Source: The Canadian Press

CIBC (TSX:CM) says its fourth-quarter profits slipped 22% to $500 million as the bank contended with higher losses in its structured credit portfolio and lower fees from its trading and investments businesses.

The bank reported that earnings amounted to $1.19 per share, down from $1.56 a share or $644 million in the same period a year earlier.

Results were particularly weak in its wholesale division, where CIBC reported a quarterly loss for the operations which serve large corporate clients, mid-sized companies, real estate developers and investors with various financial services.

On an adjusted basis, overall earnings were $1.68 per share, above analyst expectations of $1.64, according to those polled by Thomson Reuters.

Revenue was $2.48 billion for the period, compared to $2.36 billion at the same time last year, and below expectations of $2.96 billion.

CIBC’s retail banking division rose to a profit of $576 million compared to $468 million a year ago, but was down from $599 million in the third quarter.

In wholesale banking, CIBC posted a loss of $56 million compared to a profit of $160 million last year.

Trading revenues, which are part of the division, slipped to $238 million from $503 million. Corporate and investment banking revenues were also about 20% lower to $136 million.

Nevertheless, the bank was “pleased with the progress wholesale banking made in 2010, which was a year of continued volatility in markets,” said CIBC president and chief executive Gerry McCaughey in a conference call.

“The stability of our wholesale banking business reflects the hard work put in to refocus our strategy.”

Provisions for bad loans were tightened to $150 million compared to $424 million a year earlier.

Barclays analyst John Aiken said the bank managed to beat his predictions, which were in line with the average estimates, but noted that he still considered the quarter “disappointing.”

“CIBC managed to exceed our estimates on the back of lower provisions and taxes than we had forecast,” he said.

“While the credit story should be a positive, we note that despite flat core revenue growth, core expenses increased by 6.6%, generating some very strong negative operating leverage.”

Investors have been closely watching the banks to see which ones would announce a dividend increase this quarter, and while CIBC did not boost its payout, McCaughey offered an optimistic tone for the future. He said the quarter’s earning are close to a threshold that would encourage it to consider making a move on dividends.

“The discussion around dividend increases is one that is starting to come into focus a little bit more than when I would’ve talked about this in the past,” he told investors.

But “we’re not there quite yet,” he added.

Shares of CIBC slipped $1.90 to $79.15 in afternoon trading on the Toronto Stock Exchange.

For the year ended Oct. 31, CIBC reported net income of $2.5 billion, up from net income of $1.2 billion in the same period when it benefited from higher fees from arranging stock sales and mergers, which helped offset rising loan-loss provisions.

CIBC has more than 41,000 employees across its operations including retail and wholesale banking and financial services, serving more than 11 million customers.

In September, the bank closed a deal to buy a $2.1-billion credit card portfolio from Citigroup’s Canadian MasterCard business, a transaction which makes CIBC the country’s largest issuer of Visa and MasterCard credit cards.

The portfolio includes accounts associated with co-branded Petro-Canada (TSX:SU) credit cards that offer the Petro Points rewards program.

Last month, the bank hired then-federal environment minister Jim Prentice as vice-chairman.