Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q2 2024 Earnings Presentation
58 slides from Canadian Imperial Bank Of Commerce's earnings presentation, May 30, 2024
Slide 1: Quarterly Results Presentation Second Quarter 2024
Quarterly Results Presentation Second Quarter 2024 May 30, 2024 All amounts are in Canadian dollars unless otherwise indicated.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Second Quarter 2024 A NOTE ABOUT FORWARD-LOOKING STATEMENTS: From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this Investor Presentation, in other filings with Canadian securities regulators o
Slide 3: CIBC Overview
CIBC Overview Victor Dodig President & Chief Executive Officer
Slide 4: Strong execution of our strategy while remaining agile
CIBC Overview Strong execution of our strategy while remaining agile in an evolving environment Diluted EPS Results reflect strong execution against our strategic priorities Reported $1.79 Adjusted1,2 $1.75 YoY +2% / +3%2 Capital position Credit metrics Building on our ESG Revenue growth NIM (exclud
Slide 5: Our Progress
Our Progress A disciplined approach to resource allocation to drive profitable growth Imperial Service money-in balance Canadian Asset Management business Leading in Mass Affluent growth1 27% higher versus the ranked #1 vs. Big-6 for absolute long-term & High Net Worth and total retail mutual fund n
Slide 6: Financial Overview
Financial Overview Robert Sedran Senior Executive Vice-President & Chief Financial Officer
Slide 7: Financial Results Overview
Financial Results Overview Results demonstrate ongoing growth momentum and balance sheet strength Diluted Earnings Per Share Return on Equity Revenue Operating Leverage1 Reported $1.79 Reported 13.7% $6.2B Reported3 (3.4)% +8% YoY Adjusted2 $1.75 Adjusted2 13.4% Reported / Adjusted2 Adjusted2,4 0.5%
Slide 8: Financial Results Overview
Financial Results Overview Second quarter results reflect the diversification and resilience of our business model Reported ($MM) Q2/24 YoY QoQ Revenue Revenue 6,164 8% (1)% • Revenue growth of 8% YoY driven by margin expansion, higher fee income Non-Trading Net Interest Income 3,443 9% 0% and tradi
Slide 9: Net Interest Income (NII)
Net Interest Income (NII) NII (ex-trading) grew 9%, supported by margin expansion and the benefit of product mix shift Net Interest Income Loans4,5 ($B, local currency) Deposits5 ($B, local currency) 1.72% 1.65% 1.72% 1.54% YoY / QoQ 1.43% 1.46% YoY / QoQ 70 (1)% / (1)% 3,187 3,249 3,281 40 (1)% / +
Slide 10: Non-Interest Income
Non-Interest Income Double-digit growth driven by strong trading and higher fees amidst appreciating markets Non-Interest Income by Category ($MM)4,5 Market-Related Fees4 Transactional Fees4 15% 2,972 2,883 2,517 848 666 470 1,132 1,178 1,278 725 782 765 Q2/23 Q1/24 Q2/24 Trading1 Market-related (ex
Slide 11: Non-Interest Expenses
Non-Interest Expenses Focused investments and continued realization of efficiencies Adjusted1 Expenses ($MM) and YoY Expense Growth KEY INVESTMENTS +8% Leading in Mass Affluent & High Net Worth +4% • Expanding our Private Wealth Management 66 3,474 teams in the U.S. and Canada 170 41 • Hiring Imperi
Slide 12: Capital and Liquidity
Capital and Liquidity Resilient balance sheet well-positioned to support continued organic growth Capital Position $B Q2/23 Q1/24 Q2/24 • CET1 ratio of 13.1%, up from 13.0% last quarter Average Loans and Acceptances 1 534.8 538.8 540.4 1 • Increase primarily due to internal capital generation and sh
Slide 13: Canadian Banking: Personal & Business Banking
Canadian Banking: Personal & Business Banking Strong execution delivering double-digit PPPT growth and positive operating leverage • Double-digit growth in net interest income (up 10% YoY) driven by Reported Adjusted1 expanding margins and volume growth ($MM) Q2/24 YoY QoQ Q2/24 YoY QoQ • Net intere
Slide 14: Canadian Banking: Commercial Banking & Wealth Management
Canadian Banking: Commercial Banking & Wealth Management Strong wealth management business offset by slowing commercial growth • Net interest income down 2% YoY and sequentially Reported & Adjusted1 ($MM) Q2/24 YoY QoQ • Volume growth modest on both sides of the balance sheet Revenue 1,384 4% 1% whi
Slide 15: U.S. Region: Commercial Banking & Wealth Management
U.S. Region: Commercial Banking & Wealth Management Core business revenue stable; higher expenses reflect annualization of investments in our business • Net interest income down 1% YoY mainly driven by mix shift to Reported Adjusted1 higher cost deposits (US$MM) Q2/24 YoY QoQ Q2/24 YoY QoQ • Deposit
Slide 16: Capital Markets & Direct Financial Services
Capital Markets & Direct Financial Services Strong momentum in Investment Banking powers revenue growth • Revenue growth of 9% YoY, or 4% on an adjusted basis1: Reported Adjusted1 • Corporate and Investment Banking up 12% YoY mainly ($MM) Q2/24 YoY QoQ Q2/24 YoY QoQ from stronger equity and debt und
Slide 17: Corporate & Other
Corporate & Other Improved results supported by normalizing Treasury revenues • Revenue higher YoY and sequentially Reported Adjusted1 • Net interest income higher due to Treasury-related revenues ($MM) Q2/24 YoY QoQ Q2/24 YoY QoQ during the quarter • International Banking up 4% YoY, benefitting fro
Slide 18: In Conclusion
In Conclusion A continued focus on execution and sustainable, profitable growth Consistent execution and momentum across our diversified business driving profitable growth Strong balance sheet with capital ratios above operating targets provide flexibility in an evolving environment Disciplined and
Slide 19: Risk Overview
Risk Overview Frank Guse Senior Executive Vice-President & Chief Risk Officer
Slide 20: Key Messages
Key Messages Loan Loss Performance Prudent Risk Management Allowance Coverage Loan losses continue to remain Accelerated our progress on Strong allowance coverage stable as we execute on the US office portfolio maintained with market strategic priorities uncertainty persisting Second Quarter, 2024 1
Slide 21: Allowance for Credit Losses
Allowance for Credit Losses Allowance for credit losses was down QoQ • Our total provision for credit losses was $514MM in Q2/24, compared to $585MM last quarter • Provision on impaired loans was $447MM, down $45MM quarter-over-quarter • Lower impaired provisions were recognized in both retail loan
Slide 22: PCL on Impaired Loans
PCL on Impaired Loans1 CIBC Total ($MM, bps) Canadian PBB ($MM, bps) PCL on Impaired Loans down QoQ • Total bank impaired PCL was down attributable to lower provisions in both retail, and business and government loans • Canadian PBB impaired PCL was down due to a lower allowance increase, partially
Slide 23: Credit Performance – Gross Impaired Loans
Credit Performance – Gross Impaired Loans Gross impaired loan ratios down QoQ • Gross impaired loan ratio was down QoQ, primarily due to a decrease in business Gross Impaired Loan Ratios Q2/23 Q1/24 Q2/24 and government loans, partially offset by an increase in Canadian personal lending Canadian Res
Slide 24: Canadian Consumer Lending
Canadian Consumer Lending Net write-offs and delinquencies trending in line with our expectations Net Write-offs: Reported Net Write-offs Q2/23 Q1/24 Q2/24 Canadian Residential Mortgages <0.01% <0.01% <0.01% • Overall consumer net write-offs increased QoQ, mainly attributable to seasonality in credi
Slide 25: U.S. Commercial Real Estate – Office Portfolio
U.S. Commercial Real Estate – Office Portfolio Majority of challenges behind us • Solid progress made as we work through maturity profile and liquidation of problem loans • Gross impaired loan ratio was down from 19.7% in Q1/24 to 10.3% in Q2/24 as a result of focused disposition efforts • 10.2% al
Slide 26: In Summary
In Summary Credit performance in line with expectation Overall credit performance continues in-line with our guidance Allowance coverage remains prudent for the macroeconomic environment Our team remains focused and resilient through the market uncertainty Second Quarter, 2024 25
Slide 27: Appendix
Appendix CIBCO®
Slide 28: Business Segment Trends: Personal & Business Banking
Business Segment Trends Canadian Banking: Personal & Business Banking Revenue ($MM)2,3 Non-Interest Expenses ($MM) & Efficiency Ratio (%) ROE7 Reported 23.0% Adjusted1 23.2% YoY (5)% / (5)%1 1 Operating Leverage 1 1 1 (Rolling 4Q Avg.) Net Interest Margin on Average Interest-Earning Assets4 Average
Slide 29: Growing Digital Adoption & Engagement in Canadian Personal Banking
Business Segment Trends Growing Digital Adoption & Engagement in Canadian Personal Banking1 Digital Adoption Rate2 Active Digital Banking Users3 Digital Channel Usage (MM) (# of Sessions, MM) 86.1% 7.3 374 382 335 335 Awards & Recognition 85.8% 7.2 Based on Surviscor & MoneySense’s 85.0% 321 review
Slide 30: Business Segment Trends: Canadian Commercial Banking & Wealth Management
Business Segment Trends Canadian Banking: Commercial Banking & Wealth Management Revenue ($MM) Net Interest Margin on Average Non-Interest Expenses ($MM) Interest-Earning Assets2 & Efficiency Ratio (%) ROE8 Reported & Adjusted1 19.9% YoY (2)% Double-Digit AUA / AUM Growth5,6 Average Loans & Deposits
Slide 31: Business Segment Trends: Canadian Personal & Commercial Banking
Business Segment Trends Canadian Banking: Personal & Commercial Banking1 Revenue ($MM)3,4 Margins impacted by benchmark reform, moderating headwinds from deposit mix and mortgage pricing Net Interest Margin on Average Interest-Earning Assets5 Mortgage Portfolio Spreads (bps)6 2 2 2 Non-Interest Expe
Slide 32: Business Segment Trends: U.S. Region Commercial Banking & Wealth
Business Segment Trends U.S. Region: Commercial Banking & Wealth Management ($US) Revenue ($MM) Net Interest Margin on Average Non-Interest Expenses ($MM) Interest-Earning Assets2 & Efficiency Ratio (%) ROE9 Reported 3.5% Adjusted1 4.1% YoY 2% / 2%1 1 Clients with Private 1 Banking & Wealth7 13% Ave
Slide 33: Business Segment Trends: Capital Markets & Direct Financial Services
Business Segment Trends Capital Markets & Direct Financial Services Revenue (TEB) ($MM)1 Revenue Composition by Line of Business ($MM)1 ROE6 Reported 24.2% Adjusted2 22.0% YoY 1% / (1)%2 2,3 2 2 DFS Revenue Growth Non-Interest Expenses ($MM) & Efficiency Ratio (%) Average Loans & Deposits ($B)4,5 +5
Slide 34: Balance Sheet
Balance Sheet NII continues to benefit from growth in loans and deposits, as well as margin expansion Average Assets ($B) & Yields1,2,3 Average Liabilities and Equity ($B), & Costs1,4,5 Client Deposit Mix (Spot Balances)6 • Loan yields and deposit costs continue to rise YoY and sequentially • Mix sh
Slide 35: Funding & Liquidity
Funding & Liquidity A well-diversified, high-quality, client-driven balance sheet • Liquidity and funding position continue to remain well-above regulatory requirements • Client deposits are the primary source of funding, comprising over $500B of the total funding base • Funding strategy is suppleme
Slide 36: Interest Rate Sensitivity
Interest Rate Sensitivity Well-positioned to demonstrate agility in a changing rate environment Net Interest Income Sensitivity to SBU Composition of Structural Interest Rate Environment in a +/- 100 bps change ($MM)1 Interest Rate Sensitivity1,2 Canada and the U.S.3 Implied Forwards 305 (361) • Yea
Slide 37: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Total PCLs trended lower in Q2/24 ($MM) Q2/23 Q1/24 Q2/24 Provision for Credit Losses up YoY and down QoQ Cdn. Personal & Business Banking 123 329 270 • Impaired provision was down in Q2/24, largely due to lower impairments in the U.S. and Canadian commercial portfo
Slide 38: Allowance Coverage
Allowance Coverage Allowance coverage remains higher than the pre-pandemic level Total allowance coverage ratio up YoY and down QoQ Total Allowance Coverage Q2/23 Q1/24 Q2/24 • Decrease QoQ was largely attributable to the U.S. Commercial Banking Canadian Credit Cards 4.3% 4.2% 4.0% portfolio, as a r
Slide 39: Credit Portfolio Breakdown
Credit Portfolio Breakdown Lending Portfolio has a strong risk profile Credit portfolio is well diversified Overall Loan Mix (Net Outstanding Loans and Acceptances) • 62% of our portfolio is consumer lending, composed mainly of mortgages, with Canadian uninsured having an average loan-to-value of 52
Slide 40: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending Mortgage delinquencies perform in line with expectation • Mortgage originations continue to be driven by clients with deep and 90+ Days Delinquency Rates Q2/23 Q1/24 Q2/24 balanced relationships Total Mortgages 0.16% 0.25% 0.26% • 87% of mortgages are ow
Slide 41: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Credit bureau score1 and LTV2 distributions remain healthy Credit Bureau Score1 Distribution 3 3 Loan-to-Value (LTV)2 Distribution 3 3 Endnotes are included on slides 49 to 54. Second Quarter, 2024 40
Slide 42: Canadian Uninsured Residential Mortgages – Q2/24 Originations
Canadian Uninsured Residential Mortgages – Q2/24 Originations1 Credit quality of new originations continues to remain high • Originations of $7.5B in Q2/24 • Average LTV2 in Canada: 67%, GVA3: 61%, GTA3: 67% Credit Bureau Score4 Distribution 3 3 Loan-to-Value (LTV)2 Distribution 3 3 Endnotes are inc
Slide 43: Canadian Mortgages Renewal Profile
Canadian Mortgages Renewal Profile Impacts of payment increases at renewal expected to be manageable • Using an illustrative 6% rate at time of renewal, and no borrower income growth since origination, mortgage payment increases are forecasted to be less than 3.8% of clients’ income • Low LTV of ren
Slide 44: Commercial Real Estate
Commercial Real Estate Commercial real estate exposure is well diversified • Canada represents 62% of total Canadian & U.S. real estate exposure • Gross impaired loans as a percentage of total Canadian & U.S. real estate is 1.30% Canadian Commercial Real Estate Exposure by Sector1 U.S. Commercial Re
Slide 45: Commercial Real Estate – Multi-Family Loans
Commercial Real Estate – Multi-Family Loans Credit quality continues to remain strong • Multi-family portfolios1 are well diversified across various regions in both Canada and the U.S., with healthy risk-ratings and robust overall loan-to-values • Minimal impaired balances as at Q2/24 Canada US Onta
Slide 46: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 Robust trading performance in recent volatile market Endnotes are included on slides 49 to 54. Second Quarter, 2024 45
Slide 47: Forward Looking Information
Forward Looking Information Variables used to estimate our Expected Credit Losses1 Forward-Looking Information Variables Avg. Value over the next Avg. Value over the Avg. Value over the next Avg. Value over the Avg. Value over the next Avg. Value over the 12 months remaining forecast period 12 month
Slide 48: Items of Note
Items of Note Second quarter 2024 Period Q2/24 Reporting Segments Pre-Tax EPS After-Tax & NCI Effect Effect Effect ($MM) ($MM) ($/Share)1 Charge related to the special assessment imposed by the Federal Deposit Insurance 13 10 0.01 U.S. Commercial Banking and Wealth Management Corporation (FDIC) on U
Slide 49: Reconciliation
Reconciliation GAAP (reported) to non-GAAP (adjusted) results1 $MM Q1/24 Q2/24 Reporting Segment Reported revenue 1,561 1,488 Non-trading revenue (856) (906) 1 Trading revenue 705 582 Impact of item of note Capital Markets and Corresponding impact on TEB in Capital Markets and Direct Financial Servi
Slide 50: Endnotes
Endnotes Second quarter 2024 Slide 3 – CIBC Overview 1. See note 1 on slide 56. 2. Adjusted results are non-GAAP measures. See slide 55 for further details. 3. Pre-provision, pre-tax earnings (PPPT) is revenue net of non-interest expenses and is a non-GAAP measure. See slide 55 for further details.
Slide 51: Endnotes
Endnotes Second quarter 2024 Slide 8 – Net Interest Income (NII) cont’d 8. Benchmark reform refers to impact of transitioning to the Canadian Overnight Repo Rate Average (CORRA) from Canadian Dollar Offered Rate (CDOR). Slide 9 – Non-Interest Income 1. See note 11 on slide 56. 2. Market-related fees
Slide 52: Endnotes
Endnotes Second quarter 2024 Slide 14 – U.S. Region: Commercial Banking & Wealth Management cont’d… 4. Average balances are calculated as a weighted average of daily closing balances. 5. Assets under management (AUM) are included in assets under administration (AUA). Includes certain Canadian Commer
Slide 53: Endnotes
Endnotes Second quarter 2024 Slide 28 – Business Segment Trends: Digital 1. Canadian Personal Banking only, excluding Simplii Financial. Based on spot balances as at April 30 for the respective periods. 2. Digital Adoption (Penetration) Rate represents the percentage share of Digital Registered Cust
Slide 54: Endnotes
Endnotes Second quarter 2024 Slide 32 – Business Segment Trends: Capital Markets & Direct Financial Services 1. Reported revenue is reported on a taxable equivalent basis (TEB). Adjusted revenue excludes TEB. Commencing in Q1/24, our adjusted results exclude TEB - $52MM in Q1/24 and $71MM in Q2/24.
Slide 55: Endnotes
Endnotes Second quarter 2024 Slide 40 – Canadian Uninsured Residential Mortgages 1. Starting Q2/23, our primary credit score provider is TransUnion as opposed to Equifax in the prior quarters. The scores are not identical, so score distributions up to Q1/23 are not directly comparable to score distr
Slide 56: Non-GAAP Measures
Non-GAAP Measures Second quarter 2024 We use a number of financial measures to assess the performance of our business lines as described below. Some measures are calculated in accordance with GAAP (IFRS), while other measures do not have a standardized meaning under GAAP, and accordingly, these meas
Slide 57: Glossary
Glossary Second quarter 2024 Definition 1 Adjusted Diluted EPS We adjust our reported diluted EPS to remove the impact of items of note, net of income taxes, to calculate the adjusted EPS. We adjust our reported net income attributable to common shareholders to remove the impact of items of note, ne
Slide 58: Glossary
Glossary Second quarter 2024 Definition We adjust our reported revenue and non-interest expenses to remove the impact of items of note. Commencing Q1/24, we no longer gross up tax-exempt revenue to bring it to a TEB 12 Adjusted Efficiency Ratio for the application of this ratio to our consolidated r
Canadian Imperial Bank of Commerce — Q2 2024 Earnings Presentation on 6ix