* C$148 million charge follows U.S. bankruptcy court
* Profit excluding items tops estimates
* Retail banking income rises
TORONTO, Feb 28 Canadian Imperial Bank of
Commerce reported a 4 percent drop in quarterly profit
on Thursday due largely to a C$148 million charge for a legal
settlement with bankrupt U.S. bank Lehman Brothers.
CIBC, Canada's fifth-largest bank, earned C$798 million
(C$777 million), or C$1.91 per share, in the first quarter ended
on Jan. 31, down from C$835 million, or C$1.91 per share, a year
The settlement stems from an agreement to pay the estate of
Lehman Brothers Holdings Inc to resolve litigation over a
collateralized debt obligation tied to the bankruptcy of the
former Wall Street Bank. CIBC agreed to the settlement in
Stripping out that charge and other smaller items, CIBC
earned C$2.15 per share, up from C$1.97 a year earlier and ahead
of analysts' expectations of C$2.08, according to Thomson
Retail banking income rose to C$611 million from C$567
million, helped by loan volumes that grew despite the bank's
decision last year to wind down its FirstLine discount mortgage
division and focus on higher-margin loans.
Canada's banks have been bracing for a sharp slowdown in
retail banking growth due to a cooling housing market, more
frugal borrowing trends among consumers, and low interest rates,
which narrow the margins on loans.
CIBC has the smallest international exposure of Canada's
"big five" banks, making it particularly vulnerable to a
domestic lending slowdown.
Wholesale banking income, which includes trading, investment
banking, and corporate lending, fell to C$91 million from C$133
million a year earlier, due to the settlement charge.