Feb 29 Reuters Canadian Imperial Bank of Commerce exceeded estimates for firstquarter profit on Thursday, driven by gains in its domestic personal and business banking unit that offset a blow from higher provisions it set aside for potential bad debts.

Although higher interest rates have slowed demand for bank loans, they have helped to boost income through their lending activities.

The Canadian personal and business banking unit saw earnings jump 10 to C650 million in the first quarter ended January from a year earlier, helped by higher deposits, loans and improved margins.

Analysts also expect a rebound in revenue from capital markets as deal activity resumes after a long lull.

CIBC39;s revenue from capital markets rose 5 to C1.56 billion in the reported quarter, aided by strength in investment banking on strong advisory and debt underwriting activity.

Excluding onetime charges, the country39;s fifth largest lender reported a profit of C1.81 a share, above analysts39; average estimates of C1.66, according to LSEG data.

Though the lender benefited from higher interest rates, elevated borrowing costs worsened default risks. To safeguard against the risk, CIBC built C585 million in provisions, up by C290 million.

Earlier this week, peers Royal Bank of Canada, Bank of Montreal BMO.TO, Bank of Nova Scotia BNS.TO and National Bank of Canada said they built larger provisions to prepare for bad loans and warned that growth would be muted until rates begin to fall.

CIBC…