Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q4 2021 Earnings Presentation
51 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Dec 2, 2021
Slide 1: Quarterly Results Presentation Fourth Quarter 2021
Quarterly Results Presentation Fourth Quarter 2021 December 2, 2021 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: A Diversified Relationship Bank Built for Growth
A Diversified Relationship Bank Built for Growth Net Income by Strategic Business Unit1 29% 48% 39% F16 26% F21 $4.3B $6.4B U.S. 14% Region2 21% 2% 23% U.S. 26% Region2 2% Personal & Business Banking Cdn. Commercial & Wealth U.S. Commercial & Wealth Capital Markets 1 Corporate & Other not shown. 2 S
Slide 5: Record earnings in Fiscal 2021
Record earnings in Fiscal 2021 Results reflect strong execution of our strategic priorities EPS Revenue ROE2 CET1 Ratio3 Reported $13.93 Reported $20B Reported 16.1% 12.4% $14.47 +7% YoY +26 bps YoY Adjusted1 +49% YoY Adjusted1 Adjusted1 16.7% Medium-term Earnings Return on Operating Dividend TSR fi
Slide 6: Further strengthening our Canadian consumer franchise
Further strengthening our Canadian consumer franchise Market share gains in Personal Banking Continued leadership in digital platforms Rank #1 #1 31 bps 18 bps J.D. Power Mobile App Market Share1 Canadian Banking Satisfaction Study Record mutual fund net flows Double-digit growth in Direct Financial
Slide 7: Protecting and building on our areas of strength
Protecting and building on our areas of strength Strong volume growth in Commercial Continued strength in our Wealth businesses Canada U.S 2 Average Loans & Deposits ($B, local currency)1 Assets Under Management ($B, local currency)3,4 Robust origination activity in Capital Markets Connectivity acro
Slide 8: Investing for future growth
Investing for future growth • Acquisition of Costco Canadian credit card portfolio Strengthening our • Opportunity to deepen connectivity with Costco’s affluent client competitive positioning base Expanding our digital • Rolled out CIBC GoalPlanner to Imperial Service clients • Introduced new produc
Slide 9: Our Refocused ESG Strategy
Our Refocused ESG Strategy Ambitions in Action We’re activating our resources to create positive change for our team, our clients, our communities and our planet, contributing to a more secure, equitable and sustainable future where everyone’s ambitions are made real. We are putting our environmenta
Slide 10: Economic Outlook
Economic Outlook GDP growth in the mid-single-digits Rising interest rates on both sides of the border Inflationary pressures Wind-down of COVID-related stimulus in Canada and the U.S. Fourth Quarter, 2021 10
Slide 11: Our 2022 Strategic Priorities
Our 2022 Strategic Priorities Elevating the client Focusing on Investing in future experience in an high-growth, high-touch differentiators within faster increasingly digital world client segments growing markets Fourth Quarter, 2021 11
Slide 12: Financial Review
Financial Review Hratch Panossian Senior Executive Vice-President and Chief Financial Officer
Slide 13: Q4 2021 Highlights
Q4 2021 Highlights EPS ROE Revenue Operating Leverage Reported $3.07 Reported 13.4% Reported Reported 1.7% $5.1B $3.37 +10% YoY Adjusted1 Adjusted1 14.7% Adjusted1 Adjusted1 (2.8)% +21% YoY PPPT1,2 PCL Ratio3 Liquidity Coverage Ratio, CET1 Ratio Average4 Reported $1.9B Total 7 bps 12.4% +26 bps 127%
Slide 14: Fourth Quarter 2021 Financial Results
Fourth Quarter 2021 Financial Results Reported ($MM) Q4/21 YoY QoQ Revenue Revenue 5,064 10% 0% • Net interest income up 7% YoY Net interest income 2,980 7% 3% • Strong volume growth on both sides of the balance sheet partly offset by the Non-interest income 2,084 15% (4%) impact of lower rates Non-
Slide 15: Strong volume growth driving increase in net interest income
Strong volume growth driving increase in net interest income NIM1 on Average2 Interest Earning Assets1 Average Loans2,4 ($B, local currency) Average Deposits2 ($B, local currency) YoY QoQ YoY QoQ +14% +5% +3% +2% +15% +5% +15% +4% +19% +3% +13% +7% +12% +3% +6% +2% 3 Personal & Business Banking Cdn.
Slide 16: Strong growth in fee income despite some normalization in trading
Strong growth in fee income despite some normalization in trading Non-Interest Income by Category ($MM)1 • Strong momentum in transactional activity • Increased consumer activity driving higher card and deposit fees • Higher credit fees • Market-related fees higher YoY and down QoQ • Continued marke
Slide 17: Accelerating investments to fuel continued growth
Accelerating investments to fuel continued growth Non-Interest Expense Growth ($MM) - Adjusted1 • Expense growth reflects strong revenue Reported performance Reported $2,891MM $3,135MM • Investments focused on driving long-term growth +13% • Transforming our technology infrastructure, +7% including
Slide 18: Continued balance sheet strength
Continued balance sheet strength $B Q4/20 Q3/21 Q4/21 • CET1 ratio of 12.4%, up 7 bps, reflecting: Average Loans and Acceptances 413.1 440.1 455.5 • Capital generation from earnings net of dividends of $0.7B Average Deposits 568.7 599.3 623.2 • Increase in RWAs of $3.8B from strong credit growth CET
Slide 19: Personal & Business Banking – broad-based volume growth and strong client activity
Personal & Business Banking – broad-based volume growth and strong client activity Reported ($MM) Q4/21 YoY QoQ • Double-digit loan growth and continued deposit growth driving increase in net interest income Revenue 2,128 7% 4% Net interest income 1,542 4% 3% • NIM down 2 bps QoQ and 17 bps YoY Non-
Slide 20: Canadian Commercial & Wealth – robust funds managed growth
Canadian Commercial & Wealth – robust funds managed growth driving continued momentum Reported & Adjusted1 ($MM) Q4/21 YoY QoQ • Net Interest Income growth of 20% reflects diversified volume growth across sectors Revenue 1,240 21% 3% • Commercial loan balances up 14% YoY Net interest income 352 20%
Slide 21: U.S. Commercial & Wealth – new client originations continue to fuel growth
U.S. Commercial & Wealth – new client originations continue to fuel growth Reported (US$MM) Q4/21 YoY QoQ • Continued momentum in client acquisition and franchising Revenue 448 14% 2% • Loan balances up 3% YoY; up 7% excluding PPP loan forgiveness Net interest income 293 9% 1% • Deposit balances up
Slide 22: Capital Markets – strong top-line growth despite market normalization
Capital Markets – strong top-line growth despite market normalization impacting trading Reported & Adjusted1 ($MM) Q4/21 YoY QoQ • Revenue growth of 8% reflects continued strength in our diversified business Revenue2 1,012 8% (11%) • Higher underwriting activity Net interest income 688 6% 3% • Stron
Slide 23: Corporate and Other
Corporate and Other Reported ($MM) Q4/21 YoY QoQ • Stable revenues as higher loan balances in FCIB were offset by the impact of a weaker U.S. dollar Revenue1 122 0% 7% • Adjusted1 expense growth of 24% Net interest income 30 $26 7% Non-interest income 92 (22%) 7% • Higher performance-based compensat
Slide 24: Fiscal 2021 Accomplishments
Fiscal 2021 Accomplishments Reported ($MM) FY21 YoY Achieved growth and profitability targets1 Revenue 20,015 7% • PPPT2 growth of 8% and ROE of 16.7% supported by broad momentum across our bank Net interest income 11,459 4% • Positive operating leverage; expense growth excluding performance-based N
Slide 25: Building on our momentum to achieve our F22 priorities
Building on our momentum to achieve our F22 priorities Net interest income growth driven by continued market share gains across our businesses, and stabilizing margins Strong fee momentum driven by our advice capabilities in high-touch segments Growth in Capital Markets revenues as we continue to ex
Slide 26: Risk Review
Risk Review Shawn Beber Senior Executive Vice-President, Chief Risk Officer
Slide 27: Provision for credit losses down YoY and up QoQ
Provision for credit losses down YoY and up QoQ Reported & Adjusted1 ($MM) Q4/20 Q3/21 Q4/21 Provision for Credit Losses down YoY & up QoQ Cdn. Personal & Business Banking 121 67 164 • Overall impaired provisions remained low in Q4/21 Impaired 88 82 87 • Q4/21 continued to have a performing provisio
Slide 28: Allowance for credit losses down YoY and QoQ
Allowance for credit losses down YoY and QoQ Reported Q4/20 Q3/21 Q4/21 Allowance coverages were down YoY and QoQ Canadian Credit Cards 6.2% 5.0% 5.9% • Slightly lower allowance coverage driven by portfolio growth and favourable portfolio credit migration, partially offset by an unfavourable change
Slide 29: Lending portfolio is well diversified
Lending portfolio is well diversified 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 49% • Oil and gas is 1% of the loan portfolio; 49% investment grade Consumer Cards 2% • The ba
Slide 30: Credit Quality — gross impaired loan ratios trended lower in Q4
Credit Quality — gross impaired loan ratios trended lower in Q4 Reported Q4/20 Q3/21 Q4/21 Balances were down YoY & QoQ Canadian Residential Mortgages 0.29% 0.19% 0.17% • Lower mortgage impaired balances driven by relatively high levels of consumer liquidity from low (but increasing) levels of spend
Slide 31: Credit Quality — Canadian Consumer
Credit Quality — Canadian Consumer Reported Net Write-Offs Q4/20 Q3/21 Q4/21 Net Write-off Ratio1 Canadian Residential Mortgages 0.01% 0.01% 0.01% Canadian Credit Cards 1.76% 2.40% 1.83% Personal Lending 0.51% 0.49% 0.39% Total 0.16% 0.16% 0.13% 90+ Days Delinquency Rates1 Q4/20 Q3/21 Q4/21 Canadian
Slide 32: Strong performance in F21 with recovery expected to continue in F22
Strong performance in F21 with recovery expected to continue in F22 Favourable credit performance in F21 driven by disciplined underwriting, prudent client behaviour and support programs Allowance remains higher than pre-pandemic and provides coverage for various potential pandemic outcomes Economic
Slide 33: Appendix
Appendix CIBCO®
Slide 34: Interest Rate Sensitivity
Interest Rate Sensitivity • Our interest rate profile is managed to target stable and predictable earnings • An immediate and sustained 100 bps increase would have a $404MM positive impact on net interest income over a 12-month period • Total interest rate sensitivity has not changed materially from
Slide 35: Growing Digital Engagement and Adoption
Growing Digital Engagement and Adoption1 Digital Adoption Rate2 Active Digital Banking Users3 Digital Channel Usage (MM) (# of Sessions, MM) 2.4% 7.0% 9.9% Digital Transactions4 Transactions by Channel4 (MM) 11.9% 5 1 Canadian Personal Banking only, excluding Simplii Financial. 2 Digital Adoption Ra
Slide 36: Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking1 Net Income Net Interest Margin on Average Interest Earning Assets (bps) 2 Average Loans ($B)3,4 Average Deposits ($B)3 +12% +8% 5 1 Includes the results of Canadian Personal and Business Banking and Canadian Commercial Banking, as well as Simplii Financial a
Slide 37: U.S. Commercial Banking & Wealth Management (C$)
U.S. Commercial Banking & Wealth Management (C$) Reported (C$MM) Q4/21 YoY QoQ • Continued momentum in client acquisition and franchising Revenue 562 8% 4% • Loan balances down 2% YoY, impacted by a weaker U.S. dollar and PPP Net interest income 368 3% 3% forgiveness Non-interest income 194 19% 6% •
Slide 38: 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 Outstanding2 Food, Beverage & Department & Gas Stations Drug - Retail Restaurants Convenience 9% 19% 34% Stores 5% Hotels/Motels Auto Parts 20% Retailers 11% $3.2B $4.8B Ret
Slide 39: 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 Office 11% Residential Office Industrial 25% 19% 16% Industrial 10% Residential 1% Seniors Housing 6% Retail Healthcare 3% $34.9B 9% US$16.1B Hotel
Slide 40: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending 90+ Days Delinquency Rates Q4/20 Q3/21 Q4/21 • The Greater Vancouver Area1 (GVA) and Greater Toronto Area1 (GTA) continue to outperform the Canadian average Total Mortgages 0.29% 0.19% 0.17% Uninsured Mortgages 0.28% 0.15% 0.14% Uninsured Mortgages in GV
Slide 41: Canadian Uninsured Residential Mortgages — Q4/21 Originations
Canadian Uninsured Residential Mortgages — Q4/21 Originations FICO score Distribution • Originations of $18B in Q4/21 • Average LTV1 in Canada: 66% • GVA2: 62% • GTA2: 65% 2 2 Loan-to-Value (LTV)1 Distribution 2 2 1 LTV ratios for residential mortgages are calculated based on weighted average. See p
Slide 42: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages FICO score Distribution • Better current FICO score and LTV1 distributions in GVA2 and GTA2 than the Canadian average • Less than 1% of this portfolio has a FICO score of 650 or lower and an LTV1 over 75% • Average LTV1 in Canada: 49% • GVA2: 45% • GTA2: 47%
Slide 43: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 1 See note 6 on slide 51. Fourth Quarter, 2021 43
Slide 44: Forward-looking Information Variables used to estimate our Expected Credit Loss
Forward-looking Information Variables used to estimate our Expected Credit Loss1 Forward-Looking Information Variables Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the Avg. Value over the next 12 months remaining forecast next 12 months remaining fo
Slide 45: Items of Note
Items of Note Period Q4 2020 Q4 2021 Q4 2020 FY 2020 FY 2021 FY 2020 Item Pre-Tax After-Tax & EPS Pre-Tax After-Tax & EPS Effect NCI Effect Effect Effect NCI Effect Effect ($MM) ($MM) ($/Share) ($MM) ($MM) ($/Share) Charge related to the consolidation of our real estate portfolio 109 80 0.18 109 80
Slide 46: 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 International Financial Reporting Standards (IFRS or GAAP), while other measures do not have a standardized meaning under GAAP, and accor
Slide 47: Reconciliation of GAAP (reported) to non-GAAP (adjusted) results
Reconciliation of GAAP (reported) to non-GAAP (adjusted) results Item U.S. U.S. Canadian Commercial Commercial Canadian Commercial Banking & Banking & $MM Personal & Banking & Wealth Wealth Business Wealth Management Capital Corporate & Management Banking Management (C$) Markets Other CIBC Total (US
Slide 48: Reconciliation of GAAP (reported) to non-GAAP (adjusted) results
Reconciliation of GAAP (reported) to non-GAAP (adjusted) results Item U.S. U.S. Canadian Commercial Commercial Canadian Commercial Banking & Banking & $MM Personal & Banking & Wealth Wealth Business Wealth Management Capital Corporate & Management Banking Management (C$) Markets Other CIBC Total (US
Slide 49: Reconciliation of GAAP (reported) to non-GAAP (adjusted) results
Reconciliation of GAAP (reported) to non-GAAP (adjusted) results Item U.S. U.S. Canadian Commercial Commercial Canadian Commercial Banking & Banking & $MM Personal & Banking & Wealth Wealth Business Wealth Management Capital Corporate & Management Banking Management (C$) Markets Other CIBC Total (US
Slide 50: Reconciliation of GAAP (reported) to non-GAAP (adjusted) results
Reconciliation of GAAP (reported) to non-GAAP (adjusted) results Item U.S. U.S. Canadian Commercial Commercial Canadian Commercial Banking & Banking & $MM Personal & Banking & Wealth Wealth Business Wealth Management Capital Corporate & Management Banking Management (C$) Markets Other CIBC Total (US
Slide 51: Glossary
Glossary Item Definition Net income for the U.S. Commercial Banking and Wealth Management segment and Capital Markets U.S. region results as a percentage 1 U.S. Region Earnings Contribution of net income for the entire Bank. Long-Term Net Sales as a % of 2 Net sales of long-term retail mutual funds
Canadian Imperial Bank of Commerce — Q4 2021 Earnings Presentation on 6ix