Q4 2020 Canadian Imperial Bank of Commerce Earnings Call

Please standby your meeting is about to begin.

Good morning, and welcome to the <unk> quarterly financial results call. Please be advised on this call is being recorded.

I'd like to turn the meeting over to Jeff White Senior Vice President Investor Relations. Please go ahead Jeff.

Thank you and good morning.

Begin this morning's presentation with opening remarks from Victor Dodig, <unk>, President and Chief Executive Officer, Following Victor Raich promotion, our Chief Financial Officer will review our operating results.

By risk management update from Sean Bieber, our Chief risk Officer, Victor will close out the prepared remarks with a brief update on 2021.

We are joined in the room by Sea Ibcs business leaders, including Harry column, Lord The Tory Athanasios and John on tower as well as my Capitated, who is joined that's remotely from U.S. They will be available to take questions. Following the prepared remarks.

As noted on slide two of our Investor presentation. Our comments may contain forward looking statements, which involve assumptions and have inherent risks and uncertainties actual results may differ materially with that I will now turn the meeting over to Victor.

Thanks, Jeff and.

Good morning, Thanks for joining us and we hope you're all doing well too.

2020 was a year, where we experienced a once in a century health crisis that affected all aspects of our society.

At the same time it was a year of continued transformation for bank as we focused on helping make her clients ambitions a reality.

Our C.I.B.C. team acted with urgency and with purpose to support our clients one another and our communities on building a relationship oriented bank for modern world.

For the full year adjusted revenue of $18.7 billion on pre provision earnings of 88.2 billion were up over 2019 well.

Well expense growth was limited to just 2%.

Net of a higher provision for credit losses that was primarily pandemic related adjusted earnings were 4.4 billion or $9.69 per share.

Our capital remained strong with a C.J.C.G. one ratio of 12.1%.

Our investments in technology over the past several years to digitize and simplify our bank are allowing us to provide real time remote support to our clients at a time on physical distancing has become the norm.

These efforts are being recognized by our clients was our highest client experience scores on record and recognition as the top performing banking brand during the pandemic.

Well continue to convert this momentum into deeper client relationships going forward.

Now, let me turn to our business performance.

During the fourth quarter, we saw some improvement in the macroeconomic environment.

The resulting increase in consumer activity was reflected in our Canadian personal and business banking franchise with monthly improvement in card purchase volume throughout the quarter.

Plane applications have also recovered from earlier lows and are generally back to positive year over year growth.

We've invested in enhancing our product offerings on leveraging technology to capture this growth as the recovery takes hold.

Our innovations also being recognized as rewards, Canada recently named the C.I.B.C. dividend visa infinite card the top cash back card in Canada.

We also continue to see positive momentum in our mortgage business in the fourth quarter with year over year spot balance growth of 5% sequential growth of 2%.

To modernize and simplify the financial plenty experience for clients.

We just launched the IVC goal planner.

Coupled with expert advice the platform will play a key role in building comprehensive financial plans for our clients well leveraging data and insights to guide decision, making and track their progress digitally.

We expect personalized advice and technology platforms like C.I.B.C. gallbladder to create value both for our clients and for our shareholders over time.

Turning to North American commercial banking and wealth management loan growth continued to moderate as businesses maintained their conservative stance towards growth oriented financing given the uncertain economic outlook.

Deposits remain elevated in the fourth quarter as our clients focus continued to be on liquidity.

To support our commercial banking clients, we continue to invest in our cash management platform.

On a relationship management capability this along with our focus on growth markets will strengthen our franchise as the economy recovers. This.

Despite ongoing market volatility. We also saw continued robust net flows in our Canadian asset management, and North American private wealth businesses.

Following an exceptional third quarter for our capital markets business, we delivered a solid quarter supported by continued strength in trading activity and a more constructive debt underwriting market from a year ago.

Corporate banking commitments range strong, increasing 10% year over year, this quarter and surpassing fiscal 2019, 8% 8% growth rate.

During the quarter. We also continue to increase our focus on environmental social and governance matters to help create a more sustainable future.

Our commitment to our communities is stronger than ever so.

We couldn't gathered person for the annual Canadian Cancer Society CNBC run for the cure, we took the run virtual and her team raised over $2 million towards lifesaving breast cancer research.

We also took decisive actions to address systemic racism, including our recent partnership with the government of Canada to lunch Canada's first ever Black Entrepreneurship loan fund, which will help grow black led businesses.

Importantly, we also continue to foster a more sustainable economy hosting our first first virtual sustainability conference and the inaugural issuance of a U.S. $500 million five your green bond.

Financing, new and existing Green project assets and businesses that mitigate the risks and effects of climate change.

In addition, she I'd be she was named one of Canada's top 100 employers our ninth consecutive year, receiving that honor, reflecting the strength of our culture now.

Now with that let me turn the call over to Raj for a more detailed review of our financial results.

Thank you Victor and good morning, everyone.

Starting on slide eight this morning, we reported earnings of $1 billion and diluted earnings per share of $2.20 for the fourth quarter of 2020.

Excluding items of note, we delivered earnings of 1.3 billion or $2.79 per share.

Adjusted our OE improved to 13.5% for the quarter as our profitability continues to recover from the Q2 truck.

Pre provision earnings of 2 billion were down 3% from the prior year, reflecting the relative resilience of our diversified franchise in a challenging environment.

Revenues of 4.6 billion were down 2% year over year at balance growth across our businesses and solid trading revenues, partially offset the impact of lower client activity and interest rates due to the COVID-19 pandemic stay.

Strong expense management helped offset the pressure on revenue with adjusted expenses declining 2% from the prior year as efficiency improvements outpaced targeted investments aligned with our strategy for.

Provision for credit losses of 291 million were meaningfully lower from the prior year and prior quarter, Sean will speak to provisions in more detail in his remarks.

Turning to slide nine we maintain the strength of our balance sheet over this quarter.

Average LCR of 145% was relatively stable from the prior quarter and well above the 100% regulatory minimum.

Capital position continue to strength and ending the quarter with C on ratio of 12.1% or 11.9%, excluding the east yellow transitional benefit internal capital generation and a decreasing arguably ways were the primary drivers of capital build in the quarter.

Consistent with our previous guidance R.W.M. migration was a modest headwind to see two one in the quarter driven by negative migration or wholesale portfolios net of improvements in retail.

We remain very comfortable with our current capital outlook strong internal generation provides capacity to absorb further credit migration and organic deployment in support of our clients.

The balance of my presentation will refer to adjusted results, which exclude items of note.

Slide 10 reflects our personal and business banking results, where we continue to see positive trends as we revitalize the business.

Net income for the quarter was 635 million up 5% from last year helped by sequential improvement in revenue and pre provision earnings as well as lower provisions on credit losses.

Revenue was 2.1 billion improved 4% sequentially, but remained 4% below prior year due to pressure on both net interest income and fees as a result of the ongoing COVID-19, and <unk> expenses of 1.1 billion were comparable to both the prior year and the prior quarter.

Going forward, we expect disciplined expense growth to resume in this business as we balance efficiency improvements with targeted reinvestment to revitalize our consumer franchise net.

Net interest margin of 243 basis points for the quarter was down nine basis points from last year, mainly due to declines in interest rates and a change in mix.

Surgeons improved five basis points sequentially, primarily driven by the end of the interest rate relief, we provided to certain credit card clients and growth in deposits we.

We continue to expect moderate pressure on nims over the medium term as we absorb the full impact of recent changes in the interest rate environment.

Slide 11 shows the results of our Canadian commercial banking and wealth management business net income for the quarter was 341 million up 11% from a year ago, primarily due to a stable pre provision earnings and lower impairments.

Commercial banking revenue was down 1% from a year ago, primarily due to the impact of rates offset in part by strong deposit growth 23% low.

Loan growth continues to be muted during the quarter, but is anticipated to resume as the economic recovery takes hold.

Wealth management revenue was up 1% from the prior year, primarily driven by higher balance is in private banking and higher fee based assets in our full service brokerage business NIM was up four basis points year over year, but down two basis points sequentially driven largely by on favorable rate.

Non interest expenses reflect higher revenue linked expenses in wood gundy.

Turning to slide 12, U.S. commercial banking and wealth management results reflect continued growth marking another record quarter for revenue and pre provision earnings and local currency net.

Net income of 144 million was down 24% from the prior year driven entirely by higher provision for credit losses.

Revenues were up 4% and strong growth in client balances and higher asset management fees helped offset lower margins and lower transactional loans.

Despite moderating in recent quarters average loans grew 13% from a year ago, while deposit growth of 33% continued to outpace loans.

In our wealth business Solitaire U M growth of 10% benefited from both client flows and market appreciation net.

Net interest margin was 277 basis points in this business up one basis point sequentially and down 22 basis points from a year ago, driven by the continued decline in effective LIBOR over the year and the impact of lower yielding triple b loans, excluding the impact of Pvp, we anticipate margins to remain.

It will be stable as we continue to manage deposit pricing and optimize margin.

Non interest expenses were down 4%, reflecting the impact of our efficiency initiatives and a reduction in traveling on business development expenses.

Slide 13 covers capital markets, where we delivered another solid quarter net income of 267 million was up 16% from a year ago, driven by higher revenues and a lower provision for credit losses pre provision earnings increased 15% largely as a result of higher revenue and strong expense discipline.

Revenues of 792 million were up 7% from a year ago helped by growth across most global markets businesses corporate banking and debt issuance activity. These were partially offset by reduced market activity in equity issuance and advisory.

Non interest expenses were largely in line with a year ago as investments to grow the business were offset by efficiency initiatives.

Slide 14 reflects the results of the corporate another business unit, where our reported results were impacted by the items of note discussed in the appendix of our presentation on an adjusted basis net loss of 170 $707 million in the quarter compared to a net loss of 20 million in the same quarter last year due to lower revenues and a higher.

Net of provisions, partially offset by strong expense management.

The COVID-19 pandemic continues to pressure revenues in this segment driven by the impact of lower rates on client activity in our international banking business and the cost of elevated liquidity reserves and Treasury. We expect these factors to moderate when the recovery period takes hold.

Finally, slide 15 shows our fiscal 2020 results, which reflect the resilience of our business in the face of significant disruption as well as the impact of ongoing transformation within a day.

In 2020, we delivered adjusted net income of 4.4 billion and yes of $9.69 down 19% from a year ago driven entirely by the significant increase in our price provisions against performing loans.

Record pre provision earnings of 8.2 billion were in line with fiscal 2019, despite the challenging environment driven by modest revenue growth and strong expense management throughout the year. In addition to supporting this year solid performance. The progress made on transforming our business this year positions us well to grow our franchise.

As the recovery period unfolds I will now turn the call over to Sean.

Thank you very much and good morning.

While the start of the fourth quarter saw the continued reopening of economies. Following the restrictive measures implemented at the onset of depends on mix by the end of the quarter. We were starting to see a resurgence in case accounts. Since then we've had a mix of both challenging and positive developments with renewed restrictions occurring in many of the markets. We serve while at the same time promising.

The news regarding vaccine development has been announced we've.

We've continued to evolve our analysis from prior quarters, and exercise judgement, where appropriate in determining our provision for credit losses for performing loans.

Our overall provisions this quarter were lower than the third quarter. At this time, we're not seeing broad based credit weakness on the portfolio and to date performance has been better than had been anticipated that started the pandemic as our clients both business and personal have continued to exhibit prudent financial behavior and given the benefit of ongoing government.

Support.

Where we have seen issues they have arisen in various unrelated sectors and in many cases, we're experiencing issues before the pandemic.

As forecasted we did see some additional migration from stage to stage three allowances, which we expect will be a continuing trend over the coming quarters as net credit losses are expected to peak in the middle of 2021.

Turning to slide 17 provision for credit losses was 291 million in Q4 down from $525 million in the prior quarter with lower provisions in both impaired and performing loans from.

Revision on impaired loans of 178 million was down 122 million from last quarter, largely due to lower insolvencies and write offs experienced in our Canadian retail portfolios similar.

Similar to the prior quarter the decrease in retail insolvencies was in line with the industry trends as a result of lower consumer filings.

The lower level of write offs resulted from a combination of factors, including government support as well as the impact of the assistance offered to clients through our bank for leap programs. We expect we expect this trend will reverse over the next few quarters as the vast majority of deferrals have ended and returned to normal repayment status.

On the commercial side, we experienced lower provisions in our Canadian commercial and wealth and capital markets businesses offset by an increase in U.S. commercial.

Provision on performing loans was 113 million largely due to a number of model parameter updates along with some other moving parts that will speak to on the next slide.

Our credit portfolios have generally performed in line with our expectations. This quarter that said, we do anticipate additional negative credit risk migration across the portfolio absence of material improvement in actual economic conditions over the coming quarters relative to where its current outlook. We believe we've been prudent in recognizing performing allowances to reflect that outlook.

Moving to slide 18 allowance for credit losses grew by 3% to 3.7 billion this quarter and ended the year up 79% or 1.6 billion since Q1.

Our performing provision was 113 million in Q4, there are a few elements within this number which we broken out in the lower left corner of the slide.

The largest component was an impact of 128 million for several parameter updates on our USIO model, which we do periodically.

Partially offsetting this we had a net $97 million of allowances move from performing to impaired which is what we would expect to see a certain loans tip from performing to impaired status, reflecting the ongoing challenges will depend on me.

The last piece is 82 million of growth in provisions related to a continuation of our normal course activity, including the impact of FX wise, which were small help migration within our portfolios as we continue our risk rating activity and other portfolio movements.

Overall, the loan losses, this quarter were somewhat better than expected for both our retail and business government portfolios. So as we've discussed before we believe the relief efforts have had a significant impact on these results, particularly in the cards portfolio and delayed actual losses to future quarters.

Turning to slide 19, we provided details of our allowances coverage by line of business.

Allowance coverage ratio increased from 86 basis points in Q3 to 89 basis points in the current quarter.

The increase was mainly driven by higher provisions recognized in U.S. commercial banking and CNBC first Caribbean.

We feel comfortable with the current level of coverage and remain focused on monitoring the credit quality of our portfolios for potential future adjustments.

On slide 20, we show our credit portfolio mix, which remains well diversified and consistent with last quarter.

Our total loan balances were 416 billion and the overall credit quality of our portfolio continues to remain high.

Two thirds of our outstanding loans are to consumers the majority of which are mortgages with our uninsured mortgages, having an average loan to value of 52%.

Balance of our portfolio is in business and government lending with an average risk rating for the portfolio equivalent to a triple b.

This quarter. We've included in the appendix the additional details we previously previously discussed on specifically affected industries.

Performance of those portfolios is inline with our prior outlook and expectations at this point.

Slide 21 provides the status of our client accommodations and credit quality details by segment most.

Most of the deferrals of now run their course repay.

Repayments are within expectations and we believe our allowance coverage reflects the current risk in the portfolio.

Slide 22 provides an overview of our gross impaired loans.

Isn't pure dollars were down mainly driven by consumer loans.

Reduction in in impaired consumer loans was principally due to payment deferrals and collection activities in the quarter.

Well new formations also trended lower we do expect this to remain volatile in the near term.

Slide 23 shows the net write offs and 90 plus day delinquency rates of our Canadian consumer portfolios.

In the current quarter, we had lower insolvencies and flow write offs as a result of government support programs and big relief offerings.

The late stage delinquencies of residential mortgages are down as we work with our clients who were not part of the deferral program to bring their current accounts current.

Well personal lending delinquencies remained relatively flat quarter over quarter credit card delinquencies have increased.

We proactively enabled payment deferrals for credit card clients, who were already showing vulnerabilities and payment difficulties at the onset of the pandemic.

The increase in delinquencies is driven by a portion of these clients who have now exited the bank relief program and continue to have financial difficulties. However, the performance overall of the credit card balances that have now exited deferrals is in line with our expectations.

In closing the economic outlook remains uncertain as we have seen an increase of new covert cases, while also receiving encouraging news regarding the development of Cobiz vaccines.

We will continue to monitor the changes in the macro environment and their impacts on our portfolio's overall, we remain comfortable with the quality of our portfolios and are well positioned to support our clients on managing through the crisis provide.

Provisions were lower this quarter. However, we do expect to see impaired provisions trend higher and peak in the middle of 2021.

As that occurs and as we sought to some degree in the fourth quarter, we would expect to see more of our performing allowance transfer from stage two to stage three and provided a partial offset to losses in future periods I will now turn the call back to Victor.

Thanks on before we take questions I'd like to share our thoughts on CNBC strategic focus for 2021 and beyond.

Our first priority is to reinvigorate our Canadian consumer franchise.

And this includes gaining share on our core personal and small business product access.

Accelerating growth on our newly created direct financial services business.

And improving asset management net flows while delivering good investment performance for our clients.

Weve made good progress in each of these areas throughout 2020, but theres more upside to capture in the year and years ahead.

Serving the Canadian consumers, an important part of what we do.

Efforts will deliver enhanced value to our clients and growth to our bank as we go forward.

Our second priority is to continue its continuing our transformation journey with a determined focus on vending our cost base and reinvesting a substantial portion of savings into high return projects, particularly as it relates to process simplification and technology enhancements.

And our third priority is to build on the advantages, where we're performing well, including commercial banking and private wealth on both sides of the border and on our capital markets business.

Each of these businesses have plans to continue to grow and are also implementing new initiatives to enhance capabilities in fast growing market segments like the innovation economy and sustainable finance.

With that let me now provide some color on our performance expectations for 2021 in each of our strategic business units.

Our Canadian personal banking franchise will continue to build off our recent improvements and work to get our business back to market levels of growth and doing so consistently.

Assuming pandemic related constraints begin to ease in the latter half from calendar 21, we expect to see a pick up in consumer activity.

In commercial banking, while loan growth is expected to slow from historical levels. We expect we expect to return to growth oriented financing as the economic recovery takes hold.

In wealth management, we expect to see an uplift aligned to the economic recovery as investors look for alternatives to low rates on savings deposits.

Strategic hires on or private wealth businesses, along with enhanced product on product offerings will enable us to grow our net flows and our assets under management.

Capital markets equity issuance on M&A activity could pick up this corporate consolidations increase in the aftermath of the pandemic.

Our strong connectivity across our CNBC franchise will continue to provide opportunities and deliver enhanced capital markets capabilities for our clients in Canada and the United States.

Well the reopening of the economy provided some cautious optimism in the fourth quarter. The recent increase in infection rates as many municipalities and posing greater restrictions.

And that will continue to have an adverse impact on the near term economic outlook on.

Economists forecast assumes that mass vaccinations or effective treatments will be underway in the middle of 2021, allowing for stronger global recovery in the latter half of the calendar year.

Well. This is our best forecast, we don't know how vaccine access and efficacy will play out. So we remain vigilant and are planning for a range of scenarios to allow us to move with agility as the current situation unfolds.

I want you to know this we have a strong management team to lead the continued transformation of our bank as our investments helped improve efficiency and to capture growth Raj all well capitalized well provisioned and we'll continue to sensibly adapt to the changing macroeconomic environment and with that let me turn it over to the operator for questions.

Thank you.

If you have a question. Please press star one on your telephone keypad.

And your first question is from Ebrahim Poonawala from Bank of America Securities. Please go.

Go ahead.

Good morning.

Yes, so a couple of follow up questions regarding your strategic priorities Victor.

From the negating the Canadian franchise.

On stop loss in terms of your outlook for mortgage growth. If we do have a decent on mortgage market next year do you think.

The business is at a point, where we could see Pierre like growth and share.

Secondly, what does it mean in terms of when you talk about tight expense management investing enhancing the technology platform. What should we expect in terms of the efficiency out low or just absolute expense growth as we think about next year.

Good morning, Ebrahim. Thanks for the question. So let me just Oh I'll provide a couple of comments something on and off the Laura on the mortgage growth more specifically and to harass on the expense growth management going forward. So you'll recall that we said a year ago that our goal is to get our mortgage growth in particular, but our Canadian consumer franchise.

It's performing consistently at the very least in line with market share.

If you look at our numbers quarter over quarter sequentially over the course of the year. We are achieving that target last year. We were negative. This year were quite positive in terms of spot balances. We expect this to continue we expect to keep pace with the housing market as the housing market evolves and we certainly expect to keep pace with their competitors in terms of our invest.

Segment in our mobile on mortgage advisors, and our product offerings with.

With respect to expenses, we're trying to keep them into low single digits to reflect economic reality.

If things recover we'll roll with that economy and maintain our capture the upside. So why don't I do this lora can provide more detail on the progress that she's making leading the Canadian personal bank and then harassed can provide you a little more color commentary on expense management.

Alright, well I think you answered that very well so I don't know if I have anything to add other than.

Again, a lot of work has been done to ensure that we can deliver more consistent and sustainable performance and I think that's what we're starting to see in mortgages in particular and as you mentioned.

Good news, we reverse the trend that we were on and we're now starting to close the gap with the competition.

So feeling very good about sort of the trajectory that we're on and maybe over to harass on expenses.

Sure. Thanks, Laura and I think Nick Victor cover the Punch line Ebrahim and good morning, and so.

We continue to be focused on expense management, and we think it's an important part of the transformation of our bank we prove.

Proven that we can deliver efficiency. If you look at this quarter down almost 2% on a year over year basis for the full year, we contain expenses to 2% and in a year, where we had tough environment on revenue, we contained operating leverage to modestly negative and so we're focused on pre provision earnings and we're focused on operating leverage.

Yes, that's the way, we sort of guide our expense.

Targets, if you will and so going into next year, we're trying to get at pre provision earnings to a growth trajectory, we're trying to get to positive operating leverage as soon as possible and what is a tough environment right. So to do all of that we're going to have to pull the levers and.

We think of expenses and a few buckets on the first bucket as revenue linked expenses.

And number of those will be improving as performance improves but that from an operating leverage perspective on a pre provision earnings perspective. It doesn't work against our objective what we're really focused on is the other two buckets, which is our investment to against the strategy on to transform the business and discretionary expenses.

So between those two were pulling the lever so that discretionary is eliminated where it's not value, creating and we're investing in the right places and net net of those two well actually manage the outcome to get the pre provision earnings and operating leverage where we want to and its victory said in the current environment, we think that means that low single digit.

Recent restructuring we did this year, that's largely completed it'll give us that full year benefit of 250, we talked about and we telegraphed that the time, that's going to allow us to stay at that low single digit level. We think we have opportunities to be at that level, while it even accelerating investments by doing even more on efficiency initiatives as we go forward into anyway.

Okay. Thank you very much.

Thank you. The next question is from.

John Aiken from Barclays. Please go ahead.

Ross just a quick follow on in terms of the efficiency discussion.

Did that you still got about $200 million left from the restructuring charge taken this year, how much do you think that.

On that can benefit your your expense plans in 2021.

Sure. Thank you Doug and on that.

It's a bit of accounting so as we had mentioned on the last call we anticipated to largely complete that this fiscal year and we have on not so it is mostly complete from a taking action perspective, and so the benefits will start accruing from an accounting perspective on what happens is when.

When when folks elect deferred payments over time than the accounting reserve will come down over time as those payments are made to individuals and so you're going to see that wind down slowly over time, but as a benefit in the earnings will already be realized from fiscal year 2021.

Thanks, and if I can add one quick one on a noted the.

First Caribbean.

From Oh available for sale in terms of the accounting treatment can you update us in terms of where the deal on the transaction sits at this point yeah.

Yeah, Let me let me just provide some perspective on that John and then Roger will get into some of the technicalities just to remind everyone. We have engaged buyer with a genuine interest in the Caribbean banking sector on a proven track record and banking.

Our business there like any other well run banking platform is adjusting sensibly to the economic reality of the pandemic.

And it is a good business is going to recover as the economy recovers are our focus now is to continue to pursue the regulatory approval process and that's been kept complicated that by the covert pandemic as well when we have an important development on that front, we will advise our investors. Accordingly, this quarter was an accounting quarter and I just want to pass it on.

On the rights for some of the true technicalities around that share. Thanks, Victor and you know we we.

You're going to have time as you do John to go through the Mdna and the notes to our statements in the annual report and you'll see all of this reported there so not much to add to whats in the disclosures, but for the benefit of folks on the call.

Really the accounting classification of the held for sale and the assessment of recoverable value on goodwill both of those are governed by the relevant accounting guidance on dry FRS and this was really triggered by US following the guidance. So really delineating the accounting here from the deal as a as Victor said, so the changes, particularly with the accounting and the.

Corridor were triggered by the increased uncertainty surrounding the deal as we've described on the disclosures that we've spoken about before complexity of the regulatory environment Covidien related complexities and so forth and so that increased uncertainty given the technical requirements here when we consider the circumstances and the guidance we determined it was appropriate.

Discontinue the held for sale accounting this quarter.

And to revert to using an estimated value based on current market circumstances for the purposes of assessing the goodwill versus say using the terms of the actual proposed deal with GMB and so that's what really drove that but as Victor said, we continue to see the transaction.

Sure I hopefully the rest of your questions won't be leading into the we've done a county or re queue.

Thank you. The next question is from Gabriel Dechaine from National Bank Financial. Please go ahead.

Are there any other implications of other accounting change other than like the valuation on the goodwill, which I assume that on the really a quarter or something like that.

No there there wouldn't be a decade. So we had a as you recall we had added disclosure specific to held for sale classification. There was a summary balance sheet and so forth, but I'd put in and so that's really the only changes in the disclosures in terms of how we were accounting for the business. We had continued to consolidate the business.

In the earnings coming in through the corporate and other segments. So that will continue.

Okay. My real question is on the.

Mortgage growth strategy and I guess, the overall gross revenue from the Canadian retail business.

Victor you mentioned the word.

Market level growth from consistent growth and Lora you reiterated that.

What are you doing differently this time, because a few years ago.

A bit of a roller coaster a move around on the mortgage growth rates or is really high at one point the really low low.

What do you what are you doing differently to make sure it's more consistent than.

Building better relationships overall.

Good morning, Gabriel So I'm happy to take that one I guess I would you know I think it's worth mentioning that you have the new management team and across the board, but overseeing mortgages in particular and we've given full end to end accountability for client journey.

This management team, which I believe will make a difference and I guess two things. So on the acquisition I tell you that we're very focused on the quality of our growth and the anchoring of our new clients and so that will certainly help us on a go forward basis.

And then secondly, you might recall on the last.

Quarter, I spoke about retention and well I tell you that we haven't been as successful as I would have liked in terms of retaining some of our past vintage clients when they came up for renewal.

I believe we've laid the groundwork to ensure that we get not just better retention on a go forward basis, the better acquisition.

We've worked to increase our level end points the contacts I on the different channels Weve had weve eliminate friction points et cetera. So all of that to say that I expect we're going to see a improvements on a go forward basis in mortgages and as Victor pointed out a this is all about lane.

Groundwork so that we can deliver you more consistent and sustainable performance.

If I look at Investor day material.

If I can just add to laura's comments because their business is heading in the right direction and it's all consistent with the long term strategy that we've laid out when we say building relationship oriented bank for the modern World you got to decouple not just the numbers that you are seeing in the business, but also some of the numbers that we don't accentuated as much like our client experience scores.

Our client experience scores at sea IVC are the highest that they've been in two decades that has been a steady climb up it is a reflection of all the things that we're doing to improve process to improve our product offerings, which are way more competitive than day than they were before and super competitive relative to our peer group.

And that's why we're starting to win business on our checking accounts front you Esix thousand dollars on the bankruptcy IVC you pay no fees, we have alternatives to our direct financial services. It simply if you have less you can pay no fees through our direct Nick when it comes to our mutual fund offer we launched our smart portfolios, which are more sharply price than any other mountain multi asset.

Fully offered by our peer group again, you see a growth in the managed money portfolio. We've launched the IVC goal planner to build deeper relationships with our clients all of this stitched together.

With Loris leadership from the team's leadership around continuing that trajectory will deliver that against that performance GAAP that we have and it'll close and overtime on the market will continue to see us as the banks that we are a new bank a relationship oriented bank and one that is ready to take on the future.

Thank you.

Thank you.

The next question is from many Grauman from Scotia Bank. Please go ahead.

Hi, Good morning, just wanted to ask about the potential for reserve releases through this cycle and to.

Specifically, what would be reasonable timing and then also.

Where would it be more concentrated consumer versus the commercial loan book.

Good morning, many it's Sean so thanks for the question, we expect a as I mentioned in my prepared remarks that our impaired losses will increase going forward and peak sometime mid next year.

So obviously, an uncertain environment, but based on our current outlook, we expect to average somewhere in the low to mid 40 basis points for impaired losses as those impairments come through we would expect to see the performing allowance I get pulled through as a function of that and what's contributing to that impaired loss.

The ratio you know you would've seen this quarter, we had a a particularly low level of impairments. This quarter that was driven by a combination of.

Strong credit performance, but also some of the deferral activity that we have had and we expect to see that deferral activity, particularly in the consumer side roll through so as a result, we will we'll see that those performing allowance is sort of come through and offset some of those impaired losses in fiscal 21.

On.

In terms of sort of how that from the rest of the performing allowance behaves relative to those loans that wont ever go impaired or statistically.

On an expected to go impaired that's going to be a function of a bunch of different moving pieces credit performance outlook and so that'll be over a six day quarter period, we expect to see most of that build that we that we saw over the course of fiscal 21.

We were up 79% with our allowances you'd see that sort of pull through but that's going to be like there may be timing mismatches between those releases and which you see on the impaired side.

Yes.

Maybe switching gears a little bit just on a.

Pre tax pre provision basis.

Would you say do you have confidence that you can get to positive PT pp gross sales in a in fiscal 2021.

Oh, yeah. Many that's our goal that's our goal that's.

Winning market share and bending the cost curve done right with some economic tailwinds, we'd expect to start heading into positive territory.

And can you give us any more in terms of the detailed like how positive and more.

More specifically what are the key drivers there is it really about revenue.

More than an expensive yeah. So many made maybe maybe I'll jump in and give a give a little bit more color and obviously I'll caveat that with a it's a tough environment to predict as we all know that but we'll based this on our current like our current expectation so and I think as we as we look at the revenue this year for the flow.

All year, given the tough environment, we we had just over 1% growth on on on the revenue side and that modestly negative operating leverage I spoke about which drove the decrease in pre provision earnings. So that's what we're trying to revert here and we're going to look at both sides of that revenue and expense and we alluded a bit to expenses earlier, but.

You know I think the revenue side will be part of the story. So we are seeing some good momentum as we talked about in a in retail business as well as other businesses and so from an Eni perspective, we're going to continue have pressure from low interest rates, but the balance growth with client business that we're doing and all of our businesses and there's good momentum.

And we think as we get into that latter part of the year last year. The lateral next year in the latter half.

Once the recovery takes hold we think those will accelerate and so we think an eye towards actively with such with sorry shifting from the sea perspective. We are also seeing some good momentum there we are seeing the recoveries on the card side. Some of the foreign exchange on that is still lagging, but you know all of those things as well later next year will come and well managed.

From inside and investment fees, we've seen good momentum as we've talked about and we expect if markets day cooperative that.

Continues as well and then on the capital market side, we've seen some good strength on trading obviously, a tough year as a comp, but you know the team's going to be working very hard to produce growth on top of a on top of the year. This year from a revenue perspective, so we think that bodes well for revenue relative to where we were this year, hoping to bring revenues and at a higher pace than.

This year and then as I said, we're trying to contain the expenses to that low single digits and as much contained as possible. So between those two as we get later into next year. How do we think we can turn this around on the PT and and eventually operating leverage as well.

Thank you.

Thank you. The next question is from Scott Chan from Canaccord Genuity. Please go ahead.

Good morning, Victor in your opening remarks, you talked about robust net flows on on both sides of the border and.

Theres a lot of net cash on the sidelines at low rates.

We invested industry wide, but is there anything you can elaborate on that a kind of specific the C.I.B.C. and is it directed towards any certain client segment like retail private wealth or institutional yeah. Good morning, Scott. Thank you for that question I'd say, there's a couple of things that are.

Driving our net flows on both sides of the border one is investment performance our investment performance in our Canadian asset management business.

And on our U.S. managed asset management platform.

As in the top half and top quartile of performance consistently good across important asset classes to our clients.

I'd say the second thing is we've been really working hard, particularly on the Canadian market, where our footprint is larger to ensure that our product offering is competitive relative to our peer group and is relevant to our clients and that's what's driving our growth we not on something called our smart portfolios last year with smart beta embedded in them and that is really really getting good.

Traction in our Canadian personal banking franchise, and then I'd say the third piece is on the higher net worth segment.

The strategy of putting together commercial banking and wealth management, what were seeing the monetization of assets from our clients and our commercial banking business from the sale businesses to private equity or to strategic buyers, we're capturing those assets into our private wealth business and the U.S. and our private wealth business in Canada.

Notably in the U.S. Weve gone from zero to over 70 billion in a way over the last six years and in the fall of this year Barron's ranked as the number two registered investment advisor in the United States, such CBC private wealth management, something that we don't focus on enough. So again three things investment performance.

Products that are relevant to our clients and the referral activity within our bank is quite robust and we expect that to continue.

Thank you you talked about the commercial and wealth management high connection maybe Laura maybe you can kind of talk about the strategy on the retail side and on the wealth management and how that to me I make on side.

Sure Scott I'll cover a sort of some of the retail and maybe on the wealth side to side John wanted to add in.

His views I think it's either from Victor a lot of the work that we've done I'd say on retail is really to start with low.

On that groundwork to deliver again consistent sustainable earnings.

And so a lot of what we've done we've reprioritized our investments so into better digital capabilities. So really on the starting with the sales and servicing capabilities and then we're really focused on increasing our sales force productivity you know Victor referenced.

Earlier on before the Q and eight you talked about that financial planning tool that we have so we think that's going to allow us to elevate our advice offering because we have our clients income in either to banking centers or they can just sessions with us virtually.

We think that's actually going to help move the dial. So we're really focused on on I would say those segments, where we see that we can grow and I'm going to say even regained our natural market share.

So we've done all the prioritization on I'd say 2021 is really about execution. So what we've invested in has to deliver results.

Being granular being targeted and I think you're going to see and we're starting to see from a better client experience and ultimately better result, as we go forward for our shareholders and maybe I'll stop there and see if John wants to add in on the wealth side. So most of 'em most of what needs to be said, it's been said the one thing.

I would add is our confidence level is high and we are adding people in every channel and the wealth side to keep up with the flows everything we talk about is working we need more people to handle the volume.

Thank you very much.

Thank you. The next question is from Doug Young from day Chardan capital markets. Please go ahead.

Hi, Good morning, just thinking about the all bank a bank.

And you did mention the impact from higher liquidity in your comments as well wondering how we should think about this going into fiscal 21. So maybe we can think about like what was the impact in fiscal 21 from the additional liquidity on your balance sheet. How do you think that on falls.

Yes through fiscal 21, and how does that roll through your on your all day.

Just hoping to get a little bit more color on that.

Sure happy to elaborate on that so so yes, you look at the all bank NIM I think it's been a story of the degradation. We saw on through the year and then now stabilizing right. So this quarter all day NIM was down only one basis points and you know really the drivers behind that are.

Some of the benefits that we saw in the retail on them with the recovery there offset by small pressure from changes in mix towards lower yielding parts of the balance sheet. So so that part is abating and that's related to a to your comments with respect to the excess liquidity. So if I look at that piece, particularly.

It has been something that's built up since the middle of the year on we've spoken about it quite a bit and it's really because of that growth and deposits versus loans. We're pleased to have been growing deposits very robustly with our clients and when you look at our data rights over $80 billion over the year of growth in deposits versus you know.

Just less than $20 million on loans, so that delta has added up to the liquidity on the balance sheet, but you know that has stabilized in terms of the cost of that it's it's it's been sort of and it varies quarter over quarter, but it's been in that teens territory in terms of basis points impact on NIM, but you know I should point out it's not a big negative.

And <unk>, it's really the balance so that you know if you do the math just on the numbers I gave you. It would say 60, but it's more like a $50 billion balance increases the denominator that's driving it so when that goes away that can recover pretty quickly. So when we get into next year. We do think that liquidity is going to get deployed we do think that loan growth is going to.

Accelerate and we feel confident about that you've heard from Victor and the businesses just momentarily moments ago. So as that happens, we think that that will start coming down and that will help offset some of that pressure that we're still going to have from rates and so net net I think those will help us moderates is decreasing.

From here.

And it's not built into.

Great job kind of that you think revenue and expenses flow.

Next year, that's built into your expectations or is it not.

No absolutely. It is a it is so what we would have built on expectations is stable names in the U.S. as we've talked about we feel pretty good about that a small gradual decline in retail as we absorb the impact of lower rates and a normalization of the excess liquidity on those.

Perfect and then just second there was a charge related to the consolidation of the real estate portfolio. Just hoping you can on pack what size or what that is.

Cash are happy to do that and maybe Victor can start with the overall square project because it is related to our consolidation and square and then I'll give you a bit more on the on the accounting.

Yeah. Thanks again for that question again, I take us back to you know what are we trying to achieve over the long term, we're playing the long game here well before the pandemic, we had a vision to consolidate our head office footprint and the 23 locations that we have scattered across the greater Toronto area, where a significant amount of our head office team is located.

Into a modern purpose built headquarters and it's called CBC square it exemplifies the future of work on what I mean by that is flexible agile space collaborative space modern space. It reinforces employee wellness and convenience and were happy to highlight more of that into the future as we start moving in there and its equipped with.

Most advanced ventilation systems and technology.

And now with the pandemic, it's allowed us to accelerate our consolidation plan, which is the result of some of the accounting that we undertook this quarter.

As we move into a more normal environment.

I've got three points to highlight here one is our team is going to return to the office, including C.I.B. square see square on into our other locations across Canada, and the U.S. well, we're going to do this with safety in mind health in mind on when you're doing the very staged fashion, because keeping our team healthy and well and engaged is the most important thing to us some of our team members.

I'm going to work work remotely more permanently we've had great success with their contact center team working from home they're engaged they are productive there speaking to our clients and making their experience much better.

And the other thing I'll say is this I think it's important to recognize that many of our C.I.B.C. team members have continued to serve our clients in the workplace throughout the pandemic that includes in our banking centers and on a currency operations or technology operations, and it's really been a team effort I mean, many of US have worked remotely some of us have had to go.

On to the workplace, each and every day I admire them for their courage and what we've done is try to keep them healthy and safe and well protected well engaged with our clients now the accounting of what happens with the real estate touch on me and it off to you nothing just want you to talk about accounting, but it's part of the question that was on us.

Sure. Thank you. Thank you Victor.

And yeah, so as Victor said and it was important context, but this isn't something we've done in isolation. It was always part of the plan and we are not taking on more real estate, we are moving into square, taking on and square footage and we were always going to give up square footage, but well, we've always got our eye on optimizing shareholder value and creating value from shareholders. So indeed.

Current circumstance, we sort of looked at how we can optimize the exits that we were already going to do some of the spaces that is sitting vacant at this point in time with teams working from home, there's cleaning expenses utilities and so forth. So there really was a positive payback for our shareholders. When we looked at it to exiting some of the space earlier, and then on just where it gets into the accounts.

On the technicals are the accounting since we adopted I F. R. S 16, and put the right of use assets on the balance sheet is that when you vacate space at that point in time, you've got to take the charge and so this was a quarter, where we vacated a number of those spaces as people work from home until we get into squares mix, you mentioned and so that was the one.

On your and $14 million charge related to to the right of use assets plus a number of other things related to that with respect to the fixed assets on those properties properties and so forth, but as I said there is that there is a positive payback for our shareholders on that and that's why we took the decision when we did.

And just sorry the.

What is the positive payback on citizenship determination of leases essentially.

Some share.

So it is a it is exit of the existing leases a there is positive payback from a few things one a there is a sublease recovery assumption weve been very modest with that sublease recovery assumption. That's net it off that 114, we understand its a tough environment, but there are some some some lease.

It is here with value a the second one is related to some of those other expenses related to the properties I spoke about and then the third one is really the the savings on the expenses on the on the future rent, but that you know to be fair that that offset to some extent with the additional new cost of moving into square and that was it.

Expenses.

Great. Thank you very much.

Thank you the net.

Next question is from them on per stock from Cormark Securities. Please go ahead.

Thanks. My question is for shown on chart I just want to take your answer on the PCL outlook a step further just because it's important to my estimates I think you said to the impaired loss ratio would be in the low to mid 40 basis point range, but that's going to be offset by some performing releases. So my question is how should we think about the total PCL ratio for 2021.

Yeah. Thanks for the question <unk>, the the behavior of the performing a provision that is.

It's going to be.

Variable through the year I mean as I as I said on the earlier remarks, we built a significant amount of allowance coming into the pandemic over the course of a Q2 and Q3 in particular, a little bit this quarter as well and we anticipate that that would kind of run through that that incremental amount holding all else constant growth would run through.

True the piano over call it a six to eight quarter period.

But how that is going to play out you know quarter to quarter is going to vary based on a whole bunch of factors. So I you know I'm I'm reluctant to put a particular number around it I'd say there is a there's an amount of that performed provision that is going to move across.

As those impaired loans move because theres, a certain amount of that performing allowance that we'd be booked against those particular loans, but for the balance of the portfolio. That's going to be you know as we've talked about the.

Macroeconomic factors.

Credit behavior over the course of time and so I think.

That's kind of the guidance that we could we can provide at this point.

And the other thing I would say is over that six day quarter period.

It's likely a little bit more front end loaded than back then.

You mean, the rip the the release of the performance more Frontend loaded just on the basis of the way. The allowance is billed and then you know as the economic things play out the way there. So the way they're a they are forecasted to at least at this point.

You'd see those macroeconomic facts variables improve and so you'd see some level of performing allowance come through.

Over the course of time generally it will be probably more leading indicator, but so I would say quite a bit of uncertainty.

It will be more front end loaded we would expect.

Got you and then at the end of that six to eight quarter period should we expect the hcl to revert back to historical levels or would it remain elevated from where you're at right now.

<unk> will take into account from actually all of the new information that we get is having gone through this this pandemic there will be presumably portfolio growth at the same time, so hard to say, where it'll it'll land at the at the end, but if you think about sort of the arc of the whole exercise when the pandemic hit we took.

Went through the portfolios generated or recognized allowances when you get to the other side of all of this where will those provisions be you'd expect to see you know.

Back to some level of normalcy, but we'll be taking into account all of the the information that we that we gain through this whole experience a true.

One former allowances at the end of it.

Okay, Thanks, and if I could squeeze another one in there.

So last quarter you provided some disclosure on what delinquency rates would be in the Canadian consumer portfolio, excluding the impact of deferrals. It looks like residential mortgages and personal lending is trending better than expected because it's a bit worse can you talk about the trends moving forward Lamar it's Jeff here I I kinda can I ask you to reach you.

Got a number of people in line and we're going to run over yeah sure share of it everybody what will catch up after or two facts no problem. Thanks.

Thank you. The next question is from Mario Mendonca from TD Securities. Please go ahead.

Morning, Sean if you could go back to your.

Back to you you referred to getting paired share impaired approaching 40 to 45 points.

Into 2021, now impaired loan losses were around 17 basis points. This quarter from doing it correctly that would imply a two to two and a half times increase in the impairments in 2021 person is that really what what you're guiding us to on a two to two and a half times increase from this quarter and secondly, if so.

So what line items are what loans in particular is it credit cards, your you'd be sensitive to or commercial.

Could help me.

Yes, so as I mentioned, the this quarter the impaired losses were particularly low and impacted pretty significantly in the credit card side from the deferrals. So we would expect so in answer to your question, Yes, we're talking about a vote.

Low to mid Fortys for impaired some of that is going to be catching up for a credit card in particular deferrals that we'll be running through so I think on the consumer side, you'll see it's a less so on the on the on the business and government side, that's as you know historically pretty lumpy.

We do expect it to come through over the course of 21, but but in terms of the particular outperformance this quarter relative to what we anticipate and with our what our allowances that we have built would be reflective of it'll be in part the growth the consumer side, and then the business and government which will.

Be lumpy in episodic over the course of the year is still our expectation.

Thank you.

Thank you.

The next question some Darko Mihelic from RBC capital markets. Please go ahead.

Hi, Thank you a question for Laura Dottori, Laura as we do a postmortem on on 2020.

Done some preliminary math, but I'm, hoping you've done this not to and you can provide some sort of guidance on it I'm interested in understanding the revenue impact on credit cards, So and I don't really need it line by line I'm just thinking about the drop in net interest income.

The release you provided.

On the drop in and balances the drop in revolve rates you name. It fees. So if we look at 2020 versus 2019, how much did that drop.

And how much do you think you can you can recoup in a in a recovery and maybe you can speak to the results. So far in November what does credit card.

Usage look like in November we bouncing back our balance is back up are people using their cards again are they spending on Christmas. So any kind of thought process. There on just helping me pencil in a bit of revenue a pickup from people going back into credit cards.

Okay. Thanks, Darko that sounded more like a statement than a question, but let me see if I can provide a little bit of color I guess I'd start just by saying a lot of sort of the performance we're going to see on a go forward basis will matter like in terms of economic activity on consumer activity.

I would tell you that in the month of November we have seen increased activity.

We're expecting from the NII perspective, and maybe this is a bit broader than cars, but as you know cards has higher margins so tends to drive more on the business.

We do expect to see and <unk> growth in the later half of 2021, so somewhere around the second quarter.

So I do think that's going to help offset some of that NIM compression that tranche was talking about earlier on.

I think we're going to see some good usage from the cash back card that Victor talked about with our dividend enhancement card and the great ratings that we have.

When I look at our applications for those cars that are up significantly.

You mean, those get utilized and we have a revolving balances I would expect to see.

A better trajectory if you will in 2021, and we seen in Twentytwenty as you saw and I think we provided some of that in our disclosure you can see where purchase volume have come back somewhat and then remains to be seen a if it continues but for the time being I would tell you that we're feeling pretty good.

Good, including our Aventura card.

We did a really good job in my view in terms of modifying some of the rewards that we provide so that they're not just travel and in fact from an outstanding perspective, we've seen an increase in our outstanding.

I would say almost flat from a purchase volume per.

Perspective, so I think we've managed to do well in that regard, but as far as every day rewards cash back cards go Ah. That's a I would say, we're seeing more activity there from a purchase volume perspective, and I would expect to see more from an outstanding but it will really depend on you know the way forward from a consumer.

Activity perspective.

That help answer the questions you have.

Well I prefer to here I'd prefer to hear the revenue impact in 2020 versus 2019.

If you're not willing to provide that that's fine.

So I'd love to know though.

On your assessment of 2020, how much.

Credit card revenues were down versus 2019 in totality.

Uh huh.

If you have that number handy I mean.

Maybe darko I'll jump in its Raj I think low Laura Laura can maybe answer the anything more on the business side. If you on it but we do not disclose P.N. now that the product. So let me start with that but I will give you. Some pieces just just to help you think through what you're thinking through and I think you're trying to get to what this means from 21 more importantly.

So when I look at this year, you're right you mentioned a number of pieces you can do the math on the on the credit card interest rate relief from the basis points you see most of that five basis points increase this quarter. They said it was related to that but I'll save you. The math on that one that was probably around sort of between the two quarters. It really impacted it was kinda.

40, just over 40 basis $40 million for the year. So that's one impact the other one is what you would see coming in in the card fees line and our asset five which I'm sure you've looked at and then there was also a piece in the FX other than trading piece that's related to cards FX transactions. So on those you know that the cars line there is that broader.

Line. So when you really just look at the personal and business banking element of that fee.

Fees on on cards. This quarter were recovered they were down a bit more than this in the last couple of quarters, but this quarter. There was still down about just over 10 million that number may have been double that over the last couple of quarters and then on the FX side as well there is about another similar number just over $10 million this growth.

Third or so when you look at it about 20 or so this quarter from that line item and as I said that line was larger in Q3 and Q2.

And then you put that together with the $40 million from the interest rate relief and then the Eni balance Im sure you can do based on the balance drop in the average outstanding you saw that would get you a pretty good estimate for the year.

That's helpful. Thanks, Great. Yeah, that's very helpful. I suppose low before thanks very much thanks, Sir.

Thank you.

The next question is from Nigel differential from Veritas investment. Please go ahead.

Thank you good morning, I had a follow up for you on the payment deferral for your credit card book and when I look at your reactive.

Vs proactive portfolios it looks like there's a divergence there on credit performance and I was wondering if you could touch on what.

And what characteristics specific to the proactive portfolio thats driving less favorable experience because when I look at FICO scores they seem to be relatively similar.

Yeah. Good morning, Thanks for the question so.

The the population that we that we show is the proactive we have identified a group of clients at the outset of the pandemic, who were already experiencing some level of difficulty.

Difficulties going into the pandemic and so we provided the that group with the proactive deferrals.

At the time.

We had this disclosure in our in last quarter's investor presentation that group would have been 68% of that group would have been current coming into the pandemic. So with the deferrals running off from that group is now 75% current so actually an uptick so they've had more time to sort of a.

Address their their financial their financial situations, we provided that relief and so relative to coming into the pandemic, they're actually doing better at this point that it's still early stages and we will continue to watch that portfolio very carefully.

But that's what sort of gives rise to the differential between the two populations.

Okay. That's it that's really helpful. Just a quick question on non performing loan loss provisions and I look at your forward looking indicators it looks like that from Twoq across.

Each of your scenarios. So you know the offset to that the mall parameter updates as more so management overlay on scenario waiting driven could you just provide some color there.

So we also had a scenario wage.

Change so we put more weighting towards the downside from the upside so that would have also contributed to it.

But beyond that it's been a it's been sort of regular way a risk rating activity et cetera, that's contributed to the.

The performing balance this this quarter.

Okay. Thank you appreciate the color.

Thank you.

The next question is from Sohrab Movahedi from BMO capital markets. Please go ahead.

Okay. Thank you maybe Victor two quick questions for you, you've obviously done very well by the by the clients allowed us to.

Actions, you've taken maybe waiving fees on what have you.

Beneficial both declines on I guess to customer retention.

And you think brokerage commissions.

Well go to zero in Canada.

I don't know [laughter], Oh, I think the most important thing in our in our model.

And I would say that we're not the low cost producer our models relationship based on actually if you lift the hood on our investors edge business, which sits within direct financial services as the simply financial.

The biggest most substantive part there is our premium edge service, which is very competitively priced clients are trading from $4.95 to actually have a relationship manager and its very connected to our most affluent clients. So the business model works very very well for our other claim.

Within our personal banks that are in our sort of mass affluent in core segments, where price to $6.95, which is market leading for the peer group banks.

On the offering is very very good satisfies their needs. So we will stay competitive that's the most important thing I can tell you and we will stay relationship oriented in terms of our focus.

Okay, and so when you look at it.

And you know assuming credit is.

And so to speak and and you think about every.

Recovery and your comps complex businesses here do you feel like it's going to be more of a consumer or commercial net recovery.

Well, let me just take a step back and talk about sort of my perspective on the on our perspective on the economy. Today I think it's important to recognize that there are parts of our economy.

Particularly in the discretionary consumer sector and in the small business sector that have really been.

Feeling the economic fallout of the pandemic it's.

It's going to take some time for them to recover.

And they're an important part of our economy.

So that is something that we need to be very mindful of we don't talk about it enough, having said that I believe in Canadian and American entrepreneurial spirit and I see business is starting to retool in terms of their business models and I think they'll come back.

Perhaps with some targeted government support they'll come back more quickly and will be there to support them.

You know from abroad.

From a from I I.

I I think I can you give me the point I mean, I think you've got the U.S. franchise, as well, which I I suspect is actually very well positioned with improved sentiment as well now it is my capital leases on the call are so maybe Mike if you want to chime in on that.

Sure. Thanks for the question.

We think we are.

Incredibly well positioned for that you know we had a very good outing earlier this year with the Triple P program.

We we got applications and funded again.

Literally every one of our clients, who who who requested it a.

A lot of goodwill our relationship based approach to commercial banking you know were contacted our customers around the clock.

And you know I will say we are looking forward.

We're working positioned we're positioned for growth with those customers.

And lastly, our our wealth platform.

You heard earn on earlier that we've had a positive net flows literally every quarter on the back of performance and the strength of a sea IVC, but something that's going on on notice as we literally built out our private banking platform and a <unk> loan balances there are year over year.

Almost 100%.

So we're feeling good about how.

How were positioned us for the coming year with our customer sentiment.

Yeah I appreciate that thanks, I know I know, it's been a long call. So I'll leave it there. Thanks.

Thank you. The next question is from Mike Van <unk> from Credit Suisse Securities. Please go ahead.

Hi, Good morning, I wanted to go back to Laura on your mortgage growth and clearly you've had a pretty decent pickup, but when I look at your market share among the big six you actually you actually lost a bit more market share this quarter sequentially than last so I'm wondering if you're comfortable in need giving us a timeline on on when you think CNBC you could see that that.

I can share a steady or potentially growth.

Hey, Mike.

I did I have the charts that you prepared that is locked in my mind, a [laughter]. So again I I do want to highlight that and you're right like we're still in that six place from a year over year growth perspective lost some ground in the last month, but again I just want to point out and Vic.

Or said that we have a lot tighter performance distribution.

I do feel we're headed in the right direction and the consistent sustainable performance is really what matters. The most and this one so I don't know what that I'm prepared to tell you you know, it's one or two quarters in.

What I would expect and again you know there is movement from quarter to quarter, but that you will see a gradual improvement over the course of 2021.

That would be the expectation, okay fair enough and then really quickly what are your thoughts on mortgages being an anchor product.

For your business, it's something that I tend to think about with respect to what the broader implications might have been on the.

The share that you've lost overseas it seems like the pass here like when you do lose a client on a on a renewal that doesn't stay we see I do see does that typically means that they take over a lot of the other.

Services with them to the to the competitor.

You know that really depends on the client and there are differing views out there. There's a lotta research that tells you that as we go more digital clients are more inclined to want to have that one product from that one institution.

You know the way we operate and the competition. We're all the same once we sell the product whether it's the mortgage a credit card you name. It we all work to anchor the clients because it's just better we know our clients better it's better from a risk management perspective, usually better for the clients as well.

Remains to be seen look a lot of the mortgage growth we had in the past those were more than just from clients that delta elsewhere.

So it depends it depends on on the client I guess all I can leave you with is that so like everyone. We work really hard from when we do provide a mortgage to try the anchor that client because we think it's better for the clients and better for the organization.

Thank you for the on site.

Thank you ladies and gentlemen, this will conclude today's question and answer session I'd like to turn the meeting back over to Victor. Thank.

Q, operator, and thank you all free or very good questions on Europe patient says we've got a a.

Kind of manage through an extended webcast.

Let me just close as follows I want to tell you that our bank has performed well on a very challenging 2022 supported by a sound strategy focused on deep client relationships.

Diversified earnings mix and a conservative approach to risk on expense management.

Our investments in tech talent and technology positions us well to provide remote client support throughout the pandemic and it's going to provide us with that support going forward.

In the year ahead, whatever the economic trajectory will capture the upside as economic Tailwinds prevail and we have a strong balance sheet to weather any prolonged economic downturns.

Today, we also announced that the honorable John Manley will be retiring as is the share of our board and Kate Stephenson, who served as a director of CBC for nine years will take on the role share upon a really re election or annual meeting in 2021.

John strong leadership and his commitment to inclusion of helped US help guide our bank through a period of change in the industry and strengthened our C.I.B.C. culture.

Want to thank John for his guidance and counsel and I look forward to working with Kate who will bring a wealth of leadership sheep experience to her new role.

And before we end todays call on.

On a think or 44000 CBC colleagues globally from honoring our history of being there for our clients and challenging times I couldn't be more proud of how our CPC team has rallied to support our clients to support our communities on one another as we lived our purpose and to our shareholders. Thank you for it can you your continued support.

It's a safe and happy holiday season, and we'll speak to you in the new calendar year take care.

Thank you.

Conference has now ended please disconnect your lines at this time and thank you for your participation.

This conference is no longer being recorded no interest from all this it coffeehouse it that that won't be.

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