even the largest canadian bank might even go under and
bankrupt
what might happen if it goes under?
dont ask, If it were to happen, look at our own Temasek
investments
It would go under
CIBC has lost over USD$ 1.1B and time and time again its stock
plummet
Canadian Imperial Bank of Commerce posted a net loss of $1.11
billion in the second quarter as its Canadian retail operations, a
key profit driver, suffered a slowdown and the bank recorded a huge
writedown at its investment banking division.
The bank (TSX: CM) said Thursday the second quarter loss was
worth $3 per share. That was down from net income of $807 million
or $2.27 per share in the same period last year.
Retail banking revenue from CIBC's consumer operations slipped
three per cent to $2.24 billion, and the segment's earnings fell to
$509 million, compared with $617 million a year ago, which included
an $80-million tax recovery.
CIBC was the only big Canadian bank to report lower results in
its retail banking operations during the February-April period,
which is the second quarter of its 2008 financial year.
"CIBC's quarter was disappointing in that core businesses were
less profitable than we expected and writeoffs were larger than we
expected, partially offset by a benign quarter from a credit
perspective," wrote Andre-Philippe Hardy of RBC Dominion
Securities.
The loss included a charge of $2.48 billion, or $1.67 billion
after tax, on writedowns of structured credit, adding to $3.46
billion in first-quarter writedowns.
Shares in the bank slipped $1.38 to $69.47 on the Toronto Stock
Exchange after falling as low as $69 earlier in the session – down
from over $100 before the credit crunch hit last summer.
The $1.1-billion quarterly loss came as "the deterioration in
credit and liquidity conditions, particularly for securities with
exposure to the U.S. residential mortgage market, has required CIBC
to record asset writedowns and counterparty credit reserves within
its structured credit business," the bank stated.
"In addition, market conditions have had a negative impact on
performance in other areas, particularly within CIBC's wholesale
and retail brokerage operations."
CIBC stressed that its Tier 1 capital ratio at April 30 was a
robust 10.5 per cent.
The CIBC World Markets investment banking division lost $1.64
billion, including the $1.67-billion setback, and warned that
``market and economic conditions relating to the financial
guarantors may change in the future, which could result in
significant future losses."
Further after-tax losses of $92 million were logged on foreign
exchange, derivatives and other items – including $18 million of
``higher than normal severance expense in CIBC World Markets."
The results were weak and credit losses were worse than
expected, said Brad Smith, an analyst at Blackmont Capital.
Operating earnings per share, worth $1.62, fell "well below"
market expectations, Smith added.
The bank said it expects Canadian economic growth "to remain
very sluggish in the coming quarter, held back by weak exports as
the U.S. appears to be entering a mild recession."
The bank said in its outlook that it foresees a return to
moderate growth by the final calendar quarter of 2008.
"For CIBC World Markets, mergers and acquisition and equity
activity will likely remain slower than in the prior year due to
credit concerns affecting global leveraged deals," CIBC added.
"We expect loan demand to increase due to reduced investor
appetite for asset-backed securities. U.S. economic softness and a
strong Canadian dollar could lead to a less favourable period for
corporate credit risk in certain parts of the Canadian
economy."