Canadian Imperial Bank of Commerce lost $1.11 billion in the second quarter, down from profits of $807 in the same period last year, the bank announced today.

This loss was due, in part, to a $2.48 billion pre-tax hit the bank took on structured credit activities related its exposure to the subprime mortgage crisis in the U.S.

Diluted loss per share amounted to s $3.00, compared to diluted earnings per share (EPS) of $2.27 a year ago.

“While the current environment is challenging, CIBC’s franchise remains solid,” said Gerald McCaughey, the bank’s president and CEO. “Our capital position is strong and our core businesses are well positioned for growth. In support of our strategy of consistent and sustainable performance, we are taking further steps to adapt our business profile and risk management processes to evolving financial market risks.”

In the bank’s retail business profits were down $108 million, to $509 million, compared with $617 million for the same period last year.

CIBC World Markets, the bank’s wholesale and corporate banking arm, saw a net loss of $1.6 billion, compared with net income of $160 million in the same period last year. “CIBC World Markets’ results were significantly affected by the $1.46 billion after-tax charge with respect to the counterparty credit protection purchased from financial guarantors,” the bank said in a statement.

Investment banking and credit products revenue was down $181 million, primarily, according to CIBC, due to lower gains associated with corporate loan hedging programs and lower investment banking revenue, including the impact of the sold U.S. investment and corporate banking business.

Earlier this year, CIBC issued 45.3 million common shares and raised a total of $2.9 billion, through a combination of private placements and a public offering. The bank issued 23.9 million common shares, totaling $1.5 billion, through a private placement to a group of institutional investors made up of Manulife Financial Corporation, Caisse de dépôt et placement du Québec, Cheung Kong (Holdings) Ltd. and OMERS Administration Corporation. And it issued 21.4 million common shares, totaling $1.4 billion, through a public offering.

As well, on January 1, CIBC sold its U.S. based investment banking, leveraged finance, equities and related debt capital markets businesses and Israeli investment banking and equities businesses to Oppenheimer. During the first and second quarters, the bank recorded a loss of $82 million on this sale. It said it anticipates the sale of other U.S. capital markets related businesses located in the U.K. and Asia to Oppenheimer will close in the third quarter of 2008.

“Canadian economic growth is expected 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. “We expect both economies should return to moderate growth by the final calendar quarter of 2008, helped by ongoing central bank interest rate cuts and fiscal stimulus. Healthy global resource markets and a stable housing market are expected to keep the Canadian economy from an outright recession.”

The bank says it expects low unemployment rates and a stable housing market will support lending and deposit growth and merger and acquisition activity will remain slower due to credit concerns.