CIBC Announces Third Quarter 2012 Results

CIBC Announces Third Quarter 2012 Results

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Aug 30, 2012, 05:33 ET

TORONTO, Aug. 30, 2012 /CNW/ - CIBC (TSX: CM) (NYSE: CM) reported today net income of $841 million for the third quarter ended July 31, 2012, compared with net income of $591 million for the same period last year. Reported diluted earnings per share (EPS) were $2.00, compared with reported diluted EPS of $1.33 a year ago. Adjusted diluted EPS were $2.06⁽¹⁾, compared with adjusted diluted EPS of $1.93⁽¹⁾ a year ago. Return on common shareholders' equity for the third quarter was 21.8%.

Results for the third quarter of 2012 were affected by the following items of note netting to a negative impact of $0.06 per share:

$26 million ($19 million after-tax or $0.05 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 $841 million for the third quarter compared with reported net income of $811 million for the prior quarter. Reported diluted EPS and adjusted diluted EPS of $2.00 and $2.06⁽¹⁾, respectively,for the third quarter compared with reported diluted EPS and adjusted diluted EPS of $1.90 and $2.00⁽¹⁾, respectively, for the prior quarter.

CIBC's Tier 1 Capital and Tangible Common Equity ratios at July 31, 2012 were 14.1% and 11.3%⁽¹⁾, respectively, compared to 14.1% and 11.0%⁽¹⁾, respectively, at April 30, 2012. CIBC currently exceeds the minimum requirements as proposed by the Basel Committee on Banking Supervision and the Office of the Superintendent of Financial Institutions, while continuing to invest for future growth.

CIBC announced a quarterly dividend increase of 4 cents or 4.4% per share on common shares for the quarter ending October 31, 2012. We also announced our intention to purchase for cancellation up to a maximum of 8.1 million or approximately 2% of our outstanding common shares, subject to the approval of the Toronto Stock Exchange, under a normal course issuer bid over the next 12 months.

"CIBC's solid results in the third quarter reflect broad-based performance across our core businesses," says Gerry McCaughey, President and Chief Executive Officer. "The dividend increase announced today, and our intention to repurchase common shares, reflects our confidence and underscores our commitment to creating value for our shareholders."

Core business performance
Retail and Business Banking reported net income of $594 million for the third quarter, up from $551 million for the same quarter last year.

Revenue of $2.1 billion was up 2% from the third quarter of 2011, primarily due to volume growth across most products and higher fees, partially offset by narrower spreads.

Provision for credit losses of $273 million was down $18 million from the same quarter last year due to lower write-offs and bankruptcies in the cards portfolio, partially offset by higher losses in the business and personal lending portfolios.

During the third 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 were named the Best Commercial Bank in Canada by World Finance magazine for our strong client focus, clear commitment to building long-term client relationships, investment in infrastructure and strong management focus on strategic priorities in challenging market conditions;
We continue to migrate business clients to the new Cash Management Online platform with more than 40% of the clients migrated at the end of the third quarter and full migration targeted for completion in early 2013;
We have rolled out the CIBC Home Power Plan in Alberta and British Columbia. The new offer combines the benefits of a traditional mortgage and a line of credit to give clients a long-term borrowing solution resulting in a deeper, longer term relationship with CIBC;
We continue to invest in a strong distribution network. As of the third quarter we have added 16 new, relocated or expanded branches. In addition, by the end of September, we will provide our clients even greater access by expanding our business hours - more than half of our branches will be open on Saturdays, we will double the number of branches open Sundays and we will be open later on weekdays at most of our branches across the country;
As part of our strategic focus to deepen relationships with our clients, we have introduced "Next Best Offer" in our client contact centres and branches. This shifts sales leads from a product focus to a client focus by providing our frontline sales teams with the best offer based on the client's current holdings; and
We implemented a national advertising campaign that highlights our leadership position as Canada's strongest bank, as awarded by Bloomberg, as well as our ongoing leadership position in mobile banking.

Wealth Management reported net income of $76 million for the third quarter, up from $70 million or 9% for the same quarter last year.

Revenue of $401 million was comparable to the third quarter of 2011. Lower commissions from equity trading and new issuance activity were offset by income from our proportionate share in American Century Investments.

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

As of the third quarter we have transitioned over $1.8 billion in retail sub-advised funds to American Century Investments; and
Subsequent to quarter end, we announced that CIBC will acquire the private wealth business of MFS McLean Budden to build on our strategic priority of strengthening relationships with high-net-worth clients and enhance distribution capabilities while delivering attractive returns.

Wholesale Banking reported net income of $156 million for the third quarter, up $25 million from the prior quarter, in an environment that continues to be challenging. Higher revenue from corporate and investment banking and capital markets were partially offset by a higher provision for credit losses.

Revenue of $527 million was up $64 million from the prior quarter, primarily due to higher investment gains, and higher credit and trading revenue, partially offset by lower equity underwriting activity. The prior quarter included a hedge accounting loss on leveraged leases.

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

CIBC acted as joint lead manager and lead co-ordinator on Canada Housing Trust's $5.0 billion, 5-year offering and $4.5 billion, 2-tranche 5 & 10 year offering;
CIBC acted as financial advisor to the Maple Group on its $3.8 billion acquisition of the TMX Group, as well as acting as joint underwriter on the $1.9 billion acquisition financing to support the Maple Group;
CIBC acted as financial advisor to Starlight Investments on its acquisition of TransGlobe Apartment Real Estate Investment Trust for $2.3 billion, as well as acting as sole underwriter, arranger and bookrunner on $499 million of financings to support Starlight Investment Limited, PSPIB and Timbercreek Asset Management on their acquisition of TransGlobe Apartment REIT;
CIBC acted as joint bookrunner of Fortis Inc.'s $601 million subscription receipt offering;
CIBC acted as joint bookrunner on Inter Pipeline Fund's $400 million bond offering; and
Post quarter-end, CIBC entered into an agreement to acquire Griffis & Small, LLC, a Houston-based energy advisory firm specializing in acquisitions and divestitures in the exploration and production sector.

"CIBC's third quarter results reflect our strong focus on our clients as well as our underlying business fundamentals," says Mr. McCaughey. "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."

CIBC in our communities

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

Thirty grade 10 students across Canada were awarded a 2012 CIBC Youthvision Scholarship. Each award, valued at up to $38,500, provides the recipients with up to six summer internships at the YMCA beginning after grade 10, up to $4,000 towards tuition for four years, and ongoing mentoring from Big Brothers, Big Sisters or the YMCA. The scholarships target youth who may not have the financial means or support system to easily pursue a post-secondary education;
CIBC continued its strong commitment to bringing hope and support to those living with cancer during the quarter. The CIBC co-sponsored Pink Tour hit the road in Ontario providing mobile breast health education to over 26,000 visitors in 60 communities; the 2012 CIBC Pink Collection^TM launched nationally to raise funds for the Canadian Breast Cancer Foundation; and CIBC employees and clients raised $575,000 for cancer research through the Tour CIBC Charles Bruneau - a 600 km four-day cycling fundraiser from Quebec to Montreal; and
As lead partner of the Toronto 2015 Pan/Parapan Am Games, CIBC joined the Games organizers in bringing Play Me, I'm Yours to life in Toronto to mark the three year countdown to the Games. Play Me, I'm Yours is an interactive art project that invited the community to play 41 pianos, representing the countries participating in the Games, at various locations around the city including six CIBC branch locations.

________________________________________________

⁽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 third 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 third 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 July 31, 2012, compared with prior quarters. The MD&A should be read in conjunction with our 2011 Annual Report, 2012 second quarter interim 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 August 29, 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 13 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", "Overview - Income Taxes", "Overview - Significant Events", "Overview - Outlook for calendar year 2012", "Wholesale Banking - Structured credit run-off business", "Capital Resources", "Management of Risk - Credit Risk", "Management of Risk - Liquidity Risk", 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.

THIRD QUARTER FINANCIAL HIGHLIGHTS


							As at or for the						As at or for the
							three months ended						nine months ended
				2012			2012			2011			2012			2011
Unaudited				Jul. 31			Apr. 30			Jul. 31			Jul. 31			Jul. 31
Financial results ($ millions)
Net interest income			$	1,883		$	1,753		$	1,785		$	5,478		$	5,286
Non-interest income				1,266			1,331			1,346			3,912			3,954
Total revenue				3,149			3,084			3,131			9,390			9,240
Provision for credit losses				317			308			310			963			838
Non-interest expenses				1,831			1,764			2,005			5,386			5,566
Income before taxes				1,001			1,012			816			3,041			2,836
Income taxes				160			201			225			554			715
Net income			$	841		$	811		$	591		$	2,487		$	2,121
Net income attributable to non-controlling interests			$	2		$	1		$	2		$	6		$	8
	Preferred shareholders			29			44			55			129			139
	Common shareholders			810			766			534			2,352			1,974
Net income attributable to equity shareholders			$	839		$	810		$	589		$	2,481		$	2,113
Financial measures
Reported efficiency ratio				58.1	%		57.2	%		64.0	%		57.4	%		60.2	%
Adjusted efficiency ratio ⁽¹⁾				56.1	%		55.1	%		55.9	%		55.5	%		55.6	%
Loan loss ratio ⁽²⁾				0.52	%		0.53	%		0.53	%		0.53	%		0.51	%
Return on common shareholders' equity				21.8	%		22.1	%		17.1	%		22.1	%		22.0	%
Net interest margin				1.87	%		1.82	%		1.76	%		1.85	%		1.80	%
Net interest margin on average interest-earning assets ⁽³⁾				2.18	%		2.11	%		1.98	%		2.15	%		2.02	%
Return on average assets ⁽⁴⁾				0.84	%		0.84	%		0.58	%		0.84	%		0.72	%
Return on average interest-earning assets ⁽³⁾⁽⁴⁾				0.98	%		0.98	%		0.66	%		0.98	%		0.81	%
Total shareholder return				(0.33)	%		(1.12)	%		(9.89)	%		1.29	%		(3.61)	%
Common share information
Per share ($)
		- basic earnings	$	2.00		$	1.90		$	1.35		$	5.83		$	4.99
		- reported diluted earnings		2.00			1.90			1.33			5.83			4.93
		- adjusted diluted earnings ⁽¹⁾		2.06			2.00			1.93			6.03			5.80
		- dividends		0.90			0.90			0.87			2.70			2.61
		- book value		36.57			35.22			31.83			36.57			31.83
Share price ($)
		- high		74.68			78.00			84.45			78.00			85.49
		- low		69.70			73.27			72.75			68.43			72.75
		- closing		73.35			74.53			72.98			73.35			72.98
Shares outstanding (thousands)
		- weighted-average basic		405,165			403,058			397,232			403,108			395,265
		- weighted-average diluted		405,517			403,587			410,185			403,571			408,122
		- end of period		405,626			404,945			398,856			405,626			398,856
Market capitalization ($ millions)			$	29,753		$	30,181		$	29,109		$	29,753		$	29,109
Value measures
Dividend yield (based on closing share price)				4.9	%		4.9	%		4.7	%		4.9	%		4.8	%
Reported dividend payout ratio				45.0	%		47.4	%		64.6	%		46.3	%		52.3	%
Adjusted dividend payout ratio⁽¹⁾				43.7	%		45.0	%		45.0	%		44.7	%		45.0	%
Market value to book value ratio				2.01			2.12			2.29			2.01			2.29
On- and off-balance sheet information ($ millions)
Cash, deposits with banks and securities			$	70,776		$	68,695		$	75,467		$	70,776		$	75,467
Loans and acceptances, net of allowance				253,616			251,487			244,822			253,616			244,822
Total assets				401,010			387,458			392,646			401,010			392,646
Deposits				254,002			244,207			246,422			254,002			246,422
Secured borrowings				51,094			52,904			49,330			51,094			49,330
Common shareholders' equity				14,834			14,260			12,697			14,834			12,697
Average assets				400,543			391,646			401,315			396,136			393,226
Average interest-earning assets ⁽³⁾				342,883			337,852			357,473			340,117			349,171
Average common shareholders' equity				14,760			14,095			12,428			14,228			11,992
Assets under administration⁽⁵⁾				1,377,012			1,397,624			1,327,207			1,377,012			1,327,207
Balance sheet quality measures
Risk-weighted assets ($ billions) ⁽⁶⁾			$	114.9		$	113.3		$	109.0		$	114.9		$	109.0
Tangible common equity ratio ⁽¹⁾⁽⁶⁾				11.3	%		11.0	%		11.0	%		11.3	%		11.0	%
Tier 1 capital ratio ⁽⁶⁾				14.1	%		14.1	%		14.6	%		14.1	%		14.6	%
Total capital ratio ⁽⁶⁾				17.7	%		17.7	%		18.7	%		17.7	%		18.7	%
Other information
Retail / wholesale ratio ⁽¹⁾⁽⁷⁾				76 % / 24	%		76 % / 24	%		77 % / 23	%		76 % / 24	%		77 % / 23	%
Full-time equivalent employees				42,380			42,267			42,425			42,380			42,425

(1)	For additional information, see the "Non-GAAP measures" section.
(2)	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.
(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 $841 million, compared to $591 million for the same quarter last year and $811 million for the prior quarter. Net income for the nine months ended July 31, 2012 was $2,487 million, compared to $2,121 million for the same period in 2011.

Reported diluted earnings per share (EPS) for the quarter was $2.00, compared to $1.33 for the same quarter last year and $1.90 for the prior quarter. Reported diluted EPS for the nine months ended July 31, 2012 was $5.83, compared to $4.93 for the same period in 2011.

Adjusted diluted EPS⁽¹⁾ for the quarter was $2.06, compared to $1.93 for the same quarter last year and $2.00 for the prior quarter. Adjusted diluted EPS⁽¹⁾ for the nine months ended July 31, 2012 was $6.03, compared to $5.80 for the same period in 2011.

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

$26 million ($19 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 $98 million or 5% 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.

Net interest income was up $130 million or 7% from the prior quarter, primarily due to higher trading and treasury-related net interest income, more days in the quarter, and volume growth across retail products. The prior quarter included a hedge accounting loss on leveraged leases shown as an item of note below.

Net interest income for the nine months ended July 31, 2012 was up $192 million or 4% from the same period in 2011, primarily due to higher trading and treasury-related net interest income, volume growth across most retail products, partially offset by narrower spreads. The current year period included a hedge accounting loss on leveraged leases shown as an item of note below, while the prior year period had interest income on tax reassessments.

Non-interest income
Non-interest income was down $80 million or 6% from the same quarter last year. The current quarter had lower underwriting and advisory fees, and lower commissions on securities transactions.

Non-interest income was down $65 million or 5% from the prior quarter. The current quarter had lower trading income and lower gains net of write-downs on available-for-sale (AFS) securities.

Non-interest income for the nine months ended July 31, 2012 was down $42 million or 1% from the same period in 2011, primarily due to lower underwriting and advisory fees and lower commissions on securities transactions, partially offset by 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 Services business noted below.

Provision for credit losses
The provision for credit losses was up $7 million or 2% from the same quarter last year. In Retail and Business Banking, provisions were down due to lower write-offs and bankruptcies in the cards portfolio, partially offset by higher losses in the personal and business lending portfolios. In Wholesale Banking, provisions were up mainly due to higher losses in the U.S. real estate finance and Canadian credit portfolios. In Corporate and Other, the provisions related to CIBC FirstCaribbean International Bank (CIBC FirstCaribbean) and the collective allowance reported in this segment were comparable to the prior year quarter.

The provision for credit losses was up $9 million or 3% from the prior quarter. In Retail and Business Banking, higher losses in business lending were mostly offset by lower write-offs in the cards portfolio and lower losses in the personal lending portfolio. In Wholesale Banking, provisions were up mainly due to higher losses in the U.S. real estate finance and Canadian credit portfolios. In Corporate and Other, provisions were lower due to lower losses in CIBC FirstCaribbean. Provisions related to the collective allowance reported in Corporate and Other were comparable to the prior quarter.

The provision for credit losses for the nine months ended July 31, 2012 was up $125 million or 15% from the same period in 2011. In Retail and Business Banking, provisions were down due to higher recoveries and lower bankruptcies in the cards portfolio, partially offset by higher losses in the personal and business lending portfolios. In Wholesale Banking, provisions were up mainly due to higher losses in the U.S. real estate finance and Canadian credit portfolios. In Corporate and Other, provisions were up due to higher losses 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 nine months ended July 31, 2012, compared with the same period in 2011.

Non-interest expenses
Non-interest expenses were down $174 million or 9% compared to the same quarter last year, primarily due to the goodwill impairment charge related to CIBC FirstCaribbean in the prior year quarter. The current quarter had higher employee compensation and benefits.

Non-interest expenses were up $67 million or 4% from the prior quarter, primarily due to higher employee compensation and benefits, and advertising and business development expenses.

Non-interest expenses for the nine months ended July 31, 2012 were down $180 million or 3% from the same period in 2011, primarily due to the goodwill impairment charge related to CIBC FirstCaribbean in the prior year period and cost savings from operational efficiencies. The current period had higher employee compensation and benefits and occupancy costs.

Income taxes
Income tax expense was down $65 million or 29% 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. The current year quarter included a write-up of deferred income tax assets owing to recently enacted higher Ontario income tax rates. The prior year quarter included the CIBC FirstCaribbean goodwill impairment which was not tax-effected.

Income tax expense was down $41 million or 20% from the prior quarter, mainly due to the above-noted deferred income tax asset write-up, an increase in the relative proportion of income subject to lower tax rates and higher tax-exempt income.

Income tax expense for the nine months ended July 31, 2012 was down $161 million or 23%, from the same period in 2011, primarily due to a lower statutory tax rate, higher tax-exempt income, the above-noted write-up of deferred tax assets in the current quarter as compared with a write-down in the prior year period, and the favourable impact of tax reassessments. The prior year period included the CIBC FirstCaribbean goodwill impairment which was not tax-effected.

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 (and reconfirmed on July 5, 2012), 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 which is scheduled to be heard on November 21, 2012.

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 $181 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 nine
					months ended		months ended
			Jul. 31, 2012		Jul. 31, 2012		Jul. 31, 2012
			vs.		vs.		vs.
$ millions			Jul. 31, 2011		Apr. 30, 2012		Jul. 31, 2011
Estimated increase in:
	Total revenue	$	22	$	11	$	32
	Provision for credit losses		3		2		6
	Non-interest expense		8		4		14
	Net income		11		5		12
Average US$ appreciation
	relative to C$		6%		3%		3%

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.

Q2, 2012

$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.

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.

Q3, 2011

CIBC FirstCaribbean goodwill impairment of $203 million;
$14 million ($11 million after-tax) loss from the structured credit run-off business;
$8 million ($7 million after-tax) amortization of intangible assets; and
$12 million premium paid on preferred share redemptions.

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's Issuer Services business; and
$9 million ($7 million after-tax) amortization of intangible assets.

Significant events
TMX Group Limited
On July 31, 2012, Maple Group Acquisition Corporation (Maple), whose investors comprise CIBC and other leading Canadian financial institutions and pension funds, announced that all of the conditions to Maple's offer to acquire up to 80% of the TMX Group Inc. (TMX Group) shares for $50 per share in cash had been satisfied. Upon completion of its offer, Maple had taken up all of the approximately 95% of the outstanding TMX Group shares deposited under the offer. Upon completion of the subsequent plan of arrangement, the 20% of TMX Group shares not acquired for cash will be exchanged for Maple shares on a one-for-one basis. CIBC made a $194 million equity investment in Maple which upon completion will result in CIBC owning 6.7% of Maple. Maple's board of directors includes one nominee of CIBC.

On August 1, 2012, Maple completed the acquisitions of 100% of Alpha Trading Systems Inc., Alpha Trading Systems Limited Partnership and The Canadian Depository for Securities Limited which will result in an estimated combined after-tax gain, net of associated expenses, of $19 million to CIBC in the fourth quarter in relation to the sale of CIBC's prior interests in these entities. In addition, on August 1, 2012, as part of $1.9 billion in syndicated credit facilities underwritten by the banks of four Maple shareholders, CIBC provided a loan to Maple to support the transaction. Maple was renamed "TMX Group Limited" on August 10, 2012. The investment will be included in the Wholesale Banking SBU.

MFS McLean Budden
On August 7, 2012 CIBC announced that we will acquire the private wealth business of MFS McLean Budden, which has approximately $1.4 billion in assets under management for high-net-worth individuals and families, endowments and foundations. The transaction, which is conditional upon regulatory approval and other closing conditions, is expected to close in the fourth quarter. The acquired business will be consolidated from the date of close and the results will be included in the Wealth Management SBU.

FirstLine mortgages
During the quarter, we announced that effective July 31, 2012, we will no longer be accepting mortgages through our broker mortgage brand called FirstLine. As a result, we will be exiting from the broker mortgage channel and renewals of existing FirstLine mortgages will be under the CIBC brand. This strategic direction is consistent with Retail and Business Banking's client-centric strategy, which has now put a 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 approximately $2 billion as at July 31, 2012. The deal is subject to certain closing conditions and regulatory approvals and is expected to close in the fourth quarter of 2012 or early 2013. CIBC's other businesses in Asia are unaffected by this transaction.

Griffis and Small, LLC
Subsequent to the quarter end, we entered into an agreement to acquire the business of Griffis & Small, LLC, a Houston-based energy advisory firm specializing in acquisitions and divestitures in the exploration and production sector. The transaction is expected to close in the fourth quarter. The acquired business will be consolidated from the date of close and the results will be included in the Wholesale Banking SBU.

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 both Canada and the U.S. in the face of a deceleration in economic activity overseas, including a 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 a continued recovery in home building should support second half growth.

Canada's economy faces a deceleration in global demand due to a 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 avoiding interest rate increases through 2012 as growth remains moderate, containing inflation risks.

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 could remain muted until 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 could remain sluggish awaiting a reduction in global growth uncertainties, but merger activity looks to be improving. 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
																	Canadian
$ millions, except per share amounts,		IFRS															GAAP
for the three months ended			Jul. 31		Apr. 30		Jan. 31		Oct. 31		Jul. 31		Apr. 30		Jan. 31		Oct. 31
Revenue
	Retail and Business Banking	$	2,085	$	2,004	$	2,029	$	2,076	$	2,035	$	1,932	$	2,002	$	1,961
	Wealth Management		401		418		435		396		404		420		416		378
	Wholesale Banking ⁽¹⁾		527		463		495		561		503		477		517		264
	Corporate and Other ⁽¹⁾		136		199		198		162		189		186		159		651
Total revenue			3,149		3,084		3,157		3,195		3,131		3,015		3,094		3,254
Net interest income			1,883		1,753		1,842		1,776		1,785		1,731		1,770		1,645
Non-interest income			1,266		1,331		1,315		1,419		1,346		1,284		1,324		1,609
Total revenue			3,149		3,084		3,157		3,195		3,131		3,015		3,094		3,254
Provision for credit losses			317		308		338		306		310		245		283		150
Non-interest expenses			1,831		1,764		1,791		1,920		2,005		1,756		1,805		1,860
			1,001		1,012		1,028		969		816		1,014		1,006		1,244
Income taxes			160		201		193		212		225		247		243		742
Non-controlling interests			n/a		n/a		n/a		n/a		n/a		n/a		n/a		2
Net income		$	841	$	811	$	835	$	757	$	591	$	767	$	763	$	500
Net income attributable to:
	Non-controlling interests	$	2	$	1	$	3	$	3	$	2	$	3	$	3		n/a
	Equity shareholders		839		810		832		754		589		764		760		500
Earnings per share
	- basic	$	2.00	$	1.90	$	1.94	$	1.80	$	1.35	$	1.83	$	1.82	$	1.17
	- diluted		2.00		1.90		1.93		1.79		1.33		1.80		1.80		1.17

(1)	Starting in the third quarter of 2012, Wholesale Banking revenue and income taxes are reported on a taxable equivalent basis (TEB). The equivalent amounts are offset in the revenue and income taxes of Corporate and Other. Prior period information has been reclassified accordingly.
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 is lower over the period on weaker retail brokerage trading activity, partially offset by continued strong net sales of long-term mutual funds and higher average assets under management. The first quarter of 2012 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 prior 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 2011. While the losses in the cards portfolio improved in 2012, the losses related to the personal lending portfolio have stabilized. Wholesale Banking provisions declined in 2010 and the first three quarters of 2011, while the fourth quarter of 2011 had higher European leveraged loan losses and the first nine months of 2012 had higher losses in the U.S. real estate finance portfolio. Commencing in the first quarter of 2011 under IFRS, the provision for credit losses includes 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. The above-noted impairment loss relating to CIBC FirstCaribbean goodwill was not tax-effected. 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.

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. Where applicable, we also adjust our results to gross up tax-exempt net interest income on certain securities to the equivalent level that would have incurred tax at the statutory rate to bring it to a taxable equivalent basis. 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 for the impact of items of note and gross up tax-exempt net interest income to bring it to a taxable equivalent basis, as applicable.

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.


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

Reported and adjusted diluted EPS
Reported net income attributable to diluted
	common shareholders	A	$	810		$	766		$	546		$	2,352		$	2,010
Adjusting items:
	After-tax impact of items of note ⁽¹⁾			25			41			233			82			322
	Dividends on convertible preferred shares ⁽²⁾			-			-			(12)			-			(36)
Adjusted net income attributable to diluted
	common shareholders⁽³⁾	B	$	835		$	807		$	767		$	2,434		$	2,296

Reported diluted weighted-average common shares
	outstanding (thousands)	C		405,517			403,587			410,185			403,571			408,122
Removal of impact of convertible preferred
	shares (thousands) ⁽²⁾			-			-			(12,145)			-			(11,953)
Adjusted diluted weighted-average shares
	outstanding (thousands) ⁽³⁾	D		405,517			403,587			398,040			403,571			396,169

Reported diluted EPS ($)		A/C	$	2.00		$	1.90		$	1.33			5.83			$4.93
Adjusted diluted EPS ($) ⁽³⁾		B/D		2.06			2.00			1.93			6.03			5.80

Reported and adjusted efficiency ratio
Reported total revenue		E	$	3,149		$	3,084		$	3,131		$	9,390		$	9,240
Adjusting items:
	Pre-tax impact of items of note ⁽¹⁾			24			29			(3)			43			126
	TEB			71			61			49			189			133
Adjusted total revenue ⁽³⁾		F	$	3,244		$	3,174		$	3,177		$	9,622		$	9,499

Reported non-interest expenses		G	$	1,831		$	1,764		$	2,005		$	5,386		$	5,566
Adjusting items:
	Pre-tax impact of items of note ⁽¹⁾			(9)			(16)			(228)			(42)			(286)
Adjusted non-interest expenses ⁽³⁾		H	$	1,822		$	1,748		$	1,777		$	5,344		$	5,280

Reported efficiency ratio		G/E		58.1	%		57.2	%		64.0	%		57.4	%		60.2	%
Adjusted efficiency ratio ⁽³⁾		H/F		56.1	%		55.1	%		55.9	%		55.5	%		55.6	%

Reported and adjusted dividend payout ratio
Reported net income attributable to common shareholders		I	$	810		$	766		$	534		$	2,352		$	1,974
Adjusting items:
	After-tax impact of items of note ⁽¹⁾			25			41			233			82			322
Adjusted net income attributable to common shareholders ⁽³⁾		J	$	835		$	807		$	767		$	2,434		$	2,296
Dividends paid to common shares		K	$	365		$	364		$	346		$	1,089		$	1,032
Reported dividend payout ratio		K/I		45.0	%		47.4	%		64.6	%		46.3	%		52.3	%
Adjusted dividend payout ratio ⁽³⁾		K/J		43.7	%		45.0	%		45.0	%		44.7	%		45.0	%

(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.

Revenue, taxable equivalent basis
The SBUs evaluate net interest income included in revenue on an equivalent pre-tax basis. In order to arrive at the TEB amount, the SBUs gross up tax-exempt net interest income on certain securities to the equivalent level that would have incurred tax at the statutory rate. Simultaneously, an equivalent amount is booked as an income tax expense; hence there is no impact on net income of the SBUs. This measure enables comparability of net interest income arising from both taxable and tax-exempt sources. The total TEB adjustments of the SBUs are offset in net interest income and income tax expense 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								For the nine
			months ended								months ended
			2012			2012			2011			2012			2011
$ millions			Jul. 31			Apr. 30			Jul. 31			Jul. 31			Jul. 31
Revenue
	Personal banking	$	1,659		$	1,590		$	1,636		$	4,855		$	4,887
	Business banking		382			368			360			1,123			1,053
	Other		44			46			39			140			29
Total revenue			2,085			2,004			2,035			6,118			5,969
Provision for credit losses			273			271			291			825			830
Non-interest expenses			1,035			998			1,013			3,029			3,011
Income before taxes			777			735			731			2,264			2,128
Income taxes			183			179			180			547			541
Net income		$	594		$	556		$	551		$	1,717		$	1,587
Net income attributable to:
	Equity shareholders (a)	$	594		$	556		$	551		$	1,717		$	1,587
Efficiency ratio			49.7	%		49.8	%		49.8	%		49.5	%		50.4	%
Return on equity ⁽²⁾			60.1	%		57.9	%		64.2	%		58.7	%		63.9	%
Charge for economic capital ⁽²⁾ (b)		$	(126)		$	(125)		$	(118)		$	(381)		$	(342)
Economic profit ⁽²⁾ (a+b)		$	468		$	431		$	433		$	1,336		$	1,245
Full-time equivalent employees			21,588			21,733			21,553			21,588			21,553

(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 $594 million, an increase of $43 million or 8% from the same quarter last year. Revenue increased as a result of volume growth across most products and higher fees, partially offset by narrower spreads.

Net income was up $38 million or 7% compared to the prior quarter. Revenue increased due to additional days in the quarter, higher fees, and volume growth. Non-interest expenses were up 4% compared to the prior quarter.

Net income for the nine months ended July 31, 2012 was $1,717 million, an increase of $130 million or 8% from the same period in 2011. Revenue increased due to strong volume growth, higher treasury allocations, and higher fees, partially offset by narrower spreads.

Revenue
Revenue was up $50 million or 2% from the same quarter last year.

Personal banking revenue was up $23 million primarily due to volume growth across most products and higher fees, partially offset by narrower spreads.

Business banking revenue was up $22 million primarily due to strong volume growth and higher fees.

Other revenue was up $5 million mainly due to higher treasury allocations.

Revenue was up $81 million or 4% from the prior quarter.

Personal banking revenue was up $69 million primarily due to additional days, higher fees, and volume growth.

Business banking revenue was up $14 million primarily due to higher fees and volume growth.

Other revenue was down $2 million.

Revenue for the nine months ended July 31, 2012 was up $149 million or 2% from the same period in 2011.

Personal banking revenue was down $32 million, primarily due to narrower spreads, partially offset by volume growth across most products and higher fees.

Business banking revenue was up $70 million, primarily due to strong volume growth and higher fees, partially offset by narrower spreads.

Other revenue was up $111 million mainly due to higher treasury allocations.

Provision for credit losses
Provision for credit losses was down $18 million or 6% from the same quarter last year due to lower write-offs and bankruptcies in the cards portfolio, partially offset by higher losses in the business and personal lending portfolios.

Provision for credit losses was up $2 million or 1% from the prior quarter. The increase was mainly driven by higher losses in business lending, mostly offset by lower write-offs in the cards portfolio and lower losses in the personal lending portfolio.

Provision for credit losses for the nine months ended July 31, 2012 was down $5 million or 1% from the same period in 2011, primarily due to higher recoveries and lower bankruptcies in the cards portfolio, partially offset by higher losses in the personal and business lending portfolios.

Non-interest expenses
Non-interest expenses were up $22 million or 2% from the same quarter and up $18 million or 1% from the same nine month period last year, primarily due to increased spending on strategic business initiatives, partially offset by operational efficiencies.

Non-interest expenses were up $37 million or 4% from the prior quarter primarily due to increased spending on strategic business initiatives and lower recovery of commodity taxes.

Income taxes
Income taxes were up $3 million and $6 million from the same quarter and the same nine month period last year, respectively. The impact of higher income was partially offset by a lower Canadian statutory tax rate.

Income taxes were up $4 million from the prior quarter primarily due to higher income.

WEALTH MANAGEMENT

Wealth Management comprises the 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								For the nine
			months ended								months ended
			2012			2012			2011			2012			2011
$ millions			Jul. 31			Apr. 30			Jul. 31			Jul. 31			Jul. 31
Revenue
	Retail brokerage	$	246		$	263		$	263		$	758		$	826
	Asset management		130			130			116			422			341
	Private wealth management		25			25			25			74			73
Total revenue			401			418			404			1,254			1,240
Provision for credit losses			-			-			1			-			4
Non-interest expenses			299			313			304			924			942
Income before taxes			102			105			99			330			294
Income taxes			26			26			29			75			85
Net income		$	76		$	79		$	70		$	255		$	209
Net income attributable to:
	Equity shareholders (a)	$	76		$	79		$	70		$	255		$	209
Efficiency ratio			74.6	%		74.8	%		75.4	%		73.7	%		76.0	%
Return on equity ⁽²⁾			17.4	%		18.8	%		32.2	%		20.1	%		32.3	%
Charge for economic capital ⁽²⁾ (b)		$	(55)		$	(52)		$	(28)		$	(159)		$	(85)
Economic profit ⁽²⁾ (a+b)		$	21		$	27		$	42		$	96		$	124
Full-time equivalent employees			3,708			3,756			3,675			3,708			3,675

(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 $76 million, an increase of $6 million or 9% from the same quarter last year, driven by higher revenue from asset management, lower non-interest expenses and a lower statutory tax rate, partially offset by lower revenue in retail brokerage.

Net income was comparable to the prior quarter as lower revenue in retail brokerage was largely offset by lower non-interest expenses.

Net income for the nine months ended July 31, 2012 was $255 million, an increase of $46 million or 22% from the same period in 2011, 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), higher income from our proportionate share in ACI (included from September 1, 2011), lower non-interest expenses and a lower statutory tax rate, partially offset by lower revenue in retail brokerage.

Revenue
Revenue was comparable to the same quarter last year.

Retail brokerage revenue was down $17 million or 6%, primarily due to lower commissions from equity trading and new issuance activity.

Asset management revenue was up $14 million or 12%, primarily due to income from our proportionate share in ACI.

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 down $17 million or 6%, primarily due to lower commissions from equity trading and new issuance activity.

Both asset management and private wealth management revenue were comparable to the prior quarter.

Revenue for the nine months ended July 31, 2012 was up $14 million or 1% from the same period in 2011.

Retail brokerage revenue was down $68 million or 8%, primarily due to lower commissions related to equity trading and new issuance activity.

Asset management revenue was up $81 million or 24%, primarily due to the income from our proportionate share in ACI and the item of note discussed above.

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

Non-interest expenses
Non-interest expenses were down $5 million or 2% from the same quarter last year primarily due to lower performance-based compensation.

Non-interest expenses were down $14 million or 4% from the prior quarter primarily due to lower performance-based compensation and salaries.

Non-interest expenses for the nine months ended July 31, 2012 were down $18 million or 2% from the same period in 2011 primarily due to lower performance-based compensation, partially offset by higher salaries.

Income taxes
Income taxes were down $3 million from the same quarter last year, mainly due to a lower statutory tax rate.

Income taxes were comparable to the prior quarter.

Income taxes for the nine months ended July 31, 2012 were down $10 million from the same period in 2011, primarily due to a 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									For the nine
			months ended									months ended
			2012			2012			2011			2012			2011
$ millions			Jul. 31			Apr. 30			Jul. 31			Jul. 31			Jul. 31
Revenue
	Capital markets	$	308		$	285		$	247		$	900		$	857
	Corporate and investment banking		223			175			232			595			620
	Other		(4)			3			24			(10)			20
Total revenue ⁽²⁾			527			463			503			1,485			1,497
Provision for credit losses			34			16			9			76			15
Non-interest expenses			284			279			297			852			871
Income before taxes			209			168			197			557			611
Income taxes ⁽²⁾			53			37			56			137			190
Net income		$	156		$	131		$	141		$	420		$	421
Net income attributable to:
	Non-controlling interests	$	-		$	-		$	-		$	-		$	1
	Equity shareholders (a)		156			131			141			420			420
Efficiency ratio			53.8	%		60.4	%		58.9	%		57.4	%		58.1	%
Return on equity ⁽³⁾			27.9	%		25.0	%		32.9	%		26.5	%		32.0	%
Charge for economic capital ⁽³⁾ (b)		$	(70)		$	(66)		$	(57)		$	(201)		$	(176)
Economic profit ⁽³⁾(a+b)		$	86		$	65		$	84		$	219		$	244
Full-time equivalent employees			1,274			1,222			1,214			1,274			1,214

(1)		For additional segmented information, see the notes to the interim consolidated financial statements.
(2)		Starting in the third quarter of 2012, revenue and income taxes are reported on a TEB basis. Accordingly, revenue and income taxes include a TEB adjustment of $71 million and $189 million for the three months and nine months ended July 31, 2012, respectively ($61 million, $49 million and $133 million for the three months ended April 30, 2012 and three months and nine months ended July 31, 2011, respectively). Prior period information has been reclassified accordingly. The equivalent amounts are offset in the revenue and income taxes of Corporate and Other.
(3)		For additional information, see the "Non-GAAP measures" section.

Financial overview
Net income for the quarter was $156 million, up $15 million from the same quarter last year, mainly due to higher capital markets revenue and lower non-interest expenses, partially offset by a higher provision for credit losses and higher losses in the structured credit run-off business.

Net income was up $25 million from the prior quarter, mainly due to higher revenue from corporate and investment banking and capital markets, partially offset by a higher provision for credit losses.

Net income for the nine months ended July 31, 2012 was comparable to the same period in 2011. Lower revenue and a higher provision for credit losses were largely offset by a lower effective tax rate and lower non-interest expenses.

Revenue
Revenue was up $24 million or 5% from the same quarter last year.

Capital markets revenue was up $61 million, primarily due to higher revenue from equity derivatives and interest rate trading, debt issuance, and foreign exchange trading, partially offset by lower equity new issuance revenue.

Corporate and investment banking revenue was down $9 million as higher revenue from corporate credit products and U.S. real estate finance was more than offset by lower merchant banking gains, and lower equity new issuance and advisory revenue.

Other revenue was down $28 million, primarily due to net losses in the structured credit run-off business compared to gains in the prior year period.

Revenue was up $64 million or 14% from the prior quarter.

Capital markets revenue was up $23 million, mainly due to higher revenue from equity derivatives trading, debt issuance, and foreign exchange trading, partially offset by lower equity new issuance revenue and lower interest rate trading.

Corporate and investment banking revenue was up $48 million, primarily due to higher merchant banking gains and higher revenue from corporate credit products and U.S. real estate finance, partially offset by lower equity new issuance revenue.

Other revenue was down $7 million from the prior quarter, primarily due to higher losses in the structured credit run-off business. The prior quarter included a hedge accounting loss on leveraged leases.

Revenue for the nine months ended July 31, 2012 was down $12 million or 1% from the same period in 2011.

Capital markets revenue was up $43 million, mainly due to higher revenue from equity derivatives and interest rate trading, debt issuance, and foreign exchange trading, partially offset by lower equity new issuance revenue.

Corporate and investment banking revenue was down $25 million, primarily due to lower equity new issuance revenue and lower merchant banking gains, partially offset by higher revenue from corporate credit products and U.S. real estate finance.

Other revenue was down $30 million, mainly due to the hedge accounting loss on leveraged leases noted above and higher losses from other exited portfolios, partially offset by lower losses from the structured credit run-off business and higher treasury allocations.

Provision for credit losses
Provision for credit losses was up $25 million from the same quarter last year, up $18 million from the prior quarter, and up $61 million from the same nine month period last year, mainly due to higher losses in the U.S. real estate finance and Canadian credit portfolios.

Non-interest expenses
Non-interest expenses were down $13 million or 4% from the same quarter last year due to lower expenses in the structured credit run-off business, partially offset by higher employee-related expenses.

Non-interest expenses were up $5 million or 2% from the prior quarter, primarily due to higher performance-based compensation, partially offset by lower expenses in the structured credit run-off business.

Non-interest expenses for the nine months ended July 31, 2012 were down $19 million or 2% from the same period in 2011, primarily due to lower expenses in the structured credit run-off business, partially offset by higher employee-related expenses.

Income taxes
Income tax expense for the quarter was $53 million compared with $56 million in the same quarter last year. The current quarter had a decrease in the relative proportion of income earned in jurisdictions subject to higher income tax rates.

Income tax expense was $16 million higher than the prior quarter, primarily due to higher income in the current quarter.

Income tax expense for the nine months ended July 31, 2012 was $137 million compared to $190 million for the same period in 2011. The current year period had lower income and a decrease in the relative proportion of income earned in jurisdictions subject to higher income tax rates.

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				For the nine
				months ended				months ended
		2012		2012		2011		2012		2011
$ millions		Jul. 31		Apr. 30		Jul. 31		Jul. 31		Jul. 31
Net interest income (expense)	$	(16)	$	(17)	$	(17)	$	(48)	$	(29)
Trading income (loss) ⁽¹⁾		(6)		18		(56)		4		(77)
Designated at fair value (FVO) gains (losses) ⁽¹⁾		(3)		(3)		72		(11)		34
Other income		1		1		4		3		-
Total revenue		(24)		(1)		3		(52)		(72)
Provision for credit losses		-		-		-		-		1
Non-interest expenses		2		9		17		19		57
Loss before taxes		(26)		(10)		(14)		(71)		(130)
Income taxes		(7)		(3)		(3)		(19)		(36)
Net loss	$	(19)	$	(7)	$	(11)	$	(52)	$	(94)

(1)	During the quarter, we reclassified gains and losses (both realized and unrealized) on certain trading securities and derivatives that are managed in conjunction with FVO financial instruments from trading income (loss) to FVO gains (losses), net in the consolidated statement of income. Prior period information has been reclassified accordingly.

The net loss for the quarter was $19 million (US$18 million), compared to $11 million (US$12 million) for the same quarter last year and $7 million (US$7 million) for the prior quarter. The net loss for the nine months ended July 31, 2012 was $52 million (US$51 million) compared to $94 million (US$94 million) for the same period in 2011.

The net loss for the quarter was mainly due to net interest expense, 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, and a credit valuation adjustment (CVA) loss of $2 million (US$2 million) relating to financial guarantors.

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
July 31, 2012				Investments and loans					⁽¹⁾	and credit facilities					Financial guarantors			Other counterparties
				Fair
				value of	Fair		Carrying
				trading,	value of		value of						Fair
				AFS	securities		securities						value of			Fair value				Fair value
				and FVO	classified		classified						written credit			net of				net of
		Notional		securities	as loans		as loans				Notional		derivatives	Notional		CVA		Notional		CVA
USRMM - CDO	$	-	$	-	$	-	$	-		$	322	$	293	$	-	$	-	$	322	$	293
CLO		3,828		-		3,648		3,698			3,114		108		6,007		157		281		15
Corporate debt		-		-		-		-			4,949		117		-		-		4,949		119
Other		998		578		67		71			656		82		372		48		25		4
Unmatched		-		-		-		-			-		-		140		114		374		-
	$	4,826	$	578	$	3,715	$	3,769		$	9,041	$	600	$	6,519	$	319	$	5,951	$	431
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$59 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$29 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. (63%) and European-based (35%) senior secured leveraged loans. As at July 31, 2012, approximately 13% of the total notional amount of the CLO tranches was rated equivalent to AAA, 85% was rated between the equivalent of AA+ and AA-, and the remainder was the equivalent of A+. As at July 31, 2012, approximately 17% of the underlying collateral was rated equivalent to BB- or higher, 52% 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 53 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 July 31, 2012, include:

US$299 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$194 million;
US$196 million notional value of trading securities with a fair value of US$147 million, and US$306 million notional value of written protection with a fair value of US$79 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 36% rated the equivalent of AA- or higher, 15% rated between the equivalent of A+ and A-, and the majority of the remaining rated equivalent of BBB or lower;
US$67 million notional value of an asset-backed security (ABS) classified as a loan, with fair value of US$56 million and carrying value of US$60 million;
Variable rate Class A-1/A-2 notes classified as trading securities with a notional value of US$288 million and a fair value of US$228 million, tracking notes classified as AFS with a notional value of US$15 million and a fair value of US$2 million, and loans with a notional value of US$61 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$299 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 and a loan backed by film receivables.

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.


														Credit protection purchased
														from financial guarantors
			Notional amounts of referenced assets											and other counterparties
US$ millions, as at					Corporate		CDO -					Total		Fair value				Fair value
July 31, 2012			CLO		debt		USRMM	Other		Unmatched		notional		before CVA		CVA		net of CVA
Financial guarantors ⁽¹⁾
	Investment grade	$	3,640	$	-	$	-	$	74	$	140	$	3,854	$	303	$	(57)	$	246
	Non-investment grade		75		-		-		218		-		293		73		(50)		23
	Unrated		2,292		-		-		80		-		2,372		98		(48)		50
			6,007		-		-		372		140		6,519		474		(155)		319
Other counterparties ⁽¹⁾
	Investment grade		281		20		322		25		-		648		312		1		313
	Unrated		-		4,929		-		-		374		5,303		120		(2)		118
			281		4,949		322		25		374		5,951		432		(1)		431
Total		$	6,288	$	4,949	$	322	$	397	$	514	$	12,470	$	906	$	(156)	$	750
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 July 31, 2012 was US$363 million relative to US$118 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				For the nine
							months ended				months ended
			2012		2012		2011		2012		2011
$ millions			Jul. 31		Apr. 30		Jul. 31		Jul. 31		Jul. 31
Revenue
International banking		$	146	$	139	$	140	$	433	$	427
Other			(10)		60		49		100		107
Total revenue ⁽²⁾			136		199		189		533		534
Provision for (reversal of) credit losses			10		21		9		62		(11)
Non-interest expenses			213		174		391		581		742
Income (loss) before taxes			(87)		4		(211)		(110)		(197)
Income taxes ⁽²⁾			(102)		(41)		(40)		(205)		(101)
Net income (loss)		$	15	$	45	$	(171)	$	95	$	(96)
Net income (loss) attributable to:
	Non-controlling interests	$	2	$	1	$	2	$	6	$	7
	Equity shareholders		13		44		(173)		89		(103)
Full-time equivalent employees			15,810		15,556		15,983		15,810		15,983

(1)	For additional segmented information, see the notes to the interim consolidated financial statements.
(2)	Starting in the third quarter of 2012, Wholesale Banking revenue and income taxes are reported on a TEB basis. The equivalent amounts are offset in the revenue and income taxes of Corporate and Other. Accordingly, revenue and income taxes include a TEB adjustment of $71 million and $189 million for the three months and nine months ended July 31, 2012, respectively ($61 million for the three months ended April 30, 2012 and $49 million and $133 million for the three months and nine months ended July 31, 2011, respectively). Prior period information has been reclassified accordingly.

Financial overview
Net income for the quarter was $15 million compared to a net loss of $171 million in the same quarter last year. The same quarter last year included a goodwill impairment charge of $203 million relating to CIBC FirstCaribbean. The current quarter included lower unallocated treasury revenue.

Net income was down $30 million from the prior quarter, mainly due to lower unallocated treasury revenue and higher non-interest expenses, partially offset by a lower provision for credit losses.

Net income for the nine months ended July 31, 2012 was $95 million compared to a net loss of $96 million in the same period in 2011. The same period last year included the goodwill impairment charge noted above and losses from MTM volatility prior to the establishment of accounting hedges on securitized mortgages and funding liabilities, partially offset by a gain on sale of CMT's Issuer Services business, and interest income on tax reassessments. The current year period included a provision for credit losses compared to a reversal of credit losses in the prior year period and higher unallocated corporate support costs, partially offset by higher unallocated treasury revenue.

Revenue
Revenue was down $53 million and $63 million from the same quarter last year and the prior quarter, respectively.

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

Other revenue was down $59 million and $70 million from the same quarter last year and the prior quarter, respectively, mainly due to lower unallocated treasury revenue and a higher TEB adjustment. Additionally, the same quarter last year had interest income on tax reassessments.

Revenue for the nine months ended July 31, 2012 was comparable to the same period in 2011.

International banking revenue was comparable to the prior year period.

Other revenue was comparable to the prior year period. The current year period included a higher TEB adjustment, partially offset by higher unallocated treasury revenue. The prior year period included the loss from MTM volatility prior to the establishment of accounting hedges on securitized mortgages and funding liabilities, 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 comparable to the same quarter last year. Net higher reversals of collectively assessed credit losses relating to the cards portfolio was offset by net lower reversals in the business and government, and personal lending portfolios.

Provision for credit losses was down $11 million from the prior quarter, mainly due to lower losses in CIBC FirstCaribbean.

Provision for credit losses was $62 million for the nine months ended July 31, 2012 compared to a reversal of credit losses of $11 million in the same period last year. Net lower reversal of collectively assessed credit losses relating to business and government, commercial banking and small business portfolios were partially offset by net higher reversals in the cards portfolio. The current year period also had higher losses in CIBC FirstCaribbean.

Non-interest expenses
Non-interest expenses were down $178 million from the same quarter last year, and down $161 million for the nine months ended July 31, 2012. The same quarter last year included the goodwill impairment charge noted above. The current year period had higher unallocated corporate support costs.

Non-interest expenses were up $39 million from the prior quarter, mainly due to higher unallocated corporate support costs.

Income taxes
Income tax benefit was up $62 million from the same quarter last year and up $104 million for the nine months ended July 31, 2012 from the same period in 2011, primarily due to higher TEB adjustments, and lower net write-offs of deferred tax assets as a result of a lower decline in tax rates. The current year periods included a write-up of deferred tax assets owing to higher Ontario tax rates that were enacted in the quarter, whereas the prior year periods included net write-downs. The prior year periods included the CIBC FirstCaribbean goodwill impairment that was not tax-effected.

Income tax benefit was up $61 million from the prior quarter, primarily due to lower income and a higher TEB adjustment.

FINANCIAL CONDITION

Review of condensed consolidated balance sheet
	2012		2011
$ millions, as at	Jul. 31		Oct. 31
Assets
Cash and deposits with banks	$	8,799	$	5,142
Securities		61,977		60,295
Securities borrowed or purchased under resale agreements		32,957		27,479
Loans and acceptances, net of allowance		253,616		248,409
Derivative instruments		28,802		28,270
Other assets		14,859		14,163
Total assets	$	401,010	$	383,758
Liabilities and equity
Deposits	$	254,002	$	237,912
Secured borrowings		51,094		51,308
Obligations related to securities lent or sold short or under repurchase agreements		22,755		21,730
Derivative instruments		29,092		28,792
Other liabilities		22,232		22,787
Subordinated indebtedness		4,828		5,138
Equity		17,007		16,091
Total liabilities and equity	$	401,010	$	383,758

Assets
As at July 31, 2012, total assets were up $17.3 billion or 4% from October 31, 2011.

Cash and deposits with banks increased by $3.7 billion or 71% mostly due to higher treasury deposit placements.

Securities increased by $1.7 billion or 3%, 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 increased by $5.5 billion or 20%, primarily due to an increase in our funding requirements and client-driven activities.

Net loans and acceptances increased by $5.2 billion or 2%. Residential mortgages were up $636 million due to mortgage originations, partially offset by principal repayments and liquidations. Personal loans were up $345 million due to volume growth. Credit card loans were down $465 million mostly due to net repayments. Business and government loans and acceptances were up $4.7 billion due to growth in our domestic and international portfolios.

Derivative instruments increased by $532 million or 2% largely driven by higher valuation of interest rate derivatives, partially offset by lower foreign exchange and credit derivatives valuation.

Other assets increased by $696 million or 5%, mainly due to a higher current income tax receivable as a result of payments made in the period.

Liabilities
As at July 31, 2012, total liabilities were up $16.3 billion or 4% from October 31, 2011.

Deposits increased by $16.1 billion or 7% driven by funding and retail volume growth.

Secured borrowings decreased by $214 million or less than 1%, primarily due to maturities, net of new issuance.

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

Derivative instruments increased by $300 million or 1% largely driven by higher valuation of interest rate derivatives, partially offset by lower credit derivatives valuation.

Other liabilities decreased by $555 million or 2%, mainly due to lower negotiable instruments, brokers' client payables and accrued expenses, partially offset by higher acceptances.

Subordinated indebtedness decreased by $310 million or 6%, largely due to the redemption of our floating rate Debentures (subordinated indebtedness).

Equity
Equity increased by $916 million or 6%, 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 58 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.

The BCBS finalized its methodology for assessing global systemically important banks (G-SIBs), which are subject to increased minimum common equity requirements, in November 2011; none of the Canadian banks are on the list of 29 G-SIBs. In June 2012, the BCBS proposed to extend the G-SIBs framework for assessing domestic systemically important banks (D-SIBs). The framework is principles based and provides domestic regulators with some flexibility in how they determine which banks are D-SIBs and what incremental capital requirements will be required. The BCBS expects the domestic regulators to adopt the D-SIBs' higher loss absorbency capital requirements by 2016.

Subsequent to the quarter end, in August 2012, OSFI issued for public comment revisions to its guidelines for capital adequacy in Canada which incorporate the Basel III reforms. Based on our current understanding of the revised capital requirements, we expect to exceed the minimum requirements as proposed by BCBS and OSFI while continuing to invest for future growth.

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	Jul. 31			Oct. 31		⁽¹⁾
Capital
Tier 1 capital	$	16,244	⁽²⁾	$	16,208
Total regulatory capital		20,318	⁽²⁾		20,287
Risk-weighted assets
Credit risk	$	93,607		$	90,110
Market risk		3,138			1,646
Operational risk		18,149			18,212
Total risk-weighted assets	$	114,894		$	109,968
Capital ratios
Tier 1 capital ratio		14.1	%		14.7	%
Total capital ratio		17.7	%		18.4	%
Assets-to-capital multiple		17.4	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).

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 an increase in RWAs while Tier 1 and Total regulatory capital were comparable to October 31, 2011. 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 1.4x 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 nine months ended July 31, 2012, we phased in $823 million of the negative IFRS transitional impact on Tier 1 capital, representing three-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 July 31, 2012 would have been as follows:

Tier 1 capital ratio

13.7%

Total capital ratio

17.2%

ACM

17.8x

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
Subsequent to the quarter end, we decided to redeem all of the 12 million Non-cumulative Class A Series 18 Preferred Shares with a par value and redemption price of $25.00 each for cash. The preferred shares will be redeemed on October 29, 2012.

During the quarter, we purchased and cancelled $15 million (US$15 million) of our floating rate Debentures (subordinated indebtedness) due August 31, 2085. As a result, the principal balance outstanding on this issue was reduced to $52 million (US$52 million).

On June 22, 2012, we redeemed all $257 million (€200 million) of our floating rate Debentures due June 22, 2017 for their outstanding principal amount plus unpaid interest accrued to the redemption date in accordance with their terms.

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.

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.

Normal course issuer bid
On August 29, 2012, the Board of Directors approved a proposal to commence a new common share purchase program. Subject to the approval of the Toronto Stock Exchange, we intend to purchase for cancellation up to a maximum of 8.1 million common shares over the course of the ensuing 12 months, which is approximately 2% of our outstanding common shares.

Dividends
On August 29, 2012, the Board of Directors approved an increase in our quarterly common share dividend from $0.90 per share to $0.94 per share for the quarter ending October 31, 2012.

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.

As at July 31, 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 0.8 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 $21 million (October 31, 2011: $3 million). Our committed backstop liquidity facilities to these conduits were $2.2 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 July 31, 2012.

We participated in a syndicated facility for a 3-year commitment of $575 million to our single-seller conduit that provides funding to franchisees of a major Canadian retailer. Our portion of the commitment was $110 million. As at July 31, 2012, we funded $81 million (October 31, 2011: $77 million) through the issuance of bankers' acceptances.

Additional details of our off-balance sheet arrangements are provided on pages 24 and 25 of the 2012 second quarter interim report.

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. Written credit derivatives are notional amounts of written credit default swap (CDS) contracts and total return swaps under which we assume exposures.


							2012								2011
$ millions, as at							Jul. 31								Oct. 31
					Undrawn								Undrawn
		Investment			liquidity		Written						liquidity		Written
		and			and credit		credit			Investment			and credit		credit
		loans		⁽¹⁾	facilities		derivatives		⁽²⁾	and loans		⁽¹⁾	facilities		derivatives		⁽²⁾
CIBC sponsored conduits		$	102		$	1,356	$	-		$	80		$	1,297	$	-
CIBC structured CDO vehicles			240			39		226			292			42		284
Third-party structured vehicles
	Structured credit run-off		4,348			319		4,448			4,497			391		4,830
	Continuing		1,140			23		-			1,626			16		-
Pass-through investment structures			1,828			-		-			520			-		-
Commercial mortgage securitization trust			-			-		-			5			-		-

(1)		Excludes securities issued by, retained interest 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). $3.7 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 $1.3 billion (October 31, 2011: $1.6 billion). Notional of $3.3 billion (October 31, 2011: $3.6 billion) was 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). An additional notional of $1.1 billion (October 31, 2011: $1.2 billion) was hedged through a limited recourse note. Accumulated fair value losses were $39 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 2012 second quarter 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		Jul. 31		Oct. 31
Business and government portfolios-advanced internal
ratings-based (AIRB) approach
Drawn	$	76,901	$	73,022
Undrawn commitments		33,365		29,707
Repo-style transactions		53,384		55,290
Other off-balance sheet		58,514		49,439
Over-the-counter (OTC) derivatives		14,655		14,429
Gross exposure at default (EAD) on business and government portfolios		236,819		221,887
Less: repo collateral		46,949		50,106
Net EAD on business and government portfolios		189,870		171,781
Retail portfolios-AIRB approach
Drawn		195,402		194,010
Undrawn commitments		71,135		69,881
Other off-balance sheet		352		428
Gross EAD on retail portfolios		266,889		264,319
Standardized portfolios		11,845		12,164
Securitization exposures		19,130		19,488
Gross EAD	$	534,683	$	517,858
Net EAD	$	487,734	$	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. 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. No material losses are expected in the mortgage portfolio.

The following table provides details on our Canadian residential mortgage portfolios:


$ billions, as at July 31, 2012	Notional		Insured	⁽¹⁾	Uninsured
Ontario	$	67	77	%	23	%
British Columbia		29	72		28
Alberta		24	78		22
Quebec		10	83		17
Other		15	83		17
	$	145	77	%	23	%
October 31, 2011	$	144	77	%	23	%

(1)	93% (October 31, 2011: 92%) is insured by Government of Canada and the remaining by two private Canadian insurers, both rated at least AA (low) by DBRS.

The following table provides details on LTV related to our Canadian residential mortgage portfolios:

(1)		Based on latest available industry house price estimates from Teranet (June 30, 2012).
(2)		Based on industry house price estimates from Teranet (September 30, 2011).

We have two types of condominium exposures in Canada: mortgages and developer loans. Both are primarily concentrated in the Toronto and Vancouver areas. As at July 31, 2012, our Canadian condominium mortgages were $17.1 billion (October 31, 2011: $17.1 billion) of which 77% (October 31, 2011: 78%) were insured. Our drawn developer loans were $594 million (October 31, 2011: $458 million) or 1% of our business and government portfolio and our related undrawn exposure was $1.8 billion (October 31, 2011: $1.4 billion). The condominium developer exposure is diversified across 60 projects.

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 July 31, 2012, the CVA for all derivative counterparties was $192 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			Jul. 31				Oct. 31
		Exposure
Standard & Poor's
rating equivalent
	AAA to BBB-	$	5.97	82.1	%	$	5.72	79.3	%
	BB+ to B-		1.29	17.8			1.46	20.3
	CCC+ to CCC-		-	-			0.01	0.1
	Below CCC-		0.01	0.1			0.01	0.2
	Unrated		-	-			0.01	0.1
		$	7.27	100.0	%	$	7.21	100.0	%


		2012		2011
$ millions, as at		Jul. 31		Oct. 31
Gross impaired loans
Consumer	$	763	$	815
Business and government		1,190		1,102
Total gross impaired loans	$	1,953	$	1,917
Allowance for credit losses
Consumer	$	1,128	$	1,167
Business and government		756		636
Total allowance for credit losses	$	1,884	$	1,803
Comprises:
Individual allowance for loans	$	485	$	366
Collective allowance for loans⁽¹⁾		1,399		1,437
Total allowance for credit losses	$	1,884	$	1,803

(1)

Excludes allowance on undrawn credit facilities of $52 million (October 31, 2011: $48 million).

Gross impaired loans (GIL) were up $36 million or 2% from October 31, 2011. Consumer GIL were down $52 million or 6%, mainly due to lower classifications in residential mortgages and personal lending. Business and government GIL were up $88 million or 8%, attributable to an increase in the publishing, printing and broadcasting, oil and gas, and real estate and construction sectors.

The total allowance for credit losses was up $81 million or 4% from October 31, 2011. Canadian and U.S. allowances for credit losses comprise 72% and 10%, respectively, of the total allowance. The individually assessed allowance was up $119 million or 33% from October 31, 2011, mainly driven by the real estate and construction sector. The collectively assessed allowance was down $38 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
		Corporate	Sovereign		Bank		Total		Corporate			Bank		Total
							funded							unfunded
$ millions, as at July 31, 2012							(A)							(B)

Austria	$	-	$	76	$	-	$	76	$	-		$	-	$	-
Belgium		-		-		6		6		-			-		-
Finland		1		-		1		2		-			-		-
France		48		-		707		755		11			6		17
Germany		194		61		10		265		67			-		67
Greece		-		-		-		-		-			-		-
Ireland		-		-		10		10		-			-		-
Italy		1		-		-		1		-			1		1
Luxembourg		-		-		56		56		-			-		-
Netherlands		5		210		78		293		2			8		10
Portugal		-		-		-		-		-			-		-
Slovenia		-		-		-		-		-			3		3
Spain		-		-		2		2		-			-		-
Total Eurozone	$	249	$	347	$	870	$	1,466	$	80		$	18	$	98

Denmark	$	-	$	50	$	31	$	81	$	-		$	10	$	10
Guernsey		-		-		2		2		-			-		-
Isle of Man		-		-		-		-		2			-		2
Norway		-		91		119		210		-			-		-
Russia		-		-		-		-		-			-		-
Sweden		151		108		259		518		42			-		42
Switzerland		249		-		163		412		390			-		390
Turkey		-		-		11		11		-			1		1
United Kingdom		500		902		561		1,963		759	⁽²⁾		118		877
Total non-Eurozone	$	900	$	1,151	$	1,146	$	3,197	$	1,193		$	129	$	1,322
Total Europe	$	1,149	$	1,498	$	2,016	$	4,663	$	1,273		$	147	$	1,420
Middle East and North Africa⁽³⁾	$	-	$	-	$	-	$	-	$	-		$	3	$	3
Total exposure	$	1,149	$	1,498	$	2,016	$	4,663	$	1,273		$	150	$	1,423
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 $140 million of exposure (notional value of $178 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 (continued)
	Derivative MTM receivables and repo-style transactions														Total
		Corporate	Sovereign		Bank		Gross		Collateral			Net			direct
							exposure		held		⁽¹⁾	exposure			exposure
$ millions, as at July 31, 2012												(C)		⁽²⁾	(A)+(B)+(C)

Austria	$	-	$	-	$	38	$	38	$	37		$	1		$	77
Belgium		-		-		54		54		51			3			9
Finland		-		-		16		16		8			8			10
France		-		-		2,064		2,064		2,046			18			790
Germany		-		-		2,051		2,051		1,819			232			564
Greece		-		-		-		-		-			-			-
Ireland		-		-		228		228		221			7			17
Italy		-		-		37		37		33			4			6
Luxembourg		-		-		-		-		-			-			56
Netherlands		37		-		124		161		108			53			356
Portugal		-		-		-		-		-			-			-
Slovenia		-		-		-		-		-			-			3
Spain		-		-		5		5		4			1			3
Total Eurozone	$	37	$	-	$	4,617	$	4,654	$	4,327		$	327		$	1,891
								-
Denmark	$	-	$	-	$	44		44	$	43		$	1		$	92
Guernsey		-		-		-		-		-			-			2
Isle of Man		-		-		-		-		-			-			2
Norway		-		-		-		-		-			-			210
Russia		-		-		-		-		-			-			-
Sweden		1		-		-		1		-			1			561
Switzerland		-		-		1,100		1,100		1,058			42			844
Turkey		-		-		-		-		-			-			12
United Kingdom		65		-		2,579		2,644		2,554			90			2,930
Total non-Eurozone	$	66	$	-	$	3,723	$	3,789	$	3,655		$	134		$	4,653
Total Europe	$	103	$	-	$	8,340	$	8,443	$	7,982		$	461		$	6,544
Middle East and North Africa⁽³⁾	$	-	$	-	$	-	$	-	$	-		$	-		$	3
Total exposure	$	103	$	-	$	8,340	$	8,443	$	7,982		$	461		$	6,547
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 $5.8 billion (October 31, 2011: $6.2 billion), and comprises cash and investment-grade debt securities.
(2)		The amounts shown are before CVA. The CVA for European counterparties was $25 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.


	Total
	indirect
$ millions, as at July 31, 2012	exposure

Austria	$	11
Belgium		42
Finland		12
France		521
Germany		383
Greece		13
Ireland		55
Italy		88
Luxembourg		60
Netherlands		310
Spain		142
Total Eurozone	$	1,637

Denmark	$	44
Norway		10
Sweden		68
Switzerland		4
United Kingdom		644
Total non-Eurozone	$	770
Total exposure	$	2,407
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 based on their risk characteristics and the current market environment may be of particular interest to investors. 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 July 31, 2012		Drawn		Undrawn
Construction program		$	140	$	40
Interim program			3,649		384
Permanent program			30		-
Exposure, net of allowance		$	3,819	$	424
Of the above:
	Net impaired	$	146	$	2
	On credit watch list		269		3
Net exposure as at October 31, 2011		$	3,379	$	629

During the quarter, our loans relating to the Joint Venture with a U.S. financial service entity were fully repaid. As at July 31, 2012, the allowance for credit losses for this portfolio was $134 million (October 31, 2011: $86 million). During the quarter and nine months ended July 31, 2012, we recorded provision for credit losses of $24 million and $65 million, respectively (provision for credit losses of $7 million and $15 million for the quarter and nine months ended July 31, 2011, respectively).

The business also maintains commercial mortgage-backed securities (CMBS) trading and distribution capabilities. As at July 31, 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 July 31, 2012		Drawn		Undrawn
Manufacturing		$	334	$	61
Publishing and printing			35		2
Utilities			10		-
Business services			5		2
Transportation			6		9
Exposure, net of allowance		$	390	$	74
Of the above:
	On credit watch list	$	185	$	10
Net exposure as at October 31, 2011		$	437	$	91

Facilities on the credit watch list were reduced to $185 million drawn and $10 million undrawn (October 31, 2011: $355 million drawn and $35 million undrawn) and net impaired facilities were reduced to nil for drawn and undrawn (October 31, 2011: $8 million drawn and nil undrawn), due to repayments and improvements in the financial position of underlying portfolio companies.

As at July 31, 2012, the allowance for credit losses for this portfolio was $39 million (October 31, 2011: $43 million). During the quarter and nine months ended July 31, 2012, the net reversal of credit losses were $1 million (net reversal of credit losses of nil and $3 million for the quarter and nine months ended July 31, 2011, respectively).

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


$ millions, as at July 31, 2012	Drawn		Undrawn
Transportation	$	112	$	17
Healthcare		1		16
Media and advertising		9		-
Manufacturing		14		4
Other		6		5
Exposure, net of allowance	$	142	$	42
Of the above:
Net impaired	$	3	$	2
On credit watch list		127		18
Net exposure as at October 31, 2011	$	111	$	179

As at July 31, 2012, the allowance for credit losses for this portfolio was $13 million (October 31, 2011: $13 million). During the quarter and nine months ended July 31, 2012, the provision for credit losses were nil (net reversal of credit losses of $1 million and $7 million for the quarter and nine months ended July 31, 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 December 31, 2007 to December 30, 2008.

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 (TEB) comprises both trading net interest income and non-interest income and excludes underwriting fees and commissions. Trading revenue (TEB) for the purposes of these tables excludes positions described in the "Structured credit run-off business" section of the MD&A and certain other exited portfolios.

Total average VaR for the three months ended July 31, 2012 was up 22% from the last quarter, driven mainly by an increase in our equity risk and debt specific risk, offset by a decrease in interest rate risk.

VaR by risk type - trading portfolio


														As at or for the			For the nine
														three months ended			months ended
							2012				2012				2011		2012		2011
							Jul. 31				Apr. 30				Jul. 31		Jul. 31		Jul. 31
$ millions	High		Low		As at		Average		As at		Average		As at		Average		Average		Average
Interest rate risk	$	2.5	$	0.9	$	2.5	$	1.5	$	1.3	$	2.4	$	1.9	$	3.2	$	1.9	$	3.7
Credit spread risk		1.9		0.6		1.2		1.3		1.7		1.4		0.8		1.2		1.3		1.1
Equity risk		4.4		3.1		4.4		3.9		3.8		2.4		1.5		2.6		2.7		3.6
Foreign exchange risk		1.1		0.4		0.7		0.7		0.7		0.7		0.6		0.5		0.7		1.0
Commodity risk		2.0		0.8		1.0		1.3		1.2		1.3		0.5		1.0		1.2		1.0
Debt specific risk		4.2		1.8		2.1		2.9		2.4		2.4		2.1		3.4		2.6		2.8
Diversification effect ⁽¹⁾		n/m		n/m		(5.3)		(6.0)		(6.2)		(6.0)		(3.9)		(5.8)		(5.7)		(6.1)
Total VaR (one-day measure)	$	6.6	$	4.4	$	6.6	$	5.6	$	4.9	$	4.6	$	3.5	$	6.1	$	4.7	$	7.1

(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

For the nine

three months ended

months ended

2012

2012

2012

$ millions

Jul. 31

Apr. 30

Jul. 31

High

Low

As at

Average

As at

Average

Average

Interest rate risk

8.3

2.9

6.8

5.2

4.3

6.0

6.0

Credit spread risk

5.5

0.7

2.5

5.4

3.7

2.9

Equity risk

6.6

2.1

3.0

3.7

1.4

2.0

2.5

Foreign exchange risk

6.7

0.5

0.8

2.1

2.3

1.6

1.8

Commodity risk

3.9

0.6

0.7

1.5

0.9

1.2

Debt specific risk

1.3

0.6

0.7

0.9

0.8

0.9

Diversification effect ⁽¹⁾

n/m

(7.4)

(9.1)

(9.5)

(8.8)

(8.9)

Total stressed VaR (one-day measure)

$ 12.0

3.5

7.1

6.8

5.6

$ 6.2

6.4

(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 nine

three months ended

months ended

2012

2012

2012

$ millions

Jul. 31

Apr. 30

Jul. 31

High

Low

As at

Average

As at

Average

Average

Default risk

45.4

25.5

42.6

$ 36.3

27.9

$ 38.0

34.0

Migration risk

55.1

27.8

43.1

41.3

31.2

28.0

37.9

Incremental risk charge (one-year measure)

92.5

55.0

85.7

$ 77.6

59.1

$ 66.0

$ 71.9

Trading revenue
The trading revenue (TEB) and VaR graph below compares the current quarter and the three previous quarters' actual daily trading revenue (TEB) with the previous day's VaR measures.

During the quarter, trading revenue (TEB)was positive for 98% of the days and trading losses did not exceed VaR. The largest loss occurred on June 15, 2012, totalling $0.5 million. The loss was mainly driven by interest rate moves in the Canadian retail treasury business. The largest gain occurred on July 3, 2012, totalling $12.8 million and it was driven by revenue associated with the client index facilitation business. Average daily trading revenue (TEB)⁽¹⁾ was $3.2 million during the quarter.

Trading revenue (TEB) versus VaR

http://files.newswire.ca/256/TradingRevenue-VAR.pdf

(1)

Includes average daily TEB adjustment of $1.1 million.

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							Jul. 31						Apr. 30						Jul. 31
			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	$	96	$	(17)	$	3	$	78	$	(30)	$	3	$	189	$	(7)	$	3
Decrease in present value of
	shareholders' equity		(106)		(109)		(41)		(123)		(169)		(38)		(22)		(39)		(34)
100 basis points decrease in interest rates
Increase (decrease) in net income
	attributable to equity shareholders		(215)		1		(2)		(171)		19		(3)		(252)		6		(3)
Decrease (increase) in present value of
	shareholders' equity		(61)		50		42		(5)		130		38		(74)		21		34
200 basis points increase in interest rates
Increase (decrease) in net income
	attributable to equity shareholders	$	166	$	(34)	$	5	$	137	$	(51)	$	6	$	348	$	(14)	$	6
Decrease in present value of
	shareholders' equity		(253)		(218)		(81)		(285)		(337)		(76)		(91)		(78)		(67)
200 basis points decrease in interest rates
Increase (decrease) in net income
	attributable to equity shareholders		(332)		(9)		(3)		(245)		16		(7)		(363)		7		(6)
Decrease (increase) in present value of
	shareholders' equity		(309)		48		67		(120)		129		61		(77)		27		52

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		Jul. 31		Oct. 31
Cash and deposits with banks ⁽¹⁾	$	8.2	$	4.6
Securities issued by Canadian governments⁽²⁾		6.5		9.2
Other securities ⁽³⁾		42.9		42.5
Cash collateral on securities borrowed		4.0		1.8
Securities purchased under resale agreements		29.0		25.6
Total liquid assets	$	90.6	$	83.7

(1)		Excludes restricted balances.
(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 July 31, 2012 totalled $61.1 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 $113.4 billion as at July 31, 2012 (October 31, 2011: $111.8 billion).

During the quarter and nine months ended July 31, 2012, we raised $0.9 billion and $6.0 billion, respectively, of secured term funding in U.S. and Canadian dollars. We also raised $4.5 billion and $8.7 billion in term funding through the issuance of unsecured U.S. and Canadian deposit notes for the quarter and nine months ended July 31, 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 2012 second quarter interim consolidated financial statements. Certain accounting policies require us to make judgments and estimates, some of which may relate to matters that are uncertain. For a description of the judgments and estimates involved in the application of critical accounting policies and assumptions, see pages 36 to 42 of the 2012 second quarter interim report.

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						2011
					Jul. 31						Oct. 31
		Structured credit		Total	Total			Structured credit		Total	Total
$ millions, as at		run-off business		CIBC	CIBC	⁽¹⁾		run-off business		CIBC	CIBC	⁽¹⁾
Assets
Trading securities and loans	$	611	$	627	1.6	%	$	559	$	570	1.7	%
AFS securities		2		1,596	7.1			2		2,052	7.6
FVO securities		195		195	60.2			198		198	42.7
Derivative instruments		758		849	2.9			1,020		1,109	3.9
Liabilities
Deposits ⁽²⁾	$	429	$	582	33.0	%	$	389	$	583	33.3	%
Secured borrowings - FVO		-		-	-			-		372	100.0
Derivative instruments		1,493		1,586	5.5			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 earnings 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 bifurcated embedded derivatives, due to the complexity and unique structure of the instruments, require significant assumptions and judgments 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 a loss of approximately $70 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 $23 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 $32 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 $86 million.

A 10% reduction in the MTM of our AFS privately issued equity and debt 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 $73 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 bifurcated embedded derivatives, valued using internally vetted valuation techniques, would result in a gain of approximately $11 million.

Net gains of $26 million and $118 million for the quarter and nine months ended July 31, 2012, respectively ($112 million and $134 million for the quarter and nine months ended July 31, 2011, respectively) 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 July 31, 2012 interim consolidated financial statements.

The following table summarizes our valuation adjustments:


			2012		2011
$ millions, as at			Jul. 31		Oct. 31
Securities
	Market risk	$	2	$	4
Derivatives
	Market risk		47		51
	Credit risk		192		243
	Administration costs		5		6
Total valuation adjustments		$	246	$	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.

Asset impairment
Goodwill, other intangible assets and long-lived assets
As at July 31, 2012, we had goodwill of $1,682 million (October 31, 2011: $1,677 million) and other intangible assets with an indefinite life of $136 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.

Based on the most recent annual impairment conducted in the third quarter of 2012, the estimated recoverable amount of CIBC FirstCaribbean and the other CGUs exceeded the carrying value as at April 30, 2012. Reductions in the estimated recoverable amount of our CIBC FirstCaribbean CGU could result in goodwill impairment charges in future periods. 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.

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. The following developments occurred during the quarter:

The plaintiffs in Brown v. Canadian Imperial Bank of Commerce and CIBC World Markets Inc. filed an appeal of the Ontario Superior Court of Justice's decision denying the plaintiffs' motion for certification of the proposed overtime class action.
In Fresco v. Canadian Imperial Bank of Commerce, the Ontario Court of Appeal released its decision overturning the lower court and granting certification as a class action. CIBC will be seeking leave to appeal to the Supreme Court of Canada.
In Green v. Canadian Imperial Bank of Commerce, et al., the Ontario Superior Court of Justice released its decision dismissing the plaintiffs' motion for leave to file a statement of claim and certification as a class action. The plaintiffs filed an appeal to the Ontario Court of Appeal.
The Sino-Forest proposed class actions were temporarily stayed as a result of Sino-Forest obtaining protection under the Companies' Creditors Arrangement Act.

Subsequent to quarter end, the Quebec Court of Appeal released its decision in Marcotte v. Bank of Montreal, et al., overturning the trial judgment against CIBC.

Other than these rulings, there are no significant developments in the matters identified in our 2011 annual consolidated financial statements, and no significant new matters have arisen during the quarter ended July 31, 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 January 2013. 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.

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 13 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 13, 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 13 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 our 2012 second quarter 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 our 2012 second quarter 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 July 31, 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 nine months ended July 31, 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		Jul. 31		Oct. 31		Nov. 1
ASSETS
Cash and non-interest-bearing deposits with banks	$	2,319	$	1,481	$	1,817
Interest-bearing deposits with banks		6,480		3,661		9,005
Securities
Trading		39,147		32,713		29,074
Available-for-sale (AFS) (Note 3)		22,506		27,118		24,369
Designated at fair value (FVO)		324		464		875
		61,977		60,295		54,318
Cash collateral on securities borrowed		3,990		1,838		2,401
Securities purchased under resale agreements		28,967		25,641		34,722
Loans
Residential mortgages		151,157		150,509		143,284
Personal		35,173		34,842		34,335
Credit card		15,242		15,744		15,914
Business and government		43,860		39,663		37,946
Allowance for credit losses (Note 4)		(1,884)		(1,803)		(1,886)
		243,548		238,955		229,593
Other
Derivative instruments		28,802		28,270		24,700
Customers' liability under acceptances		10,068		9,454		7,633
Land, buildings and equipment		1,610		1,580		1,568
Goodwill		1,682		1,677		1,907
Software and other intangible assets		673		633		579
Investments in equity-accounted associates and joint ventures		1,602		1,394		495
Other assets		9,292		8,879		10,570
		53,729		51,887		47,452
	$	401,010	$	383,758	$	379,308
LIABILITIES AND EQUITY
Deposits
Personal	$	118,080	$	116,592	$	113,294
Business and government		129,199		117,143		115,841
Bank		6,723		4,177		5,618
		254,002		237,912		234,753
Obligations related to securities sold short		11,944		10,316		9,673
Cash collateral on securities lent		2,284		2,850		4,306
Secured borrowings		51,094		51,308		43,518
Capital Trust securities		1,672		1,594		1,600
Obligations related to securities sold under repurchase agreements		8,527		8,564		20,651
Other
Derivative instruments		29,092		28,792		25,363
Acceptances		10,072		9,489		7,633
Other liabilities		10,488		11,704		12,239
		49,652		49,985		45,235
Subordinated indebtedness		4,828		5,138		4,773
Equity
Preferred shares (Note 7)		2,006		2,756		3,156
Common shares (Note 7)		7,744		7,376		6,804
Contributed surplus		87		93		98
Retained earnings		6,719		5,457		4,157
Accumulated other comprehensive income (AOCI)		284		245		416
Total shareholders' equity		16,840		15,927		14,631
Non-controlling interests		167		164		168
Total equity		17,007		16,091		14,799
	$	401,010	$	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 nine
						months ended				months ended
				2012		2012		2011		2012		2011
Unaudited, $ millions				Jul. 31		Apr. 30		Jul. 31		Jul. 31		Jul. 31
Interest income
Loans			$	2,532	$	2,454	$	2,563	$	7,526	$	7,648
Securities				394		363		368		1,145		1,071
Securities borrowed or purchased under resale agreements				83		77		100		236		283
Deposits with banks				11		9		16		31		48
				3,020		2,903		3,047		8,938		9,050
Interest expense
Deposits				639		620		638		1,881		1,945
Secured borrowings				271		290		321		854		938
Securities sold short				85		77		105		249		299
Securities lent or sold under repurchase agreements				33		41		63		126		217
Subordinated indebtedness				52		52		53		156		163
Capital Trust securities				36		36		37		108		106
Other				21		34		45		86		96
				1,137		1,150		1,262		3,460		3,764
Net interest income				1,883		1,753		1,785		5,478		5,286
Non-interest income
Underwriting and advisory fees				99		114		130		320		420
Deposit and payment fees				203		188		195		581		564
Credit fees				112		98		98		307		282
Card fees				154		149		156		467		457
Investment management and custodial fees				107		105		104		314		307
Mutual fund fees				219		219		218		650		639
Insurance fees, net of claims				81		80		82		243		234
Commissions on securities transactions				96		107		110		304		387
Trading income (loss) ⁽¹⁾				(16)		41		(33)		70		57
AFS securities gains, net				70		81		65		203		161
FVO gains (losses), net ⁽¹⁾				(9)		(11)		65		(28)		5
Foreign exchange other than trading				17		35		41		82		156
Income from equity-accounted associates and joint ventures				30		24		27		116		102
Other				103		101		88		283		183
				1,266		1,331		1,346		3,912		3,954
Total revenue				3,149		3,084		3,131		9,390		9,240
Provision for credit losses (Note 4)				317		308		310		963		838
Non-interest expenses
Employee compensation and benefits				1,036		994		1,022		3,043		2,998
Occupancy costs				170		172		162		515		490
Computer, software and office equipment				259		256		247		756		735
Communications				75		76		70		230		220
Advertising and business development				63		52		55		164		152
Professional fees				47		43		43		129		120
Business and capital taxes				15		10		11		38		33
Other				166		161		395		511		818
				1,831		1,764		2,005		5,386		5,566
Income before income taxes				1,001		1,012		816		3,041		2,836
Income taxes				160		201		225		554		715
Net income			$	841	$	811	$	591	$	2,487	$	2,121
Net income attributable to non-controlling interests			$	2	$	1	$	2	$	6	$	8
	Preferred shareholders		$	29	$	44	$	55	$	129	$	139
	Common shareholders			810		766		534		2,352		1,974
Net income attributable to equity shareholders			$	839	$	810	$	589	$	2,481	$	2,113
Earnings per share (in dollars) (Note 10)		- Basic	$	2.00	$	1.90	$	1.35	$	5.83	$	4.99
		- Diluted		2.00		1.90		1.33		5.83		4.93
Dividends per common share (in dollars)				0.90		0.90		0.87		2.70		2.61

(1)

During the quarter, we reclassified gains and losses (both realized and unrealized) on certain trading securities and derivatives that are managed in conjunction with FVO financial instruments from trading income (loss) to FVO gains (losses), net in the consolidated statement of income. Prior period information has been reclassified accordingly.

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 nine
		months ended							months ended
				2012		2012		2011			2012		2011
Unaudited, $ millions				Jul. 31		Apr. 30		Jul. 31			Jul. 31		Jul. 31
Net income			$	841	$	811	$	591		$	2,487	$	2,121
Other comprehensive income (OCI), net of tax
	Net foreign currency translation adjustments
	Net gains (losses) on investments in foreign operations			83		(95)		40			29		(325)
	Net (gains) losses on investments in foreign operations
	reclassified to net income			-		-		-			1		-
	Net gains (losses) on hedges of investments in foreign operations			(35)		39		(8)			(15)		105
	Net (gains) losses on hedges of investments in foreign operations
	reclassified to net income			-		-		-			(1)		-
				48		(56)		32			14		(220)
	Net change in AFS securities
	Net gains (losses) on AFS securities			89		(2)		199			172		183
	Net (gains) losses on AFS securities reclassified to net income			(51)		(57)		(33)			(148)		(96)
				38		(59)		166			24		87
	Net change in cash flow hedges
	Net gains (losses) on derivatives designated as cash flow hedges			(1)		(3)		(28)

July 31, 2012 ⁽¹⁾

October 31, 2011 ⁽²⁾