Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q3 2024 Earnings Presentation
56 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Aug 29, 2024
Slide 1: Quarterly Results Presentation Third Quarter 2024
Quarterly Results Presentation Third Quarter 2024 August 29, 2024 All amounts are in Canadian dollars unless otherwise indicated.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Third 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 or
Slide 3: CIBC Overview
CIBC Overview Victor Dodig President & Chief Executive Officer
Slide 4: CIBC Overview
CIBC Overview Strong balance sheet supports organic growth and continued execution of our strategy Diluted EPS KEY PERFORMANCE DRIVERS Reported $1.82 Adjusted1,2 $1.93 +24% / +27%2 YoY +24% Broad-based revenue growth Record client-driven revenue, diversified across all businesses Revenue Reported &
Slide 5: Personal and Business Banking
Personal and Business Banking Strong momentum in our Canadian Consumer franchise KEY HIGHLIGHTS ~640k +1.6MM #2 Net new clients across our Canadian New chequing and savings Market share growth in Demand Consumer platforms [LTM]1 account openings [LTM]2 and Notice deposits3 IMPERIAL SERVICE O U R D I
Slide 6: Commercial Banking and Wealth Management
Commercial Banking and Wealth Management A highly connected, relationship-oriented franchise Annualized client Loan growth [YoY] referral volume CANADA U N I T E D S TAT E S +3% U.S. Commercial 56% 20% and Industrial Private Banking clients with U.S. Commercial clients with Wood Gundy relationship6
Slide 7: Capital Markets and Direct Financial Services
Capital Markets and Direct Financial Services Best-in-class insight, advice and execution Premium year-over-year revenue and loan growth across the franchise KEY HIGHLIGHTS Global Markets 16% Acted as a financial advisor to Canada’s largest Indigenous Equity Ownership Direct Financial Services 5% Ag
Slide 8: Our Commitment to Advancing Artificial Intelligence (AI)
Our Commitment to Advancing Artificial Intelligence (AI) Responsible and ethical development and use of AI in our Bank Rolled out Generative AI (Gen AI) Pilots KEY HIGHLIGHTS CIBC AI Platform to foster innovation Enhanced partnership to access world- with our team members class AI research and appli
Slide 9: Financial Overview
Financial Overview Robert Sedran Senior Executive Vice-President & Chief Financial Officer
Slide 10: Financial Results Overview
Financial Results Overview Results demonstrate strong momentum and balance sheet strength Diluted Earnings Per Share Return on Equity Revenue Operating Leverage1 Reported $1.82 Reported 13.2% $6.6B Reported3 1.5% +13% / +12% YoY Adjusted2 $1.93 Adjusted2 14.0% Reported / Adjusted2 Adjusted2,4 0.6% P
Slide 11: Financial Results Overview
Financial Results Overview Strong results across our businesses reflecting the strength and resilience of our diversified business model Reported ($MM) Q3/24 YoY QoQ Revenue Revenue 6,604 13% 7% • Revenue up 13% YoY, broad-based (12% YoY adjusted1) Non-Trading Net Interest Income 3,810 14% 11% • Mar
Slide 12: Net Interest Income (NII)
Net Interest Income (NII) NII (ex-trading) grew 14%, supported by margin expansion and continued balance sheet growth Net Interest Income Total Bank NIM (ex. Trading)3,4 1.72% 1.84% 17 bps YoY 1.67% 1.80% 1.71% +12 bps 1.49% 1.46% 1.50% 3,532 2 bps 1.84% 3,281 3 bps 3,236 (278) 2 bps (102) (162) 3 b
Slide 13: Non-Interest Income
Non-Interest Income Double-digit growth driven by strong trading revenues and higher market-related fees Non-Interest Income by Category ($MM)4 Market-Related Fees4 Transactional Fees4 +17% Other 3,072 YoY 7% 2,883 2,616 845 +54% 666 Deposit & 548 Trading Payment Investment Credit 40% 34% Mgmt & Cus
Slide 14: Non-Interest Expenses
Non-Interest Expenses Focused investments and continued realization of efficiencies Adjusted1 Expenses ($MM) and YoY Expense Growth +12% 134 3,665 +6% 50 65 3,481 166 (33) 3,284 Q3/23 Other operating Efficiencies2 Legal provision Investments3 Perf. based Q3/24 costs and software comp. Reported: impa
Slide 15: Capital and Liquidity
Capital and Liquidity Resilient balance sheet well-positioned to support continued organic growth Capital Position $B Q3/23 Q2/24 Q3/24 • CET1 ratio of 13.3%, up from 13.1% last quarter Average Loans and Acceptances 1 537.3 540.4 545.9 1 • Increase primarily due to internal capital generation Averag
Slide 16: Canadian Banking: Personal & Business Banking
Canadian Banking: Personal & Business Banking Double-digit net income growth supported by strong margins and lower PCLs • Net interest income up 6% YoY driven by expanding margins and Reported Adjusted1 volume growth ($MM) Q3/24 YoY QoQ Q3/24 YoY QoQ • Net interest margin up 12 bps YoY • Deposits up
Slide 17: Canadian Banking: Commercial Banking & Wealth Management
Canadian Banking: Commercial Banking & Wealth Management Continued growth in client franchise reflecting our relationship focused strategy • Net interest income up 22% YoY and sequentially Reported & Adjusted1 ($MM) Q3/24 YoY QoQ • Largely due to impact of benchmark reform (offset by Revenue 1,449 7
Slide 18: U.S. Region: Commercial Banking & Wealth Management
U.S. Region: Commercial Banking & Wealth Management Solid core business revenue and lower PCLs drive bottom line performance • Net interest income down 3% YoY mainly driven by mix shift to Reported Adjusted1 higher cost deposits (US$MM) Q3/24 YoY QoQ Q3/24 YoY QoQ • Non-interest income up 28% YoY, a
Slide 19: Capital Markets & Direct Financial Services
Capital Markets & Direct Financial Services Revenue growth underpinned by strong trading activity in Global Markets • Revenue down 1% YoY, or up 9% on an adjusted basis1: Reported Adjusted1 • Total trading revenues up 9% YoY driven by higher ($MM) Q3/24 YoY QoQ Q3/24 YoY QoQ equities, fixed income a
Slide 20: Corporate & Other
Corporate & Other Strong results supported by market-related Treasury revenues • Reported and adjusted revenue higher YoY and sequentially Reported Adjusted1 • Revenue impacted by the reversal of TEB revenue following ($MM) Q3/24 YoY QoQ Q3/24 YoY QoQ the enactment of a Federal tax measure • Net int
Slide 21: In Conclusion
In Conclusion A continued focus on execution and sustainable, profitable growth Consistent execution against our strategy and momentum across our diversified business driving profitable growth Continue to manage to positive operating leverage, balancing between expense control and investment in grow
Slide 22: Risk Overview
Risk Overview Frank Guse Senior Executive Vice-President & Chief Risk Officer
Slide 23: Key Messages
Key Messages Credit Performance Portfolio Management Allowance Coverage Continued focus across portfolios to work with clients to Allowance coverage continues to Loan losses remain moderate proactively manage risks remain strong as economic despite economic climate backdrop evolves Third Quarter, 20
Slide 24: Allowance for Credit Losses
Allowance for Credit Losses Allowance for credit losses was up QoQ • Our total provision for credit losses was $483MM in Q3/24, compared to $514MM last quarter • Provision on impaired loans was $404MM, down $43MM quarter-over-quarter • Lower impaired provisions in business and government loans were
Slide 25: PCL on Impaired Loans
PCL on Impaired Loans1 Total impaired provisions were down QoQ CIBC Total ($MM, bps) Canadian Personal & Business Banking ($MM, bps) PCL on Impaired Loans down QoQ • Total bank impaired PCL was down attributable to lower provisions in US Commercial • Canadian PBB impaired PCL was up mainly due to hi
Slide 26: 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 Q3/23 Q2/24 Q3/24 and government loans, partially offset by an increase in Canadian consumer lending Canadian Res
Slide 27: Canadian Consumer Lending
Canadian Consumer Lending Net write-offs and delinquencies trending in line with our expectations Reported Net Write-offs Q3/23 Q2/24 Q3/24 Net Write-offs: Canadian Residential Mortgages <0.01% <0.01% <0.01% • Overall consumer net write-offs increased QoQ, partially attributable to seasonality Canad
Slide 28: In Summary
In Summary Credit performance continues to be in line with full-year expectations Healthy credit performance metrics continue to support our guidance Continue to deploy a client focused strategy, maintaining diversified portfolios to manage risk Allowance coverage remains strong Third Quarter, 2024
Slide 29: Appendix
Appendix CIBCO®
Slide 30: Benchmark Reform
Benchmark Reform Margin impact of CDOR cessation • The Banker’s Acceptance (BA) product is being transitioned to CORRA1 based loans Q3/24 Impact • BA fees previously included in non-interest income (OI) are now reflected as a loan coupon and reported in net interest income (NII) $MM Net Non- Total •
Slide 31: Digital Trends
Digital Trends Growing Digital Adoption & Engagement in Canadian Personal Banking1 Digital Adoption Rate2 Active Digital Banking Users3 Digital Channel Usage (MM) (# of Sessions, MM) 86.1% 86.3% 7.4 382 391 374 335 85.8% 7.3 335 85.0% 84.4% 7.2 6.9 6.8 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q3/23 Q4/23 Q1/24
Slide 32: Canadian Banking: Personal & Commercial Banking
Canadian Banking: Personal & Commercial Banking1 Margins impacted by benchmark reform, moderating headwinds from deposit mix and mortgage pricing Revenue ($MM)3,4 3,332 3,332 3,363 3,363 3,467 3,467 Net Interest Margin on Average Interest-Earning Assets5 Mortgage Portfolio Spreads6 3,289 3,323 3,307
Slide 33: Balance Sheet
Balance Sheet Continued growth in loans and deposits, as well as margin expansion Average Assets ($B) & Yields1,2,3 Average Liabilities and Equity ($B), & Costs1,4,5 5.68% 5.70% 5.60% 5.61% 4.16% 4.18% 4.22% 4.20% 5.35% 3.86% 944 962 982 990 1,012 944 962 982 990 1,012 51 52 54 55 57 210 213 216 215
Slide 34: 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 $500B of the total funding base • Funding strategy is suppleme
Slide 35: Interest Rate Sensitivity
Interest Rate Sensitivity Well-positioned to demonstrate agility in a changing rate environment Net Interest Income Sensitivity to SBU Composition of Structural Interest Rate Environment in a +/- 100 bps change ($MM)1 Interest Rate Sensitivity1,2 Canada and the U.S.3 -1% Implied 22% Forwards 224 49%
Slide 36: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Total PCLs trended lower in Q3/24 Provision for Credit Losses down both YoY and QoQ ($MM) Q3/23 Q2/24 Q3/24 • Impaired provision was down in Q3/24, largely due to lower impairments in the Cdn. Personal & Business Banking 423 270 338 U.S., partially offset by increas
Slide 37: Allowance Coverage
Allowance Coverage Allowance coverage remains stable Total allowance coverage ratio relatively flat YoY and QoQ Total Allowance Coverage Q3/23 Q2/24 Q3/24 • Allowance dollars were up slightly in retail and remained flat in business and Canadian Credit Cards 4.3% 4.0% 4.1% government loans Canadian R
Slide 38: 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 51
Slide 39: 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 Q3/23 Q2/24 Q3/24 balanced relationships Total Mortgages 0.17% 0.26% 0.30% • 86% of mortgages are ow
Slide 40: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Credit bureau score1 and LTV2 distributions remain healthy Credit Bureau Score1 Distribution 3 3 GVA GTA Loan-to-Value (LTV)2 Distribution 3 3 GVA GTA Endnotes are included on slides 47 to 52. Third Quarter, 2024 39
Slide 41: Canadian Uninsured Residential Mortgages – Q3/24 Originations
Canadian Uninsured Residential Mortgages – Q3/24 Originations1 Credit quality of new originations continues to remain high • Originations of $11.0B in Q3/24 • Average LTV2 in Canada: 66%, GVA3: 62%, GTA3: 67% Credit Bureau Score4 Distribution 3 GTA 3 GVA Loan-to-Value (LTV)2 Distribution 3 3 GVA GTA
Slide 42: Canadian Mortgages Renewal Profile
Canadian Mortgages Renewal Profile Impacts of payment increases at renewal expected to be manageable • Using illustrative 5% and 6% interest rates at time of renewal, and no borrower income growth since origination, mortgage payment increases are forecasted to be in the range of 1% to 3.7% of client
Slide 43: U.S. Commercial Real Estate – Office Portfolio
U.S. Commercial Real Estate – Office Portfolio Majority of challenges behind us • Solid progress made as we work through maturity profile and liquidation of problem loans • Watchlist loans remain elevated and there will be some new inflow, but defaults are significantly reduced going forward • Gros
Slide 44: Commercial Real Estate
Commercial Real Estate Commercial real estate loans outstanding are well diversified Multi-Family Portfolio Metrics • Canada represents 63% of total Canadian & U.S. real estate loans Canada US outstanding Total outstanding ($B) C$10.5 US$5.3 • Gross impaired loans as a percentage of total Canadian &
Slide 45: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 Robust trading performance in recent volatile market Endnotes are included on slides 47 to 52. Third Quarter, 2024 44
Slide 46: Forward Looking Information
Forward Looking Information Variables used to estimate our Expected Credit Losses1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining
Slide 47: Items of Note
Items of Note Third quarter 2024 Period Q3/24 Reporting Segments Pre-Tax EPS After-Tax & NCI Effect Effect Effect ($MM) ($MM) ($/Share)1 Charge related to the special assessment imposed by the Federal Deposit Insurance 2 1 0.00 U.S. Commercial Banking and Wealth Management Corporation (FDIC) on U.S.
Slide 48: Endnotes
Endnotes Third quarter 2024 Slide 3 – CIBC Overview 1. See note 1 on slide 54. 2. Adjusted results are non-GAAP measures. See slide 53 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 53 for further details. 4
Slide 49: Endnotes
Endnotes Third quarter 2024 Slide 9 – Financial Results Overview cont’d 6. See notes 9 and 10 on slide 54. 7. OSFI requirement of 11.5% includes Pillar 1 minimum and Domestic Stability Buffer. 8. LCR is calculated pursuant to OSFI’s Liquidity Adequacy Requirements (LAR) Guideline, which is based on
Slide 50: Endnotes
Endnotes Third quarter 2024 Slide 16 – Canadian Banking: Commercial Banking & Wealth Management cont’d 3. Comprises loans and acceptances and notional amount of letters of credit. Loan amounts are stated before any related allowances. 4. Commercial Banking only. Average balances are calculated as a
Slide 51: Endnotes
Endnotes Third quarter 2024 Slide 29 - Benchmark Reform: Margin impact of CDOR cessation 1. Canadian Overnight Repo Rate Average. 2. Certain additional disclosures for net interest margin on average interest-earning assets (NIM) have been incorporated by reference and can be found on pages 47-53 in
Slide 52: Endnotes
Endnotes Third quarter 2024 Slide 35 – Provision for Credit Losses (PCL) 1. See notes 9 and 10 on slide 54. Slide 36 – Allowance Coverage 1. Capital Markets excludes allowance for credit losses related to Simplii Financial which is included in the respective Canadian retail products. 2. See notes 13
Slide 53: Endnotes
Endnotes Third quarter 2024 Slide 45 – Forward Looking Information 1. See page 71 of the Q3/24 Report to Shareholders, available on SEDAR+ at www.sedarplus.com for further details. Slide 46 – Items of Note 1. Includes the impact of rounding differences between diluted EPS and adjusted diluted EPS. 2
Slide 54: Non-GAAP Measures
Non-GAAP Measures Third 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 measu
Slide 55: Glossary
Glossary Third 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, net
Slide 56: Glossary
Glossary Third 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 re
Canadian Imperial Bank of Commerce — Q3 2024 Earnings Presentation on 6ix