Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q3 2022 Earnings Presentation
40 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Aug 25, 2022
Slide 1: Quarterly Results Presentation Third Quarter 2022
Quarterly Results Presentation Third Quarter 2022 August 25, 2022 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 Investor Presentation, in other filings with Canadian securities regulators or the SEC and in oth
Slide 3: CIBC Overview
CIBC Overview Victor Dodig President and Chief Executive Officer
Slide 4: Strong performance across our Bank, as we support our clients and communities
Strong performance across our Bank, as we support our clients and communities Focusing on high-touch, high-growth client segments | Elevating the client experience | Investing in future differentiators Revenue $5.6B YoY +10% #1 2nd J.D. Power collaborated with an Online Banking in YoY balance online
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 relationships Industry-leading platforms through personal advice and that support seamless digital innov
Slide 6: Financial Review
Financial Review Hratch Panossian Senior Executive Vice-President and Chief Financial Officer
Slide 7: Solid results that demonstrate core business strength
Solid results that demonstrate core business strength EPS ROE Revenue Operating Leverage1 Reported $1.78 Reported 14.6% Reported Reported 1.1% $5.6B $1.85 +10% YoY Adjusted2 Adjusted2 15.1% Adjusted2 Adjusted2,3 (0.3)% -6% YoY Earnings PCL Ratio5 CET1 Ratio6 Liquidity Coverage Ratio7 Average Reporte
Slide 8: Third Quarter 2022 Financial Results
Third Quarter 2022 Financial Results Reported ($MM) Q3/22 YoY QoQ Revenue 5,571 10% 4% Revenue Net interest income 3,236 12% 5% • Revenue growth of 10% over the prior year, supported by broad-based momentum Non-interest income 2,335 8% 2% • Trading revenue up 19% YoY Expenses 3,183 9% 2% • Net inter
Slide 9: Balance sheet growth and strong margins driving continued net interest income momentum
Balance sheet growth and strong margins driving continued net interest income momentum Net Interest Margin on Average Interest-Earning Assets (NIM)1,2 Loans2,5 ($B, local currency) Deposits2 ($B, local currency) YoY QoQ YoY QoQ +30% +4% +15% +2% +16% +4% +21% +4% +6% +2% +13% 0% +12% +3% +9% +3% 4 P
Slide 10: Well-positioned for rising interest rates
Well-positioned for rising interest rates Net Interest Income Sensitivity SBU Composition of Structural Deposit Mix3 to a +/- 100 bps change ($MM)1 Interest Rate Sensitivity1,2 Year 1 +100 bps Personal & Business Banking Cdn. Commercial & Wealth Interest-Bearing Deposits – Indeterminate - 100 bps U.
Slide 11: Fee income growth over the prior year supported by trading, investment management, and transactional fees
Fee income growth over the prior year supported by trading, investment management, and transactional fees Non-Interest Income by Category ($MM)1 • Higher trading income than the prior year supported by strong Foreign Exchange growth, partly offset by lower revenue in Interest Rates • Transactional r
Slide 12: Higher expenses impacted by inflation and strategic investments
Higher expenses impacted by inflation and strategic investments Expense Growth ($MM) - Adjusted1 Reported Reported $2,918MM $3,183MM +10% • Expense growth of 9% (adjusted expense growth of 10%1) • Strategic initiatives focused on long-term +6% growth driving 5% increase YoY, including: • Expenses as
Slide 13: Resilient balance sheet supports organic business growth
Resilient balance sheet supports organic business growth $B Q3/21 Q2/22 Q3/22 Average Loans and Acceptances 440.0 492.6 510.0 • CET1 ratio of 11.8%, up 4 bps sequentially, reflecting: Average Deposits 599.3 664.2 673.6 • Capital generation from earnings net of dividends, offset 1 CET1 capital 33.1 3
Slide 14: Personal & Business Banking – diversified business mix reflected in strong revenue growth
Personal & Business Banking – diversified business mix reflected in strong revenue growth Reported ($MM) Q3/22 YoY QoQ • Net interest income increase of 17% YoY driven by strong volume growth and Revenue 2,321 13% 8% favourable product mix Net interest income 1,767 17% 12% • Loan balances up 12%, 1%
Slide 15: Canadian Commercial & Wealth – continued revenue momentum driven by double-digit volume growth
Canadian Commercial & Wealth – continued revenue momentum driven by double-digit volume growth • Strong volume growth and higher net interest margins driving 32% YoY increase in Reported & Adjusted1 ($MM) Q3/22 YoY QoQ net interest income Revenue 1,338 11% 3% • Commercial loan balances up 21% YoY Ne
Slide 16: U.S. Commercial & Wealth – continued expansion driving revenue growth and platform investments
U.S. Commercial & Wealth – continued expansion driving revenue growth and platform investments Reported (US$MM) Q3/22 YoY QoQ • Net interest income up 12% YoY primarily due to volume growth Revenue 473 8% 1% • Average loan balances up 16% YoY Net interest income 325 12% 7% • Average deposit balances
Slide 17: Capital Markets – YoY growth supported by trading, corporate banking, and DFS
Capital Markets – YoY growth supported by trading, corporate banking, and DFS • Revenue growth of 5% over the prior year, despite market headwinds Reported & Adjusted1 ($MM) Q3/22 YoY QoQ • Strong performance in our Direct Financial Services business Revenue2 1,199 5% (9%) Net interest income 662 (1
Slide 18: Corporate and Other
Corporate and Other Reported ($MM) Q3/22 YoY QoQ • Revenue higher sequentially, and down 4% over the prior year Revenue1 109 (4%) $86 • Revenue momentum in FCIB as post-pandemic recovery continues Net interest income (50) ($78) (25%) • Treasury revenues stronger sequentially, but below prior year, l
Slide 19: Continued focus on sustainable growth and outperformance as investment spend plateaus
Continued focus on sustainable growth and outperformance as investment spend plateaus Proactive Resilient balance Solid results sheet positions us well management driving demonstrate continued for continued organic improved expense top-line momentum growth, and potential growth and operating against
Slide 20: Risk Review
Risk Review Shawn Beber Senior Executive Vice-President, Chief Risk Officer
Slide 21: Provision for credit losses up YoY and QoQ on an adjusted basis
Provision for credit losses up YoY and QoQ on an adjusted basis Adjusted Provision for Credit Losses up YoY and QoQ ($MM) Q3/21 Q2/22 Items of Q2/22 Q3/22 Reported Reported Note1 Adjusted2 Reported • Impaired provisions down in Q3/22 due to lower provisions net of reversals across all strategic busi
Slide 22: Allowance coverage ratio down YoY and stable QoQ
Allowance coverage ratio down YoY and stable QoQ Reported Q3/21 Q2/22 Q3/22 Allowance coverage ratio down YoY and stable QoQ Canadian Credit Cards 5.0% 4.9% 4.9% • Allowance dollar increased QoQ due to higher performing allowance, partially offset by lower impaired allowance Canadian Residential Mor
Slide 23: Lending portfolio is well positioned
Lending portfolio is well positioned Overall Loan Mix (Loans/Acceptances Outstanding) • Nearly two-thirds of our portfolio is consumer lending, composed mainly of mortgages with uninsured having an average loan-to-value of 45% Cards 3% • The total variable rate mortgage portfolio with fixed payments
Slide 24: Credit Quality — gross impaired loan ratios down YoY and QoQ
Credit Quality — gross impaired loan ratios down YoY and QoQ Reported Q3/21 Q2/22 Q3/22 Balances were down YoY & QoQ Canadian Residential Mortgages 0.19% 0.14% 0.14% • Overall impaired balances continued to trend lower Canadian Personal Lending 0.26% 0.30% 0.34% Business & Government Loans1 0.64% 0.
Slide 25: Credit Quality — Canadian Consumer
Credit Quality — Canadian Consumer Reported Net Write-Offs Q3/21 Q2/22 Q3/22 Net Write-off Ratio1 Canadian Residential Mortgages 0.01% 0.01% 0.01% Canadian Credit Cards 2.40% 2.16% 2.02% Personal Lending 0.49% 0.40% 0.52% Total 0.16% 0.15% 0.17% 90+ Days Delinquency Rates1 Q3/21 Q2/22 Q3/22 Canadian
Slide 26: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending • 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-occupied mortgages • The Greater Vancouver
Slide 27: Canadian mortgages renewing in the next 12 months
Canadian mortgages renewing in the next 12 months • There are $26B of mortgages renewing in the next 12 months based on current terms - $19B fixed and $7B variable • As interest rates rise, most of our variable rate mortgages with fixed payments are impacted through an extension of amortization unti
Slide 28: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages FICO score Distribution • Better current FICO score and LTV1 distributions in GVA2 and GTA2 than the Canadian average • Less than 1% of this portfolio has a FICO score of 650 or lower and an LTV1 over 75% • Average LTV1 in Canada: 45% • GVA2: 42% • GTA2: 42%
Slide 29: In Summary
In Summary Portfolios continue to Proactively engaging perform well, and Expect credit losses with clients in light of credit quality remains to normalize over time macroeconomic strong uncertainty Third Quarter, 2022 29
Slide 30: Appendix
Appendix CIBCO®
Slide 31: Growing Digital Engagement and Adoption
Growing Digital Engagement and Adoption1 Digital Adoption Rate2 Active Digital Banking Users3 Digital Channel Usage (MM) (# of Sessions, MM) 6.2% 41.1% 16.5% Digital Transactions4 Transactions by Channel4 (MM) 11.6% 134 6.9% 6.7% 120 5 1 Canadian Personal Banking only, excluding Simplii Financial. 2
Slide 32: Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking1 Net Income Net Interest Margin on Average Interest Earning Assets (bps) 2 2 Average Loans ($B)3,4 Average Deposits ($B)3 +14% +10% 5 1 Includes the results of Canadian Personal and Business Banking and Canadian Commercial Banking, as well as Simplii Financia
Slide 33: U.S. Commercial Banking & Wealth Management (C$)
U.S. Commercial Banking & Wealth Management (C$) Reported (C$MM) Q3/22 YoY QoQ • Net interest income up 17% YoY primarily due to volume growth Revenue 604 12% 2% • Loan balances up 20% YoY Net interest income 415 17% 8% • Deposit balances up 10% YoY Non-interest income 189 3% (8%) Expenses 334 22% 4
Slide 34: Commercial Real Estate exposure is well diversified
Commercial Real Estate exposure is well diversified Canadian Commercial Real Estate Exposure by Sector1 U.S. Commercial Real Estate Exposure by Sector2 Office Residential 10% Industrial Office 21% 17% 23% Industrial 11% Seniors Housing Retail Residential 2% 5% 7% $38.8B Other 4% US$18.0B Healthcare
Slide 35: Canadian Uninsured Residential Mortgages — Q3/22 Originations
Canadian Uninsured Residential Mortgages — Q3/22 Originations1 FICO score Distribution • Originations of $17B in Q3/22 • Average LTV2 in Canada: 65% • GVA3: 61% • GTA3: 64% 3 3 Loan-to-Value (LTV)2 Distribution 3 3 1 Originations include refinancing of existing mortgages but not renewals. 2 LTV rati
Slide 36: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 1 See note 7 on slide 40. Third Quarter, 2022 36
Slide 37: Forward-looking Information Variables used to estimate our Expected Credit Loss
Forward-looking Information Variables used to estimate our Expected Credit Loss1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining fo
Slide 38: Q3/22 Items of Note
Q3/22 Items of Note Item Pre-Tax After-Tax & EPS Effect NCI Effect Effect ($MM) ($MM) ($/Share) Reporting Segments Acquisition and integration-related costs as well as purchase accounting adjustments associated with the acquisition of the Canadian 50 38 0.05 Canadian Personal & Business Banking Cost
Slide 39: Non-GAAP Measures
Non-GAAP Measures 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 under GAAP, and accordingly, th
Slide 40: Glossary
Glossary Definition Revenue from non-traditional Capital Markets clients, leveraging the full suite of Capital Markets products and services across the bank’s 1 Connectivity Revenue Canadian and U.S. Commercial clients, high net worth individuals and retail clients. We adjust our reported net income
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