Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Debt Investor Presentation (June 2021)
64 slides from Canadian Imperial Bank Of Commerce's debt investor presentation, June 2021
Slide 1: CIBC Fixed Income Investor Presentation Q2-2021
CIBC Fixed Income Investor Presentation Q2-2021
Slide 2: Disclaimer
Disclaimer The material that follows is a presentation (the "Presentation") of general background information about Canadian Imperial Bank of Commerce ("CIBC") and its covered bond programme (the "Programme") as of the date of this document. It is information in summary form and does not purport to
Slide 3: Disclaimer (continued)
Disclaimer (continued) The Securities and the Covered Bond Guarantee (as described herein) have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons (as defined in Regulation S) except
Slide 4: Disclaimer (continued)
Disclaimer (continued) The Guarantor is not a bank nor an authorised deposit taking institution authorised to carry on banking business under the Australian Banking Act and it is not supervised by the Australian Prudential Regulation Authority. The Guarantor is not registered as a foreign company or
Slide 5: 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 6: Table of Contents
Table of Contents 1 Debt Programmes Summary 7 2 Canadian Economy & Consumer Profile 8 3 Canadian Imperial Bank of Commerce (“CIBC”) Overview 12 4 Canadian Bail-in and Regulatory Regime Update 27 5 Canadian Mortgage Market 35 6 Legislative Covered Bond Programme, Collateral Pool 39 7 Contacts 44 8 Ap
Slide 7: Debt Programmes Summary
Debt Programmes Summary Best economic performance amongst G7 economies as measured by long term GDP growth rate during 2000-20191 • Strong diversified stable economy Canada • Aaa/AAA/AA+/AAA (Moody’s/S&P/Fitch/DBRS) • The World Economic Forum ranked Canada’s soundness of banks first in the world fro
Slide 8: Canadian Economy & Consumer Profile
Canadian Economy & Consumer Profile CIBC Investor Presentation |
Slide 9: Canada: Key Facts
Canada Canada: Key Facts • GDP broken down by province/territory continues to demonstrate that Canada’s economy is well Population2 38.0 MM diversified GDP (market prices)3 CAD 2,057 BN GDP per capita3 CAD 58,808 Canada’s GDP by Province / Territory1 (%) Labour Force4 20.3 MM Provinces/Territories 1
Slide 10: Canadian Economy Selected Indicators
Canadian Economy Selected Indicators Unemployment Rate • Canada’s unemployment rate less volatile in the past decade, and not directly comparable to the United States unemployment rate1 • As measured by GDP indexed to 2007, the Canadian economy has outperformed other major economies since the financ
Slide 11: Canada GDP and Exports
Canada GDP and Exports • Well diversified economy, with several key industries including finance, manufacturing, services and real estate • Following the 2007-2008 global recession, the diversity had been a stabilizing factor and led to strong economic performance relative to other industrialized na
Slide 12: CIBC Overview
CIBC Overview CIBC Investor Presentation |
Slide 13: CIBC Snapshot
CIBC Snapshot1 (TSE & NYSE: CM) TOP-TIER MOBILE $57B 10MM 44K 12.4% 9.0% BANKING APP - 7 MARKET-CAP2 CLIENTS2 EMPLOYEES1 CET1 RATIO2 PPPT (5-yr CAGR)3 CONSECUTIVE YEARS4 EARNINGS (5-yr CAGR)2 CONSECUTIVE YEARS3 DIVERSIFIED EARNINGS MIX STRONG CREDIT RATINGS Net Income by Strategic Business Unit5 Net
Slide 14: Overview of Our Strategic Business Units
Overview of Our Strategic Business Units Canadian Personal & Canadian Commercial Banking U.S. Commercial Banking & Capital Markets Business Banking & Wealth Management Wealth Management • Providing clients across Canada with • High-touch, relationship-oriented • High-touch, relationship-oriented • I
Slide 15: Sustainable Returns to Shareholders
Sustainable Returns to Shareholders • CIBC has a strong track record of shareholder returns • CIBC has not missed a regular dividend or reduced its dividend since the first dividend payment in 1868 Note: Dividend of CAD 1.46 per share for the quarter ending July 31, 2021 payable on July 28, 2021 to
Slide 16: High-Quality, Client-Driven Balance Sheet
High-Quality, Client-Driven Balance Sheet (Based on Q2 2021 Results) Assets Liabilities & Equity $783B Cash & Repos Unsecured 130% Funding 27% 35% Coverage Wholesale Funding Liquid Assets (Liquid Assets / Trading & Wholesale Funding) Secured Funding3 Investment Securities Personal Deposits Residenti
Slide 17: Underpinned by a Commitment to Balance Sheet Strength
Underpinned by a Commitment to Balance Sheet Strength… Basel III CET1 Ratio (%) Basel III Total Capital Ratio (%) 12.1% 12.4% 11.4% 11.6% 16.1% 16.2% 10.6% 14.9% 15.0% 13.8% 2017 1 2018 2019 2020 Q2 2021 2017 1 2018 2019 2020 Q2 2021 Basel III Leverage Ratio (%) Liquidity Coverage Ratio (%) 4.7% 4.7
Slide 18: Strong and resilient balance sheet
Strong and resilient balance sheet $B Q2/20 Q1/21 Q2/21 Q2 Highlights Average Loans and Acceptances 412.8 417.5 425.0 • Continued balance sheet strength Average Deposits 526.5 583.6 586.6 • CET1 increase driven by internal capital generation CET1 capital 29.5 31.4 31.9 CET1 ratio 11.3% 12.3% 12.4% p
Slide 19: Credit Review
Credit Review Provision For Credit Losses (PCL) Reported & Adjusted1 ($MM) Q2/20 Q1/21 Q2/21 Cdn. Personal & Business Banking 640 54 65 Impaired 201 109 206 Performing 439 (55) (141) Cdn. Commercial Banking & Wealth 186 33 (18) Impaired 62 19 (8) Performing 124 14 (10) U.S. Commercial Banking & Weal
Slide 20: Prudent Risk Management
Prudent Risk Management Allowance for Credit Losses/Gross Loans1,2 (%) 0.89% 0.77% 0.47% 0.51% 0.45% 2017 2018 2019 2020 Q2 2021 Loan Loss Ratio2,3,4 (bps) Impaired Total 61 31 34 33 27 28 26 29 26 25 25 23 24 3 2015 2016 2017 2018 2019 2020 Q2 2021 COVID-19 Pandemic 1 Allowance for credit losses to
Slide 21: Allowance in line with a year ago
Allowance in line with a year ago Reported Q2/20 Q1/21 Q2/21 Allowance coverages were up YoY and flat QoQ Canadian Credit Cards 6.3% 6.4% 5.8% • More than half of the performing allowance decrease in Canadian Residential Mortgages 0.1% 0.1% 0.1% Q2 due to net transfer of performing provision to Cana
Slide 22: 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 51% • Oil and gas is 1.8% of the loan portfolio; 47% investment grade • The balance of our portf
Slide 23: Diversification is Key to a Stable Wholesale Funding Profile
Diversification is Key to a Stable Wholesale Funding Profile Wholesale Funding Diversification • Well diversified across products, currencies, investor segments and geographic regions • Achieve appropriate balance between cost and stability of funding • Regular issuance to promote investor engagemen
Slide 24: CIBC Funding Strategy and Source
CIBC Funding Strategy and Source Funding Strategy • CIBC’s funding strategy includes access to funding through retail deposits and wholesale funding and deposits • CIBC updates its three-year funding plan on at least a quarterly basis • The wholesale funding strategy is to develop and maintain a sus
Slide 25: Wholesale Funding Geography
Wholesale Funding Geography Wholesale Funding By Currency1 CAD 46.5 BN EUR 8.1 BN, CHF 2.2 BN, GBP 3.7 BN, SEK 2.0 BN, NOK: 0.15 BN Canada Mortgage Bonds Covered Bonds Credit Cards Securitization JPY 55.0 BN Medium Term Notes Medium Term Notes Medium Term Notes Canadian Dollar Deposits
Slide 26: CIBC Funding Composition
CIBC Funding Composition Funding Sources – April 20211 Funding Sources BN Personal deposits 207.0 Business and government deposits 207.2 Unsecured funding1 123.2 Securities sold short or repurchase agreements 89.6 Others (Includes derivatives) 68.4 2 Capital 48.3 Securitization & Covered Bonds 39.2
Slide 27: Canadian Bail-in and Regulatory Regime Update
Canadian Bail-in and Regulatory Regime Update Note: All amounts are in Canadian dollars unless otherwise indicated. CIBC Investor Presentation |
Slide 28: Canadian Bail-in Regime Update
Canadian Bail-in Regime Update On April 18, 2018, Department of Finance published the bail-in regulations, and OSFI finalized the guidelines on Total Loss Absorbing Capacity (TLAC) and TLAC holdings. Department of Finance’s bank recapitalization (bail-in) conversion regulations • Provide statutory p
Slide 29: Canadian Bail-in Regime – Comparison to Other Jurisdictions
Canadian Bail-in Regime – Comparison to Other Jurisdictions Bail-in implementation in other jurisdictions has increased the riskiness of bail-inable bonds vs. non-bail-inable bonds: • Legislative changes prohibit bail-outs, increasing the probability that bail-in will be relied on • The hierarchy of
Slide 30: How Bail-In Is Expected To Work
How Bail-In Is Expected To Work When OSFI deems a bank has ceased to or may be about to cease to continue to be viable, it may trigger temporary takeover of the bank and carry out the bail-in conversion of NVCC capital and bail-in debt to common equity. There are no write-down provisions in the fr
Slide 31: Loss Absorption Waterfall
Liquidation to Resolution Comparison Liquidation Scenario Liquidation Resolution Bail-in debt ranks pari passu with all other senior Securitizations, Covered Bonds Securitizations, Covered Bonds unsecured liabilities. Legacy Senior Debt Structured Notes Derivatives Legacy Senior Debt Resolution Scen
Slide 32: Overview of Creditor Hierarchies in Bail-In Resolution
Overview of Creditor Hierarchies in Bail-In Resolution National layers of bail-inable senior debt instruments Canada Bank Recapitalization (Bail- Bank Insolvency Ordinance (BIO- Resolution Mechanism Act (§46f French Sapin 2 Italy Spanish Revised in) Regulations FINMA) / BoE/PRA KWG new) Insolvency L
Slide 33: OSFI Non Viability Criteria
Office of the Superintendent of Financial Institutions (OSFI) Non Viability Criteria In assessing whether an institution has ceased, or is about to cease, to be viable, the following criteria can be considered, which may be mutually exclusive and should not be viewed as an exhaustive list1 Whether t
Slide 34: Domestic Stability Buffer
Domestic Stability Buffer Background • Canadian Domestic Systemically Important Banks (D-SIBs) are required to hold Pillar 2 capital buffer that is privately communicated to each bank, to address risks that are inadequately captured by the Pillar 1 minimum capital requirements • D-SIBs are subject t
Slide 35: Canadian Mortgage Market
Canadian Mortgage Market Note: All amounts are in Canadian dollars unless otherwise indicated. CIBC Investor Presentation |
Slide 36: Mortgage Market Performance and Urbanisation Rates
Mortgage Market Performance and Urbanisation Rates Mortgage Arrears by Number of Mortgages Canadian mortgages consistently outperform U.S. and U.K. mortgages • Low defaults and arrears reflect the strong Canadian credit culture • Mortgage interest is generally not tax deductible, resulting in an inc
Slide 37: Canadian House Prices
Canadian House Prices Average Home Price • Absolute price level is moderate compared to major global urban City CAD USD Eq. 1 centers Canada 696K 566K • Canadian debt to income ratio in line with many developed nations Toronto 1025K 835K • Growth rates of house prices in Canada have diverged across
Slide 38: CIBC's Mortgage Portfolio
CIBC’s Mortgage Portfolio Condo Exposure: CAD 37.3 BN CIBC Canadian Residential Mortgages: CAD 225.5 BN • 28% of CIBC’s Canadian residential mortgage portfolio is insured, with 67% of insurance being provided by CMHC • The average loan to value1 of the uninsured portfolio is 51% • The condo develope
Slide 39: Legislative Covered Bond Programme, Collateral Pool
Legislative Covered Bond Programme, Collateral Pool Note: All amounts are in Canadian dollars unless otherwise indicated. CIBC Investor Presentation |
Slide 40: Legislative Programme Summary
Legislative Programme Summary Programme Size CAD 60,000,000,000 Ratings Aaa / AAA by Moody’s / Fitch Asset Percentage Currently at 93.0% Currency Most Convertible Currencies Guarantor CIBC Covered Bond (Legislative) Guarantor Limited Partnership Listing Luxembourg Law Canadian Legislative Framework
Slide 41: Covered Bond Structure
Covered Bond Structure • In April 2012, the Canadian government introduced legislation which provides a framework for the issuance of covered bonds by Canadian financial institutions • In July 2012, the National Housing Act was amended to establish a legal framework for covered bond programmes in Ca
Slide 42: Cover Pool
Cover Pool Summary Statistics (April 30, 2021)1 Current Collateral Pool Canadian uninsured residential mortgages Asset Percentage Requirement 93.00% Current Balance CAD 32,493,800,584 Outstanding Covered Bonds CAD Eq. 27,559,750,800 Number of Loans 120,184 Average Balance CAD 270,367 Weighted Ave Or
Slide 43: Cover Pool (April 2021)
Cover Pool (April 2021) Remaining Term Geographic Distribution Current Indexed Loan to Value Property Type CIBC Investor Presentation | 43
Slide 44: Contacts
Contacts PETER LEVITT WOJTEK NIEBRZYDOWSKI EXECUTIVE VICE PRESIDENT VICE PRESIDENT TREASURY AND TAXATION GLOBAL TERM FUNDING, TREASURY Email: Peter.Levitt@cibc.com Email: Wojtek.Niebrzydowski@cibc.ca Phone: +1 (416) 594-8487 Phone: +1 (416) 594-6748 Bloomberg: Niebrzydowsk@bloomberg.net CIBC Investo
Slide 45: Appendix
Appendix CIBC Investor Presentation |
Slide 46: Appendix
Appendix 1 Canadian Mortgage Market 47 2 CIBC Canadian Real Estate 50 3 Selected Credit Exposures 53 4 Sustainability 56 5 Covered Bond Triggers 59 6 Selected Covered Bond and Senior Issuances 63 CIBC Investor Presentation | 46
Slide 47: Canadian Mortgage Market
Canadian Mortgage Market Beneficial Mortgage Regulation in Canada • Under the Bank Act, banks can only advance uninsured mortgages up to an LTV ratio of 80% • Borrowers have to purchase default insurance if the mortgage has an LTV > 80% • Insurance covers the entire outstanding principal amount, up
Slide 48: Canadian Mortgage Market Regulatory Developments
Canadian Mortgage Market Regulatory Developments • Second home mortgage • Max. amortization insurance no longer • Standardizing eligibility reduced to 35 yrs. from • Reduce max. criteria for high-and low- available 40 amortization to 30 • Min. down payment for ratio insured mortgages, • Tightened in
Slide 49: Canadian Mortgage Market Regulatory Developments (continued)
Canadian Mortgage Market Regulatory Developments (continued) • Ontario Government • Temporary expansion of portfolio introduced Non- insurance eligibility criteria to allow • Minimum qualifying rate Resident the following for loans funded before (MQR) of greater of 5.25% speculation Tax March 20th,
Slide 50: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending 90+ Days Delinquency Rates Q2/20 Q1/21 Q2/21 • The Greater Vancouver Area1 (GVA) and Greater Total Mortgages 0.32% 0.27% 0.25% Toronto Area1 (GTA) continue to outperform the Uninsured Mortgages 0.28% 0.24% 0.23% Canadian average Uninsured Mortgages in GV
Slide 51: Canadian Uninsured Residential Mortgages — Q2/21 Originations
Canadian Uninsured Residential Mortgages — Q2/21 Originations Beacon Distribution • Originations of $20B in Q2/21 47% 43% 43% • Average LTV1 in Canada: 63% 28% 28% • GVA2: 58% 24% 14% 17% 15% • GTA2: 63% 12% 10% 11% 3% 2% 3% ≤650 651-700 701-750 751-800 >800 2 2 Canada GVA GTA Loan-to-Value (LTV)1 D
Slide 52: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Beacon Distribution • Better current Beacon and LTV1 42% 43% 43% distributions in GVA2 and GTA2 than the Canadian average 25% 25% 23% 19% • Less than 1% of this portfolio has a 17% 17% 11% 11% 10% Beacon score of 650 or lower and an 5% 4% 5% LTV1 over 75% • A
Slide 53: 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 Restaurants Auto Dealers 32% 43% Hotels/Motels 18% Department & Convenience $3.6B $4.7B Stores 6% Air Transport Other Retail Household 14% 12% Furnishing Stores
Slide 54: 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 Residential Office 12% 19% 26% Industrial 15% Industrial 10% Residential 1% Seniors Housing 6% Healthcare 3% $33.4B Retail US$15.4B Other 5%
Slide 55: Sustainability
Sustainability CIBC Investor Presentation |
Slide 56: ESG Commitments
ESG Commitments Commitments Material Topics Key Performance indicators Target Status as of Oct 31, 2020 or later 28%1 achieved Environment Sustainable Finance Environmental and sustainable financing $150 billion over 10 years (2018–2027) ($42 billion) Social Client Experience CIBC Enterprise Net Pro
Slide 57: Our Commitment to Sustainability
Our Commitment to Sustainability Environmental Social Governance CIBC Investor Presentation | 57
Slide 58: Our Commitment to ESG
Our Commitment to ESG Rating Provider Rating1 2020 Climate Change Score A- (from B in 2019) 2020 ESG Rating “AA” Scale of CCC to AAA In November 2020, CIBC received an ESG risk rating score of 18.3, placing it in the 11th percentile of the Banks industry group CIBC’s overall Sustainability Ranking:
Slide 59: Covered Bond Structural Summary - Triggers
Covered Bond Structural Summary - Triggers Trigger Consequences • Servicer downgraded below Baa2/F2 by • Servicer, Guarantor and Bond Trustee agree to use Moody’s/Fitch commercially reasonable efforts to arrange for the • Servicer defaults on amounts due to Guarantor appointment of a successor Servi
Slide 60: Covered Bond Structural Summary - Triggers
Covered Bond Structural Summary - Triggers Trigger Consequences • Issuer fails to pay any principal or interest in • Delivery of Issuer Acceleration Notice respect of the Covered Bonds within 10 business • Bond Trustee will serve a Notice to Pay on the days in the case of principal and 30 days in th
Slide 61: Covered Bond Structural Summary - Triggers
Covered Bond Structural Summary - Triggers Trigger Consequences • Servicer Event of Default, not remedied within 30 • Notice of loans’ sale given by Issuer to Borrowers days • Borrowers notified to make payments to the • Issuer Event of Default (other than insolvency), Standby Account Bank for the a
Slide 62: Covered Bond Structural Summary - Triggers
Covered Bond Structural Summary - Triggers Trigger Consequences Cash Manager’s ratings fall below P-1/F1 or A by Cash Manager required to direct the Servicer to deposit all Revenue Cash Management Moody’s/Fitch Receipts and Principal Receipts directly into the GDA Account within Deposit Ratings two
Slide 63: Outstanding Benchmark Covered Issuance
Outstanding Benchmark Covered Issuance Series Currency Issued Issue Date Maturity Date Legal Final Maturity Coupon Rate Issue Spread CBL9 CHF 200,000,000 22-Dec-15 22-Dec-25 22-Dec-26 0.125% MS + 0% CBL9-2 CHF 150,000,000 22-Dec-15 22-Dec-25 22-Dec-26 0.125% MS + 0.05% CBL12 EUR 1,250,000,000 25-Jul
Slide 64: Selected Legacy and TLAC Senior
Selected Legacy and TLAC Senior1 ISIN Programme Currency Issued Issue Date2 Maturity Date Coupon Rate Issue Spread US136069TY74 SEC USD 1,000,000,000 16-Jun-17 16-Jun-22 2.55% T + 0.80% US136069TZ40 SEC USD 500,000,000 16-Jun-17 16-Jun-22 LIBOR + 0.72% 0.72% XS1646520921 EMTN/Formosa USD 300,000,000
Canadian Imperial Bank of Commerce — Debt Investor Presentation (June 2021) on 6ix