Q4 2023 Canadian Imperial Bank of Commerce Earnings Call

Speaker 1: interest margins, our positive operating leverage and our strong capital liquidity.

<unk> operating leverage and our strong capital and liquidity.

Speaker 1: The second message is that we're advancing our competitive advantages by focusing on four key strategic priorities, which I'll elaborate on in a moment.

The second message is that we're advancing our competitive advantage advantages by focusing on four key strategic priorities, which I'll elaborate on in a moment.

Speaker 1: And the third message is that while global economic growth is expected to continue to slow, our client focus strategy, our discipline resource allocation, and our experienced leadership team will deliver profitable growth in fiscal 2024 and beyond.

And the third message is that while global economic growth is expected to continue to slow our client focused strategy, our disciplined resource allocation and our experienced leadership team will deliver profitable growth in fiscal 2024 and beyond.

Speaker 1: Now turning to our results, fiscal 2023 demonstrated our bank's strength and resiliency amid a challenging economic backdrop. With high interest rates and all of that inflation, all of which affects our clients to varying degrees. Guided by our purpose, we support our clients with advice to navigate the challenging environment and to help make their ambitions real.

Now turning to our results fiscal 2023 demonstrated our bank strength and resiliency amid a challenging economic backdrop with high interest rates and all of that inflation all of which affects our clients to varying degrees guided by our purpose, we supported our clients with advice to navigate the challenging environment and to help make their.

Speaker 1: We continue to benefit from our organic investments over the past several years, delivering record revenue of $23.4 billion, which was up 7%, and pre-provisioned, pre-tax earnings of $10.2 billion, which were up 8% from last year.

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We continued to benefit from our organic investments over the past several years delivering record revenue of $23 $4 billion, which was up 7% and pre provision pretax earnings of $10 2 billion, which were up 8% from last year.

Speaker 1: We achieve revenue growth across all of our businesses. Where we've pretty little group volumes, we remain disciplined on pricing to protect margins, and we generated incremental fee income through deeper relationship with our clients.

We achieved revenue growth across all of our businesses, where we prudently grew volumes. We remained disciplined on our pricing to protect margins and we generated incremental fee income through deeper relationship with our clients.

Speaker 1: Adjusted net earnings of $6.5 billion were down 2% as a result of higher provisions for credit losses as credit continues to normalize.

Adjusted net earnings of $6 $5 billion were down 2% as a result of higher provisions for credit losses as credit continues to normalize.

Speaker 1: earnings per share of $6.72, $2.02, we're down 5% from the prior year, impacted by an increased number of shares outstanding, primarily due to the dividend reinvested plan discount in effect since the first quarter.

Earnings per share of $6, 72% 72 were down 5% from the prior year impacted by an increased number of shares outstanding primarily due to the dividend reinvestment plan discount in effect since the first quarter.

Speaker 1: Adjusted operating leverage was positive 1.2% in fiscal 2023. In line with our guidance, as we harvested the investments we made to deliver strong revenue growth, while prudent in managing our expense.

Adjusted operating leverage was positive one 2% in fiscal 2023 in line with our guidance as we harvested the investments we've made to deliver strong revenue growth, while prudently managing our expenses.

Speaker 1: We proactively improved our capital position in every quarter of fiscal 2023 to the end of the year, with a 12.4% CET1 ratio and have multiple levers available to continue accreting capital.

We proactively improved our capital position in every quarter of fiscal 2023 to the end of the year with a 12, 4% CET one ratio and have multiple levers available to continue accrete capital.

Speaker 1: As we communicated with our second quarter results, we have adopted an annual review of our dividend payment during fourth quarter earnings moving forward. So today we've announced a three cent dividend increase to our common shareholders.

As we communicated with our second quarter results, we have adopted an annual review of our dividend payment during the fourth quarter earnings moving forward. So today, we've announced a <unk> <unk> dividend increase to our common shareholders.

Speaker 1: Our adjusted RWE was 13.3% for the year and was impacted by normalizing provisions for credit laws and higher capital levels.

Our adjusted ROE was 13, 3% for the year and was impacted by normalizing provisions for credit losses and higher capital levels.

Speaker 1: We continue to prioritize investments that support capital-like, fee-based, and deposit-generating businesses that will be accretive to capital. You're creative to ROE.

We continue to prioritize investments that support capital light.

Fee based and deposit generating businesses that will be accretive to capital accretive to Roe.

Speaker 1: Our client focus strategy is working. Our study execution is enabled us to make good progress, and we have built momentum for our bank on a number of fronts.

Our client focused strategy is working our steady execution has enabled us to make good progress and we have built momentum for our bank on a number of fronts.

Speaker 1: So as we go forward, our four key strategic priorities will build on our momentum and will advance our real competitive advantage.

So as we go forward, our four key strategic priorities will build on our momentum and will advance our real competitive advantage.

Speaker 1: These four priorities are first, we're committed to growing our mass affluent well-franchising Canada and the US.

These four priorities are first we're committed to growing our mass affluent wealth franchise in Canada and the U S.

Speaker 1: in Canada, we're well positioned with our differentiated mass affluent coverage model through Imperial service. We have a great private wealth business, and in the US, we have a high quality, scalable private wealth program that we want to grow.

In Canada, we were well positioned with a differentiated mass affluent coverage model through Imperial service, we have a great private wealth business and in the U S. We have a high quality scalable private wealth program that we want to grow.

Speaker 1: Second, we're further enhancing our digital banking offering. We're a leader here today and we intend to build on our market position.

Second we're further enhancing our digital banking offering we're a leader here today, and we intend to build on our market position.

Speaker 1: Third, we'll continue to leverage our connectivity for commercial and capital markets clients, where uniquely positioned to bring this differentiated approach to the market. And our clients tell us that this sets us apart. Our model creates value by deepening client relationships. It generates a recurring revenue, and it enhances our returns.

Third we'll continue to leverage our connectivity for commercial and capital markets clients, we're uniquely positioned to bring this differentiated approach to the market and our clients tell us that this sets sets us apart.

Our model creates value by deepening client relationships it generates recurring revenue and it enhances our returns.

Speaker 1: Finally, our efforts to enable, simplify and protect our bank, are building the operational excellence, and efficiency required to drive hires that returns first stakeholders. With that, let's get...

Finally, our efforts to enable simplify and protect our bank or building the operational excellence and efficiency required to drive higher returns for our stakeholders.

With that let's get into the segment results.

Speaker 1: In Canadian personal and business banking, we have been a leader in growing our retail client base. On a trailing 12 month basis, we grew over 650,000 net new clients across a CIBC and simply brands, including successfully attracting many newcomers and students to our bank.

In Canadian personal and business banking, we have been a leader in growing our client retail client base on a trailing 12 month basis. We grew over 650000 net new clients across our CIBC and simply brands, including successfully attracting many new comers and students to our bank.

Speaker 1: We're leveraging our highly differentiated Imperial Service offering to serve clients in the Mass Avalon segment. This year, we introduced a dedicated leadership structure to sharpen our focus on growing this business.

We're leveraging our highly differentiated imperial service offering to serve clients in the mass affluent segment. This year, we introduced a dedicated leadership structure to sharpen our focus on growing this business.

Speaker 1: Our success in client growth and franchising has been a product of a relentless focus on enhancing our client relationship experience.

Our success in client growth in franchising has been a product of our relentless focus on enhancing our client relationship experience CIBC continued to maintain a leadership position with our digital offering for the third time since 2020, we ranked number one in the 2023 J D power, Canada banking mobile App satisfaction studies.

Speaker 1: C.I.B.C. continued to maintain a leadership position with their digital office.

Speaker 1: for the third time since 2020 we ranked number one in the 2020 3JD power Canada banking mobile app satisfaction study

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Speaker 1: Canadian commercial banking. The effect of rapidly rising interest rates and inflationary pressures slowed growth across the Canadian commercial market.

In Canadian commercial banking the effect of rapidly rising interest rates and inflationary pressures slowed growth across the Canadian commercial market.

Speaker 1: against the backdrop of moderating economic growth we achieved our third consecutive year of increasing client net promoter scores and in fact hit a record

Against the backdrop of moderating economic growth, we achieved our third consecutive year of increasing client net promoter scores and in fact hit a record this year.

Speaker 1: We continue to improve the client experience and deliver our whole bank to each client. As evidenced by the $17 billion of referrals since fiscal 2019 across commercial banking and private wealth management.

We continue to improve the client experience and deliver our whole bank to each client as evidenced by the $17 billion of referrals since fiscal 2019 across commercial banking and private wealth management.

We continue to improve the client experience and deliver our whole bank to each client as evidenced by the $17 billion of referrals since fiscal 2019 across commercial banking and private wealth management.

Speaker 1: and in our C.I.B.C. Wood-Gundee franchise, we ranked among the leaders for big six banks and the investment executive brokerage report cards surveyed the advisor.

And in our CIBC Wood Gundy franchise, we ranked among the leaders for big six banks and the investment Executive brokerage report card survey of advisors.

Speaker 1: In the U.S., higher interest rates also cool lending demand. However, our highly connected franchise and the investments we've made to scale our footprint have enabled us to attract new clients in a tempered economic environment. Deposit volumes in the U.S. have stabilized and were focused on strengthening and diversifying our deposit...

In the U S higher interest rates also called lending demand. However, a highly connected franchise and the investments we've made to scale our footprint have enabled us to attract new clients and a tempered economic environment deposit volumes in the U S have stabilized and we're focused on strengthening and diversifying our deposit base.

Speaker 1: Our efforts to build a best-in-class U.S. private wealth franchise was recognized again by Barron's, who ranked us in the top ten of RIA firms in the United States for the fourth consecutive year.

Our efforts to build a best in class U S. Private wealth franchise was recognized again by Barron's, who ranked us in the top 10 of our law firms in the United States for the fourth consecutive year.

Speaker 1: Now looking ahead, we'll continue to grow our US commercial banking franchise organically with a focus on industries that value high-touch service and specialized expertise.

Now looking ahead, we will continue to grow our U S. Commercial banking franchise organically with a focus on industries that value high touch service and specialized expertise will also be expanding our U S. Private wealth platform by leveraging our talent and technology investments and expanding into fast growing affluent markets like southern Florida.

Speaker 1: We'll also be expanding our U.S. Private Wealth platform by leveraging our talent and technology investments and expanding into fast growing afluent markets like Southern Florida.

Speaker 1: In capital markets and direct financial services, our dear friends-yated platform continued to generate consistently strong performance.

And capital markets indirect financial services, our differentiated platform continues to generate consistently strong performance.

Speaker 1: Our double-digit revenue growth was enabled by our strong client focus and increased activity in global markets as we help clients address their short and long-term needs in a rising rate environment.

Our double digit revenue growth was enabled by our strong client focus and increased activity in global markets as we help clients address their short and long term needs in a rising rate environment.

Speaker 1: In line with our strategy, more than 20% of total capital markets revenue was originated from the U.S. region, where we've almost tripled our capital markets revenue since 2017. We also further expanded our DFS business to generate growing recurring revenue and to attract new clients seeking convenient digital banking and investing solutions.

With our strategy more than 20% of total capital markets revenue was originated from the U S region.

Where we've almost tripled our capital markets revenues since 2017.

We also further expanded our DFS business to generate growing recurring revenue and to attract new clients seeking convenient digital banking and investing solutions.

Speaker 1: Through continued growth is simply financial and our leading edge effects and remittance capabilities, the FS revenues of $1.2 billion increase 26% year-over-year. Collectively, the strength of our diversified platform and strategic connectivity positions as well for more fluid market conditions in the year ahead.

Through continued growth is simply financial and our leading edge FX and remittance capabilities DFS revenues of $1 $2 billion increased 26% year over year.

Collectively the strength of our diversified platform and strategic connectivity positions us well for a more fluid market conditions in the year ahead.

Speaker 1: We closed out 2023 in a position of strength, as a result of strategic investments in all of our core businesses. Looking ahead to 2024, we expect slowing consumer spending and continued softness in global economic growth in response to monetary policy tightening.

We closed out 2023, and a position of strength as a result of strategic investments in all of our core businesses. Looking ahead to 2024, we expect slowing consumer spending and continued softness in global economic growth and response to monetary policy tightening.

Speaker 1: I mid this backdrop, we'll continue to prioritize financial strength and risk discipline while advancing our purpose-driven culture and our growth strategy. We're confident that this approach combined with our client-focused strategy and strong execution will deliver relative out performance and top-tier shareholder returns over the years to come. And with that, I'll turn it over to my colleague, Haraj, for a detailed review of our financial results. Thanks, Victor, and good morning to you all.

Amid this backdrop, we will continue to prioritize financial strength and risk discipline, while advancing our purpose driven culture and our growth strategy. We are confident that this approach combined with our client focused strategy and strong execution will deliver relative outperformance and top tier shareholder returns over the years to come.

And with that I'll turn it over to my colleague <unk> for a detailed review of our financial results. Thanks, Victor and good morning to you all.

Speaker 2: We delivered a solid fourth quarter to cap off 2023 as laid out on slide 10.

We delivered a solid fourth quarter to cap off 2023 as laid out on slide 10.

Speaker 2: echoing the themes we demonstrated throughout fiscal 23. Our fourth quarter results reflect the resilience of our business, our ability to proactively manage through a dynamic environment and the strength of our balance.

Echoing the themes, we demonstrated throughout fiscal 'twenty three our fourth quarter results reflect the resilience of our business our ability to proactively manage through a dynamic environment and the strength of our balance sheet.

Speaker 2: Support by revenue momentum across all of our business units and a continued focus on productivity. We generated robust operating leverage, strong pre-tax pre-provision earnings growth, and diluted earnings per share of $1.53, which was up 22% over the prior year.

Supported by our revenue momentum across all of our business units and a continued focus on productivity, we generated robust operating leverage strong pretax pre provision earnings growth and diluted earnings per share of $1 53, which was up 22% over the prior year.

Speaker 2: excluding items of note adjusted EPS with $1.57 and ROE was 12.1%.

Excluding items of note adjusted EPS was $1 57, and ROE was 12, 1%.

Speaker 2: Our capitalization and liquidity continued to improve during the quarter, coming in ahead of our in-year guidance on both fronts, with a period-end CT1 ratio of 12.4%, and average LCR of 135%.

Our capitalization and liquidity continued to improve during the quarter coming in ahead of or in your guidance on both fronts with a period end CET one ratio of 12, 4% an average LCR of 135%.

Speaker 2: The balance of my presentation will refer to adjusted results which exclude items of note starting with slide 11.

The balance of my presentation will refer to adjusted results, which exclude items of note starting with slide 11.

Adjusted net income of $1 5 billion increased 16% from the same quarter last year revenue of $5 8 billion was up 9% supported broadly by higher NII trading revenue and fee income and we grew pre provision pre tax earnings, 18%, but by containing expense growth to 3% and generating over six.

Percent operating leverage credit provisions of $541 million were up 24% from a year ago, which Frank will discuss in more detail.

Speaker 2: Flight 12 and 13 highlight key trends in drivers of net interest income. While trading income was 26% higher year over year in aggregate, we continue to see a shift in trading revenues from interest to non-interest income due to higher rates.

Slide 12, and 13 highlight key trends and drivers of net interest income.

Trading income was 26% higher year over year in aggregate, we continue to see a shift in trading revenues from interest to noninterest income due to higher rates, excluding trading NII was up 8% over the year driven by continued balance sheet growth and solid margins.

Speaker 2: Scrooving trading and I was up 8% over the year driven by continued balance, your growth and solid margin.

Speaker 2: Total Bank NIM excluding trading was up six basis points from the prior year or down one basis point sequentially. Last quarter's margin included a couple of basis points from non-occurring interest as we disclosed at the time. And underlying these quarterly fluctuations, we continue to see gradual margin expansion.

Total bank NIM, excluding trading was up six basis points from the prior year or down one basis point sequentially last quarters margin included a couple of basis points from nonrecurring interest as we disclosed at the time and underlying these quarterly fluctuations we continue to see gradual margin expansion Canadian.

Speaker 2: Canadian PNC NIM of 267 basis points was up 20 basis points from the prior year and was stable sequentially, as modest expansion and core margins offset the one-time interest loss quarter.

Canadian P&C NIM of 267 basis points was up 20 basis points from the prior year and was stable sequentially as modest expansion in core margins offset the one time interest last quarter.

Speaker 2: We have once again provided incremental disclosure on PNC margin drivers in the appendix.

We have once again provide an incremental disclosure on P&C margin drivers in the appendix.

Speaker 2: NIM of 344 base points in our US segment was down five basis points year over year and two basis points from the buyer quarter. The sequential decrease was largely due to interest on a significant loan required recovery in the prior quarter.

NIM of 344 basis points in our U S segment was down five basis points year over year and two basis points from the prior quarter. The sequential decrease was largely due to interest on our significant loan ricard recovery in the prior quarter.

Speaker 2: As shown on flight 13, average client loans and deposits continue to grow over the prior year, despite the market-wide slowdown experience this year. Deposit mixes largely stabilized, and aggregate balance growth and deposits picked up late in the quarter, resulting in 4% growth sequentially on a spot base.

As shown on slide 13 average client loans and deposits continued to grow over the prior year. Despite the market wide slowdown experienced this year deposit mix has largely stabilized and aggregate balance growth in deposits picked up late in the quarter, resulting in 4% growth sequentially on a spot basis we.

Speaker 2: We remain focused on growing our balance sheet prudently and with strong returns. And we anticipate this to drive continued momentum in non-trading NII based on current market interest rate expectations.

Remain focused on growing our balance sheet prudently and with strong returns and we anticipate this to drive continued momentum and non trading NII based on current market interest rate expectations.

Speaker 2: Turning to slide 14, non-interesting come of 2.6 billion was up 20% from the prior year due to growth in trading revenues as well as higher market-related and transactional fees. Excluding trading, market-related fees increased 8% year over year driven by higher investment management and custodial revenues as well as recovery from lower treasury income in the same quarter last year.

Turning to slide 14, noninterest income of $2 6 billion was up 20% from the prior year due to growth in trading revenues as well as higher market related and transactional fees, excluding trading market related fees increased 8% year over year, driven by higher investment management, and custodial revenues as well as recovery from lower.

Treasury income in the same quarter last year.

Speaker 2: Transaction-related fees were up 6% year-over-year driven by growth in credit, as well as deposit and payment fees. While market factors can significantly impact these revenues, our strategic focus on deep relationships, as well as advice and differentiated solutions for key client segments, will continue supporting ongoing growth in non-interest incomes.

Transaction related fees were up 6% year over year, driven by growth in credit as well as deposit and payment fees, while market factors can significantly impact. These revenues are a strategic focus on deep relationships as well as advice and differentiated solutions for our key client segments will continue supporting ongoing growth in noninterest income.

Speaker 2: Slide 15 highlights our continued success in maintaining robust investment in our bank while also containing overall expense growth. In Q4, year-over-year expense growth moderated to 3% as investments were partly offset by the benefits of prior initiatives to improve efficiency and deliver a better experience for our clients and our team.

Slide 15 highlights our continued success and maintaining robust investment in our bank. While also containing overall expense growth in Q4 year over year expense growth moderated to 3% as investments were partly offset by the benefits of prior initiatives to improve efficiency and deliver it.

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Speaker 2: We've also demonstrated the impact of this approach over the longer term. For the full year, this approach allowed us to meet our targets containing expense growth to 6% in generating operating leverage of positive 1.2%.

We've also demonstrated the impact of this approach over the longer term for the full year. This approach allowed us to meet our targets containing expense growth to 6% and generating operating leverage are positive one 2%.

Speaker 2: and despite the significant increase in strategic investment over the last few years, we've delivered neutral operating leverage and aggregate while positioning ourselves to improve on that going forward by leveraging these foundational investments. We intend to manage expense growth to around or below mid-single digits per fiscal 24, and we continue to target positive operating leverage over the medium term.

And despite the significant increase in strategic investment over the last few years, we've delivered neutral operating leverage in aggregate, while positioning ourselves to improve on that going forward by leveraging these foundational investments, we intend to manage expense growth to around or below mid single digits for fiscal 'twenty four and we continue to talk.

That positive operating leverage over the medium term.

Speaker 2: Slide 16 is focused on our balance sheet, which continues to benefit from our focus on disciplined resource allocation and an emphasis on returns over balance sheet growth.

Slide 16 is focused on our balance sheet, which continues to benefit from our focus on disciplined resource allocation and an emphasis on returns over balance sheet growth we.

Speaker 2: We improved our CET-1 ratio to 12.4% over the quarter driven by organic capital generation in cherry assurance, partly offset by higher RWA driven in part by credit migration and model changes.

We improved our CET one ratio to 12, 4% over the quarter driven by organic capital generation and share issuance, partially offset by higher <unk> driven in part by credit migration and model changes.

Speaker 2: Late in the quarter, we also received regulatory approval to apply the internal ratings-based approach to the majority of our US bank portfolio, which we intend to implement in Q1 2024. On a performance basis, we estimate this implementation, net of the other regulatory changes coming into affecting Q1 results in us starting fiscal 24 with a CET-1 ratio over 12.5%.

Late in the quarter. We also received regulatory approval to apply the internal ratings based approach to the majority of our U S Bank portfolio, which we intend to implement in Q1 2024.

On a pro forma basis, we estimate this implementation net of the other regulatory changes coming into effect in Q1 results in us starting fiscal 'twenty four with a CET one ratio over 12, 5%.

Speaker 2: are already strongly, Quitedy position improved further throughout the quarter as long growth slowed and deposits rebounded, resulting in a sequentially higher average LCR of 135%.

Our already strong liquidity position to improve further throughout the quarter as loan growth slowed and deposits rebounded, resulting in a sequentially higher average LCR of 135%.

Speaker 2: Despite an evolving environment in regulatory landscape, throughout 2023, we demonstrated our ability to absorb unexpected headwinds and strengthen our balance sheet while maintaining support for our clients and deploying capital to generate solid top line growth. This positions us well as the environment continues to be fluid.

Despite an evolving environment and regulatory landscape throughout 2023, we demonstrated our ability to absorb unexpected headwinds and strengthen our balance sheet, while maintaining support for our clients and deploying capital to generate solid topline growth this positions as well as the environment continues to be fluid.

Speaker 2: Starting on slide 17, we highlight our strategic business unit results. Net income in Canadian personal and business banking was $639 million, up 32% from the same quarter last year. We grew pre-provision pre-tax earnings 19% from the prior year by driving 9% revenue growth through the strategic priorities victor outlined earlier. Revenue was supported by 19 basis point increase in margins and volume growth on both sides of the balance.

Starting on slide 17, we highlight our strategic business unit results net income in Canadian personal and business banking with $639 million up 32% from the same quarter last year.

We grew pre provision pre tax earnings 19% from the prior year by driving 9% revenue growth through the strategic priorities Victor outlined earlier.

Revenue was supported by 19 basis point increase in margins and volume growth on both sides of the balance sheet.

Speaker 2: And we delivered operating leverage of 8% by containing expense growth to 1% from the same period despite continued investment against our strategic priorities.

And we delivered operating leverage of 8% by containing expense growth to 1% from the same period. Despite continued investment against our strategic priorities.

Speaker 2: Turning to slide 18, net income in Canadian commercial banking and wealth management was $490 million. Revenue of $1.4 billion was up 4% from a year ago, benefiting from mid-single-digit loan and deposit growth in commercial banking, as well as higher fee-based revenues from market appreciation and net flows in wealth management.

Turning to slide 18, net income in Canadian commercial banking and wealth management was $490 million revenue of $1 4 billion was up 4% from a year ago benefiting from mid single digit loan and deposit growth in commercial banking as well as higher fee based revenues from market appreciation and net flows in wealth management.

Speaker 2: We also delivered positive operating leverage as we manage expenses to sweep a cent increase year over year.

We also delivered positive operating leverage as we manage expenses two 3% increase year over year.

Speaker 2: Our strategy continues to create momentum across our combined Canadian PNC banking franchise, where net income was up 22%, while pre-provision pre-tax earnings were up 15%, fueled by 8% revenue growth and over 6% operating leverage. And we expect this momentum to continue.

Our strategy continues to create momentum across our combined Canadian P&C banking franchise, where net income was up 22%, while pre provision pre tax earnings were up 15% fueled by 8% revenue growth and over 6% operating leverage and we expect this momentum to continue.

Speaker 2: We've included more details on this segment in the appendix of our presentation.

We've included more details on this segment in the appendix of our presentation.

Speaker 2: Turning to U.S. commercial banking and wealth management, net income of $39 million in U.S. dollars was down 69 percent from the prior year due to higher credit provisions predominantly in the office portfolio.

Turning to U S commercial banking and wealth management net income of $39 million in U S dollars was down 69% from the prior year due to higher credit provisions predominantly in the office portfolio.

Speaker 2: Revenue is where up 2% over the same period driven by 5% increase in being come in a 1% increase in net interest income. Expense to where up 11% year over year including higher severance in the quarter.

Revenues were up 2% over the same period, driven by 5% increase in fee income and a 1% increase in net interest income expenses were up 11% year over year, including higher severance in the quarter.

Speaker 2: Excluding one-time charges, expenses were up 6%. Reflecting investments across our business and infrastructure, which we expect to continue into 2024 as we expand our US platform. We remain focused on prudent and profitable growth to scale this business across both commercial banking and wealth management.

Excluding one time charges expenses were up 6%, reflecting investments across our business and infrastructure, which we expect to continue into 2024 as we expand our U S platform, we remain focused on prudent and profitable growth to scale. This business across both commercial banking and wealth management.

Speaker 2: Turning to slide 20, in our capital markets and DFS business, net income of $383 million was up 1% year over year. Revenues of $1.3 billion were up 9% over the prior year, driven by 20% growth in gold markets and 12% growth in direct financial services.

Turning to slide 20, and our capital markets and DFS business net income of $383 million was up 1% year over year.

Revenues of $1 3 billion were up 9% over the prior year, driven by 20% growth in global markets and 12% growth in direct financial services expenses.

Speaker 2: expenses of 734 million were up 12% year over year, partly driven by charges in the quarter, including higher sebum.

Expenses of $734 million were up 12% year over year, partly driven by charges in the quarter, including higher severance. Excluding these charges expenses grew 8% and we anticipate them to moderate.

Speaker 2: excluding these charges, expenses due 8% and we anticipate them to moderate.

Speaker 2: By 21, reflects the results of the corporate and other business unit. Net loss of 48 million compared with a net loss of 197 million in the prior year, largely due to higher revenues from treasury and international banking, as well as lower corporate expenses. Going forward, we now anticipate a quarterly loss of 50 to 100 million in this segment.

Slide 21 reflects the results of the corporate and other business unit net loss of $48 million compared with a net loss of $197 million in the prior year largely due to higher revenues from treasury in international banking as well as lower corporate expenses going forward do we now anticipate a quarterly loss of $50 million to $100 million.

In this segment.

Speaker 2: In summary, notwithstanding a more challenging environment, throughout 2023 we took proactive steps to make meaningful progress against our strategy, while staying on track relative to our medium term objective.

In summary, notwithstanding a more challenging environment throughout 2023, we took proactive steps to make meaningful progress against our strategy, while staying on track relative to our medium term objectives, extending the momentum we demonstrated in 2022, we grew revenue by 7% and pre provision pretax.

Speaker 2: Extending the momentum we demonstrated in 2022, we grew revenue by 7 percent and pre-provision pre-tax earnings by 8.5 percent, in line with our in-year guidance and medium-term targets.

<unk> earnings by eight 5% in line with our in year guidance and medium term targets, we delivered positive operating leverage through cost discipline and efficiency improvements to balance continued investment in our bank and we overcame significant headwinds to enter the new year with a strong CET one ratio of over 12, 5%.

Speaker 2: We delivered positive operating leverage through cost discipline and efficiency improvements to balance continued investment in our bank. And we overcame significant headwinds to enter the new year with a strong C-2-1 ratio of over 12.5% on a pro forma basis.

On a pro forma basis.

Speaker 2: EPS growth in RLE, or below our medium-term targets this year, largely due to the impact of higher credit provisions and increasing capitalization. But we remain focused on working towards these targets despite external headwinds.

EPS growth and ROE were below our medium term targets. This year largely due to the impact of higher credit provisions and increasing capitalization, but we remain focused on working towards these targets. Despite external headwinds, we expect credit provisions and capital ratios to start stabilizing in 2024, and we will drive further EPS.

Speaker 2: We expect credit provisions and calibrations to start stabilizing in 2024, and we will drive further EPS and ROE improvements through our strategic focus.

ROE improvements through our strategic focus by emphasizing growth in key client segments with strong returns maintaining discipline in our resource allocation with a focus on returns over balance sheet growth and leveraging our capabilities to drive simplification and efficiency to generate ongoing operating leverage with that let me turn the call over to Frank.

Speaker 3: By emphasizing growth in key client segments with strong returns, maintaining discipline and resource allocation with a focus on returns over balance she grows and leveraging our capabilities to drive simplification and efficiency to generate ongoing operating leverage. With that, let me turn the call over to Frank. Thank you, Verace, and good morning, everyone. During 23, if we navigated economic uncertainties, we saw our loan loss performance generally in line with our expectations.

Okay.

Thank you Raj and good morning, everyone.

During 'twenty three if we navigated economic uncertainties, we saw our loan loss performance generally in line with our expectations with retail credit normalizing Infector oak specific issues materializing in the business and government portfolio over.

Speaker 3: with retail credit normalizing and factor specific issues materializing in business and government portfolio.

Speaker 3: Over the past few quarters, the headwinds in the US office sector have translated into higher impairments in our US commercial real estate portfolio.

Over the past few quarters the headwinds in the U S office sector have translated into a higher impairments in our U S commercial real estate portfolio.

Speaker 3: While the Canadian consumer remains resilient to higher interest costs, we are seeing excess savings accumulated during the pandemic decline. So clients adjust to a variety of inflationary pressures.

While the Canadian consumer remains resilient to a higher interest costs, we are seeing excess savings accumulated during the pandemic decline for all clients drugs through a variety of inflationary pressures.

Speaker 3: notwithstanding, our allowance level increased throughout fiscal 23 positions as well, and we'll ensure we are prepared for uncertainty in the year ahead.

Withstanding our long steadily increase throughout fiscal 'twenty, three provisions as well and will ensure we are prepared for uncertainty in the year ahead.

Speaker 3: Turning to slide 25, our total provision for credit losses was 541 million in Q4 compared to 736 million last quarter.

Turning to slide 25, our total provision for credit losses was $541 million in Q4, compared with 736 million last quarter.

Speaker 3: Total allowance coverage increased to 76 basis points this quarter up from 73 basis points in Q3.

Total allowance coverage increased to 76 basis points this quarter up from 73 basis points in Q3.

Speaker 3: Our performing provision was 63 million in Q4, mainly attributable to changes to our forward-looking indicators, some auto-parameterial updates, portfolio growth, and some credit migration.

Outperforming provision was $63 million in Q4, mainly attributable to changes to our forward looking indicators, some artur paramilitary updates portfolio growth and some credit migration proving.

Speaker 3: Provision on impaired loans was $478 million, which was flat quarter over quarter. And this was largely due to high impairments in the US commercial and Canadian retail portfolios. It was partially offset by lower impairments in the Canadian commercial portfolio and CIVC first Caribbean.

Provisions on impaired loans was $478 million, which were flat quarter over quarter.

And this was largely due to higher impairments in the U S commercial and Canadian retail portfolios and was partially offset by lower impairments in the Canadian commercial portfolio in CIBC first Caribbean.

Speaker 3: While our impaired losses over the full year continue to perform in line with our expectations, we have seen elevated losses in the back of this fiscal year.

While our impaired losses over the full year continue to perform in line with our expectations, we have seen elevated losses in the back of the fiscal year.

Speaker 3: Flight 26 summarizes our growth-impaired loans and formations. Balances were up this quarter, mainly driven by business and government loans in the US, and it's specifically attributable to the Office 6.

Slide 26 summarizes our gross impaired loans informations balances were up this quarter, mainly driven by business and government loans in the U S and that's specifically attributable to the office sector.

Speaker 3: Overall, new formations remained relatively stable with the increase in retail, mostly offset by reduction in business and government loans.

Overall, new formations remained relatively stable with the increase in retail, mostly offset by a reduction in business and government loans.

Speaker 3: On flight 27, we showed the trends in our Canadian consumer portfolios. NetRideoff and 90-day-plus delinquency rates for personal landing have moved higher over the past year, reflecting the impact of higher rates.

On slide 27, we show the trends in our Canadian consumer portfolios net write offs in 90 day, plus delinquency rates for personal lending have moved higher over the past year, reflecting the impact of higher rates.

Speaker 3: This was expected to give the interest rate sensitivity of this portfolio. A residential mortgage and credit card portfolio continue to perform well and remain below pre-pandemic levels.

This was expected given the interest rate sensitivity of <unk> portfolio.

Our residential mortgage and credit card portfolio continued to perform well and remain below pre pandemic levels.

Speaker 3: By 28, provides an overview of our Canadian real estate secure personal lending portfolio, which makes up 55% of our total loan balance.

Slide 28 provides an overview of our Canadian real estate secured personal lending portfolio.

Which makes up 55% of our total loan balances.

Speaker 3: Late stage delinquency rates of residential mortgages continue to trend higher as expected if they return closer to what we experienced prior to the pandemic.

Late stage delinquency rates of residential mortgages continue to trend higher as expected if they return closer to what we experienced prior to the pandemic.

Speaker 3: There are 8 mortgages, count for 1 third of our mortgage book, and the portfolio quality remains strong.

Variable rate mortgages account for one third of our mortgage book and the portfolio quality remained strong.

Speaker 3: The portion of non-emortizing variable rate mortgages was down quarter over quarter, from 50 billion in Q3 to 43 billion in Q4. Clients are choosing to increase their payments, converting to fixed rates, making one-time prepayments, and all of which bring the loan back to amortizing status.

The portion of non amortizing variable rate mortgages was down quarter over quarter over quarter from $50 billion in Q3 to 43 billion in Q4 clients.

Clients are choosing to increase their payments converting to fixed rates, making onetime prepayment and all of which bring the loan back to amortizing status.

Speaker 3: This quarter we are also providing a scenario highlighting the credit quality and payment increases for our mortgages coming up for renewal in the coming years.

This quarter, we are also providing a scenario highlighting the credit quality and payment increases for our mortgages coming up for renewal in the coming years.

Speaker 3: Overall, this cohort showed very low LTVs of between 40 and 60% in the next five years.

Overall these cohorts, so very low ltvs of between 40 and 60% in the next five years.

Speaker 3: The average monthly payment increase is roughly between $350 and $700 for these cohorts, which prevents an increase of about 3 to 5% based on the origination ink.

The average monthly payment increase is roughly between 350 and $700 for these cohorts were prevents an increase of about 3% to 5% based on the origination income.

Speaker 3: I also want to note that in this scenario, we assumed the interest rate of 6% across the next five years. And the analysis also assumes income remains where it was at origination.

I also want to note that in this scenario, we assumed interest rate of 6% across the next five years.

M. D analysis also assumes income remains where it was at origination.

Speaker 3: I want to acknowledge that this high rate environment paired with cost of living pressures puts pressure on our clients. We are actively working with clients experiencing financial hardship to help drive to the best possible outcome.

I want to acknowledge that this high rate environment paired with cost of living pressures puts pressure on our clients. We are actively working with clients experiencing financial hardship to help drive to the best possible outcome.

Speaker 3: But overall, we feel comfortable with the resilience and reserve levels of our mortgage portfolio.

But overall, we feel comfortable with the resilience and reserve levels of our mortgage portfolio.

Speaker 3: Turning to slide 30, as we previously guided our US office portfolio continuous T.C. elevated loss.

Turning to slide 30, as we previously guided our office portfolio continues to see elevated losses.

Speaker 3: 23 we had 2.1 billion metering which is slightly more than 50% of the portfolio. Out of these majorities around 54% qualified for extension or negotiated a renewal, around 15% was repaid and the remaining 31% went into nonocrual.

In Q3, we had $2 1 billion maturing, we're just slightly more than 50% of the portfolio.

Aldo beef maturities around 54% qualified for extension or negotiated renewal.

Around 15% was repaid and the remaining 31% went into non accrual.

Speaker 3: Our allowance coverage continued to increase this quarter and now stands at 9.1% reflective of the headwind step assist in the office.

Our allowance coverage continued to increase this quarter and now stands at nine 1% reflective of the headwinds that persist in the office sector.

Speaker 3: In closing, despite the headwinds in the US office sector, our credit performance remained within our expectations and guidance for fiscal 23. As we head into the new fiscal year, we expect uncertainties to persist in certain areas, and we will see impaired losses, trend above our previous guidance of 25 to 30 basis points, more in the mid-30s range.

In closing despite the headwinds in the U S office sector, our credit performance remained within our expectations and guidance for fiscal 'twenty three if.

As we head into the new fiscal year, we expect uncertainty to persist in certain areas and we will see impaired losses trend above our previous guidance of 25 to 30 basis points more in the mid 30% range.

Speaker 3: We will continue to proactively manage portfolio exposures and we will work with our clients to mitigate risk.

We will continue to proactively manage portfolio exposures and we work with our clients to mitigate risks via.

Speaker 3: The additional allowances we saw throughout 23 will provide prudent reserves for headwinds in the new year. And I will now turn back to call to the operators.

The additional allowances we saw throughout 'twenty, three will provide prudent reserves for headwinds in the new year.

Now I'll turn back the call to the operator.

Thank you.

Speaker 4: We will not take questions from the telephone lines. Please press star one at this time if you have any questions.

We will now take questions from the telephone lines.

Please press star one at this time, if you have a question.

Speaker 4: There will be a refiles while participants register for questions. We thank you for your patience.

There won't be a brief pause from all participants register for questions. We thank you for your patience.

Speaker 4: Our first question is from Doug Young from this Jordan Capital Market. Please go ahead.

My first question is from Doug Young from <unk> capital markets. Please go ahead.

Speaker 5: Good morning. Maybe our shift, we can talk a bit about expenses. It sounded like you had some restructuring charges in the US and capital markets.

Hi, good morning, maybe.

If we can talk a bit about expenses.

Like you had some restructuring charges in the U S.

In capital markets.

Speaker 5: Can you quantify what those were? Can you confirm that was not back there with cash EPS? And I do understand your position about looking to drive positive operating leverage over the medium term. I'm trying to get a sense of, you know, is that something you think you can achieve? You did obviously very well this quarter is that something you think you can achieve through fiscal 24 and 25. Thanks.

Can you quantify what those were can you confirm that was not backed out of cash EPS and I do understand.

Your position about looking to drive positive operating leverage over the medium term I am trying to get a sense of.

Is that something you think you can achieve you did obviously very well this quarter is that something you think you can achieve through fiscal 'twenty four and 'twenty five thank you.

Okay.

Speaker 2: more and a thank you for the question happy happy to take that so let me start with your media question and we did disclose that right so we had uh... we had about a hundred fourteen million in severance there was a few other things this quarter that i referred to in terms of one-time charges uh... that were in those businesses we get we get relating to some matter some real states some software etc. across the bank but that severance number that we disclosed with the majority of it in terms of how it breaks down i'm not going to get into a lot of detail but

Good morning, Doug. Thank you for the question happy I'm happy to take that so let me start with your immediate question and we did disclose that right. So we had a we had about $114 million in cyber and so it was a few other things this quarter that I referred to in terms of one time charges that were in those businesses when we get them relating to some matters some real estate some.

Software et cetera across the bank, but that severance number that we disclosed was the majority of it in terms of how it breaks down I'm not going to get into a lot of detail but.

Speaker 2: you know there was the predominant pieces of it were in the corporate another segment and in capital markets and there was a piece of it in the u.s. the one time in the u.s. and given what i said in terms of uh... that growth excluding the one time you come back into it it's it's sort of about in the ten percent of that number range that you have this quarter

There was the predominant pieces of it were in the corporate and other segment and in capital markets and that was the piece of it in the U S. The one time in the U S and given what I said in terms of.

That growth excluding the one time you can back into it it's it's sort of about in the 10% of that number or range that you had this quarter.

Speaker 2: And all of that is part of our journey and I ties to the second part of your question. As we've said, we want to continue optimizing the bank as we go, making continuous improvements, investing, having the ability to move the team around and our resources around. So that's how we've delivered not just this quarter. For the full year, 1.2% operating leverage, as we've shown over three years and five years around neutral, despite significantly increasing investment levels over that period of time. And with that foundational capability now, hope.

And all of that is part of our journey and it ties to the second part of your question as we've said we want to continue optimizing the bank as we go making continuous improvements investing having the ability to move the team around in our resources around so that's how we've delivered not just this quarter for the full year, one 2% operating leverage as we've shown.

<unk> over three years and five years around neutral despite significantly increasing investment levels over that period of time and with that foundational capability now built we have the ability to take out 1% to 2% of our expenses every year. This year. It was more around the 1% range going forward.

Speaker 2: We have the ability to take out.

Speaker 2: one to two percent of our expenses every year. This year it was more around the one percent range. Going forward, we've got now visibility into the pipeline of efficiency savings we're getting. That's getting to that two percent number a year in 24 and beyond. So that's what allows us to manage our expenses to around mid-single digits plus or minus, as we said, we will do. And the plus or minus depends on the top line environment. So next year, we think it might be a tougher environment on the top line. And so as I said in my guidance,

Got now visibility into the pipeline of efficiency savings, we're getting that's getting to that 2% number a year in 'twenty four and beyond so that's what allows us to manage our expenses to around mid single digits, plus or minus as we said, we will do and the plus or minus depends on the topline environment. So next year, we think it might be a tougher environment.

On the top line and so as I said in my guidance. We are now managing to the minus side of mid single digit on the expenses, but we can do that while actually investing and growth having expenses grow above mid single digit through those investments funding everything we've laid out in those four priorities that Victor spoke about.

Speaker 2: We are now managing to the minus side of mid-single digit on the expenses, but we can do that while actually investing and growth, having expenses grow above mid-single digits through those investments, funding everything we've laid out and those four priorities that Victor spoke about.

Speaker 2: including for the efficiency improvements through enabling and simplifying our bank.

Including further efficiency improvements through enabling and simplifying our bank and so that's what allows us to continue generating that operating leverage on an ongoing basis.

Speaker 2: And so that's what allows us to continue generating that operating leverage on an ongoing base.

Speaker 5: All adhered to my one question limit. So thank you very much.

Well I'll adhere to my one question limit.

You very much.

Speaker 4: Thank you. Our following question is from Hebron Poonawalla from Bank of America. Please go ahead.

Thank you. Our following question is from Hey, buy them, putting Hawaii from Bank of America. Please go ahead.

Speaker 6: Good morning. I guess maybe on the macro and credit for maybe Victor and Frank means just talk to us going back to your comments around the impact BCL outlook in the mid 30s for next year. One.

Hey, good morning, I guess, maybe.

On the macro and credit for maybe Victor and Frank just talk to us.

Going back to your commentary on the impaired PCL outlook into mid thirties for next year.

One.

Speaker 6: assuming that the Bank of Canada and rates are done going higher for this cycle, give us a sense of your expectations on weakness in the economy and the consumer that you expect over the coming quarters. And, and, and where the downside risk, like what should we, what are you paying attention to to ensure that impact we feel is not meaningfully above the guidance that you provided? Thanks.

Assuming that the bank of Canada and rates have done going higher for this cycle can you just give us a sense of your expectations on.

Weakness in the economy and the consumer that you expect over the coming quarters and in Red.

The downside just like what should we what are you paying attention to to ensure that impaired PCL, but not meaningfully above.

The guidance that you provided.

Speaker 3: And in that guidance, I mean, as you can imagine, there is a couple of moving parts. As I said, we continue to expect some further normalization in our consumer portfolios, something we have seen and something we expect to continue to see.

Sure and in that guidance I mean, if you can imagine there is a couple of moving parts as I said, we continue to expect some further normalization in our consumer portfolios something we have seen and something we expect to continue to fee.

Speaker 3: And then there is some others where we expect office to moderate in the next year in line with our maturity profile. And then give and take that should lead us to that mid 30s range that we feel very confident with. I mean, if asking about downsides, and again, we have...

And then there is some others, where we expect office to moderate in the next year in line with our maturity profile and then give and take that should lead us to that mid <unk> range that we feel very confident with I mean, if asking about downsides and again, we have inquiry.

Speaker 3: increases in unemployment factored in in our forward-looking information. If there is a more rapid shock to unemployment, that of course would change our outlook on

<unk> and unemployment factored in and I know a forward looking information if there is a more rapid chalk to unemployment better of course would change our outlook on on.

Speaker 3: impaired loan losses but otherwise given that we uh... have started the fiscal year already and a start to have a fairly good line of sight into the next few quarters we've a very confident with our base case outlook even though there is a few said with to to the downside in a particular any sharp trucks to the economy sharp increase in unemployment sharp drop in gdp

Impaired loan losses, but otherwise given that we have started the fiscal year already and it's hard to have a fairly good line of sight into the next few quarters, we feel very confident with our base case outlook, even though there is a if you said risks to the downside and in particular any sharp trucks through the economy.

<unk> increase in unemployment a sharp drop in GDP.

Speaker 1: uh... would certainly bring us closer to the downside and i'll victory jump in the just a really quick is another lot of good questions and we're on tight time so are we've architected cibc to deal with the economic environment that might come in 2020 four if things go slow will manage accordingly if things turn better and it's a very good chance that we have this quote unquote soft landing we'll capitalize on that as well

Certainly bring us closer to the downside.

Victor will jump into just a really quick because I know there are a lot of questions around tight time. So the art, we've architected CIBC to deal with the economic environment that might come in 2024, if things go slow we'll manage accordingly, if things turn better and there's a very good chance that we have this quote unquote soft landing, we will capitalize on that as well.

Thank you Brian.

Speaker 4: Thank you. Following question is some Gabriel DeShane from National Bank Financial. Please go ahead.

Thank you. Following question is from Gabriel <unk> from National Bank Financial. Please go ahead.

Speaker 7: Good morning. Just a question on capital here and you converted the US loan book to IRB. That's going to add 20 basis points next quarter. That's great. I'm just wondering how does that affect the proximity of your risk-bidab assets to triggering the output for because the IRB deflates the RWA. So I would think that might better bring a closer to that for more.

Good morning, just a question on capital here.

You converted the U S small book to IRB, that's going to add 20 basis points next quarter.

That's great.

I'm just wondering how does that affect the.

Proximity of your.

Risk weighted assets to triggering the.

The output floor because.

The IRB fleets yard.

I would think that might bring you closer to the floor.

Speaker 2: Yeah, thanks. Thanks for the question, Gabe. I'll take that. And so, you know, first let me clarify that the 20 basis points approximate number that we disclosed is pro forma net of everything.

Yeah. Thanks, Thanks for that question Gabe.

I'll take that so first.

First let me clarify that the 20 basis points of approximate number that we disclosed as pro forma net of everything. So that is we have more than that and benefit from the transition to IRB. Its netted off by some fairly modest negatives from the combination of that <unk> implementation in CVA changes.

Speaker 2: So that is that we have more than that and benefit from the transition to IRB. It's netted off.

Speaker 2: by some fairly modest negatives from the combination of FRTB implementation and CVEA changes.

Speaker 2: as well as negative amortization mortgages, as well as taking into account any floor impact. And we don't see at this point even post-AIRB floor being an impact in the foreseeable future. And so, net, we would have that 20 basis points this quarter and don't anticipate any other impacts because of that in the short term.

As well as negative amortization mortgages as well as taking into account any floor impact Hello.

And we don't see at this point, even post the IRB, Florida being an impact in the foreseeable future and so net we would have that 20 basis points. This quarter and don't anticipate any other impacts because of that in the short term. Okay. So another point 24 issue.

Speaker 2: Okay, so not a 2024 issue, and then... Not a material issue, 2024 or 2025, even. I'm not going to comment beyond that.

Not a material issue 'twenty four 'twenty five even I am not going to comment beyond that.

Alright, Thanks, a lot.

Speaker 4: Thank you. I'll following question is from many Gramman from the Scotiabing. Please go ahead.

Thank you I'll. Following question is from many grauman from Scotiabank. Please go ahead.

Speaker 8: Hi, good morning. Frank, I found the Play 29 very helpful. Just a question in terms of the LTV that you're showing.

Hi, good morning.

Frank.

Slide 29 very helpful. Just a question in terms of the Ltvs that youre showing.

Speaker 3: What are you assuming in terms of home prices to calculate those? Is there any sort of change in home prices that's being reflected? Yes, so those are our current LTV calculations. We're based on externally published indices. We adjust house prices to our best prediction of current LTVs.

What are you assuming in terms of home prices.

To calculate those is there any sort of change in home prices that's being reflected.

Those are our current LTV calculations were based on externally published in the fees, we adjust house prices to our best predict churn off of current Ltvs.

Speaker 3: So that would include the more recent moderation we have seen in house prices. It does not include any forward looking further moderation or recovery in the house prices. It's our current LTV calculations that are shown on the slide.

So that would include the more recent moderation we've seen in house prices. It does not include any forward looking further moderation or a recovery in the house prices. It's our current LTV calculations, there showing on the slide.

Speaker 8: Got it. And then just in terms of some of the dynamics impacting performing PCL line especially in Canada, just wondering

Got it and then just in terms of some of the dynamics impacting.

We're forming PCL.

Especially in Canada, just wondering the role of expert credit judgment this quarter determining that number.

Speaker 3: The role of expert credit judgment is quarter in determining that number and and inventing notable from a modeling perspective as well. Then input into that. Yeah, a lot smaller number, this quarter. As we discussed last quarter, we adjusted our indicate, if we're looking indicators in our expectations to to a more conservative scenario, last quarter, this quarter I wouldn't call out anything specific. It's a smaller number or a number of smaller items impacting that number.

Notable from a modeling perspective, as well that input into that.

A lot smaller number this quarter as we discussed last quarter, we adjusted our indicate a forward looking indicators and our expectation to a more conservative scenario last quarter. This quarter I wouldn't call out anything specific it's a smaller number or a number of smaller items.

Impacting that number.

Speaker 3: It's our model results, it's our expert credit judgment, and it's going through our processes that we go through every quarter to land in the right spot for our allowances. So nothing to call out specifically, I would say. OK, great.

It's our model results are expert credit judgment and its growing through our processes that we go through every quarter to land in the right spot for our allowance so nothing to call out specifically I would say.

Okay, great. Thank you.

Thank you our.

Speaker 4: I'll follow in question in some Darko Milik from RBC Capital Markets. Please go ahead.

Our following question is from Darko <unk> from RBC capital markets. Please go ahead.

Yeah.

Speaker 9: Bye, thank you very much. I'll be brief, Frank. I'll probably have a lot of follow-ups later, but I do appreciate the extra disclosure. I have a question on the negatively amortizing variable mortgages. Coming down from 50 billion to 43, you're showing some success there in getting people out of negatively amortizing. But what I'm interested in is the opposite effect, which is of the 50 billion, how many of you contacted?

Alright. Thank you very much I'll be brief for any probably had a lot of follow ups later, but.

And I do appreciate you.

The extra disclosure I had a question on the negatively amortizing.

Variable mortgages.

Coming down from $50 billion to 43, you're showing some success there in.

And getting people out of.

Negatively amortizing, but what I'm interested in is the opposite effect, which is.

Of the $50 billion, how many of you contacted.

Speaker 9: and how, you know, clearly we could see 14% reduction, but how many people are electing not to increase their payments or reduce and what would be the main reason for them not?

And Hum.

Clearly, we could see a 14% reduction.

But how many people are electing not to increase their payments are reduced and what would be the main reason for the knot.

Speaker 9: to move into a positively amortizing situation. Thanks.

To move into a positively amortizing situation. Thanks Yep. Thank you. Thank you Darko for the question. So we have had a proactive outreach program to our clients for quite some while we started that early we have now reached out or or contact.

Speaker 3: Thank you, thank you, Darko, for the question. So we have had a proactive outreach program to our clients for quite some while. We started that early. We have now reached out or contacted most of our clients in their portfolio and we do see strong results and we've seen those results quarter over quarter.

Most of our clients in their portfolio and we do feel strong results and we've seen those results quarter over quarter.

Speaker 3: In this quarter alone, 13,000 clients took action to remove themselves from negative amortizing status.

In this quarter alone AR 13000 clients took action to remove themselves from negative amortizing status for the most part by increasing their monthly payments on a voluntary basis to remove their accounts off of negative amortization.

Speaker 3: For the most part by increasing their monthly payments on a voluntary basis to remove their accounts of negative amortization.

Speaker 3: Why are clients not electing? There's a couple of reasons for that. Some are just saying, well, I'm aware of the status. I do not have to take action. I right now I expect interest rates to come down and I just want to wait for...

Why why are your clients not electing.

If a couple of reasons for that some are just saying well I'm aware of the fed of I do not have to take action right now I expect interest rates to come down.

Jeff one and wait for that.

Speaker 3: There may be other reasons for that, but in general we are very pleased with the outcomes that we are seeing so far. We continue to expect seeing those outcomes and we continue to expect that number to coming down as we keep up.

There may be other reasons for that but in general we are very pleased with the outcomes that we are seeing so far we continue to expect seeing those outcomes and we continue to expect that number coming down if we keep up our outreach efforts and having conversations with our clients.

Speaker 3: our outreach efforts and having conversations with our clients.

Okay. Thank you.

Speaker 4: Thank you. The following question is some limo or per thought from Comar Act Securities. Please go ahead.

Thank you. Our following question is from Lamar per song from Cormack Securities. Please go ahead.

Speaker 5: Thanks for taking my question. Questions are frank. Can you talk about what gives you the confidence in your PCL outlook despite the continued increase in the link with season Canadian consumer? Like does that?

Hi, Thanks for taking my question My question is for Frank.

Can you talk about what gives you the confidence in your PCL outlook. Despite the continued increase in <unk>.

<unk> and Canadian consumer like does that assume normalization and delinquencies to the Q1 'twenty rate youre showing here. So the 34 basis points or is it are you assuming something above that 34 basis points youre showing in your slide 27.

Speaker 9: Assume normalization and delinquencies to the Q-1-20 rate you're showing here. So the 34 basis points are, are you assuming something about that 34 basis points you're showing? And there's 527. Thanks.

Speaker 3: Yeah, well, I would say as I said before, there's a couple of moving parts. So we do expect some further normalization and it's probably a little bit more product specific. We talked a little bit about mortgages in our prepared remarks where we expect normalization, but we are very confident with

Yeah, well I would say that every fab before theres a couple of moving parts.

So we do expect some further normalization and it's probably a little bit more product specific we talked a little bit about mortgages in our prepared remarks, where we expect normalization, but we are very confident with the.

Speaker 3: the quality of those books and that those renewables will remain very manageable for us.

The quality of those books and that those renewals will will remain very manageable for us.

Speaker 3: Cards performance continues to be very good. There is in part our co-brand portfolio.

<unk> performance continues to be very good and there is in part our co brand portfolio.

Speaker 3: that is supporting strong credit quality, but there is underlying investments in risk management that we did in the cards book that is helping drive a real change in credit quality as well.

That is supporting strong credit quality, but there is underlying investments in risk management that we did in <unk>.

In the card book that is helping drive real change in credit quality as well and then in personal lending again, there is a little bit a mix of different things, but we.

Speaker 3: And then in personal lending, again, that is a little bit a mix of different things, but we are seeing strong credit quality there, but there's also certain pockets like our unsecured lines book where we see normalization and we should expect to see normalization. So that gives us confidence with our base outlook because it's based on a bottom-up assessment of all of those moving parts.

We are seeing strong credit quality, there, but theres also a certain pockets like our unsecured lines book, where we see normalization and we should expect to see normalization. So that gives us confidence with our base outlook because it's based on a bottoms up assessment of all of those moving parts.

Thanks ill adhere to the one question.

Thank you.

Speaker 4: Following question is some Sorab, Movaheri from BMO Capital Markets. Please go ahead.

<unk> question is from Sohrab <unk> from BMO capital markets. Please go ahead.

Speaker 8: Okay, thank you. Capital ratio is going to look pretty strong.

Okay. Thank you.

Capital ratio is going to look pretty strong.

Speaker 8: Maybe question for Victor and or Harach. Can I get a sense of what are the priorities?

Maybe a question for Victor and or or ACH.

Can I get a sense of what are the priorities.

Speaker 8: And at what sort of levels are you comfortable running the cap ratios for the bank, you know, given the type of outlook that you've kind of presented to us?

And at what sort of levels are you comfortable running the capital ratios for the bank given the type of outlook that you've kind of presented to us.

Speaker 8: and I guess implicit in that to Ratch victory is whether or not

And I guess implicit in that is we're at Victoria's whether or not.

Speaker 8: You intend to continue to keep the drip on.

<unk> intends to continue to.

To keep the drip.

Thank you.

Speaker 1: Good morning, Sora. Thanks for that question. We've been as a leadership team very focused on a creeding capital over the course of the year. And as I said in my own putting remarks, we've done that every quarter through organic capital generation, through our drip, as well as through a strategic risk transaction. We continue to focus on a strong capital level. We look at it through three lenses.

Good morning. Thanks for that question, we've been as a leadership team very focused on creating capital over the course of the year and as I said in my opening remarks, we've done that every quarter through organic capital generation through our drip as well as through a strategic risk transaction. We continue to focus on our strong capital level, we look at it through three lenses.

Speaker 1: What is the regulatory stance today? Visa Vita-Buffer? That asks if he's put in place.

What is the regulatory stance today vis vis the buffer that osophy has put in place.

Speaker 1: how do we compare against our pure group and three is how do we view the macroeconomic environment our goal is to continue to maintain a strong level of capital liquidity all handed over to rush take it to the numbers how we think about the buffer how we think about the drip but you can rest assured that that focus of ours is a leadership team on capital is paramount

Do we compare against our peer group and three is how do we view the macroeconomic environment. Our goal is to continue to maintain a strong level of capital and liquidity I'll hand, it over to her I should take us through the numbers, how we think about the buffer how do we think about the drip, but you can rest assured that that focus of ours as a leadership team on capital is Paramount.

Speaker 2: Thanks for questions, Tara. Let me just add a little bit to what Victor said. First of all, we have very strong capital generation on an ongoing basis, and we do not need the drip on in order to continue growing our business and delivering on the EPS targets that we've laid out.

Thanks for the question Sarah Let me just add a little bit to what Victor said.

First of all we have very strong capital generation on an ongoing basis, and we do not need the drip on in order to continue growing our business and delivering on the EPS targets that we've laid out if you look at any given quarter, we generate 25 to 30 basis points of capital net of our dividend payments and our Aro as such.

That allows us to grow our risk weighted assets in the high single digits and continue growing our business alongside with that.

Speaker 2: And so what that means is over the drip program over this year has been to absorb the headwinds and to drive our capital ratio up.

And so what that means is over the drip program over this year has been to absorb the headwinds and to drive our capital ratio up and we talk about how much we've driven the capital ratio up year over year 70 basis points, but that is after having absorbed a significant amount of headwinds through some of the legal charges.

Speaker 2: And we talk about how much we've driven the calculation up year over year 70 basis point.

Speaker 2: But that is after having absorbed a significant amount of headwinds through some of the legal charges, some of the regulatory changes, and so forth that have happened. So that's what the DRIP has allowed us to do.

As some of the regulatory changes and so forth that have happened. So that's what the drip has allowed us to do we're in a good place now if you look at those three factors Victor spoke but theres still a little bit of uncertainty.

Speaker 2: we're in a good place now if you look at those three factors victor spoke but there's still a little bit of uncertainty around regattora requirements where they stabilize around the pure group and where it stabilizes we're in a very good place entering north of twelve five and a creating from there in twenty twenty four

Regulatory requirements, where they stabilize around the peer group and where it stabilizes. We're in a very good place and touring north of 12, five and creating from there in 2024.

Speaker 2: and you know we'll look at as we get more certainty on those factors once we're satisfied that we're vaporizing around these levels on a relative and absolute basis were able to shut down the grip

And we will look at as we get more certainty on those factors once were satisfied that we're stabilizing around these levels on a relative and absolute basis, we're able to shut down the drip and able to continue growing our business through our strong organic generation.

Speaker 2: and able to continue growing our business through our strong organic generation.

Thank you.

Speaker 4: Thank you. Our following question is on my job this is a very just investment research. Please go ahead.

Thank you. Our following question is from Nigel D'souza from favorite Test investment research. Please go ahead.

Speaker 10: Thank you. Good morning. This is another question for Frank. On performing title losses this quarter, a couple of factors here. First, it does look like you're specialized fully reflected recently. Soffiting macroeconomic outlook and specifically on home prices.

Thank you good morning.

Another question for Frank on performing credit losses this quarter.

Couple of factors here first it doesn't look like your analyzed fully reflect the recent.

Softening macroeconomic outlook and specifically on home prices or what I understand your economics team.

Speaker 10: For what I understand, your economic team has negatively revised to how it looks for house prices for 2024. So just wondering how sensitive you're performing PCLs would be to that downward revision in home prices and maybe some comments on why you elected not to apply a management overlinked to build more provisions given the challenging macroeconomic.

Negatively revised outlook for house prices for 2024, So I'm just wondering how sensitive you are performing.

<unk> would be due that downward revision in home prices and maybe some comments on.

Why you elected not to apply management overlay to build more provisions given the challenging macroeconomic backdrop.

Speaker 3: Yeah, so thanks for the question, Nigel. Overall, as I said, we feel very comfortable with our allowances. We reflected some of those adjustments last quarter and didn't feel like there was anything that we had to add materially, this quarter for those outlooks.

Yeah. So thanks for the question Nigel I'm overall, very fair, we feel very comfortable with our with our allowances we reflected some of those adjustments.

Adjustments last quarter and didn't feel like there was anything that we had to add materially this quarter four for those logs.

Speaker 3: Generally and across all products, I would say...

Generally and across all product I I would say.

Speaker 3: It's probably that service ratios, unemployment, GDP, that is more sensitive to actual PCLs. House prices, of course, would play a role in the mortgage allowances, but that is an area where we actually have built quite a lot of reserves.

It's probably debt service ratios unemployment GDP that is more sensitive to actual ppl's house prices of course would play a role in the mortgage allowances, but that is an area, where we actually have built quite quite a lot of reserves and then again.

Speaker 3: And then again, we are reflecting a variety of outcomes and have adequately reflected that in our allowance. Okay, how's that?

We are reflecting a variety of outcomes and have have have adequately reflected that in our allowance.

Okay.

Thank you.

Thank you.

Speaker 5: I'll follow in question if some Mario Mandonka from TD Securities. Please go ahead. Good morning. I'm this new Canadian mortgage charter. I've gone through it and...

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

Good morning.

On this new Canadian mortgage charter I've gone through it and.

Speaker 9: I am having a little difficulty finding stuff that's brand new. Just a high level from your perspective. Is there anything in there that's new, that affects CIVC, that could affect earnings or capital? That's my first question.

I am having a little difficulty finding stuff Thats brand new.

Just high level from your perspective is there anything in there.

That's new that affect CIBC that could affect earnings or capital. That's my first question.

Speaker 3: So you're right, it's very well aligned with previous guidance and expectations. It's something that we do. We work with clients in financial hardship and we try to get to the best possible outcomes with our clients wherever possible.

All right.

Youre right, its very well aligned with previous guidance and expectations. It's something that we do we work with clients in financial hardship and we try to get to the best possible outcomes with our clients wherever possible.

Speaker 9: So that's nothing new that I would say that sticks out and would impact us as we already have established practices of how we work with clients and financial heart. It took two quick follow-ups on that then. So the

So there's nothing new that I would say that sticks out in with impact off as we already have established practices of how we work with clients in financial hardship two quick follow ups on that then so the.

Speaker 10: The notion that banks can't charge interest on interest.

The notion that banks cat charge interest on interest.

Speaker 10: Presumably that only applies to mortgages that fall under that relief category under the charter It doesn't apply to existing mortgages that are negative M. Is that that appropriate fair? That is our understanding. And then finally on the hardship, when mortgages fall into hardship, does that necessarily increase the capital requirements and is that meaning?

Presumably that only applies to mortgages that fall under that relief category under the charter it doesn't apply to existing mortgages that are negative them is that they're not appropriate is that fair that is our understanding and then finally on the.

Hardship when mortgages fall into hardship.

Does that necessarily increase the capital requirements and is that meaningful.

Speaker 3: Well, it does increase capital requirements, but it is a very small part that would actually be captured under the financial hardship rules. So overall, it is not material or meaningful, but it would impact capital requirements for sure. Thank you.

Well it does increase capital requirements, but it is a very small part that would actually be captured under under the financial hardship rewards. So overall, it is not material or meaningful, but it would impact capital requirements for sure.

Okay.

Speaker 4: Thank you. We have no further questions. Register at this time. I would not like to turn the meeting back over to Victor.

Thank you we have no further questions registered at this time I would now like to turn the meeting back over to Victor.

Speaker 1: Thank you operator and thank you for the questions today. We're going to give it back some time. I know you got another call at 830 and another call today. I want to thank you all for your engagement with us throughout the fiscal year this past year on our quarterly calls and in the other forums where we get to engage with you. I set it the outside of my more remarks that we have the right strategy at CIBC.

You operator, and thank you for the questions today, we're gonna give me back some time I know you got another call at 830 in another call today I want to thank you all for your engagement with us throughout the fiscal year.

This past year on our quarterly calls and in other forums, where we get to engage with you I said at the outset of my remarks that we have the right strategy at CIBC.

Speaker 1: We also know how to operate in a fluid and uncertain environment.

We also know how to operate in a fluid and uncertain environment.

Speaker 1: Our proactive management and a more challenging environment this past year is an example of that. A year in which we generated positive operating leverage, a year in which we protected net interest margin, and a year in which we strengthened our balance sheet throughout the year.

Our proactive advantaged management in a more challenging environment. This past year is an example of that a year in which we generated positive operating leverage a year in which we protected net interest margin in a year in which we strengthened our balance sheet throughout the year.

Speaker 1: while continuing to make strategic investments to ensure our bank is well positioned for the future.

While continuing to make strategic investments to ensure our bank is well positioned for the future.

Speaker 1: I have full confidence and our leadership team has full confidence in the deep bench of talent within our businesses and our experienced leadership team is there to deliver on our strategic priorities that we've laid out here in all of our businesses.

I have full confidence in our leadership team has full confidence in the deep bench of talent within our businesses.

And our experienced leadership team is there to deliver on our strategic priorities that we've laid out here and all of our businesses in the upcoming year.

Speaker 1: Before we close the call, I'd also like to recognize our entire CIBC team for their contributions as they delivered on our purpose for our clients.

Before we close the call I'd also like to recognize our entire CIBC team for their contributions as they delivered on our purpose for our clients our communities and for one another and of course for our shareholders. This purpose comes to life each year at CIBC Miracle day, taking place next week next Wednesday to raise fund.

Speaker 1: our communities and for one another and of course for our shareholders. This purpose comes to life each year at CIBC Miracle Day. Next, taking place next week, next Wednesday to raise funds for children's charities. I'm looking forward to the event. It's a big deal for us. It's a big deal for the community. It's something we started over three decades ago and I hope you all participate. Wishing you all the best for the holiday season. Thank you. Thank you.

For children's charities I'm looking forward to the event, it's a big deal for US It's a big deal for the community. It's something we started over three decades ago and I Hope you all participate wishing you all the best for the holiday season. Thank you.

Thank you.

Conference has now ended.

Speaker 4: Please disconnect your lines at this time, and we thank you for your participation.

Please disconnect your lines at this time and we thank you for your participation.