Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Debt Investor Presentation (2023)
73 slides from Canadian Imperial Bank Of Commerce's debt investor presentation, 2023
Slide 1: CIBC Fixed Income Investor Presentation Q2-2023
CIBC Fixed Income Investor Presentation Q2-2023
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 Investor Presentation, in other filings with Canadian securities regulators or the SEC and in oth
Slide 6: Table of Contents
Table of Contents 1 Debt Programmes Summary 6 2 Canadian Economy & Consumer Profile 7 3 Canadian Imperial Bank of Commerce (“CIBC”) Overview 13 4 Canadian Mortgage Market 33 5 Legislative Covered Bond Programme, Collateral Pool 38 6 Contacts 43 7 Appendix 44 5
Slide 7: Debt Programmes Summary
Debt Programmes Summary Outperformed most G7 economies as measured by long term GDP growth rate during 2002-20221 • 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 from 2008 to 2016,
Slide 8: Canadian Economy & Consumer Profile
Canadian Economy & Consumer Profile CIBC Investor Presentation
Slide 9: Canada: GDP by Province / Territory
Canada GDP broken down by province/territory continues to demonstrate that Canada’s Canada: Key Facts economy is well diversified Population2 39.2MM GDP (Market Prices)3 CAD 2,789 BN GDP per capita3 CAD 55,632 Canada’s GDP by Province / Territory1 Labour Force4 21.2 MM (%) Provinces/Territories 10 /
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 most other major economies since the f
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: Canada's Economic Outlook Post COVID – Employment & Output
Canada’s Economic Outlook Post COVID – Employment & Output Monthly Real GDP & Employment Trend Index January 2020 = 100 2 s.a. • Real GDP increased by 0.1% in February 2023 • Economy-wide output has expanded in seventeen of the last twenty months and, in February 2023, was 3.4% above pre- pandemic •
Slide 13: Canada's Economic Outlook Post COVID - Inflation
Canada’s Economic Outlook Post COVID - Inflation Canadian Inflation Year over Year % change 2 • BoC expected to maintain overnight rates at elevated levels through calendar 2023 • Weaker economic growth, improvements in supply chains, and softer average prices for food and energy will be key to brin
Slide 14: CIBC Overview
CIBC Overview CIBC Investor Presentation
Slide 15: A leading Canadian financial institution
A leading Canadian financial institution1 1867 13MM 49K $1.7B 14.5% 60.6% 11.9% NET-INCOME ROE3 TSR4 FOUNDED CLIENTS EMPLOYEES2 CET1 RATIO5 (Q2/23) (Q2/23) (3-YR) (Q2/23) DIVERSIFIED EARNINGS MIX STRONG STRONG CREDIT CREDIT RATINGS RATINGS Net Income by Strategic Business Unit Net Income Contributio
Slide 16: Clear purpose, well-defined strategy creating enduring value for stakeholders
Clear purpose, well-defined strategy creating enduring value for stakeholders OUR AMBITION: To deliver top-tier shareholder returns over the medium term while maintaining financial strength and risk discipline Focusing on high-growth, high-touch segments • Leveraging our unique capabilities to be a
Slide 17: Our disciplined approach to resource allocation continues to drive profitable growth
Our disciplined approach to resource allocation continues to drive profitable growth Strategic Investments High-growth, high touch segments Future differentiators Simplifying our bank Affluent & high net worth | The private economy The new economy Automation |Digitization | Data & analytics Digital
Slide 18: Robust operational framework underpinning strength and stability of our bank
Robust operational framework underpinning strength and stability of our bank… For footnoted information refer to slide 68. 17
Slide 19: Foundation to deliver sustainable outperformance through the cycle
…and providing the foundation to deliver sustainable outperformance through the cycle Earnings Growth • 7%-10% Through the Return on Equity • 16%+ Cycle Financial Operating Leverage • Positive Objectives1,2 Dividend Payout Ratio • 40%-50% 1. We have set through the cycle targets for each of these me
Slide 20: 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 18681 • Flat dividends from Q2-2020 to Q4-2021 due to temporary OSFI policy2 Note: Dividend of CAD 0.87 per
Slide 21: Solid returns underpinned by a commitment to balance sheet strength
Solid returns underpinned by a commitment to balance sheet strength Basel III CET1 Ratio1 (%) Basel III Total Capital Ratio1 (%) 12.1 12.4 11.9 16.1 16.2 15.5 11.6 11.7 15.0 15.3 2019 2020 2021 2022 Q2/23 2019 2020 2021 2022 Q2/23 Basel III Leverage Ratio1 (%) Liquidity Coverage Ratio (LCR)1 (%) 4.7
Slide 22: Prudent risk management
Prudent risk management1 Total Allowance Coverage Ratio2 (%) 0.89 0.64 0.66 0.62 0.51 2019 2020 2021 2022 Q2/23 Loan Loss Ratio (bps) 61 33 34 29 29 26 21 16 14 4 2019 2020 2021 2022 Q2/23 Impaired3 Total4 For footnoted information refer to slide 69. 21
Slide 23: Asset yields and funding costs
Asset yields and funding costs For footnoted information refer to slide 69. 22
Slide 24: High-Quality, Client-Driven Balance Sheet
High-Quality, Client-Driven Balance Sheet (Based on Q2-2023 Results) Assets Liabilities & Equity $935B Cash & Repos Unsecured 131% Funding 27% 35% Coverage Wholesale-sourced Funding Liquid Assets (Liquid Assets / Trading & Wholesale Funding) Secured Funding3 Investment Securities Personal Deposits R
Slide 25: Resilient balance sheet supports organic business growth
Resilient balance sheet supports organic business growth $B Q2/22 Q1/23 Q2/23 Average Loans and Acceptances 1 492.6 529.2 534.8 • CET1 ratio of 11.9%, up 26 bps QoQ, and comfortably above current regulatory requirements; strong sequential increase reflects: Average Deposits1 664.2 715.1 702.8 CET1 C
Slide 26: Provision for credit losses up YoY and QoQ on an adjusted basis
Provision for credit losses up YoY and QoQ on an adjusted basis Provision for Credit Losses up YoY and down QoQ ($MM) Q2/22 Q2/22 Q1/23 Q2/23 Reported Adjusted Reported Reported • Impaired provisions up in Q2/23, largely due to higher write-offs as expected in retail, and higher impairments in busin
Slide 27: Canadian Consumer Lending
Canadian Consumer Lending Reported Net Write-Offs Q1/20 Q2/22 Q1/23 Q2/23 Net Write-off Ratio2 Canadian Residential Mortgages 0.01% 0.01% <0.01% <0.01% Canadian Credit Cards 3.16% 2.16% 2.65% 2.95% Personal Lending 0.77% 0.40% 0.59% 0.76% Total 0.28% 0.15% 0.21% 0.25% 90+ Days Delinquency Rates1 Q1/
Slide 28: Allowance coverage ratio is well-positioned for the economic outlook
Allowance coverage ratio is well-positioned for the economic outlook Total Allowance Coverage Q1/20 Q4/20 Q2/22 Q1/23 Q2/23 Total allowance coverage ratio down YoY and up QoQ Canadian Credit Cards 4.0% 6.2% 4.9% 5.1% 4.3% • Increase QoQ is due to a higher allowance in both performing and impaired po
Slide 29: Lending portfolio has a strong risk profile
Lending portfolio has a strong risk profile • Nearly two-thirds of our portfolio is consumer lending, composed mainly of mortgages, with uninsured having an average loan-to- value of 53% • Total variable rate mortgage portfolio accounts for 36% of the Canadian mortgage portfolio • Balance of portfol
Slide 30: 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 31: CIBC Funding Strategy and Sources
CIBC Funding Strategy and Sources 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 su
Slide 32: Wholesale Funding Geography
Wholesale Funding Geography Wholesale Funding By Currency1 CAD 49.5 BN EUR 13.7 BN, CHF 3.2 BN, GBP 7.6BN, NOK: 1.9 BN Canada Mortgage Bonds Covered Bonds JPY 106.0 BN Credit Cards Securitization Medium Term Notes Medium Term Notes Medium Term Notes Certificates of Deposit Canadian D
Slide 33: CIBC Funding Composition
CIBC Funding Composition Funding Sources – April 20234 Funding Sources BN Personal deposits 236.7 Business, Bank and Government deposits 277.7 Unsecured funding1 148.6 Securities sold short or repurchase agreements 98.4 Others (Includes derivatives) 72.8 Capital2 51.5 Securitization & Covered Bonds
Slide 34: Canadian Mortgage Market
Canadian Mortgage Market Note: All amounts are in Canadian dollars unless otherwise indicated. CIBC Investor Presentation
Slide 35: Canadian House Prices
Canadian House Prices Household Debt to Income Ratio4 • Absolute price level is moderate compared to major global urban centers • Canadian debt to income ratio in line with many developed nations • Growth rates of house prices in Canada have diverged across regions Average Home Price YoY % Region CA
Slide 36: Mortgage Market Performance and Urbanization Rates
Mortgage Market Performance and Urbanization 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: CIBC's Mortgage Portfolio
CIBC’s Mortgage Portfolio CIBC Canadian Residential Mortgages: CAD 263.0 BN Condo Exposure: CAD 47.6 BN • 19% of CIBC’s Canadian residential mortgage portfolio is insured, with 60% of insurance being provided by CMHC • The average loan to value1 of the uninsured portfolio is 53% • The condo develope
Slide 38: Canadian Mortgages Renewing In The Next 12 Months
Canadian Mortgages Renewing In The Next 12 Months • 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 rise, most of our variable rate mortgages with fixed payments are impacted through an exte
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 CIBC Interest Rate Swap Provider Consideration CIBC CIBC Loans and Covered Bond Seller (Legislative) Related Security Guarantor LP Guarantor CIBC Covered Bond Swap Repayment of Provider Intercompany Loan Intercompany Loan Computershare CIBC Trust Company of Canada Issuer / Ban
Slide 42: Cover Pool
Cover Pool Summary Statistics (April 30, 2023)1 Current Collateral Pool Canadian uninsured residential mortgages Asset Percentage Requirement 93.00% Current Balance CAD 43,275,433,460 Outstanding Covered Bonds CAD Eq. 31,672,149,000 Number of Loans 143,851 Average Balance CAD 300,835 Weighted Ave Or
Slide 43: Cover Pool (April 2023)
Cover Pool (April 2023) Remaining Term Geographic Distribution Current Indexed Loan to Value Property Type 42
Slide 44: Contacts
Contacts ROBERT SEDRAN WOJTEK NIEBRZYDOWSKI EXECUTIVE VICE PRESIDENT VICE PRESIDENT TREASURY GLOBAL TERM FUNDING, TREASURY Email: Robert.Sedran@cibc.com Email: Wojtek.Niebrzydowski@cibc.ca Phone: +1 (416) 594-7874 Phone: +1 (416) 956-6748 Bloomberg: Niebrzydowsk@bloomberg.net 43
Slide 45: Appendix
Appendix CIBC Investor Presentation
Slide 46: Appendix
Appendix 1 ESG & Sustainability 46 2 Canadian Mortgage Market 48 3 CIBC Canadian Real Estate 51 4 Selected Credit Exposures 53 5 Canadian Bail-in and Regulatory Regime Update 55 6 Covered Bond Triggers 62 7 Selected Covered Bond and Senior Issuances 66 8 Notes, Non-GAAP Measures & Glossary 69 45
Slide 47: Furthering our ESG strategy by putting our ambitions into action
Furthering our ESG strategy by putting our ambitions into action 1 2 3 3 3 2 2 2 2 2 2 1. Source: Inframation. For transactions that closed from January 1, 2022 to December 31, 2022 (North American Renewables League Tables). 2. Refer to footnotes in Section 1.3 of CIBC's Sustainability Report 2022,
Slide 48: External recognition for our commitment to sustainability
External recognition1 for our commitment to sustainability 2022 Climate Change Score = B 2022 ESG Rating = AA 2022 ESG Risk Rating = 17.7 (low risk) or Scale: D- to A (best) Industry-Adjusted Score = 8.4 9th percentile among banks Scale: CCC to AAA (best) Scale: 1 or 1st percentile (best) to 40+ 0 t
Slide 49: 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% Default • Insurance covers the entire outstanding principal amo
Slide 50: 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 51: Canadian Mortgage Market Regulatory Developments (continued)
Canadian Mortgage Market Regulatory Developments (continued) • Ontario • Effective January 1st, 2023 a Government • Temporary expansion of portfolio two-year ban on the • Minimum qualifying rate introduced Non- insurance eligibility criteria to allow purchase of residential (MQR) of greater of 5.25%
Slide 52: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending • 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 owner-occupied mortgages • The portion of non-amortizin
Slide 53: Canadian Uninsured Residential Mortgages — Q2/23 Originations
Canadian Uninsured Residential Mortgages — Q2/23 Originations1 Credit Bureau Distribution • Originations of $8B in Q2/23 • Average LTV2 in Canada: 66% • GVA3: 60% • GTA3: 64% 3 3 Loan-to-Value (LTV)2 Distribution 3 3 For footnoted information refer to slide 68. 52
Slide 54: Commercial Real Estate exposure is well diversified
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 estate is 13bps Canadian Co
Slide 55: U.S. Commercial Real Estate – Office Portfolio
U.S. Commercial Real Estate – Office Portfolio • 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 portfolio is at higher risk (Class B, central business d
Slide 56: 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 57: 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 58: 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 59: 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 Legacy Senior Debt Derivatives Structured Note
Slide 60: Loss absorption waterfall: Canadian and European Hierarchies
Comparison of Canadian and European Hierarchies in Bail-in Resolution Layers of bail-inable senior debt instruments European norm Canada Bank Recapitalization (Bail-in) Regulations Loss absorption waterfall Common Equity Tier 1 Common Equity Tier 1 Loss absorption waterfall Preferred Shares/ AT1 (PO
Slide 61: 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 62: 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 63: 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 64: 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 65: 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 66: Covered Bond Structural Summary - Triggers
Covered Bond Structural Summary - Triggers Trigger Consequences Cash Manager required to direct the Servicer to deposit all Revenue Cash Management Cash Manager’s ratings fall below P-1/F1 or A by Receipts and Principal Receipts directly into the GDA Account within Deposit Ratings Moody’s/Fitch two
Slide 67: Outstanding Covered Issuances
Outstanding Covered Issuances Series Currency Issued Issue Date1 Maturity Date2 Coupon Rate Issue Spread1 CBL9 CHF 350,000,000 22-Dec-15 22-Dec-25 0.1250% MS + 0% CBL20 CHF 250,000,000 30-Apr-18 30-Apr-25 0.1000% MS - 0.08% CBL22 EUR 1,000,000,000 09-Jul-19 09-Jul-27 0.0400% MS + 0.09% CBL25 EUR 1,0
Slide 68: Selected Outstanding TLAC Senior
Selected Outstanding TLAC Senior1 ISIN Programme Currency Issued Issue Date Maturity Date Coupon Rate Issue Spread CA1360695D97 CAD 1,250,000,000 15-Jan-19 15-Jan-24 3.290% GoC+1.40% CH0419040826 EMTN CHF 100,000,000 30-Jan-19 30-Jan-25 0.600% MS + 0.70% US13607GAP90 SEC USD 1,000,000,000 02-Apr-19
Slide 69: Selected Outstanding TLAC Senior (continued)
Selected Outstanding TLAC Senior1 (continued) ISIN Programme Currency Issued Issue Date Maturity Date Coupon Rate Issue Spread US13607HVE97 SEC USD 750,000,000 22-Jun-21 22-Jun-23 1.250% T + 0.50% US13607HVD15 SEC USD 500,000,000 22-Jun-21 22-Jun-23 SOFR + 0.34% SOFR + 0.34% CA13607HVV19 CAD 1,100,0
Slide 70: Notes
Notes Slide 14 – A leading Canadian financial institution 1. All results are in Canadian dollars unless otherwise indicated. 2. Global regular head count for CIBC. This excludes FCIB, temporary employees and contingent workers. 3. For additional information on the composition, see the "Glossary" sec
Slide 71: Notes continued
Notes continued Slide 21 – …Prudent Risk Management 1. All results are on a Reported basis and in Canadian dollars unless otherwise indicated. 2. Allowance for credit losses to gross carrying amount of loans. The gross carrying amount of loans include certain loans that are measured at fair value th
Slide 72: Notes continued
Notes continued 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 accordingly, thes
Slide 73: Glossary
Glossary Definition We adjust our reported diluted EPS to remove the impact of items of note, net of income taxes, to calculate the adjusted EPS. 1 Adjusted Diluted EPS We adjust our reported net income attributable to common shareholders to remove the impact of items of note, net of income taxes, t
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