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Posted May 30 , 2013

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CIBC Announces Second Quarter 2013 Results

TORONTO - CIBC today announced its financial results for the second quarter ended April 30, 2013.

Second quarter highlights

• Reported net income was $876 million, compared with $811 million for the second quarter a year ago, and $798 million for the prior quarter.
• Adjusted net income was $876(1) million, compared with $840(1) million for the second quarter a year ago, and $895(1) million for the prior quarter.
• Reported diluted earnings per share was $2.12, compared with $1.90 for the prior year quarter, and $1.91 for the prior quarter.
• Adjusted diluted earnings per share was $2.12(1), compared with $2.00(1) for the prior year quarter, and $2.15(1) for the prior quarter.

Results for the second quarter of 2013 were affected by the following items of note:

• $27 million ($20 million after-tax or $0.05 per share) income from the structured credit run-off business;
• $21 million ($15 million after-tax or $0.04 per share) loan losses in our exited European leveraged finance portfolio; and
• $6 million ($5 million after-tax or $0.01 per share) amortization of intangible assets.

CIBC's Basel III Common Equity Tier 1 ratio at April 30, 2013 was 9.7%, and our Tier 1 capital ratio and Total capital ratio were 12.2% and 15.5%, respectively, on an all-in basis compared to Basel III Common Equity Tier 1 ratio of 9.6%, Tier 1 capital ratio of 12.0% and Total capital ratio of 15.3% in the prior quarter.

Return on common shareholders' equity for the second quarter was 22.3%.

CIBC announced a quarterly dividend increase of 2 cents per common share to 96 cents per share.

"CIBC delivered solid results this quarter across our core businesses in Retail and Business Banking, Wealth Management and Wholesale Banking," says Gerald T. McCaughey, President and Chief Executive Officer. "These results reflect our strong focus on our clients as well as our underlying business fundamentals."

Core business performance
Retail and Business Banking reported net income of $604 million for the second quarter, up $48 million or 9% from the same quarter last year.

Revenue of $2.0 billion was up $32 million or 2% from the second quarter of 2012, primarily due to volume growth across most products, wider spreads, and higher fees. Provision for credit losses of $233 million was down $38 million, or 14%, from the same quarter last year due to lower write-offs and bankruptcies in the cards portfolio.

During the second quarter of 2013, Retail and Business Banking continued to make progress against our objectives of accelerating profitable revenue growth and enhancing client experience:

• We continued to invest in our distribution platform, opening 10 branches in the first half of fiscal 2013 to better serve our clients. We now offer expanded evening and Saturday hours at over 650 of our branches, as well as Sunday hours at over 100 branches;
• In April, we launched the CIBC Everyday Banking Bundle and the CIBC Premium Banking Bundle to make it easier for our clients to bank with us and reward them for doing so;
• We launched Break Away to our Imperial Service teams across the country. Break Away, a leadership training program to support frontline best practices, has successfully demonstrated that through a consistent approach to sales and service delivery we can significantly improve sales and client experience results; and
• Post quarter-end, we announced the availability of CIBC Mobile Payments to Android smartphones, starting with the Samsung Galaxy S3 from Rogers. This builds on our leadership in the mobile payments space. Last October, CIBC became the first bank in Canada to provide consumers with the ability to complete credit card transactions via their smartphone.

Wealth Management reported net income of $92 million for the second quarter, up 16% from the same quarter last year.
Revenue of $443 million was up $25 million or 6% compared to the second quarter of 2012, primarily due to higher client assets under management driven by higher long-term net sales of mutual funds.

During the second quarter of 2013, Wealth Management continued its progress in support of our strategic priority to build our wealth management platform:

• We announced our intention to acquire Atlantic Trust Private Wealth Management from its parent company Invesco Ltd. as part of our strategic plan to grow our North American wealth management business; and
• We continue to maintain momentum in our retail fund business with 17 consecutive quarters of positive long-term net sales.

Wholesale Banking reported net income of $198 million for the second quarter, up $107 million from the prior quarter, which included a settlement charge shown as an item of note. Excluding items of note, adjusted net income was $193(1) million, down $7 million from the prior quarter.

Revenue of $580 million was up $17 million or 3% from the prior quarter, primarily due to higher revenue in the structured credit run-off business and U.S. real estate finance, partially offset by lower capital markets revenue.

In support of its objective to be the premier client-focused wholesale bank centred in Canada, Wholesale Banking acted as:

• Financial advisor to Inmet Mining on its sale to First Quantum Minerals for $4.6 billion;
• Joint bookrunner and administrative agent in the refinancing of Hydro-Québec's US$2.0 billion revolving credit facility;
• Joint bookrunner of TELUS Corporation's $1.7 billion dual-tranche bond offering;
vFinancial advisor, joint underwriter, joint bookrunner and administrative agent for Leon's Furniture Limited's $500 million acquisition financing to acquire The Brick; and
• Joint lead and joint bookrunner on the Province of Manitoba's US$500 million global debt offering.

In summary, CIBC delivered solid performance during the second quarter.

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

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