Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q4 2023 Earnings Presentation
69 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Nov 30, 2023
Slide 1: Quarterly Results Presentation Fourth Quarter 2023
Quarterly Results Presentation Fourth Quarter 2023 November 30, 2023 All amounts are in Canadian dollars unless otherwise indicated.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Fourth quarter and fiscal 2023 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: Key Messages
Key Messages Performance underpinned by our client-focused strategy and financial strength Strength in Advancing our Well-Positioned Financial Results Competitive Advantages for Growth Strong margins Mass affluent and private Client-focused strategy wealth franchise Positive operating leverage Disci
Slide 5: CIBC Overview
CIBC Overview Solid performance in 2023 against a backdrop of moderate economic growth Results reflect strong execution against our strategic priorities Diluted EPS Revenue PPPT3 NIAT ROE4 Reported $5.16 Reported $23.3B Reported $9.0B Reported $5.0B Reported 10.3% Adjusted1,2 $6.72 Adjusted2 $23.4B
Slide 6: Our Purpose
Our Purpose To help make your ambition a reality Our Strategic Priorities Mass Affluent & Private Digital Banking Highly Connected Enabling & Wealth Franchise Solutions Franchise Simplifying our Bank Grow and become a Leverage our Deliver solutions Develop and improve leader with our mass digital ca
Slide 7: Our Progress
Our Progress Key accomplishments against our strategic priorities +650,000 $17B of referrals +15% Top 10 net new clients since fiscal 2019 across Canadian of U.S. Commercial Registered Investment across CIBC and Commercial Banking and clients have a Private Advisor by Barron’s for Simplii over 12 mo
Slide 8: In Summary
In Summary Strong execution will drive profitable growth and top-tier returns Strength in Advancing our Well-Positioned Financial Results Competitive Advantages for Growth Strategic investments Continue to prioritize Our approach, in our core businesses financial strength and risk strategy and stron
Slide 9: Financial Overview
Financial Overview Hratch Panossian Senior Executive Vice-President & Chief Financial Officer
Slide 10: Financial Results Overview
Financial Results Overview Fourth quarter results continue to demonstrate the momentum and resilience of our business Diluted Earnings Return on Equity Revenue Operating Leverage1 Per Share Reported $1.53 Reported 11.8% $5.8B Reported 9.7% +8% / +9% YoY Adjusted2 $1.57 Adjusted2 12.1% Reported / Adj
Slide 11: Financial Results Overview
Financial Results Overview Results demonstrate revenue growth and operating agility in a challenging market Revenue Reported ($MM) Q4/23 YoY QoQ • Broad-based revenue growth of 8% YoY (9% YoY Revenue 5,844 8% (0)% adjusted1) Non-Trading Net Interest Income 3,368 8% 1% • Net interest income up 8% exc
Slide 12: Net Interest Income (NII)
Net Interest Income (NII) NII (ex-trading) grew 8%, supported by strong margins and volume growth Net Interest Income Trailing 5Q NIM Trends1 Canadian Personal & Commercial NIM1,4,5 U.S. Commercial & Wealth NIM1,5 +20 bps YoY -5 bps YoY Endnotes are included on slides 58 to 66. Fourth Quarter, 2023
Slide 13: Balance Sheet
Balance Sheet NII continues to benefit from B/S growth and margin expansion Average Assets ($B) & Yields1,2,3 Average Liabilities and Equity ($B), & Costs1,4,5 Client Deposit Mix (Spot Balances)6 • Loan yields continue to expand (YoY and sequentially), capturing rate increases by the Bank of Canada
Slide 14: Non-Interest Income
Non-Interest Income Double-digit growth driven by strong trading momentum and higher fees Non-Interest Income by Category ($MM)4 Market-Related Fees4 Transactional Fees4 Reported: $2,614MM 5 1 2 1 3 • Non-interest income up 20% YoY, or 7% excluding trading • Transactional revenues up 6% YoY driven m
Slide 15: Non-Interest Expenses
Non-Interest Expenses Contained through focused investments and continued realization of efficiencies Adjusted1 Expenses ($B) and YoY Expense Growth (%) Operating Leverage (%) 3-Year 5-Year F23 Average Average (5.2)% (0.6)% (1.5)% 1.2% 0.0% (0.1)% Reported Adjusted1 Reported: $12,803MM Reported: $14
Slide 16: Capital
Capital Ending the year with a significantly stronger balance sheet Capital Position $B Q4/22 Q3/23 Q4/23 • CET1 ratio of 12.4%, up 18 bps sequentially Average Loans and Acceptances 1 525.6 537.3 539.5 • Increase primarily due to organic generation Average Deposits 1 703.8 712.4 721.2 and share issu
Slide 17: Canadian Banking: Personal & Business Banking
Canadian Banking: Personal & Business Banking Net income growth supported by strong margin expansion and expense discipline • Net interest income up 11% YoY driven by strong Reported Adjusted1 margins and higher volumes ($MM) Q4/23 YoY QoQ Q4/23 YoY QoQ • Net interest margin up 19 bps YoY Revenue 2,
Slide 18: Canadian Banking: Commercial Banking & Wealth Management
Canadian Banking: Commercial Banking & Wealth Management Solid performance driven by client relationship focus through a challenging economic backdrop • Net interest income comparable to the prior year Reported & Adjusted1 ($MM) Q4/23 YoY QoQ • Net interest margin down 1 bp YoY but improved 2 Revenu
Slide 19: U.S. Region: Commercial Banking & Wealth Management
U.S. Region: Commercial Banking & Wealth Management Disciplined growth through relationship focused strategy despite market challenges • Net interest income up 1% YoY driven by margins and Reported Adjusted1 loan volumes, partially offset by deposit volumes (US$MM) Q4/23 YoY QoQ Q4/23 YoY QoQ • Depo
Slide 20: Capital Markets & Direct Financial Services
Capital Markets & Direct Financial Services Revenue growth underpinned by robust trading activity in Global Markets • Revenue growth of 9% YoY: Reported & Adjusted1 ($MM) Q4/23 YoY QoQ • Trading revenues up 23% YoY driven mainly by higher Revenue 2 1,290 9% (5)% equities, interest rate, and FX tradi
Slide 21: Corporate & Other
Corporate & Other Strong results supported by International Banking and lower expenses • Revenue higher YoY and lower sequentially Reported Adjusted2 • International Banking up 6% YoY, ($MM) Q4/23 YoY QoQ Q4/23 YoY QoQ benefitting from margin expansion and FX 1 translation Revenue 61 $86 $(6) 61 $86
Slide 22: Business Performance & Outlook
Business Performance & Outlook Well-positioned to navigate uncertainty and deliver stakeholder value Fiscal 2023 Highlights Revenue Growth Expense Growth PPPT Growth2 Diluted EPS Growth Reported & Adjusted1 Reported: 12% YoY Reported: (1)% YoY Reported: (23)% YoY 7% YoY Adjusted1: 6% YoY Adjusted1:
Slide 23: Risk Overview
Risk Overview Frank Guse Senior Executive Vice-President & Chief Risk Officer
Slide 24: Key Messages
Key Messages Credit continued to normalize, in 2023 loan loss The overall loan line with expected performance in line portfolio remains performance with expectations healthy and across consumer despite higher U.S. resilient and business office losses portfolios Fourth Quarter, 2023 24
Slide 25: Allowance for Credit Losses
Allowance for Credit Losses Allowances for credit losses continued to increase • Our total provision for credit losses was $541MM in Q4/23, compared to $736MM last quarter • Provision on impaired loans was $478MM, flat QoQ • Impaired provision was attributable to both retail and business and governm
Slide 26: Credit Performance – Gross Impaired Loans
Credit Performance – Gross Impaired Loans Gross impaired loan ratios up YoY and QoQ • Gross impaired loan ratio was up, mainly attributable to the Gross Impaired Loan Ratios Q1/20 Q4/22 Q3/23 Q4/23 headwinds in the U.S. commercial real estate sector Canadian Residential Mortgages 0.30% 0.13% 0.17% 0
Slide 27: Canadian Consumer Lending
Canadian Consumer Lending Net write-offs and delinquencies trending in line with our expectations Net Write-offs: Reported Net Write-Offs Q1/20 Q4/22 Q3/23 Q4/23 • Overall consumer net write-offs increased slightly QoQ from Unsecured Canadian Residential Mortgages 0.01% <0.01% <0.01% <0.01% Personal
Slide 28: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending Mortgage delinquencies continue to perform better than pre-pandemic levels • Mortgage growth has been driven by clients with deep and balanced relationships • 87% of mortgages are owner-occupied; investor mortgages performance is strong and compares favo
Slide 29: Canadian Mortgages Renewal Profile
Canadian Mortgages Renewal Profile Impacts of payment increases at renewal expected to be manageable • Using an illustrative 6% rate at time of renewal, and no borrower income growth since origination, mortgage payment increases are forecasted to be less than 5.1% of clients’ income • Low LTV of ren
Slide 30: U.S. Commercial Real Estate – Office Portfolio
U.S. Commercial Real Estate – Office Portfolio Progress made as we work through maturity profile • The US Office portfolio is less than 1% of total loan exposure and is 20% of overall U.S. Commercial Real Estate • 48% of the portfolio is Class A; average loan-to-value at origination was 60%; 50% of
Slide 31: In Summary
In Summary Overall credit performance in line with expectations Continued Macro – economic proactive Allowance coverage environment is management of remains robust expected to remain portfolio exposure heading into the dynamic to mitigate risk year ahead Fourth Quarter, 2023 31
Slide 32: Appendix
Appendix CIBC®
Slide 33: Medium-Term Objectives
Medium-Term Objectives Financial performance against our objectives Medium-Term Objectives1,2 3-Year 5-Year Reported: 7.9% Reported: (2.4)% Diluted EPS Growth of 7% - 10% (CAGR3) Adjusted4,5: 11.5% Adjusted4,5: 1.9% Reported: 13.5% Reported: 13.0% Return on Equity of 16%+ (Average) Adjusted4,6: 14.9
Slide 34: Canadian Banking: Personal & Business Banking
Canadian Banking: Personal & Business Banking Helping our clients achieve their ambitions, and delivering market-leading performance Our retail business in review Revenue PPPT2 NIAT Operating Leverage Balance Sheet (Avg.) Credit Reported & Adjusted1 Reported $4.2B Reported $2.4B Reported 1.6% Loans3
Slide 35: Canadian Banking: Commercial Banking & Wealth Management
Canadian Banking: Commercial Banking & Wealth Management Becoming Canada’s leader in financial advice and generating consistent growth Our Canadian commercial and wealth franchise in review Revenue PPPT2 NIAT Operating Leverage Balance Sheet (Avg.) Credit Reported & Adjusted1 Reported & Adjusted1 Re
Slide 36: U.S. Region: Commercial Banking & Wealth Management ($US)
U.S. Region: Commercial Banking & Wealth Management ($US) Relationship-oriented solutions with a focus on organic growth and seamless connectivity Our U.S. commercial and wealth business in review Revenue PPPT2 NIAT Operating Leverage Balance Sheet (Avg.) Credit Reported & Adjusted1 Reported $0.9B R
Slide 37: Capital Markets & Direct Financial Services
Capital Markets & Direct Financial Services Deliver leading solutions through best-in-class insight, advice and execution Our capital markets franchise in review Revenue1 PPPT3 NIAT Operating Leverage Balance Sheet (Avg.) Credit Reported & Adjusted2 Reported & Adjusted2 Reported & Adjusted2 Reported
Slide 38: Our Digital Footprint
Our Digital Footprint Growing Digital Adoption & Engagement1 Digital Adoption Rate2 Active Digital Banking Users3 Digital Channel Usage (MM) (# of Sessions, MM) +2% +10% +12% Digital Transactions4 Transactions by Channel4 (MM) +14% 5 5 Endnotes are included on slides 58 to 66. Fourth Quarter, 2023 3
Slide 39: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking1 Continued loan and deposit growth underlying the Canadian P&C business Net Income ($MM) +24% YoY Reported Net Interest Margin on Average Interest Earning Assets (bps)3 +17% QoQ Reported +22% YoY Adjusted2 +14% QoQ Adjusted2 Average Loans ($B)4,5 Average Deposi
Slide 40: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking1 Margins benefit from higher rates, moderating headwinds from deposit mix and mortgage pricing Adjusted NIM2 Trajectory Asset & Deposit Contribution to Segment NIMs Reported (QoQ change, bps) 2.52% 2.39% Asset & Client Deposit Mix3 (Spot Balances) Mortgage Port
Slide 41: U.S. Region: Commercial Banking & Wealth Management (C$)
U.S. Region: Commercial Banking & Wealth Management (C$) Disciplined relationship focused growth despite market challenges • Net interest income up 2% YoY driven by margins and Reported Adjusted1 loan volumes, partially offset by deposit volumes ($MM) Q4/23 YoY QoQ Q4/23 YoY QoQ • Deposits down 5% Y
Slide 42: Funding & Liquidity
Funding & Liquidity A well-diversified, high-quality, client-driven balance sheet • Liquidity and funding position continue to remain well above regulatory requirement • Client deposits are the primary source of funding, comprising over $500B of the total funding base • Funding strategy is supplemen
Slide 43: Interest Rate Sensitivity
Interest Rate Sensitivity Well-positioned for higher interest rates Net Interest Income Sensitivity to SBU Composition of Structural Interest Rate Environment in a +/- 100 bps change ($MM)1 Interest Rate Sensitivity1,2 Canada and the U.S.3 • Year 1 benefit of approximately $394MM from an immediate a
Slide 44: Furthering Our ESG Strategy
Furthering Our ESG Strategy Advancing our strategy by building on our history of ESG leadership Committed to ESG Leadership & Creating a Competitive Advantage We are focused on embedding ESG principles into our business strategy, purpose and everyday decision-making, while responding to stakeholder
Slide 45: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Total PCLs trended lower in Q4/23 driven by lower performing provision Provision for Credit Losses up YoY and down QoQ ($MM) Q4/22 Q3/23 Q4/23 • Impaired provisions remained flat in Q4/23, largely due to higher Cdn. Personal & Business Banking 305 423 282 impairment
Slide 46: Allowance Coverage
Allowance Coverage Allowance coverage remains higher than the pre-pandemic level Total allowance coverage ratio up YoY and QoQ Total Allowance Coverage Q1/20 Q4/20 Q4/22 Q3/23 Q4/23 • Increase QoQ is due to higher allowances in both Canadian Credit Cards 4.0% 6.2% 5.3% 4.3% 4.2% performing and impai
Slide 47: Credit Portfolio Breakdown
Credit Portfolio Breakdown Lending Portfolio has a strong risk profile • 62% of our portfolio is consumer lending, composed mainly of Overall Loan Mix (Net Outstanding Loans and Acceptances) mortgages, with uninsured having an average loan-to-value of 50% HELOC 4% • Total variable rate mortgage port
Slide 48: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Credit bureau score1 and LTV2 distributions remain healthy Credit Bureau Score1 Distribution 3 3 Loan-to-Value (LTV)2 Distribution 3 3 Endnotes are included on slides 58 to 66. Fourth Quarter, 2023 48
Slide 49: Canadian Uninsured Residential Mortgages – Q4/23 Originations
Canadian Uninsured Residential Mortgages – Q4/23 Originations1 Credit quality of new originations continues to remain high • Originations of $10B in Q4/23 • Average LTV2 in Canada: 66%, GVA3: 61%, GTA3: 65% Credit Bureau Score4 Distribution 3 3 Loan-to-Value (LTV)2 Distribution 3 3 Endnotes are incl
Slide 50: Commercial Real Estate
Commercial Real Estate Commercial real estate exposure is well diversified • Canada represents 62% of total Canadian & U.S. real estate exposure • Gross impaired loans as a percentage of total Canadian & U.S. real estate is 1.75% • Trailing five-year average loan losses for Canadian & U.S. real esta
Slide 51: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 Robust trading performance in recent volatile market Endnotes are included on slides 58 to 66. Fourth Quarter, 2023 51
Slide 52: Forward Looking Information
Forward Looking Information Variables used to estimate our Expected Credit Losses1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining
Slide 53: Items of Note
Items of Note Fourth quarter and fiscal 2023 Period Q4/23 FY23 After-Tax After-Tax Reporting Segments Pre-Tax EPS Pre-Tax EPS & NCI & NCI Effect Effect Effect Effect Effect Effect ($MM) ($/Share) ($MM) ($/Share) ($MM) ($MM) Income tax charge related to the Canada Recovery Dividend tax and the 1.5% t
Slide 54: Reconciliation
Reconciliation GAAP (reported) to non-GAAP (adjusted) results1 U.S. Canadian U.S. Commercial Canadian Commercial Commercial Capital Banking Personal and Banking Banking Markets and and Wealth Business and Wealth and Wealth Direct Financial Corporate Management $ millions, for the three months ended
Slide 55: Reconciliation
Reconciliation GAAP (reported) to non-GAAP (adjusted) results1 U.S. Canadian U.S. Commercial Canadian Commercial Commercial Capital Banking Personal and Banking Banking Markets and and Wealth Business and Wealth and Wealth Direct Financial Corporate Management $ millions, for the three months ended
Slide 56: Reconciliation
Reconciliation GAAP (reported) to non-GAAP (adjusted) results1 U.S. Canadian U.S. Commercial Commercial Commercial Capital Banking Canadian Banking Banking Markets and and Wealth Personal and and Wealth and Wealth Direct Financial Corporate Management $ millions, for the three months ended October 3
Slide 57: Reconciliation
Reconciliation GAAP (reported) to non-GAAP (adjusted) results1 U.S. Canadian U.S. Commercial Canadian Commercial Commercial Capital Banking Personal and Banking Banking Markets and and Wealth Business and Wealth and Wealth Direct Financial Corporate Management $ millions, for the three months ended
Slide 58: Endnotes
Endnotes Fourth quarter and fiscal 2023 Slide 5 – CIBC Overview 1. See note 1 on slide 68. 2. Adjusted results are non-GAAP measures. The quantitative reconciliations for these non-GAAP measures for the years ended October 31, 2023 and October 31, 2022 have been incorporated by reference and can be
Slide 59: Endnotes
Endnotes Fourth quarter and fiscal 2023 Slide 11 – Financial Results Overview 1. Adjusted results are non-GAAP measures. See slide 67 for further details. 2. Adjusted results are non-GAAP measures. See slide 67 for further details. For Q3/23, adjusted non-interest income excludes $34MM related to th
Slide 60: Endnotes
Endnotes Fourth quarter and fiscal 2023 Slide 15 – Non-Interest Expenses 1. Adjusted results are non-GAAP measures. See slide 67 for further details. 2. Investments include incremental costs associated with front-line hires related to growth initiatives, investments in enterprise initiatives, invest
Slide 61: Endnotes
Endnotes Fourth quarter and fiscal 2023 Slide 20 – Capital Markets & Direct Financial Services 1. Adjusted results are non-GAAP measures. See slide 67 for further details. 2. Revenue is reported on a taxable equivalent basis (TEB). TEB adjustment in Q4/23 was $62 million. 3. Pre-provision, pre-tax e
Slide 62: Endnotes
Endnotes Fourth quarter and fiscal 2023 Slide 33 – Medium-Term Objectives 1. Based on adjusted measures. Adjusted measures are non-GAAP measures. See slide 67 for further details. 2. Medium-term targets are defined as through the cycle, which is currently defined as three to five years, assuming a n
Slide 63: Endnotes
Endnotes Fourth quarter and fiscal 2023 Slide 36 – U.S. Region: Commercial Banking & Wealth Management ($US) 1. Adjusted results are non-GAAP measures. See slide 67 for further details. 2. Pre-provision, pre-tax earnings (PPPT) is revenue net of non-interest expenses and is a non-GAAP measure. See s
Slide 64: Endnotes
Endnotes Fourth quarter and fiscal 2023 Slide 40 – Canadian Personal & Commercial Banking 1. Includes the results of Canadian Personal and Business Banking and Canadian Commercial Banking, as well as Simplii Financial and CIBC Investor’s Edge, in Capital Markets. 2. Adjusted results are non-GAAP mea
Slide 65: Endnotes
Endnotes Fourth quarter and fiscal 2023 Slide 45 – Provision for Credit Losses (PCL) 1. See notes 9 and 10 on slide 68. Slide 46 – Allowance Coverage 1. Capital Markets excludes allowance for credit losses related to Simplii Financial which is included in the respective Canadian retail products. 2.
Slide 66: Endnotes
Endnotes Fourth quarter and fiscal 2023 Slide 53 – Items of Note 1. The income tax charge is comprised of $510 million for the present value of the estimated amount of the Canada Recovery Dividend (CRD) tax of $555 million, and a charge of $35 million related to the fiscal 2022 impact of the 1.5% in
Slide 67: Non-GAAP Measures
Non-GAAP Measures Fourth quarter and fiscal 2023 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 68: Glossary
Glossary Fourth quarter and fiscal 2023 Definition 1 Adjusted Diluted EPS We adjust our reported diluted EPS to remove the impact of items of note, net of income taxes, to calculate the adjusted EPS. We adjust our reported net income attributable to common shareholders to remove the impact of items
Slide 69: Glossary
Glossary Fourth quarter and fiscal 2023 Definition We adjust our reported revenue and non-interest expenses to remove the impact of items of note and gross up tax-exempt revenue to bring it 12 Adjusted Efficiency Ratio to a TEB, to calculate the adjusted efficiency ratio. Total allowance for credit
Canadian Imperial Bank of Commerce — Q4 2023 Earnings Presentation on 6ix