Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q2 2020 Earnings Presentation
36 slides from Canadian Imperial Bank Of Commerce's earnings presentation, May 28, 2020
Slide 1: Investor Presentation Second Quarter 2020
Investor Presentation Second Quarter 2020 May 28, 2020 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: Our Response to COVID-19
Our Response to COVID-19 Our Team Our Clients Our Communities Supporting and ensuring our team’s Assisting more than 500,000 clients Increasing donations to support those well-being facing financial hardships most at risk • Enabled 75% of employees to work • Implemented payment deferral • Community
Slide 5: How we're helping our clients
How we’re helping our clients Payment Deferrals Total Balances with Business / Product # of Accounts Payments Deferred ($B) Mortgages 108,000 35.5 Credit Cards 270,000 1.8 Reactive 75,000 0.8 Proactive 195,000 1.0 Other Personal Lending 70,000 2.3 Personal Banking 448,000 39.6 Canadian Business Bank
Slide 6: Record levels of Digital Engagement
Record levels of Digital Engagement1 As the COVID-19 crisis continues, we see digital engagement accelerating and becoming entrenched client behavior that will be the new normal in a post-COVID world. Digital Traffic Digital Registrations Digital Banking Sessions increased by 19.4% increased by 39.4
Slide 7: Second Quarter 2020 Key Performance Measures
Second Quarter 2020 Key Performance Measures EPS Q2/20 EPS Pre-Provision Q2/20 Pre-Provision Efficiency Ratio Q2/20 Ratio Earnings2 Earnings Reported $0.83 Reported $1.9B Reported 59.1% Adjusted1 $0.94 Adjusted1 $1.9B Adjusted1 57.2% -68% YoY -2% YoY +110 bps YoY ROE PCL Ratio on CET1 Ratio Q2/20 CE
Slide 8: Financial Review
Financial Review Hratch Panossian Senior Executive Vice-President and Chief Financial Officer
Slide 9: Second Quarter 2020 Financial Results
Second Quarter 2020 Financial Results Reported ($MM) Q2/20 YoY QoQ Overall Performance Revenue 4,578 1% (6%) • Pre-Provision Earnings2 down 2% YoY Net interest income 2,762 12% 0% • Solid CET1 ratio of 11.3% Non-interest income 1,816 (13%) (13%) Revenue Non-Interest Expenses 2,704 4% (12%) • Adjuste
Slide 10: Strong capital, liquidity and balance sheet metrics
Strong capital, liquidity and balance sheet metrics $B Q2/19 Q1/20 Q2/20 Q2 Highlights Average Loans and Acceptances 388.6 399.9 412.8 • Comfortably above regulatory requirements; well-positioned to support client needs for commitment draws and loan capacity Average Deposits 473.7 501.6 526.5 • Impa
Slide 11: Consumer behaviour impacting revenues in Personal & Business Banking
Consumer behaviour impacting revenues in Personal & Business Banking Reported ($MM) Q2/20 YoY QoQ • Results impacted by implications of COVID-19, including relief programs offered to clients, the recent rate environment, and lower consumer activity Revenue 2,079 (2%) (6%) Net interest income 1,541 0
Slide 12: Strong business volume offsetting market volatility in Canadian Commercial Banking & Wealth
Strong business volume offsetting market volatility in Canadian Commercial Banking & Wealth Reported & Adjusted1 ($MM) Q2/20 YoY QoQ • Net interest income up 11% driven by strong volume growth and YoY NIM expansion Revenue 1,025 3% (3%) • Commercial loan balances up 9% YoY Net interest income 321 11
Slide 13: Strong pre-provision earnings growth in U.S. Commercial Banking & Wealth Management
Strong pre-provision earnings1 growth in U.S. Commercial Banking & Wealth Management Reported ($MM) Q2/20 YoY QoQ • Continued focus on expanding market share and deepening relationships with existing client base driving double-digit growth in net interest income Revenue 518 9% 2% Net interest income
Slide 14: Strong revenue growth in Capital Markets
Strong revenue growth in Capital Markets Reported & Adjusted1 ($MM) Q2/20 YoY QoQ • Revenue growth of 9% YoY, mainly due to: Revenue2 824 9% (5%) • Strong trading revenues, particularly in Interest Rates and Foreign Exchange Net interest income 461 76% 20% • Higher revenues in Corporate Banking driv
Slide 15: Corporate and Other
Corporate and Other Reported ($MM) Q2/20 YoY QoQ • FCIB revenues lower due to expected credit losses on debt securities as well as lower net interest income and fee income Revenue1 132 (30%) (37%) • Lower Treasury revenues reflect costs of carrying excess liquidity Net interest income 62 77% (35%) N
Slide 16: Risk Review
Risk Review Shawn Beber Senior Executive Vice-President, Chief Risk Officer & General Counsel
Slide 17: Lending portfolio mix remains sound
Lending portfolio mix remains sound 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 53% • Oil and gas is 2.5% of the loan portfolio; 54% investment grade • The balance of our portf
Slide 18: Provision for credit losses higher primarily due to performing provisions
Provision for credit losses higher primarily due to performing provisions Reported & Adjusted1 ($MM) Q2/19 Q1/20 Q2/20 Provision for Credit Losses up YoY & QoQ Cdn. Personal & Business Banking 229 215 654 • Higher impairments and performing provisions as a result of COVID-19 and continued pressure o
Slide 19: Increased allowance to reflect the current economic backdrop
Increased allowance to reflect the current economic backdrop Allowance for Credit Losses ($MM) Allowance for Credit Losses up YoY & QoQ • Coverage1 increased to 78 basis points based on current economic headwinds • Performing provisions higher as a result of updates to forward-looking indicators, pa
Slide 20: Exposure to Oil & Gas represents 2.5% of our lending portfolio
Exposure to Oil & Gas represents 2.5% of our lending portfolio Oil & Gas Mix (Outstanding) • $10.5B drawn exposure in Q2/20 • 54% investment grade • 78% of undrawn exposure is investment grade • $39.6B of retail exposure1 to oil provinces2 ($31.4B mortgages) • Alberta accounts for $31.5B or 79% of t
Slide 21: Exposure to select industries in vulnerable sectors
Exposure to select industries in vulnerable sectors Leisure & Entertainment Loans Outstanding Retail Loans Outstanding 1 • 38% of drawn loans investment grade2 • 50% of drawn loans investment grade2 1 Includes amusement services, gambling operations, sports clubs, horse racing, movie theaters, ski f
Slide 22: 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 • 71% of drawn loans investment grade3 • 42% of drawn loans investment grade3 1 Includes $2.5B in Multi Family that is included in residential mortg
Slide 23: Credit Quality — gross impaired loans trended marginally higher
Credit Quality — gross impaired loans trended marginally higher Reported Q2/19 Q1/20 Q2/20 Balances were up YoY and QoQ Canadian Residential Mortgages 0.27% 0.30% 0.32% • Higher impairments in both consumer loans and business and government loans Canadian Personal Lending 0.34% 0.37% 0.44% • Impacts
Slide 24: Credit Quality — Canadian Consumer
Credit Quality — Canadian Consumer Reported Net Write-Offs Q2/19 Q1/20 Q2/20 Net Write-off Ratio Canadian Residential Mortgages 0.01% 0.01% 0.01% Canadian Credit Cards 3.48% 3.16% 3.68% Personal Lending 0.82% 0.77% 0.81% Total 0.30% 0.28% 0.29% Net write-offs were relatively consistent YoY & QoQ • O
Slide 25: Trading Revenue (TEB) Distribution
Trading Revenue (TEB)1 Distribution2 1 Non-GAAP financial measure. See slide 36 for further details. 2 Trading revenue (TEB) comprises both trading net interest income and non-interest income and excludes underwriting fees, commissions, certain month-end transfer pricing and other miscellaneous adju
Slide 26: Appendix
Appendix
Slide 27: Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking Net Income – Adjusted ($MM)1 Net Interest Margin (bps) Average Loans & Acceptances2 ($B) Average Deposits ($B) 1 Adjusted results are non-GAAP financial measures. See slide 36 for further details. 2 Loan amounts are stated before any related allowances. 27
Slide 28: Canadian Personal Banking Digital Transformation
Canadian Personal Banking Digital Transformation1 Digital Adoption Rate2 Active Mobile Users3 (Millions) Banking Centres Self-Serve Transactions4 (%) 1 Excludes Simplii Financial. 2 Digital Adoption Rate calculated using 90-day active users. 3 Active Mobile Users represent the 90-day Active clients
Slide 29: U.S. Commercial Banking & Wealth Management (US$)
U.S. Commercial Banking & Wealth Management (US$) Reported (US$MM) Q2/20 YoY QoQ • Continued focus on expanding market share and deepening relationships with existing client base driving growth in net interest income Revenue 374 5% (3%) Net interest income 272 7% 3% • Loan balances up 22% YoY Non-in
Slide 30: Improved Diversification - Continued Growth in the U.S. Region
Improved Diversification - Continued Growth in the U.S. Region U.S. Region Earnings Contribution – Adjusted1 U.S Region AUA (US$B)2 1 Adjusted results are non-GAAP financial measures. See slide 36 for further details. 2 Assets under management (AUM) are included in assets under administration (AUA).
Slide 31: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending 90+ Days Delinquency Rates Q2/19 Q1/20 Q2/20 • Total mortgage delinquency rate remained stable YoY Total Mortgages 0.27% 0.30% 0.32% • The Greater Vancouver Area1 (GVA) and Greater Toronto Area1 (GTA) continue to outperform the Canadian average Uninsured
Slide 32: Canadian Uninsured Residential Mortgages — Q2/20 Originations
Canadian Uninsured Residential Mortgages — Q2/20 Originations Beacon Distribution • Originations of $9B in Q2/20 • Average LTV1 in Canada: 64% • GVA2: 58% • GTA2: 62% 2 2 Loan-to-Value (LTV)1 Distribution 2 2 1 LTV ratios for residential mortgages are calculated based on weighted average. See page 3
Slide 33: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Beacon Distribution • Better current Beacon and LTV1 distributions in GVA2 and GTA2 than the Canadian average • Less than 1% of this portfolio has a Beacon score of 650 or lower and an LTV1 over 75% • Average LTV1 in Canada: 53% • GVA2: 46% • GTA2: 49% 2 2 Lo
Slide 34: Forward-looking Information Variables used to estimate our Expected Credit Loss
Forward-looking Information Variables used to estimate our Expected Credit Loss1 Forward-Looking Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Information Variables – next 12 months – remaining forecast next 12 months – remain
Slide 35: Q2 2020 Items of Note
Q2 2020 Items of Note Item Pre-Tax After-Tax & EPS Effect NCI Effect Effect ($MM) ($MM) ($/Share) Reporting Segments Canadian Personal & Business Banking Amortization and impairment of acquisition-related intangible assets 57 49 0.11 U.S. Commercial Banking & Wealth Management and goodwill Corporate
Slide 36: 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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