Asia Non Deal Roadshow - cibc.com · 3 CIBC (1) Basel III all-in-basis. (2) Source: IMF, World...

Asia Non Deal RoadshowMarch 2015

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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 thispresentation, in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission and in othercommunications. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-lookingstatements under, applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995.These statements include, but are not limited to, statements made about our operations, business lines, financial condition, riskmanagement, priorities, targets, ongoing objectives, strategies and outlook for calendar year 2015 and subsequent periods. Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “forecast”, “target”,“objective” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could”. By their nature, thesestatements require us to make assumptions and are subject to inherent risks and uncertainties that may be general or specific. A varietyof factors, many of which are beyond our control, affect our operations, performance and results, and could cause actual results to differmaterially from the expectations expressed in any of our forward-looking statements. These factors include: credit, market, liquidity,strategic, insurance, operational, reputation and legal, regulatory and environmental risk; the effectiveness and adequacy of our riskmanagement and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate, includingthe Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued and to be issued thereunder, the U.S. ForeignAccount Tax Compliance Act and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking Supervision’s globalstandards for capital and liquidity reform and those relating to the payments system in Canada; amendments to, and interpretations of,risk-based capital guidelines and reporting instructions, and interest rate and liquidity regulatory guidance; the resolution of legal andregulatory proceedings and related matters; the effect of changes to accounting standards, rules and interpretations; changes in ourestimates of reserves and allowances; changes in tax laws; changes to our credit ratings; political conditions and developments; thepossible effect on our business of international conflicts and the war on terror; natural disasters, public health emergencies, disruptions topublic infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure;potential disruptions to our information technology systems and services, including the evolving risk of cyber attack; social media risk;losses incurred as a result of internal or external fraud; the accuracy and completeness of information provided to us concerning clientsand counterparties; the failure of third parties to comply with their obligations to us and our affiliates; intensifying competition fromestablished competitors and new entrants in the financial services industry including through internet and mobile banking; technologicalchange; global capital market activity; changes in monetary and economic policy; currency value and interest rate fluctuations; generalbusiness and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations, includingincreasing Canadian household debt levels and the high U.S. fiscal deficit; our success in developing and introducing new products andservices, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from thesechannels; changes in client spending and saving habits; our ability to attract and retain key employees and executives; our ability tosuccessfully execute our strategies and complete and integrate acquisitions and joint ventures; and our ability to anticipate and managethe risks associated with these factors. This list is not exhaustive of the factors that may affect any of our forward-looking statements.These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Wedo not undertake to update any forward-looking statement that is contained in this presentation or in other communications except asrequired by law.

Investor Relations contacts:Geoff Weiss, Senior Vice-President 416 980-5093Investor Relations Fax Number 416 980-5028Visit the Investor Relations section at www.cibc.com

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Contents

2

Highlights

Canadian Economy

Canadian Imperial Bank of Commerce (“CIBC”) Overview

Appendix

Canadian Mortgage Market

Oil & Gas Exposure

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CIBC

(1) Basel III all-in-basis.(2) Source: IMF, World Economic Outlook, October 2014.(3) Source: The Global Competitiveness Report 2014 – 2015, World Economic Forum.

Well capitalized top 5 Canadian Bank with Common Equity Tier 1, Tier 1 Capital, and Total Capital ratios of 10.3%, 12.1% and 14.9% respectively, as of January 31, 2015(1)

5th largest bank in Canada as measured by market capitalization

Highest ROE among peers

Canada

Best economic performance amongst G7 economies as measured by 10-year GDP growth rate

The lowest government net debt-to-GDP among G7(2)

Aaa/AAA/AAA/AAA (Moody’s/S&P/Fitch/DBRS)

The World Economic Forum ranked Canada’s financial system the soundest in the world for seven consecutive years, 2008 – 2014(3)

Highlights

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Contents

4

Highlights

Canadian Economy


Appendix


Oil & Gas Exposure

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Canadian Economic Trends Compare Favourably to Other G7 Members

(1) Source: IMF, World Economic Outlook, October 2014. Includes estimates for 2014.(2) Source: Statistics Canada, Department of Finance. The Fiscal Year runs from April-March. For example, the 2014 Fiscal Year period is from April 1, 2014 to

March 31, 2015.

Projections

4.31.9

-2.9-5.2

-18.4

-33.4

13.89.5

2.17.37.04.5

201620152014201320122010200820062004200220001998

Canadian Federal Budget Balance (Fiscal Year)(2)

($ billions)

Long Term GDP Growth Rate (2004-2014)(1)

(%)

Total Government Net Debt-to-GDP Ratio (2014)(1)

(%)

Canada had the highest long term GDP growth between 2004 and 2014 among the G7

Only G7 nation to balance its budget for 11 consecutive years (1998-2008), and on track to return to balanced budgets in 2015

Lowest government net debt-to-GDP ratio among G7 Canada

1.94%

Italy

-0.21%

Japan

0.82%

France

0.94%

Germany

1.33%

U.K.

1.33%

U.S.

1.79%

38.6%53.9%

GermanyCanada

114.3%

137.8%

80.8%

Japan

83.9% 88.1%

ItalyU.S.FranceU.K.

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Well diversified economy, with several key industries including finance, manufacturing, services and commodities Although several sectors have been impacted by the global recession, the diversity has been a stabilizing

factor and has led to strong economic performance relative to other industrialized nations

Source: Statistics Canada

GDP By Industry (monthly)(September 2014)

Exports: Top 20 Industries (2013)

Agriculture, forestry, fishing and hunting, 1%

Mining, quarrying, and oil and gas extraction, 8%

Manufacturing, 11%

Construction , 7%

Utilities, 2%

Transportation and warehousing, 4%

Information and cultural industries,

3%

Wholesale trade, 6%Retail trade, 5%

Finance and Insurance , 20%

Professional, scientific and

technical services, 5%

Administrative and support, waste

management and remediation services, 3%

Public administration, 7%

Educational services, 5%

Health care and social assistance,

7%

Arts, entertainment and recreation, 1%

Accommodation and food services,

2%

Other services (except public

administration), 2%

Canadian Economy is Well Diversified

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Contents

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Highlights

Canadian Economy


Appendix


Oil & Gas Exposure

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Our Stock & Our Company(1)(2)

CIBC is a leading Canadian-based global financial institution with aclient-focused strategy that creates value for our stakeholders.

OUR STOCK

CMSYMBOL

NYSE/TSXEXCHANGE

$35BMARKET CAP

1.1MSHARES/DAY

Aa3, A+, AA-

DEBT RATINGS

4.6%YIELD

OUR COMPANY

~11MCLIENTS

+1,100BRANCHES

+43KEMPLOYEES

$13.7BREVENUE

$3.7BNET INCOME

$445BTOTAL ASSETS

(1) Presented under IFRS basis. Non-GAAP measures which exclude items of note as referenced in our quarterly Report to Shareholders.(2) Last Twelve Months or As of January 31, 2015.

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2 Growing our US Franchise in Wealth Management

3Maintaining disciplined capital deployment and sound risk management

Investing in our core franchise to deepen client relationships

1

A strong performance - oriented relationship

bank

2 0 1 5 S t r a t e g yCorporate Objective

Client-centric focus to create value for all stakeholders9

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Our Business Segments

(1) Last twelve months (as of Q1/15). Net Income includes $202MM loss from Corporate and Other. Results are adjusted for items of note.

THREE MAIN SEGMENTS(FY2015 LTM; Net Income of $3.7B) (1)

65% Retail and Business Banking 14% Wealth Management26% Wholesale Banking-6% Corporate & Other

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65%

14%

26%

-6%

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(1) Presented under IFRS basis. Non-GAAP measures which exclude items of note as referenced in our quarterly Report to Shareholders.(2) Q1/15 Peer Average does not include BNS as BNS has not released its earnings for Q1/15 yet.

Strong Performance….

Diluted Earnings / Share(1)

($)Basel III Common Equity Ratio

(%)

11Sound risk management is a key element of CIBC’s strategy

10.310.3

9.4 9.69.99.3

Q1/1520142013

Peer AverageCM

8.948.657.98

7.57

2014201320122011

6%

(2)

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Return on Equity(%)

Dividend Yield(%)

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…. and attractive returns to shareholders(1)

4.6

3.8

4.34.64.7

4.1

3.73.9

4.34.0

Q1/152014201320122011

20.620.9

22.922.824.8

16.116.917.2

18.519.1

Q1/152014201320122011

Peer AverageCMPeer AverageCM

Return on Equity greater than 20% for last 21 Quarters

(1) Presented under IFRS basis. Non-GAAP measures which exclude items of note as referenced in our quarterly Report to Shareholders.(2) Q1/15 Peer Average does not include BNS as BNS has not released its earnings for Q1/15 yet.

(2) (2)

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Cash Earnings >$3.6B Annually

13Strong Capital Generation flexibility

Organic Growth

High priority

Focused on operational investment

Deeper client relationships

Acquisitions

Selective acquisitions to support strategic priorities

Consistent with defined risk appetite

Return to Shareholders

Dividend payout ratio of 40-50%

Share repurchase program in place (up to 2% of outstanding)

D i s c i p l i n e d C a p i t a l D e p l o y m e n tReinvestment / Return to Shareholders

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ENHANCING CLIENT EXPERIENCE

ACCELERATING PROFITABLE REVENUE GROWTH

MODERN CONVENIENCE BANKING• Easy• Personalized• Flexible

STRATEGIC RELATIONSHIPS

INNOVATION

Retail & Business Banking

Delivering a better experience for our clients

Strategic Objectives:

Our Strategy to Win:

Growth Accelerators:

Foundation – continued investment in our people14

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Retail & Business Banking: Key Priorities

Delivering on consumers’ preferences for a banking experience that is easy, personalized and flexible

2Personalized

3Flexible

1Easy

KEY PRIORITIES OBJECTIVE

• Streamline / simplify / automate processes

• Digitization of information

• Product & documentation simplification

Improve market position

• 360° view of client

• Differentiated experience based on client value and preferences

• Over-index growth from Mass Affluent and Commercial Banking

Differentiated position in market Leadership in

Mass Affluent

• Drive digital sales growth

• Enhance self-serve capabilities

• Channel integration

• Payments innovation

Leadership in emerging channels and banking

innovation

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R e t a i l a n d B u s i n e s s B a n k i n gMaking good progress(1)

Net Income($ billions)

Loans($ billions)

Loan Loss Ratio(%)

(1) Presented under IFRS basis. Non-GAAP measures which exclude items of note as referenced in our quarterly Report to Shareholders.(2) Last Twelve Months.

2.422.382.20

0.22

2014

0.04

2013 2015LTM

0.420.32 0.27

Q1/1520142013

162156 169

Q1/1520142013

226220217

2014 Q1/152013

(2)

Deposits($ billions)

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Aero

ex Aero

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• Continue to develop deep client relationships

• Focus on eliminating platform gaps

• Build core Canadian Commerce activities

Consistent, sustainable earnings

• Extend core business

• North American energy & infrastructure build out

Higher long-term growth & diversification

• Enterprise-wide client management

• Align Private Banking & Corporate contacts

• Investments in cash management & other deposit gathering initiatives

New revenue & relationship opportunities

2Client Capabilities Outside of Canada

3Collaboration &

Innovation Across CIBC

1Client Leadership

in Canada

Wholesale Banking: Key Priorities

Developing deep client relationships in Canada, growing execution capabilities in the U.S., and creating innovative solutions for Retail and Wealth clients.

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W h o l e s a l e B a n k i n gMaking good progress(1)

Average Loans and Acceptances($ billions)

Average Value at Risk($ millions)


Net Income($ millions)

Efficiency Ratio(%)

21.625.0

28.0

Q1/1520142013

(2)

4.63.5 3.8

Q1/1520142013

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58.850.3 46.5

2013 2014 Q1/15

969913817

2014 2015LTM2013

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• Elevate our integrated Wealth offer

• Continue fee-based conversion

• Enhance investment capabilities

Improve and differentiate market position

• Attract net new High Net Worth clients

• Grow self-directed business

• Elevate Asset ManagementOrganic growth

• Grow earnings contributions from 14% to >15%

• Target US Private Banking, Wealth Management, Asset Management

Inorganic growth

2Attract New

Clients

3Strategic

US Acquisitions

1Enhance

Client Experience

Wealth Management: Key Priorities

Capitalizing on client demand shifts, enhancing client experience, and advancing CIBC’s overall growth, diversification and funding objectives.

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W e a l t h M a n a g e m e n tMaking good progress(1)

Net Income($ millions)

Contribution to CIBC’s Earnings(%)

Asset Under Administration($ billions)

Mutual Funds($ billions)


389486 500

2015LTM20142013

297234

309

Q1/1520142013

66.777.0 81.3

Q1/1520142013

1113 14 15+

20142013 Target2015LTM(2) (2)

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Summary

Retail & BusinessRepositioned to focus on

client relationships to accelerate profitable revenue growth and enhance the client experience

Wealth ManagementTargeting 15%+ NIAT

contribution in the medium term through organic

growth and strategic acquisitions

Wholesale BankingDe-risked with plans to grow with our clients’ global needs for lending, advisory services and capital markets products

Committed to delivering sustainable shareholder value21

Industry leading Return on Equity, Capital Strength and Dividend Yield

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Contents

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Highlights

Canadian Economy


Appendix


Oil & Gas Exposure

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This combination of factors results in consistently low credit losses

on the Canadian banks’ mortgage books

Beneficial Mortgage Regulation in Canada

Default Insurance

Under the Bank Act, banks can only advance uninsured mortgages up to an LTV ratio of 80%

Borrowers must purchase default insurance if the mortgage has an LTV > 80%

Insurance covers the entire outstanding principal amount, up to 18 months accrued interest and, subject to certain caps, any out-of-pocket costs incurred by the lender (e.g. foreclosure expenses, legal fees, maintenance costs, property insurance, etc.)

Mortgage default insurance is provided by CMHC and private mortgage insurers (e.g. Genworth)

CMHC is the dominant residential mortgage insurance provider in Canada

Favorable Legal

Environment

In most provinces, lenders have robust legal recourse to recoup losses(e.g. garnishing wages for loan deficiency after a loss on sale)

Taxation Mortgage interest is generally not tax deductible, which results in an incentive for mortgagors to limit their amount of mortgage debt

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Recent Government Action to Strengthen Mortgage Oversight

2013

Intent to gradually limit insurance on low-ratio mortgages (loan is less than 80% of the value of the property) unless they are part of a CMHC-backed mortgage securitization program.

Allocate CMHC portfolio insurance limit equally among all mortgage lenders.

Intent to prohibit Government-backed insured mortgages (both low and high ratio) from being used in any non-CMHC sponsored securitization program.

CMHC announced increase to mortgage insurance premiums effective May 1, 2014

Impact on CIBC (and industry) mortgage growth rates is expected to be limited

CMHC will no longer offer mortgage insurance to those buying second homes, self-employed borrowers without third-party income validation, and developers to finance the construction of new condo buildings

2014

2012

Reduce the maximum amortization period to 25 years from 30 years for new government-backed insured mortgages with loan-to-value ratios of more than 80%

Lower the maximum amount Canadians can borrow in refinancing their mortgages to 80% from 85% of the value of their homes

Limit the Gross Debt Service Ratio to 39% and Total Debt Service Ratio to 44%

Withdraw government insurance on home purchases that are $1 million or greater

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Canadian Mortgage Market Differs from U.S.

Product

Conservative product offerings – generally consist of fixed or variable rate option

Borrowers qualify based on qualifying posted mortgage rate

Underwriting

Regulation and

Taxation

More exotic offerings (e.g. ARMs, IOs) and a greater proportion of mortgages are variable or adjustable rate

Borrowers were often qualified using teaser rates

Prepayment penalties are common

Terms usually 5 years or less, renewable at maturity – allows reassessment of credit

Amortization usually 25 years, but can be up to 30 years

Mortgage insurance mandatory if LTV over 80%. Insurance covers full amount

Mortgages can be prepaid without penalty

30 year term most common

Amortizations usually 30 years, but can be up to 50 years

Mortgage insurance often used to cover portion of LTV over 80%

Interest is generally not tax deductible, so there is an incentive to take on less mortgage debt

Lenders have recourse to both the borrower and the property in most provinces

Interest is tax deductible, creating an incentive to take on more mortgage debt

Lenders have limited recourse in most jurisdictions

Canada United States

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67% of CIBC’s Canadian residential mortgage portfolio is insured, with 87% of insurance being provided by CMHC

The average loan to value of the uninsured portfolio based on January house price estimates is 60%

The credit quality of the residential portfolio continues to be high, with a net credit loss of approximately three basis point per annum

Condos account for 11% of the total mortgage portfolio Condo developer exposure is 1.5% of the total business and government portfolio

CIBC’s Mortgage Portfolio

Canadian Residential Mortgage Portfolio: $154BCanadian Condo Mortgage: $17.3B

Canadian Condo Developer Portfolio:$2.9B

Condo DevelopersCondo Mortgages

Insured

Uninsured

January 31, 2015

67%

33%

January 31, 2015

$2.9B

38%

62%

Drawn

Undrawn

Residential Mortgages(includes Condo)

Insured

Uninsured

January 31, 2015

68%

32%

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Contents

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Highlights

Canadian Economy


Appendix


Oil & Gas Exposure

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Oil & Gas Portfolio

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Downstream4%

Integrated11%

Midstream18%

O&G Services4%

Petroleum Distribution

5%

Exploration & Production

58%

Direct Exposure(1)

$16.7B of direct exposure(1); $6.8B drawn(1)

About 80% of direct exposure(1) is to investment grade names

$29.7B of indirect exposure to Alberta (or $12.8B excluding insured mortgages)

Loan-to-value (LTV) of uninsured mortgage portfolio in Alberta was 62%

Comments:

Indirect Exposure

(1) Based on business and government Advanced Internal Rating-Based (AIRB) exposures. See page 27 of the Q1/15 Supplementary Regulatory Capital Disclosure for further details.

(2) Comprises unsecured personal lending, credit cards and small business.

($MM)

Insured Uninsured

Alberta 16,986 6,576 2,815 3,359

Loan-to-value (LTV) 65% 62% 57% N/A

Mortgages HELOC Other(2)

Outstandings

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CIBC Contacts

Peter Levitt

EVP & Treasurer, Treasury

Email: [email protected]

Phone: +1 416-594-8487

Geoff Weiss

SVP, Investor Relations


Phone: +1 416-980-5093

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Kevin Glass

SEVP & Chief Financial Officer


Phone: +1 416-304-2424

Asia Non Deal Roadshow - cibc.com · 3 CIBC (1) Basel III all-in-basis. (2) Source: IMF, World...

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Transcript of Asia Non Deal Roadshow - cibc.com · 3 CIBC (1) Basel III all-in-basis. (2) Source: IMF, World...