CIBC took steps in 2008 to exit positions outside its core Canadian and small Caribbean operations. With Canadian citizens in better shape and a fractional subprime market compared to the US, CIBC net income will remain healthy over the next several years.
CIBC's 10.5% Tier-1 Capital Ratio (a measure of a bank's financial health) is the highest in North America and 3.5% above the regulatory limit in Canada. This high ratio provides a cushion for CIBC and will let the company buy riskier and higher returning assets when the economy improves.
In early 2008, management increased capital by issuing equity shares. In addition, the company exited non-streamline businesses, including US investment banking, and received downside protection in the summer for its exposure to the US real estate market.