CIBC blamed soft U.S. real estate and construction sectors and high interest rates for its three-fold jump in bad loan provisions to C$736 million ($544 million).
"Where we are seeing the issues is in commercial real estate and in particular, in the institutional office space," said Shawn Beber, the bank's head of U.S. operations.
And as that transition continues, you'll see (commercial real estate) wind up being a smaller percentage of the overall U.S. portfolio as our commercial and industrial and our wealth businesses continue to grow," Beber told analysts.
The U.S. office portfolio represents less than 1% of CIBC's overall loan book and 20% of overall U.S. commercial real estate.
"It appears that higher interest rates for longer may be the primary culprit," RBC analyst Darko Mihelic said.
Persons:
Carlos Osorio, Shawn Beber, Beber, Brian Madden, Darko Mihelic, Nivedita Balu, Pritam Biswas, David Holmes, Mark Potter
Organizations:
Canadian Imperial Bank of Commerce, CIBC, REUTERS, Bank, Bank of Montreal, Bank of Nova, National Bank, Royal Bank of Canada, Investment, RBC, Thomson
Locations:
Toronto , Ontario, Canada, U.S, Bank of Nova Scotia, Canadian, Toronto, Bengaluru