managed.

Financial instruments are accounted for according to their classification. For details on the accounting for these instruments, see Note 1 to the interim consolidated financial statements.

For significant assumptions made in determining the valuation of financial and other instruments, see the "Valuation of financial instruments" section above.

Transition to International Financial Reporting Standards
We transitioned to IFRS effective November 1, 2011.

The results and balances of our 2011 comparative year have been restated to reflect the retrospective adoption of IFRS effective November 1, 2010. Note 12 to the interim consolidated financial statements contains reconciliations of our 2011 Canadian GAAP financial results to the 2011 IFRS financial results included elsewhere in the interim consolidated financial statements.

Our selection of optional exemptions and the discussion of the mandatory exceptions applied in the preparation of our November 1, 2010 opening IFRS consolidated balance sheet are provided in section A of Note 12, including our decision to apply the "fresh-start" elections that resulted in both: (i) the recognition of $1,150 million of after-tax unamortized net actuarial losses on our defined benefit plans that existed under Canadian GAAP as at November 1, 2010 through retained earnings, and (ii) the reclassification of $575 million of accumulated net foreign exchange losses on foreign operations, net of the hedge gains and losses, from AOCI to retained earnings.

Section B of Note 12 discusses other differences between IFRS and Canadian GAAP that gave rise to adjustments in our consolidated balance sheet and consolidated statements of income and comprehensive income. The most significant change to our consolidated balance sheet was a gross-up of approximately $29 billion to our assets and liabilities from the transfer of securitized residential mortgages to a government-sponsored trust accounted as secured borrowings under IFRS, rather than as sales under Canadian GAAP. The most significant impact on our net income was due to the $203 million goodwill impairment charge relating to CIBC FirstCaribbean that we recognized only under IFRS in the third quarter of 2011.

Note 13 to the interim consolidated financial statements contains IFRS disclosures related to the 2011 comparative period that are generally only required on an annual basis and that were not previously provided in the 2011 Canadian GAAP consolidated financial statements either because of an IFRS measurement difference or the absence of an equivalent Canadian GAAP disclosure requirement.

Future accounting policy changes
For details on the future accounting policy changes, see Note 14 to the interim consolidated financial statements.

Controls and procedures
Disclosure controls and procedures
CIBC's management, with the participation of the President and Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness, as at April 30, 2012, of CIBC's disclosure controls and procedures (as defined in the rules of the SEC and the Canadian Securities Administrators) and has concluded that such disclosure controls and procedures were effective.

Changes in internal control over financial reporting
There have been no changes in CIBC's internal control over financial reporting during the quarter and six months ended April 30, 2012, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

CONSOLIDATED BALANCE SHEET

		2012		2011		2010
Unaudited, $ millions, as at		Apr. 30		Oct. 31		Nov. 1
ASSETS
Cash and non-interest-bearing deposits with banks	$	2,200	$	1,481	$	1,817
Interest-bearing deposits with banks		3,957		3,661		9,005
Securities
Trading		37,651		32,713		29,074
Available-for-sale (AFS) (Note 3)		24,530		27,118		24,369
Designated at fair value (FVO)		357		464		875
		62,538		60,295		54,318
Cash collateral on securities borrowed		3,116		1,838		2,401
Securities purchased under resale agreements		23,444		25,641		34,722
Loans
Residential mortgages		151,103		150,509		143,284
Personal		35,114		34,842		34,335
Credit card		15,492		15,744		15,914
Business and government		42,602		39,663		37,946
Allowance for credit losses (Note 4)		(1,856)		(1,803)		(1,886)
		242,455		238,955		229,593
Other
Derivative instruments		25,911		28,270		24,700
Customers' liability under acceptances		9,032		9,454		7,633
Land, buildings and equipment		1,560		1,580		1,568
Goodwill		1,671		1,677		1,907
Software and other intangible assets		661		633		579
Investments in equity-accounted associates and joint ventures		1,389		1,394		495
Other assets		9,524		8,879		10,570
		49,748		51,887		47,452
	$	387,458	$	383,758	$	379,308
LIABILITIES AND EQUITY
Deposits
Personal	$	117,798	$	116,592	$	113,294
Business and government		121,332		117,143		115,841
Bank		5,077		4,177		5,618
		244,207		237,912		234,753
Obligations related to securities sold short		9,891		10,316		9,673
Cash collateral on securities lent		3,041		2,850		4,306
Secured borrowings		52,904		51,308		43,518
Capital Trust securities		1,617		1,594		1,600
Obligations related to securities sold under repurchase agreements		7,803		8,564		20,651
Other
Derivative instruments		26,166		28,792		25,363
Acceptances		9,032		9,489		7,633
Other liabilities		11,256		11,704		12,239
		46,454		49,985		45,235
Subordinated indebtedness		5,112		5,138		4,773
Equity
Preferred shares (Note 6)		2,006		2,756		3,156
Common shares (Note 6)		7,697		7,376		6,804
Contributed surplus		86		93		98
Retained earnings		6,276		5,457		4,157
Accumulated other comprehensive income (AOCI)		201		245		416
Total shareholders' equity		16,266		15,927		14,631
Non-controlling interests		163		164		168
Total equity		16,429		16,091		14,799
	$	387,458	$	383,758	$	379,308

The accompanying notes and shaded sections in "MD&A - Management of risk" are an integral part of these interim consolidated financial statements.

CONSOLIDATED STATEMENT OF INCOME

								For the three				For the six
								months ended				months ended
				2012		2012		2011		2012		2011
Unaudited, $ millions				Apr. 30		Jan. 31		Apr. 30		Apr. 30		Apr. 30
Interest income
Loans			$	2,454	$	2,540	$	2,499	$	4,994	$	5,085
Securities				363		388		355		751		703
Securities borrowed or purchased under resale agreements				77		76		87		153		183
Deposits with banks				9		11		14		20		32
				2,903		3,015		2,955		5,918		6,003
Interest expense
Deposits				620		622		634		1,242		1,307
Secured borrowings				290		293		308		583		617
Securities sold short				77		87		101		164		194
Securities lent or sold under repurchase agreements				41		52		72		93		154
Subordinated indebtedness				52		52		55		104		110
Capital Trust securities				36		36		35		72		69
Other				34		31		19		65		51
				1,150		1,173		1,224		2,323		2,502
Net interest income				1,753		1,842		1,731		3,595		3,501
Non-interest income
Underwriting and advisory fees				114		107		128		221		290
Deposit and payment fees				188		190		183		378		369
Credit fees				98		97		92		195		184
Card fees				149		164		145		313		301
Investment management and custodial fees				105		102		103		207		203
Mutual fund fees				219		212		214		431		421
Insurance fees, net of claims				80		82		73		162		152
Commissions on securities transactions				107		101		138		208		277
Trading income				60		61		62		121		133
AFS securities gains, net				81		52		35		133		96
FVO losses, net				(30)		(24)		(41)		(54)		(103)
Foreign exchange other than trading				35		30		43		65		115
Income from equity-accounted associates and joint ventures				24		62		15		86		75
Other				101		79		94		180		95
				1,331		1,315		1,284		2,646		2,608
Total revenue				3,084		3,157		3,015		6,241		6,109
Provision for credit losses (Note 4)				308		338		245		646		528
Non-interest expenses
Employee compensation and benefits				994		1,013		948		2,007		1,976
Occupancy costs				172		173		166		345		328
Computer, software and office equipment				256		241		245		497		488
Communications				76		79		76		155		150
Advertising and business development				52		49		51		101		97
Professional fees				43		39		41		82		77
Business and capital taxes				10		13		10		23		22
Other				161		184		219		345		423
				1,764		1,791		1,756		3,555		3,561
Income before income taxes				1,012		1,028		1,014		2,040		2,020
Income taxes				201		193		247		394		490
Net income			$	811	$	835	$	767	$	1,646	$	1,530

Net income attributable to non-controlling interests			$	1	$	3	$	3	$	4	$	6

	Preferred shareholders		$	44	$	56	$	42	$	100	$	84
	Common shareholders			766		776		722		1,542		1,440
Net income attributable to equity shareholders			$	810	$	832	$	764	$	1,642	$	1,524
Earnings per share (in dollars) (Note 9)		- Basic	$	1.90	$	1.94	$	1.83	$	3.84	$	3.65
		- Diluted		1.90		1.93		1.80		3.83		3.60
Dividends per common share (in dollars)				0.90		0.90		0.87		1.80		1.74

The accompanying notes and shaded sections in "MD&A - Management of risk" are an integral part of these interim consolidated financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

							For the three			For the six
							months ended			months ended
			2012		2012		2011		2012		2011
Unaudited, $ millions			Apr. 30		Jan. 31		Apr. 30		Apr. 30		Apr. 30
Net income		$	811	$	835	$	767	$	1,646	$	1,530
Other comprehensive income (OCI), net of tax
	Net foreign currency translation adjustments
	Net gains (losses) on investments in foreign operations		(95)		41		(272)		(54)		(365)
	Net (gains) losses on investments in foreign operations reclassified to net income		-		1		-		1		-
	Net gains (losses) on hedges of investments in foreign operations		39		(19)		84		20		113
	Net (gains) losses on hedges of investments in foreign operations reclassified to net income		-		(1)		-		(1)		-
			(56)		22		(188)		(34)		(252)
	Net change in AFS securities
	Net gains (losses) on AFS securities		(2)		85		26		83		(16)
	Net (gains) losses on AFS securities reclassified to net income		(57)		(40)		(8)		(97)		(63)
			(59)		45		18		(14)		(79)
	Net change in cash flow hedges
	Net gains (losses) on derivatives designated as cash flow hedges		(3)		3		(9)		-		(27)
	Net (gains) losses on derivatives designated as cash flow hedges reclassified to net income		(1)		5		7		4		11
			(4)		8		(2)		4		(16)
Total OCI⁽¹⁾			(119)		75		(172)		(44)		(347)
Comprehensive income		$	692	$	910	$	595	$	1,602	$	1,183
Comprehensive income attributable to non-controlling interests		$	1	$	3	$	3	$	4	$	6
	Preferred shareholders	$	44	$	56	$	42	$	100	$	84
	Common shareholders		647		851		550		1,498		1,093
Comprehensive income attributable to equity shareholders		$	691	$	907	$	592	$	1,598	$	1,177
(1)	Includes $4 million of gains for the quarter ended April 30, 2012 (January 31, 2012: $3 million of gains; April 30, 2011: $3 million of losses) and $7 million of gains for the six months ended April 30, 2012 (April 30, 2011: $7 million of losses) relating to our investments in equity-accounted associates and joint ventures.

				For the three				For the six
				months ended				months ended
		2012		2012		2011		2012		2011
Unaudited, $ millions		Apr. 30		Jan. 31		Apr. 30		Apr. 30		Apr. 30
Income tax (expense) benefit
	Net foreign currency translation adjustments
	Net gains (losses) on investments in foreign operations	$	3	$	(1)	$	1	$	2	$	1
	Net gains (losses) on hedges of investments in foreign operations		(9)		5		(18)		(4)		(25)
			(6)		4		(17)		(2)		(24)
	Net change in AFS securities
	Net gains (losses) on AFS securities		12		(34)		(3)		(22)		5
	Net (gains) losses on AFS securities reclassified to net income		25		15		6		40		40
			37		(19)		3		18		45
	Net change in cash flow hedges
	Net gains (losses) on derivatives designated as cash flow hedges		3		(2)		1		1		9
	Net (gains) losses on derivatives designated as cash flow hedges reclassified to net income		(1)		(1)		-		(2)		(3)
			2		(3)		1		(1)		6
		$	33	$	(18)	$	(13)	$	15	$	27

The accompanying notes and shaded sections in "MD&A - Management of risk" are an integral part of these interim consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

							For the three				For the six
							months ended				months ended
			2012		2012		2011		2012		2011
Unaudited, $ millions			Apr. 30		Jan. 31		Apr. 30		Apr. 30		Apr. 30
Preferred shares
Balance at beginning of period		$	2,306	$	2,756	$	3,156	$	2,756	$	3,156
Redemption of preferred shares			(300)		(450)		-		(750)		-
Balance at end of period		$	2,006	$	2,306	$	3,156	$	2,006	$	3,156
Common shares
Balance at beginning of period		$	7,537	$	7,376	$	6,951	$	7,376	$	6,804
Issue of common shares			156		161		165		317		312
Treasury shares			4		-		-		4		-
Balance at end of period		$	7,697	$	7,537	$	7,116	$	7,697	$	7,116
Contributed surplus
Balance at beginning of period		$	87	$	93	$	98	$	93	$	98
Stock option expense			1		3		1		4		2
Stock options exercised			(2)		(9)		(7)		(11)		(9)
Other			-		-		(2)		-		(1)
Balance at end of period		$	86	$	87	$	90	$	86	$	90
Retained earnings
Balance at beginning of period		$	5,873	$	5,457	$	4,533	$	5,457	$	4,157
Net income attributable to equity shareholders			810		832		764		1,642		1,524
Dividends
	Preferred		(32)		(38)		(42)		(70)		(84)
	Common		(364)		(360)		(344)		(724)		(686)
Premium on redemption of preferred shares			(12)		(18)		-		(30)		-
Other			1		-		-		1		-
Balance at end of period		$	6,276	$	5,873	$	4,911	$	6,276	$	4,911
AOCI, net of tax
	Net foreign currency translation adjustments
	Balance at beginning of period	$	(66)	$	(88)	$	(64)	$	(88)	$	-
	Net change in foreign currency translation adjustments		(56)		22		(188)		(34)		(252)
	Balance at end of period	$	(122)	$	(66)	$	(252)	$	(122)	$	(252)
	Net gains (losses) on AFS securities
	Balance at beginning of period	$	383	$	338	$	300	$	338	$	397
	Net change in AFS securities		(59)		45		18		(14)		(79)
	Balance at end of period	$	324	$	383	$	318	$	324	$	318
	Net gains (losses) on cash flow hedges
	Balance at beginning of period	$	3	$	(5)	$	5	$	(5)	$	19
	Net change in cash flow hedges		(4)		8		(2)		4		(16)
	Balance at end of period	$	(1)	$	3	$	3	$	(1)	$	3
Total AOCI, net of tax		$	201	$	320	$	69	$	201	$	69
Non-controlling interests
Balance at beginning of period		$	163	$	164	$	163	$	164	$	168
Net income attributable to non-controlling interests			1		3		3		4		6
Dividends			-		(2)		-		(2)		(4)
Other			(1)		(2)		(9)		(3)		(13)
Balance at end of period		$	163	$	163	$	157	$	163	$	157
Equity at end of period		$	16,429	$	16,286	$	15,499	$	16,429	$	15,499

The accompanying notes and shaded sections in "MD&A - Management of risk" are an integral part of these interim consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

								For the three				For the six
								months ended				months ended
				2012		2012		2011		2012		2011
Unaudited, $ millions				Apr. 30		Jan. 31		Apr. 30		Apr. 30		Apr. 30
Cash flows provided by (used in) operating activities
Net income			$	811	$	835	$	767	$	1,646	$	1,530
Adjustments to reconcile net income to cash flows provided by (used in) operating activities:
	Provision for credit losses			308		338		245		646		528
	Amortization ⁽¹⁾			92		91		89		183		178
	Stock option expense			1		3		1		4		2
	Deferred income taxes			(51)		15		160		(36)		378
	AFS securities gains, net			(81)		(52)		(35)		(133)		(96)
	Net gains on disposal of land, buildings and equipment			-		-		(1)		-		(4)
	Other non-cash items, net			(20)		131		3		111		(114)
	Net changes in operating assets and liabilities
		Interest-bearing deposits with banks		788		(1,084)		(16,141)		(296)		(25,600)
		Loans, net of repayments		(1,669)		(2,951)		(1,817)		(4,620)		(3,324)
		Deposits, net of withdrawals		1,536		4,580		19,613		6,116		30,930
		Obligations related to securities sold short		1,532		(1,957)		1,219		(425)		2,996
		Accrued interest receivable		(42)		5		(51)		(37)		96
		Accrued interest payable		206		(368)		199		(162)		(153)
		Derivative assets		4,439		(3,095)		(1,878)		1,344		3,260
		Derivative liabilities		(4,639)		3,616		1,820		(1,023)		(3,444)
		Trading securities		(2,069)		(2,869)		(5,954)		(4,938)		(9,494)
		FVO securities		40		67		324		107		298
		Other FVO assets and liabilities		(200)		125		(239)		(75)		(473)
		Current income taxes		53		(555)		39		(502)		(67)
		Cash collateral on securities lent		840		(649)		1,419		191		592
		Obligations related to securities sold under repurchase agreements		(3,043)		2,282		(2,693)		(761)		(439)
		Secured borrowings		203		1,456		299		1,659		3,115
		Cash collateral on securities borrowed		(1,250)		(28)		(1,915)		(1,278)		(809)
		Securities purchased under resale agreements		(609)		2,806		4,077		2,197		(623)
		Other, net		(16)		(354)		386		(370)		917
				(2,840)		2,388		(64)		(452)		180
Cash flows provided by (used in) financing activities
Issue of subordinated indebtedness				-		-		-		-		1,500
Redemption/repurchase of subordinated indebtedness				-		-		(1,080)		-		(1,080)
Redemption of preferred shares				(312)		(468)		-		(780)		(604)
Issue of common shares, net				156		161		165		317		312
Net proceeds from treasury shares				4		-		-		4		-
Dividends paid				(396)		(398)		(386)		(794)		(770)
Other, net				(1)		(9)		99		(10)		204
				(549)		(714)		(1,202)		(1,263)		(438)
Cash flows provided by (used in) investing activities
Purchase of AFS securities				(8,487)		(14,408)		(7,201)		(22,895)		(15,914)
Proceeds from sale of AFS securities				5,485		6,727		4,603		12,212		7,006
Proceeds from maturity of AFS securities				7,139		6,087		4,401		13,226		9,367
Net cash used in acquisitions				-		(3)		(6)		(3)		(12)
Net purchase of land, buildings and equipment				(53)		(45)		(53)		(98)		(80)
				4,084		(1,642)		1,744		2,442		367
Effect of exchange rate changes on cash and non-interest-bearing deposits with banks				(10)		2		(27)		(8)		(35)
Net increase (decrease) in cash and non-interest-bearing deposits with banks during period				685		34		451		719		74
Cash and non-interest-bearing deposits with banks at beginning of period				1,515		1,481		1,440		1,481		1,817
Cash and non-interest-bearing deposits with bank at end of period⁽²⁾			$	2,200	$	1,515	$	1,891	$	2,200	$	1,891
Cash interest paid			$	944	$	1,541	$	1,025	$	2,485	$	2,655
Cash income taxes paid				199		733		48		932		179
Cash interest and dividends received				2,861		3,020		2,904		5,881		6,099

(1) Comprises amortization of buildings, furniture, equipment, leasehold improvements, and software and other intangible assets.
(2) Includes restricted cash balances of $292 million (January 31, 2012: $252 million; April 30, 2011: $238 million).

The accompanying notes and shaded sections in "MD&A - Management of risk" are an integral part of these interim consolidated financial statements.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of preparation and summary of significant accounting policies

Basis of preparation
The interim consolidated financial statements of CIBC are prepared in accordance with Section 308(4) of the Bank Act which states that, except as otherwise specified by the Office of the Superintendent of Financial Institutions (OSFI), the financial statements are to be prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). There are no accounting requirements of OSFI that are exceptions to IFRS.

These interim consolidated financial statements have been prepared in accordance with IAS 34 "Interim Financial Statements" and IFRS 1 "First-time Adoption of International Financial Reporting Standards".

An explanation of how the transition to IFRS has affected the equity, net income, comprehensive income, and cash flows of CIBC is provided in Note 12.

Subject to certain transitional elections disclosed in Note 12, CIBC has consistently applied the same accounting policies in preparing its opening IFRS consolidated balance sheet as at November 1, 2010 and throughout all periods presented, as if these policies had always been applied.

While these interim consolidated financial statements do not include all of the information required for full annual consolidated financial statements, Note 13 discloses additional IFRS information for the year ended October 31, 2011 that helps to provide an understanding of the comparative IFRS financial information in Note 12 as at and for the year ended October 31, 2011.

These interim consolidated financial statements are presented in Canadian dollars, unless otherwise indicated, which is CIBC's functional currency.

These interim consolidated financial statements were authorized for issue by the Board of Directors on May 30, 2012.

Summary of significant accounting policies
The following paragraphs describe our significant accounting policies.

Use of estimates and assumptions
The preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the recognized and measured amounts of assets, liabilities, net income, comprehensive income and related disclosures. Estimates and assumptions are made in the areas of determining the fair value of financial instruments, the allowance for credit losses, the evaluation of control of special purpose entities (SPEs), asset impairment, income taxes, contingent liabilities and employee benefits. Actual results could differ from these estimates and assumptions.

Basis of consolidation
Subsidiaries
Subsidiaries are entities over which CIBC has control, where control is defined as the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. Control is presumed to exist where we hold, either directly or indirectly, 50% or more of the voting rights of an entity. Generally, CIBC has a shareholding of more than 50% of the voting rights in its subsidiaries. The effect of potential voting rights that are currently exercisable are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date control is obtained by CIBC, and are deconsolidated from the date that control is lost. Consistent accounting policies are applied throughout CIBC for the purposes of consolidation. Details of our principal subsidiaries are provided in Note 28 to our 2011 annual consolidated financial statements.

Special purpose entities
SPEs are created to accomplish a narrow and well-defined objective. We consolidate a SPE if an assessment of the relevant factors indicates that we control the SPE. The assessment of whether we have control over a SPE is performed at inception and is based on an evaluation of the substance of our relationship with the SPE and the risks and rewards.

The following factors may indicate a relationship in which we in substance control and consequently consolidate a SPE:

the activities of the SPE are being conducted according to our specific business needs so that we obtain benefits from the SPE's operations;
we have the decision-making powers to obtain the majority of the benefits of the activities of the SPE or, by setting up an 'autopilot' mechanism, we have delegated these decision-making powers;
we have rights to obtain the majority of the benefits of the SPE and therefore may be exposed to risks incidental to the activities of the SPE; or
we retain the majority of the residual or ownership risks related to the SPE or its assets in order to obtain benefits from the SPE's activities.

Consolidation conclusions are reassessed whenever there is a change in the substance of the relationship with a SPE. Factors that trigger the reassessment include, but are not limited to, significant changes in ownership structure of the SPE, changes in contractual or governance arrangements, provision of a liquidity facility beyond the original terms, transactions with the SPE that were not contemplated originally and changes in the financing structure of the SPE. As part of the reassessment process, we update assumptions with respect to loss probabilities, the likelihood of additional liquidity facilities being drawn in the future and the likelihood of future actions being taken for reputational or other purposes. All currently available information is taken into account.

Transactions eliminated on consolidation
All intercompany transactions, balances and unrealized gains and losses on transactions are eliminated on consolidation.

Non-controlling interests
Non-controlling interests (NCI) are presented on the consolidated balance sheet as a separate component of equity that is distinct from CIBC's shareholders' equity. The net income attributable to non-controlling interests is presented separately in the consolidated statement of income.

Associates and joint ventures
We classify investments in entities over which we have significant influence, and that are neither subsidiaries nor joint ventures, as associates. Where we are a party to a contractual arrangement whereby, together with one or more parties, we undertake an economic activity that is subject to joint control, we classify our interest in the venture as a joint venture.

Investments in associates and interests in joint ventures are accounted for using the equity method. Under the equity method, such investments are initially measured at cost, including attributable goodwill and intangible assets, and are adjusted thereafter for the post-acquisition change in our share of the net assets of the investment.

Profits on transactions with our associates and joint ventures are eliminated to the extent of our interest in the respective associates or joint ventures. Losses are also eliminated to the extent of our interest in the associates or joint ventures unless the transaction provides evidence of an impairment of the asset transferred.

Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currencies of operations at prevailing exchange rates at the date of the consolidated balance sheet. Non-monetary assets and liabilities are translated into functional currencies at historical rates. Revenue and expenses are translated using average monthly exchange rates. Realized and unrealized gains and losses arising from translation into functional currencies are included in the consolidated statement of income.

Assets and liabilities of foreign operations with a functional currency other than the Canadian dollar, including goodwill and fair value adjustments arising on acquisition, are translated into Canadian dollars at the exchange rates prevailing as at the reporting date, while revenue and expenses of these foreign operations are translated into Canadian dollars at the average monthly exchange rates. Exchange gains and losses arising from the translation of these foreign operations and from the results of hedging the net investment in these foreign operations, net of applicable taxes, are included in Net foreign currency translation adjustments, which is included in AOCI. A deferred income tax asset or liability is not recognized in respect of a translation gain or loss arising from an investment in a foreign operation when the gain or loss is not expected to be realized for tax purposes in the foreseeable future.

Any accumulated exchange gains and losses and any applicable taxes in AOCI are reclassified into the consolidated statement of income when there is a disposal of a foreign operation. A disposal occurs when we have lost control, significant influence or joint control of a foreign operation. A partial disposal occurs when there has been any reduction in our ownership interest of a foreign operation other than that described above. On partial disposal of a foreign operation, the proportionate share of the accumulated exchange gains and losses and any applicable taxes previously recognized in AOCI are reclassified into the consolidated statement of income.

Classification and measurement of financial assets and liabilities
CIBC recognizes financial instruments on its consolidated balance sheet when it becomes a party to the contractual provisions of the instrument.

All financial assets must be classified at initial recognition as trading, AFS, designated at fair value (fair value option - FVO), held-to-maturity (HTM), or loans and receivables, based on the purpose for which the instrument was acquired and its characteristics. All financial assets and derivatives are required to be measured at fair value with the exception of loans and receivables, debt securities classified as HTM, and AFS equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured. Reclassification of non-derivative financial assets from trading to AFS or HTM is allowed under rare circumstances. Such reclassifications are only permitted when there has been a change in management's intent with respect to a particular non-derivative financial asset. In addition, reclassification of non-derivative financial assets from trading to loans and receivables is allowed if they meet the definition of loans and receivables and we have the intention and ability to hold the financial assets for the foreseeable future or until maturity.

Financial liabilities, other than derivatives, obligations related to securities sold short and FVO liabilities, are measured at amortized cost. Derivatives, obligations related to securities sold short and FVO liabilities are measured at fair value. Interest expense is recognized on an accrual basis using the effective interest method.

Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that do not have a quoted market price in an active market and that we did not intend to sell immediately or in the near term at the time of inception. Loans and receivables are recognized initially at fair value, which represents the cash advanced to the borrower plus direct and incremental transaction costs. Subsequently, they are measured at amortized cost, using the effective interest method, net of an allowance for credit losses. Interest income is recognized on an accrual basis using the effective interest method. Refer to the "Impairment of financial assets" policy for our accounting for impaired loans. Certain loans and receivables may be designated at fair value (see below).

Trading financial instruments
Trading financial instruments are assets and liabilities held for trading activities or that are part of a managed portfolio with a pattern of short-term profit taking. These are measured initially at fair value. Loans and receivables that we intend to sell immediately or in the near term are classified as trading financial instruments.

Trading financial instruments are re-measured at fair value as at the reporting date. Gains and losses realized on disposition and unrealized gains and losses from changes in fair value are included in Non-interest income as Trading income (loss) except to the extent they are economically hedging a FVO asset or liability, in which case the gains and losses are included in FVO (losses) gains, net. Dividends and interest income earned and interest expense incurred are included in Interest income and Interest expense, respectively.

AFS financial assets
AFS financial assets are those non-derivative financial assets that are not classified as trading, FVO or loans and receivables, and are measured initially at fair value, plus direct and incremental transactions costs. Only equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. We have determined that all of our equity securities have reliable fair values. As a result, all AFS financial assets are re-measured at fair value through OCI subsequent to initial recognition, except that, foreign exchange gains or losses on AFS debt instruments are recognized in the consolidated statement of income. Foreign exchange gains or losses on AFS equity securities, along with all other fair value changes, are recognized in OCI until the investment is sold or impaired, whereupon the cumulative gains and losses previously recognized in OCI are transferred from AOCI to the consolidated statement of income. Realized gains and losses on sale, determined on an average cost basis, and write-downs to reflect impairment, are included in AFS securities gains (losses), net. Dividends and interest income from AFS financial assets are included in Interest income.

Refer to the "Impairment of financial assets" policy for our accounting for the impairment of AFS financial assets.

Designated at fair value financial instruments
FVO financial instruments are those that we designate on initial recognition as instruments that we will measure at fair value through the consolidated statement of income. This designation, once made, is irrevocable. In addition to the requirement that reliable fair values are available, there are restrictions imposed by IFRS and by OSFI on the use of this designation. The criteria for applying the FVO is met when: (i) the application of the FVO eliminates or significantly reduces the measurement inconsistency that would arise from measuring assets or liabilities on a different basis, or (ii) the financial instruments are part of a portfolio which is managed on a fair value basis, in accordance with our investment strategy, and are reported internally on that basis. FVO also includes financial liabilities that have one or more embedded derivatives that significantly modify the cash flows of the contract but are not bifurcated.

Gains and losses realized on dispositions and unrealized gains and losses from changes in fair value of FVO financial instruments, and gains and losses arising from changes in fair value of derivatives, trading securities and obligations related to securities sold short that are managed in conjunction with FVO financial instruments, are included in FVO (losses) gains, net. Dividends and interest earned and interest expense incurred on FVO assets and liabilities are included in Interest income and Interest expense, respectively.

Determination of fair value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability at the measurement date in an orderly arm's length transaction between knowledgeable and willing market participants motivated by normal business considerations. Fair value measurements are categorized into levels within a fair value hierarchy based on the nature of the valuation inputs (Level 1, 2 or 3). See Note 13 for more details about fair value measurement subsequent to initial recognition by type of financial instrument.

Transaction costs
Transaction costs relating to trading and FVO financial instruments are expensed as incurred. Transaction costs for all other financial instruments are generally capitalized. For debt instruments, transaction costs are amortized over the expected life of the instrument using the effective interest method. For equity instruments, transaction costs are included in the carrying value.

Date of recognition of securities
We account for all securities on the consolidated balance sheet using settlement date accounting.

Effective interest rate
Interest income and expense for all financial instruments measured at amortized cost and for AFS debt securities is recognized in Interest income and Interest expense using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument to the net carrying value of the financial asset or liability upon initial recognition. When calculating the effective interest rate, we estimate future cash flows considering all contractual terms of the financial instrument, but not future credit losses.

Fees related to loan origination, including commitment, restructuring and renegotiation fees, are considered an integral part of the yield earned on the loan and are accounted for using the effective interest method. Fees received for commitments that are not expected to result in a loan are included in Non-interest income over the commitment period. Loan syndication fees are included in Non-interest income on completion of the syndication arrangement, provided that the yield on the portion of the loan we retain is at least equal to the average yield earned by the other lenders involved in the financing; otherwise, an appropriate portion of the fee is deferred as unearned income and amortized to interest income using the effective interest method.

Securities purchased under resale agreements and obligations related to securities sold under repurchase agreements
Securities pur