Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q3 2020 Earnings Presentation
36 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Aug 27, 2020
Slide 1: Investor Presentation Third Quarter 2020
Investor Presentation Third Quarter 2020 August 27, 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: Third Quarter 2020 Key Performance Measures
Third Quarter 2020 Key Performance Measures Pre-Provision Q3/20 Pre-Provision Efficiency Q3/20 Efficiency EPS Q3/20 EPS Earnings CET1 Ratio Q3/20 CET1 Ratio Earnings2 Ratio Ratio Reported $2.55 Reported $2.0B Reported 57.4% $2.71 11.8% +36 bps YoY Adjusted1 Adjusted1 $2.1B Adjusted1 54.8% -13% YoY +
Slide 5: Record levels of Digital Engagement
Record levels of Digital Engagement1 We continue to see digital engagement becoming entrenched client behavior in a post-COVID world. Digital Traffic Digital Registrations Digital Banking Sessions 18.6% increased 44.5% increased 24.4% increased Digital Transactions eTransfers eDeposits 25.7% increas
Slide 6: Financial Review
Financial Review Hratch Panossian Senior Executive Vice-President and Chief Financial Officer
Slide 7: Third Quarter 2020 Financial Results
Third Quarter 2020 Financial Results Reported ($MM) Q3/20 YoY QoQ Overall Performance1 Revenue 4,708 (1%) 3% • Pre-Provision Earnings2 up 1% YoY Net interest income 2,729 1% (1%) • Operating Leverage of 1.1% Non-interest income 1,979 (3%) 9% • Strong CET1 ratio of 11.8% Non-Interest Expenses 2,702 1
Slide 8: Continued capital, liquidity and balance sheet strength
Continued capital, liquidity and balance sheet strength $B Q3/19 Q2/20 Q3/20 Q3 Highlights Average Loans and Acceptances 393.7 412.8 414.9 • We continue to maintain a strong liquidity and capital position while supporting client needs Average Deposits 479.1 526.5 557.4 • Internal capital generation,
Slide 9: Personal & Business Banking – continued impact from the economic shutdown
Personal & Business Banking – continued impact from the economic shutdown Reported ($MM) Q3/20 YoY QoQ • Economic implications of COVID-19 continue to impact performance Revenue 2,056 (8%) (1%) • Net interest income down 6% YoY reflecting margin compression, partially offset Net interest income 1,53
Slide 10: Canadian Commercial & Wealth – strong expense discipline in slower growth environment
Canadian Commercial & Wealth – strong expense discipline in slower growth environment Reported & Adjusted1 ($MM) Q3/20 YoY QoQ • Higher net interest income driven by volume growth and YoY NIM expansion Revenue 1,013 (1%) (1%) • Commercial loan balances up 5% YoY Net interest income 318 6% (1%) • Com
Slide 11: U.S. Commercial Banking & Wealth Management – solid volume growth and expense discipline
U.S. Commercial Banking & Wealth Management – solid volume growth and expense discipline Reported (C$MM) Q3/20 YoY QoQ • Continued success in expanding market share and deepening relationships with existing client base help to offset net interest margin pressure Revenue 514 1% (1%) Net interest inco
Slide 12: Capital Markets – strong and well-diversified results in a record quarter
Capital Markets – strong and well-diversified results in a record quarter Reported & Adjusted1 ($MM) Q3/20 YoY QoQ • Strong revenue growth YoY, mainly due to: Revenue2 1,000 33% 21% • Higher trading revenues in Interest Rates and Commodities Net interest income 524 55% 14% • Strong performance in Co
Slide 13: Corporate and Other
Corporate and Other Reported ($MM) Q3/20 YoY QoQ • Lower net interest income in FCIB driven by unfavourable rates, and lower fees Revenue1 125 (41%) (5%) • Treasury revenues continue to be impacted by elevated liquidity carried at a higher cost Net interest income (5) NM NM Non-interest income 130 (
Slide 14: Risk Review
Risk Review Shawn Beber Senior Executive Vice-President, Chief Risk Officer & General Counsel
Slide 15: Provision for credit losses lower in both impaired and performing loans
Provision for credit losses lower in both impaired and performing loans Reported & Adjusted1 ($MM) Q3/19 Q2/20 Q3/20 Provision for Credit Losses up YoY & down QoQ Cdn. Personal & Business Banking 204 654 220 • Provisions were lower in Q3/20 after raising the performing reserve in Q2/20, but were sti
Slide 16: Increased allowance to reflect the current economic backdrop
Increased allowance to reflect the current economic backdrop Allowance for Credit Losses ($MM) Allowance for Credit Losses up YoY & QoQ • Performing allowance increased this quarter as a result of updates to forward looking outlook related to COVID-19 • Impaired allowance increased this quarter due
Slide 17: Increased allowance to reflect the current economic backdrop
Increased allowance to reflect the current economic backdrop Reported Q3/19 Q2/20 Q3/20 Allowance coverages were up YoY and QoQ Canadian Credit Cards 3.6% 6.3% 6.2% • Reflective of updates to forward looking indicators, and increased provisions related to COVID-19 Canadian Residential Mortgages 0.1%
Slide 18: 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 52% • Oil and gas is 2.3% of the loan portfolio; 43% investment grade • The balance of our portf
Slide 19: The majority of client accommodation to roll-off next quarter
The majority of client accommodation to roll-off next quarter Weekly Account Accommodations - Canadian Personal Banking • New accommodation requests have decreased and stabilized this quarter • The majority of our exposure in the deferral program are in Mortgages (90%) • Nearly all credit card accom
Slide 20: Exposure to vulnerable sectors represents 2% of our lending portfolio
Exposure to vulnerable sectors represents 2% of our lending portfolio Leisure & Entertainment Loans Outstanding Retailer Loans Outstanding 1 • 29% of drawn loans investment grade2 • 47% of drawn loans investment grade2 • The U.S. comprises 18% of drawn exposure • The U.S. comprises 5% of drawn expos
Slide 21: 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 • 68% of drawn loans investment grade3 • 35% of drawn loans investment grade3 1 Includes $2.7B in Multi Family that is included in residential mortg
Slide 22: Exposure to Oil & Gas represents 2.3% of our lending portfolio
Exposure to Oil & Gas represents 2.3% of our lending portfolio Oil & Gas Mix (Outstanding) • $9.6B drawn exposure in Q3/20 • 43% investment grade • The U.S. comprises 35% of drawn loan exposure • 80% of undrawn exposure is investment grade • $39.8B of retail exposure1 to oil provinces2 ($31.6B mortg
Slide 23: Credit Quality — gross impaired loans trended higher
Credit Quality — gross impaired loans trended higher Reported Q3/19 Q2/20 Q3/20 Balances were up YoY and QoQ Canadian Residential Mortgages 0.27% 0.32% 0.36% • Higher impairments in both consumer loans and business and government loans Canadian Personal Lending 0.34% 0.44% 0.38% • Impacts related to
Slide 24: Credit Quality — Canadian Consumer
Credit Quality — Canadian Consumer Reported Net Write-Offs Q3/19 Q2/20 Q3/20 Net Write-off Ratio Canadian Residential Mortgages 0.01% 0.01% 0.01% Canadian Credit Cards 3.34% 3.68% 1.84% Personal Lending 0.72% 0.81% 0.74% Total 0.28% 0.29% 0.20% Net write-offs were down YoY & QoQ • Due to lower insol
Slide 25: Appendix
Appendix
Slide 26: Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking Net Income – Adjusted ($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. 26
Slide 27: 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 28: U.S. Commercial Banking & Wealth Management (US$)
U.S. Commercial Banking & Wealth Management (US$) Reported (US$MM) Q3/20 YoY QoQ • Continued success in expanding market share and deepening relationships with existing client base helped to offset net interest margin pressure Revenue 379 (1%) 1% Net interest income 262 (3%) (4%) • Loan balances up
Slide 29: Improved Diversification - Growth in the U.S. Region
Improved Diversification - Growth in the U.S. Region U.S. Region Earnings Contribution – Adjusted1 U.S Region AUA (US$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). 29
Slide 30: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending 90+ Days Delinquency Rates Q3/19 Q2/20 Q3/20 • Total mortgage delinquency rate was up due to COVID-19 Total Mortgages 0.27% 0.32% 0.36% • The Greater Vancouver Area1 (GVA) and Greater Toronto Area1 (GTA) continue to outperform the Canadian average Uninsu
Slide 31: Canadian Uninsured Residential Mortgages — Q3/20 Originations
Canadian Uninsured Residential Mortgages — Q3/20 Originations Beacon Distribution • Originations of $11B in Q3/20 • Average LTV1 in Canada: 63% • GVA2: 58% • GTA2: 62% 2 2 Loan-to-Value (LTV)1 Distribution 2 2 1 LTV ratios for residential mortgages are calculated based on weighted average. See page
Slide 32: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Beacon Distribution • Better current Beacon and LTV1 distributions in GVA2 and GTA2 than the Canadian average • Less than 1% of this portfolio has a Beacon score of 650 or lower and an LTV1 over 75% • Average LTV1 in Canada: 52% • GVA2: 46% • GTA2: 47% 2 2 Lo
Slide 33: Trading Revenue (TEB) Distribution
Trading Revenue (TEB)1 Distribution2 1 Non-GAAP financial measure. See slide 36 for further details. 2 Trading revenue (TEB) comprises both trading net interest income and non-interest income and excludes underwriting fees, commissions, certain month-end transfer pricing and other miscellaneous adju
Slide 34: Forward-looking Information Variables used to estimate our Expected Credit Loss
Forward-looking Information Variables used to estimate our Expected Credit Loss1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining fo
Slide 35: Q3 2020 Items of Note
Q3 2020 Items of Note Item Pre-Tax After-Tax & EPS Effect NCI Effect Effect ($MM) ($MM) ($/Share) Reporting Segments Increase in legal provisions 70 51 0.11 Corporate & Other Canadian Personal & Business Banking Amortization of acquisition-related intangible assets 26 20 0.05 U.S. Commercial Banking
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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