Q4 2021 Canadian Imperial Bank of Commerce Earnings Call

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Speaker 3: All participants, please stand by. Your conference is ready to begin. Good morning and welcome to the CIBC quarterly financial results call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Jeff Weiss, Senior Vice President, Investor Relations. Please go ahead, Jeff.

All participants please standby your conference.

Good morning, and welcome to the CIBC quarterly.

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This call is being recorded I would now like to turn the meeting over to Mr. Geoff Weiss Senior Vice President Investor Relations. Please go ahead Jeff.

Speaker 4: Thank you and good morning. We will begin this morning's presentation with opening remarks from Victor Dodig, our President and Chief Executive Officer, followed by Hrach Panosian, our Chief Financial Officer, and Sean Bieber, our Chief Risk Officer.

Thank you and good morning, we will begin this morning's presentation with opening remarks from Victor <unk>, Our President and Chief Executive Officer, followed by her entrepreneur Sheehan, our Chief Financial Officer, and Shawn Beber, our chief risk Officer.

Speaker 4: Also on the call today are a number of group heads, including Mike Capitides, U.S. Commercial Banking and Wealth Management, Harry Cullum, Capital Markets, Laura DeTore Atanasio, Canadian Personal and Business Banking, and John Hentalis, Canadian Commercial Banking and Wealth Management. They are all available to take questions following the prepared remarks.

Also on the call today are a number of group heads, including my appetite is U S commercial banking and wealth management, Harry Culham capital markets Laura Detore.

Canadian personal and business banking and John Entellus, Canadian commercial banking and wealth management. They are all available to take questions. Following the prepared remarks.

Speaker 4: During the Q&A, to ensure we have enough time for everyone to participate, we ask that you please limit your questions and re-queue.

During the Q&A to ensure we have enough time for everyone to participate we ask that you. Please limit your questions and re queue.

Speaker 4: 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. Our results may differ.

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, everyone.

2021 was a very good year for our bank one in which we delivered strong financial results and importantly, we positioned our bank well for future growth on our call today I want to cover three things first highlight certain areas, where we've made strong strategic progress over the fiscal year second provide you with our R V.

Speaker 5: First, highlight certain areas where we've made strong strategic progress over the fiscal year. Second, provide you with our view on the economic environment as we enter this coming fiscal year. And third, after Hiratch and Sean's review of our fourth quarter results, I'd like to share some insights into our strategic priorities going forward that we believe will build on the strong momentum we've established and enable further growth going forward.

On the economic environment as we enter this coming fiscal year and third.

<unk> review of our fourth quarter results I'd like to share some insights into our strategic priorities going forward that we believe will build on the strong momentum we've established enable and enable further growth going forward.

Speaker 5: Our primary strategy over the past number of years has been to build a modern, relationship-oriented bank with a strong core franchise and a diversified earnings mix. You can see that on this slide. Our success in executing on our strategy is reflected in our earnings growth in each of our business units, improved client experience scores, and further earnings diversification.

Our primary strategy over the past number of years has been to build a modern relationship oriented bank with a strong core franchise and a diversified earnings mix you can see that on the slide are some.

Success in executing on our strategy as reflected in our earnings growth in each of our business units.

<unk> client experience scores and further earnings diversification.

Speaker 5: In fiscal 2021, our laser focus on executing our strategic priorities delivered record results with adjusted earnings per share of $14.47, which is up 49% from 2020, and ROE of 17% and positive operating leverage. Our capital position remains strong, ending the year with a CET1 ratio of 12.4% to $14.47.

In fiscal 2021, our laser focus on executing our strategic priorities delivered record results with adjusted earnings per share of $14.47, which is up 49% from 2020, an Roe of 17% and positive operating leverage our capital position.

It remains strong ending the year with a tier one ratio of 12, 4%.

Speaker 5: These results exceeded 2021 key performance targets and our rolling five-year total shareholder return of 92% outperformed the S&PTSX Bank's composite...

These results exceeded 2021 key performance targets and a rolling five year total shareholder return of 92% outperformed the S&P T S X banks composite index.

Speaker 5: Our strong results support the announcements this morning of our share buyback program of 10 million common shares, which is just over 2% of our outstanding, and 15 cent dividend increase to our common shareholders, while maintaining our dividend payout ratio target of between 40 and 50%

Our strong results support the announcements this morning of our share buyback program of 10 million common shares which is just over 2% of our outstanding and 15 cent dividend increase to our common shareholders, while maintaining our dividend payout ratio target of between 40 and 50%.

Our results were driven by strong top line growth across all of our businesses supported by market share gains from client acquisitions deepening relationships with our clients and harnessing technology to enhance the client experience.

Speaker 5: Our results were driven by strong top-line growth across all of our businesses, supported by market share gains from client acquisitions, deepening relationships with our clients, and harnessing technology to enhance the client experience.

Speaker 5: We successfully rejuvenated and further strengthened our Canadian consumer franchise through market share gains and our core personal products.

We successfully rejuvenated and further strengthened our Canadian consumer franchise through market share gains in our core personal products.

Speaker 5: Accelerated growth in DFS or a direct financial services business and record net inflows from asset management During the year we also returned to market

Celebrated growth in DFS or a direct financial services business and record net inflows from asset management.

During the year, we also returned to market level growth in our mortgage business we.

We also continued to invest in technology to meet the evolving needs of our clients. The rollout of CIBC Gallbladder tour Imperial service clients has been instrumental in driving deeper client relationships and a better client experience.

Speaker 5: We also continue to invest in technology to meet the evolving needs of our clients. The rollout of CIBC Goal Planner to our imperial service clients has been instrumental in driving deeper client relationships and a better client experience.

Speaker 5: And in our DFS business, we expanded our product offerings and our capabilities for our digital savvy clients who prefer a self-directed experience. And these investments resulted in double-digit revenue growth.

And then our DFS business, we expanded our product offerings and our capabilities for a digital savvy clients, who prefer a self directed experience and these investments resulted in double digit revenue growth.

Speaker 5: Overall, the significant progress we've made in providing a modern experience for our clients is reflected in our best client experience scores on record.

Overall, the significant progress we've made in providing a modern experience for our clients is.

Reflected in our best client experience scores on record.

And over a decade of having a leader leading mobile banking App in Canada based on third party surveys.

Speaker 5: and over a decade of having the leading mobile banking app in Canada based on third-party surveys.

During the year, we continued to build on our areas of strength in commercial banking as global economic activity accelerated in 2021, so did the pace of loan growth in our commercial portfolios.

Speaker 5: During the year, we continued to build on our areas of strength in commercial banking as global economic activity accelerated in 2021, so did the pace of loan growth in our commercial portfolio.

Market share gains were attributable not only to existing clients, but also to new relationships that we've established.

Speaker 5: As well, cross-border referrals between our Canadian and U.S. business for clients seeking seamless North American access remain strong.

As well third cross border referrals between our Canadian and U S business for clients seeking seamless North American access remains strong.

In wealth management robust funds flow in asset management in our brokerage business were supported by award winning advisory teams.

Speaker 5: In a new ranking by the Globe and Mail and Shook Research, 35 of CIBC-Wood Gundy's advisors were named among Canada's top wealth advisors, by far the largest number among participating Canadian peers.

And then your ranking by the global Mail and shook research 35 of CIBC Wood Gundy advisers were named among Canada's top wealth advisors by far the largest number among participating Canadian peers.

Speaker 5: Our capital markets business continued to deliver strong results with a number two ranking in both debt and equity underwriting in 2021.

Our capital markets business continued to deliver strong results with a number two ranking in both debt and equity underwriting in 2021.

Speaker 5: And importantly, our business is uniquely structured in capital markets to leverage the strong connectivity we have across our bank, driving revenue growth of 27% in this area. This is a big differentiator for us.

And importantly, our business is uniquely structured capital markets to leverage the strong connectivity, we have across our bank driving revenue growth of 27% in this area. This is a big differentiator for us.

Throughout fiscal 2021, we continue to seek opportunities to further strengthen our competitive position and to invest for future growth.

Speaker 5: Throughout fiscal 2021, we continue to seek opportunities to further strengthen our competitive position and to invest for future growth.

Speaker 5: Our announcement in the fourth quarter to become the exclusive issuer of Costco MasterCards in Canada and to acquire the existing portfolio is a clear example of that.

Our announcement in the fourth quarter to become the exclusive issuer of Costco Mastercard's in Canada and to acquire the existing portfolio is a clear example of this.

In addition to diversifying your credit card book, the Costco partnership provides us the opportunity to bring this a valued client base deeper into our banks suite of offerings.

Speaker 5: Costco client base is highly aligned with our retail affluence strategy and their growing membership will make this a strategically important investment in the coming years.

Costco client base is highly aligned with our retail affluent strategy and Theyre growing membership will make this a strategically important investment in the coming years.

Speaker 5: Building on CIBC's strong history of ESG across our bank, we have released a refocused strategy that includes three key pillars. The first is accelerating climate action, which was released in August along with our Net Zero ambition.

Building on CIBC strong history of ESG across our bank. We have released a refocused strategy that includes three key pillars. The first is accelerating climate action, which was released in August along with our net zero ambition.

Speaker 5: The second is creating access to opportunities for underserved and underrepresented communities to enable social and economic inclusion and to help them realize their ambitions.

The second is creating access to opportunities for underserved and under represented communities to enable social and economic inclusion and to help them realize their ambitions.

And the third is building integrity and trust to safeguard data ensure we act responsibly promote accountability and enhance client experience by leveraging technology and empowering our people.

Speaker 5: And the third is building integrity and trust to safeguard data, ensure we act responsibly, promote accountability, and enhance client experience by leveraging technology and empowering our people.

Speaker 5: We're activating our resources to create positive change for our CIBC team, our clients, our communities, and our planet, contributing to a more secure, equitable, and sustainable future. Now let me turn to our economic outlook.

We're activating our resources to create positive change for our CIBC team, our clients our communities and our planet contributing to a more secure.

And sustainable future.

Now, let me turn to our economic outlook for 2022.

In Canada, our economists are forecasting domestic GDP growth of 4% and unemployment is expected to average near 6% in the United States Real GDP is expected to grow by 4.2%, while unemployment is expected to average in the 4% range.

Speaker 5: In Canada, our economists are forecasting domestic GDP growth of 4%, and unemployment is expected to average near 6%.

Speaker 5: In the United States, real GDP is expected to grow by 4.2% while unemployment is expected to average in the 4% range.

Speaker 5: On both sides of the border, interest rates are expected to rise by 50 basis points in the latter half of the calendar year.

On both sides of the border interest rates are expected to rise by 50 basis points in the latter half of the calendar year.

Speaker 5: In speaking with our clients, the recent inflation pressure is largely driven by both labour-related and non-labour-related factors.

And speaking with our clients. The recent inflation pressure is largely driven by both labor related and non labor related factors.

Speaker 5: Supply-side disruptions that drove pricing increases are expected to abate over time. However, wage inflation may persist until these labor shortages are resolved.

Supply side disruptions that drove pricing increases are expected to abate over time, however, wage inflation may persist until these labor shortages are resolved.

For our business. The most important takeaway is that we're well positioned.

Speaker 5: For our business, the most important takeaway is that we're well-positioned.

Speaker 5: to our strong capital position and importantly the depth of our client relationships we will continue to pursue and we will deliver against our growth ambitions in the year ahead.

Thanks to our strong capital position and importantly, the depth of our client relationships. We will continue to pursue and we will deliver against our growth ambitions in the year ahead.

Speaker 5: And before I pass the call on to Harach and Sean to review our fourth quarter results, I wanted to also acknowledge the recent extreme weather conditions that devastated parts of British Columbia. Our thoughts are with those who have been displaced and will continue to support our affected clients, colleagues and their families as they work through these difficult circumstances. Our thoughts are with you. And with that, I'm going to turn the call over to Harach for a financial review.

And before I pass the call onto Ratchet, Sean to review, our fourth quarter results I wanted to also acknowledge the extreme the recent extreme weather conditions that devastated parts of British Columbia, Our thoughts are with those who have been displaced and will continue to support our affected clients colleagues and their families. As they work through these difficult circumstances, our thoughts are with you and with.

That I'm going to turn the call over to Raj for a financial review.

Thank you Victor and good morning all.

Speaker 6: I'll begin my remarks with a review of our fourth quarter results on slide 13 before covering highlights of fiscal 2021 and providing some color on our expectations for 2022.

I'll begin my remarks, with a review of our fourth quarter results on slide 13, before covering highlights of fiscal 2021 and providing some color on our expectations for 2022.

Speaker 6: Capping off a successful 2021, our fourth quarter results reflect strong performance across our diversified client franchise, with solid top-line growth in all of our business units contributing to record revenue.

Nothing off the successful a 2021 our fourth quarter results reflect strong performance across our diversified client franchise with solid top line growth in all of our business units contributing to record revenues.

Speaker 6: Combined with strong credit performance, this allowed our bank to generate robust earnings growth over the prior year and maintain the resilience of our balance.

Combined with strong credit performance, that's allowed our bank to generate robust earnings growth over the prior year and maintain the resilience of our balance sheet.

Reported earnings per share of $3 seven for the quarter included a number of items of note detailed in the appendix of our presentation. Excluding these items adjusted earnings per share was $3.37. The balance of my presentation will refer to adjusted results starting with slide 14.

Speaker 6: Supported earnings per share of $3.07 for the quarter included a number of items of note detailed in the appendix of our presentation. Excluding these items, adjusted earnings per share was $3.37. The balance of my presentation will refer to adjusted results starting with slide 14.

Adjusted net income of $1 6 billion for the quarter was up 23% from the prior year, while our O E. A 14.7% improved by 120 basis points over the same period.

Speaker 6: Adjusted net income of $1.6 billion for the quarter was up 23% from the prior year, while ROE of 14.7% improved by 120 basis points over the same period.

Pre provision pretax earnings of $2 1 billion was up 6% from a year ago or 8%, excluding the impact of currency translation as record revenue more than offset the increase in strategic investments across our business.

Speaker 6: Pre-provisioned pre-tax earnings of $2.1 billion was up 6% from a year ago, or 8% excluding the impact of currency translation. As record revenue more than offset the increase in strategic investments across our business.

Speaker 6: Revenue of $5.1 billion was up 10% year-over-year, driven most notably by solid momentum across our wealth management and PNC banking businesses, benefiting from broad-based volume growth as well as higher market and transaction-related fees.

Revenue of $5 1 billion was up 10% year over year, driven most notably by solid momentum across our wealth management and P&C banking businesses benefiting from broad based volume growth as well as higher market and transaction related fees expenses were up 13% from the prior year largely due to performance based compensation and the.

Speaker 6: Expenses were up 13% from the prior year, largely due to performance-based compensation and the increase in business and enterprise investments we had previously communicated.

Increase in business and enterprise investments, we had previously communicated.

Slide 15 highlights the drivers of our continued improvement in net interest income excluding trading NII was up 8% from last year helped by double digit growth in client business on both sides of the balance sheet. We anticipate continued improvement in non trading NII supported by volume growth and a stabilizing impact of a more constructive or interest rate environment on our.

Speaker 6: Slide 15 highlights the drivers of our continued improvement in net interest income. Excluding trading, NII was up 8% from last year, helped by double-digit growth in client business on both sides of the balance sheet.

Speaker 6: We anticipate continued improvement in non-trading NII supported by volume growth and the stabilizing impact of a more constructive interest rate environment on our margins.

Margins.

Speaker 6: Total bank NIM was largely stable this quarter, down two basis points sequentially.

Total bank NIM was largely stable this quarter down two basis points sequentially.

Speaker 6: Canadian personal and commercial banking NIMS declined two basis points for the prior quarter as tailwinds from continued deposit growth were more than offset by the impact of lower interest rates and the change in asset mix due to robust mortgage growth. Going forward, we expect PNC NIMS to stabilize on the back of an improving rate environment and the resumption of growth in higher margin unsecured lending and credit cards products.

Canadian personal and commercial banking Nims declined two basis points for the prior quarter as tailwind from continued deposit growth were more than offset by the impact of lower interest rates and the change in as it makes you too robust mortgage growth going forward, we expect P&C nims to stabilize on the back of an improving rate environment and the.

A resumption of growth in higher margin unsecured lending and credit card products.

Speaker 6: South of the border, NIM in the U.S. segment was down one basis point relative to last quarter as modest margin compression from lower rates and moderating prepayment activity was partly offset by ongoing deposit growth. We continue to expect the benefits from loan prepayment activity to subside over the next few quarters, causing margins in this business to stabilize.

South of the border NIM in the U S segment was down one basis point relative to last quarter as modest margin compression from lower rates and moderating prepayment activity was partly offset by ongoing deposit growth. We continue to expect the benefits from loan prepayment activity to subside over the next few quarters, causing margins in this business to stabilize.

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Speaker 6: Turning to slide 16, non-interest income of $2.1 billion was up 15% from the prior year, driven by continued growth in transactional and market-related fees, despite modest normalization in trading revenue.

Turning to slide 16, noninterest income of $2 1 billion was up 15% from the prior year driven by continued growth in transactional and market related fees. Despite modest normalization in trading revenues deposit and payment fees card fees and credit fees, all trended higher reflecting the benefit of increased transactional activity.

Speaker 6: Deposit and payment fees, card fees, and credit fees all trended higher, reflecting the benefit of increased transactional activity by our clients.

By our clients.

Speaker 6: market-related fees and wealth management continue to benefit both market appreciation and record client flows.

Market related fees in wealth management continued to benefit both market appreciation and record client flows.

On a combined basis mutual fund and investment management and custodial fees were up 20% from the prior year.

Speaker 6: On a combined basis, mutual fund and investment management and custodial fees were up 20% from the prior year. Client activity also continued to be robust in investment banking, contributing to another quarter of solid underwriting and advisory revenues up 47% over the same quarter last year.

Activity also continued to be robust in investment banking contributing to another quarter of solid underwriting and advisory revenues up 47% over the same quarter last year.

Speaker 6: We expect these factors in aggregate to continue contributing to fee income growth.

We expect these factors in aggregate to continue contributing to fee income growth.

Turning to slide 17 expenses were up 13% with higher performance based compensation being a significant driver.

Speaker 6: Turning to slide 17, expenses were up 13% with higher performance-based compensation being a significant driver. Excluding this, expenses were up 7% driven by increased investment against strategic initiatives as well as infrastructure enhancements and business growth.

Scooting. This expenses were up 7% driven by increased investment against strategic initiatives as well as infrastructure enhancements and business growth.

Speaker 6: Looking ahead, our approach to investments and operating leverage remains unchanged.

Looking ahead, our approach to investments and operating leverage remains unchanged.

Speaker 6: In Fiscal 2022, we intend to build on our recent top-line momentum through continued investments in our business to drive market-leading growth, while generating further efficiency improvements to manage net expense growth and operating leverage. Our medium-term goal continues to be to deliver positive operating leverage through continued growth.

Fiscal 2022 we intend to build on our recent top line momentum through continued investments in our business to drive market leading growth.

Generating further efficiency improvements to manage net expense growth and operating leverage.

Our medium term goal continues to be to deliver positive operating leverage through continued growth.

Turning to slide 18, our balance sheet remains strong we ended the quarter with a CET one ratio of 12, 4% as strong internal capital generation was partially offset by higher RW ways from organic credit growth net of asset quality improvements and lower market risk going forward, we expect to drive a modest decline in our C. A T.

Speaker 6: Turning to slide 18, our balance sheet remains strong. We ended the quarter with a CET1 ratio of 12.4% as strong internal capital generation was partially offset by higher RWAs from organic credit growth, net of asset quality improvements, and lower market risk. Going forward, we expect to drive a modest decline in our CET1 ratio as we plan to prioritize accelerated capital deployment towards organic growth plans, take on the Costco credit card portfolio, and return more capital to shareholders.

One ratio as we plan to prioritize accelerated capital deployment towards organic growth plans.

Take on the Costco credit card portfolio and return more capital to shareholders.

Speaker 6: Average LCR for the quarter was 127%, and we expect to continue operating at these strong but normalized liquidity levels going forward.

Average LCR for the quarter was 127% and we expect to continue operating at these strong but normalized liquidity levels going forward.

Speaker 6: Starting on slide 19, we highlight our strategic business unit results, all of which were strong momentum in this quarter.

Starting on slide 19, we highlight our strategic business unit results all of which strong we're strong momentum this quarter.

Net income in personal and business banking with 606 million up 3% from a year ago, reflecting our progress in strengthening our consumer franchise pre provision pretax earnings of $988 million were up 7% from the prior year revenue of $2 1 billion was up 7% over the year and increased 4%.

Speaker 6: Net income in personal and business banking was $606 million, up 3% from a year ago. Reflecting our progress in strengthening our consumer franchise, pre-provision pre-tax earnings of $988 million were up 7% from the prior year. Revenue of $2.1 billion was up 7% over the year and increased 4% sequentially, largely due to broad-based volume growth and strong fee-generating client activity.

<unk> largely due to broad based volume growth and strong fee generating client activity expense.

Expenses of $1 1 billion were up 6% from the same quarter last year as we continue to invest in our franchise to sustain the momentum generated over the past few years.

Speaker 6: Expenses of $1.1 billion were up 6% from the same quarter last year as we continue to invest in our franchise to sustain the momentum generated over the past few years.

Moving on to slide 'twenty net income in Canadian commercial banking and wealth management was $442 million pre provision pretax earnings of $594 million were up 21% from a year ago commercial banking revenue was up 20% over last year, largely due to robust client activity driving growth in both borrowing and deposits.

Speaker 6: Moving on to slide 20, net income in Canadian commercial banking and wealth management was $442 million. Pre-provisioned pre-tax earnings of $594 million were up 21% from a year ago. Commercial banking revenue was up 20% over last year, largely due to robust client activity driving growth in both borrowing and deposit.

Wealth management revenue was up 21% from the prior year, primarily driven by higher fee based assets and commissions benefiting from market appreciation and increased client activity.

Speaker 6: Wealth management revenue was up 21% from the prior year, primarily driven by higher fee-based assets and commissions benefiting from market appreciation and increased client activity.

Speaker 6: Slide 21 shows U.S. commercial banking and wealth management results in U.S. dollars, where we delivered net income of $214 million.

Slide 21 shows U S commercial banking and wealth management results in U S dollars, while we delivered net income of $214 million pre.

Speaker 6: Pre-provision pre-tax earnings of $226 million were up 12% from the prior year as continued growth in strategic clients drove increased lending, deposits and AUM.

Pre provision pretax earnings of $226 million were up 12% from the prior year as continued growth in strategic clients drove increased lending deposits and AUM.

Excluding P. P. P forgiveness average loan growth was 7% driven by new and existing client needs.

Speaker 6: Excluding PPP forgiveness, average loan growth was 7% driven by new and existing clients.

Speaker 6: In our wealth business, solid AUM growth of 36% benefited from strong client flows and market appreciation.

In our wealth business solid AUM growth of 36% benefited from strong client flows and market appreciation.

Speaker 6: Increased expenses were driven by ongoing investment in our U.S. franchise to sustain our growth and support increasing regulatory requirements as our business continues to scale.

Increased expenses were driven by ongoing investment in our U S franchise to sustain our growth and support increasing regulatory requirements as our business continues to scale.

Speaker 6: By 22, speaks to our well-diversified capital markets business, net income of $378 million compared with $310 million in the prior year. And pre-provision pre-tax earnings of $484 million were up 2% from last year. Revenue of $1 billion were up 8% over the year, driven by strong corporate investment banking activity and growth in direct financial services, partially offset by normalization in trading revenue.

Slide 22 speaks to our well diversified capital markets business net income of $378 million compared with $310 million in the prior year and pre provision pretax earnings of $484 million were up 2% from last year.

Revenue of $1 billion were up 8% over the year, driven by strong corporate and investment banking activity and growth in direct financial services, partially offset by normalization in trading revenues.

Speaker 6: Expenses of $528 million were up 15% compared to last year, driven by performance-related compensation as well as continued frontline and infrastructure investments to support our future growth.

Expenses of $528 million were up 15% compared to last year, driven by performance related compensation as well as continued frontline and infrastructure investments to support our future growth.

Speaker 6: Slide 23 reflects on the results of corporate and other business units. Net loss of $121 million in the quarter compared to a net loss of $110 million in the same quarter last year. Revenue was in line with the prior year, as improvements in Treasury and CIBC First Caribbean offset headwinds from currency translation and other corporate revenues.

Slide 23 reflects on the results of corporate and other business unit net loss of $121 million in the quarter compared to a net loss of $110 million in the same quarter last year.

Revenue was in line with the prior year as improvements in Treasury and CIBC first Caribbean offset headwinds from currency translation and other corporate revenues.

Speaker 6: As highlighted in the past, expenses in this segment are impacted by enterprise investments, which increased this quarter as anticipated due to previously mentioned strategic investments.

As highlighted in the past expenses in this segment are impacted by enterprise investments, which increased this quarter as anticipated due to previously mentioned strategic investments.

Slide 24 highlights our full year financial results.

Speaker 6: Slide 24 highlights our full year financial results.

Speaker 6: Throughout 2021, our team executed with purpose against our focused priorities, allowing us to meet or exceed our strategic goals and financial targets for the year, while building client momentum and organizational capabilities that will fuel our continued growth going forward.

Throughout 2021 our team executed with purpose against our focused priorities, allowing us to meet or exceed our strategic goals and financial targets for the year, while building client momentum and organizational capabilities that will fuel our continued growth going forward.

Speaker 6: As Victor mentioned in his opening remarks, we achieved all of our strategic objectives this year. We strengthened our Canadian consumer franchise, and now have strong momentum to continue gaining share across all of our personal and commercial banking businesses.

As Victor mentioned in his opening remarks, we achieved all of our strategic objectives. This year, we strengthened our Canadian consumer franchise and now have strong momentum to continue gaining share across all of our personal and commercial banking businesses.

Speaker 6: Our continued focus on expanding and deepening high-value client relationships resulted in record client flows contributing to 24% growth in AUM across our global wealth management business. And our differentiated capital markets business delivered 13% growth in pre-tax, pre-provision earnings supported by the connectivity across our bank and growth initiatives including U.S. expansion and DFS.

Our continued focus on expanding and deepening high value client relationships resulted in record client flows contributing to a 24% growth in AUM across our global wealth management business and our differentiated capital markets business delivered 13% growth in pretax pre provision earnings supported by the connectivity across our bank and growth initiatives.

It gives including U S expansion in DFS.

Speaker 6: This progress allows us to deliver on the financial guidance we provided coming into the year. Pre-provisioned pre-tax earnings growth of 8% or 10% excluding the impact of currency translation exceeded our target for the year, supported by growth in each of our business

This progress allows us to deliver on the financial guidance, we provided coming into the year.

Provision pretax earnings growth of 8% or 10%, excluding the impact of currency translation exceeded our target for the year supported by growth in each of our business units.

Speaker 6: ROE exceeded 16% and was robust in all of our businesses, including 11% in our U.S. segment, the highest since our acquisition of private banks.

ROE exceeded 16% and was robust in all of our businesses, including 11% in our U S segment, the highest since our acquisition of private bank.

And we delivered positive operating leverage by containing expense growth to 2% excluding performance based compensation. Despite significant increased investment for future growth all in all it was a record year with strong performance from all of our businesses.

Speaker 6: And we delivered positive operating leverage by containing expense growth to 2%, excluding performance-based compensation despite significant increased investment for future growth. All in all, it was a record year with strong performance from all of our business.

Speaker 6: Heading into 2022, we're confident we can build on this momentum across our business to deliver strong results relative to the industry through continued top line growth.

Heading into 2022, we're confident we can build on this momentum across our business to deliver strong results relative to the industry through continued top line growth.

Speaker 6: We expect continued market share gains in our PNC banking businesses, helping drive a robust growth in net interest income. In parallel, we anticipate robust growth in fee revenues driven by our focus on wealth management, our diversified capital markets business, and increasing try-and-transaction activity. In the context of this constructive top-line outlook, we intend to continue investing to further strengthen our banks' capabilities and drive growth.

We expect continued market share gains in our P&C banking businesses, helping drive robust growth in net interest income in parallel we anticipate robust growth in fee revenues driven by our focus on wealth management, our diversified capital markets business, and increasing try and transaction activity in.

In the context of this constructive topline outlook, we intend to continue investing to further strengthen our bank's capabilities and drive growth. While we may have periods of negative operating leverage earlier in the year, we will target positive operating leverage across our business through the course of next year and have opportunities to adjust our pace of investment in response to the environment.

Speaker 6: While we may have periods of negative operating leverage earlier in the year, we will target positive operating leverage across our business through the course of next year and have opportunities to adjust our pace of investment in response to the environment as required.

As required.

Speaker 6: Subject to the economic outlook described in our annual report, we anticipate our efforts will generate pre-provision, pre-tax earnings growth within our target 5-10% range now.

Subject to the economic outlook described in our annual report, we anticipate our efforts will generate pre provision pretax earnings growth within our target, 5% to 10% range next year.

Speaker 6: While we will prioritize capital deployment towards this organic growth, our strong capital position also provides us the capacity to return capital to shareholders at a higher level over the course of next year.

While we will prioritize capital deployment towards this organic growth our strong capital position also provides us the capacity to return capital to shareholders at a higher level over the course of the next year.

We are very pleased with our team's achievements in 2021 and look forward to another successful year I'll now turn the call over to Sean.

Speaker 6: We are very pleased with our team's achievements in 2021 and look forward to another successful year. I'll now turn the call over to Sean.

Thanks, Raj and good morning.

Speaker 4: Throughout fiscal 2021, we saw significant progress in economic reopening supported by vaccine campaigns and lifting of the more restrictive public health measures that had been in place at various stages during the pandemic.

Throughout fiscal 2020, one we saw significant progress in economic reopening supported by vaccine campaigns and lifting of the more restrictive public health measures that had been in place at various stages during the pandemic.

Speaker 7: While some of the goods industry sectors experienced supply chain disruptions that continue today, service sector activity has partially recovered, supported by job growth, higher savings from fiscal measures in 2020, and low interest rates. Both business and consumer credit quality also showed improvement over the year.

While some of the goods industry sectors experienced supply chain disruptions that continue today service sector activity has partially recovered supported by job growth higher savings from fiscal measures in 2020, and low interest rates, both business and consumer credit quality also showed improvement over the year.

Speaker 7: We've had a strong fourth quarter and fiscal 2021, and as we enter a new fiscal year, we remain comfortable with our risk levels and are well-positioned to continue to support our clients and for portfolio growth.

We've had a strong fourth quarter and fiscal 2021 and as we enter a new fiscal year, we remain comfortable with our risk levels and are well positioned to continue to support our clients and for portfolio growth.

Turning to slide 27 in Q4, the provision for credit losses was 78 million compared with a provision reversal of 99 million last quarter provision.

Speaker 7: Turning to slide 27, in Q4, the provision for credit losses was $78 million compared with a provision reversal of $99 million last quarter.

Speaker 7: Provision on impaired loans remain near historic lows at $112 million in Q4.

Provisions on impaired loans remained near historic lows and $112 million in Q4.

Speaker 7: In Canadian personal and business banking, the impaired provision remained low and stable quarter over quarter.

Canadian personal and business banking impaired provision remained low and stable quarter over quarter.

In Canadian commercial and capital markets impaired provisions were up slightly quarter over quarter as Q3 benefited from a few reversals par.

Speaker 7: In Canadian commercial and capital markets, impaired provisions were up slightly quarter over quarter as Q3 benefited from a few reversals.

Speaker 7: Partially offsetting these increases, our U.S. commercial and CIBC First Caribbean experience lower impaired provisions this quarter.

Partially offsetting these increases our U S commercial and first Caribbean CIBC first Caribbean experienced lower impaired provisions this quarter.

We had a provision reversal of $34 million in Q4 in our performing portfolio, primarily driven by favorable portfolio credit migration, partially offset by an unfavorable change in forward looking indicators and an unfavorable impact due to normal course model parameter updates in retail.

Speaker 7: We had a provision reversal of $34 million in Q4 in our performing portfolio, primarily driven by favorable portfolio credit migration, partially offset by an unfavorable change in forward-looking indicators, and an unfavorable impact due to normal course model parameter updates in retail.

Speaker 7: Overall, we've had another strong quarter for credit performance, reflecting the resilience of our portfolio and improving economic conditions.

Overall, we've had another strong quarter for credit performance, reflecting the resilience of our portfolio and improving economic conditions.

Speaker 7: Slide 28 details our allowance coverage by line of business.

Slide 28 details our allowance coverage by line of business as mentioned earlier, we had a reversal in performing provision and a low level of impaired loan losses.

Speaker 7: As mentioned earlier, we had a reversal in performing provision and a low level of impaired loan loss.

These two factors overall resulted in a lower allowance level in the quarter.

Speaker 7: These two factors overall resulted in a lower allowance level in the quarter.

We feel comfortable with the current level of coverage, reflecting the performing provision build and recognized following the onset of the pandemic.

Speaker 7: We feel comfortable with the current level of coverage, reflecting the performing provision build we recognized following the onset of the pandemic, the continued uncertainty with respect to the speed and consistency of the economic recovery, as well as model parameter updates that we've implemented over the past several quarters.

The continued uncertainty with respect to the speed and consistency of the economic recovery as well as model parameter updates that we've implemented over the past several quarters.

Turning to slide 29, we've provided our credit portfolio mix, which remains consistent with previous quarters, both well diversified and with strong overall credit quality.

Speaker 7: Turning to slide 29, we've provided our credit portfolio mix, which remains consistent with previous quarters, both well diversified and with strong overall credit quality.

Our total loan balances were 463 billion over half of which are mortgages.

Speaker 7: Our total loan balances were $463 billion, over half of which are mortgages.

Speaker 7: The average loan-to-value of uninsured mortgages originated in the quarter was 66%, and the average loan-to-value for our uninsured mortgage portfolio overall remains low at 49%.

The average loan to value of uninsured mortgages originated in the quarter was 66% and the average loan to value for our uninsured mortgage portfolio overall remains low at 49%.

The business in government portion of the portfolio has an average risk rating equivalent to a triple B and continues to perform well.

Speaker 7: The business and government portion of the portfolio has an average risk rating equivalent to a BBB and continues to perform well.

On slide 30, we provided an overview of our gross impaired loans.

Speaker 7: On slide 30, we provided an overview of our gross impaired.

Speaker 7: Overall, gross impaired balances continue to improve in Q4.

Overall gross impaired balances continued to improve in Q4.

And notwithstanding a slight increase in new formations in the quarter compared with Q3, both the gross impaired loan ratio and our new formations are still lower than our pre COVID-19 run rate.

Speaker 7: And notwithstanding a slight increase in new formations in the quarter compared with Q3, both the gross impaired loan ratio and our new formations are still lower than our pre-COVID run.

Slide 31 details the net write off and 90 plus day delinquency rates of our Canadian consumer portfolios.

Speaker 7: Slide 31 details the net write-off and 90-plus-day delinquency rates of our Canadian consumer portfolio.

Speaker 7: Delinquencies and write-offs in our retail portfolios continue to trend lower in Q4, driven by our clients' higher saving and payment behavior, our client engagement activities, and government support.

Delinquencies and write offs in our retail portfolios continue to trend lower in Q4, driven by our clients hire saving and payment behavior, our client engagement activities and government support.

Speaker 7: We don't expect this very low level of delinquencies and write-offs to repeat in fiscal 2022. As the benefits of government support begin to wind down, the economy further reopens and our clients' liquidity starts to normalize, retail delinquencies and write-offs are likely to revert towards more historic levels.

We don't expect this very low level of delinquencies and write offs to repeat in fiscal 2022.

As the benefits of government support begins to wind down the economy further reopens and our clients' liquidity starts to normalize retail delinquencies and write offs are likely to revert towards more historic levels.

Speaker 7: In closing, we've had a strong fiscal 2021 despite the effects of the ongoing pandemic and related impacts to the economy and our businesses over the past year.

In closing we've had a strong fiscal 2020 one despite the effects of the ongoing pandemic and related impacts to the economy and our businesses over the past year.

Speaker 7: Our base case expectation remains for a continued economic recovery in fiscal 2022.

Our base case expectation remains for a continued economic recovery in fiscal 2022.

While we expect the path to full recovery will continue to be impacted by some of the same headwinds we've experienced in 2021, including disruptions in supply chains labor availability and inflationary pressures, we expect those headwinds to abate over time with increased global distribution of vaccines, helping relieve supply chain disruptions and allowing for more tar.

Speaker 7: While we expect the path to full recovery will continue to be impacted by some of the same headwinds we've experienced in 2021, including disruptions in supply chains, labor availability and inflationary pressures, we expect those headwinds to abate over time with increased global distribution of vaccines, helping relieve supply chain disruptions and allowing for more targeted health measures as opposed to broader economic closure.

Good health measures as opposed to broader economic closures.

Speaker 7: Based on our current economic outlook, we expect that our impaired loss rate will trend closer to the low to mid-20 basis point range over the course of the year as credit reverts to more historic patterns.

Based on our current economic outlook, we expect that our impaired loss rate will trend closer to the low to mid 20 basis point range over the course of the year as credit reverts to more historic patterns. We're mindful of emerging variance of concerned that it could affect this outlook and we'll continue to monitor developments closely.

Speaker 7: We're mindful of emerging variants of concern that it could affect this outlook and we'll continue to monitor developments closely.

Now I'll turn the call back to Victor.

Speaker 5: Thanks, John . So as we wrap up a successful 2021, I'd like to share our thoughts on CIBC's strategic focus for 2022 and beyond.

Thanks, Sean so as we wrap up a successful 2021 I'd like to share our thoughts on CIBC strategic focus for 2022 and beyond.

Speaker 5: As we assess our position today, we believe we're a bank built for growth. Our newly launched branding introduced in September is not a promise of something we're trying to be. It's a statement of the bank that we've worked hard to become. Our evolution as a bank is also evident in our financial performance. And our new headquarters, CIBC Square, is going to be the hub for innovation, inspiration, and continued value creation. And we look forward to continuing to welcome back our colleagues here in short order.

We assess our position today, we believe we are a bank built for growth our newly launched branding introduced in September is not a promise is something we're trying to be it's a statement of the banks that we've worked hard to become.

Our evolution as a bank is also evident in our financial performance and our new headquarters CIBC square is going to be the hub for innovation inspiration and continued value creation and we look forward to continuing to work come back our colleagues here in short order.

The foundation, we built has positioned us well and allowed us to navigate through challenges and disruptions to emerge as a winner.

Speaker 5: The foundation we built has positioned us well and allowed us to navigate through challenges and disruptions to emerge as a winner.

Going forward, our first priority is to continue to elevate the customer experience in an increasingly digital world across all of their interactions with our bank by one simplifying processes and creating seamless and end to end client experiences to providing technology enabled advice solutions for our clients.

Speaker 5: Going forward, our first priority is to continue to elevate the customer experience in an increasingly digital world across all of their interactions with our bank. By one, simplifying processes and creating seamless and end-to-end client experiences. Two, providing technology-enabled advice solutions for our clients. And three, creating more personalized client experiences and strengthening client-facing services.

And three creating more personalized client experiences and strengthening client facing services.

For our CIBC teams, we're investing in leading technologies to make it easier to deliver on our brand promise.

Speaker 5: For our CIBC teams, we're investing in leading technologies to make it easier to deliver on our brand promise and build lasting relationships with our clients.

And build lasting relationships with our clients.

Our second priority is to focus on higher growth high touch client segments, where relationships really matter by one prioritizing our affluent and high net worth consumer offerings to focusing on advice led corporate relationships, where we can offer specialized expertise and three scaling our commercial and <unk>.

Speaker 5: Our second priority is to focus on higher growth, high touch client segments where relationships really matter. By one, prioritizing our affluent and high net worth consumer offerings.

Speaker 5: Two, focusing on advice-led corporate relationships, where we can offer specialized expertise. And three, scaling our commercial and wealth platform that is aligned to the fast-growing private economy.

<unk> platform that is aligned to the fast growing private economy.

Speaker 5: We will leverage our differentiated business model with strong cross-bank connectivity, again a competitive advantage for our bank, to meet the complex needs of our clients on both sides of the border and capitalize on their growth opportunities.

We will leverage our differentiated business model with strong cross bank connectivity again, a competitive advantage for our bank to meet the complex needs of our clients on both sides of the border and capitalize on their growth opportunities.

Speaker 5: And our third priority is to invest in our future differentiators.

And I don't know a third priority is to invest in our future differentiators.

Speaker 5: within faster-growing market segments, and these would be direct financial services.

Within faster growing market segments, and these would be direct financial services, our innovation banking unit and our energy transition and sustainability franchise, where we have unique assets competitive advantages and significant opportunities to build on leadership positions and grow our business and grow our client relationships.

Speaker 5: our Innovation Banking Unit, and our Energy Transition and Sustainability Franchise where we have unique assets, competitive advantages, and significant opportunities to build on leadership positions and grow our business and grow our client relationship.

Speaker 5: In closing, we have engineered our organic growth plan to be flexible so that we can adjust to the economic reality of the day.

In closing, we have engineered our organic growth plan to be flexible so that we can adjust to the economic reality of the day.

Speaker 5: In an environment that's robust and constructive, with strong GDP growth on both sides of the border, we will continue to invest at a more elevated level.

In an environment, that's robust and constructive with strong GDP growth on both sides of the border. We will continue to invest at a more elevated level. We are a bank built for growth and we are a bank on the ascent. We built we have a balanced strategy to compete on all fronts and the right resources in place to grow we are confident in our ability.

Speaker 5: We are a bank built for growth, and we are a bank on the ascent. We have a balanced strategy to compete on all fronts, and the right resources in place to grow. We are confident in our abilities to earn business, to attract talent, and to deliver for our shareholders.

To earn business to attract talent and to deliver for our shareholders with that I'd like to open the call up for questions and pass it onto the operator.

Speaker 5: With that, I'd like to open the call up for questions and pass it on to the operator. Thank you.

Thank you Pete.

Press Star one at this time, if you have any question.

Speaker 3: There will be a brief pause for participants to register for questions. We thank you for your...

Yeah, It will be a brief pause.

All participants register for questions. We thank you for your patience.

Our first question is from Gabriel <unk> from.

Speaker 8: Our first question is from Gabrielle Deschenes from National Bank Financial. Please go ahead. Hi, good morning. Good morning. Thanks for taking the question. First, there's a bit of a housekeeping one for Sean. Stage 2 classifications, the higher risk performing loan category, up 25%. You mentioned model parameter updates. Is that the main driver there, not negative migration? And if that's the case, can you give me some broad strokes on, you know, maybe what sort of assumption changes?

From National Bank financial Please go ahead.

Good morning, good morning, and thanks for taking the question our first as a bit of a housekeeping one for Sean a stage two classifications, but higher risk performing loan category up 25%.

Mentioned the model parameter updates, but the main driver there not negative migration and if that's the case can you give me some broad strokes on maybe what sort of assumption changes you made.

Speaker 7: Yeah, thanks for the question, Gabriel. So, you're absolutely right. It's the model parameter updates that have driven the lion's share of the shift from Stage 1 to Stage 2. So, this is part of our normal course review of our models. We are continuously updating them as part of annual review cycles. And so, we are looking at a variety of different underlying drivers and...

Yeah. Thanks for the question Gabriel So you're absolutely right. It's the model parameter updates that have driven the lion's share of those the the shift from stage one to stage. Two. So this is part of our normal course, a review of our models. We are continuously updating them as part of annual review cycles and so we're looking at.

A variety of different underlying.

Drivers and.

Speaker 7: items like delinquencies, utilization rates, etc., and that's long time series data that goes into those models. So this isn't a reflection of a particular view on credit deterioration, more a function of the models and then the impact that IFRS 9 has in terms of when we make those types of changes.

Items like delinquencies utilization rates et cetera, and that's long time series data that goes into those models. So this isn't a reflection of a particular view on credit deterioration more a function of the models and then the impacts that I have for S. Nine has in terms of when we make those types of of changes.

Speaker 7: So, from an outlook perspective, I still feel very good and as I said in my opening remarks, from an impaired loss perspective, we're looking at sort of low to mid-20s as the economy reopens and activity normalizes.

From an outlet perspective, we still feel very good and as I said in my opening remarks.

From a impaired loss perspective, we're looking at sort of low to mid twenty's as the economy reopens and activity normalizes and rats.

Speaker 8: Great, thanks. And Hrach, the Expanse operating leverage commentary, you made continued investment in the business in 2022.

<unk> expense operating leverage commentary you made continued investment in the business in 2022.

Speaker 8: It sounds like we're going to keep going with elevated expense growth, perhaps. Medium-term objective of positive operating leverage, does that mean next year we might not have that outcome? It sounds like maybe first half will be...

Sounds like we're going to keep going with elevated expense growth, perhaps a medium term objective of positive operating leverage does that mean next year, we might not a bad outcome.

It sounded like maybe first half will be a little bit soft second half you'll get back into positive territory and if you can clarify like what you're targeting for absolute expense growth is mid single digits. Six this year on an adjusted basis, but two thirds I guess from variable comp.

Speaker 8: little bit soft second half you'll get back into positive territory just and if you can clarify like what you're targeting for you know absolute expense growth is it mid single digit is it six this year on an adjusted basis but two thirds I guess from variable comp maybe

Maybe clarify a few of those points.

Thanks.

Speaker 6: Sure. Thanks, Gabriel. Thanks for the question. And it's a good opportunity to elaborate a bit on the comments I had in our opening remarks, which I think are an important point.

Sure. Thanks, Gabriel Thanks for the question and it's a good opportunity to elaborate a bit on the comments I had a in our opening remarks, which I think on unimportant point.

Speaker 6: And, you know, I'll start by saying the way we've been managing our investments and the growth of our expenses on a net basis we think is working for us. We are continuously investing in our business and our strategy is to generate positive operating average, but to do so through the top line growth rather than containing expenses or underinvestment.

And you know I'll start by saying the way, we've been managing our investments and the growth of our expenses on a net basis. We think is working for us.

We are continuously investing in our business and our strategy is to generate positive operating leverage but to do so through the top line growth rather than containing expenses are under investing and so this year, we did that and we had signaled we'd be at the low single digit level with respect to expense growth.

Speaker 9: And so this year we did that and we had signaled we'd be at the low single-digit level with respect to expense growth and without performance-based compensation and mid-with and we achieved that. And at the same time we achieved positive operating leverage because we are already starting to see some of the benefits of those investments so operating leverage for the year was positive almost 1%.

And without performance based compensation and met with and we achieve that and at the same time, we achieved positive operating leverage because we are already starting to see some of the benefits of those investments so operating leverage for the year was positive almost 1%.

Speaker 9: Next year we'll continue to invest, and in fact, as I referenced, we do see our year-over-year investment against the strategic initiatives bucket, which we will provide more and more transparency to you as we've started. We see that increasing, and those are investments that will drive benefit and returns for our

Next year, we'll continue to invest and in fact as I referenced we we do see our year over year investment against the strategic initiatives bucket, which we will provide more and more transparency to you is we've started we see that increasing and those are investments that will drive benefit and returns for our shareholders.

Speaker 9: We also see that probably driving about half our growth next year and so more proportion of the expense growth than it did this year.

We also see that probably driving about half our gross loss next year until more proportion of the expense growth than it did this year and so that'll be half of it the rest of it and why the picture next year it may be a little bit different than the low single digit without performance based comp this year.

Speaker 9: And so that'll be half of it. The rest of it, and why the picture next year maybe is a little bit different than the low single digit without performance-based comp this year.

Speaker 9: is because we also see some inflationary impact out there. We do see impact of the world returning back to normal, travel, business development activities, and so forth resuming. And that's going to be, call it a couple of percent for us on expenses, and that's really the difference between last year and this year, the increased investment and that increased amount in the expenses from those items. So, all in all, that mid-single digits is, I think, the right guidance. I don't want to get any more specific than that. As we said, we have the opportunity to dial that up or down. So, I don't think more specificity would really be accurate at this point.

Because we also see some inflationary impacts out there and we do see impact of our of the world's returning back to normal the travel business development activities and so forth resuming and that's gonna be a call. It a couple of percent for us on expenses and that's really the difference between last year and this year the increased investment and not an increased amount in the.

From those items. So all in all that mid single digits is I think the right guidance I don't want to get any more specific than that as we said we have the opportunity to dial that up or down. So I don't think more specificity would really be accurate at this point.

Speaker 9: And, you know, that said, we do expect that relatively constructive top line next year that we described, and so putting all of that together, we do think that we can strive for positive operating leverage next year, and if we see the environment continue to be constructive with respect to interest rates and market growth across our products, we think we can achieve that. But the front half of next year may be negative.

And you know that said, we do expect that relatively constructive topline next year that we described and so putting all of that together. We do think that we can strive for positive operating leverage next year and if we see the environment continues to be constructive with respect to interest rates and market growth across our products. We think we can achieve that but the.

Front half of next year, maybe negative we are making some investments and there's some upfront investment for future revenues right and I'll call out just our investments upfront to get set up for the Costco credit card portfolio. For example, as revenues come later in the year. So some of those items earlier on we will drive us negative but for the full year.

Speaker 9: We are making some investments and there's some upfront investment for future revenues, right, and I'll call out just our investments up front to get set up for the Costco credit card portfolio, for example, as revenues come later in the year. So, some of those items earlier on will drive us negative, but for the full year, we're, we're pushing for that positive.

We're pushing for that positive.

Speaker 8: 10% revenue growth this quarter and nothing to sneeze at. So yeah, clearly the expenses are, investments are hopping out, paying off. Thanks.

<unk> revenue grew up in this quarter and nothing to sneeze at so yeah, clearly the expenses our investments there are paying.

Thanks.

Thanks Gabriel.

Speaker 3: Thank you. Our next question is from Manny Groman from Scotiabank. Please go ahead.

Thank you.

Question is from Roman <unk> from Scotiabank. Please go ahead.

Speaker 5: Hi, good morning. Victor, in slide four, you show the improvement in terms of geographic earnings mix that you've been able to achieve at 21% coming from the U.S. I'm wondering, as you think about the future, where would you ideally like to get that?

Hi, Good morning, Victor in Slide four you show us the.

The improvement in terms of geographic earnings.

Earnings mix that you've been able to achieve that 21% coming from the U S and I'm wondering as you think about the future where would you ideally like to get that mix.

Well many good morning. Thank you for your question Slide four reflects the bank that where we've been building over time and the bank that we will continue to build we've always said that we're focused on diversifying our revenue streams beyond Canada. We've achieved that you look at this slide 19, 2016, we were generating 86 million.

Speaker 5: Well, Manny, good morning. Thank you for your question. Slide four reflects the bank that we've been building over time, and the bank that we will continue to build. We've always said that we're focused on diversifying our revenue streams beyond Canada. We've achieved that. You look at this slide, in 2016...

Speaker 5: We were generating $86 million in net after-tax profits.

And net after tax profits in 2016, and this year, it's well over 1 billion. It's 1 billion too that is a dramatic change we made a smart investment in the private bank that has continued to prove that we are a client focused bank that can grow we've retained our clients we've retained our team.

Speaker 5: in 2016 and this year it's well over a billion, it's a billion two. That is a dramatic change. We made a smart investment in the private bank that is...

Speaker 5: that we are a client-focused bank that can grow. We've retained our clients, we've retained our team, and CIBC's footprint in the U.S. continues to grow in that regard. We've also done the same thing in wealth management, where we've pulled together three separate investments that has grown from zero.

And CIB sees a footprint in the U S continues to grow in that regard. We've also done the same thing in wealth management, where we've pulled together three separate investments that has grown from zero to $100 billion in assets under administration and become the fourth ranked wealth manager. According the Barents in the United States.

Speaker 5: to a hundred billion dollars in assets under administration.

Speaker 5: and become the fourth-ranked wealth manager, according to Barron's, in the United States.

And we also grow our growing our capital markets business and almost doubled it over this period of time in the United States. As we go forward. Our goal is to continue to strengthen our hand in Canada, It's our home market and we don't plan on seeding any territory. In fact, we plan on growing market share across all of our businesses.

Speaker 5: and we also grow are growing our capital markets business and of almost double that over this period of time in the united states

Speaker 5: As we go forward, our goal is to continue to strengthen our hand in Canada.

Speaker 5: It's our home market and we don't plan on ceding any territory, in fact we plan on growing market share across all of our businesses, including some of our new and emerging businesses.

Including some of our new and emerging businesses and in the U S. We're at 21% today I would see us going over <unk> 25 per cent over that four to five year period of time and I believe we can do that largely through organic growth with some smart tuck in acquisitions here and there we're really pleased with what we've achieved everything that we've oh.

Speaker 5: And in the U.S., we're at 21% today. I would see us going over 25% over that four-to-five-year period of time. And I believe we can do that largely through organic growth with some smart tuck-in acquisitions here and there. We're really pleased with what we've achieved.

Speaker 5: Everything that we've outlined to our shareholders, we've delivered on and we plan on doing that going forward.

Aligned to our shareholders, we've delivered on and we plan on doing that going forward.

Thanks for that and that's what I was trying to get at that.

Speaker 10: Thanks for that, and that's what I was trying to get at, that you highlighted the success you've had in the U.S., and I was wondering, you know, given that success that we clearly see in the U.S., why not...

And you've highlighted the success you've had in the U S.

And I was wondering.

Given that six tests that would clearly see a in the U S why not Uh huh.

Speaker 10: look at more significant acquisitions and it doesn't sound like your views have changed on that but just wondering, you know, why that is just given the kind of performance you've been able to generate from private banks.

Look at more significant acquisitions in and it doesn't sound like your views have changed on that but just wondering why that is just given the kind of performance you've been able to generate from private bank. What we're seeing really really good organic growth I can pass it onto my colleague, Mike hepatitis in a moment and because we see really good.

Speaker 5: Well, we're seeing really, really good organic growth. I can pass it on to my colleague, Mike Capitides, in a moment. And because we see really good organic growth, we're going to be investing in our U.S. franchise in terms of our platform and our infrastructure so we can drive even more growth and press on our competitive advantages. But the highest and best use of capital for us is to continue to invest organically and deliver the kind of returns, and Gabriel just said it before he got off his call, 10%.

Organic growth, we're going to be investing in our U S franchise in terms of our platform and our infrastructure. So we can drive even more growth and pressing our competitive advantages, but the highest and best use of capital for US is to continue to invest organically and deliver the kind of returns and Gabriel just set it before he got off is call it 10%.

Speaker 11: year-over-year growth this quarter is the highest in the industry here and we plan on delivering on that going forward. Cap, I don't know if you want to add anything from a U.S. perspective. Yeah, thank you, Victor. So, just to add that we have been, I'll use the words pleasantly surprised, but not surprised because it has been our focus at our ability to generate organic growth.

Year over year growth. This quarter is the highest in the industry are and we plan on delivering on that going forward I don't know if you want to add anything from a U S perspective, yes. Thank you Victor so just to add that that we have been Oh I'll use the word the word pleasantly surprised but not surprised because it's been a it has been our focus.

At our ability to generate organic growth and all of our U S businesses. That's the commercial lending that's the wealth franchises with a seamless connection to our capital markets. Our colleagues in the U S and the growth has been across the board.

Speaker 11: in all of our U.S. businesses. That's the commercial lending. That's the wealth franchises with a seamless connection to our capital markets colleagues in the U.S.

Speaker 11: and and the growth has been across the board uh... we've built out our network of offices across the u s

We built out our network of offices across the U S and our our focus has been bringing our full capabilities of CIBC to each of those major cities. So you know looking forward.

Speaker 11: And our focus has been bringing our full capabilities of CIBC to each of those major cities. So you know, looking forward, we're just very optimistic on all our businesses in terms of lending growth, AUM growth, and capital markets, you know, connectivity to all our clients.

We're just very optimistic on all our businesses in terms of lending growth.

Growth in capital markets.

Connectivity to to all our clients and frankly, where we're making investments in those platforms as Victor mentioned this year and next year and you know again, where we're looking at a robust growth in all of those businesses in the U S.

Speaker 11: and uh... frankly were were making investments

Speaker 11: in those platforms, you know, as Victor mentioned, you know, this year and next year. And, you know, again, we're looking at robust growth in all those businesses in the U.S.

Thanks, Kent.

Yeah.

Speaker 3: Thank you. Our following question is from Ibrahim from Bank of America. Please go ahead.

Thank you. Our following question is on the Ebrahim <unk> from Bank of America. Please go ahead.

Hey, good morning.

I guess just following up on this team around investments Victor would you mind us as U S. S.

Speaker 12: I guess just following up on this theme around investments, Victor, remind us, as we think about…

As we think about.

Oh, you know what messaging around investments one.

Speaker 12: messaging around investments. One, are there certain gaps in your franchises relative to some of the bigger competitors that you think you need to catch up on?

Are there certain gaps in your franchise that relative to some of the bigger competitors that you think you need to catch up on.

So one that and secondly, as we think about your competitiveness.

Speaker 12: And secondly, as we think about your competitiveness with your larger peers, just give us a sense of how you see the bank as competitively positioned. Do you need to be more aggressive on pricing in order to get business, or is your digital offering at par or better? Any perspective there would be helpful.

Your larger peers does it give us a sense of how you see the bank is competitively position do you need to be more aggressive on pricing in order to get business.

Digital offering E at par or better.

Any perspective, there would be helpful.

Thanks, Ebrahim good morning, and good question. So overall the overarching theme at our bank and our strategic focus as a leadership team is to continue to invest to grow market share at the expense of our competition. We don't have any evident competitive gaps relative to our competition. We just wanted to press on our technology advantages.

Speaker 5: Thanks, Ibrahim. Good morning and good questions. So overall, the overarching theme at our bank and our strategic focus as a leadership team is to continue to invest, to grow market share at the expense of our competition.

Speaker 5: We don't have any evident competitive gaps relative to our competition, we just want to press on our technology advantages, both with our clients.

Both with our clients as well as to our relationship managers. So it's easier for them to do business and that's effectively what we're doing you look business by business by business, you look at personal and business banking.

Speaker 5: as well as to our relationship managers so it's easier for them to do business.

Speaker 5: and that's effectively what we're doing you look business by business by business you look at personal business banking

It is rejuvenated it is in growth mode. We are winning market share Lora you can comment on that in a moment you see that in the investments we've made in our credit card portfolio, our financial planning portfolio, our CRM portfolio as well as on a direct financial services business, which is there to attract the digital savvy clients you see that investment being made.

Speaker 5: rejuvenated. It is in growth mode. We are winning market share. Laura, you can comment on that in a moment. You see that in the investments we've made in our credit card portfolio, our financial planning portfolio, our CRM portfolio, as well as in our direct financial services business, which is there to attract a digital savvy client.

Speaker 5: You see that investment being made in our commercial bank and wealth management businesses in the US and Canada. We call that the private economy focus of our bank and the fact is the world is shifting more and more to private markets.

In our commercial banking and wealth management businesses in the U S and Canada, we called out the private economy focus of our bank and the fact is the world is shifting more and more to private markets and we're capitalizing that by investing in the business investing in our wealth platforms and investing in our in our relationship management and capital markets are the leader.

Speaker 5: And we're capitalizing that by investing in the business, investing in our wealth platforms, and investing in our relationship management. And in capital markets, the leadership positions that we have in foreign exchange, for example, has been a deliberate focus on investing in the foreign exchange platform and in our derivatives platform.

Ship positions that we have and foreign exchange for example has been a deliberate focus on investing in the foreign exchange platform and in our derivatives platform and then we have a unique growth engines, our unique growth engines, our direct financial services and you're going to hear more about that at our Investor day, our focus on innovation banking, where we bought the <unk>.

Speaker 5: And then we have our unique growth engines. Our unique growth engines are direct financial services, and you're gonna hear more about that in our investor day.

Speaker 5: our focus on innovation banking, where we bought the Wellington financial business. It had $152 million in venture loans, and today we have more than $3 billion in deposits, and almost $5 billion in authorized loans, and a leading technology bank that's focused on the recurring revenue aspect of technology, as well as the emerging life sciences sector.

Ellington financial business it at $152 million in venture loans and today, we have more than 3 billion in deposits and almost $5 billion in authorized loans and our leading technology bank. That's focused on the recurring revenue aspect of technology as well as the emerging life science sector and then.

Speaker 5: And then finally on energy, we're the number three renewable energy lender in North America. That shows leadership, that shows investment, not only in renewables, but also our commitment to the non-renewable energy sector through the transition strategy that we have. Laura, maybe you want to highlight on the retail side.

Finally on energy, we're the number three renewable energy lender in North America that shows leadership that shows investment not only in renewables, but also our commitment to the nonrenewable energy sector through the transition strategy that we have Laura maybe you want to highlight on the retail side.

How we've been winning.

Yeah.

Speaker 13: Well, thank you, Victor. I think you said it all, though. I don't know that...

Well. Thank you Victor I think he said it all though I don't know that has much more to add I think we've done a great job setting our strategic priorities and the rest quite frankly is just relentless execution and doing it with a sense of urgency. So we just continue to be as you said.

Speaker 13: much more to add. I think we've done a great job setting our strategic priorities and the rest quite frankly is just relentless execution and doing it with a sense of urgency. So we just continue to be, as you said Victor, focused on putting our clients first in everything that we do and just trying to remove as many pain points as we can in our client journeys and we're starting to see the results of that.

Victor are focused on putting our clients first in everything that we do and just trying to remove as many pain points as we can in our client journeys and we're starting to see the results of that and so I think we still have a lot to do but we're incredibly pleased with the progress that we've made to date and as you said.

Speaker 13: And so I think we still have a lot to do, but we're incredibly pleased with the progress that we've made to date, and as you said, we strongly believe that we can continue to deliver some really good momentum and growth in our business.

We strongly believe that we can continue to deliver some really good momentum and growth in our business.

Got it and just a quick follow up on her etch not sure. If you mentioned, how your outlook for the Canadian and U S margins and if anything at all in the U S. B P. P that we should be mindful off in terms of the resetting of that margin going forward. Thank you.

Speaker 12: Got it and just a quick follow up her at not sure if you mentioned your outlooks for the Canadian and US margins and if anything around the USPPP that we should be mindful of in terms of the resetting of that margin going forward. Thank you.

Yeah. Thanks, Thanks, Ebrahim I had a few comments in their remarks around margin outlook, but happy to two to provide a bit more color.

Speaker 9: i think that i think the brain i had a few comments in the remarks around the margin outlook but happy to uh... to to provide a bit more color

Speaker 9: And so what you've seen in our Canadian PNC business over the last little while is a bit of stabilization. While we have been declining quarter over quarter, that decline has gotten smaller and you see that two basis points just this quarter. And that's because the impact of lower interest rates is starting to trough.

So what you've seen in our Canadian P&C business over the last little while is a bit of stabilization in a while we have been declining quarter over quarter that decline has gotten smaller and you see that two basis points, just this quarter and that's because the impact of lower interest rates is starting to trust and the impact of the business mix changes.

Speaker 9: and the impact of the business mix changes with what we saw in the reduction in card balances and slowdown and reduction in unsecured credit, those things are starting to also trough. So as we look forward, we do think in the Canadian PNCB

With what we saw in the reduction in card balances and slowdown and reduction in unsecured credit those things are starting to also trusts and so as we look forward we.

We do think in the Canadian P&C business, even before we talk about the Costco portfolio, we think that our NIM will trough here in the next couple of quarters, and then stabilize from there and start turning positive.

Speaker 9: Even before we talk about the Costco portfolio, we think that NIM will trough here in the next couple of quarters and then stabilize from there and start turning positive.

Speaker 9: And with a Costco portfolio, given the margins on that product, that would add even further and that would add several basis points to that.

And then with the Costco portfolio given the margins on that product that would add even further and that would add several basis points to that in the U S. Our NIM, it's been reasonably stable at these elevated levels, but we've been very clear all along there is some level of prepayments activity and forgiveness activity.

Speaker 9: In the U.S., it's been reasonably stable at these elevated levels, but we've been very clear all along there's some level of prepayments activity and forgiveness activity on the PPP portfolio that is coming into margins and elevating that. It's moved around a bit, but this quarter it was about 7 and change U.S. or 10 million Canadians.

On the P. P. P portfolio that is coming into margins and elevating that that's a you know it's moved around a bit but this quarter. It was about a seven and change U S Ah or 10 million Canadian and so that's about 10 basis points on the margin. So as that plays through and we think that will happen and end in the next couple of quarters.

Speaker 9: And so that's about 10 basis points on the margin. So as that plays through, and we think that will happen and end in the next couple of quarters.

Speaker 9: You can see margins coming back to the $3.30s and then from there it all depends on the liquidity in the system and the deposits and the trajectory of deposit growth, but core product margins there in deposits and loans holding very strong, in fact in some places getting stronger, and the impact of interest rates will provide small tailwinds over time as well. So we think all of that bodes well for margins and it bodes well for NII growth for the bank.

You can see margins coming back to the three thirties, and then from there it all depends on the liquidity in the system in the deposits and the trajectory of deposit growth, but core product margins. There in deposits and loans are holding very strong in fact in some places getting stronger and our and the impact of interest rates will provide small tailwind over time.

As well, so where we think all of that bodes well for margins and it bodes well for NII growth for the bank.

Thank you.

Thank you.

Speaker 3: The following question is from Scott Chan from Canaccord Genuity. Please go ahead.

Question is from Scott Chan from Canaccord Genuity. Please go ahead.

Speaker 11: I just wanted to go back to you on the Canadian side and specifically on mortgages and I think Victor, you talked about getting to peer levels this quarter, so now that you're there, is it something that you want to kind of press above and continue and perhaps punch above peers as we look into next year or are you kind of satisfied with where you're at right now?

Yeah. Thanks, a lot more I just wanted to go back to you on the.

Well on the Canadian side, and specifically on mortgages and I think Victor you talked about getting to peer levels this quarter.

So now that you're there is it is it something that you wanted to kind of kind of press, a button and continue and perhaps punch above peers.

As we look into next year or are you kind of satisfied where you're at right now.

Well thanks Scott.

Speaker 13: look we're really pleased with uh... what we've managed to do uh... from a growth perspective and we continue to have a really good pipeline of activity uh... but never pleased there's always more to do so our intention is to continue to deliver i'd say really broad-based uh... quality client growth and so revenue growth uh... and volume growth and of course

Look we're really pleased with what we've managed to do from a growth perspective, and we continue to have a really good pipeline of activity.

But never pleased there's always more to do so our intention is to continue to deliver I'd say really broad based a quality client growth and so revenue growth and volume growth and of course.

Speaker 13: As we continue to sell across the board, we continue to really focus on franchising, or differently said, deepening our client relationships.

As we continue to sell across the board, we continue to really focus on franchising or differently said deepening our client relationships are we had a fantastic year. This year. So not only did we perform incredibly well when it came to new client acquisition, we did better on.

Speaker 13: I'm going to say a fantastic year this year, so not only did we perform incredibly well when it came to new client acquisition, we did better on client retention, and we did better on client franchising. And so we've made a lot of really good progress, and we see a lot of great opportunity ahead of us to continue to deliver strong market-leading growth.

<unk> client retention and we did better on client a franchising and so we've made a lot of really good progress and we see a lot of great opportunity ahead of us to continue to deliver a strong market leading growth.

Speaker 11: My second question, just on the real estate charge, I know she took one several quarters ago. Maybe you can describe what that charge related to and if there's any kind of future charges on the real estate side.

Alright, and just my second question just on the real estate charge I know she took one several quarters ago.

Maybe you can just describe what that charge related to and if there's any kind of future charges on the AR on the on the real estate side.

Yeah happy to do that thanks for the question and so this is a this is really relating to our the final stage I would say of our move into the first tower in our headquarters in Toronto and say you remember we did take one that was a few million dollars higher loss to Q4 and that was related to the number of the bill.

Speaker 9: Yeah, happy to do that. Thanks for the question. And so this is this is really relating to our the final stage, I would say, of our move into the first tower in our headquarters in Toronto. And so you remember, we did take 1 that was a few million dollars higher last Q4, and that was related to the number of buildings we exited in the leases we exited last year.

Things, we exited and at least as we exited last year and this is a the bulk of the remaining exits as we start moving in and today. We're at we're talking to you from CIBC square. So as we start moving into our new headquarters those leases that were exited now I'll remind you as we said last year. These are have positive payback over.

Speaker 9: And this is the bulk of the remaining exits as we start moving in. And today we're talking to you from CIBC Square.

Speaker 9: So as we start moving into our new headquarters, those leases that were exited. Now I will remind you, as we said last year, these have positive payback over a number of years. And so while we are taking the charges, we are saving ongoing real estate costs. And so this year, the occupancy line item did actually benefit from last year's exit.

Number of years until while we are taking the charges, we are saving ongoing real estate costs and so this year. The occupancy line item did actually benefit from last year's exit and what you'll see with this new a new charge as well is that we will get both of those charges benefiting on the occupancy line next year.

Speaker 9: And what you'll see with this new charge as well is that we will get both those charges benefiting on the occupancy line next year. And so with respect to our Toronto headquarter cost, if you will, or corporate real estate cost, what that allows us to do is moving into our new headquarters, actually keep the net cost flat from 2020 on.

And so with respect to our Toronto, a headquarter cost if you will or corporate real estate costs with that allows us to do is moving into a new headquarters actually keep the net cost flat.

From 2020 onwards, and overall occupancy includes a number of other items, obviously in it including our retail network. So there'll be some noise in that but with respect to our headquarters costs are we've moved into the new building, while retaining those expenses relatively flat with those exits.

Speaker 9: and overall occupancy includes a number of other items obviously and it's a including a retail network so there'll be some noise in that but with respect to our headquarters costs uh... we've moved into the new building while retaining those expenses relatively flat with those exits

Hi, Thank you very much.

Thank you.

Speaker 3: The following question is from Saurabh Movahedi from BMO Capital Markets, please go ahead.

One question is from Sohrab.

From BMO capital markets. Please go ahead.

Speaker 14: Yeah, thank you. I just wanted to go to Hari for a second, please. A few years ago, you had said the franchise was around a billion or so in earnings annually.

Yeah. Thank you I just wanted to go to Harry for a second please.

Few years ago.

You had said the franchise was around a billion or so in earnings annually.

Speaker 14: In the past couple of years, you've rolled in the DFS, which I think is probably.

In the past couple of years, you've rolled in the DFS, which I think he's probably.

Speaker 14: rough numbers, a couple hundred million dollars. So let's say relative to a baseline of

Numbers, a couple of hundred million dollars that so, let's say relative to our baseline.

Speaker 14: 1.3 billion, 1.3, 1.4 billion, you know, you did very well this year.

At 1.3 billion 131 4 billion.

You did very well this year.

Speaker 14: Where do you think your franchise is going forward and maybe you could talk us through Harry the geography of the income statement because presumably adding DFS will put a little bit more pressure on your PCL line but you will pick it up on the pre-tax pre-provision. I'm just trying to kind of get a feel for what's the franchise capability.

Where do you think your franchise is going.

Going forward and maybe you could talk us through Harry D. G.

The geography of the income statement, because presumably adding DFS will.

Could a little bit more pressure on your PCL line, but you will pick it up on the pretax pre provision.

Just trying to kind of get a feel for what's the franchise capability.

Speaker 14: from here on, and how it's going to be contributing to some of the broader metrics that Haraj and the team have talked about vis-a-vis the total bank operating leverage and so on and so forth.

From Hereon.

And how it's going to be contributing to some of the broader.

Metrics that Tara and her team have talked about vis vis the total bank operating leverage and so on and so far so.

Speaker 4: Good morning, Saurabh, and thank you for that question. The short answer is we see continued growth as we move forward in both revenue and PP in a very diversified manner. You've seen the delivery of strong performance in absolute and relative terms over the last several years, as you point out.

Good morning, Sarah and thank you for that question. The short answer is we see continued growth as we move forward in both revenue and Pee Pee in a very diversified manner.

You've seen the delivery of strong performance in absolute and relative terms over the last several years as you point out.

Speaker 4: This has been a consistent strategy that we continue to enhance, and we really are, I think, pleased with our leading PPE and NIAC growth this year and for the previous several years. So this is a differentiated platform, as Victor has said on his opening remarks. We remain very disciplined around our resources as a starting point, but we're continuing to build our leading capital markets platform for our core clients in Canada.

This has been a consistent strategy that we continue to enhance and we really are I think pleased with our with our leading P. P. NII growth this year.

And for the previous several years. So this is a differentiated platform as Victor has said in his opening remarks, we remain very disciplined around our resources as a starting point, but we're continuing we're continuing to build.

Our leading capital markets platform for our core clients in Canada.

Speaker 4: And we continue to grow market share. And you've seen growth in rankings in most league tables and, I think, truly enhanced client relationships across our platform.

And we continue to grow market share and you've seen our growth in rankings in most league tables, and I think truly enhance client relationships across our platform.

Speaker 4: We're also growing our U.S. platform, as Victor mentioned, and the doubling of the size of that platform since our last Investor Day until now has shown a leadership position in many of the areas that we're focused on, including the new economy, where we see the intersection of private capital, renewable, sustainable finance, key focus areas where we think we have a strong competitive advantage.

We're also growing our U S platform as Victor mentioned and the doubling of the size of that platform since our last Investor day until now has shown a leadership position in many of the areas that we're focused on including the new economy, where we see the intersection of private capital renewable sustainable finance key focus areas, where we think we have a strong competitive advantage.

Speaker 4: And we're also very focused, of course, by the way, just on the U.S., we saw 9% growth this year in U.S. dollar terms as well, which is therefore leading to a doubling over the last four years, just about.

And we're also very focused of course by the way just on the U S. We saw 9% growth this year in U S dollar and U S dollar terms as well.

So therefore, leading to a doubling over the last four years, just about and then of course the area of connectivity, we talk a lot about really diversifying our franchise by delivering capital markets products and solutions to commercial wealth and retail clients and that connectivity has been further enhanced by the inclusion of a direct financial services within our capital markets franchise and we're seeing.

Speaker 4: And then, of course, the area of connectivity we talk a lot about, really diversifying our franchise by delivering capital markets, products and solutions to commercial, wealth and retail clients. And that connectivity has been further enhanced by the inclusion of direct financial services within the capital markets franchise. And we're seeing revenues from non-traditional capital markets clients grow significantly at 27% year over year this year.

Revenues from nontraditional capital markets clients grow significantly at 27% year over year this year.

Speaker 4: So we may see some normalization of markets over the next little while. We expect to see continued robust activity, however, across our corporate and institutional client base, and you've seen some significant increases in our underwriting advisory and lending capabilities. And we continue to see growth in our global markets platform as well, which has great diversification across products, industries, and geographies.

So we may see some normalization of markets over the next little while we expect to see continued robust activity, however across our corporate and institutional client base and you've seen some significant increases in our underwriting and advisory and lending capabilities and we continue to see growth in our global markets platform as well, which has great diversification across.

Products industries and geographies.

Speaker 4: We think that we can deliver pre-provision earnings growth next year again and revenue growth in the higher single-digit area as we go forward. This is well above pre-pandemic levels, as you will note. So in terms of geography, continued focus on the U.S. You know, 25% of our income is approximately the level we come from with respect to the U.S. platform, and we expect to see further resources deployed into the United States.

We think that we can see we can deliver pre provision earnings growth next year again and revenue growth in our <unk>.

Single digit area as we go forward. This is well above pre pandemic levels. As you will note. So in terms of geography continue to focus on the U S.

Hum.

25% of our of our of our income is approximately the level, we come from with respect to the U S and our platform and we expect to see further resources are deployed into the United States.

Speaker 14: Harry, just to be crystal clear relative to let's say 18 or 19.

Harry just to be crystal clear relative to lets say 18 or 19, you're.

Speaker 15: you're maybe 800 million higher on pre-tax pre-provision at the end of this year, and you think you can grow off of this year's pre-tax pre-provision, which is I think around 2.4 billion if I've done my math right. Yeah, that's correct. It's right around 2.4 billion. If you think back to pre-pandemic levels, we were in the 400, mid 400s, call it, pre-provision earnings per quarter. And we think we can generate north of 600 million per quarter on an average basis this year going forward. Very much.

You're maybe 800 million higher on pretax pre provision at the end of this year and you think you can grow off of this year's pretax pre provision, which is I think around $2 4 billion. If I've done my math right. Yeah. That's that's correct. It's right around $2 4 billion. If you think back to pre pandemic levels. We were in the 400 mid <unk>.

400 call it pre provision earnings per quarter, and we think we can we can generate north of $600 million per quarter on an average basis this year going forward.

Very much very much appreciate that thank you.

Thank you. Following question is from Darko <unk> from RBC capital markets. Please go ahead.

Speaker 3: The following question is from Darko Mielek from RBC Kavdoma.

Speaker 10: Hi, thank you. I just wanted to go down the line of questioning of your priorities and expenses a little bit more, but I think my questions are actually though for for Victor and for Laura, the first one.

Alright. Thank you I just wanted to go down the line of questioning of your bigger priorities and expenses a little bit more so I think my questions are actually though or for Victor and for Laura The first one.

Speaker 16: Victor, in your remarks, your prioritization of spending and investing, it made it sound like on the retail side that it was more about relationships.

Has to do with the victory in Europe in your remarks your prioritization.

Spending and investing it made it sound like in on the retail side.

That you know it was more about relationships and there I just want to understand I mean or more of the.

Speaker 16: And there, I just want to understand more of the personal experience. And I'm just trying to think my way through what that means because, you know, from a branch perspective, it's been very stable, very close to the next two largest banks in Canada in terms of number of branches.

The personal experience and I'm, just trying to think where my way through what that means because you know from a branch perspective, it's been very stable very close to the next two largest banks in Canada in terms of number of branches, it's hard to tell sometimes with employees because each bank sort of reports differently, but I tend to think of the employee.

Speaker 16: It's hard to tell sometimes with employees because each bank sort of reports differently, but I tend to think of, you know, the employee count as being relatively similar. So I'm just trying to understand.

E count as being relatively similar so I'm just trying to understand.

Speaker 16: what specifically the investment is to further enhance the personal experience in Canada.

What specifically the investment is to further enhance the personal experience in Canada.

Speaker 16: And when I think of, you know, further with the question earlier about gaps, you know, relative to peers, I can think of a couple like auto lending, for example, or maybe small business. I don't know. But, but maybe, maybe you can just.

When I think of you know further with the question earlier about gaps relative.

Relative to peers I can think of a couple like auto lending for example, or maybe small business I don't know, but but maybe maybe you can just touch on what it is you're investing on in the personal franchise too to really enhance that experience and how and where I should look for the impact should I look for the <unk>.

Speaker 16: what it is you're investing on in the personal franchise to really enhance that experience and where I should look for the impact. Should I look for the impact in continued growth in mortgages or should I look for the impact somewhere else? That would be very helpful for me.

And continued growth in mortgages or should I look for the impact somewhere else that would be very helpful. For me. Thank you.

Okay.

Speaker 13: Well, thanks, Darko. Why don't I start, and then Victor can take it from there. So more specifically to the personal and business bank.

Well, Thanks, Darko why don't why don't I start and then Victor cannot take it from there so more specifically to the personal and business bank the.

Speaker 13: The investments we're going to continue to make are all about supporting the strategic priorities that I believe we've shared previously. So that includes where we want to increase our sales force effectiveness.

Investments, we're going to continue to make are all about supporting the strategic priorities that I believe we've shared previously so that includes where we want to increase our salesforce effectiveness. Our productivity, we want to continue with our Digitization and end to end straight through processing and then we want to increase all of our clients.

Speaker 13: our productivity. We want to continue with our digitization and end-to-end straight through processing. And then we want to increase all of our client engagement, so call that personalization. So you're going to see us continue to invest in our frontline tools.

<unk>, so call that personalization, so youre going to see us continue to invest in our frontline tools.

Speaker 13: So that's where we continue to roll out some of our modernized platforms like our Client Relationship Manager. We're going to roll that out to all of our frontline roles in the personal and business bank. And we think that's going to help us continue to increase our sales force productivity and we think it will also help us with better client engagement.

So that's where we continue to rollout some of our modernized platforms like our client relationship manager, we're going to roll that out to.

All of our frontline roles in the personal and business Bank and we think that's going to help us continue to increase our sales force productivity and we think it will also help us with better client engagement.

Speaker 13: And then we've talked a lot about this as it relates to digital first. So we're going to continue to build out our digital self-serve capabilities and all of our digital experiences. So I think you saw we released this year our digital identity verification tool. We had virtual card issuance for debit and credit cards. We released CIBC Insights. Just to name a few, and we're going to continue to build upon that. So all of it just to ensure that we can continue to deliver.

And then we've talked a lot about this as it relates to digital first so we're going to continue to build out our digital self serve capabilities in all of our digital experiences. So I think you saw we released our this year our digital identity verification tool, we had virtual card issuance for debit and credit cards to be released.

A b C insights just to name a few and we're going to continue to build upon that so all of it just to ensure that we can continue to deliver sustainable performance and all of it to allow our clients to engage with us in the way, they're most comfortable and maybe with that I'll hand, it back to Victor to elaborate more sure.

Speaker 5: sustainable performance and all of it to allow our clients to engage with us in the way they're most comfortable. And maybe with that, I'll hand it back to Victor to elaborate more. Sure. So, Darko, it's a good question. What we've seen

Darko, it's a good question, but what we've seen.

Speaker 5: is every dollar of investments that we're making is generating an uplift in our pre-provision earnings because we're laser focused on making sure that our investments are working hard for our clients, are working hard for our shareholders.

As every dollar of investments that we're making is generating an uplift in our pre provision earnings.

Because we're laser focused on making sure that our investments are working hard for our clients are working hard for our shareholders you referenced auto lending, while we're the smaller one where the growing market share faster than anybody else's. We've invested in that business. We're investing in relationships, Florida has articulated that you know the investment we've made in CIBC go planner.

Speaker 5: You referenced auto lending. While we're the smaller one, we're the growing market share faster than anybody else.

Speaker 5: We've invested in that business. We're investing in relationships. Laura's articulated that. You know, the investment we've made in CIBC Goal Planner, our CRM investments for our relationship managers, better client experiences is driving a better result. You see that in a higher client experience score for us. Quite frankly, a record score for us, and we still have headway to make against our competitors, and we're gonna make that headway. We're gonna close that gap through these further investments.

Our CRM investments for our relationship managers better client experiences is driving a better result, you see that in a higher client experience score for us quite frankly, a record score for us and we still have headway to make against our competitors and we're going to make that headway, we're going to close that gap through these further investments the other thing that we're going.

Speaker 5: The other thing that we're going, and these investments that we're making are not only in technology, they're in our people. Our imperial service continues to remain a competitive advantage in the marketplace.

And these investments that we're making are not only in technology that are there on our people. Our imperial service continues to remain a competitive advantage in the marketplace larger average account size at the retail level than many of our competitors because of the the competitive advantage. We have there we will continue to invest in our banking centers because they I believe.

Speaker 5: larger average account size at the retail level than many of our competitors because of the competitive advantage we have there. We will continue to invest in our banking centers because I believe they continue to be a focal point for building relationships alongside the technology investments we're making.

They continue to be a focal point for building relationships alongside the technology investments, we're making and we will invest in this emerging direct segment, where we see fintech competitors starting to nibble away a business. We know open banking is coming our DFS business was set up to have to defend.

Speaker 5: and we will invest in this emerging direct segment where we see fintech competitors

Speaker 5: starting to nibble away at business. We know open banking is coming. Our DFS business was set up.

Speaker 5: to defend, but to more importantly get that 85% of the market that we don't own. That's going to go after the direct client while we manage our relationships to the personal and business bank. I don't know here if you want to add anything else on the DFS side, but we're going to see more client acquisition growth, particularly in a simply direct bank where you've been adding capability.

But more importantly get that 85% of the market that we don't own that's going to go after the direct client, while we manage our relationships through the personal and business banking I don't know here. If you want to add anything else in the DFS side, but we're gonna see more client acquisition growth, particularly in our simply direct bank, where you've been adding capability.

Yes. Thank you Victor you know clearly the direct financial services on a very nice growth path and wait just a reminder for everybody. We've got the three businesses within direct financial services, we've got investors edge. That's the direct investing for the do it yourself clients. We've got simply our direct no fee banking for digital savvy and value conscious clients. We brought the alternate solutions group.

Speaker 15: Yeah, thank you, Victor. Clearly, Direct Financial Services is on a very nice growth path. Just a reminder for everybody, we've got the three businesses within Direct Financial Services. We've got Investors Edge, that's direct investing for the do-it-yourself clients. We've got Simpli, our direct no-fee banking for digital savvy and value-conscious clients. We've got the Alternate Solutions Group, which is really our institutional fintech business built on leading FX technology.

Which is really our institutional fintech business built on leading FX technology, and we are we believe as the market as the economies continue to progress through the pandemic, we see an opening up in terms of travel we see a movement in interest rates that these businesses will have some very good tailwind. So we're quite optimistic about the future.

Speaker 15: And we believe as the economies continue to progress through the pandemic, we see an opening up in terms of travel, we see a movement in interest rates, that these businesses will have some very good tailwinds. So we're quite optimistic about the future in terms of attaining market share and growth generally.

In terms of attaining market share and growth generally.

And I think he said.

Speaker 16: Yes, actually I did have a follow-up on that and I'm glad you sort of weaved or moved the discussion to the director.

Yes, actually I just have a follow up on that and I'm glad you're sort of week or in a movie.

Move the discussion to the direct.

Speaker 16: And I'm glad you touched on it because I do have a question on it with respect to

And I'm glad you touched on it because they do have a question on it with respect to the.

Speaker 16: the direct business. The one thing that we can see, which you guys do provide us, is the revenues in the direct business. And it's up. I mean, if I look at annually anyway,

The direct business you know the one thing that we can see what you guys do provide US is is the revenues in the direct business and it's up I mean, if I look at it annually anyway.

It's up almost 17%.

Speaker 16: you know, almost 17% in 2021.

In 2021, and so the question is what's driving that is it investors edge is it simply wasn't the alternative.

Speaker 16: And so the question is, what's driving that? Is it Investors Edge? Is it Simpli or is it the Alternative Solutions Group in 2021?

Solutions group in 2021, and what are you most excited about in 2022 for that business.

Speaker 16: and what are you most excited about in 2022 for that business?

Speaker 15: I'll take that. Thank you for the question again. So obviously, Investors Edge benefited from record trading volumes in the second half of fiscal 20 and through 2021.

That thank you for the question again, so obviously investors edge benefited from record trading volumes in the second half of fiscal 'twenty and into 2020 one.

Speaker 15: We do expect a normalization of trading volumes, but expect our franchise to grow.

We do expect a normalization of trading volumes, but expect our franchise to grow we spent to take market share. So we've been making some significant investments as Victor pointed out.

Speaker 15: uh... we've got to take market shares we've been making significant investments as victor pointed out

Speaker 15: We're investing in talent, we're investing in technology, and we're protecting our market share, but we believe we can grow our market share and increase our penetration with our CIBC clients. Our teams are working very closely together to make that happen.

We're investing in talent, we're investing in technology, and we're protecting our market share, but we believe we can grow our market share and increase our penetration with our our CIBC clients. Our teams are working very closely together to make that happen the largest area of growth perhaps could be our alternative solutions group next year. This is our fintech as I mentioned built on leading FX and payment solutions and.

Speaker 15: The largest area of growth perhaps could be our Alternative Solutions Group next year. This is our FinTech, as I mentioned, built on leading FX and payment solutions. And our focus on investments pre and during the pandemic are really our paying dividends as we see outsized growth with the opening of the global economies.

Our focus on investments pre and during the pandemic are really are paying dividends as we see outsize growth with the opening of the global economies. We're seeing increased travel of course international students, arriving and attending universities, which is all part of that business and that business can grow in the double digits, perhaps north of 20% next year and then of course are simply.

Speaker 15: We're seeing increased travel of course, international students arriving and attending universities which is all part of that business and that business can grow in the double digits, perhaps north of 20% next year and then of course our Simply franchise, we expect to grow over the median term as interest rates normalize and as we cross sell to existing clients and onboard new clients. So we're really encouraged with the results that you've seen but we're more confident that we can deliver value to our clients and grow these businesses as we move forward.

We expect to grow over the medium term as interest rates normalize as we cross sell to existing clients and onboard new clients. So we're really encouraged with the results that you've seen but we're more confident that we can deliver value to our clients and grow these businesses as we move forward Darko when you visit us on June 16th for Investor Day will get even more details on the business.

Speaker 5: Darko, when you visit us on June the 16th for Investor Day, you'll get even more details on the business.

Speaker 16: Thanks very much for that. I appreciate it. And to be clear, are you at zero trading commission in Investor's Edge?

Thanks, very much for that appreciate it and to be clear are you are you at zero trading Commission an investors day.

No. We are you know we build relationships Darko, we're very competitively priced more competitively priced than most of the competition out there.

Speaker 5: No. We build relationships, Darko. We're very competitively priced. More competitively priced than most of the competition out there.

Great. Thanks very much.

Thank you.

Speaker 16: The next following question is from Mario Mendonca from PD Securities. Please go ahead. Good morning. I want to go to a very different topic, the legal provisions. We saw a second one this quarter. So $40 million this quarter, $85 million last quarter. I know it's not appropriate to get into the details, like what this actually relates to, but could you talk about are these provisions related to the same matter? And what do you believe going forward? Could we see further meaningful provisions related to this?

The following question is from Mario Mendonca from TD Securities. Please go ahead.

Good morning, I want to go to a very different topic. The legal provisions we saw a second one this quarter. So $40 million is for 85 million last quarter.

No, it's not appropriate to get into the details like what these but this actually relates to but could you talk about.

Are these provisions related to the same matter and what do you believe going forward could we see further meaningful provisions related.

Related to this.

Speaker 9: Yeah, thanks. Thanks for the question, Mario. It's rush. I'll take that. Um, you know, while we don't speak about these in detail, as you said, and specifically to matters, I'm happy to give you a bit of color.

Yeah. Thanks, Thanks for the question Mario It's Raj I'll take that well, while we don't speak about these in detail as he said specifically to matters I'm happy to give you a bit of color.

Speaker 9: And I'll start saying legal liabilities do arise in our business as part of the normal course and we don't treat them all as items of note and so we've had some this year that we haven't. What you're seeing is the ones that we truly think are unusual in nature and therefore are treated as items of note based on their nature and based on their quantum.

And I'll start, saying legal liabilities do arise in our business as part of the normal course, and we don't treat them all as items of note and so we've had some this year that we have and what you're seeing is the ones that are we truly think are unusual in nature and therefore are therefore treated as items of note based on their nature and based on their quantum.

Speaker 9: And, you know, I think what I would point you to is, if you look at note 23 to our statements in the annual report, you've got a listing of all of the ongoing matters. And you'll notice some of them have had some changes and updates to them, including ones where we have noted that we've got agreements to settle them.

And you know I think our what I would point you to is if you look at note 23 to our statements in the annual report you've got a listing of all of the ongoing matters and you'll notice some of them have had some changes and updates to them Oh.

<unk> ones, where we have noted that we've got our agreements to settle them and so you know that's that's as far as I'll go as related to those matters and so the good news is to your question about the future.

Speaker 9: And so, you know, that's as far as all goes related to those matters. And so the good news is to your question about the future, the charges we've taken and you referenced in these two quarters related to matters that are behind.

The charges, we've taken any reference in these two quarters related to matters that are behind us.

Okay. That's helpful and then private sticking with you on the capital ratios.

Speaker 17: That's helpful. And then probably sticking with you, Hrach, on the capital ratios, it sounds like the bank, through growth and buybacks, will see the CET1 ratio trend a little lower. Do you have a bogey in mind? Like, how much lower can you go? Could you see the bank break through 12% and sink into something like 11.8 or 11.9 capital ratio to support growth and buybacks, or is 12 an appropriate level? Yeah, I'm happy to.

It sounds like the bank.

Through growth and buybacks, we'll see the CET one ratio trend a little more.

Do you have a bogey in line like how how much lower can you go can you see the bank breakthrough, 12% second to something like 11, eight or 11 non capital ratios to support growth in buybacks or is 12, an appropriate level.

Yeah, I'm happy to happy to start with that Mario.

Speaker 9: I think we have a very solid capital position to start. We also have very solid generation. Like you noticed this quarter, we had 27 basis points of generation, but that was impacted by the charges that were fairly significant this quarter. And so on an ongoing basis, we feel comfortable generating over 30 basis points of capital.

I think we have very solid capital position to start we also have very solid generation like you notice. This quarter, we had 27 basis points of generation, but that was impacted by the charges that were fairly significant this quarter and so on ongoing basis.

We feel comfortable with generating over 30 basis points of capital and we're starting from that 12, 4% as I mentioned in my remarks, we are deliberately planning to draw down on that ratio and that's because we continue to believe the highest and best use of our capital given our marginal returns across all of our businesses is to organically.

Speaker 9: And we're starting from that 12.4%. As I mentioned in my remarks, we are deliberately planning to draw down on that ratio, and that's because we continue to believe the highest and best use of our capital, given our marginal returns across all of our businesses, is to organically invest that capital to support our clients and for the benefit of our shareholders. So we will continue to do that to the extent that we can and to the maximum extent that we can within risk-adjusted measures.

Invest that capital to support our clients and for the benefit of our shareholders. So we will continue to do that to the extent that we can and to the maximum extent that we can within our risk adjusted measures and so as we do that plus take on the Costco portfolio. When we talked about the cost of a portfolio. When we announced that that's going to be just north of 20 basis points of impact.

Speaker 9: And so as we do that, plus take on the Costco portfolio, and we talked about the Costco portfolio when we announced it, that's gonna be just north of 20 basis points of impact. So those things will draw down on the capital, but between the generation and the strong place we're starting from, I think that will still leave us in that sort of 12 plus.

So those things will draw down on the capital, but are you know between the generation and a strong place where starting from I think that would still leave us a in that sort of 12 plus range.

Speaker 9: And from that point on, it's about what we do with the rest of the capital and our levers remain unchanged. We've announced a 10% dividend increase this quarter. We will continue to assess our dividend and continue to try to remain in the middle of our range.

And from that point on it's about what we do with the rest of the capital and our leverage remain unchanged, we have announced the 10% dividend increase this quarter, we will continue to assess our dividend and continue to try to remain in the in the middle of our range and as needed we will adjust the dividend and beyond that will we will look at potential for share buyback, we announced our intention.

Speaker 9: and as needed we will adjust the dividend and beyond that we will look at potentials for share buyback. We announced our intention to start an NCIB program. That gives us a...

To start in N T I D program.

That gives us a lever and we might look at tuck ins in terms of acquisitions, we've talked about that but you know beyond the 12% I think that the laser focus is going to be shareholder returns and generating shareholder value and returning capital at that point. We believe is the better thing to do we may return more of that capital through the buyback and go below.

Speaker 9: We might look at tuck-ins in terms of acquisitions, we've talked about that, but beyond the 12%, I think the laser focus is going to be shareholder returns and generating shareholder value and if returning capital at that point we believe is the better thing to do, we may return more of that capital through the buyback and go below the 12%.

12%, if we believe keeping it for future organic growth is the thing to do for shareholders and that's what we'll do and we will treat acquisitions with the same lines financial and strategic value for our shareholders.

Speaker 9: if we believe keeping it for future organic growth is the thing to do for shareholders and that's what we'll do and we will treat acquisitions with the same lines financial and strategic value for our share

Speaker 9: Do you expect to go back to raising dividends twice a year, or do you think you'll go to the annual now, the way several other banks are thinking? Yeah, Mario, I wouldn't look at it as annual or twice a year, or frankly, we look at it on an ongoing basis. We assess every quarter where we're trending relative to our targets. We assess where we are with respect to our expectations of future earnings, and we'll adjust it as needed to stay at the level that we want to stay at.

Do you expect to go back to raising dividends twice a year or do you think you'll go to the annual meeting.

Several other banks are thinking.

My I wouldn't look at it as annual or twice a year or frankly, we look at it on an ongoing basis, we assess every quarter, where we're trending relative to our targets, we assess where we are with respect to our expectations of future earnings and we'll adjust it as needed to stay at the level that we want to staff.

Thank you.

Thank you.

Speaker 3: Thank you. The following question is from Doug Young from Desjardins Capital Markets. Please go ahead.

Question is from Doug Young from Desjardin.

Capital markets. Please go ahead Sir.

Speaker 18: I'll hopefully keep this relatively quick. Thanks for taking the question. So, Sean, just, you know, there was a small pickup in new retail gross impaired loan formations quarter over quarter, year over year. It doesn't look like that's in Canada and the U.S., but maybe I'm wrong. Hoping to get a little bit of color on that. And then I assume as well that the performing loan build in Canada, small business banking, I assume that's related to the earlier discussion about the parameter changes. But if not, then a little color on that.

Well hopefully keep this relatively quick thanks for taking the question. So as Sean just yeah. There was a small pickup in new retail gross impaired loan formations quarter over quarter year over year. It doesn't look like that's in Canada, and the U S, but maybe I'm wrong, hoping to get a little bit of color on that and then I assume as well that the performing loan build.

In Canada.

Mall business banking I assume that's related to the earlier discussion about the parameter changes, but if not then a little color on that.

Yeah. Thanks, Doug So yes, it's it's a slight build in AR in performing was in a R. P. B B segment and really relates to those model parameter updates we had some deterioration in the EF allies, but that was more off more than offset by releases of management a management overlays from prior.

Speaker 7: Yeah, thanks Doug. So, yes, the slight build in performing was in our PVB segment and really relates to those model parameter updates. We had some deterioration in the FLIs, but that was more than offset by releases of management overlays from prior quarters. So, the uptick this quarter was really reflective of that parameter.

So the uptick this quarter was really reflective of a of a parameter.

Parameter update and.

Speaker 7: And, you know, our outlook for performing sort of remains similar to what we've talked about in prior quarters in so much as, you know, we've...

Outlook for for performing sort of remains similar to what we've talked about in prior quarters and so much as you know we've we've we recognize significant performing build in 2020, we've released about 44% of that so far and as long as the economic activity sort of plays out.

Speaker 7: We recognize significant performing build in 2020. We've released about 44 percent of that so far.

Speaker 7: And as long as the economic activity sort of plays out in alignment with our outlook, then we expect to continue to see releases as we saw, you know, each quarter in fiscal 21, releases of performing provisions as we move through 2022.

In alignment with our outlook, we would expect to continue to see releases as we saw each quarter in fiscal 'twenty. One our releases are performing provisions as we move through 2020 two.

Okay, and then just second in the U S wealth management, obviously, Victor you've said, that's our focus but we did see a decline quarter over quarter, and just wealth management loans and I don't know if theres, a misstatement, there or something's going on but I'm just curious.

Speaker 18: Okay, and then just second in the U.S., wealth management, obviously, Victor, you've said that's a focus, but we did see a decline quarter over quarter in just wealth management loans. And I don't know if there's a restatement there or something's going on, but just curious.

Right.

Speaker 11: I didn't see any decline at all, Doug. In fact, the business has been growing on net flows, on market appreciation, on deposits, and on mortgage growth in the U.S. So maybe there's some sort of recategorization that we can refer to after the call cap. I mean, I think you're seeing the same thing, right? Yeah, absolutely. You know, on our wealth management businesses, on AUM growth.

I didn't see any decline at all Doug in fact that business has been growing on net flows and market appreciation on deposits and on.

Mortgage growth in the U S. So maybe there's some sort of re categorization that we can refer to you. After the Cold Cup I mean, I think you're seeing the same thing right, yes, absolutely.

Or are you now on our wealth management businesses on a growth.

Speaker 11: uh... has been robust as we continue to build out our are uh... our private banking uh... capabilities you know across our platform you know we we anticipate uh... you know growth looking forward

<unk> has been robust and as we continue to build out our our our private banking capabilities.

Cross our platform you know, we we anticipate our growth looking forward.

Yes, just related to that I could take it just really FX related Doug it's FX related.

Speaker 18: Yeah, it just relates to the... I can take it offline. Oh, yeah. It's FX-related, Doug. It's FX-related, so... Yeah. Okay. Yeah, no. Okay.

Okay, Yeah no okay.

Thank you.

Speaker 3: The following question is from Nigel D'Souza from Veritas Investment Research.

Following question is from Nigel D'souza from Veritas investment research. Please go ahead.

Speaker 15: Thank you. Good morning. Thanks for taking the question. I wanted to follow up on the line of questioning for looking variables here. When I turn to your disclosure on page 44 of your presentation.

Thank you good morning, Thanks for taking the question I wanted to follow up on.

The one question your forward looking variables here and when I turned to your disclosure on page 44 of your presentation and I look at your downside case, it looks like the variables there are a bit optimistic and I say that within the context of the emergence of the recent COVID-19, Varian. So is there a risk that you'll have to revise.

Speaker 9: And I look at your downside case, it looks like the variables there are.

Speaker 9: a bit optimistic, and I see that within the context of the emergence of the recent COVID-19 variant. So, is there a risk that you'll have to?

Speaker 9: revise those assumptions lower and would that limit the potential for future releases of performing allowances?

Those assumptions lower and would that will limit the potential for future releases are performing allowances.

Hey, Nigel Thanks for the question so.

Speaker 7: Look, these were set as of a particular date, so before Omicron was on the horizon. That said, they were set at a time where the Delta variant activity was.

But these were set up as of a particular date. So before omicron Ah was on the horizon that said they were set at a time, where the Delta Varian activity was front and center and we did increase slightly the weighting to our downside scenario and coming up with our U C. L. A numbers this quarter, so I'd say.

Speaker 7: front and center and we did increase slightly the weighting to our downside scenario in coming up with our

Speaker 7: ECL numbers this quarter. So I'd say, you know, part of that activity is, is reflected. But to your point, you know, we have to see how the economic activity plays out. We feel good about where we are right now. But, you know, we were all watching with, with great interest in terms of transmissibility, you know, severity and the efficacy of vaccines against this newest.

You know part of that activity is is reflected but to your point you know we have to see how the economic activity plays out we feel good about where we are right.

Right now, but you know we were all watching with with great interest in terms of Transmissibility.

Severity and the efficacy of vaccines against this newest are emerging a variant of concern, but we did increase the downside slightly our in our ECL calculations. This quarter, so that should provide some level of of coverage.

Speaker 7: emerging variant of concern, but we did increase the downside slightly in our UCL calculations this quarter, so that should provide some level of coverage.

Depending on how things play out.

Speaker 9: That's helpful. Let me just quickly follow up on the same topic here. It looks like you're disclosing the household DSR assumption, the debt service ratio assumption in your forward-looking information. Correct me if I'm wrong. I don't think you've… I don't think you've… I don't think you've… I don't think you've… I don't think you've… I don't think you've…

That's helpful and I can just quickly follow up on the same topic here it looks like your.

Disclosing the the household DSR assumptions the debt service ratio assumptions in your forward looking information and correct me if I'm wrong I don't think you've.

I suppose that in the past so could you just provide some color is that something you've always considered and something you're highlighting now and how does that feed into your expected credit loss modeling.

Speaker 9: I suppose that in the past, so could you just provide some color, is that something you've always considered and something you're highlighting now and how does that feed into your expected credit loss modeling? Yes, so it's one of the drivers of our UCL activity and we thought it was relevant to include it in our disclosures. It really drives the consumer, part of our consumer businesses. Okay, and your base case assumes two rate hikes in 2022, I assume?

So it's it's it's a it's one of the drivers of our U C O activity than we thought it was relevant to to include it in our in our disclosures is it really drives the consumer part of our consumer businesses.

Okay. In your base case assumes two rate hikes in 2022 I assume.

Correct Okay.

Great. That's it for me thank you.

Thank you.

Speaker 3: Our last question is from Lamar Persaud from ComRack Security.

Our last question is from Nomura.

[laughter] from Mexico.

Yeah.

Speaker 9: Hi, just a point of clarification on some of the earlier discussion on expenses for Hrach. Hrach is a mid-single-digit outlook on expenses inclusive of performance-based comps, or is that excluding performance-based comps?

Hi, Yeah, just a point of clarification on some of the earlier discussion on our expenses for her ACH or I shouldn't say mid single digit Oh look on expenses inclusive of performance based comp or is that excluding performance based comp.

Speaker 9: Yeah, thanks. Thanks for the question, Lamar. And, uh, you know, next year we had a very strong year this year and performance based compensation for that reason was up.

Yeah. Thanks, Thanks for the question Lamar and you know next year, we had a very strong year. This year and performance based compensation for that reason. It was up next year. We also plan to have a strong year, but because we're starting from a strong year on a year over year basis performance based compensation, we don't expect it to be as major a factor and so.

Speaker 6: Next year, we also plan to have a strong year, but because we're starting from a strong year on a year-over-year basis, performance-based compensation, we don't expect it to be as major a factor.

Speaker 6: And so I think you end up in that mid-single-digit range, with and without.

So I think you end up in that mid single digit range with and without and I think and I'll take the opportunity to sort of stress some of the there's a lot of discussion of expenses and investments, but our approach to investments and the way we construct our portfolio investing in growth for the short term medium term and long term across all of the areas we've covered today.

Speaker 6: You know, I think, and I'll take the opportunity to sort of stress some of the, there's a lot of discussion of expenses and investments, but our approach to investments and the way we construct our portfolio, investing in growth for the short term, medium term and long term across all of the areas we've covered today, but we construct the portfolio in order to contribute to earnings as we go along. And so, while we will have

But we construct the portfolio in order to contribute to earnings as we go along and so while we will have higher expenses without that performance based compensation next year with mid single digit persistent low single digit. This year, we do expect our investments and our expenses to pay off in year end. So there is a few percent positive contribution to.

Speaker 6: higher expenses without that performance-based compensation next year with mid-single-digit versus low-single-digit this year.

Speaker 6: We do expect our investments and our expenses to pay off in year, and so there's a few percent positive contribution to pre-tax, pre-provision earnings from our strategic investment portfolio.

Pre tax pre provision earnings from our strategic investment portfolio next year.

Speaker 9: Okay, thanks. I just want to continue along the lines of the expenses here. I want to circle back to the commentary suggesting that operating leverage at the start of 2022 may be

Okay. Thanks, So I just want to continue along the lines of the expenses here just I want to circle back to the commentary, suggesting that operating leverage at the start of 2022 baby chat.

Speaker 9: Is there an element of timing of expenses? Maybe you're talking about a step up in the first half and then a decline in the back half of the year, or is the improvement in operating leverage in the back half of the year more related to the expectation for acceleration of revenue growth rather than a step down in expenses? That's a good question.

Challenge there element of timing of expenses. So maybe maybe you were talking about it.

Up in the first half and then a decline in the back half of the Aero is the improvement in operating leverage in the back half of the year are more related to the the expectation for acceleration of revenue growth rather than a.

Step down in expenses by asking because revenue grows had mentioned there was very strong in the back half of 'twenty 'twenty. One I think it was 7% last quarter and then as mentioned 10% in Q4, so any thoughts there would be helpful.

Speaker 9: Revenue growth, as mentioned, was very strong in the back half of 2021. I think it was 7% last quarter and then, as I mentioned, 10% in Q4. Any thoughts there would be helpful.

Yeah happy to offer them Tomorrow and do we you know as we've said we've got a bank that's built for growth and we were in a dynamic industry and we're not standing still so we're continuing to invest and we don't manage the business on a quarterly basis, we're managing the business for the long term and we look at our operating leverage over the long term. So there's a number of factors that are playing.

Speaker 6: Yeah, happy to offer them, Lamar. And as we've said, we've got a bank that's built for growth.

Speaker 6: and we're in a dynamic industry and we're not standing still so we're continuing to invest.

Speaker 6: and we don't manage a business on a quarterly basis. We're managing the business for the long term and we look at our operating leverage over the long term. So there's a number of factors that are playing in. One, we continue to invest in a number of areas and a lot of these times you're investing for technology build, you're investing to hire people who will generate revenues or to service our clients.

And one we continue to invest in a number of areas and a lot of these times you are investing for technology build you're investing to hire people, who will generate revenues or to service our clients and so Costco with one example, I mentioned, we are hiring a head. We are building technology ahead and revenues come after the fact and the.

Speaker 6: And so, Costco was one example I mentioned. We are hiring ahead. We are building technology ahead. And revenues come after the fact. In the U.S., we are continuing to invest. We're investing in the infrastructure. We're investing in frontline people. And again, all of those things, we are continuing to invest because we believe in the returns. We've got very solid business cases and a rigorous process for tracking execution and holding ourselves accountable to deliver the benefits. That's worked for us so far. And so, we've got the confidence to invest for those revenues.

U S. We are continuing to invest we're investing in the infrastructure, we're investing in frontline people and again all of those things we are continuing to invest because we believe in the returns we've got very solid business cases in a rigorous process for tracking execution and holding ourselves accountable to deliver the benefits that's worked for us so far and so we've got the confidence to invest.

Are those revenues in the last part I'll say is the environment, we've talked about the constructive environment and some of the loan growth continuing and accelerating potentially in the commercial businesses and we've got the interest rate environment looking better until all of those things will generate the revenues. We expect it is not a expense reduction in the back half of the year we were take.

Speaker 6: And the last part I'll say is the environment. We've talked about the constructive environment and some of the loan growth continuing and accelerating potentially in the commercial businesses.

Speaker 6: We've got the interest rate environment looking better and so all of those things will generate the revenues we expect. It is not a expense reduction in the back of the year. We're taking a very consistent approach to our expenses and our investments.

A very consistent approach to our expenses and our investments and if the top line starts looking different I mentioned this before we have levers we can pull we've got a portfolio. That's contributing positively next year, but the pace of some of the things that are more long term investments can be adjusted if we need to so that we invest more slowly as the topline is less robust.

Speaker 6: And if the top line starts looking different, I mentioned this before, we have levers we can pull. We've got a portfolio that's contributing positively next year, but the pace of some of the things that are more long-term investments can be adjusted if we need to, so that we invest more slowly if the top line is less robust.

That's helpful. Thank you.

Speaker 3: Thank you. I would now like to turn the meeting back over to Victor.

Thank you I would now like to turn the meeting back over to Victor.

Speaker 5: Thank you, operator. I'm going to do the unorthodox thing and throw a minute over to my colleague, John Huntalis, who's one of our four strategic business unit leaders that didn't have a chance to speak today, but he can give you a perspective on how things are looking in the Canadian private economy, Canadian wealth economy. John , over to you, and then I'll make some closing remarks. Thank you, Victor. Business confidence is good.

Thank you operator, and I'm Gonna do the unorthodox thing and throw a throw a minute over to my colleague John Hotel. It's just one of our four strategic business unit leaders that didn't have a chance to speak today, but he can give you a perspective on how things are looking at the Canadian private economy Canadian wealth economy, John over to you and then I'll make some closing remarks. Thank you Victor business confidence is good.

Speaker 18: The back half, particularly on the commercial side, was strong. The economy is opening up. You talk to entrepreneurs, I know there's risks out there, but they're coping with them. The top line is growing. There's some operational challenges, but it's been strong. And all they're talking to us about is growth.

The back half, particularly on the commercial side with strong economies opening up you talked to entrepreneurs I know there's risks risks out there, but you are coping with them the top lines growing there's some operational challenges, but it's been strong and all they're talking to us about is growth.

Speaker 19: Our pipeline's good, so we're feeling pretty confident on the wealth side. We have good investment performance. We've made some investments in tools, in people, in some technology. So again, we see momentum.

Pipeline is good so we're feeling pretty confident on the wealth side. We have good investment performance. We've made some investments in tools and people in some technology. So again, we see momentum so.

Speaker 19: We had a strong year in 21. I think you'll see another strong year out of the SBU in 22.

We had a strong year in 'twenty, one I think you'll see another strong year out of the SBU in 'twenty. Two thank you John I appreciate that and I think she's a strong growth across all of our business units. So before we wrap up and I know you went over time today and thank you for indulging us I wanted to thank our 45000 and CIBC team members globally for their continued support of our clients.

Speaker 5: Thank you, John . I appreciate that and I think you see the strong growth across all of our business units. So before we wrap up, and I know we went over time today, I thank you for indulging us. I want to thank our 45,000 CIBC team members globally for their continued support of our clients. Their purpose-driven, client-first focus is a critical component to the success of our bank, and you're seeing that in our top-line revenue metrics, you're seeing that in our client experience metrics, and you're seeing that in our full-year financial results. So as we look ahead to 2020, I want to thank you for your continued support of

Are there a purpose driven client first focus is a critical component to the success of our bank and you're seeing that in our topline revenue metrics, you're seeing that in our client experience metrics and you're seeing that in our full year financial fun financial results. So as we look at that the 2022.

Speaker 5: I hope that you got the sense from every business leader, from Hrach, from Sean, that we've got everything in place to harness the strong momentum that we've created in this past year. We have a balanced strategic agenda.

I hope that you got the sense from every business leader from Hodge from Sean that we've got everything in place to harness the strong momentum that we've created in this past year, we have a balanced strategic agenda. It's aligned with continued growth and we're excited about the prospects in the coming years, we're looking forward to reporting on our progress again at the end of <unk>.

Speaker 5: It's aligned with continued growth. We're excited about the prospects in the coming years.

Speaker 5: We're looking forward to reporting on our progress again at the end of February .

Lastly, I want to as I said earlier, our Investor day is going to be on June 16th 2022, we moved it there because of the Ontario government guidelines in terms of health restrictions and you know we're gonna watch out what happens with this new variant, but that's our plan currently and that'll also give us an opportunity to invite all of you to meet our leadership.

Speaker 5: Lastly, as I said earlier, our Investor Day is going to be on June 16, 2022. We moved it there because of the Ontario government guidelines.

Speaker 5: in terms of health restrictions, and we're going to watch out what happens with this new variant, but that's our plan currently. And that will also give us an opportunity to invite all of you to meet our leadership team face-to-face at CIBC Square.

Team face to face at CIBC square, so we can share our strategic vision and direction for our bank and more granular detail because I know you're all interested in that we're gonna posted more information as we get closer to the date in the meantime, I wanted to wish all of you a happy holiday season. Thank you for your interest in our bank. Thank you for your very good questions and we.

Speaker 5: so we can share our strategic vision and direction for our bank in more granular detail, because I know you're all interested in that. We're going to post more information as we get closer to the date. In the meantime, I wanted to wish all of you a happy holiday season. Thank you for your interest in our bank. Thank you for your very good questions, and we look forward to engaging you in the new year. Have a good day.

Look forward to engaging in the new year have a good day.

Thank you.

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

Speaker 3: conference has now ended. Please disconnect your lines at this time and we thank you for your participation.

Yep.

Yeah.

Yeah.

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