Q2 2024 Canadian Imperial Bank of Commerce Earnings Call

Speaker Change: [music] please wait.

Operator: 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 Geoff Weiss. Senior Vice President, Investor Relations Please go ahead, Geoff.

All participants please standby your conference is ready to begin.

Speaker Change: Good morning, and welcome to D C I B C quarterly financial results call.

It binds that this call is being recorded.

Speaker Change: I would like to turn the meeting over to Geoff Weiss.

Geoffrey M. Weiss: Senior Vice President Investor Relations. Please go ahead.

Geoffrey M. Weiss: Thank you and good morning everyone. We'll begin this morning's presentation with opening remarks from Victor Dodig, our President and Chief Executive Officer, followed by Rob Sedran, our Chief Financial Officer, and Frank Guse, our Chief Risk Officer. Also on the call today are a number of our group heads, including Shawn Beber, U.S. Region; Harry Culham, Capital Markets and Direct Financial Services; Jon Hountalas, Canadian Banking; and Hratch Panossian, Personal and Business Bank. They're all available to take questions following the prepared remarks.

Geoffrey M. Weiss: Thank you and good morning, everyone. We'll begin this morning's presentation with opening remarks from Victor <unk>, Our President and Chief Executive Officer, followed by Rob <unk>, Our Chief Financial Officer, and Frank <unk>, Our Chief Risk Officer also on the call today are a number of our group heads, including Shawn Beber U S region.

Geoffrey M. Weiss: Capital markets and direct financial services, John <unk> Palace, Canadian banking, and her entrepreneurs and personal and business banking, they're all available to take questions. Following the prepared remarks, we.

Geoffrey M. Weiss: We have a hard stop this morning at 8.30, so please limit your questions to one during the Q&A to allow everyone to participate. As usual, we'll make ourselves available after the call for any follow-ups. As noted on slide two of our investor presentation, our comments may contain forward-looking statements that involve assumptions and have inherent risks and uncertainties. However, actual results may differ materially. With that, I will now turn the call over to Victor.

Geoffrey M. Weiss: We have a hard stop this morning at 830. So please limit your questions to one during the Q&A to allow everyone to participate as usual, we will make ourselves available after the call for any follow ups.

Geoffrey M. Weiss: 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 call over to Victor.

Victor G. Dodig: Thank you, Geoff, and good morning, everyone. I'll begin the call today with a brief overview of our second quarter results, followed by an update on our key operating segments and progress on our strategy. We delivered strong results this quarter that reflected our differentiated business model, our diversified portfolio, and our client-centric strategy, which we continue to consistently execute on. On an adjusted basis, we reported net income of $1.7 billion and earnings per share of $1.75.

Victor: Thank you, Jeff and good morning, everyone I'll begin the call today with a brief overview of our second quarter results followed by an update on our key operating segments and progress on our strategy.

Victor: We delivered strong results this quarter reflected our differentiated business model, our diversified portfolio and our client centric strategy, which we continue to consistently execute on.

Victor: On an adjusted basis, we reported net income of $1 7 billion.

Victor: And earnings per share of $1.75. This performance was driven by 9% pretax pre provision earnings growth and a third consecutive quarter of positive operating leverage.

Victor G. Dodig: This performance was driven by 9% pre-tax, pre-provision earnings growth and a third consecutive quarter of positive operating leverage. Our capital position remains strong, with a C21 ratio of 13.1%. This provides us with flexibility to draw on excess capital, support our clients, and continue growing our businesses while also returning capital as shareholders. Our adjusted return on equity was 13.4%, as we maintained a focus on profitability while holding elevated capital. Looking forward, our strategy is deliberately designed to deliver a robust, long-term return profile as we prioritize specific client segments. Advance our digital capabilities, deepen client relationships, and realize efficiencies across our portfolio. Now, turning to our business...

Victor: Our capital position remains strong with a CET one ratio of 13, 1%.

Victor: This provides us with flexibility to draw on excess capital support our clients and continuing to continue growing our businesses, while also returning capital to shareholders.

Victor: Our adjusted return on equity was 13, 4% as we maintained focus on profitability, while holding elevated capital.

Victor: Looking forward our strategy is deliberately designed to deliver robust long term return profile as we prioritize specific client segments advance our digital capabilities deepen client relationships and realized efficiencies across our portfolio.

Victor: Now turning to our business units.

Victor G. Dodig: Starting with our Canadian personal and business banking franchise, we delivered a strong quarter as we continue to advance our strategic priorities. CIBC Imperial Service, which serves the needs of the mass affluent segment in Canada. Our client net promoter scores are trending higher, and money in balance growth for imperial service clients was up 27% sequentially. With the support of AI, we're continuing to foster a cultural mindset of delivering an enhanced client experience. In one use case, we're using advanced analytics to compile a holistic client financial snapshot, which provides our advisors with deeper insights to guide more personalized conversations with their clients.

Victor: Turning with Canadian personal and business, our Canadian personal and business banking franchise, we delivered a strong quarter as we continue to advance our strategic priorities.

Victor: CIBC Imperial service, which serves the needs of the mass affluent segment in Canada, our client net promoter scores are trending higher and.

Victor: And money and balanced growth for Imperial service clients was up 27% sequentially.

With the support of AI, we're continuing to foster a cultural mindset of delivering an enhanced client experience.

Victor: In one use case, we're using advanced analytics to compile a holistic client financial snapshot, which provides our advisers with deeper insights to guide more personalized conversations with their clients.

Victor G. Dodig: We're also leveraging our digital capabilities to continue deepening relationships with our personal banking clients. Today, 4 out of 10 core banking products are sold digitally, continuing to trend up from prior periods. In addition, we saw improved net promoter scores for digital channel clients as well. Now, turning to our Canadian Commercial Banking and Wealth Management business. Soft economic growth and lower levels of residential construction have dampened loan demand, while financial markets have benefited from expectations of interest rate reductions later in the year.

Victor: We're also leveraging our digital capabilities to continue deepening relationships with their personal banking clients today.

Victor: Today four out of 10 core banking products are sold digitally.

Victor: <unk> to trend up from prior periods in.

Victor: In addition, we saw improved net promoter scores for digital channel clients as well.

Speaker Change: So turning to our Canadian commercial banking and wealth management businesses softer economic growth and lower levels of residential construction of damping loan demand while financial markets have benefited from expectations of interest rate reductions later in the year.

Victor G. Dodig: Our emphasis on client-relationship returns generated significant growth in referral volumes between commercial banking and wealth management, which are on track to increase 70% relative to fiscal 2023. In line with our strategic priorities, we recently launched a modernized platform for our investment advisors as we continue to evolve our wealth management capabilities. And during the quarter, our asset management business garnered first place out of our Big Six peer group in absolute long-term and total retail mutual fund net sales.

Speaker Change: Our emphasis on client relationship returns generated significant growth in referral volumes between commercial banking and wealth management, which are on track to increase 17% relative to fiscal 2023.

Speaker Change: In line with our strategic priorities, we recently launched a modernized platform for our investment advisors as we continue to evolve our wealth management capabilities.

Speaker Change: And during the quarter, our asset management business garnered first place out of our big six peer group and absolute long term and total retail mutual fund net sales.

Victor G. Dodig: We will continue to drive growth in this business as we execute on our strategy to lead in the mass affluent and high net worth client segment. In the U.S. region, our results reflected continued progress on our growth agenda. During the quarter, C&I loan growth was strong and broad-based, while we continued to de-emphasize certain segments of our institutional commercial real estate business.

Speaker Change: We will continue to drive growth in this business as we execute on our strategy to lead in the mass affluent and high net worth clients segments.

Speaker Change: In the U S region, our results reflected continued progress on our growth agenda.

Speaker Change: During the quarter C&I loan growth was strong and broad based while we continue to deemphasize certain segments of our institutional commercial real estate business.

Victor G. Dodig: In our private wealth management business, we continue to invest in technology and infrastructure to scale our platform, attract new advisory teams, and drive connectivity. Cross-business referral volumes from the U.S. are tracking well above our targets, supported by our ECRM investors. Scaling our highly connected U.S. platform remains a critical imperative to our cross-border strategy and to our long-term enterprise earnings potential, as we move to capital markets and direct financial services.

Speaker Change: In our private wealth management business, we continued to invest in technology and infrastructure to scale our platform.

Speaker Change: New advisory teams and drive connectivity.

Speaker Change: [noise] cross business referral volumes from the U S are tracking well above our targets supported by our ECR M investments.

Speaker Change: Scaling our highly connected U S platform remains a critical imperative to our cross border strategy and to our long term enterprise earnings potential.

Speaker Change: Moving to capital markets and direct financial services.

Victor G. Dodig: Our differentiated platform delivered another strong quarter of results. We maintained our number one market share position among the Canadian Peer Group in equity trading, while also moving to the number one market share position for advisory. Revenue sourced from the U.S. region was up 20% year-on-year on a year-to-date basis.

Speaker Change: Our differentiated platform delivered another strong quarter of results.

Speaker Change: We maintained our number one market share position among Canadian peer group among the Canadian peer group in equity trading while also moving to the number one market share position for advisory fees.

Speaker Change: Revenue sourced from the U S region was up 20% year on year on a year to date basis.

Victor G. Dodig: In our DFS business, our efforts to build a best-in-class digital experience were recognized as well, with CIBC Investors Edge ranking number one of the big five Canadian banks and J.D. Power's self-directed investor satisfaction study. Underpinning our momentum are the investments that we've made to strengthen our bank. We're investing in technology to enhance our client experience, advance operational resilience, and protect our clients. Deliver Efficiencies and How We Work. We're taking a thoughtful and proactive approach to how AI plays a role in advancing our client-focused strategy and in the governance required to do so effectively.

And our DFS business, our efforts to build a best in class digital experience, we're recognized as well with CIBC investor's edge ranking number one of the big five Canadian banks in J D. Power's self directed Investor satisfaction study.

Speaker Change: Underpinning our momentum are the investments that we've made to strengthen our bank, we're investing in technology and enhance our client experience advance operational resilience to protect our clients and to deliver efficiencies in how we work.

Speaker Change: We're taking a thoughtful and proactive approach to how AI plays a role in advancing our client focused strategy and then the governance required to do so effectively.

Victor G. Dodig: We already use AI and key functions across our bank. Existing implementations include sophisticated risk and information security models that can detect fraud and enable our team to help prevent losses for our clients. We're also using generative AI solutions to enhance our front-line experience, improve our contact center efficiency, and to make head-off activities easier and faster to perform.

Speaker Change: We already use AI and key functions across our bank.

Speaker Change: Existing implementations include sophisticated risk and information security models that can detect fraud enabler and enable our team to help prevent losses for our clients.

Speaker Change: We're also using generative AI solutions to enhance our frontline experience to improve our contact center efficiency and to make head off his activities easier and faster to perform.

Victor G. Dodig: We've got many use cases currently in flight across our bank, all connected to our strategy and all with our clients at the center of our thinking. Delivering on our commitment to build a secure, equitable, and sustainable future, our efforts were recognized by several prominent third-party organizations again this quarter. For the second consecutive year, we were recognized by Global Finance as the best investment bank and for our leadership in sustainable finance. For the third consecutive year, we were recognized by Mediacorp as one of Canada's greenest employers. And finally, for the fourth consecutive year, we rank number one in Canada for gender equality by equity.

Speaker Change: We've got many use cases currently in flight across our bank all connected to our strategy and all with our clients at the center of our thinking.

Speaker Change: Delivering on our commitment to build a secure equitable and sustainable future. Our efforts were recognized with several prominent third party organizations again this quarter.

Speaker Change: For the second consecutive year, we were recognized by global Finance is the best investment Bank and for our leadership and sustainable finance.

Speaker Change: For the third consecutive year, we were recognized by immediate Corp is one of Canada's greenest employers.

Speaker Change: Finally for the fourth consecutive year, we ranked number one in Canada for gender equality back relief.

Victor G. Dodig: These recognitions further enforce the hallmark of consistency we're focused on delivering across our bank on a number of fronts. So, in closing, we delivered another strong quarter to build on our recent momentum. We have a skilled, tenured, and connected management team that is laser-focused on the consistent execution of our clearly defined strategy. Going forward, our focus is to continue delivering on our strategic priorities, to remain disciplined with resource allocation, and to further improve the client experience.

Speaker Change: These recognitions further enforced a hallmark of consistency, we're focused on delivering across our bank on a number of fronts.

Speaker Change: So in closing we delivered another strong quarter to build on our recent momentum we have a skilled.

Speaker Change: Tenured and connected management team that is laser focused on the consistent execution of our clearly defined strategy.

Speaker Change: Going forward, our focus is to continue delivering on our strategic priorities to remain disciplined with resource allocation and to further improve the client experience.

Victor G. Dodig: With that, I'm pleased to hand things over to our new CFO, Rob Cedran, to review our financial results. Rob has a deep understanding of the banking sector and will bring valuable perspective to our CIBC Executive Committee. This move, along with the other new and expanded rules announced during the quarter, is consistent with our approach to deliver a strong bench from which to draw to lead our bank into the future. Sohrab, over to you.

Speaker Change: With that I'm pleased to hand things over to our new CFO, Rob sedan to review our financial results, Rob has a deep understanding of the banking sector and will bring valuable perspective to our CIBC Executive Committee.

Speaker Change: This move along with the other new and expanded roles announced during the quarter are consistent with our approach to deliver a strong bench to draw from to draw from to lead our bank into the future So Rob over to you.

Rob Sedran: Thank you, Victor, and good morning, everyone. Having spent 19 years with CIBC in various roles, I'm very excited to serve as our bank's CFO. So, let's get started with our Q2'24 performance. I'm on slide 6.

Unknown Executive: Thank you Victor and good morning, everyone.

Unknown Executive: Having spent 19 years with CIBC in various roles I'm very excited to serve as our bank CFO. So let's get started with our Q2 'twenty four performance I'm on slide six.

Rob Sedran: The results this quarter reflect our focus on the consistent execution of the strategy Victor reiterated in his remarks. Strong performance in our largest business unit, personal and business banking, momentum in market-sensitive businesses, and balance between expense control and investing in our growth contributed to diluted earnings per share of $1.79 and ROE of 13.7% on a reported basis. Excluding items of note, adjusted EPS was $1.75, and adjusted ROE was 13.4. Our balance sheet remains in a strong position, with ratios that are well above our normal course operating target. The balance of my presentation will refer to adjusted results, starting with slide 7. Unless otherwise noted, results are being compared with Q2 of 23.

Unknown Executive: Our results this quarter reflect our focus on the consistent execution of the strategy Victor reiterated in his remarks strong performance in our largest business unit personal and business banking momentum and market sensitive businesses and balance between expense control and investing in our growth contributed to diluted earnings per share of $1 70.

Unknown Executive: Nine and ROE of 13, 7% on a reported basis, excluding items of note adjusted EPS was $1 75, and adjusted ROE was $13 four.

Unknown Executive: Our balance sheet remains in a strong position with ratios that are well above our normal course operating targets.

Speaker Change: My presentation will refer to adjusted results starting with slide seven unless otherwise noted results are being compared with Q2 of 'twenty three.

Rob Sedran: Adjusted net income of $1.7 billion increased 6%. Pre-provision, pre-tax earnings of $2.7 billion were up 9%, and revenues of $6.2 billion were up 8%, aligned with our growth targets and supported by expanding margins, volume growth, and higher fee income. We also continue to prudently manage expenses while still investing to support our strategy, which helps generate positive operating leverage. Provisions for credit losses continue to be elevated, up 17% from a year ago, but they are down 12% sequentially. Frank will discuss credit in detail in his presentation.

Speaker Change: Adjusted net income of $1 7 billion increased 6% pre provision pretax earnings of $2 7 billion were up 9% and revenues of $6 2 billion were up 8% aligned with our growth targets and supported by expanding margins volume growth and higher fee income.

Speaker Change: We also continue to prudently manage expenses, while still investing to support our strategy, which helped generate positive operating leverage.

Speaker Change: Provisions for credit losses continue to be elevated up 17% from a year ago, but they are down 12% sequentially Frank will discuss credit in detail in his presentation.

Rob Sedran: Slide 8 Highlights Key Drivers of Net Interest Income Excluding trading, NII was up 9% over the year, driven by expanding margins and continued balance sheet growth. However, the net interest margin performance this quarter and for the next couple of quarters is muddied by the impact of benchmark reform as we approach the June 28th cessation of CDOR. I would note that this transition is revenue neutral, and it is simply a shift of revenue to NII from other incomes. Excluding trading, Total Bank NIM was up 7 basis points from the prior year and stable sequentially. Canadian PNC NIMH of 263 basis points was down 5 basis points sequentially.

Speaker Change: Slide eight highlights key drivers of net interest income.

Speaker Change: Excluding trading NII was up 9% over the year, driven by expanding margins and continued balance sheet growth.

Speaker Change: The net interest margin performance this quarter and for the next couple of quarters is muddied by the impact of benchmark reform as we approach the June 28th cessation of SEDAR.

Speaker Change: I would note that this transition is revenue neutral and it is simply a shift of revenue to NII from other income.

Speaker Change: Excluding trading total bank NIM was up seven basis points from the prior year and stable sequentially.

Speaker Change: Canadian P&C NIM of 263 basis points was down five basis points sequentially about half that decline was from revenue neutral items in commercial banking, including benchmark reform.

Rob Sedran: About half that decline was from revenue-neutral items in commercial banking, including benchmark reform. The balance of the decrease was driven by competitive pricing and business mix, also mainly in commercial banking, and has since largely stabilized. In the U.S., NIM of 343 basis points was down 6 basis points from the prior quarter, with a continued mixed shift in deposits and slightly lower loan margin.

Speaker Change: The balance of the decrease was driven by competitive pricing and business mix also mainly in commercial banking and has since largely stabilized.

Speaker Change: In the U S. NIM of 343 basis points was down six basis points from the prior quarter with a continued mix shift in deposits and slightly lower loan margins.

Rob Sedran: Consistent with our prior guidance, aside from the ongoing impact of benchmark reform, we continue to expect core margins to be stable for the balance of the year, based on current market rate expectations. Turning to slide 9, non-interest income of $2.9 billion was up 15% from the prior year amid growth in trading revenues as well as higher market-related and transactional... Excluding trading, market-related fees increased 13% due to higher underwriting and advisory fees, as well as investment management and custodial revenue. Transaction-related fees were up 6%, driven by growth in deposit and payment, card, and credit.

Speaker Change: Consistent with our prior guidance aside from the ongoing impact of benchmark reform, we continue to expect core margins to be stable.

Speaker Change: For the balance of the year based on current market rate expectations.

Speaker Change: Turning to slide nine noninterest income of $2 9 billion was up 15% from the prior year amid growth in trading revenues as well as higher market related and transactional fees.

Speaker Change: Excluding trading market related fees increased 13% due to higher underwriting and advisory fees as well as investment management and custodial revenues transaction related fees were up 6% driven by growth in deposit and payment card and credit fees.

Rob Sedran: Slide 10 highlights our balanced approach to expense management. Excluding performance-based compensation linked to stronger revenues and continued investments, expenses grew 4%. Over the last year, we achieved efficiencies while investing to advance the four pillars of our strategy, as you can see on the slide.

Speaker Change: Slide 10 highlights our balanced approach to expense management.

Speaker Change: Excluding performance based compensation linked to the stronger revenues and continued investments expenses grew 4%.

Speaker Change: Over the last year, we realized efficiencies, while investing to advance the four pillars of our strategy as you can see on the slide.

Rob Sedran: That combination helped us to deliver 50 basis points of positive operating leverage this quarter. With higher revenue-linked expenses, we expect expense growth to be in the mid-single-digit range for the full year, and we remain committed to delivering positive operating leverage for the year. Slide 11 highlights the strengths of our balance sheet. Our CT1 ratio ended the quarter at 13.1%, up from 13% last quarter and positions us well to absorb volatility in the operating environment while still supporting our clients.

Speaker Change: That combination helped us to deliver 50 basis points of positive operating leverage this quarter.

Speaker Change: With higher revenue linked expenses, we expect expense growth to be in the mid single digit range for the full year and we remain committed to delivering positive operating leverage for the year.

Slide 11 highlights the strength of our balance sheet.

Speaker Change: Our CET one ratio ended the quarter at 13, 1% up from 13% last quarter and positions us well to absorb volatility in the operating environment, while still supporting our clients.

Rob Sedran: Solid Organic Capital Generation, supported by share issuance, was partially offset by RWA increases, a combination of business growth and credit migration. Based on our strong capital position and stable outlook, and as we signaled on our Q1 earnings call, we announced earlier this morning the formal elimination of the discount on our DRIP program, starting with our Q3 dividend, payable on July 29th.

Speaker Change: All that organic capital generation supported by share issuance was partially offset by RW increases a combination of business growth and credit migration.

Speaker Change: Based on our strong capital position and stable outlook and as we signaled on our Q1 earnings call. We announced earlier this morning, the formula elimination of the discount on our drip program, starting with our Q3 dividend payable on July 29.

Rob Sedran: Our liquidity position continues to be strong, with an average LCR of 129%, down from last quarter as we moderated our funding activity during the period. Starting on slide 10, with personal and business banking, we highlight our strategic business unit results. Net income of $653 million increased 1%, driven by strong revenue growth and operating levels, partly offset by higher provisions for credit losses. Supported by core business momentum, pre-provision, pre-tax earnings were up 15% as the execution of our client-focused strategy continues to deliver results.

Speaker Change: Our liquidity position continues to be strong with an average LCR of 129% down from last quarter as we moderated our funding activity during the period.

Starting on slide 10, with personal and business banking, we highlight our strategic business unit results.

Speaker Change: Net income of $653 million increased 1% driven by strong revenue growth and operating leverage partly offset by higher provisions for credit losses.

Speaker Change: Supported by core business momentum pre provision pre tax earnings were up 15% as the execution of our client focused strategy continues to deliver results.

Rob Sedran: Revenues of $2.5 billion were up 9%, supported by a 16 basis point increase in the margin, along with volume growth. The sequential revenue decline was primarily due to the impact of two fewer days in the quarter.

Speaker Change: Revenues of $2 5 billion were up 9% supported by a 16 basis point increase in the margin along with volume growth.

Speaker Change: The sequential revenue decline was primarily owing to the impact of two fewer days in the quarter.

Rob Sedran: Expenses of $1.3 billion were up 4%, related to higher revenue growth and investments in strategic initiatives, partly offset by ongoing efficiency. On slide 13, we show Canadian commercial banking and wealth management, where net income and pre-provision pre-tax earnings were stable to a year ago. Revenues of $1.4 billion were up 4%, driven by strong wealth management revenue growth of 11%, with higher average fee-based assets on both increased client activity and market appreciation. This was partially offset by commercial banking revenue, which declined 5%.

Speaker Change: Expenses of $1 3 billion were up 4% related to higher revenue growth and investments in strategic initiatives, partly offset by ongoing efficiencies.

Speaker Change: On Slide 13, we show Canadian commercial banking and wealth management, where net income and pre provision pretax earnings were stable to a year ago.

Speaker Change: Revenues of $1 4 billion were up 4% driven by strong wealth management revenue growth of 11% with higher average fee based assets on both increased client activity and market appreciation. This was partially offset by commercial banking revenue, which declined 5%.

Rob Sedran: As I mentioned a few slides back, net interest margin in this segment was affected most directly by benchmark reform and will be for the next couple of quarters, which again has no revenue impact. We also saw the impact of deposit competition and elevated funding costs, as well as the impact of business mix during the quarter. Other than the impact of benchmark reform, we are seeing these things start to level off, and so we expect more stability in the core margin moving forward for this segment.

Speaker Change: As I mentioned, a few slides back net interest margin in this segment was affected most directly by benchmark reform and will be for the next couple of quarters, which again has no revenue impact. We also saw the impact of deposit competition and elevated funding costs as well as the impact of business mix during the quarter.

Speaker Change: Other than the impact of benchmark reform, we are seeing these things start to level off and so expect more stability in the core margin moving forward for this segment.

Rob Sedran: Expenses increased 7% from a year ago, mainly from higher compensation linked to the strong wealth management revenue. Our combined Canadian personal and commercial franchise delivered revenue growth of 6%, operating leverage of 3%, and pre-provision pre-tax earnings growth of 8% over the prior year. Additional details on Canadian P&C have been included in the appendix.

Expenses increased 7% from a year ago, mainly from higher compensation linked to the strong wealth management revenues.

Speaker Change: Our combined Canadian personal and commercial franchise delivered revenue growth of 6% operating leverage of 3% and pre provision pretax earnings growth of 8% over the prior year additional details on Canadian PNC had been included in the appendix.

Rob Sedran: Turning to U.S. Commercial Banking and Wealth Management on slide 14, net income of U.S. $81 million was up from the prior year, largely due to lower provisions in the office portfolio. Revenues were up 3%, with non-interest income up 10%, mainly due to market performance and wealth, partially offset by a 1% decline in net interest income. Expenses were up 10% year-over-year, reflecting investments across our business and infrastructure

Speaker Change: Turning to U S commercial banking and wealth management on slide 14.

Net income of U S $81 million was up from the prior year largely from lower provisions in the office portfolio.

Speaker Change: Revenues were up 3% with noninterest income up 10%, mainly due to market performance and wealth, partially offset by a 1% decline in net interest income.

Speaker Change: Expenses were up 10% year over year, reflecting investments across our business and infrastructure. We continue to scale, our U S business and our position to drive long term profitable growth across both commercial banking and wealth management.

Rob Sedran: We continue to scale our U.S. business and are positioned to drive long-term profitable growth across both commercial banking and wealth management. Turning to slide 15, our Capital Markets and DFS segment. Net income of $509 million was up 2% year over year, and revenues of $1.4 billion were up 4% driven by strong results across all business lines despite the impact of the federal budget changes on our global markets business. Corporate and Investment Banking benefited from growth in both equity and debt underwriting activity.

Rob Sedran: And 5% growth in direct financial services was helped by higher revenues in Investors Edge, our direct investing platform. Expenses of $706 million were up 6%, largely due to continued investments in growth initiatives and higher employee-related compensation. Slide 16 reflects the results of the Corporate and Other Business Unit, which shows a net loss of $9 million compared with a net loss of $33 million in the prior year, driven by higher Treasury-related revenues and higher revenues from CIBC Caribbean, partly offset by higher expenses. This quarter's expenses included a charge related to the divestiture of certain CIBC Caribbean assets.

Speaker Change: Turning to slide 15, and our capital markets and DFS segment.

Speaker Change: Net income of $509 million was up 2% year over year.

Speaker Change: Revenues of $1 4 billion were up 4% driven by strong results across all business lines. Despite the impact of the federal budget changes on our global markets business corporate.

Speaker Change: Corporate and investment banking benefited from growth in both equity and debt underwriting activity and 5% growth in direct financial services was helped by higher revenues and investor's edge, our direct investing platform.

Speaker Change: Expenses of $706 million were up 6% largely due to continued investments in growth initiatives and higher employee related compensation.

Speaker Change: Yeah.

Speaker Change: Slide 16 reflects the results of the corporate and other business unit, which shows a net loss of 9 million compared with a net loss of $33 million in the prior year driven by higher treasury related revenues and higher revenues from CIBC Caribbean, partly offset by higher expenses. This quarter's expenses included a charge relate.

Speaker Change: To the divestiture of certain CIBC Caribbean assets.

Rob Sedran: In periods of heightened volatility, our treasury function can sometimes buffer the impact on our client-facing business. As that volatility settles back down, so too should the impact on our corporate and other segments, which we are now seeing. Therefore, in the current environment, we would anticipate losses of between zero and $50 million, rather than our previous guidance of a loss of between $50 million and $100 million for this segment.

Speaker Change: In periods of heightened volatility our treasury function can sometimes buffer the impact on our client facing businesses as that volatility settles back down so too should the impact on our corporate and other segment, which we are now seeing.

Speaker Change: Therefore in the current environment, we would anticipate losses of between zero and $50 million rather than our previous guidance of a loss of between $50 million and $100 million for this segment.

Rob Sedran: So, let me close with three takeaways from the results. First, our results reflect the consistent execution of our client-focused strategy and positive momentum across our diversified franchise. We remain very focused on controlling what we can control and positioning CIBC for consistent, strong, profitable growth. Second, our strong balance sheet, combined with capital and liquidity ratios that are ahead of operating targets, positions us well for the present and the future as we continue to manage with a long-term lens. Third, our disciplined and balanced resource allocation approach allows us to focus our investments, support our clients, and drive sustainable shareholder value. With that, I'll turn it over to Frank. Thank you, Rob.

Speaker Change: So let me close with three takeaways from the results.

First our results reflect the consistent execution of our client focused strategy and positive momentum across our diversified franchise. We remain very focused on controlling what we can control and positioning CIBC for consistent strong profitable growth.

Speaker Change: Second our strong balance sheet combined with capital and liquidity ratios that are ahead of operating targets position us well for the present and the future as we continue to manage with a long term lens.

Speaker Change: And third our disciplined and balanced resource allocation approach allows us to focus our investments support our clients and drive sustainable shareholder value with that I'll turn it over to Frank.

Frank Guse: Thank you, Rob, and good morning everyone. Our credit performance this quarter has remained stable despite a challenging environment. We completed a number of dispositions in our U.S. office book which reduced impaired balances in this sector. With strong allowance coverage, we remain focused on maintaining reserves for evolving macroeconomic conditions. Turning to slide 20, our total provision for credit losses was $514 million in Q2, compared to $585 million last quarter. We have continued to build allowance levels by 9 basis points over the past 12 months to prepare for future changes in the economy. Our performing provision was $67 million this quarter, primarily from our business and government portfolio. Provision on impaired loans was $447 million, down $45 million quarter over quarter.

Frank: Thank you Rob and good morning, everyone. Her credit performance. This quarter has remained stable despite a challenging environment we.

Frank: We completed a number of dispositions in our U S office book, which reduced impaired balances in this sector.

Frank: With strong allowance coverage, we remain focused on maintaining reserves for evolving macroeconomic conditions.

Frank: Turning to slide 20, our total provision for credit losses was $514 million in Q2 compared to $585 million last quarter.

We've continued to build the allowance levels by nine basis points over the past 12 months to prepare for future changes in the economy.

Frank: Performing provision was $67 million this quarter, primarily from our business and government portfolios.

Frank: Revision unimpaired loans was $447 million down 45 million quarter over quarter.

Frank Guse: This was due to lower provisions in the Canadian retail portfolios, as well as both the Canadian and U.S. commercial lending portfolios. Turning to slide 21, we are providing an updated view of our impaired PCLs by business. Over the past few quarters, we've seen total bank-impaired PCL performing around our mid-thirties guidance with strong performance in a number of our strategic business units. In PVB, impaired PCL trended slightly higher over the past year.

Frank: This was due to lower provisions in our Canadian retail portfolios as well as both the Canadian and the U S commercial lending portfolios.

Turning to slide 21, we are providing an updated view of our impaired PCL probably business.

Frank: The past few quarters, we've seen total bank impaired PCL performing around our mid thirties guidance with strong performance in a number of our strategic business units.

Frank: N P V be impaired P. P O trended slightly higher over the past year, we expected to move slightly higher in the coming quarters.

Frank Guse: We expect it to move slightly higher in the coming quarter. The Canadian commercial portfolio has yielded strong and stable performance. While some fluctuation will be normal for this portfolio, we remain pleased with these results. I would also highlight the performance in our capital markets business, where impaired PCL rates over the past few quarters remain muted. U.S. commercial-impaired PCL has seen improvements over the past few quarters, with lower provisions in the office sector, partially offset by increases in diversified commercial. We expect to see these improvements continue.

Frank: The Canadian commercial portfolio have yielded strong and stable performance, whereas some fluctuation will be normal for this portfolio. We remain pleased with these results.

Frank: I would also highlight the performance in our capital markets business were impaired PCL rates over the past few quarters remain muted.

Frank: U S commercial impaired PCL has seen improvements over the past few quarters with lower provisions in the office sector, partially offset by increases in diversified commercial.

Frank: We expect to see these improvements continue.

Frank Guse: Our credit performance this quarter reflects strong credit quality across all of our portfolios, driven by our underlying relationship and client-focused strategies and proactive risk management approaches. Slide 22 summarizes our growth-impaired loans information. Growth-impaired balances were down in Q2, mainly due to the disposition of U.S. office loans, partially offset by an increase in Canadian personal lending. Overall, new formations continue to remain stable quarter over quarter, with the increase in retail offset by a reduction in business and government. Slide 23 summarizes the net write-off and 90-plus-day delinquency rates of our Canadian consumer petroleum. We've seen 90 plus state delinquency rates trending higher, reflecting the year-over-year impact of rising unemployment and elevated interest rates.

Frank: Our credit performance this quarter reflects strong credit quality across all of our portfolio driven by our underlying relationship and client focused strategies and proactive risk management approach.

Frank: Slide 22 summarizes our gross impaired loans informations.

Frank: Gross impaired balances were down in Q2, mainly due to the disposition of U S office loans, partially offset by an increase in Canadian personal lending.

Frank: Overall, new information has continued to remain stable quarter over quarter with the increase in retail offset by a reduction in business and government.

Frank: Slide 23 summarizes the net write off and 90 plus day delinquency rates of our Canadian consumer portfolios.

Frank: We've seen 90, plus day delinquency rates trending higher reflecting the year over year impact of rising unemployment and the elevated interest rates the overall credit quality and portfolio health of our clients remains strong.

Frank Guse: The overall credit quality and portfolio health of our clients remains strong. We also remain comfortable with our mortgage portfolio, given the overall reasonable loan-to-value metrics, and we do not expect to see material losses from this portfolio. Consistent with last quarter, our analysis of clients who are renewing in the next 12 months demonstrates that only 1% of these renewal balances are clients in uninsured mortgages and at a higher risk from a credit perspective.

Frank: We also remain comfortable with our mortgage portfolio given the overall reasonable loan to value metrics and we do not expect to see material losses from this portfolio.

Frank: Consistent with last quarter, our analysis on clients, who are renewing in the next 12 months demonstrates that only 1% of the three newer balances our clients, an uninsured mortgages and at a higher risk from a credit perspective.

Frank Guse: We also continue to see positive trends in negatively amortizing mortgages, which were down from $38 billion in Q1 to $36 billion this quarter, primarily from clients continuing to voluntarily increase payments to reduce the interest rate impact. Slide 24 shows an updated view of our U.S. Office Portfolio. Our team's focused efforts have reduced the portfolio size by more than 20% year-over-year. As mentioned in my opening remarks, disposition actions taken have reduced our growth-impaired loan ratio from 19.7% last quarter to 10.3% in Q2. With the reduction in impaired balances, our allowance coverage is now at 10.2, down from 13.7% last quarter.

Frank: We also continue to see positive trends negatively amortizing mortgages that was down from 38 billion in Q1 to $36 billion. This quarter, primarily from clients continuing to voluntarily increased payments to reduce the interest rate impact.

Frank: Slide 24 shows an updated view of our U S office portfolio.

Frank: Our team's focused efforts have reduced the portfolio size by more than 20% year over year.

Speaker Change: As mentioned in my opening remarks, the disposition of actions taken have reduced our gross impaired loan ratio from 19, 7% last quarter to 10, 3% in Q2.

Speaker Change: With the reduction in impaired balances our allowance coverage is now at 10.2 down from 13, 7% last quarter.

Frank Guse: Going forward, we believe that we have worked through the bulk of substantive issues in this portfolio and expect losses to continue to trend lower in the coming quarter. In closing, we continue to proactively assess the portfolio, and we remain comfortable with our mid-30s guidance. Our allowance coverage remains strong for the macroeconomic environment we operate in, and we remain prudently provisioned for what is ahead. As market uncertainty persists, our team remains focused on closely monitoring portfolio performance and quality while also staying engaged with our clients. And I will now turn the call back to the operator.

Speaker Change: Going forward, we believe that we are through the bulk of substantive issues in this portfolio and expect losses to continue to trend lower in the coming quarters.

Speaker Change: In closing, we continue to proactively assess the portfolio and we remain comfortable with our mid thirties guidance.

Our allowance coverage remains strong for the macroeconomic environment, we operate in and we remain prudently provisioned for what is ahead.

Speaker Change: Market uncertainty persists our team remains focused on closely monitoring portfolio performance and quality, while also staying engaged with our clients.

Speaker Change: I will now turn to turn the call back to the operator.

Speaker Change: Thank you.

Operator: Please press star 1 at this time if you have a question. There will be a brief pause while participants register for questions. We thank you for your patience. Our first question is from Matthew Lee from Canaccord. Please go ahead.

Speaker Change: Please press star one at this time, if you have a question that will be a brief pause all participants, but just a question. We thank you for your patience.

Speaker Change: Our first question is from Matthew Li from Canaccord. Please go ahead.

Matthew Lee: Morning guys, thanks for taking my question. I wanted to hone in on the Canadian PBV segment, which saw a sequential improvement in impaired PCLs. That sort of goes against the industry-wide trend in this space. Could you maybe talk about the puts and takes in that business and maybe how we should expect that to trend in the back half of the year, just given an increasingly strained Canadian consumer?

Matthew Li: Hey, good morning, guys and thanks for taking my question I wanted to hone in on the Canadian <unk> segment, which saw sequential improvement impaired PCL and started goes against the industry wide churn in this space.

Matthew Li: Could you maybe talk about the puts and takes in that business and maybe how we should expect that to trend in the back half of the year, just given an increasingly strained Canadian consumer.

Unknown Executive: Thanks, Matthew. Thanks for the question.

Speaker Change: Thanks, Matthew Thanks for the question I think as we guided in my prepared remarks, we continue to expect Npls are trending up a little bit more in the second half of the year.

Unknown Executive: I think, as I guided in my prepared remarks, we continue to expect NCLs to trend up a little bit more in the second half of the year, and that should be expected against the macroeconomic environment. But we do remain overall very comfortable with our performance and credit quality in the Canadian Consumer Book. We're very intentionally focused on growing relationships with clients with strong credit quality. We have invested heavily in retail strategies focused on the mass affluence segment.

Speaker Change: And that should be expected against the macroeconomic environment, but we do remain overall very comfortable with our performance in credit quality in the Canadian consumer book, we're very intentionally focused on growing relationships with clients with strong credit quality, we have invested heavily in retail.

Speaker Change: Our strategy is focused on the mass affluent segment.

Speaker Change: Even investing in our co brand credit card has improved overall credit quality for the portfolio and we are also investing heavily in risk strategies and Victor touched upon some of those using AI.

Unknown Executive: Even investing in our co-brand credit card has improved overall credit quality for the portfolio, and we are also investing heavily in risk strategies. And Victor touched upon some of those using AI and bringing in more data to just be very conscious about risk decisions that we are making in the portfolio at origination, during the lifecycle of the loan, and even when it comes to collection efforts and pre-delinquency strategies. So I would say this is a very intentional strategy, good investments that we are making both on the business and the risk side. And that's what you're seeing reflected there in the results. Notwithstanding, we are still guiding to net credit losses to continue to trend up moderately in the second half.

Speaker Change: And bringing in more data to just be.

Speaker Change: I'm very conscious about risk decisions that we are making in the portfolio either ed or origination during the lifecycle of the loan and even when it comes to collection efforts and pre delinquency strategies. So I would say a very intentional strategy. Good investments that we're making both on the business and in the risk side and.

Speaker Change: That's what you're seeing reflected there.

Speaker Change: In the results notwithstanding there we are still guiding to a net credit losses to continue to trend up moderately in the second half of the quarter.

Unknown Executive: Okay, that's helpful. Sorry, Matthew? Yeah, you got another question? Go ahead.

Speaker Change: Okay. That's helpful.

Speaker Change: Sorry, Matthew Yeah, you got another question go ahead.

Matthew Lee: Oh, no, no, no; go ahead.

Speaker Change: Oh No no no go ahead, no I wanted to hear from you Matthew.

Unknown Executive: No, I want to hear from you, Matthew.

Matthew Lee: Oh, sure. I just wanted to ask about the Costco portfolio. You know, it feels like when I go to Costco, get my groceries, and enjoy my $1.50 hot dog, you know, I can see how it's really easy to end up with a Costco CIBC MasterCard and perhaps even open a bank account. But could you maybe elaborate on how you've been able to take that initial interaction with the consumer and turn it into a kind of a longer-term multi-product relationship?

Matthew: Oh sure I, just want to ask what the Costco portfolio.

Speaker Change: It feels like when I go to Costco get my groceries enjoying my dollar 50, Hotdog you know I can see how it's real easy to end up with a Costco CIBC Mastercard and perhaps even open a bank account, but just can you maybe elaborate on how you've been able to take that initial interaction with the consumer.

Speaker Change: Kind of a longer term multi product relationship yeah, sure I'm going to hand, it off to <unk> in a moment the whole Costco strategy is very much tied to our overall client strategy to build a product suite that is market, leading and in that instance, we have a market leading travel and non travel credit card portfolio, that's performing very well and to make sure that our club.

Victor G. Dodig: Yeah, sure. I'm going to hand it off to Hratch in a moment. The whole Costco strategy is very much tied to our overall client strategy to build a product suite that is market-leading, and in that instance, we have a market-leading travel and non-travel credit card portfolio that's performing very well, and to make sure that our clients, including you, Matthew, have an opportunity to do more banking business with us. So, franchising the client and making progress on that front is something that we're seeing in a So, Hratch, over to you.

Speaker Change: Including you math, you have an opportunity to do more banking business with us so franchising the client and making progress on that front is something that we're seeing in a very encouraging way and our partnership with Costco and quite frankly across our banking business. So right over to you.

Victor G. Dodig: Thanks, Victor. Good morning, Matthew.

Speaker Change: Thanks, Victor and good morning, Matthew.

Matthew: Let's go portfolio overall is trending very well for us and let me go back for a second and remind you. What we had said at the time of the acquisition. The card itself is interesting to us the economics of the card per our business case, we're good but the real value for US was building the relationship and franchising that client base, which is several million that we've acquired.

Hratch Panossian: The Costco portfolio overall is trending very well for us. And let me go back for a second and remind you what we had said at the time of the acquisition. The card itself is interesting to us.

Hratch Panossian: The economics of the card, per our business case, were good. But the real value for us was building the relationship and franchising that client base, which is several million that we've acquired and hundreds of thousands that we are acquiring on an annual basis going forward as new cardholders. And a large portion of that client base aligns with our strategy of our focus on mass affluent. And so what we're seeing so far on the card itself, there are some puts and takes. The cost of funds is higher because of where the environment is.

Matthew: <unk> and hundreds of thousands that we are acquiring on an annual basis going forward as new cardholders and a large portion of that client base aligns with our strategy of our focus on mass affluent and so what we're seeing so far on the card itself. There are some puts and takes cost of funds is higher because of where the environment is that hurts us, but if I look.

Hratch Panossian: That hurts us. But if I look at some of the operational metrics, in terms of the number of accounts, in terms of the number of new accounts, in terms of balances, in terms of transaction volumes, in terms of how that spend is materializing, all of that is trending at or better than the business case. And so I would say overall, the economics of the card are as good as we expected in the business case. But when I look at the real value of franchising, though, we are ahead. We're ahead of our initial goals in life to date.

Matthew: Look at some of the operational metrics in terms of number of accounts in terms of number of new accounts in terms of balances in terms of transaction volumes in terms of how that spend is materializing all of that is trending at or better than business case, and so I would say overall the economics of the card are as good as we expected and the business case.

Matthew: When I look at the real value of franchising, though we are ahead. We're ahead of our initial goals of life to date, we're acquiring clients. We're engaging those clients. So you asked how are we doing that a large portion I would say the vast majority of the client base, that's coming to us through this portfolio is digitally engaged and so we're able to engage with them.

Hratch Panossian: We're acquiring clients. We're engaging those clients. So you asked, how are we doing that?

Hratch Panossian: A large portion, I would say the vast majority of the client base that's coming to us through this portfolio is digitally engaged. And so we're able to engage with those clients digitally after the fact to build a relationship. We've got data on the clients, and so we understand those clients. And, as we do with all of our client base, we mine that data to generate insights and understand what other products and services could be beneficial to those clients.

Matthew: Clients digitally after the fact to build a relationship we've got the data on the clients until we understand those clients and as we do with all of our client base mine that data to generate insights and understand what other products and services could be beneficial to those clients and we've got a very good relationship with our partner and we think over time, there's more.

Hratch Panossian: And we've got a very good relationship with our partner. And we think over time, there's more and more we can do with that partner, both with cardholders but also the overall base that they serve, their member base, which is significantly larger than that.

Matthew: More we can do with that partner, both with car who lives, but also the overall base that they serve their member base, which is significantly larger than that.

Hratch Panossian: All right, that's really helpful. I appreciate it.

Speaker Change: Alright, Thats really helpful. I appreciate it.

Operator: Thank you. Our next question is from Doug Young from Desjardins Capital Markets. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Our following question is from Doug Young from additional debt capital market. Please go ahead.

Doug Young: Hi, good morning. Rob, just wanted to go back to this whole discussion and maybe you can kind of clear some stuff that I just find very cloudy, but the Canadian commercial down 40 basis points, US commercial down, Canadian banking up a little. I assume the offset is in corporate. I assume there is some of that benchmarking you talked about. Just can you help me think through what's going on? And maybe you can put a finer point on how you think NIMS will kind of evolve maybe at the divisional level and at the all bank level and how corporate kind of intertwines with that.

Doug Young: Hi, Good morning, Rob just wanted to go back to this whole NIM discussion and maybe you can kind of clear out some stuff that I find very cloudy.

Speaker Change: Canadian commercial down.

Unknown Executive: 40 basis points U S commercial down Canadian banking up a little.

Speaker Change: I assume the offset is incorporate I assume there is some of that benchmarking you talked about just can you help me think through what's going on and maybe you can put a finer point on how you know how you think nims will kind of evolve maybe at the divisional level and at the all bank level in house.

Speaker Change: Corporate kind of intertwined with that.

Rob Sedran: Okay, thanks, Doug. And good morning.

Doug Young: Okay. Thanks, Doug and good morning, So theres, probably no piece of guidance that we give that has more underlying assumptions then the net interest margin. So maybe I'll take you to the top of the house and I'll I'll explain to you how I think about it and then you can kind of overlay your investment thesis on top of that to see how are you know to see how you may challenge.

Rob Sedran: So, you know, there's probably no piece of guidance that we give that has more underlying assumptions than the net interest margin. So maybe I'll take you to the top of the house. And I'll explain to you how I think about it, and then you can kind of overlay your investment thesis on top of that to see how, you know, to see how you may challenge or agree with it. So I break it down into three buckets, right?

Doug Young: Or or agree with it so I'd break it down into three buckets. The first bucket is our hedging and positioning of how we how we hedge our balance sheet for interest rate risk.

Rob Sedran: The first bucket is our hedging and positioning of how we hedge our balance sheet for interest rate risk. And as you know, we aim for margin stability as best we can through the cycle, including in periods of volatility, and we've had some success with that. In most plausible rate scenarios from here...

Doug Young: And as you know we've we aim for margin stability as best we can through the cycle, including in periods of volatility and we've had some success with that.

Doug Young: And in almost in most plausible rate scenarios from here.

Rob Sedran: The roll-on rate for the new hedge that's coming on is going to be better than the roll-off rate for the new hedge that's maturing. Like most banks, we have some version of a tractoring strategy. So that first bucket, I look at it as a tailwind for the next little while.

Doug Young: The roll on rate for the new hedge that's coming on is going to be better than the roll off rate for the new hedge that's maturing like most banks. We have some version of attracting strategy. So that first bucket I look at it as a as a tailwind for the next little while for us.

Unknown Executive: The second bucket, I would say, comes down largely to business mix, right? So, if you think higher for longer, maybe you're thinking less mortgage, you're thinking more GIC, you're thinking a little less demand deposit, all of that category of, you know, how customers react and what customers do, and what choices they're making has an impact on margin. It has been, particularly as rates have been rising, a headwind to the margin and to the consolidated margin over the last little while.

Doug Young: The second bucket I would say it comes down largely to business mix right. So if you think higher for longer and maybe you're thinking less mortgage you're thinking more GIC youre thinking a little less demand deposit all of that category of you know how customers react and what customers do and what choices, they're making has an impact on margin.

Doug Young: It has been particularly as rates have been rising it's been a headwind to the margin to the consolidated margin over the last little while.

Unknown Executive: The longer rates stay where they are, we think it's still a bit of a mild headwind, but it's not the headwind that it was. And then the third bucket, I would say, is the competitive environment. And that third bucket is always intense competition in Canadian banking, intense competition everywhere we operate. I would say it's generally stable, though, certainly in periods of lower asset growth and lower balance sheet growth for the industry, we see a little bit more of it.

Doug Young: The longer rates stay where they are at we think it's still a bit of a mild headwind, but it's not the headwind that it was.

Doug Young: And then the third bucket I would say is the competitive environment.

Doug Young: And that third bucket is always intense competition in Canadian banking intense competition everywhere we operate.

Doug Young: I would say, it's generally stable, though certainly in periods of lower asset growth and lower balance sheet growth for the industry, we see a little bit more of it but I would also say that ours is definitively not a product strategy right. So we will and that's not to say that from time to time, we might not be the high rate of the low rate depending on the product.

Unknown Executive: But I would also say that ours is definitively not a product strategy, right? So we will, and that's not to say that from time to time, we might not be the high rate or the low rate, depending on the product. But it's certainly not our strategy. We'll test and learn every now and again. But we try to balance margin and volume for the right answer for our chosen customer segments and for the right answer for our shareholders. So when I roll all of that together, I get a modest tailwind on the first bucket, a modest headwind on the second bucket, and a bit of a neutral on the third. I come around flat.

Doug Young: But it's certainly not our strategy, we will test and learn every now and again, but we try to balance margin and and volume for the right answer for our chosen customer segments and for the right answer for our shareholder so when I when I roll all of that together I got a modest modest tailwind on the first bucket modest headwind on the second bucket and a bit of a nut.

Doug Young: On the third I come around flat.

Unknown Executive: If you push me one way or the other, I'd say I have a bit of a positive bias just because that first bucket continues to have some upsides. And when you kind of drill that down, and it's sort of the same thinking as you drill it down into Canadian personal and commercial banking, and then down into commercial banking and wealth. Now, all that guidance I gave you is excluding the impact of benchmark reform.

Doug Young: If you pushed me one way or the other I would say a bit of a positive bias just because that first bucket continues to have some some upside to it and when you kind of drill that down and it's sort of the same thinking as you drill it down into Canadian personal and commercial banking and then down into the commercial banking and wealth now all of that guidance. I gave you is excluding the impact of benchmark reform.

Unknown Executive: I wouldn't waste too many brain cells on benchmark reform. It's going to be around for another quarter or two, and then we're not going to be talking about it anymore. It will have an impact on margin going forward at all of those levels, and we'll be as transparent as we can to help you understand what's really happening to the core margin going forward.

Doug Young: I wouldn't spend too many brain cells on benchmark reform it is going to be around for another quarter or two and then we're not going to be talking about it anymore. It will have an impact on margin going forward at all of those levels and we'll be as transparent as we can to help you understand what's really happening to the core margin going forward.

Doug Young: So maybe I can just think about this, like the hedging comes through the corporate side, so that's the benefit. And then on the Canadian commercial side, is that a normal mark? Like, is that a normal level of margin on that Canadian commercial that we should be thinking of going forward?

Doug Young: So maybe I can just think about this like the hedging comes into corporate so that have been.

Doug Young: With that.

Unknown Executive: Like, there's nothing unusual in there. And then I can figure out the rest of the two. But those are the kind of things that I was hoping to get a little more color on.

Speaker Change: And then in the Canadian commercial side is that a normal like is that a normal level of margin in the Canadian commercial that we should be thinking of going forward like theres nothing unusual in there and then I can figure out the rest of them to you, but those are as you kind of things that I was hoping they begin with solar and.

Unknown Executive: I would clarify slightly that the hedging doesn't come through the corporate. The hedging, and the tractoring strategy has the benefit that gets fed into the businesses over time.

Speaker Change: I would clarify slightly there the hedging doesn't come through the corporate.

Speaker Change: The hedging the tractor and strategy has the benefit that gets fed into the businesses over time, and that's kind of what youre seeing in the personal and business Bank is the most direct example, what youre seeing in corporate is largely the normalization of some of the treasury volatility that you otherwise would see when rates are spiking, we do try to insulate the business and.

Unknown Executive: And that's kind of what you're seeing in the personal and business bank as the most direct example. What you're seeing in corporate is largely the normalization of some of the treasury volatility that you otherwise would see when rates are spiking. We do try to insulate the business and the customer-facing businesses from some of that volatility because we want them focused on serving the client and growing the business the right way, and they need stability to be able to do that.

Speaker Change: And the customer facing businesses from some of that volatility because we want them focused on serving the clients and growing the business the right way and they need stability to be able to do that on.

Unknown Executive: The commercial banking margin, yeah, listen, around these levels is what we're assuming from here. A number of moving parts really, and it's been a bit of a noisy quarter for the commercial banking margin, but all the things that have affected it are generally stabilizing, and so we would suggest more stability from here in that margin. Appreciate it.

Speaker Change: The commercial banking margin yeah listen around around these levels is the is what we're what we're assuming from here a number of moving parts really and it's a bit of a noisy quarter on the commercial banking margin, but all the things that have affected our are generally stabilizing and so we would suggest more more stability from here in that margin.

Doug Young: I appreciate the color. Thank you. Thank you.

I appreciate the color. Thank you.

Speaker Change: Thank you.

Ebrahim Huseini Poonawala: Our following question is from Ebrahim Poonawala from Bank of America. Please go ahead.

Speaker Change: Following question is from him I am putting them onto <unk> from Bank of America. Please go ahead.

Speaker Change: Hey, good morning.

Victor G. Dodig: I just had a question, maybe a multi-part question on the outlook for CET1 capital build from 13.1%, and if you could just respond, maybe Frank, Rob, and maybe even Victor, around how we should think about RWA migration from your balance sheet growth. The balance sheet has been shrinking, so how should we think about balance sheet growth? And then, finally, how should we think about inorganic deployment? Is it too early for buybacks? And then, when we think about the US strategy, are we back, maybe, open to US M&A?

Speaker Change: I just had a question maybe a multi part question on the outlook for CET, one capital build from them the 13, 1%.

Speaker Change: If you could just respond maybe fan club and maybe even Victor.

Speaker Change: How we should think about RWD migration from here.

Speaker Change: She'd grow with balance sheet has been shrinking so should we think about balance sheet growth and then finally, how should we think about inorganic deployment.

Speaker Change: Is it too early for buybacks and then maybe thinking.

Speaker Change: Pat maybe open to U S. M&A. So thank you.

Victor G. Dodig: So, thank you.

Victor G. Dodig: So Ebrahim, thanks for the question. Capital is always an important area to focus on, and we're very pleased with the progress that we've made over the past year. We've built 120 basis points in capital from this time last year, and that was a very deliberate focus of the leadership team to continually focus on the strategy that we've laid out, a client-focused strategy, high-quality returns, and increasingly, over time, capital light, and therefore generating capital for our business. We were pretty clear in terms of how we're thinking about the discount of the drip, which we've made official this quarter.

Speaker Change: So ebrahim. Thanks for the question capital is always an important area to focus on and we're very pleased with the progress that we've made over the past year. We've built 120 basis points in capital from this time last year and that was a very deliberate.

Speaker Change: The focus of the leadership team to continually focus on our strategy that we've laid out a client focused strategy high quality returns and increasingly over time capital light and therefore generating capital for our business.

Speaker Change: We were pretty clear in terms of how we're thinking about the discount to the drip, which we've made official.

Victor G. Dodig: And we saw some credit migration, which I think reflects the reality of what we see out in the marketplace. But it's not our strategy. It's just what the marketplace is doing. Our strategy is working. And what I'll do with this question now is just hand it off to Frank on the credit migration, just to give you a little bit of a double click there. And then we can move on to any other questions you might have in your multi-part question, Ebrahim.

Speaker Change: In this quarter.

Speaker Change: And we saw some credit migration, which I think reflects the reality of what we see out in the marketplace. It's not our strategy. It's just what the marketplace is doing our strategy is working and what I'll do with this question now just hand, it off to Frank on the credit migration just to give you a little bit of a double click there and then we can move on to any other questions you might have.

And your multi part question you Ben.

Frank Guse: Thank you, Ebrahim. And as Victor said, I think it is a reflection of the macroeconomic conditions out there, specifically migration this quarter. I think it's split between our Canadian retail portfolios and some of our commercial businesses, including CRE. I think what is important to reiterate is we do not expect these migrations to lead to losses outside of our guidance, which I reiterated at the mid-35 basis point range. And there are a couple of reasons for that, but for instance, on the Canadian consumer side, a lot of the migration is actually driven by current LTVs changing, and changing slightly, driven by house prices continuing to moderate in some cities.

Speaker Change: Yes.

Frank: And if it took that I think it is a reflection of the macroeconomic conditions out there specifically to the migration this quarter.

Frank: I think its split between our Canadian retail portfolios and some of our commercial businesses, including theory I think what is important to reiterate is we do not expect these migrations to lead into losses outside of our guidance, which I reiterated at the mid 35 basis point range.

Frank: <unk>.

Frank: And a couple of reasons for that but for instance on the Canadian consumer side, a lot of in migration is actually driven by by Crooned, ltvs changing and changing slightly driven house prices continuing to moderate in some cities.

Frank Guse: But those migrations happen with clients with very, very strong credit scores, so we don't have any reason to believe that we will see large impairments or losses arising out of that. And as you can see in our disclosures, overall LTVs continue to remain very, very strong. So yes, we do expect some of that migration to happen in an environment like that, but it's not translating into higher losses or changes to our guidance and outlook on losses.

Frank: But those migrations happen with clients with very very strong credit score. So we don't have any reason to believe that we will see large impairments or losses arising out of that and if you can see in our in our disclosures overall ltvs continue to remain very very strong.

Frank: So yes, we do expect some of that migration to happen in an environment like that but it's not translating into a higher losses or changes to our guidance.

Speaker Change: Go go on on the last thank you Frank and Ebrahim just to kind of answer some other aspects of what you kind of put forth earlier on one when you think about our capital deployment strategy, which is what you were getting at you know the first priority is continue to invest in our business continue to make investments that are highly consistent with the strategy that we've.

Victor G. Dodig: Thank you, Frank. And Ebrahim, just to kind of answer some other aspects of what you kind of put forth earlier. One, when you think about our capital deployment strategy, which is what you were getting at, the first priority is to continue to invest in our business, continue to make investments that are highly consistent with the strategy that we've laid out and that we are going to continue to deliver on.

Speaker Change: Laid out and that we are going to continue to deliver on.

Victor G. Dodig: That would include growth and credit formation as the interest rate environment starts to become clear and the economic environment becomes clear. We have the capital to continue to do that. The second aspect is obviously to grow our dividends, which we do once a year. That's in line with earnings growth and to be within our payout ratio of 40 to 50 percent. The third aspect is buyback.

Speaker Change: That would include growth and credit formation.

Speaker Change: No interest the interest rate environment starts to become clear in the economic environment becomes clearer we have the capital to continue to do that the second aspect is obviously to grow our dividends, which we do once a year. That's in line with earnings growth and to be within our payout ratio of 40% to 50%.

The threat is buyback the buyback lever obviously it becomes more active when your capital it gets to a higher level.

Ebrahim Huseini Poonawala: The buyback lever obviously becomes more active when your capital gets to a higher level, but be mindful of the fact that we want to be within our peer group here. We don't want to be an outlier. We want to have the strong capital to grow. Not an outlier, but that active lever is there for us. And on M&A, I'd say think about CIBC as a highly organically focused bank, with the opportunities to do tuck-ins in areas that we want to strengthen, particularly in wealth management. Shawn's already been focused on team lift-outs. We see some of that, and there may be other opportunities to further strengthen our hand in wealth management. That's the way to think about it, Ebrahim. Thank you.

Speaker Change: But are mindful of the fact that we want to be within our peer group here, we don't want to be an outlier. We want to have the strong capital to grow not an outlier, but that active lever is there for us and on M&A I'd say think about CIBC is a highly organically focused bank.

Victor G. Dodig: Thank you. That answered it all. Thank you, Victor.

Speaker Change: With the opportunities to do tuck ins in areas that we want to strengthen particularly in wealth management. Shawn has already been focused on team lift outs, we see some of that and there may be other opportunities to further strengthen our hand in wealth management, that's the way to think about it ebrahim. Thank.

Speaker Change: Thank you.

Ebrahim: Thank you.

Ebrahim: Thank you.

Operator: Our following question is for Meny Grauman from Scotiabank. Please go ahead.

The following question is from many Grumman from Scotiabank. Please go ahead hi.

Meny Grauman: Hi, good morning. I wanted to ask about the loan sale that you did in the U.S. office portfolio. Is there more potential for loan sales in that specific portfolio? And more broadly, are there other portfolios where that type of strategy would be appropriate, in your view?

Speaker Change: Good morning, I wanted to ask about the loan sale that you did in the U S office portfolio.

Speaker Change: Are there more is there more potential for loans held in that specific portfolio.

Speaker Change: More broadly are there other portfolios.

Speaker Change: Is that a type of strategy would be appropriate in your view.

Shawn Beber: Good morning, Meny. It's Shawn.

Sean: Hi, Good morning, many it's Sean Thanks for the question so as as we've talked about over the last several quarters, we've been looking at various strategies as we work through challenges in the in the office portfolio. That's included extensions Ah that's included short sale.

Shawn Beber: Thanks for the question. As we've talked about over the last several quarters, we've been looking at various strategies as we work through challenges in the office portfolio. That included extensions, that included short sales. And earlier in the year, we identified a portfolio of eight loans that we thought made sense to expose to the market and see what kind of attention and interest that would generate. We were very pleased with the level of bidder interest and the execution that we ultimately completed, which was in line with our expectations.

Speaker Change: <unk> and earlier in the year, we identified a portfolio of eight loans that we thought made sense to expose to the market and see what kind of.

Speaker Change: Attention and interest that would that would generate we were very pleased.

Speaker Change: With the level of bidder interests and the execution that we ultimately are completed.

Speaker Change: Completed which was in line with our with our expectations. So we continue to look at all of those.

Shawn Beber: So we continue to look at all of those strategies as we work through the portfolio and any challenges in it. And these aren't unique strategies in terms of how they can be employed in other circumstances. So we continue to evaluate the portfolio on an ongoing basis and look for best execution in order to optimize the outcome.

Speaker Change: Strategies as we work through.

Speaker Change: The portfolio and any challenges and these aren't unique.

Speaker Change: Our strategies in terms of how they can be employed in other in other circumstances. So we continue to evaluate the portfolio on an ongoing basis and look for best execution in order to optimize our IND in order to optimize the outcome.

Meny Grauman: Thanks for that, Shawn. And, just as a follow up,

Speaker Change: Thanks for that Sean it and just as a follow up.

Shawn Beber: In terms of the characteristics of that portfolio that you sold, either regionally and then from a credit perspective relative to the sort of average credit performance of the overall U.S. office portfolio, yes, so these were loans.

Speaker Change: In terms of the characteristics of that portfolio that you sold either regionally and then from a credit perspective relative.

Speaker Change: And now to the.

Speaker Change: The average credit performance of the overall U S office portfolio.

Shawn Beber: Yes, so these were loans that were, I think, seven of eight of them were impaired at the time that we took them to market. So they would have been some of our more troubled assets. And we presented them as a portfolio. As it happened, we got best execution by splitting them up into a few different sales transactions. And again, we're very pleased with the outcome.

Speaker Change: So these were these were loans that were I think seven of the eight of them were impaired at the time that we are that we took them to markets. So they would have been some of our more troubled.

Speaker Change: Assets and we presented it as a portfolio as it happens we got best execution.

Speaker Change: By splitting it up into a few different sales transactions and again, we're very pleased with the outcome.

Speaker Change: Thanks for that.

Operator: Thank you. The following question is for Sohrab Movahedi from BMO Capital Markets. Please go ahead.

Speaker Change: Thank you our.

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

Sohrab Movahedi: Okay, thank you very much. I wanted to go back to a comment Rob made about momentum in the markets-related businesses and see if I could get Harry and, uh..., and John to talk a little bit about how they see that momentum for the wealth and capital markets businesses over the coming quarters. Thank you.

Sohrab Movahedi: Okay. Thank you very much I wanted to go back to your comments, Rob made about momentum in the market related businesses and see if I could get a.

Speaker Change: Maybe both Harry and.

Speaker Change: Hey, John to talk talked a little bit about.

Speaker Change: How do you see that momentum for the wealth and capital markets businesses.

Speaker Change: Over the coming quarters. Thank you.

Harry K. Culham: Hi. Good morning. It's Harry.

Harry: Hi, Good morning, it's Harry.

Speaker Change: So just to just a couple of comments on the outlook, perhaps I mean as you know this is a very well diversified strategy and so as we saw a slowdown perhaps in some of the lending and deposit areas of of of our product capabilities. We saw growth in other areas and Victor mentioned some of those areas in terms of the M&A space the underwriting revenue.

Harry K. Culham: You know, just a couple of comments on the outlook. I mean, as you know, this is a very well-diversified strategy. And so, as we saw a slowdown, perhaps, in some of the lending and deposit areas of our product capabilities, we saw growth in other areas. And Victor mentioned some of those areas in terms of the M&A space, the underwriting revenue, and across global markets. We're seeing some good activity. So, I would say that, you know, the pipeline is strong.

Speaker Change: And all in across global markets, we're seeing some some good activity so I would say that the.

Harry K. Culham: Our clients are, the activity is very robust. And you're seeing some of those results, for example, in the U.S., where, as Victor mentioned, we've seen growth in the north of 20% this quarter and for the first half of the year. You know, we're really focused on driving towards those investor-day targets that we laid out, and we're quite confident we can achieve those while maintaining a very robust ROE and NIX ratio that's street-leading.

Speaker Change: The pipeline is strong our clients are the activity is very robust and you're seeing some of those results. For example in the U S for as Victor mentioned, we've seen growth in the north of north of 20% this quarter and.

Speaker Change: And for the first half of the year.

Speaker Change: We're really focused on driving towards those investor day targets that we laid out where we're quite confident that we can achieve those while maintaining a very robust R. O. A nix ratio of that street, leading so we're quite confident.

The environment is such that we can continue to service our clients in a diversified manner and drive the results that you've been seeing of late maybe I'll pass it over to John to make a couple of comments.

Harry K. Culham: So, we're quite confident that the environment is such that we can continue to service our clients in a diversified manner and drive the results that you've been seeing of late. Maybe I'll pass this over to John to make a couple of comments.

Jon Hountalas: Thank you, Harry, and good morning Sohrab. So on the wealth side, the first six months, I mean, just the markets have been good. I don't expect that to stay at the same level, but still positive overall. Our investment performance has been solid. The big differentiators for us, I think, are financial advice. That would be one.

Speaker Change: Thank you haven't even got good morning, Sohrab, so on the wealth side the first six months.

John: Markets have been good I don't expect that to stay at the same level.

John: But still positive overall.

Our investment performance has been solid the big Differentiators for us.

Jon Hountalas: We're getting better. We've been at it for a while now. We're getting better at doing this digitally. Our advisors are getting better. Our focus on imperial service is paying off. You see it in the IFIC numbers. So everything we've laid out, our plans, they're working as we expected. Then the other leg of our strategy on wealth is just the referral volumes we do. [inaudible]

John: I think as financial advice that would be one where getting better we've been at it for a while now we are getting better doing this digitally our advisers are getting better our focus on Imperial service is paying off do you see it in the FIC numbers. So everything we've laid out our plans there working as we expected then there's the other leg.

John: Of our strategy on wealth, it's just the referral volumes we do.

John: Both between retail and wealth, but also between commercial and wealth again, we think that's differentiator on the street. We think it is helping US we think M&A is going to get better in the back half it's been pretty quiet. So again as companies get sold proceeds come in in the referral process works I think it'll be good for our wealth business. So again.

John: Generally pretty positive on the back half.

Sohrab Movahedi: So, Sohrab, prior, I would say not exactly before COVID, but if you think about the pre-COVID years, maybe you were in the low 50, maybe around 50-50 between spread income and fee income. When you looked at your total revenues, I think for the last few quarters, it's obviously more skewed towards spread income. Do you see that, you know, over the next four, six quarters, kind of staying at current levels? Or do you see that gravitating?

Speaker Change: So Rob I mean prior.

Speaker Change: Not exactly before Covid, but if you think about pre Covid years, maybe you were in the low 50, maybe around 50 50 between spread income and fee income when you looked at your total revenues I think for the last few quarters. It's been obviously more skewed towards spread income do you see that.

Speaker Change: Over the next four six quarters kind of staying at current levels or do you see that gravitating to to closer to a 50 50.

Unknown Executive: Thanks. Thanks, Sohrab. It's Rob.

Unknown Executive: Thanks, Thanks, Sara it's Rob so the strategy absolutely would have us migrate more towards fee based income over time.

Unknown Executive: So the strategy absolutely would have us migrate more towards fee-based income over time. As you think about the next four or six quarters, everything from benchmark reform, which is actually pushing some revenue from credit fees into NII, to, you know, the tractoring strategy that I talked about earlier, delivering some help on the margin side, the ability to move that in the shorter term from a balanced perspective might be a little challenged.

Speaker Change: As you think about the next four or six quarters everything from benchmark reform, which is actually pushing some revenue from credit fees into NII to the tractor and strategy that I talked about earlier delivering some help on the margin side.

Speaker Change: The ability to move that in the shorter term from a balanced perspective might be a little challenged but in terms of the strategy itself to focus on growing fee based income.

Unknown Executive: But in terms of the strategy itself, the focus on growing fee-based income in balance with other income from NII is, excuse me, absolutely part of the strategy. But in the short term, it may not play out quite that way.

Speaker Change: In balance with other income with our NII excuse me is absolutely part of the strategy, but in the short term it may not play out quite that way.

Sohrab Movahedi: Thank you for taking my calls.

Speaker Change: Thank you for taking my call.

Operator: Thank you. Our next question is from Nigel D'Souza from Veritas Investment Research; please go ahead.

Speaker Change: Thank you.

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

Nigel D'Souza: Good morning. Thank you for taking my question.

Speaker Change: Good morning, Thank you for taking my question.

Nigel D'Souza: I wanted to confirm that the outlook for credit losses is that based on an expectation of a higher for longer interest rate environment.

Frank Guse: I wanted to confirm that the outlook for credit losses is based on an expectation of a higher for longer interest rate environment? I don't think I heard you touch on the interest rate outlook. And I noticed that your debt service ratio forecast was revised lower this quarter. So could you touch on interest rates and also any potential for loss rates on your commercial portfolio to increase for the remainder?

Speaker Change: I don't think I heard you touch on the interest rate outlook and I noticed that your debt service ratio.

Nigel D'Souza: Forecast.

Speaker Change: <unk> lowered the scoring so based on interest rates and also any potential for loss rates on your commercial portfolio decrease.

Speaker Change: For the remainder of the year.

Frank Guse: Yeah, Nigel, thanks for the question. Yes, our mid-30s guidance for the fiscal year 2024 includes a variety of scenarios and includes a variety of scenarios also from an interest rate perspective, where we have been preparing for a higher for longer scenario for quite some time now and have been working through the portfolios and working with our clients in those portfolios. Specifically, regarding the DSR ratios, we saw some moderate changes from an FLI perspective.

Speaker Change: Yes, Nigel thanks for the question.

Amit: Yes, Amit <unk> guidance for for the our fiscal year 'twenty. Four includes a variety of scenarios and includes a variety of scenarios, but also from an interest rate perspective.

Speaker Change: Where we have been preparing for a higher for longer scenario I would say quite some time now and have been working through the portfolio and working with our clients in those portfolios.

Speaker Change: Specifically to the DSL ratios, where you saw some moderate changes from an F&I perspective. This is not so much driven by interest rate decreases is much more driven by continued strong income.

Frank Guse: This is not so much driven by interest rate decreases as much more driven by continued strong income numbers, driving DSRs down slightly for our clients from an FLI perspective. However, we only had been very cautious and put in very moderate interest rate cuts into our plans. We also expect it to take some time before the impact of the interest rate cuts will fully migrate into some of our losses, so it will take some time even from when the interest rate cuts come, and as such, we feel very comfortable with our mid-30s guidance under a variety of scenarios.

Speaker Change: Numbers I'm driving DSR of stone slightly for our clients from <unk> perspective, we only had been very cautious and in and put in very moderate interest rate cards into all plans. We also expect it to will it will take some time before the impact of the interest rate cuts.

Speaker Change: Wally.

Speaker Change: Migrate into some of our losses. So it will take some time even from when the interest rates are rates cuts come and as such we feel very comfortable with our mid thirty's guidance under a variety of scenarios.

Frank Guse: If I could touch really quickly on U.S. commercial real estate, any comments on risks outside of office? We see some regional banks make some, you know, potential losses on multifamily or life sciences in Greece. So any color on your portfolio outside of U.S. office in Greece? Yeah. If you can imagine, we watch those.

Speaker Change: If I could touch really quickly on U S commercial real estate any comments on.

Speaker Change: I guess outside of office received from regional banks take some no actual losses on multifamily or life Sciences Creek. So any color on on your portfolio outside the U S office.

Frank Guse: Yeah, as you can imagine, we watch those sectors and industries very closely. Our multifamily loan portfolio is very stable, well-diversified, with very low impaired balances in the portfolio, and we do not see anything systemic in that portfolio. And, very differently from office, demand for those asset classes remains strong, even though we see some pressures on short-term rental rates, even though we see some pressure on cap rates, demand remains very strong. And we don't expect this to translate into anything similar to office, even though we are watching it very, very closely.

Speaker Change: Yeah. If you as you can imagine we watch those are factors in the industry. It's also very closely at all of them.

Speaker Change: Multifamily loan portfolio is very stable well diversified very low impaired balances in the portfolio and we do not see anything systemic in the portfolio.

Speaker Change #100: And what I would say very different than office demand for those asset classes remains strong even though we see some pressure on short term rental rates, giving them, even though we see some pressure on cap rates demand remains very strong.

Speaker Change #100: And we don't expect this to translate into into anything similar to office, even though we are watching it very very closely.

Speaker Change #101: That's it for me thank you.

Speaker Change #102: Thank you.

Operator: The following question is from Lemar Persaud from Comrock Securities. Please go ahead.

Speaker Change #103: Following question is from Nomura per song from <unk> Securities. Please go ahead.

Lemar Persaud: Yeah, thanks. Maybe for Rob on expenses. Just looking at your waterfall on slide 10, that divestiture related to CIBC Caribbean assets, is that in the operating cost bucket?

Speaker Change #104: Yeah, Thanks, a lot.

Speaker Change #105: For Rob on expenses.

Speaker Change #105: Yeah.

Speaker Change #106: Just looking at your waterfall on slide 10 that divestiture related to CIBC Caribbean assets is that any operating cost bucket.

Speaker Change #107: At 170.

Unknown Executive: It is, Lemar, good morning, it's Rob. It is, it's roughly two cents a share. It's a non-recurring expenses where the exit closed just recently, so it's included in that number.

Unknown Executive: It is lamar good morning, it's Rob.

Speaker Change #108: It is it's it's roughly two cents a share.

Speaker Change #108: It's a nonrecurring nonrecurring expenses were.

Speaker Change #108: The exit closed just recently so it's included in that number okay.

Lemar Persaud: Okay, thanks, and just sticking with that same question, that mid-single-digit expense growth target, do you think you could get there even with some strength in the markets-related business, or is that mid-single-digit, you know, subject to what happens in capital markets? Uh, well, you know...

Speaker Change #109: Okay. Thanks, and then just sticking.

Speaker Change #109: Sticking with that same question.

Speaker Change #109: That mid single digit expense growth target.

Speaker Change #110: Do you think you could get there even with some strength in the markets related business or is that mid single digit.

Speaker Change #110: Subject to what happens in capital markets.

Unknown Executive: Well, you know, it is, we do think mid-single-digit is the right range for it. But having said that, as you pointed out, when performance-based compensation is the item that's lifting our overall expense outlook, we're actually okay with it, right? The revenues come in, and some of the expenses come along for the ride, but on a net basis, it's a positive for shareholders. So if revenues continue to outperform, could there be some upward pressure on our expenses, on that expense number? Yes. Are we concerned about it? Not really.

Speaker Change #111: Well you know it is we we didn't think mid single digit is the right range for it but having said that as you pointed out.

Speaker Change #111: When performance based compensation is the item that is lifting our overall expense outlook.

Speaker Change #111: We're actually okay with it right the revenues the revenues come up some of the expenses come along for the ride, but on a net basis is a positive for shareholders. So if revenues continue to outperform could there be some upward pressure on our expense on that expense number yes.

Speaker Change #111: Are we concerned about it no I think what you're seeing on the slide.

Unknown Executive: I think what you're seeing on the slide is very much thematically linked to the efficiencies and the investments that we're making. That part we try to control very tightly. The operating costs we try to control very tightly. But in terms of investing for growth and then seeing that growth, having a little bit of higher expense growth come with it, we think it's ultimately a positive for shareholders.

Speaker Change #111: Very much thematic Lee linked the efficiencies and the investments that we're making.

Speaker Change #111: That part we try to control it very tightly the operating cost we try to control very tightly but in terms of investing for growth and then seeing that growth, having a little bit of higher expense growth come with it we think it's.

Speaker Change #111: But we are positive for shareholders.

Speaker Change #112: Thank you.

Operator: The following question is from Gabriel Dechaine from National Bank Financial. Please go ahead.

Speaker Change #112: Thank you.

Speaker Change #113: The following question is from Gabriel does Shang from National Bank Financial. Please go ahead.

Gabriel Dechaine: Good morning. I have a detailed accounting question for Rob. No, just kidding. My question is about mortgages. It seems like the pace of the 30-year plus amortization balances has been declining, but it seems like the pace has slowed. I don't know if I'm reading too much into it, just more of a macro-type question, whether it's getting tougher to get people to increase their payments or take other actions to get back on track, so to speak, because of inflation and stuff like that. And just more broadly, what is your process, and how easy or difficult is it?

Speaker Change #114: Good morning.

Detailed accounting question corrupt no I'm just kidding.

Speaker Change #115: My question's on mortgages.

Speaker Change #116: It seems like the pace of it.

Speaker Change #116: 30 year, plus amortization balances they've been declining but it seems like the pace has slowed.

Speaker Change #116: I don't know if I'm reading too much into it just more of a macro type question, whether it's getting tougher to.

Speaker Change #116: To get people to increase their payments or.

Speaker Change #116: Pick other actions to it'll get back on track so to speak because of you know inflation and stuff like that and just more broadly what is your process and how easy or difficult is it.

Frank Guse: Yeah, I think it is a very proactive process, and it's very thorough conversations with clients that we have on an ongoing basis. You're right, we are seeing that drop decelerating, or the speed of how it comes down decelerating a little bit. But it is still a good drop.

Speaker Change #117: Yeah, I think it is a very proactive process and it is very thorough conversations with clients that we are having on on an ongoing basis.

Speaker Change #118: Youre right, we are seeing that drop a decelerating or the speed of how it comes down decelerating a little bit.

Speaker Change #118: It's still a good drop and all of that keep in mind, if clients, making voluntary payments.

Frank Guse: And all of that, keep in mind is clients making voluntary payments. Contractually, they are not obliged to do that. And this is just good, sound financial planning we do with our clients. Actually, we expected that to come down over time because, of course, there are clients that have an easier time of making those payments. But we also see some more sophisticated clients in their portfolio; they are just saying, I want to wait it out, and are waiting for interest rates to drop, and helping on that part. And those are good conversations as well, because those are reasonable arguments that clients can bring forward. And as I said, again, all of those are voluntary adjustments that clients are making based on good financial planning.

Speaker Change #118: Actually they are not obliged to do that and this is just good financial planning, we do with our clients.

Speaker Change #118: Actually we expected that to come down over time because of course, they have clients that have either have an easier time of making those payments.

Speaker Change #118: But we also see some more sophisticated clients in their portfolio. They are just saying Oh I want to wait it out and are waiting for interest rates to drop and in helping on that part and those are good conversations as well because those are reasonable arguments that clients can bring forward and as I said again all of those are voluntary adjustments.

Speaker Change #118: Our clients are making.

Speaker Change #118: Based on good financial planning.

Frank Guse: And are you..., you know, stepping it up, so to speak, to try to get that number down even more, or are you just kind of doing the normal course, what you've been doing over the past year or so?

Speaker Change #119: And then are you.

Speaker Change #119: Stepping it up so to speak.

Speaker Change #120: Try to get that number down even more or are you just kind of.

Speaker Change #121: You know normal course, what you've been doing over the past year or so while we have been very proactive. We started our efforts early I don't think we are letting down on our efforts, but they're also not a lot of what we are seeing that would give us reason to really stepping it up or or foreseeing those discussions more.

Frank Guse: Well, we have been very proactive. We started our efforts early. I don't think we are letting down on our efforts, but there's also not a lot of what we have seen that would give us reason to really step it up or force those discussions more broadly. So there would be room for doing that, but I wouldn't say we would accelerate that. We will just keep it as a constant proactive outreach to those clients. Got it, thanks.

Speaker Change #122: Rodley overall, the portfolio is performing well.

Speaker Change #122: When we look into deposit cushion cushions, even for those non amortizing mortgages clients hold substantial incremental liquid assets in their portfolio.

Speaker Change #122: That would carry them at least six to seven months of payment. So there would be room for for doing that.

But we I wouldn't say, we will accelerate that we will just keep it as a constant and a proactive outreach to those clients.

Victor G. Dodig: It's very consistent with our strategy. Our strategy is to help each and every one of our clients, and the output of that is reflected in our financial statements, but more importantly, in our clients' financial statements. You know, the approach we have at our bank is the relationship-oriented approach, whether that's Main Street Canada, Affluent Canada, Wealthy Canada, business owners, corporate executives, that's how we operate at CIBC. It is not product-driven, it's relationship-driven, it's planning-driven, and done right, it reflects well in our clients' financials, and done right, it reflects well in our own financial And that we take great pride in, and that's what you're seeing in our results.

Speaker Change #122: Thanks, Gabe, it's very consistent with our strategy our strategy is to help each and every one of our clients and the output of that is reflected in our financial statements, but more importantly in our clients' financial statements.

Speaker Change #122: Approach, we have at our bank is the relationship oriented approach, whether that's main street, Canada affluent Canada wealthy Canada business owners corporate.

Speaker Change #123: <unk>, that's how we operate at CIBC. It is not a product driven it's relationship driven it's planning driven and done right. It reflects well on our clients' financials and done right. It reflects in our own financials and that we take great pride in and that's what you're seeing in our results.

Speaker Change #124: Thanks Victor.

Victor: Thank you.

Victor G. Dodig: Thank you. There are no further questions, but just at this time, I would now like to turn the meeting back over to Victor. Thank you, operator, and thank you.

Speaker Change #125: There are no further questions registered at this time I would now like to turn to be the meeting back over to Victor.

Victor G. Dodig: Thank you, Operator, and thank you for your engagement today. As I said just now, our recent relative outperformance is a direct outcome of delivering consistency for all of our stakeholders, starting with our clients. We're going to continue to build the modern, relationship-oriented bank that we've set out on the path to build, while maintaining our financial strength and maintaining our Risk Discipline. I'd like to thank our 48,000 CIBC team members. I'd like to thank our executive team and our leadership team, who work collaboratively to bring our purpose-driven culture to life every single day.

Victor: Thank you operator, and thank you for your engagement today as I said just now our recent relative outperformance is a direct outcome of delivering consistency for all of our stakeholders starting with our clients. We're going to continue to build the modern relationship oriented bank bank that we've set out on the path to build.

Victor: While maintaining our financial strength.

Victor: Maintaining our risk discipline again.

Victor: Walmart because of what you're seeing in our results. This quarter and then several quarters now I'd like to thank our 48000 and CIBC team members.

Victor: Like to thank our executive team and our leadership team, who worked collaboratively to bring our purpose driven culture to life every single day. The success of what Youre seeing at CIBC is a team effort possible by the dedication from everyone met one of our team members were motivated and we're excited to keep delivering for you.

Victor G. Dodig: The success of what you're seeing at CIBC is a team effort, made possible by the dedication from every one of our team members. We're motivated and excited to keep delivering for you, our stakeholders, and we look forward to reporting on our progress in August and clearly engaging with you between now and then. Thank you for your interest in our bank. Have a great day and a good upcoming weekend. Cheers.

Jess: Our stakeholders and we look forward to reporting on our progress in August and clearly engaging with you between now and then thank you for interest in our bank have a great day and a good upcoming weekend Jess.

Victor: Yeah.

Speaker Change #127: Thank you.

Operator: The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.

Speaker Change #128: The conference has now ended please disconnect your lines at this time.

Speaker Change #129: We thank you for your participation.