Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q3 2023 Earnings Presentation
54 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Aug 31, 2023
Slide 1: Quarterly Results Presentation Third Quarter 2023
Quarterly Results Presentation Third Quarter 2023 August 31, 2023 All amounts are in Canadian dollars unless otherwise indicated.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Third Quarter 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 regulators or
Slide 3: CIBC Overview
CIBC Overview Victor Dodig President & Chief Executive Officer
Slide 4: CIBC Overview
CIBC Overview Continued momentum in our core business performance Strong execution against our strategic priorities… Diluted EPS Revenue PPPT3 NIAT ROE4 Reported EPS $1.47 $5.9B Reported PPPT $2.5B Reported NIAT $1.4B Reported ROE 11.6% Adjusted EPS1,2 $1.52 Reported / Adjusted2 Adjusted PPPT2$2.6B
Slide 5: Executing Against Our Strategic Priorities
Executing Against Our Strategic Priorities Disciplined approach to resource allocation and execution of our client-focused strategy Our Strategic Priorities High growth, high touch segments Future differentiators Enabling and simplifying Grow our North American Affluent and Deliver leading digital b
Slide 6: Financial Overview
Financial Overview Hratch Panossian Senior Executive Vice-President & Chief Financial Officer
Slide 7: Financial Results Overview
Financial Results Overview Third quarter reflects ongoing franchise growth and balance sheet strength Diluted Earnings Return on Equity Revenue Operating Leverage1 Per Share Reported $1.47 Reported 11.6% $5.9B Reported 1.1% +5% / +6% YoY Adjusted2 $1.52 Adjusted2 11.9% Reported / Adjusted2 Adjusted2
Slide 8: Financial Results Overview
Financial Results Overview Results demonstrate revenue momentum and expense agility in an uncertain environment Reported ($MM) Q3/23 YoY QoQ Revenue Revenue 5,850 5% 3% • Revenue up 5% YoY, broad-based (6% YoY adjusted1) Non-Trading Net Interest Income 3,338 8% 6% • Net interest income up 8% excludi
Slide 9: Net Interest Income (NII)
Net Interest Income (NII) Robust NII (ex-trading) growth of 8%, supported by strong P&C margins and higher volume Net Interest Margin on Average Interest-Earning Assets (NIM)1 Total Bank NIM (ex. Trading) -1 bp YoY Canadian Personal & Commercial NIM1,3 Reported +15 bps YoY U.S. Commercial & Wealth N
Slide 10: Balance Sheet
Balance Sheet NII continues to benefit from B/S growth and repricing to reflect prevailing market rates 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 incr
Slide 11: Non-Interest Income
Non-Interest Income Strong trading activity and transactional fees Non-Interest Income by Category ($MM)4 Market-Related Fees4 Transactional Fees4,5 Reported: $2,614MM 5 5 5 Reported: $767MM 1 2 1 3 +7% YoY • Non-interest income up 12% YoY (13% on an adjusted5 basis), or 1% excluding trading • Repor
Slide 12: Non-Interest Expenses
Non-Interest Expenses Moderating inflation, stabilizing investment, and continued realization of efficiencies Reported: $3,183MM Reported: $3,307MM YoY Expense Growth +6% • Reported expenses up 4% YoY +3% • Adjusted1 expenses up 6% YoY • Relatively stable investment for future growth, driving 1% inc
Slide 13: Capital & Liquidity
Capital & Liquidity Disciplined balance sheet management continues to support organic growth and prudent returns Capital & Liquidity Position $B Q3/22 Q2/23 Q3/23 1 • CET1 ratio of 12.2%, up 30 bps QoQ, and above Average Loans and Acceptances 510.0 534.8 537.3 current regulatory requirements; strong
Slide 14: Canadian Banking: Personal & Business Banking
Canadian Banking: Personal & Business Banking Strong margins and proactive expense management drive PPPT growth momentum • Net interest income up 7% YoY (8% on an adjusted1,2 Reported Adjusted1 basis) driven by strong net interest margins ($MM) Q3/23 YoY QoQ Q3/23 YoY QoQ • Non-interest income down
Slide 15: Canadian Banking: Commercial Banking & Wealth Management
Canadian Banking: Commercial Banking & Wealth Management Leading client franchise which continues to grow as a result of our relationship-focused strategy • Net interest income stable YoY supported by higher Reported & Adjusted1 ($MM) Q3/23 YoY QoQ volumes, offset by unfavourable margins Revenue 1,3
Slide 16: U.S. Region: Commercial Banking & Wealth Management
U.S. Region: Commercial Banking & Wealth Management Continued revenue growth while expense base begins to stabilize • Net interest income up 10% YoY driven by margins and Reported Adjusted1 higher loan volumes • Deposits down 6% YoY, and mix shift to interest- (US$MM) Q3/23 YoY QoQ Q3/23 YoY QoQ bea
Slide 17: Capital Markets
Capital Markets Double-digit revenue growth led by strong performance in Global Markets and DFS • Revenue growth of 13% YoY, driven in part by strong Reported & Adjusted1 ($MM) Q3/23 YoY QoQ trading activity during the quarter 2 Revenue 1,355 13% (1%) • Trading revenues up 16% YoY driven mainly by h
Slide 18: Corporate & Other
Corporate & Other PPPT impacted by expense growth and a pressured revenue environment • Revenue lower YoY and sequentially Reported Adjusted2 • Net interest income lower due to favourable ($MM) Q3/23 YoY QoQ Q3/23 YoY QoQ Treasury-related revenues in the prior year • International Banking up 29% YoY
Slide 19: Looking Ahead
Looking Ahead Well-positioned to navigate through uncertainty and deliver stakeholder value Solid results demonstrate Disciplined resource Strong, well profitable franchise management with a capitalized balance growth against a focus on profitability sheet provides challenging market will deliver lo
Slide 20: Risk Overview
Risk Overview Frank Guse Senior Executive Vice-President & Chief Risk Officer
Slide 21: Key Messages for Q3/23
Key Messages for Q3/23 While the U.S. Office Prudent build in Expected sector faces performing normalization of headwinds, allowances driven impaired overall our portfolios by refinements to our provisions continue to perform economic outlook continues well and remain resilient Third Quarter, 2023 2
Slide 22: Allowance for Credit Losses
Allowance for Credit Losses Allowances for credit losses trended higher • Our total provision for credit losses was $736MM in Q3/23, compared to $438MM last quarter • Total allowance coverage increased from 66bps in Q2/23 to 73bps this quarter • About 80% of our performing provision in Q3/23 was dri
Slide 23: 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 Q3/22 Q2/23 Q3/23 U.S. commercial real estate sector Canadian Residential Mortgages 0.30% 0.14% 0.16% 0.17% • New format
Slide 24: Canadian Consumer Lending
Canadian Consumer Lending Net write-offs and delinquencies are in line with expectations Reported Net Write-Offs Q1/20 Q3/22 Q2/23 Q3/23 Net Write-offs: Canadian Residential Mortgages 0.01% 0.01% <0.01% <0.01% • Overall consumer net write-off ratio remained stable QoQ Canadian Credit Cards 3.16% 2.0
Slide 25: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending Uninsured mortgage delinquencies continue to remain low • Mortgage balance growth has been driven by clients with deep and balanced relationships • 87% of mortgages are owner-occupied; investor mortgages performance is strong and compares favourably with
Slide 26: U.S. Commercial Real Estate – Office Portfolio
U.S. Commercial Real Estate – Office Portfolio The book is diverse by location, borrower and tenant mix • The U.S. Office portfolio is less than 1% of total loan exposure and comprises 20% of overall U.S. Commercial Real Estate • Approximately 50% of the portfolio is Class A; average loan-to-value a
Slide 27: In Summary
In Summary Overall credit performance in line with expectation and proactively managing exposures Prudent allowance Performance within Thorough risk and coverage reflect expectations account ongoing notwithstanding management in uncertainties in the headwinds causing place to mitigate risk macroecon
Slide 28: Appendix
Appendix CIBC®
Slide 29: 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% +8% +13% Digital Transactions4 Transactions by Channel4 (MM) +17% 5 5 Endnotes are included on slides 46 to 51. Third Quarter, 2023 29
Slide 30: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking1 Continued loan and deposit growth underlying the Canadian P&C business Net Income ($MM) Net Interest Margin on Average Interest Earning Assets (bps)3 (8)% YoY Reported (12)% QoQ Reported (9)% YoY Adjusted2 (10)% QoQ Adjusted2 Average Loans ($B)4,5 Average Depo
Slide 31: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking1 Margins benefit from higher rates, moderating headwinds from deposit mix and mortgage pricing Adjusted NIM2 Trajectory Asset & Deposit Margin Contribution to Segment NIMs Reported (QoQ change, bps) 2.52% 2.39% Client Deposit Mix3 (Spot Balances) Mortgage Portf
Slide 32: U.S. Region: Commercial Banking & Wealth Management (C$)
U.S. Region: Commercial Banking & Wealth Management (C$) Continued revenue growth while expense base begins to stabilize • Net interest income up 15% YoY driven by margins and Reported Adjusted1 higher loan volumes ($MM) Q3/23 YoY QoQ Q3/23 YoY QoQ • Deposits down 2% YoY with a greater mix shift to
Slide 33: 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 $500B of the total funding base • Funding strategy is supplemen
Slide 34: Interest Rate Sensitivity
Interest Rate Sensitivity Well-positioned for higher interest rates Net Interest Income Sensitivity to SBU Composition of Structural Interest Rate Environment in a +/- 100 bps change ($MM)1 Interest Rate Sensitivity1,2 Canada and the U.S.3 • Year 1 benefit of approximately $414MM from an immediate a
Slide 35: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Both impaired and performing PCLs trended higher Provision for Credit Losses up YoY and QoQ ($MM) Q3/22 Q2/23 Q3/23 • Impaired provisions up in Q3/23, largely due to higher impairments in business and government loans, mainly in the U.S Canadian Personal & Business
Slide 36: Allowance Coverage
Allowance Coverage Allowance coverage increase is driven by updated portfolio performance and economic outlook Total allowance coverage ratio up YoY and QoQ Total Allowance Coverage Q1/20 Q4/20 Q3/22 Q2/23 Q3/23 • Increase QoQ is due to higher allowances in both Canadian Credit Cards 4.0% 6.2% 4.9%
Slide 37: 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 (Net Outstanding Loans and Acceptances) mainly of mortgages, with uninsured having an average loan-to- value of 51% HELOC 4% • Total variable rat
Slide 38: 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 46 to 51. Third Quarter, 2023 38
Slide 39: Canadian Uninsured Residential Mortgages – Q3/23 Originations
Canadian Uninsured Residential Mortgages – Q3/23 Originations1 Credit quality of new originations continues to remain high • Originations of $11B in Q3/23 • 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 40: 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 $37B of mortgages renewing in the next 12 months based on current terms - $30B fixed and $7B variable. 73% of $37B is uninsured • As interest rates ris
Slide 41: Commercial Real Estate
Commercial Real Estate Commercial real estate exposure is well diversified • Canada represents 62% of total Canadian & U.S. real estate exposure • Gross impaired loans as a percentage of total Canadian & U.S. real estate is 1.32% • Trailing five-year average loan losses for Canadian & U.S. real esta
Slide 42: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 Robust trading performance in recent volatile market Endnotes are included on slides 46 to 51. Third Quarter, 2023 42
Slide 43: Forward Looking Information
Forward Looking Information Variables used to estimate our Expected Credit Losses1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining
Slide 44: Items of Note
Items of Note Third quarter 2023 Period Q3/23 Reporting Segments Pre-Tax After-Tax & EPS Effect NCI Effect Effect ($MM) ($MM) ($/Share) Commodity tax charge related to the retroactive impact of the Canadian Personal 34 25 0.03 2023 Canadian Federal budget and Business Banking Canadian Personal and B
Slide 45: Reconciliation
Reconciliation GAAP (reported) to non-GAAP (adjusted) results1 $MM CIBC Total Q3/23 Reported non-interest income 2,614 Impact of item of note Commodity tax charge related to the retroactive impact of the 34 2023 Canadian Federal budget Adjusted non-interest income1 2,648 Non interest income – tradin
Slide 46: Endnotes
Endnotes Third quarter 2023 Slide 4 – CIBC Overview 1 See note 1 on slide 53. 2 Adjusted results are non-GAAP measures. See slide 52 for further details. 3 Pre-provision, pre-tax earnings (PPPT) is revenue net of non-interest expenses and is a non-GAAP measure. See slide 52 for further details. 4 Fo
Slide 47: Endnotes
Endnotes Third quarter 2023 Slide 9 – Net Interest Income (NII) 1 Certain additional disclosures for net interest margin on average interest-earning assets (NIM) have been incorporated by reference and can be found on pages 51-57 in the Q3/23 Report to Shareholders, available on SEDAR+ at www.sedarp
Slide 48: Endnotes
Endnotes Third quarter 2023 Slide 14 – Canadian Banking: Personal & Business Banking 1 Adjusted results are non-GAAP measures. See slide 52 for further details. 2 Adjusted results are non-GAAP measures. See slide 52 for further details. For Q3/22, adjusted net interest income excludes $6MM for the a
Slide 49: Endnotes
Endnotes Third quarter 2023 Slide 18 – Corporate & Other 1 Revenue is reported on a taxable equivalent basis (TEB). TEB adjustment in Q3/23 was $66 million. 2 Adjusted results are non-GAAP measures. See slide 52 for further details. 3 Pre-provision, pre-tax earnings is revenue net of non-interest ex
Slide 50: Endnotes
Endnotes Third quarter 2023 Slide 31 – 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 measures. See sli
Slide 51: Endnotes
Endnotes Third quarter 2023 Slide 37 – Credit Portfolio Breakdown 1 Incorporates security pledged; equivalent to S&P/Moody’s rating of BBB/Baa2. 2 LTV ratios for residential mortgages are calculated based on weighted average. See page 35 of the Q3/23 Report to Shareholders for further details. 3 GVA
Slide 52: Non-GAAP Measures
Non-GAAP Measures Third quarter 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 under GAAP,
Slide 53: Glossary
Glossary Third quarter 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 of note, net
Slide 54: Glossary
Glossary Third quarter 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 losses to gr
Canadian Imperial Bank of Commerce — Q3 2023 Earnings Presentation on 6ix