Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q4 2022 Earnings Presentation
47 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Dec 1, 2022
Slide 1: Quarterly Results Presentation Fourth Quarter 2022
Quarterly Results Presentation Fourth Quarter 2022 December 1, 2022 [Month] [Day], [Year] All amounts are in Canadian dollars unless otherwise indicated. CONFIDENTIAL
Slide 2: Forward-Looking Statements
Forward-Looking Statements Fourth quarter and fiscal 2022 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 r
Slide 3: CIBC Overview
CIBC Overview Victor Dodig President & Chief Executive Officer
Slide 4: CIBC Overview
CIBC Overview Solid performance in fiscal 2022 despite a challenging macroeconomic backdrop Results reflect strong execution against our strategic priorities Diluted EPS Revenue Earnings ROE CET1 Ratio6 Reported $6.68 $21.8B Reported NIAT $6.2B Reported4 14.0% 11.7% Adjusted1,2 $7.05 YoY +9% Adjuste
Slide 5: Our Path Moving Forward
Our Path Moving Forward A modern, relationship-oriented bank that generates value for all stakeholders Emerging Affluent & Online / Digitization, High Potential Personalized Banking Deepen client Industry-leading relationships through platforms that support personal advice and seamless digital innov
Slide 6: Key Accomplishments Against Our Strategic Priorities
Key Accomplishments Against Our Strategic Priorities High-growth, high-touch client segments | Client experience | Future differentiators #1 2030 financed in J.D. Power’s Best B2B Brands emissions targets Customer Satisfaction by Globe and Mail in 2022 released for Oil & Gas and Power for Online Ban
Slide 7: Furthering Our ESG Strategy
Furthering Our ESG Strategy Advancing our new strategy by putting ambitions into action Committed to ESG Leadership & Creating a Competitive Advantage We are focused on embedding ESG principles into our business strategy, purpose and everyday decision-making, while responding to stakeholder interest
Slide 8: Financial Overview
Financial Overview Hratch Panossian Senior Executive Vice-President & Chief Financial Officer
Slide 9: Financial Results Overview
Financial Results Overview Fourth quarter impacted by economic uncertainties and prudent reserve build Earnings Per Share Return on Equity Revenue Operating Leverage1 $1.26 10.1% $5.4B (4.7)% Reported Reported Reported +6% YoY Reported & Adjusted2 Adjusted2 $1.39 Adjusted2 11.2% Adjusted2,3 (5.8)% P
Slide 10: Financial Results Overview
Financial Results Overview Results reflect core business strength and resilience of our diversified business model Revenue Reported ($MM) Q4/22 YoY QoQ • Revenue growth of 6% over the prior year, despite the Revenue 5,388 6% (3%) impact of challenging markets Net interest income 3,185 7% (2%) • Net
Slide 11: Net Interest Income (NII)
Net Interest Income (NII) Continued balance sheet growth across business lines anchors net interest income Net Interest Margin on Average Interest-Earning Assets (NIM)1 Deposit Mix3 2 Average Loans4,5 ($B, local currency) Average Deposits4 ($B, local currency) 1 Certain additional disclosures for ne
Slide 12: Net Interest Margin (NIM)
Net Interest Margin (NIM) Deliberate positioning that aims to deliver more predictable NII growth Canadian Personal & Commercial NIM1,2 U.S. Commercial & Wealth NIM1 4 Canadian Personal & Commercial NIM (incl. peers)6,7 U.S. Commercial & Wealth NIM (incl. peers)6,7 1 Certain additional disclosures f
Slide 13: Non-Interest Income
Non-Interest Income Strong trading activity offset by lower fees due to market deterioration Non-Interest Income by Category ($MM)4 Market-related (incl. trading) & Transactional Fees4 1 2 1 3 • Non-interest income up 6% YoY, or down 3% excluding trading • Strong trading revenues driven mainly by Fo
Slide 14: Non-Interest Expenses
Non-Interest Expenses Higher expenses reflect ongoing investments and the impact of inflationary pressures • Expense growth of 11% (adjusted1 growth of 12% or 10% excluding severance costs incurred during the quarter) • Strategic initiatives focused on long-term growth driving 5% increase YoY, inclu
Slide 15: Capital & Liquidity
Capital & Liquidity Resilient balance sheet supports organic business growth Capital & Liquidity Positions $B Q4/21 Q3/22 Q4/22 • Balance sheet continues to remain well positioned Average Loans and Acceptances 455.5 510.0 525.6 to support continued organic growth Average Deposits 623.2 673.6 703.8 1
Slide 16: Personal & Business Banking
Personal & Business Banking Diversified business mix and market share gains reflected in strong revenue growth • Net interest income increase of 12% YoY driven by Reported Adjusted2 strong volume growth (11% on an adjusted basis2) • Loan balances up 10% (9% excl. co-brand card ($MM) Q4/22 YoY QoQ Q4
Slide 17: Canadian Commercial & Wealth Management
Canadian Commercial & Wealth Management Continued growth in client franchise and revenue despite market • Strong lending volumes and margins driving 28% YoY Reported & Adjusted1 ($MM) Q4/22 YoY QoQ increase in net interest income Revenue 1,316 6% (2%) • Commercial loan balances up 20% Net interest i
Slide 18: U.S. Commercial & Wealth Management
U.S. Commercial & Wealth Management Maintained market share growth momentum as strategic investment continues • Net interest income up 18% YoY primarily due to volume Reported Adjusted1 • Loan balances up 17% (US$MM) Q4/22 YoY QoQ Q4/22 YoY QoQ • Deposit balances up 6% • NIM up 1 bp YoY and 13 bps s
Slide 19: Capital Markets
Capital Markets Revenue growth over the prior year supported by all business lines • Revenue growth of 17% over the prior year, despite Reported & Adjusted1 ($MM) Q4/22 YoY QoQ challenges in the market 2 • Continued momentum in Direct Financial Revenue 1,182 17% (1%) Services (DFS) Net interest inco
Slide 20: Corporate & Other
Corporate & Other Sequential increase in expenses and market headwinds to Treasury revenue • Revenue lower sequentially and relative to the prior year Reported Adjusted2 • Treasury revenues pressured by increased cost of liquidity and volatility in interest rate and FX markets ($MM) Q4/22 YoY QoQ Q4
Slide 21: Fiscal 2022
Fiscal 2022 A successful year against our strategic and financial targets • Revenue growth of 9% and PPPT1,2 of 7% - both in line with high- Reported ($MM) FY22 YoY single digit guidance and our medium-term targets Revenue 21,833 9% • Negative Operating Leverage impacted by market revenue Net intere
Slide 22: Looking Ahead
Looking Ahead Focus on sustainable growth and outperformance as we build on our progress Earnings Growth • 7%-10% Return on Equity • 16%+ by 2025 Medium-Term Targets1 Operating Leverage • Positive Dividend Payout Ratio • 40%-50% 1 Medium-term targets are set through the cycle, and are determined on
Slide 23: Risk Overview
Risk Overview Frank Guse Senior Executive Vice-President & Chief Risk Officer
Slide 24: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Impaired PCL remains favourable to pre-pandemic Provision for Credit Losses up YoY and QoQ ($MM) Q4/21 Q3/22 Q4/22 • Impaired provisions up in Q4/22 due to higher provisions net of reversals across all strategic business units (SBUs) Cdn. Personal & Business Banking
Slide 25: Allowance Coverage
Allowance Coverage Allowance coverage is well-positioned for the economic outlook Total Allowance coverage ratio down YoY and up Total Allowance Coverage Q1/20 Q4/20 Q4/21 Q3/22 Q4/22 QoQ Canadian Credit Cards 4.0% 6.2% 5.9% 4.9% 5.3% • Increase QoQ is due to a higher allowance in both Canadian Resi
Slide 26: 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 48% • The total variable rate mortgage
Slide 27: Credit Performance – Gross Impaired Loans
Credit Performance – Gross Impaired Loans Gross impaired loan ratios down YoY and stable QoQ • While the total bank gross impaired ratio was stable QoQ, Gross Impaired Loan Ratios Q4/21 Q3/22 Q4/22 impaired dollars were up slightly mainly attributable to the retail portfolio Canadian Residential Mor
Slide 28: Canadian Consumer Lending
Canadian Consumer Lending Write-offs and delinquencies are in line with expectations Write-offs: Reported Net Write-Offs Q4/21 Q3/22 Q4/22 • Credit Card net write-off ratio YoY increase was mainly driven by Canadian Residential Mortgages 0.01% 0.01% <0.01% return to normal levels, partially offset b
Slide 29: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending GVA and GTA continue to perform well • Mortgage 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 favourably with owner-occup
Slide 30: 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 $28B of mortgages renewing in the next 12 months based on current terms - $20B fixed and $8B variable. 72% of $28B is uninsured • As interest rates ris
Slide 31: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages FICO score and LTV distributions remain healthy • Less than 1% of this portfolio has a FICO score of 650 or lower and an LTV1 over 75% FICO score Distribution 2 2 Loan-to-Value (LTV)1 Distribution 2 2 1 LTV ratios for residential mortgages are calculated base
Slide 32: Commercial Real Estate
Commercial Real Estate Commercial real estate exposure is well diversified • Gross impaired loans as a percentage of total Canadian & U.S. real estate is 30bps • Five-year average loan losses for Canadian & U.S. real estate is 13bps Canadian Commercial Real Estate Exposure by Sector1 U.S. Commercial
Slide 33: In Summary
In Summary Strong credit performance despite macroeconomic uncertainties Increased allowance for forecasted economic slowdown Credit performance in line with Key Takeaways expectations throughout the year Proactively monitoring portfolio performance considering macroeconomic uncertainty Fourth Quart
Slide 34: Appendix
Appendix CIBC®
Slide 35: Our Digital Footprint
Our Digital Footprint Growing Digital Adoption & Engagement1 Digital Adoption Rate2 Active Digital Banking Users3 Active Digital Banking Users3 (MM) (Existing Personal Banking Clients vs. Co-brand) 6.0% 39.8% Digital Channel Usage Digital Transactions4 Transactions by Channel4 (# of Sessions, MM) (M
Slide 36: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking1 Strong loan and deposit growth underlying the Canadian P&C business Net Income Net Interest Margin on Average Interest Earning Assets (bps) 2 2 Average Loans ($B)3,4 Average Deposits ($B)3 +12% +10% 5 1 Includes the results of Canadian Personal and Business Ba
Slide 37: U.S. Commercial & Wealth Management (C$)
U.S. Commercial & Wealth Management (C$) Maintained market share growth momentum as strategic investment continues • Net interest income up 27% YoY primarily due to volume Reported Adjusted1 • Loan balances up 26% YoY ($MM) Q4/22 YoY QoQ Q4/22 YoY QoQ • Deposit balances up 14% YoY • NIM up 1bp YoY a
Slide 38: Interest Sensitivity
Interest Sensitivity Well-positioned for rising interest rates Net Interest Income Sensitivity to SBU Composition of Structural Interest Rate Environment in a +/- 100 bps change ($MM)1,2 Interest Rate Sensitivity1,2 Canada and the U.S.3 • Year 1 benefit of approximately $271MM from an immediate and
Slide 39: Canadian Uninsured Residential Mortgages – Q4/22 Originations
Canadian Uninsured Residential Mortgages – Q4/22 Originations1 Credit quality of new originations continues to remain high • Originations of $11B in Q4/22 • Average LTV2 in Canada: 65%, GVA3: 62%, GTA3: 65% FICO score Distribution 3 3 Loan-to-Value (LTV)2 Distribution 3 3 1 Originations include refi
Slide 40: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 Robust trading performance in recent volatile market ($MM) ($MM) 20 20 10 10 0 0 (10) (10) (20) Aug-22 Sep-22 Oct-22 (20) Trading Revenue VaR 1 See note 7 on slide 46. Fourth Quarter, 2022 40
Slide 41: Forward Looking Information
Forward Looking Information Variables used to estimate our Expected Credit Losses1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining
Slide 42: Items of Note
Items of Note Fourth quarter and fiscal 2022 Period Q4/22 FY/22 After- Reporting Segments After-Tax Pre-Tax Tax & EPS Pre-Tax EPS & NCI Effect NCI Effect Effect Effect Effect ($MM) Effect ($/Share) ($MM) ($/Share) ($MM) ($MM) Acquisition and integration-related costs as well as purchase accounting a
Slide 43: Non-GAAP Measures
Non-GAAP Measures Fourth quarter and fiscal 2022 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
Slide 44: Reconciliation
Reconciliation GAAP (reported) to non-GAAP (adjusted) results1 U.S. U.S. Canadian Commercial Commercial $MM Canadian Commercial Banking & Banking & Personal & Banking & Wealth Wealth Business Wealth Management Capital Corporate Management Banking Management (C$) Markets & Other CIBC Total (US$) Q4/2
Slide 45: Reconciliation
Reconciliation GAAP (reported) to non-GAAP (adjusted) results1 U.S. U.S. Canadian Canadian Commercial Commercial Personal Commercial Banking & Banking & $MM & Banking & Wealth Wealth Business Wealth Management Capital Corporate CIBC Management Banking Management (C$) Markets & Other Total (US$) Q4/2
Slide 46: Glossary
Glossary Fourth quarter and fiscal 2022 Definition We adjust our reported diluted EPS to remove the impact of items of note, net of income taxes, to calculate the adjusted 1 Adjusted Diluted EPS EPS. We adjust our reported net income attributable to common shareholders to remove the impact of items
Slide 47: Glossary
Glossary Fourth quarter and fiscal 2022 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 a
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