Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q2 2021 Earnings Presentation
40 slides from Canadian Imperial Bank Of Commerce's earnings presentation, May 27, 2021
Slide 1: Quarterly Results Presentation Second Quarter 2021
Quarterly Results Presentation Second Quarter 2021 May 27, 2021 All amounts are in Canadian dollars unless otherwise indicated.
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 report, in other filings with Canadian securities regulators or the SEC and in other communicatio
Slide 3: CIBC Overview
CIBC Overview Victor Dodig President and Chief Executive Officer
Slide 4: Continued focus on our strategic priorities
Continued focus on our strategic priorities Reinvigorate our Canadian consumer franchise Protect and build on areas of strength Accelerate the pace of transformation and growth Second Quarter, 2021 4
Slide 5: Strong momentum in our Canadian consumer franchise
Strong momentum in our Canadian consumer franchise Positive market share trends in both secured and unsecured personal lending Real Estate Secured Lending Market Share2 Other Personal Lending (incl. Cards) Market Share2 Record mutual fund net flows Double-digit revenue growth in DFS from client acti
Slide 6: Protecting and building on our areas of strength
Protecting and building on our areas of strength Strong performance in our Wealth businesses Solid volume growth in Commercial Banking driven by increased client activity and higher funds managed reflecting improving client business activity 1 Assets Under Administration ($B, local currency)2 Averag
Slide 7: Accelerating the pace of transformation through reinvestments
Accelerating the pace of transformation through reinvestments Leveraging technology and data to modernize and enhance client experience • The quality advice and convenience from CIBC +8% GoalPlanner, our new comprehensive financial planning Funds Managed platform, is resonating with our clients – re
Slide 8: Financial Review
Financial Review Hratch Panossian Senior Executive Vice-President and Chief Financial Officer
Slide 9: Q2 2021 Highlights
Q2 2021 Highlights • Strong, resilient balance sheet • Improvements in competitive positioning fueled by recent investments across our diversified business and towards our client-focused strategy • Accelerating strategic investments and business transformation to strengthen our growth trajectory and
Slide 10: Second Quarter 2021 Financial Results
Second Quarter 2021 Financial Results Reported ($MM) Q2/21 YoY QoQ Overall Performance Revenue 4,932 8% (1%) • PPPT1,2 Earnings growth of 14%, 16% excluding FX Net interest income 2,747 (1%) (3%) • Operating leverage of 4.4% Non-interest income 2,185 20% 3% • Lower provisions for credit losses Non-I
Slide 11: Strong volume growth offsets the impact of lower rates and FX translation
Strong volume growth offsets the impact of lower rates and FX translation NIM on Average Interest Earning Assets Average Loans1 ($B, local currency) Average Deposits ($B, local currency) Canadian P&C NIM U.S. Commercial & Wealth NIM 1 Average loans and acceptances, before any related allowances. Sec
Slide 12: Strong growth in market-related fees
Strong growth in market-related fees Non-Interest Income by Category ($MM)1 • Increase in market-related fees • Higher issuance and advisory activity in Capital Markets • Market appreciation and strong net flows driving an increase in investment management and mutual fund fees • Increased trading ac
Slide 13: Ongoing focus on efficiency and simplification while continuing to invest in growth
Ongoing focus on efficiency and simplification while continuing to invest in growth Expense Growth ($MM)1 • YoY expense growth primarily driven by higher performance-based compensation; stable excluding these expenses and the impact of FX • Operating baseline down YoY, driven by restructuring and ot
Slide 14: Strong and resilient balance sheet
Strong and resilient balance sheet $B Q2/20 Q1/21 Q2/21 • Continued balance sheet strength Average Loans and Acceptances 412.8 417.5 425.0 • CET1 increase driven by internal capital generation partly offset Average Deposits 526.5 583.6 586.6 by a net increase in RWAs from accelerating organic growth
Slide 15: Personal & Business Banking – strong volume growth
Personal & Business Banking – strong volume growth • Stable NII as continued mortgage and deposit balance growth largely offset by Reported & Adjusted1 ($MM) Q2/21 YoY QoQ lower rates and declining card balances Revenue 1,941 0% (4%) • NIM down 6 bps QoQ and 13 bps YoY Net interest income 1,425 0% (
Slide 16: Canadian Commercial & Wealth – strong client activity driving double-digit revenue growth
Canadian Commercial & Wealth – strong client activity driving double-digit revenue growth • Solid results in Commercial Banking, driven by robust volume growth Reported & Adjusted1 ($MM) Q2/21 YoY QoQ • Commercial loan balances up 2% YoY Revenue 1,135 11% 4% Net interest income 305 (5%) 2% • Commerc
Slide 17: U.S. Commercial & Wealth – continued momentum in building and broadening client relationships
U.S. Commercial & Wealth – continued momentum in building and broadening client relationships Reported (US$MM) Q2/21 YoY QoQ • Continued focus on growing client base and franchising, driving increase in net interest income Revenue 425 15% (3%) Net interest income 280 4% (4%) • Loan balances up 4% Yo
Slide 18: Capital Markets – strong client origination and trading activity
Capital Markets – strong client origination and trading activity Reported & Adjusted1 ($MM) Q2/21 YoY QoQ • Continued strong performance across all businesses: Revenue2 1,194 23% 2% • Strong growth in underwriting and advisory fees Net interest income 662 17% (3%) • Higher trading activity in Global
Slide 19: Corporate and Other
Corporate and Other Reported ($MM) Q2/21 YoY QoQ • Cost of excess liquidity starting to normalize Revenue1 130 (6%) 13% • FCIB revenues stable as a weaker U.S. dollar and lower margins were largely offset by write-downs on debt securities in the prior year Net interest income 4 (94%) 100% Non-intere
Slide 20: Looking forward
Looking forward Strong balance sheet provides capacity and Improved competitiveness Accelerating investments in flexibility to support our across our diversified transformation and growth as clients, grow our business franchise positions us well for we execute on our client- and return capital to fu
Slide 21: Risk Review
Risk Review Shawn Beber Senior Executive Vice-President, Chief Risk Officer
Slide 22: Provision for credit losses lower in performing loans and higher in impaired loans
Provision for credit losses lower in performing loans and higher in impaired loans Reported & Adjusted1 ($MM) Q2/20 Q1/21 Q2/21 Provision for Credit Losses down YoY & QoQ Cdn. Personal & Business Banking 640 54 65 • Down YoY due to lower provisions in both performing loans and impaired loans Impaire
Slide 23: Allowance in line with a year ago
Allowance in line with a year ago Reported Q2/20 Q1/21 Q2/21 Allowance coverages were up YoY and down QoQ Canadian Credit Cards 6.3% 6.4% 5.8% • More than half of the performing allowance decrease in Q2 due to net transfer of performing provision to impaired provision for loans that became impaired
Slide 24: Lending portfolio is well diversified
Lending portfolio is well diversified Overall Loan Mix (Outstanding) • Nearly two-thirds of our portfolio is consumer lending composed mainly of mortgages, with uninsured having an average loan-to-value of 51% • Oil and gas is 1.8% of the loan portfolio; 47% investment grade • The balance of our por
Slide 25: Credit Quality — gross impaired loans trended lower in Q2
Credit Quality — gross impaired loans trended lower in Q2 Reported Q2/20 Q1/21 Q2/21 Balances were up YoY & down QoQ Canadian Residential Mortgages 0.32% 0.27% 0.25% • Lower consumer impairments in Q2 outside of Cards Canadian Personal Lending 0.44% 0.35% 0.32% • Impairments in business and governme
Slide 26: Credit Quality — Canadian Consumer
Credit Quality — Canadian Consumer Reported Net Write-Offs Q2/20 Q1/21 Q2/21 Net Write-off Ratio Canadian Residential Mortgages 0.01% 0.01% 0.01% Canadian Credit Cards 3.68% 1.49% 5.65% Personal Lending 0.81% 0.56% 0.53% Total 0.29% 0.15% 0.29% Net write-off dollars were up YoY & QoQ • Increase in c
Slide 27: Appendix
Appendix
Slide 28: Growing Digital Engagement and Adoption
Growing Digital Engagement and Adoption1 Digital Adoption Rate2 Active Digital Banking Users3 Digital Channel Usage (MM) (# of Sessions, MM) Digital Transactions4 Transactions by Channel4 (MM) 5 1 Canadian Personal Banking only, excluding Simplii Financial. 2 Digital Adoption Rate calculated using 9
Slide 29: Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking Net Income – Adjusted ($MM)1 Net Interest Margin (bps) Average Loans ($B)2 Average Deposits ($B) 3 1 Adjusted results are non-GAAP financial measures. See slide 40 for further details. 2 Before any related allowances. 3 Commercial Banking loans comprise loans
Slide 30: U.S. Commercial Banking & Wealth Management (C$)
U.S. Commercial Banking & Wealth Management (C$) Reported (C$MM) Q2/21 YoY QoQ • Results impacted by a weaker U.S. dollar Revenue 532 4% (5%) • Continued focus on growing client base and franchising Net interest income 351 (5%) (6%) • Deposit balances up 22% YoY Non-interest income 181 28% (3%) • Lo
Slide 31: Exposure to vulnerable sectors represents 2% of our lending portfolio
Exposure to vulnerable sectors represents 2% of our lending portfolio Leisure & Entertainment Loans Outstanding Retailer Loans Outstanding 1 • 28% of drawn loans investment grade2 • 52% of drawn loans investment grade2 • The U.S. comprises 19% of drawn exposure • The U.S. comprises 4% of drawn expos
Slide 32: Commercial Real Estate exposure remains diversified
Commercial Real Estate exposure remains diversified Canadian Commercial Real Estate Exposure by Sector1 U.S. Commercial Real Estate Exposure by Sector2 • 64% of drawn loans investment grade3 • 30% of drawn loans investment grade3 1 Includes $3.2B in Multi Family that is included in residential mortg
Slide 33: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending 90+ Days Delinquency Rates Q2/20 Q1/21 Q2/21 • The Greater Vancouver Area1 (GVA) and Greater Toronto Area1 (GTA) continue to outperform the Canadian average Total Mortgages 0.32% 0.27% 0.25% Uninsured Mortgages 0.28% 0.24% 0.23% Uninsured Mortgages in GV
Slide 34: Canadian Uninsured Residential Mortgages — Q2/21 Originations
Canadian Uninsured Residential Mortgages — Q2/21 Originations Beacon Distribution • Originations of $20B in Q2/21 • Average LTV1 in Canada: 63% • GVA2: 58% • GTA2: 63% 2 2 Loan-to-Value (LTV)1 Distribution 2 2 1 LTV ratios for residential mortgages are calculated based on weighted average. See page
Slide 35: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Beacon Distribution • Better current Beacon and LTV1 distributions in GVA2 and GTA2 than the Canadian average • Less than 1% of this portfolio has a Beacon score of 650 or lower and an LTV1 over 75% • Average LTV1 in Canada: 51% • GVA2: 47% • GTA2: 49% 2 2 Lo
Slide 36: Trading Revenue (TEB) Distribution
Trading Revenue (TEB)1 Distribution2 1 Non-GAAP financial measure. See slide 40 for further details. 2 Trading revenue (TEB) comprises both trading net interest income and non-interest income and excludes underwriting fees, commissions, certain month-end transfer pricing and other miscellaneous adju
Slide 37: Forward-looking Information Variables used to estimate our Expected Credit Loss
Forward-looking Information Variables used to estimate our Expected Credit Loss1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining fo
Slide 38: Improved Diversification - Growth in the U.S. Region
Improved Diversification - Growth in the U.S. Region U.S. Region Earnings Contribution – Adjusted1 U.S. Region AUA (US$B)2 1 Adjusted results are non-GAAP financial measures. See slide 40 for further details. 2 Assets under management (AUM) are included in assets under administration (AUA). Includes
Slide 39: Q2 2021 Items of Note
Q2 2021 Items of Note Item Pre-Tax After-Tax & EPS Effect NCI Effect Effect ($MM) ($MM) ($/Share) Reporting Segments U.S. Commercial Banking & Wealth Management Amortization of acquisition-related intangible assets 20 15 0.04 Corporate & Other Adjustment to Net Income attributable to common sharehol
Slide 40: Non-GAAP Financial Measures
Non-GAAP Financial Measures We use a number of financial measures to assess the performance of our business lines. Some measures are calculated in accordance with GAAP (IFRS), while other measures do not have a standardized meaning under GAAP, and accordingly, these measures may not be comparable to
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