Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Debt Investor Presentation (2019)
47 slides from Canadian Imperial Bank Of Commerce's debt investor presentation, 2019
Slide 1: CIBC Fixed Income Investor Presentation Q1 2019
CIBC Fixed Income Investor Presentation Q1 2019
Slide 2: Forward-Looking Statements
1 Forward-Looking Statements A NOTE ABOUT FORWARD-LOOKING STATEMENTS: Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “forecast”, “target”, “objective” and other similar expressions or future or conditional verbs such as “will
Slide 3: Table of Contents
2 Table of Contents 1. Debt Programmes Summary 3 2. Canadian Economy & Consumer Profile 4 3. Canadian Imperial Bank of Commerce (“CIBC”) Overview 10 4. Canadian Bail-in Regime Update 25 5. Canadian Mortgage Market 31 6. Contacts 36 7. Appendix - Canadian Mortgage Market, OSFI Non Viability 37 Criter
Slide 4: Debt Programmes Summary
3 Debt Programmes Summary Best economic performance amongst G7 economies as measured by long term GDP growth rate1 • Strong diversified stable economy Canada • Aaa/AAA/AAA/AAA (Moody’s/S&P/Fitch/DBRS) • The World Economic Forum ranked Canada’s soundness of banks first in the world from 2008 to 2016
Slide 5: Canadian Economy & Consumer Profile
Canadian Economy & Consumer Profile CIBC Q1 2019 Fixed Income Investor Presentation
Slide 6: Canada
5 Canada • GDP broken down by province / territory continues to Canada: Key Facts demonstrate that Canada’s economy is well diversified Population2 37.2 MM GDP(market prices)3 CAD 2,224 BN Canada’s GDP by Province / Territory1(%) GDP per capita3 CAD 60,501 Labour Force4 20.0 MM Provinces/Territories
Slide 7: Canadian Economic Trends Compare Favourably to Peer G7 Members
6 Canadian Economic Trends Compare Favourably to Peer G7 Members Long Term GDP Growth Rate (2000-2017) Strong Economic Fundamentals • Lowest total government net debt-to-GDP ratio among G7 in 2018 • Only G7 nation to balance its budget for 11 consecutive years (1998-2008), and one of the first to ba
Slide 8: Canadian Labour Market Profile
7 Canadian Labour Market Profile Total Employment Strong Job Creation Record • Canada regained all jobs lost during the recession by January 2010, before the United Kingdom and the United States • Net employment increases in Canada and the United States from January 2008 to January 2019 are 1,947,00
Slide 9: Canadian Economy Selected Indicators
8 Canadian Economy Selected Indicators Unemployment Rate • Canada’s unemployment rate less volatile in the past decade, and not directly comparable to the United States unemployment rate1 • As measured by GDP indexed to 2007, the Canadian economy has outperformed other major economies since the fina
Slide 10: Canada GDP and Exports
9 Canada GDP and Exports Well diversified economy, with several key industries including finance, manufacturing, services and real estate • Following the 2007-2008 global recession, the diversity had been a stabilizing factor and led to strong economic performance relative to other industrialized na
Slide 11: CIBC Overview
CIBC Overview CIBC Q1 2019 Fixed Income Investor Presentation
Slide 12: CIBC Snapshot
11 CIBC Snapshot CIBC (CM: TSX, NYSE) is a leading North American financial institution. Through our four strategic business units – Canadian Personal and Small Business Banking, Canadian Commercial Banking and Wealth Management, U.S. Commercial Banking and Wealth Management, and Capital Markets - o
Slide 13: Strong and Consistent Returns to Shareholders
12 Strong and Consistent Returns to Shareholders Adjusted Diluted Earnings Per Share1 Adjusted Return on Equity1 (C$) (%) 12.21 12.04 19.9 19.0 11.11 18.1 17.4 10.22 3.00 16.0 16.7 9.45 3.08 2.95 3.01 3.18 2015 2016 2017 2018 YTD Q1 LTM Q1 2015 2016 2017 2018 YTD Q1 LTM Q1 2019 2019 2019 2019 Divide
Slide 14: Commitment to Balance Sheet Strength
13 Commitment to Balance Sheet Strength Basel III CET1 Ratio Basel III Total Capital Ratio (%) (%) 11.3 11.4 11.2 15.0 14.8 14.9 14.7 10.8 10.6 13.8 (1) (1) 2015 2016 2017 2018 YTD Q1 2015 2016 2017 2018 YTD Q1 2019 2019 Basel III Leverage Ratio2 Liquidity Coverage Ratio2 (%) (%) 4.3 4.2 128.0 131.0
Slide 15: Our Strategy Drives Organic Growth and Shareholder Value
14 Our Strategy Drives Organic Growth and Shareholder Value 2018 Results Financial Measure Medium-Term Target Reported Adjusted1 Diluted Earnings Per Share Growth 5%-10% on average, annually 4% 10% Return on Common Shareholders’ Equity 15%+ 16.6% 17.4% 55% run rate by 2019 Efficiency Ratio 57.5% 55.
Slide 16: Sustainable Returns to Shareholders
15 Sustainable Returns to Shareholders CIBC has a strong track record of shareholder returns • CIBC has not missed a regular dividend or reduced its dividend since the first dividend payment in 1868 Dividends Note: Dividend of CAD 1.40 per share for the quarter ending April 30, 2019 (Q2-2019) will
Slide 17: Strong, High Quality Liquid Client Driven Balance Sheet
16 Strong, High Quality Liquid Client Driven Balance Sheet Based on Q1/19 results Assets CAD 615BN Liabilities & Equity Cash and Repos 111% Unsecured Funding 30% 27% Coverage Liquid Wholesale Assets Trading & Funding Investment Securities Secured Funding (3) 103% Residential Personal Deposits Covera
Slide 18: Capital
17 Capital CIBC Q1 2019 Fixed Income Investor Presentation
Slide 19: Credit Review
18 Credit Review Provision For Credit Losses (PCL) Provision for Impaired down QoQ • Overall credit quality remains strong • Higher provisions in Canadian Commercial Banking and Capital Markets • Increase in performing provision due to unfavourable changes in forward-looking information 90+ Days Del
Slide 20: Regulatory Environment Continually Evolving
19 Regulatory Environment Continually Evolving The Basel Committee has finalized its Basel III reforms. Key changes include: A new Standardized Approach for credit, CVA and operational risk (2022) A new credit risk framework for constraining model-based approaches to reduce RWA variations (202
Slide 21: Domestic Stability Buffer
20 Domestic Stability Buffer Background Canadian Domestic Systemically Important Banks (D-SIBs) are required to hold Pillar 2 capital buffer that is privately communicated to each bank, to address risks that are inadequately captured by the Pillar 1 minimum capital requirements D-SIBs are subjec
Slide 22: Diversification is Key to a Stable Wholesale Funding Profile
21 Diversification is Key to a Stable Wholesale Funding Profile Wholesale Funding Diversification Well diversified across products, currencies, investor segments and geographic regions Geography Instrument Achieve appropriate balance between cost and stability of funding Regular issuance to pr
Slide 23: CIBC Funding Strategy and Sources
22 CIBC Funding Strategy and Sources Funding Strategy CIBC’s funding strategy includes access to funding through retail deposits and wholesale funding and deposits CIBC updates its three year funding plan on at least a quarterly basis The wholesale funding strategy is to develop and maintain a
Slide 24: Wholesale Funding Geography
1. Introduction & Regulatory Framework 23 Defining Liquidity Risk Wholesale Funding Geography Wholesale Funding By Currency CAD 48.5 BN EUR 6.5 BN, CHF 1.1 BN, GBP 3.4 BN, SEK 2.0 BN, NOK: 0.15 BN Canada Mortgage Bonds Cards Securitization Covered Bonds Medium Term Notes Medium Term Notes
Slide 25: CIBC Funding Composition
24 CIBC Funding Composition Funding Sources – January 2019 Funding sources BN Personal deposits 172.8 Business and government deposits 141.0 Unsecured funding 1 100.2 Securities sold short or repurchase agreements 60.6 2 Capital 40.1 Securitization 20.9 Covered bond 18.3 Bank deposits 11.5 Others (I
Slide 26: Canadian Bail-in Regime Update
Canadian Bail-in Regime Update CIBC Q1 2019 Fixed Income Investor Presentation
Slide 27: Canadian Bail-in Regime Update
26 Canadian Bail-in Regime Update On April 18, 2018, Department of Finance published the bail-in regulations, and OSFI finalized the guidelines on Total Loss Absorbing Capacity (TLAC) and TLAC holdings. 1. Department of Finance’s bank recapitalization (bail-in) conversion regulations Provide statu
Slide 28: Canadian Bail-in Regime – Comparison to Other Jurisdictions
27 Canadian Bail-in Regime – Comparison to Other Jurisdictions Bail-in implementation in other jurisdictions has increased the riskiness of bail-inable bonds vs. non-bail-inable bonds: Legislative changes prohibit bail-outs, increasing the probability that bail-in will be relied on The hierarchy
Slide 29: How Bail-In Is Expected To Work
28 How Bail-In Is Expected To Work When OSFI deems a bank has ceased to or may be about to cease to continue to be viable, it may trigger temporary takeover of the bank and carry out the bail-in conversion of NVCC capital and bail-in debt to common equity. At bail-in, all NVCC instruments would be
Slide 30: Loss Absorption Waterfall
29 Liquidation to Resolution Comparison Liquidation Resolution Securitizations, Covered Bonds Securitizations, Covered Bonds Liquidation Scenario Legacy Senior Debt Bail-in debt ranks pari passu with Structured Notes Legacy Senior Debt Derivatives all other senior unsecured Structured Notes Deposits
Slide 31: Overview of Creditor Hierarchies in Bail-In Resolution
30 Overview of Creditor Hierarchies in Bail-In Resolution National layers of bail-inable senior debt instruments Canada Bank Recapitalization Bank Insolvency Ordinance Resolution Mechanism Act French Sapin 2 Italy Spanish Revised (Bail-in) Regulations (BIO-FINMA) / BoE/PRA (§46f KWG new) Insolvency
Slide 32: Canadian Mortgage Market
Canadian Mortgage Market CIBC Q1 2019 Fixed Income Investor Presentation
Slide 33: Mortgage Market Performance and Urbanisation Rates
32 Mortgage Market Performance and Urbanisation Rates Mortgage Arrears by Number of Mortgages Canadian mortgages consistently outperform U.S. and U.K. mortgages Low defaults and arrears reflect the strong Canadian credit culture Mortgage interest is generally not tax deductible, resulting in an
Slide 34: Canadian House Prices
33 Canadian House Prices Average Home Price • Absolute price level is moderate compared to major global urban centers City CAD USD Eq.1 Canada 472K 346K • Canadian debt to income ratio in line with Toronto 764K 580K many developed nations Vancouver 1032K 776K • Growth rates of house prices in Canada
Slide 35: CIBC’s Mortgage Portfolio
34 CIBC’s Mortgage Portfolio Condo Exposure CIBC Canadian Residential Mortgages: CAD 201.4 BN • 37% of CIBC’s Canadian residential mortgage portfolio is insured, with 72% of insurance being provided by CMHC • The average loan to value1 of the uninsured portfolio is 54% • The condo developer exposure
Slide 36: Canadian Mortgage Market
35 Canadian Mortgage Market World Home Prices Per Square Foot (USD) House Price & Household Income Growth Source: Global Property Guide, OREB, CREB GMREB, MAR, TREB, CAR, REBGV (2018) Source: Bloomberg, CREA Consistently High Owner’s Equity2 Household Debt Service Ratio1 Source: Federal Reserve, Sta
Slide 37: CIBC Investor Relations Contacts
36 CIBC Investor Relations Contacts HRATCH PANOSSIAN, EXECUTIVE VICE-PRESIDENT Email: Hratch.Panossian@cibc.com Phone: +1 416-956-3317 JASON PATCHETT, SENIOR DIRECTOR Email: Jason.Patchett@cibc.com Phone: +1 416-980-8691 ALICE DUNNING, SENIOR DIRECTOR Email: Alice.Dunning@cibc.com Phone: +1 416-861-
Slide 38: Appendix
Appendix CIBC Q1 2019 Fixed Income Investor Presentation
Slide 39: Canadian Mortgage Market
38 Canadian Mortgage Market Beneficial Mortgage Regulation in Canada • Under the Bank Act, banks can only advance uninsured mortgages up to an LTV ratio of 80% • Borrowers have to purchase default insurance if the mortgage has an LTV > 80% • Insurance covers the entire outstanding principal amount,
Slide 40: Canadian Mortgage Market Regulatory Developments
39 Canadian Mortgage Market Regulatory Developments Max. amortization Reduce max. Second home mortgage reduced to 35 yrs. from amortization to 30 insurance no longer 40 yrs. from 35 yrs. available Set min. down payment Refinancing max. Tightened income to 5% LTV lowered to 85% verificati
Slide 41: Canadian Mortgage Market Regulatory Developments (continued)
40 Canadian Mortgage Market Regulatory Developments (continued) Standardizing eligibility criteria for high-and low- Ontario ratio insured mortgages, Government Min. down payment for including a mortgage rate introduced Non- new insured mortgage stress test Resident Vancouver will increase f
Slide 42: CIBC Canadian Real Estate Secured Personal Lending
41 CIBC Canadian Real Estate Secured Personal Lending 1 GVA and GTA definitions based on regional mappings from Teranet. CIBC Q1 2019 Fixed Income Investor Presentation
Slide 43: CIBC Canadian Uninsured Residential Mortgages — Q1/19 Originations
42 CIBC Canadian Uninsured Residential Mortgages — Q1/19 Originations CIBC Q1 2019 Fixed Income Investor Presentation
Slide 44: CIBC Canadian Uninsured Residential Mortgages
43 CIBC Canadian Uninsured Residential Mortgages CIBC Q1 2019 Fixed Income Investor Presentation
Slide 45: Office of the Superintendent of Financial Institutions (OSFI) Non Viability Criteria
44 Office of the Superintendent of Financial Institutions (OSFI) Non Viability Criteria In assessing whether an institution has ceased, or is about to cease, to be viable, the following criteria can be considered, which may be mutually exclusive and should not be viewed as an exhaustive list1 ▪ Wh
Slide 46: Outstanding Benchmark Covered Issuance
45 Outstanding Benchmark Covered Issuance Maturity Maturity Extended Due for Series Currency Issued Issue Date Coupon Rate Issue Spread Fitch/Moody's Type Date Payment Date CBL3 EUR 1,000,000,000 Soft Bullet 15-Oct-14 15-Oct-19 15-Oct-20 0.375% MS + 0% AAA/Aaa CBL5 EUR 1,000,000,000 Soft Bullet 28-J
Slide 47: Selected Foreign Currency Senior
46 Selected Foreign Currency Senior Programme Currency Issued Issue Date Maturity Date Coupon Rate Issue Spread EMTN AUD 100,000,000 25-Jul-13 25-Jul-19 4.75% BBSW + 0.93% MJDS USD 1,000,000,000 6-Sep-16 6-Sep-19 1.60% T + 0.70% MJDS USD 500,000,000 6-Sep-16 6-Sep-19 LIBOR + 0.52% 0.52% MJDS USD 1,0
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