July 23 (Bloomberg) -- Canadian Imperial Bank of Commerce, the country's fifth-largest lender, may reduce the value of its investments tied to the U.S. housing market by as much as C$100 million ($95.8 million) in the third quarter, RBC Capital Markets analyst Andre-Philippe Hardy said.

A writedown of C$50 million to C$100 million at the Toronto- based bank may cut profit 5 percent for the period ending July 31, said Hardy in a research note today. He cut his per-share estimate to C$1.88 from C$1.98.

``The continued weakness in securities related to U.S. subprime housing will likely force CIBC to mark down its exposures,'' wrote Hardy, who rates the shares ``outperform.'' ``A markdown would almost certainly be partially offset by lower income taxes and incentive compensation.''

Subprime home loans, made to people with the worst credit records, are souring at the fastest pace since 2002, according to the U.S. Mortgage Bankers Association. That's made the mortgages less valuable, triggering writedowns at lenders including Washington Mutual Inc., the biggest U.S. thrift, and wiping out almost all the value of two hedge funds at Bear Stearns Cos.

CIBC doesn't comment on analysts' reports, spokesman Rob McLeod said. The shares fell 75 cents to C$96.07 at 4:10 p.m. on the Toronto Stock Exchange. They've lost 2.3 percent this year.

The company has investments in mortgage-backed securities including collateralized debt obligations, which package mortgage bonds into new securities. New York-based newsletter Grant's Interest Rate Observer reported in June that CIBC may have as much as $2.6 billion in such investments.

Potential Damage

CIBC said in a July 10 statement its ``unhedged exposure'' is well below that amount, but declined to say exactly how much it has in securities tied to the U.S. subprime market.

BMO Capital Markets analyst Ian de Verteuil said in a July 13 note that CIBC may hold C$1.2 billion of CDOs. A pretax charge of C$150 million ``seems likely'' in the third quarter if the market remains ``hostile,'' he wrote.

CIBC may say net income rose 4.8 percent to C$1.95 a share in the third quarter when it reports results Aug. 30, according to the median estimate of five analysts polled by Bloomberg.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

Last Updated: July 23, 2007 16:33 EDT