Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q4 2020 Earnings Presentation
38 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Dec 3, 2020
Slide 1: Investor Presentation Fourth Quarter 2020
Investor Presentation Fourth Quarter 2020 December 3, 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 Annual Report, in other filings with Canadian securities regulators or the SEC and in other commu
Slide 3: CIBC Overview
CIBC Overview Victor Dodig President and Chief Executive Officer
Slide 4: Fiscal 2020 Key Performance Measures
Fiscal 2020 Key Performance Measures Q4/20 Q4/20 Pre- Q4/20 Efficiency Q4/20 CET1 EPS PPE2 Provision Earnings Efficiency Ratio Ratio CET1 Ratio Ratio Reported $8.22 Reported $7.4B Reported 60.6% 12.1% +56 bps YoY Adjusted1 $9.69 Adjusted1 $8.2B Adjusted (TEB)1 55.8% -19% YoY +0% YoY +30 bps YoY Q4/2
Slide 5: Fiscal 2020 Highlights
Fiscal 2020 Highlights COVID-19 Response: >500K Leveraging technology in our clients supported continued transformation • Proactively extended payment relief to clients needing short term support • Introduced CIBC Virtual Assistant, the first of its kind across Canadian financial institutions, which
Slide 6: Our Purpose: To help make your ambition a reality
Our Purpose: To help make your ambition a reality Key Near-Term Priorities Our Strategy Reinvigorate our Canadian Focus on key client consumer franchise segments to accelerate earnings growth Accelerate the pace of Simplify and transform to transformation and simplification deliver a modern relation
Slide 7: Financial Review
Financial Review Hratch Panossian Senior Executive Vice-President and Chief Financial Officer
Slide 8: Fourth Quarter 2020 Financial Results
Fourth Quarter 2020 Financial Results Reported ($MM) Q4/20 YoY QoQ Overall Performance - Adjusted1 Revenue 4,600 (4%) (2%) • Earnings reflect resilience of diversified franchise Net interest income 2,792 (0%) 2% • Moderating provision for credit losses Non-interest income 1,808 (8%) (9%) • Strong ca
Slide 9: Strong capital, liquidity and balance sheet position
Strong capital, liquidity and balance sheet position $B Q4/19 Q3/20 Q4/20 Q4 Highlights Average Loans and Acceptances 396.4 414.9 413.1 • Continued capital, liquidity and balance sheet strength Average Deposits 485.6 557.4 568.7 • CET1 Increase driven by internal capital generation and a net decreas
Slide 10: Personal & Business Banking – results reflect improving sequential trends
Personal & Business Banking – results reflect improving sequential trends Reported ($MM) Q4/20 YoY QoQ • While performance continues to be affected by the pandemic, continuing to see positive trends reflecting ongoing efforts to revitalize the segment Revenue 2,139 (4%) 4% Net interest income 1,599
Slide 11: Canadian Commercial & Wealth – stable performance in the current environment
Canadian Commercial & Wealth – stable performance in the current environment Reported ($MM) Q4/20 YoY QoQ • Results reflect pressure on margins and slowing loan growth in Commercial Banking Revenue 1,028 0% 1% Net interest income 294 (3%) (8%) • Commercial loan balances up 1% YoY Non-interest income
Slide 12: U.S. Commercial Banking & Wealth Management – strong pre-provision earnings growth
U.S. Commercial Banking & Wealth Management – strong pre-provision earnings1 growth Reported (C$MM) Q4/20 YoY QoQ • Focus on expanding client relationships contributing to solid growth in net interest income despite significant margin compression Revenue 515 3% 0% Net interest income 352 3% (1%) • L
Slide 13: Capital Markets – revenue growth and expense discipline
Capital Markets – revenue growth and expense discipline driving positive operating leverage Reported & Adjusted1 ($MM) Q4/20 YoY QoQ • Solid revenue growth YoY Revenue2 792 7% (21%) • Strong trading activity in Interest Rates and Commodities Net interest income 541 49% 3% • Corporate Banking revenue
Slide 14: Corporate and Other
Corporate and Other Reported ($MM) Q4/20 YoY QoQ • Reported results impacted by a number of significant items Revenue1 126 (55%) 1% • Lower Treasury revenues primarily due to the costs of carrying elevated levels of liquidity, despite partial improvement in the current quarter Net interest income 6
Slide 15: 2020 Financial Results
2020 Financial Results Reported ($MM) FY20 YoY Overall Performance - Adjusted1 Revenue 18,741 1% • Record pre-provision earnings despite a challenging economic environment and revenue headwinds Net interest income 11,044 5% Non-interest income 7,697 (5%) • Operating leverage of -0.6% Non-Interest Ex
Slide 16: Risk Review
Risk Review Shawn Beber Senior Executive Vice-President, Chief Risk Officer
Slide 17: Provision for credit losses lower in both impaired and performing loans
Provision for credit losses lower in both impaired and performing loans Reported & Adjusted1 ($MM) Q4/19 Q3/20 Q4/20 Provision for Credit Losses down YoY & QoQ Cdn. Personal & Business Banking 255 220 130 • Provisions were lower in Q4/20 after raising the allowance for performing loans in Q2/20 and
Slide 18: Increased allowance to reflect the current economic backdrop
Increased allowance to reflect the current economic backdrop Allowance for Credit Losses ($MM) Allowance for Credit Losses up YoY & QoQ • Performing allowance remained stable in Q4 • Impaired allowance increased this quarter due to higher impairments Provision on Performing Loans ($MM) 82 128 113 (9
Slide 19: Increased allowance to reflect the current economic backdrop
Increased allowance to reflect the current economic backdrop Reported Q4/19 Q3/20 Q4/20 Allowance coverages were up YoY and QoQ Canadian Credit Cards 3.8% 6.2% 6.2% • Reflective of updates to forward looking indicators, and increased provisions related to COVID-19 Canadian Residential Mortgages <0.1
Slide 20: 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 2.2% of the loan portfolio; 44% investment grade • The balance of our portf
Slide 21: Most accommodations are now complete
Most accommodations are now complete Weekly Account Accommodations - Canadian Personal Banking (000s) • New accommodation requests for Canadian Personal Banking down to minimal levels • The majority of remaining mortgage balances run off in November and December • Overall client patterns since retur
Slide 22: Credit Quality — gross impaired loans trended lower in Q4
Credit Quality — gross impaired loans trended lower in Q4 Reported Q4/19 Q3/20 Q4/20 Balances were up YoY & down QoQ Canadian Residential Mortgages 0.28% 0.36% 0.29% • Lower consumer impairments in Q4 due to payment deferrals and collections performance Canadian Personal Lending 0.37% 0.38% 0.32% 1
Slide 23: Credit Quality — Canadian Consumer
Credit Quality — Canadian Consumer Reported Net Write-Offs Q4/19 Q3/20 Q4/20 Net Write-off Ratio Canadian Residential Mortgages 0.01% 0.01% 0.01% Canadian Credit Cards 3.20% 1.84% 1.76% Personal Lending 0.86% 0.74% 0.51% Total 0.30% 0.20% 0.16% Net write-offs were down YoY & QoQ • The low level of w
Slide 24: Appendix
Appendix
Slide 25: Digital Engagement and Adoption
Digital Engagement and Adoption1 Digital Adoption Rate2 Active Digital Banking Users3 Digital Channel Usage (MM) (# of Sessions, MM) Digital Transactions4 Transactions by Channel4 Banking Centres (MM) 5 1 Canadian Personal Banking excluding Simplii Financial. 2 Digital Adoption Rate calculated using
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 ($B) 1 Adjusted results are non-GAAP financial measures. See slide 38 for further details. 2 Loan amounts are stated before any related allowances. Fourt
Slide 27: U.S. Commercial Banking & Wealth Management (US$)
U.S. Commercial Banking & Wealth Management (US$) Reported (US$MM) Q4/20 YoY QoQ • Focus on expanding client relationships contributing to solid growth in net interest income despite significant margin compression Revenue 390 3% 3% Net interest income 266 3% 2% • Loan balances up 13% YoY Non-interes
Slide 28: 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 38 for further details. 2 Assets under management (AUM) are included in assets under administration (AUA). Fourth Qu
Slide 29: 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 • 25% of drawn loans investment grade2 • 44% of drawn loans investment grade2 • The U.S. comprises 16% of drawn exposure • The U.S. comprises 5% of drawn exposur
Slide 30: 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 • 69% of drawn loans investment grade3 • 31% of drawn loans investment grade3 1 Includes $2.6B in Multi Family that is included in residential mortg
Slide 31: Exposure to Oil & Gas represents 2.2% of our lending portfolio
Exposure to Oil & Gas represents 2.2% of our lending portfolio Oil & Gas Mix (Outstanding) • $9.0B drawn exposure in Q4/20 • 44% investment grade • The U.S. comprises 30% of drawn loan exposure • 76% of undrawn exposure is investment grade • $40.0B of retail exposure1 to oil provinces2 ($31.8B mortg
Slide 32: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending 90+ Days Delinquency Rates Q4/19 Q3/20 Q4/20 • The Greater Vancouver Area1 (GVA) and Greater Toronto Area1 (GTA) continue to outperform the Canadian average Total Mortgages 0.28% 0.36% 0.29% Uninsured Mortgages 0.22% 0.34% 0.28% Uninsured Mortgages in GV
Slide 33: Canadian Uninsured Residential Mortgages — Q4/20 Originations
Canadian Uninsured Residential Mortgages — Q4/20 Originations Beacon Distribution • Originations of $14B in Q4/20 • Average LTV1 in Canada: 63% • GVA2: 58% • GTA2: 62% 2 2 Loan-to-Value (LTV)1 Distribution 2 2 1 LTV ratios for residential mortgages are calculated based on weighted average. See page
Slide 34: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Beacon Distribution • Better current Beacon and LTV1 distributions in GVA2 and GTA2 than the Canadian average • Less than 1% of this portfolio has a Beacon score of 650 or lower and an LTV1 over 75% • Average LTV1 in Canada: 52% • GVA2: 46% • GTA2: 48% 2 2 Lo
Slide 35: Trading Revenue (TEB) Distribution
Trading Revenue (TEB)1 Distribution2 1 Non-GAAP financial measure. See slide 38 for further details. 2 Trading revenue (TEB) comprises both trading net interest income and non-interest income and excludes underwriting fees, commissions, certain month-end transfer pricing and other miscellaneous adju
Slide 36: Forward-looking Information Variables used to estimate our Expected Credit Loss
Forward-looking Information Variables used to estimate our Expected Credit Loss1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining fo
Slide 37: Items of Note
Items of Note Period Q4 2020 Q4 2020 Q4 2020 FY 2020 FY 2020 FY 2020 Item Pre-Tax After-Tax & EPS Pre-Tax After-Tax & EPS Effect NCI Effect Effect Effect NCI Effect Effect ($MM) ($MM) ($/Share) ($MM) ($MM) ($/Share) Goodwill impairment charge related to our controlling interest in CIBC 220 220 0.49
Slide 38: 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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