Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q2 2023 Earnings Presentation
51 slides from Canadian Imperial Bank Of Commerce's earnings presentation, May 25, 2023
Slide 1: Quarterly Results Presentation Second Quarter 2023
Quarterly Results Presentation Second Quarter 2023 May 25, 2023 All amounts are in Canadian dollars unless otherwise indicated.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Second 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 o
Slide 3: CIBC Overview
CIBC Overview Victor Dodig President & Chief Executive Officer
Slide 4: CIBC Overview
CIBC Overview We are executing our strategy while remaining agile to deliver results in an uncertain environment Strong execution against our strategic priorities… Diluted EPS Revenue PPPT3 NIAT ROE4 Reported EPS $1.76 $5.7B $2.7B Reported PPPT $2.6B Reported NIAT $1.7B Reported ROE 14.5% Adjusted E
Slide 5: Executing Against Our Strategic Priorities
Executing Against Our Strategic Priorities Our disciplined approach to resource allocation continues to drive profitable growth High-growth, high-touch segments • Imperial Service • Costco credit card partnership +$5B (LTM) in cross- +$10B (LTM) of net US Private Wealth awarded • Private Wealth plat
Slide 6: Core Business Strength
Core Business Strength Strength and stability supported by a robust operational framework The resilience of our bank is underpinned by a strong balance sheet, a sustainable funding profile, and disciplined risk and capital management practices. Resilient Strong liquidity Quality Prudent lending capi
Slide 7: Financial Overview
Financial Overview Hratch Panossian Senior Executive Vice-President & Chief Financial Officer
Slide 8: Financial Results Overview
Financial Results Overview Second quarter reflects ongoing growth momentum and balance sheet strength Diluted Earnings Return on Equity Revenue Operating Leverage1 Per Share Reported $1.76 Reported 14.5% $5.7B Reported 5.2% +6% YoY Adjusted2 $1.70 Adjusted2 13.9% Reported & Adjusted2 Adjusted2,3 (0.
Slide 9: Financial Results Overview
Financial Results Overview Results demonstrate the diversification and resiliency of our business Revenue Reported ($MM) Q2/23 YoY QoQ • Revenue up 6% YoY, supported by growth in all Revenue 5,702 6% (4%) segments Net Interest Income 3,187 3% (1%) • Net interest income up 10% excluding trading Non-I
Slide 10: Net Interest Income (NII)
Net Interest Income (NII) Double-digit growth in NII (ex-trading), driven by robust volume growth YoY Net Interest Margin on Average Interest-Earning Assets (NIM)1 Total Bank NIM (ex. Trading)1 +1 bp YoY 3 Canadian Personal & Commercial NIM1,4 U.S. Commercial & Wealth NIM1 +19 bps YoY +12 bps YoY +2
Slide 11: Balance Sheet
Balance Sheet Asset yields and funding costs 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 and the Fed • Despite mix shift
Slide 12: Non-Interest Income
Non-Interest Income Strong trading activity, partially offset by fee pressure from challenged markets Non-Interest Income by Category ($MM)4 Market-Related Fees4 Transactional Fees4 +10% YoY 1 2 1 3 • Non-interest income up 10% YoY, or 4% excluding trading • Market-sensitive fees excluding trading w
Slide 13: Non-Interest Expenses
Non-Interest Expenses Expenses contained as investments stabilize, inflation moderates, and we realize efficiencies YoY Expense Growth Reported: $3,114MM Reported: $3,140MM +7% • Expense growth of 1% YoY on a reported basis • Adjusted1 expenses up 7%, over half due to +3% investments made in 2022 in
Slide 14: Capital & Liquidity
Capital & Liquidity Building capital levels and continued strength in liquidity Capital & Liquidity Position $B Q2/22 Q1/23 Q2/23 1 • CET1 ratio of 11.9%, up 26 bps QoQ, and comfortably Average Loans and Acceptances 492.6 529.2 534.8 above current regulatory requirements; strong Average Deposits 1 6
Slide 15: Canadian Banking: Personal & Business Banking
Canadian Banking: Personal & Business Banking Revenue growth supported by strong margin expansion and franchising momentum • Net interest income up 9% YoY (10% on an adjusted2 Reported Adjusted2 basis) driven by strong margins and higher volumes ($MM) Q2/23 YoY QoQ Q2/23 YoY QoQ • Non-interest incom
Slide 16: Canadian Banking: Commercial Banking & Wealth Management
Canadian Banking: Commercial Banking & Wealth Management Continued growth in client franchise as a result of our relationship focused strategy • Net interest income up 13% YoY supported by strong Reported & Adjusted1 ($MM) Q2/23 YoY QoQ loan and deposit volumes and higher margins Revenue 1,336 3% (1
Slide 17: U.S. Region: Commercial Banking & Wealth Management
U.S. Region: Commercial Banking & Wealth Management Stable core business performance despite market disruptions and quantitative tightening • Net interest income up 11% YoY driven by volume growth Reported Adjusted1 • Deposits stable YoY but declining from peak balances, with a greater mix shift to
Slide 18: Capital Markets
Capital Markets Revenue growth supported by strength in DFS, a core differentiator • Revenue growth of 3% YoY, as trading activity normalizes: Reported & Adjusted1 ($MM) Q2/23 YoY QoQ • Strong growth momentum in Direct Financial Services 2 Revenue 1,362 3% (8%) (DFS), supported primarily by higher d
Slide 19: Corporate & Other
Corporate & Other Strong performance in International Banking supporting revenue growth • Revenue higher YoY and lower sequentially Reported Adjusted2 • International Banking up 33% YoY, ($MM) Q2/23 YoY QoQ Q2/23 YoY QoQ benefitting from margin expansion and FX translation impacts Revenue1 76 230% (
Slide 20: Looking Ahead
Looking Ahead – Client-focused strategy, strong balance sheet, and disciplined resource management, will continue driving profitable franchise growth Client-focused Strong, well capitalized balance Well-positioned to strategy and sheet contributing to generate long-term diversified business our resi
Slide 21: Risk Overview
Risk Overview Frank Guse Senior Executive Vice-President & Chief Risk Officer
Slide 22: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Both impaired and performing PCLs trended higher Provision for Credit Losses up YoY and QoQ ($MM) Q2/22 Q2/22 Q1/23 Q2/23 • Impaired provisions up in Q2/23, largely due to higher write-offs Reported Adjusted Reported Reported as expected in retail, and higher impair
Slide 23: 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 Q2/22 Q1/23 Q2/23 • Increase QoQ is due to higher allowances in both Canadian Credit Cards 4.0% 6.2% 4.9%
Slide 24: 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 (Outstanding Loans and Acceptances) mainly of mortgages, with uninsured having an average loan-to- value of 53% • Total variable rate mortgage po
Slide 25: 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 Q2/22 Q1/23 Q2/23 U.S. commercial real estate sector Canadian Residential Mortgages 0.30% 0.14% 0.16% 0.16% • New format
Slide 26: Canadian Consumer Lending
Canadian Consumer Lending Write-offs and delinquencies are in line with expectations Write-offs: • Credit cards and personal lending have been on an increasing trend Reported Net Write-Offs Q1/20 Q2/22 Q1/23 Q2/23 (both YoY and QoQ) driven by the return towards the pre-pandemic Canadian Residential
Slide 27: 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 28: Commercial Real Estate
Commercial Real Estate Commercial real estate exposure is well diversified • Canada represents 61% of total Canadian & U.S. real estate exposure • Gross impaired loans as a percentage of total Canadian & U.S. real estate is 84bps • Trailing five-year average loan losses for Canadian & U.S. real esta
Slide 29: 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 US Office portfolio is 1% of total loan exposure; comprises 21% of overall U.S. Commercial Real Estate • Over 50% of the portfolio is Class A; average LTV at origination was 60% • 10% of the
Slide 30: In Summary
In Summary Overall credit performance in line with expectation and proactively managing exposures Higher allowance in Impairment levels Prudent risk response to portfolio remain within management performance and guidance levels oversight of portfolio uncertainties in the disclosed for the credit qua
Slide 31: Appendix
Appendix CIBC®
Slide 32: Our Digital Footprint
Our Digital Footprint Growing Digital Adoption & Engagement1 Digital Adoption Rate2 Active Digital Banking Users3 Active Digital Banking Users3 (MM) (Existing Personal Banking Clients vs. Co-brand) +3% +14% Digital Channel Usage Digital Transactions4 Transactions by Channel4 (# of Sessions, MM) (MM)
Slide 33: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking1 Continued loan and deposit growth underlying the Canadian P&C business Net Income ($MM) Net Interest Margin on Average Interest Earning Assets (bps) Average Loans ($B)3,4 Average Deposits ($B)3 +6% +7% 5 Endnotes are included on slides 43 to 48. Second Quarter
Slide 34: U.S. Region: Commercial Banking & Wealth Management (C$)
U.S. Region: Commercial Banking & Wealth Management (C$) Stable core business performance despite market disruptions and quantitative tightening • Net interest income up 19% YoY driven by volume growth Reported Adjusted1 • Deposits stable YoY but declining from peak balances, ($MM) Q2/23 YoY QoQ Q2/
Slide 35: 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 $500B of the total funding base • Funding strategy is supplemen
Slide 36: Interest Rate Sensitivity
Interest Rate Sensitivity Well-positioned for higher interest rates Net Interest Income Sensitivity to SBU Composition of Structural Interest Rate Environment in a +/- 100 bps change ($MM)1,2 Interest Rate Sensitivity1,2 Canada and the U.S.3 • Year 1 benefit of approximately $359MM from an immediate
Slide 37: 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 43 to 48. Second Quarter, 2023 37
Slide 38: Canadian Uninsured Residential Mortgages – Q2/23 Originations
Canadian Uninsured Residential Mortgages – Q2/23 Originations1 Credit quality of new originations continues to remain high • Originations of $8B in Q2/23 • Average LTV2 in Canada: 66%, GVA3: 60%, GTA3: 64% Credit Bureau Score4 Distribution 3 3 Loan-to-Value (LTV)2 Distribution 3 3 Endnotes are inclu
Slide 39: 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 $34B of mortgages renewing in the next 12 months based on current terms - $26B fixed and $8B variable. 72% of $34B is uninsured • As interest rates ris
Slide 40: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 Robust trading performance in recent volatile market Endnotes are included on slides 43 to 48. Second Quarter, 2023 40
Slide 41: Forward Looking Information
Forward Looking Information Variables used to estimate our Expected Credit Losses1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining
Slide 42: Items of Note
Items of Note Second quarter 2023 Period Q2/23 Reporting Segments Pre-Tax After-Tax & EPS Effect NCI Effect Effect ($MM) ($MM) ($/Share) Decrease in legal provisions (114) (82) (0.08) Corporate and Other Canadian Personal and Business Banking Amortization of acquisition-related intangible assets 27
Slide 43: Endnotes
Endnotes Second quarter 2023 Slide 4 – CIBC Overview 1 See note 1 on slide 50. 2 Adjusted results are non-GAAP measures. See slide 49 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 49 for further details. 4 F
Slide 44: Endnotes
Endnotes Second quarter 2023 Slide 9 – Financial Results Overview 1 For additional information on the composition, see the "Glossary" section on pages 51-57 in the Q2/23 Report to Shareholders, available on SEDAR at www.sedar.com. 2 Adjusted results are non-GAAP measures. See slide 49 for further de
Slide 45: Endnotes
Endnotes Second quarter 2023 Slide 12 – Non-Interest Income 1 Market-related fees include underwriting and advisory, investment management and custodial, and mutual fund fees, commissions on securities transactions, gains/losses from financial instruments measured at FVTPL, debt securities measured
Slide 46: Endnotes
Endnotes Second quarter 2023 Slide 17 – U.S. Region: Commercial Banking & Wealth Management 1 Adjusted results are non-GAAP measures. See slide 49 for further details. 2 Pre-provision, pre-tax earnings is revenue net of non-interest expenses and is a non-GAAP measure. See slide 49 for further detail
Slide 47: Endnotes
Endnotes Second quarter 2023 Slide 25 – Credit Performance – Gross Impaired Loans 1 Excludes CIBC FirstCaribbean business & government loans. 2 See notes 12 -13 on slide 51. Slide 26 – Canadian Consumer Lending 1 See notes 14-16 on slide 51. Slide 27 – Canadian Real Estate Secured Personal Lending 1
Slide 48: Endnotes
Endnotes Second quarter 2023 Slide 34 – U.S. Region: Commercial Banking & Wealth Management (C$S) 1 Adjusted results are non-GAAP measures. See slide 49 for further details. 2 Pre-provision, pre-tax earnings is revenue net of non-interest expenses and is a non-GAAP measure. See slide 49 for further
Slide 49: Non-GAAP Measures
Non-GAAP Measures Second 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 50: Glossary
Glossary Second 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, ne
Slide 51: Glossary
Glossary Second quarter 2023 Definition Gross impaired loans as a percentage of the gross carrying amount of loans. The gross carrying amount of loans include 12 Gross Impaired Loan Ratio certain loans that are measured at FVTPL. 13 New Formations New formations represent gross carrying amount of lo
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