Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q3 2021 Earnings Presentation
42 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Aug 26, 2021
Slide 1: Quarterly Results Presentation Third Quarter 2021
Quarterly Results Presentation Third Quarter 2021 August 26, 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 Further strengthen our Canadian consumer franchise Continue to build on our areas of strength Accelerate ongoing investments in growth initiatives Third Quarter, 2021 4
Slide 5: Strong momentum in our Canadian consumer franchise
Strong momentum in our Canadian consumer franchise Solid market share gains in Personal Banking Personal Deposits & GICs Market Share2 Personal Loans Market Share2 Rebound in consumer activity Record mutual fund net flow 3 Card Purchase Volumes by Spend Category, Long-Term Net Sales as a % of Openin
Slide 6: Protecting and building on our areas of strength
Protecting and building on our areas of strength Momentum in Cdn. Commercial Banking Strong client growth in U.S. Commercial Banking driven by strong client business activity driving loan growth despite PPP forgiveness and other prepayments Average Loans ($B) Average Loans (US$B)1 Strong performance
Slide 7: Accelerating the pace of investments in growth initiatives
Accelerating the pace of investments in growth initiatives Investing in leading edge technologies • Announced a strategic relationship with Microsoft to leverage Azure as the bank’s primarily cloud platform to enable faster, real time, data-driven decisions and enhance client experience. This will a
Slide 8: CIBC's Net Zero Ambition
CIBC’s Net Zero Ambition Achieve net zero greenhouse gas 100% of electricity Sustainable Finance goal sourced from renewable emissions from our doubled to $300 billion energy by 2024 operational & financing by 2030 activities by 2050 Provide education, resources Built trading platform for and advice
Slide 9: Financial Review
Financial Review Hratch Panossian Senior Executive Vice-President and Chief Financial Officer
Slide 10: Q3 2021 Highlights
Q3 2021 Highlights • Strong and resilient balance sheet enabled organic deployment of capital • Record revenue underscores broad-based strength across our businesses • Momentum fueled by our continued investments to accelerate sustainable growth EPS Q3/21 EPS Q3/21 ROE Q3/21 Q3/21 ROE Revenue Revenu
Slide 11: Third Quarter 2021 Financial Results
Third Quarter 2021 Financial Results Reported ($MM) Q3/21 YoY QoQ Revenue Revenue 5,056 7% 3% • Net interest income up 6% YoY, 8% excluding FX Net interest income 2,893 6% 5% • Diversified volume growth partly offset by the impact of FX, lower rates and Non-interest income 2,163 9% (1%) business mix
Slide 12: Strong growth in non-trading NII driven by robust, broad-based volume growth
Strong growth in non-trading NII driven by robust, broad-based volume growth NIM on Average Interest Earning Assets Average Loans1 ($B, local currency) Average Deposits ($B, local currency) Canadian Personal & Commercial NIM U.S. Commercial & Wealth NIM 1 Average loans and acceptances, before any re
Slide 13: Strong recovery in transactional fees and continued tailwinds from markets
Strong recovery in transactional fees and continued tailwinds from markets Non-Interest Income by Category ($MM)1 • Increase in transactional fees • Rebound in consumer activity driving an increase in deposit and card fees • Higher credit fees driven by strong syndication activity and higher Banker’
Slide 14: Accelerating investments while continuing to focus on efficiency
Accelerating investments while continuing to focus on efficiency Expense Growth ($MM) - Adjusted1 • Expense growth primarily due to higher performance- based compensation; up 3% YoY excluding these expenses • Strategic and growth initiatives are focused on fueling sustainable growth 2 • Transforming
Slide 15: Strong and resilient balance sheet
Strong and resilient balance sheet $B Q3/20 Q2/21 Q3/21 • Continued balance sheet strength Average Loans and Acceptances 414.9 425.0 440.1 • CET1 ratio of 12.3%, down 7 bps, reflecting: Average Deposits 557.4 586.6 599.3 • Capital generation from earnings net of dividends, 40 bps CET1 capital 30.2 3
Slide 16: Personal & Business Banking – momentum in franchising our clients driving strong results
Personal & Business Banking – momentum in franchising our clients driving strong results • Net interest income up 5% as double-digit loan growth and strong deposit growth Reported & Adjusted1 ($MM) Q3/21 YoY QoQ more than offset continued pressure on margins Revenue 2,056 8% 6% • NIM down 3 bps QoQ
Slide 17: Canadian Commercial & Wealth – double-digit growth driven by strong client activity
Canadian Commercial & Wealth – double-digit growth driven by strong client activity Reported & Adjusted1 ($MM) Q3/21 YoY QoQ • Strong performance in Commercial Banking Revenue 1,207 19% 6% • Commercial loan balances up 9% YoY Net interest income 336 6% 10% • Commercial deposit balances up 14% YoY No
Slide 18: U.S. Commercial & Wealth – client growth and market performance driving strong results
U.S. Commercial & Wealth – client growth and market performance driving strong results Reported (US$MM) Q3/21 YoY QoQ • Continued focus on deepening client relationships and gaining market share Revenue 438 16% 3% • Loan balances flat YoY, muted by Paycheck Protection Program (PPP) Net interest inco
Slide 19: Capital Markets – strong origination and advisory activity
Capital Markets – strong origination and advisory activity Reported & Adjusted1 ($MM) Q3/21 YoY QoQ • Strong performance across our diversified business Revenue2 1,140 (1%) (5%) • Higher underwriting and advisory fees Net interest income 669 5% 1% • Increased trading activity in equity derivatives a
Slide 20: Corporate and Other
Corporate and Other Reported ($MM) Q3/21 YoY QoQ • FCIB revenues impacted by a weaker U.S. dollar Revenue1 114 (10%) (12%) • Stable revenues in Treasury as liquidity costs normalize Net interest income 28 $33 $24 • Expense growth driven by continued strategic investments Non-interest income 86 (35%)
Slide 21: Looking forward
Looking forward Strong balance sheet provides capacity and Improved competitiveness Accelerating investments to flexibility to support our across our diversified simplify and grow as we clients, grow our business franchise positions us well for execute on our client-focused and return capital to fut
Slide 22: Risk Review
Risk Review Shawn Beber Senior Executive Vice-President, Chief Risk Officer
Slide 23: Provision for credit losses down YoY and QoQ
Provision for credit losses down YoY and QoQ Reported & Adjusted1 ($MM) Q3/20 Q2/21 Q3/21 Provision for Credit Losses down YoY & QoQ Cdn. Personal & Business Banking 217 65 67 • Due to lower provisions in both performing loans and impaired loans Impaired 147 206 82 • Recoveries on a few accounts in
Slide 24: Allowance for credit losses down YoY and QoQ
Allowance for credit losses down YoY and QoQ Reported Q3/20 Q2/21 Q3/21 Allowance coverages were down YoY and QoQ Canadian Credit Cards 6.2% 5.8% 5.0% • The lower allowance coverage is due to a combination of the net impact of forward looking indicator improvements, COVID overlays and other portfoli
Slide 25: Lending portfolio is well diversified
Lending portfolio is well diversified Overall Loan Mix (Outstanding)1 • Nearly two-thirds of our portfolio is consumer lending composed mainly of mortgages, with uninsured having an average loan-to-value of 48% • Oil and gas is 1.1% of the loan portfolio; 49% investment grade • The balance of our po
Slide 26: Credit Quality — gross impaired loan ratios trended lower in Q3
Credit Quality — gross impaired loan ratios trended lower in Q3 Reported Q3/20 Q2/21 Q3/21 Balances were down YoY & QoQ Canadian Residential Mortgages 0.36% 0.25% 0.19% • Higher client payments and collection activities have lowered impairments for consumer mortgages and personal lending Canadian Pe
Slide 27: Credit Quality — Canadian Consumer
Credit Quality — Canadian Consumer Reported Net Write-Offs Q3/20 Q2/21 Q3/21 Net Write-off Ratio Canadian Residential Mortgages 0.01% 0.01% 0.01% Canadian Credit Cards 1.84% 5.65% 2.40% Personal Lending 0.74% 0.53% 0.49% Total 0.20% 0.29% 0.16% 90+ Days Delinquency Rates Q3/20 Q2/21 Q3/21 Canadian R
Slide 28: Appendix
Appendix
Slide 29: Interest Rate Sensitivity
Interest Rate Sensitivity • Our interest rate profile is managed to target stable and predictable earnings • Interest rate sensitivity has not changed materially QoQ • An immediate and sustained 100 bps increase would have a $413MM positive impact on net interest income over a 12-month period • If r
Slide 30: Growing Digital Engagement and Adoption
Growing Digital Engagement and Adoption1 Digital Adoption Rate2 Active Digital Banking Users3 Digital Channel Usage (MM) (# of Sessions, MM) Digital Transactions4 Transactions by Channel4 (MM) 5 1 Canadian Personal Banking only, excluding Simplii Financial. 2 Digital Adoption Rate calculated using 9
Slide 31: Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking Net Income – Adjusted ($MM)1 Net Interest Margin (bps) Average Loans ($B)2 Average Deposits ($B) 3 1 Adjusted results are non-GAAP financial measures. See slide 42 for further details. 2 Before any related allowances. 3 Commercial Banking loans comprise loans
Slide 32: U.S. Commercial Banking & Wealth Management (C$)
U.S. Commercial Banking & Wealth Management (C$) Reported (C$MM) Q3/21 YoY QoQ • Results impacted by a weaker U.S. dollar Revenue 539 5% 1% • Continued focus on deepening client relationships and gaining market share Net interest income 356 1% 1% • Loan balances down 9%, driven by impact of FX and P
Slide 33: Improved Diversification - Growth in the U.S. Region
Improved Diversification - Growth in the U.S. Region U.S. Region Earnings Contribution – Adjusted1 U.S. Region AUA (US$B)2 1 Adjusted results are non-GAAP financial measures. See slide 42 for further details. 2 Assets under management (AUM) are included in assets under administration (AUA). Includes
Slide 34: 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 Outstanding2 1 • 28% of drawn loans investment grade3 • 56% of drawn loans investment grade3 • The U.S. comprises 20% of drawn exposure • The U.S. comprises 4% of drawn expo
Slide 35: 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 • 70% of drawn loans investment grade3 • 32% of drawn loans investment grade3 1 Includes $3.4B in Multi Family that is reported in residential mortg
Slide 36: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending 90+ Days Delinquency Rates Q3/20 Q2/21 Q3/21 • The Greater Vancouver Area1 (GVA) and Greater Toronto Area1 (GTA) continue to outperform the Canadian average Total Mortgages 0.36% 0.25% 0.19% Uninsured Mortgages 0.34% 0.23% 0.15% Uninsured Mortgages in GV
Slide 37: Canadian Uninsured Residential Mortgages — Q3/21 Originations
Canadian Uninsured Residential Mortgages — Q3/21 Originations Beacon Distribution • Originations of $23B in Q3/21 • Average LTV1 in Canada: 64% • GVA2: 59% • GTA2: 63% 2 2 Loan-to-Value (LTV)1 Distribution 2 2 1 LTV ratios for residential mortgages are calculated based on weighted average. See page
Slide 38: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Beacon Distribution • Better current Beacon and LTV1 distributions in GVA2 and GTA2 than the Canadian average • Less than 1% of this portfolio has a Beacon score of 650 or lower and an LTV1 over 75% • Average LTV1 in Canada: 48% • GVA2: 44% • GTA2: 46% 2 2 Lo
Slide 39: Trading Revenue (TEB) Distribution
Trading Revenue (TEB)1 Distribution2 1 Non-GAAP financial measure. See slide 42 for further details. 2 Trading revenue (TEB) comprises both trading net interest income and non-interest income and excludes underwriting fees, commissions, certain month-end transfer pricing and other miscellaneous adju
Slide 40: Forward-looking Information Variables used to estimate our Expected Credit Loss
Forward-looking Information Variables used to estimate our Expected Credit Loss1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining fo
Slide 41: Q3 2021 Items of Note
Q3 2021 Items of Note Item Pre-Tax After-Tax & EPS Effect NCI Effect Effect ($MM) ($MM) ($/Share) Reporting Segments Increase in legal provisions 85 63 0.14 Corporate & Other U.S. Commercial Banking & Wealth Management Amortization of acquisition-related intangible assets 20 15 0.03 Corporate & Othe
Slide 42: 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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