Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q1 2023 Earnings Presentation
47 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Feb 24, 2023
Slide 1: Quarterly Results Presentation
Quarterly Results Presentation First Quarter 2023 February 24, 2023 All amounts are in Canadian dollars unless otherwise indicated.
Slide 2: Forward-Looking Statements
Forward-Looking Statements First Quarter 2023 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 Record performance driven by diversified revenue growth Strong execution against our strategic priorities Diluted EPS Revenue PPPT3 NIAT ROE4 Reported EPS $0.39 $5.9B Reported PPPT $1.5B Reported NIAT $0.4B Reported ROE 3.1% Adjusted EPS1,2 $1.94 YoY +8% Adjusted PPPT2 $2.7B Adjusted N
Slide 5: Our Strategic Investments
Strategic Investments Our investments are supporting profitable growth as we continue our path forward Results to Date High-growth, high-touch segments Affluent & high potential The private economy • Co-brand credit card portfolio +250K households Promising results Double-digit YoY loan • Expanding
Slide 6: Financial Overview
Financial Overview Hratch Panossian Senior Executive Vice-President & Chief Financial Officer
Slide 7: Financial Results Overview
Financial Results Overview First quarter reflects our core business momentum and balance sheet strength Earnings Per Share Return on Equity Revenue Operating Leverage1 Reported $0.39 Reported 3.1% $5.9B Reported (39.8)% +8% YoY Adjusted2 $1.94 Adjusted2 15.5% Reported & Adjusted2 Adjusted2,3 (1.5)%
Slide 8: Financial Results Overview
Financial Results Overview Results demonstrate the resilience of our diversified business model Revenue Reported ($MM) Q1/23 YoY QoQ • Revenue up 8% YoY supported by all business units Revenue 5,927 8% 10% • Net interest income up 13% excluding trading Net interest income 3,205 2% 1% • Driven by bal
Slide 9: Net Interest Income (NII)
Net Interest Income (NII) NII (ex-trading) up 13%, benefiting from strong volume growth and higher margins Net Interest Margin on Average Interest-Earning Assets (NIM)1 Loans6,7 ($B, local currency) Deposits6 ($B, local currency) Canadian Personal & Commercial NIM1,3 U.S. Commercial & Wealth NIM1 +9
Slide 10: Non-Interest Income
Non-Interest Income Strong trading activity, partially offset by fee pressure over prior year from challenging markets Non-Interest Income by Category ($MM)4 Market-Related Fees4 Transactional Fees4 1 2 1 3 • Non-interest income up 15% YoY, or down 2% excluding trading • Strong trading revenues driv
Slide 11: Non-Interest Expenses
Non-Interest Expenses Higher expenses driven by increased investments and higher inflation in 2022 Reported: $3,023MM Reported: $4,462MM YoY Expense Growth +9% • Reported expense growth of 48%, primarily due to an increase in legal provisions • Adjusted1 expenses up 9%, with approximately half due t
Slide 12: Capital & Liquidity
Capital & Liquidity Resilient balance sheet despite significant draws on capital in the quarter Capital & Liquidity Position $B Q1/22 Q4/22 Q1/23 1 • CET1 ratio of 11.6%, 60 bps above current regulatory Average Loans and Acceptances 474.5 525.6 529.2 minimum. Modest sequential decline reflects: Aver
Slide 13: Personal & Business Banking
Personal & Business Banking Strong growth in clients and funds managed • Net interest income up 8% YoY driven by strong Reported Adjusted2 volume growth, partially offset by lower margins ($MM) Q1/23 YoY QoQ Q1/23 YoY QoQ • Non-interest income down 8% YoY primarily due to lower wealth commissions an
Slide 14: Canadian Commercial Banking & Wealth Management
Canadian Commercial Banking & Wealth Management Continued growth in client franchise and revenue despite market pressures • Strong lending volumes and margins drove 23% YoY Reported & Adjusted1 ($MM) Q1/23 YoY QoQ increase in net interest income Revenue 1,351 4% 3% • Non-interest income down 4% YoY
Slide 15: U.S. Commercial Banking & Wealth Management
U.S. Commercial Banking & Wealth Management Solid core business performance amidst market challenges • Net interest income up 16% YoY due to volume growth and Reported Adjusted1 net interest margin expansion • Moderating loan growth sequentially (US$MM) Q1/23 YoY QoQ Q1/23 YoY QoQ • Continued deposi
Slide 16: Capital Markets
Capital Markets Strong revenue growth led by Direct Financial Services and Global Markets • Revenue growth of 14% over the prior year, despite Reported & Adjusted1 ($MM) Q1/23 YoY QoQ challenging markets 2 Revenue 1,481 14% 25% • Strong trading revenue, up 18%, supported by growth in Foreign Exchang
Slide 17: Corporate & Other
Corporate & Other Strong performance from International Banking supports revenue growth • Revenue higher YoY and sequentially Reported Adjusted2 • International Banking up 26% YoY, benefitting from margin expansion and FX ($MM) Q1/23 YoY QoQ Q1/23 YoY QoQ translation Revenue1 129 23% $154 129 23% $1
Slide 18: Looking Ahead – Client focused strategy, disciplined resource management
Looking Ahead – Client focused strategy, disciplined resource management, and strong balance sheet support continued momentum Successfully Strong, well navigating the current capitalized balance sheet provides Well-positioned to environment by flexibility to continue generate long-term proactively m
Slide 19: Risk Overview
Risk Overview Frank Guse Senior Executive Vice-President & Chief Risk Officer
Slide 20: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Impaired PCL remains favourable to pre-pandemic Provision for Credit Losses up YoY and down QoQ ($MM) Q1/22 Q4/22 Q1/23 • Impaired provisions up in Q1/23 is largely due to higher write-offs as Cdn. Personal & Business Banking 98 305 158 expected in retail, and highe
Slide 21: Allowance Coverage
Allowance Coverage Allowance coverage is well-positioned for the economic outlook Total Allowance coverage ratio up YoY and QoQ Total Allowance Coverage Q1/20 Q4/20 Q1/22 Q4/22 Q1/23 • Increase QoQ is due to higher allowances in both Canadian Credit Cards 4.0% 6.2% 5.7% 5.3% 5.1% performing and impa
Slide 22: Credit Portfolio Breakdown
Credit Portfolio Breakdown Lending portfolio has a strong risk profile • Nearly two-thirds of our portfolio is consumer lending, composed Overall Loan Mix (Outstanding Loans and Acceptances) mainly of mortgages with uninsured having an average loan-to-value of 52% • The total variable rate mortgage
Slide 23: Credit Performance – Gross Impaired Loans
Credit Performance – Gross Impaired Loans Gross impaired loan ratios down YoY and up QoQ • Gross impaired loan ratio was up QoQ, across all lines of Gross Impaired Loan Ratios Q1/20 Q1/22 Q4/22 Q1/23 business Canadian Residential Mortgages 0.30% 0.17% 0.13% 0.16% • New formations were up in both con
Slide 24: Canadian Consumer Lending
Canadian Consumer Lending Write-offs and delinquencies are in line with expectations Write-offs: Reported Net Write-Offs Q1/20 Q1/22 Q4/22 Q1/23 • Net write-off ratios of both credit cards and personal lending have Canadian Residential Mortgages 0.01% 0.01% <0.01% <0.01% been on an increasing trend
Slide 25: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending Uninsured mortgage delinquencies continue to remain low • Mortgage balance growth has been driven by clients that have deep and balanced relationships with CIBC • 88% of mortgages are owner-occupied. Investor mortgages performance is strong and compares
Slide 26: Canadian Mortgages Renewing in the Next 12 Months
Canadian Mortgages Renewing in the Next 12 Months The portfolio is resilient to interest rate increases, with renewal metrics stable QoQ • There are $31B of mortgages renewing in the next 12 months based on current terms - $22B fixed and $9B variable. 71% of $31B is uninsured • As interest rates ris
Slide 27: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages FICO score and LTV distributions remain healthy • Less than 1% of this portfolio has a FICO score of 650 or lower and an LTV1 over 75% FICO score Distribution 2 2 Loan-to-Value (LTV)1 Distribution 2 2 Endnotes are included on slides 39 to 44. First Quarter, 2
Slide 28: Commercial Real Estate
Commercial Real Estate Commercial real estate exposure is well diversified • Gross impaired loans as a percentage of total Canadian & U.S. real estate is 46bps • Trailing five-year average loan losses for Canadian & U.S. real estate is 11bps Canadian Commercial Real Estate Exposure by Sector1 U.S. C
Slide 29: In Summary
In Summary Credit performance in line with expectation Proactively Credit performance monitoring portfolio Robust allowance still better than performance coverage pre-pandemic level considering macroeconomic uncertainty First Quarter, 2023 29
Slide 30: Appendix
Appendix CIBC®
Slide 31: Our Digital Footprint
Our Digital Footprint Growing Digital Adoption & Engagement1 Digital Adoption Rate2 Active Digital Banking Users3 Active Digital Banking Users3 (MM) (Existing Personal Banking Clients vs. Co-brand) +6% +42% Digital Channel Usage Digital Transactions4 Transactions by Channel4 (# of Sessions, MM) (MM)
Slide 32: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking1 Strong loan and deposit growth underlying the Canadian P&C business Net Income Net Interest Margin on Average Interest Earning Assets (bps) 2 2 Average Loans ($B)3,4 Average Deposits ($B)3 +9% +8% 5 Endnotes are included on slides 39 to 44. First Quarter, 2023
Slide 33: U.S. Commercial Banking & Wealth Management (C$)
U.S. Commercial Banking & Wealth Management (C$) Solid core business performance amidst market challenges • Net interest income up 22% YoY due to volume growth and Reported Adjusted1 net interest margin expansion • Moderating loan growth sequentially ($MM) Q1/23 YoY QoQ Q1/23 YoY QoQ • Continued dep
Slide 34: Interest Rate Sensitivity
Interest Rate Sensitivity Well-positioned for higher interest rates Net Interest Income Sensitivity to SBU Composition of Structural Deposit Mix3 a +/- 100 bps change ($MM)1,2 Interest Rate Sensitivity1,2 • Year 1 benefit of approximately $292MM from an immediate and sustained 100 bps increase to ou
Slide 35: Canadian Uninsured Residential Mortgages – Q1/23 Originations
Canadian Uninsured Residential Mortgages – Q1/23 Originations1 Credit quality of new originations continues to remain high • Originations of $9B in Q1/23 • Average LTV2 in Canada: 66%, GVA3: 61%, GTA3: 65% FICO score Distribution 3 3 Loan-to-Value (LTV)2 Distribution 3 3 Endnotes are included on sli
Slide 36: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 Robust trading performance in recent volatile market Endnotes are included on slides 39 to 44. First Quarter, 2023 36
Slide 37: Forward Looking Information
Forward Looking Information Variables used to estimate our Expected Credit Losses1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining
Slide 38: Items of Note
Items of Note First quarter 2023 Period Q1/23 Reporting Segments Pre-Tax After-Tax & EPS Effect NCI Effect Effect ($MM) ($MM) ($/Share) Increase in legal provisions 1,169 844 0.93 Corporate and Other Income tax charge related to the 2022 Canadian Federal - 545 0.60 Corporate and Other budget1 Canadi
Slide 39: Endnotes
Endnotes First quarter 2023 Slide 4 – CIBC Overview 1 See note 1 on slide 46. 2 Adjusted results are non-GAAP measures. See slide 45 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 45 for further details. 4 Fo
Slide 40: Endnotes
Endnotes First quarter 2023 Slide 9 – Net Interest Income (NII) 1 Certain additional disclosures for net interest margin on average interest-earning assets (NIM) have been incorporated by reference and can be found on pages 42-48 in the Q1/23 Report to Shareholders, available on SEDAR at www.sedar.c
Slide 41: Endnotes
Endnotes First quarter 2023 Slide 13 – Personal & Business Banking 1 Pre-provision, pre-tax earnings is revenue net of non-interest expenses and is a non-GAAP measure. See slide 45 for further details. 2 Adjusted results are non-GAAP measures. See slide 45 for further details. 3 Loan amounts are sta
Slide 42: Endnotes
Endnotes First quarter 2023 Slide 17 – Corporate & Other 1 Revenue is reported on a taxable equivalent basis (TEB). TEB adjustment in Q1/23 was $62 million. 2 Adjusted results are non-GAAP measures. See slide 45 for further details. 3 Pre-provision, pre-tax earnings is revenue net of non-interest ex
Slide 43: Endnotes
Endnotes First quarter 2023 Slide 27 – Canadian Uninsured Residential Mortgages 1 LTV ratios for residential mortgages are calculated based on weighted average. See page 27 of the Q1/23 Report to Shareholders for further details. 2 GVA and GTA definitions based on regional mappings from Teranet. Sli
Slide 44: Endnotes
Endnotes First quarter 2023 Slide 33 – U.S. Commercial Banking & Wealth Management (C$S) 1 Adjusted results are non-GAAP measures. See slide 45 for further details. 2 Pre-provision, pre-tax earnings is revenue net of non-interest expenses and is a non-GAAP measure. See slide 45 for further details.
Slide 45: Non-GAAP Measures
Non-GAAP Measures First quarter 2023 We use a number of financial measures to assess the performance of our business lines. Some measures are calculated in accordance with International Financial Reporting Standards (IFRS or GAAP), while other measures do not have a standardized meaning under GAAP,
Slide 46: Glossary
Glossary First quarter 2023 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 47: Glossary
Glossary First quarter 2023 Definition Gross impaired loans as a percentage of the gross carrying amount of loans. The gross carrying amount of loans include 12 Gross Impaired Loan Ratio certain loans that are measured at FVTPL. 13 New Formations New formations represent gross carrying amount of loa
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