UPDATE 2-Canadian lender CIBC posts better than expected quarterly earnings

(Adds divisional performances)

TORONTO, Aug 24 (Reuters) - Canadian Imperial Bank of Commerce reported third-quarter earnings ahead of market expectations, with a strong performance from its retail business offsetting a weaker showing at its investment banking division.

Canada's fifth-biggest lender said on Thursday that earnings per share, excluding one-off items, increased to C$2.77 from C$2.67 a year ago, in the quarter to June 30.

Analysts had on average forecast earnings of C$2.66 per share, according to Thomson Reuters I/B/E/S data.

The bank, which acquired Chicago-based PrivateBancorp in a $5 billion deal in June, has been looking to diversify outside of Canada. Of the country's biggest banks, CIBC is the most exposed to the domestic economy.

"Our strong results this quarter reflect solid contributions from our strategic business units, as well as our (PrivateBancorp) acquisition," Chief Executive Victor Dodig said in a statement.

Net income, excluding one-off items, advanced by 9 percent to C$1.17 billion ($934 million), the bank said. That included net income of C$720 million from its Canadian personal and business banking operations, up from C$667 million a year ago.

Its Canadian wealth management business reported net income of C$136 million, up from C$124 million.

Net invome at the bank's capital markets division was C$252 million, down from C$281 million, reflecting lower equity derivatives and interest rate trading and lower equity underwriting revenue. ($1 = 1.2533 Canadian dollars) (Reporting by Matt Scuffham; Editing by David Goodman and Mark Potter)