Fitch Ratings has affirmed its credit ratings on CIBC, and revised the bank’s rating outlook to stable from negative, citing its improved credit profile.

Fitch affirmed the long- and short-term Issuer Default Ratings (IDRs) of the bank at AA-/F1+ and the short-term IDR of its subsidiary, Canadian Imperial Holdings, Inc. at F1+.

The rating agency said Wednesday the affirmation, “reflects CIBC’s improved profitability and capitalization, solid Canadian franchise, and reduced risk positions”. Fitch notes that compared with other global banks, CIBC has benefited from the relatively strong performance of the Canadian housing sector and overall economy throughout the financial crisis. Moreover, the agency observes that CIBC’s earnings improved in 2010.

While the bank has recognized large losses on a portfolio of structured securities, and it still has material positions, these have been segregated into the ‘structured credit run-off business,’ and future risk has been significantly reduced, Fitch says.

“In addition, in the past two years CIBC has built its capital position and reduced risk-weighted assets, while also increasing its operating efficiency,” Fitch adds.

“The reduction of risk in the structured credit run-off portfolio, combined with improving earnings and asset quality, have helped stabilize CIBC’s credit profile and support a revision of the rating outlook to stable,” Fitch concludes.

IE