Q3 2024 Canadian Imperial Bank of Commerce Earnings Call

Speaker Change: 7 conference is on Registrar. Participants, please stand by, your consensus ready to begin.

Speaker Change: Good morning and welcome to the CIBC Quarterny Financial Resolve's call. Please be advised that this call is being recorded. I would not like to turn a meaning over to Geoff Weiss, Senior Vice President and Vester Relations. Please go ahead, Geoff.

Geoff Weiss: Thank you and good morning. We will begin this morning's presentation with opening remarks from Victor Dodig, our president and chief executive officer, followed by Rob Sedran, our chief financial officer in Frank Guse, our chief risk officer.

Speaker Change: Also on the call today are a number of our group heads, including Sean Bieber from the US region, Harry Colum, Capital Markets and Directionantial Services, John Antalis, Canadian Banking, and Hratch Panossian, Personal and Business Banking. They're all available to take questions following the prepared remarks.

Speaker Change: As noted on slide two of our investor presentations, our comments may contain forward-looking statements which involve assumptions and have inherent risks and uncertainties.

Speaker Change: Actual Results may differ materially. I would also remind listeners that the bank uses non-gap financial measures to arrive at adjusted results. Management measures performance on a reported and adjusted basis, and considers both to be useful in assessing underlying business performance.

Speaker Change: with that, I'll now turn the call over to Victor.

Victor: Thank you, Geoff. Good morning, everyone, and thanks for joining us today. I'll begin with a few comments about how our client-focused strategy continued to deliver for our stakeholders in the third quarter before turning it over to Robin Frank to review our performance in greater detail.

Speaker Change: Our core results are strong again this quarter, demonstrating continued momentum and consistency and execution. While positioning our bank for further relative outperformance.

Speaker Change: In a nutshell, our strategy is working and it's working well.

Robin Frank: On an adjusted basis, we reported net income of $1.9 billion, and earnings per share of $1.93.

Robin Frank: Our performance is supported by record earnings, underpin by continued resilience and our credit performance.

Robin Frank: Our strong and capital liquidity positions are foundational to our continued momentum in deepening relationships and attracting clients to our bank.

Robin Frank: We ended the quarter with a 13.3% C-T1 ratio and a 126% LCR both well about regulatory and internal minimums.

Robin Frank: This also gives us confidence to announce a normal car C-shore bid for 2% of our outstanding shares.

Robin Frank: adjusted return on equity improved to 14% even with an elevated capital buffer.

Robin Frank: Are we as improving as a direct outcome of the momentum we have in our core businesses and we will continue improving our overall return profile over time.

Speaker Change: I'd like to highlight for you some of the areas of strength across our bank in the third quarter that highlight this momentum.

Speaker Change: We'll start with our Canadian consumer franchise, where we are serving the Canadian mass market segment and meeting the needs of clients in the mass affluent segment.

Speaker Change: Over the past 12 months, we welcome 640,000 net new personal clients to our bank across our CIVC and simply platforms.

Speaker Change: Continuing a trend of strong, client acquisition and retention.

Speaker Change: During the quarter, we also launched new banking offer bundles for students and those in the skilled trades.

Speaker Change: to further strengthen our leadership position with priority client segments.

Speaker Change: In Imperial Service, we continue to serve the needs of our Canadian mass affluent client base and deep interrelationships.

Speaker Change: Money in balance growth for our Imperial Service Clients was almost double the growth in the same quarter last year. Highlighting our emphasis on this segment.

Speaker Change: We're confident in our momentum going forward because we've built up the client experience to enable our CIBC team to earn more business from existing clients and attract new clients to our bank.

Speaker Change: Our net promoter scores for Imperial Service and Digital clients improved for another consecutive quarter and are tracking well above our fiscal year targets.

Speaker Change: Now moving toward commercial banking businesses.

Speaker Change: In Canada, client sentiment is improving, with average loans up 2% sequentially this quarter.

Speaker Change: Our pipeline remains strong, and we're continuing to have active dialogue with our clients.

Speaker Change: In the U.S., we continue to focus on deepening client engagement and are making meaningful progress on the strategic rebalancing of our portfolio.

Speaker Change: This quarter, we delivered above market growth in deposits and in CNI loans, while continuing to de-emphasize certain areas of our institutional commercial real estate business.

Speaker Change: This continues to improve the overall credit quality of our U.S. portfolio and Frank will provide more details in his remarks.

Frank: Well, tighter monetary policy has slowed demand for loans in the industry on both sides of the board of this year. We're expecting business activity to pick up through 2025 amid further interest rate relief and strong economic growth.

Frank: Moving to our wealth platform, which remains a key, which remains key to our long-term growth strategy.

Frank: Our Canadian Walt Business is performing well, while strong equity markets have contributed to the 20% increase in AOA from the prior year. Our Canadian retail mutual fund net sales ranked number one within the Canadian bank group for the second consecutive quarter.

Frank: These mutual fund netting sales were supported by the early success of a recently launched TIVC investment-grade bond fund lineup, which had net flows of $1.6 billion into these funds during the third quarter.

Frank: In the U.S., we are continuing to invest in our wealth business and expected to be a key contributor to a success over time.

Frank: To scale our teams, we added more relationship managers and target markets this quarter that are aligned with our culture and our strategy.

Frank: Our investments in CRM technology are paying off as well as evidence by improving client net promoter scores and higher cross business referral volumes from our US wealth business.

Frank: Moving to capital markets and direct financial services, a differentiated model delivered another quarter with strong top-line growth.

Frank: In line with our strategic objectives, our U.S. capital markets presence continues to grow. Capital markets revenues in the U.S. region increased 24% to quarter versus a year ago, supported by increased cross-business referral activity.

Frank: Our highly connected approach is deeply embedded across the CIBC platform and in the CIBC culture. With connectivity revenue up 11% on a year-to-date basis.

Frank: We also meet significant progress on our ambition to leverage AI as strategic enable for our bank.

Frank: We had a number of tools across the AI Spectrum in the third quarter First, we launched a pilot of CIBC AI, the cutting-edge Gen AI platform designed to foster innovation across our organization.

Frank: is custom built tool supports team members to improve productivity by providing access to powerful language models.

Frank: Second, we are piloting GitHub co-pilot. A tool that assists our banks developers with providing code suggestions, automating reputative tasks, and enhancing overall coding efficiency.

Frank: And finally, we're ruling out a GNI solution aimed at enhancing our frontline team members experience and using our central information how to better serve our clients. This pilot was recognized with the best GNI initiative technology award by Digital Banker.

Frank: As an early adopter of AI, we continue to recognize there is much more transformative potential if it's utilized effectively.

Frank: Our Strategic Collaboration with the Creative Destruction Lab will enable us to leverage best practices from industry leaders and our enhanced partnership with the Vector Institute will bolster our AI talent development programs.

Frank: Our track record of innovation extends to our commitment to removing barriers for the next generation of leaders from the indigenous community as well.

Frank: With a second consecutive year, CIBC received the Indigenous Reconciliation Award and the Innovation Award as part of the 2024 Employment Equity Achievement Awards.

Frank: In closing, we are continuing to stick to our game plan and it's paying off. Our approach is clear. We are prioritizing high return client segments, advancing digital capabilities, deepening client relationships, and realizing efficiencies across our footprint.

Frank: We have a differentiated strategy. We remain focused on consistent execution and we are delivering results today while positioning our CIBC franchise for the long term. And with that, I'll now turn the car all over to Rob. Thank you.

Rob: and Good Morning Everyone.

Rob: I'll begin with three takeaways from our results.

Rob: First, our underlying results were strong in this quarter. While there were a few puts in takes that I will describe in my comments, our performance shows continued execution against our strategy.

Rob: Second, we managed to another quarter of positive operating leverage, a fourth consecutive one. Excluding the items I just referenced and revenue-linked costs, our operating expenses were in the mid-singled digit range, which remains our guidance moving forward.

Rob: and third, our balance sheet positions as well to navigate the current dynamic environment and supports our organic rural aspirations and those of our clients.

Rob: Let's now move on to a detailed overview of our performance. I'm on slide 9. And let's otherwise note it results are being compared with Q3 of 23.

Rob: The quarter-son increase in net interest income.

Rob: Continued the income growth, credit quality stabilization, and capital accretion with strong performance across all of our business units. Adjusted EPS was $1.93 and adjusted RWE was 14%.

Speaker Change: Please turn this light ten.

Speaker Change: Adjusted net income of $1.9 billion increased 28%.

Speaker Change: Pre-provision pre-tax of 2.9 billion, we're up 13% and revenues of 6.6 billion were up 12%. Supported by improved spreading come, as well as continued growth across our fee-based businesses.

Speaker Change: We also continue to manage expenses relative to revenues while investing to support our strategy and posted 60 basis points of positive operating leverage.

Speaker Change: The provisions for credit losses were down significantly from a year ago due to lower losses in the U.S. office portfolio, and so impaired loan losses came in better than our annual guidance range.

Speaker Change: Frank will discuss credit in detail in his presentation.

Frank: Blight 11 highlights the key drivers of net interest income.

Frank: Excluding trading NII was up 14% driven by expanding margins and continued balance sheet growth.

Speaker Change: As a reminder, the net interest margin is affected by benchmark reform, which is a revenue neutral shift to NII from other income. We've included more information on this dynamic in the appendix.

Speaker Change: Excluding trading, Total Bank Nim was up 17 basis points from the prior year and 12 basis points sequentially. On a combination of higher deposit margins, business mix and improved product margins.

Speaker Change: We also saw benefit from market-related treasury revenues that added three basis points to the margin this quarter.

Speaker Change: Canadian PNCNN of 267 basis points was up 4 basis points.

Speaker Change: Driven by favorable business mix and deposit volume growth.

Speaker Change: For both the consolidated and PNC margin, we maintain our expectation of a neutral to gradual positive bias over time based on the current interest rate assumptions embedded in the forward curve.

Speaker Change: In the US segment, NIMM of 342 basis points was fabled to the prior quarter. As lower yielding tractors rule into higher rates, offset by some higher deposit costs.

Speaker Change: Turning to slide 12, non-interesting come of 3.1 billion was up 17% from the prior year. A midgrowth in trading, as well as continued momentum, in market-sensitive businesses that drove an 11% increase in market-related fees.

Speaker Change: Transaction related fees were down 3% and represent the flip side of the NII discussion as the decline was mainly due to the permanence shift of DA related revenues into net interest income.

Speaker Change: Flight 13 highlights our balanced approach to expense management.

Speaker Change: Excluding performance-based compensation linked to the stronger revenues and continued investments, expenses grew 6%. Over the last year, we realized the efficiencies well investing in our strategy.

Speaker Change: We expect the expense for hope for the in the mid-Single-Viger range for the full year, but we will continue to manage expenses relative to revenue growth.

Speaker Change: Flight 14 highlights the strength of our balance sheet.

Speaker Change: Our CT1 ratio ended the quarter at 13.3% up from 13.1% last quarter, and positions as well to absorb volatility in the operating environment while supporting our clients. Solid Organic Capital Generation was partially offset by our WA increases.

Speaker Change: Our liquidity position continues to be strong with an average LCR of 126% intentionally down from last quarter.

Speaker Change: Starting on Flight 15 with Personal and Business Banking, we highlight our strategic business unit results.

Speaker Change: Net income of $633 million increased 20% due to lower total provisions for credit losses.

Speaker Change: The ported by core business momentum, pre-provision pre-tax earnings were up to 6%. Reven use of 2.6 billion were also up to 6%. Help by volume growth and higher margins.

Speaker Change: Expenses of 1.4 billion were up 7% and included higher revenue-related expenses and a software impairment charge.

Speaker Change: On slide 16, we show Canadian commercial banking and wealth management, where net income and pre-provision pre-tax earnings were stable to a year ago.

Speaker Change: Reven use of 1.4 billion were up 7% driven by strong, wealth management growth of 15% with higher average fee-based assets on both increased client activity and market appreciation.

Speaker Change: This was partially offset by commercial banking revenue which declined marginally.

Speaker Change: Expenses increased 13% from a year ago, mainly from higher compensation linked to the strong wealth management revenues and increased spending on strategic initiatives.

Speaker Change: Additional detail on our combined Canadian personal and commercial banking franchise have been included in the appendix.

Speaker Change: Turning to U.S. Commercial Banking and Welp Management on Slide 17.

Speaker Change: Net income of U.S. 163 million was up significantly from the prior year, mainly due to lower loan loss provisions in the office portfolio.

Speaker Change: Revenue's were up 6% with non-interesting income up 28%, mainly from strong syndication activity, as well as market performance in wealth, partly offset by a 3% decline in net interest income.

Speaker Change: Experances were up 19% reflecting performance-based compensation as well as continuing investment to grow our business and further build infrastructure to support that growth, aligned with regulatory expectations.

Speaker Change: Turning to slide 18 and our capital markets and VFS segment.

Speaker Change: net income of 476 million was down 4% year over year. Revenue is at 1.5 billion, we're up 9% as we continue to earn through the impact of federal budget changes affecting dividends received.

Speaker Change: Strong results across our global markets and direct financial services businesses will partly offset by lower advisory revenue.

Speaker Change: Expenses of 770 million were up 14% and included the impact of higher performance based compensation linked to the stronger revenues and the charge taken in connection with the industry-wide record keeping investigations being conducted in the United States.

Speaker Change: White 19 reflects the results of the corporate and other business unit, which shows net income of 96 million compared with a net loss of 98 million in the prior year. Driven by higher market-related treasury revenues and higher revenues from CIDC Caribbean.

Speaker Change: This quarter Treasury benefited from a parameter update in addition to episodic market related games for a total of roughly 90 million in revenue.

Speaker Change: It's our preference to be closer to zero in this segment, since it gives us and you, a better reflection of business line performance. So given that, we are not changing our guidance of a loss of between zero and 50 million, but we do expect to be closer to zero in the coming quarter.

Speaker Change: Let me close with the three takeaways I started with. First, the underlying drivers of our results continue to reflect strong and consistent execution of our client-focused strategy and positive momentum across our bank.

Speaker Change: Second, we continue to manage expenses to sustain positive operating leverage by focusing our investments and driving further efficiency, including through the use of AI.

Speaker Change: and third our discipline resource allocation approach allows us to balance volume and margin, support our clients, and drive sustainable shareholder value. With that, I'll turn it over to Frank. Thank you, Rob, and good morning, everyone.

Frank: This quarter, our credit portfolio performed well in loan losses we made moderate, reflecting the diversified nature of our portfolio as strategic efforts of building strong client relationships and focus on working proactively with those clients experiencing financial stress.

Frank: We continue to monitor our portfolio closely and focus on reaching out early to pre-delink on clients. In addition, we have made significant progress on downsizing the impact balances of our U.S. office book.

Frank: As strong allowance coverage reflects our prudent risk management approach against uncertainties that continue to exist in the macroeconomic outlook.

Frank: Turning to slide 23, our total provision for credit losses was 483 million in Q3 compared to 514 million last quarter. With our allowance remaining flat quarter over quarter.

Frank: Our performing provision was 79 million this quarter, driven by both migration and changes to our economic outlook in the retail and business and government portfolios.

Frank: Provisions on the paid loans were 404 million, down 43 million quarter of a quarter.

Frank: This was due to lower provisions in the U.S. Commercial portfolio, partially offset by higher-right off-in retail, as well as increased provisions in Canadian commercial and capital markets.

Frank: Turning to slide 24, total bank impaired PCL of this quarter was down five basis points with a few offsetting movements across the business units.

Frank: In personal and business banking, oil and pay at PCL trended slightly higher as we guided to last quarter. We anticipate PCLs to remain elevated into Q4.

Geoff Weiss: Please be advised that this call is being recorded. I would not like to turn a meeting over to Geoff Weiss, Senior Vice President and Vesta Relations.

Frank: Our business in government portfolios collectively performed very well with impaired provisions down 71 million discorders, largely driven by strong performance in U.S. commercial banking.

Geoff Weiss: Please go ahead, Geoff. Thank you and good morning. We will begin this morning's presentation with opening remarks from Victor Dodig, our President and Chief Executive Officer, followed by 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 from the US region, Harry Culham, Capital Markets and Direct Financial Services, Jon Hountalas, Canadian Banking, and Hratch Panossian Personal and Business Banking.

Frank: Both Canadian commercial and capital markets portfolio experience and increase in impaired PCLs. We do expect a occasional episodic event in these portfolios and are comfortable if that's not indicated systemic or sectoral risk.

Frank: The US commercial, the impaired PCL, has seen improvements over the past few quarters, with lower provisions in the office sector.

Geoff Weiss: They're all available to take questions following the prepared remarks. As noted on slide two of our investor presentation, our comments may contain forward-looking statements which involve assumptions and have inherent risks of uncertainties. Actual results may differ materially. I would also remind listeners that the bank uses non-gap financial measures to arrive at adjusted results, management measures performance on a reported and adjusted basis, and considered both to be useful in assessing underlying business performance.

Frank: Consistent with our past guidance, we do not expect the high level of losses we previously experienced to repeat.

Frank: We remain comfortable with our 40-yup mid-30s guidance for fiscal 24.

Speaker Change: By 25 summarizes our growth in paid loans and information.

Speaker Change: Gross-and-paired loans were down two basis points this quarter, mainly due to the disposition of U.S. office loans, partially offset by an increase in Canadian resident remodagers.

Victor Dodig: With that, I'll now turn the call over to Victor. Thank you, Geoff. Good morning, everyone, and thanks for joining us today.

Speaker Change: Light 26 summarized with the net write-off in any plus daily-linkancy rates of all Canadian consumer portfolios.

Victor Dodig: I'll begin with a few comments about how our client-focused strategy continued to deliver for our stakeholders in the third quarter before turning it over to Rob and Frank to review our performance in greater detail. Our core results were strong again this quarter, demonstrating continued momentum and consistency and execution, while positioning our bank for further relative of performance. In a nutshell, our strategy is working and it's working well. On an adjusted basis, we reported net income of $1.9 billion and earnings per share of $1.93.

Speaker Change: The unemployment remains elevated, and its claims continue to navigate this macroeconomic environment, on that right-off ratio has increased by three basis points.

Speaker Change: While net riders and credit cards and unsecured products are higher this quarter, we have seen the currency rates decreasing for these products.

Speaker Change: We remain comfortable with the overall credit quality of these portfolios.

Speaker Change: Now mortgage portfolio we continue to see positive trends in negatively amortizing mortgages.

Speaker Change: Valences were down from 38 billion in Q1 to 28 billion discordus, impacting over 19,000 more digits.

Victor Dodig: Our performance is supported by record earnings underpin by continued resilience in our credit performance. Our strong and capital liquidity positions are foundational to our continued momentum in deepening relationships and attracting clients to our bank. We ended the quarter with a 13.3% CG1 ratio and a 126% LCR, both well above regulatory and internal minimums. This also gives us confidence to announce a normal currency short bid for 2% of our outstanding shares. Adjusted return on equity improved to 14%, even with an elevated capital buffer. Our OE is improving as a direct outcome of the momentum we have in our core businesses and we will continue improving our overall return profile over time.

Speaker Change: Even with the help of two rates card seen this past quarter, lines are continuing to voluntarily increase payments.

Speaker Change: Overall, we do not expect material losses from our real estate security landing portfolio.

Speaker Change: In closing, we continue to manage through the current credit cycle with strong third-quarter loan loss performance. As mentioned, we remain comfortable with our fully agitants of mid-30s for impaired PCLs, and we will continue to proactively assess our portfolios and stay engaged with our clients.

Speaker Change: Our strong allowance coverage allows us to respond to any changes in the macro environment. With that, I will now turn the call back to the operator.

Speaker Change: Thank you.

Speaker Change: Please press star one if you have a question. There will be a brief pause while participants, but just a full question. We can give a location.

Victor Dodig: I'd like to highlight for you some of the areas of strength across our bank in the third quarter that highlight this momentum. We'll start with our Canadian consumer franchise where we are serving the Canadian mass market segment and meeting the needs of clients in the mass affluent segment. Over the past 12 months, we welcome 640,000 net new personal clients to our bank across our CIBC and simply platforms, continuing a trend of strong client acquisition and retention.

Speaker Change: For first question, if some Hebrew and Puma put a while from Bank of America, please go ahead.

Speaker Change: Is it falling?

Speaker Change: Maybe we're going back, Victor, to the other things, remarks around sentiment, improving, pipelines, strong in Canada.

Speaker Change: We'll give you a sense of how deep it has been moved. That's...

Speaker Change: The concerns around higher rates, impacting the Canadian consumer, housing market, and economic activity, and our things looking on the other side of that would love to be perfect as you talk to your bankers, clients around how.

Victor Dodig: During the quarter, we also launched new banking offer bundles for students and those in the skilled trade. To further strengthen our leadership position with priority client segments. In Imperial Service, we continue to serve the needs of our Canadian mass affluent client base and deep in relationships. Money in balanced growth for our Imperial Service clients was almost double the growth in the same quarter last year, highlighting our emphasis on this segment. We're confident in our momentum going forward because we've built up the client experience to enable our CIBC team to earn more business from existing clients and attract new clients to our bank. Our net promoter scores for Imperial Service and digital clients improve for another consecutive quarter and are tracking well above our fiscal year targets.

Frank: Likely it is that we do see the GDP number next year and maybe Frank would love your perspective on how that informs resolving in your outlook on credit.

Abraham: Morning, Abraham. Thank you for your question. I would say that we're in the transition to getting to a better place. You know, we've only had one rate cut, so I think that sentiment will continue to prove both on the consumer side.

Abraham: As well as on the business side, as we continue to see more and more relief which we are expecting both in Canada and the United States.

Abraham: I think our commercial clients are feeling more buoyant, I think our retail clients, our consumer clients, are feeling a little more tentative when it comes to borrowing, but with two or three rate cuts and you know, five year of fixed mortgages getting to a better rate.

Victor Dodig: Now moving to our commercial banking businesses. In Canada, client sentiment is improving with average loans up 2% sequentially this quarter. Our pipeline remains strong and we're continuing to have active dialogue with our clients. In the US, we continue to focus on deepening client engagement and are making meaningful progress on the strategic rebalancing of our portfolio. This quarter, we delivered above market growth in deposits and in CNI loans while continuing to deemphasize certain areas of our institutional commercial real estate business.

Abraham: Price Point may be slightly below 4% I think you'll see that sentiment become more solidified and we would see that as encouraging for the business going forward.

Abraham: Frank.

Frank: Yeah, and you'd very much thanks for the question. From a credit perspective, we continue to maintain a Putin download look on credit performance overall.

Victor Dodig: This continues to improve the overall credit quality of our US portfolio and Frank will provide more details in his remarks. While tighter monetary policy has slowed demand for loans in the industry on both sides of the board of this year, we're expecting business activity to pick up through 2025 amid further interest rate relief and stronger economic growth.

Speaker Change: I think on employment continues to be a headwind for a little while. It's very hard to say when exactly that will peak and get better.

Speaker Change: We don't expect it to go out dramatically and that's what you see in our outlook and in our provisioning. But we continue to expect this to be a headwind.

Speaker Change: and then over time, interest rates will have a positive impact and will mitigate some of that pressure, but that will be lagging a little bit as well.

Victor Dodig: Moving to our wealth platform, which remains key to our long-term growth strategy. Our Canadian wealth business is performing well, while strong equity markets have contributed to the 20% increase in AUA from the prior year. Our Canadian retail mutual fund net sales ranked number one within the Canadian bank group for the second consecutive quarter. These mutual fund net sales were supported by the early success of a recently launched CIBC investment grade bond fund lineup which had net flows of $1.6 billion into these funds during the third quarter.

Speaker Change: So, as I said, more cautious or still prudent outlook on credit, but we also don't expect any material increases or on our own.

Speaker Change: and the Center for Increases in those portfolios.

Speaker Change: and just once follow up on capital for you announced the buyback or a...

Speaker Change: Osiris Weiss, you know that?

Speaker Change: but Victor, I'm sure he's got a lot of time in terms of captain and the patient. Give us a sense of the...

Victor Dodig: In the US, we are continuing to invest in our wealth business and expected to be a key contributor to success over time. To scale our teams, we added more relationship managers and target markets this quarter that are aligned with our culture and our strategy. Our investments in CRM technology are paying off as well, as evidenced by improving client net promoter scores and higher cross business referral volumes from our US wealth business.

Speaker Change: Opportunity set ahead of you in terms of going off the group in Canada. There have been a bunch of these announced, if there are any dislocations that create good opportunity. As well as in the US, some of the pressure on the regional banks, are you doing more?

Speaker Change: or two private to gain market share and that could at some point we will look at in organic opportunities as well.

Speaker Change: I'm sure you've been here, so we'll just take care of getting the order two cuts, not one cut as Geoffrey's from line did me, so thank you Geoffrey for now it

Victor Dodig: Moving to capital markets and direct financial services, our differentiated model delivered another quarter with strong top line growth. In line with our strategic objectives, our US capital markets presence continues to grow. Capital markets revenues in the US region increased 24% this quarter versus a year ago, supported by our increased cross business referral activity. Our highly connected approach is deeply embedded across the CIBC platform and in the CIBC culture, with connectivity revenue up 11% on a year-to-date basis.

Speaker Change: Look, on Capitol, our focus has been on building Capitol organically and delivering a premium ROE. And you know, we're pleased with the results that we've been delivering so far. We're not going to rest on our laurels as I mentioned in my remarks.

Speaker Change: We're going to continue executing against the strategy we've laid out, which we believe will generate capital and we believe will generate a premium ROE.

Speaker Change: So as we think about capital deployment and capital allocation, we as a team spend a great deal of time focusing first and foremost on organic growth and our business and how we can help our clients realize their growth ambitions.

Victor Dodig: We also meet significant progress on our ambition to leverage AI as a strategic enabler for our bank. We added a number of tools across the AI spectrum in the third quarter. First, we launched a pilot of CIBC AI, the Cutting Edge Gen AI platform designed to foster innovation across our organization. This custom built tool supports team members to improve productivity by providing access to powerful language models. Second, we are piloting GitHub co-pilot, a tool that assists our bank's developers with providing code suggestions, automating repetitive tasks and enhancing overall coding efficiency.

Speaker Change: by using our balance sheet prudently and working with them. So that remains focus number one. I think as you've seen in my remarks in the Canadian commercial landscape and the private economy of Canada, you're starting to see sentiment improved, but we need more to make cuts more clarity.

Speaker Change: A U.S. election that gets behind us for people to see their confidence bolstered. I think in the capital markets business, you're starting to see constructive view. In our U.S. business, what you're seeing is a shift.

Speaker Change: and I'm happy to have Sean talk about this shift from commercial real estate to C&I and growing with our clients. We're seeing that sentiment shift as well.

Victor Dodig: And finally, we're rolling out a Gen AI solution aimed at enhancing our frontline team members experience and using our central information hub to better serve our clients. This pilot was recognized at the best Gen AI Initiative Technology Award by Digital Banker. As an early adopter of AI, we continue to recognize there is much more transformative potential if it's utilized effectively.

Speaker Change: Second priority is dividend growth. We will grow our dividends as we grow our earnings. We're going to announce those once a year as we've said to you earlier this year.

Speaker Change: Third is sure by back, so we've actually activated the share by back.

Speaker Change: We believe that there's an opportunity for us to both grow our earnings and to play our capital, prudently by returning capital to our shareholders.

Speaker Change: and the last piece is around opportunistic tuck in M&A. We are leading an organic growth strategy first and foremost. It is going to deliver that premium ROI. It is going to create capital for our shareholders and we believe it will deliver strong share price performance over time.

Victor Dodig: Our strategic collaboration with the Creative Destruction Lab will enable us to leverage best practices from industry leaders and our enhanced partnership with the Vector Institute will bolster our AI talent development programs. Our track record of innovation extends to our commitment to removing barriers for the next generation of leaders from the Indigenous community as well. With a second consecutive year, CIBC received the Indigenous Reconciliation Award and the Innovation Award as part of the 2024 Employment Equity Achievement Awards.

Speaker Change: [inaudible]

Speaker Change: Thank you very much.

Speaker Change: Thank you. For one question, if I'm matu Li from Canna Courtenuity, please go ahead.

Speaker Change: Good morning, guys. Thanks for taking my questions. Maybe first on the Canadian Banking Long Road side. Deposit growth is 5% long growth is just one. Is that a function of being more selective with customers or are there maybe some other put in takes to consider there?

Victor Dodig: In closing, we are continuing to stick to our game plan and it's paying off. Our approach is clear. We are prioritizing the AI providing high return client segments, advancing digital capabilities, deepening client relationships and realizing efficiencies across our footprint. We have a differentiated strategy. We remain focused on consistent execution and we are delivering results today while positioning our CIBC franchise for the long term.

Speaker Change: Morning Matthews, thanks for the question and I'll take it and I'll speak mostly to the personal side and happy to have John speak to the commercial side of Canadian banking.

Speaker Change: I'm the personal side. I'll just remind everybody we have a very clear strategy.

Speaker Change: spoke about this for the whole bank. It's the same in our personal bank.

Rob Sedran: And with that, I'll now turn the call over to Rob. Thank you. Thank you, Victor, and good morning, everyone.

John: We have a focus strategy, we've always talked about building a relationship oriented bank.

John: We're building the relationship oriented bank of the future and that means selecting certain clients who need a deeper relationship and value a deeper relationship with the bank, winning with those clients, having the best solutions leading with differentiated advice.

Rob Sedran: I'll begin with three takeaways from our results. First, our underlying results were strong this quarter. While there were a few puts and takes that I will describe in my comments, our performance shows continued execution against our strategy. Second, we managed to another quarter of positive operating leverage, the fourth consecutive one, excluding the items I just referenced and revenue link costs, our operating expenses were in the mid-single digit range, which remains our guidance moving forward. And third, our balance sheet positions us well to navigate the current dynamic environment and supports our organic growth aspirations and those of our clients.

John: Leveraging our data and analytics and leveraging our imperial platform and our digital capabilities to build the relationships with those clients.

John: and we're digitizing the business to drive efficiency in the front lines in the back and that's our strategy. And we've talked about what that strategy will deliver. We believe that strategy will deliver, aligned with Victor's comments. Gross, that's above market. We've talked about high single that is revenue growth in our business and we've been delivering that.

John: Operating leverage over time. Again, we've been delivering that. And improving Nick Sonaro, we, which are going to help the banks process will daily overall improve.

Rob Sedran: Let's now move on to a detailed overview of our performance, I'm on slide nine, unless otherwise noted results are being compared with Q3 of 23. The quarter saw an increase in net interest income, continued fee income growth, credit quality stabilization and capital accretion with strong performance across all of our business. Units, Adjusted EPS was $1.93, and Adjusted ROE was 14%. Please turn to slide 10. Adjusted net income of $1.9 billion increased 28%.

Speaker Change: And so that's the strategy we've been following, rather than trying to grow loans or deposit. So what is that men's state today? I think what you're seeing on our balance sheet and on our income statement is a direct result of that. Yes.

Speaker Change: Long Earth has been slow, overall consumer growth has been low single digits on the low-one side when you look at Canada, we've been a bit lower than that. We've been about stable on mortgages on a year over your base to have moved than about 1% on a low and over all, as you said. But we're winning where it matters. We're winning in money in.

Rob Sedran: Pre-provisioned pre-tax of $2.9 billion were up 13%, and revenues of $6.6 billion were up 12%. Supported by improved spread income, as well as continued growth across our fee-based businesses. We also continue to manage expenses relative to revenues, while investing to support our strategy, and posted 60 basis points of positive operating leverage. Previsions for credit losses were down significantly from a year ago, due to lower losses in the U.S, office portfolio, and so impaired loan losses came in better than our annual guidance range.

Speaker Change: We reference the effect numbers in terms of the long-term net sales.

Speaker Change: On deposits, when you dig into that 5% deposit number, you'll see particularly in the last few quarters.

Speaker Change: We're starting to win in demand deposits.

Speaker Change: We're margins are higher, where relationship values are higher, and we're being more selective on the GIC friends, where it's been competitive margins are a bit smaller, and frankly, they're not that relationship oriented in terms of the business with clients. So we're going to continue doing that.

Speaker Change: We've got an amazing team. We've got great data and technology supporting that. We're going to keep rolling tools out to understand our clients needs better and to enable our team to serve those and we think with that we'll continue winning with Grab and UNR Ali and I'm less concerned about the numbers on volumes but I think your said we think volumes will accelerate as confidence comes back as we get into next year. I'll pass it on John on commercial.

Rob Sedran: Frank will discuss credit in detail in his presentation. Slide 11 highlights the key drivers of net interest income. Excluding trading, NII was up 14%, driven by expanding margins and continued balance growth. As a reminder, the net interest margin is affected by benchmark reform, which is a revenue-neutral shift to NII from other income. We've included more information on this dynamic in the appendix. Excluding trading, total bank NIM was up 17 basis points from the prior year, and 12 basis points sequentially, on a combination of higher deposit margins, business mix, and improved product margins.

John: Thanks, Aratch, and thank you, Matthew. We spoke in a little bit about this on prior calls. Our view of commercial lending over the last year was more cautious.

John: So as a result, our loan growth was slower than market and that was a conscious choice. At the same time, our loan losses are flatter down versus history, while industry loan losses have gone up. So net net, we think that's a good trade off.

Rob Sedran: We also saw benefit from market-related treasury revenues that added three basis points to the margin this quarter. Canadian PNC NIM of 267 basis points was up four basis points, driven by favorable business mix and deposit volume growth. For both the consolidated and PNC margin, we maintain our expectation of a neutral to gradual positive bias over time based on the current interest rate assumptions embedded in the forward curve.

John: Going forward, we see interest rates come down, we've seen inflation, more under control, our entrepreneurs, confidence level is increasing, so we have a more constructive view of the market.

John: What I think you'll see going forward is loan growth that is higher than what we've had in the past. A quarter of a quarter of a quarter will just an indication of that. So as you think about next year, higher loan growth, more driven by non-realist state business in the real estate business it continues to remain quiet.

Rob Sedran: In the U.S, segment, NIM of 342 basis points was stable to the prior quarter, as lower yielding tractors ruled into higher rates offset by some higher deposit costs.

Speaker Change: So, I'm going to do this great, I'll fast-wind this.

Speaker Change: Thank you for the question if I'm giving you the shame from National Bank Financial. Please go ahead.

Rob Sedran: Turning to slide 12, non-interesting income of 3.1 billion was up 17% from the prior year, amid growth in trading, as well as continued momentum in market-sensitive businesses that drove an 11% increase in market-related fees. Transaction-related fees were down 3%, and represent the flip side of the NII discussion, as the decline was mainly due to the permanent shift of DA-related revenues into net interest income.

Nigel D'Souza: Quick one and then a detailed one. The tax adjustment that was a backed out of earnings or adjusted earnings can be explained that one is that sort of true up of previously recognized Ted Brevinier's.

Nigel D'Souza: Hey, good morning, it's Rob. So yes, it is exactly that. So in the first couple of quarters, we had an adjusting item in the opposite direction related to the change in the dividends received deduction legislation.

Rob Sedran: Slide 13 highlights our balanced approach to expense management, excluding performance-based compensation linked to the stronger revenues and continued investments, expenses grew 6%. Over the last year, we realized efficiencies while investing in our strategy. We expect expense growth to be in the mid-single budget range for the full year, but we will continue to manage expenses relative to revenue growth.

Rob: It hadn't yet been substantively enacted and so for the first couple of quarters we continue to recognize that through our numbers in Q3 it was substantively enacted and so what you see on a year to date basis is a zero but this quarter is the reversal of the benefit we saw in Q1 and Q2.

Speaker Change: Okay, perfect. I actually rub, but I got you here, and when I get the message from CBC that you're balancing revenue and expense growth and that makes sense.

Rob Sedran: Slide 14 highlights the strength of our balance sheet. Our CT1 ratio ended the quarter at 13.3% up from 13.1% last quarter, and positioned us well to absorb volatility in the operating environment while supporting our clients. Lance, Solid Organic Capital Generation, was partially offset by RWA increases. Our liquidity position continues to be strong with an average LCR of 126 percent, intentionally down from last quarter.

Speaker Change: If I look at the segment, I got a few here, you know, commercial banking, US banking, cat market, expensive roads, you know, mid-teams

Speaker Change: Against the revenue growth at high-fingled digits, we'll call it.

Speaker Change: and if not for a good treasury quarter, it seems like it would have been nearly impossible to achieve the consolidated balance. So, you know, the balance that we saw at the old bank level between revenue and expense growth.

Rob Sedran: Starting on slide 15 with personal and business banking, we highlight our strategic business unit results. Net income of 633 million increased 20 percent due to lower total provisions for credit losses. Deported by core business momentum, pre-provisioned pre-tax earnings were up 6 percent. Revenues of 2.6 billion were also up 6 percent, helped by volume growth and higher margins. Expenses of 1.4 billion were up 7 percent and included higher revenue related expenses and a software impairment charge.

Speaker Change: I guess another way of asking all our other statements, but my question is, how much of these segment expenses are cash versus a cruel, like you had some opportunistic gains in treasury and we're able to step up some investments ending a cruel, something like that.

Speaker Change: Or if there's another perspective you're not sure I'm all ears? Yeah, I would say there's a few items this quarter that that's what I reference as the puts and takes Okay, that we're both positive and negative. We did have a couple of extent items

Rob Sedran: On slide 16 we show Canadian commercial banking and wealth management, where net income and pre-provisioned pre-tax earnings were stable to a year ago. Revenues of 1.4 billion were up 7 percent, driven by strong wealth management growth of 15 percent, with higher average fee-based assets on both increased client activity and market appreciation. This was partially offset by commercial banking revenue which declined marginally. Expenses increased 13 percent from a year ago, mainly from higher compensation linked to the strong wealth management revenues and increased spending on strategic initiatives. Additional detail on our combined Canadian personal and commercial banking franchise have been included in the appendix.

Speaker Change: that we show on slide 13, we expand slide in aggregate of 65 million. One was in the first business bank.

Speaker Change: 1-Mission Capital Markets

Speaker Change: and those would be the two that I would call out that sort of at least.

Speaker Change: I would twin them, again some of the unusual revenue from Treasury this quarter. On an overall basis, there's 60 basis points of positive operating leverage. We're happy to have that streak continue, but we are trying to manage the bank.

Speaker Change: We better visibility as best we can get it to deliver that operating lever. So the other bigger pieces, the revenues were strong.

Speaker Change: and when the revenues are strong and particularly from where the revenues are coming.

Speaker Change: You do end up with some of the performance based compensation and variable expenses coming along for the ride.

Speaker Change: Yeah, okay, no, I just wanted to give a sense of how you can be so nimble, not from a Skeptical standpoint, but just appreciate that dynamic more and go forward to basis. Thanks.

Rob Sedran: Turning to US commercial banking and wealth management on slide 17, net income of US 163 million was up significantly from the prior year, mainly due to lower loan loss provisions in the office portfolio. Revenues were up 6 percent, with non-interest income up 28 percent, mainly from strong syndication activity, as well as market performance and wealth, partly offset by a 3 percent decline in net interest income. Expenses were up 19 percent, reflecting performance based compensation as well as continued investments to grow our business and further build infrastructure to support that growth, aligned with regulatory expectations.

Speaker Change: Thank you. I'll follow in question if there are many grown-in, some Scottish bank please go ahead.

Speaker Change: Just a few questions on credit in terms of clarification, the sequential growth on the credit card side.

Speaker Change: I'm not sure how much of that is the feasibility, I assume some of that is travel ramps up, but I just wanted to check if there's something there beyond feasibility and broader questions it's in terms of me calling on what e-brain mask just in terms of the health of

Rob Sedran: Turning to slide 18 in our capital markets and BFS segment, net income of 476 million was down 4 percent year over year. Revenues of 1.5 billion were up 9 percent as we continue to earn through the impact of federal budget changes affecting dividends received. Strong results across our global markets and direct financial services businesses were partly offset by lower advisory revenue. Expenses of 770 million were up 14 percent, and included the impact of higher performance based compensation linked to the stronger revenues, and the charge taken in connection with the industry-wide record keeping investigations being conducted in the United States.

Speaker Change: You're credit card captain and you see any trends there and he signs it's a stress in that product in particular.

Many: Yeah, thank you, many. So yeah, I would say it is a seasonality and there's nothing else really to call out.

Speaker Change: It's, I would say, still a modest increase that we're seeing there. And then overall from a health perspective on the credit card book, we do feel very confident with the credit quality of our book. We do see increases and we do think that is a reflection of where we are in economic environment.

Rob Sedran: Slide 19 reflects the results of the corporate and other business unit, which shows net income of 96 million compared with a net loss of 98 million in the prior year, driven by higher market-related treasury revenues and higher revenues from CIDC Caribbean. This quarter treasury benefited from the parameter update in addition to episodic market-related gains, for a total of roughly 90 million in revenue, and you. It's our preference to be closer to zero in this segment since it gives us and you a better reflection of business line performance. So given that, we are not changing our guidance of a loss of between zero and 50 million, but we do expect to be closer to zero in the coming quarter.

Speaker Change: But if you look into a little bit more detail, utilisation rates, revolve rates, payment rates, all of those are very strong and compare favorably to where we were pre-pandemic. So again, speaking to a good credit quality and good resilience in the book against macroeconomic backdrop.

Frank: Thanks for that. And then, Frank, just a question about how we should view the renewal wave. You know, obviously it was a bigger concern before we saw Rape Cud's happening.

Speaker Change: How worried should we be about to renovate and can we say it's an issue that's in the past or is it more nuanced about it in your business?

Rob Sedran: Let me close with the three takeaways I started with first the underlying drivers of our results continue to reflect strong and consistent execution of our client focus strategy and positive momentum across our bank. Second, we continue to manage expenses to sustain positive operating leverage by focusing our investments and driving further efficiency, including through the use of AI. And third, our discipline resource allocation approach allows us to balance volume and margin, support our clients and drive sustainable shareholder value.

Frank: So we are still watching that closely, of course, and it's still in our presentation in the appendix. We did update our disclosures.

Frank: and what we did was we reflected that interest rates have come down so we now provide a 5% and a 6% scenario. And we continue to believe that renewal rates do provide some...

Frank: Discomfort to clients and yes they are higher but overall they are very manageable and if you see I think it's on slide 41

Frank Guse: With that, I'll turn it over to Frank. Thank you Rob.

Frank Guse: Good morning, everyone. This quarter, our credit portfolios performed well and loan losses remain moderate reflecting the diversified nature of our portfolio of strategic efforts of building strong client relationships and focus on working proactively with those clients experiencing financial stress. We continue to monitor our portfolio closely and focus on reaching out early to pre delinquent clients. In addition, we've made significant progress on downsizing the impaired balances of our US office. Our strong allowance coverage reflects our prudent management approach against uncertainties that continue to exist in the macroeconomic outlook.

Speaker Change: In terms of net income, more in terms of income for all clients that we see at originations, the average increases peak at around 2%.

Speaker Change: in that 5% scenario, and there would be in 26. So overall, I'll ever say we're watching it closely, and we're not calling it over, but we also believe it continues to be quite manageable.

Speaker Change: Thanks for watching.

Speaker Change: Thank you.

Speaker Change: Following question is some dog young from Desjardins Capital Market. Please go ahead.

Sumit Malhotra: I get morning and thanks for taking my question. Victor, you mentioned a bunch of times just premium and I guess the question is, what needs to happen to get back to the 16% plus our new Mexican kind of itemized.

Frank Guse: Turning to slide 23, our total provision for credit losses was 483 million in Q3 compared to 514 million last quarter, with our allowance remaining flat quarter over quarter. Our performing provision was 79 million this quarter driven by both migration and changes to our economic outlook in the retail and business and government portfolios. Provisions on impaired loans was 404 million down 43 million quarter over quarter. This was due to lower provisions in the US commercial portfolio, partially offset by higher right off in retail, as well as increased provisions in Canadian commercial and capital markets.

Speaker Change: and some of those items and whether it's credit, expenses, capital, and then how long do you think it takes to get back there?

Victor: So, it's a good question Doug, good morning to you. When we had our investor today, we outlined a strategy that was targeting an ROE of 16% plus at the time when the regulatory GT1 requirement was 11 and a half since that time it is going up. If you actually look at it on a like-for-like basis, that number would be 14 and a half.

Frank Guse: Turning to slide 24, total bank impaired PCL this quarter was down to five basis points with a few offsetting movements across the business units. In personal and business banking, our impaired PCL trended slightly higher as we guided to last quarter. We anticipate PCLs to remain elevated into Q4. Our business and government portfolios collectively performed very well with impaired provisions down 71 million this quarter, largely driven by strong performance in US commercial banking.

Victor: Now, we're not abandoning our goal of getting to a more premium R-E. You know, we've signed Improvement Discoordered of 14%.

Victor: And the question is how do you get there? One way and the primary way to get there is to build deeper and more meaningful client relationships.

Victor: which by definition, have a premium, are we particularly when you have a balance with money in and money out. So not as credit intensive in our affluent strategy, if you actually did all the math, that is the most premium, are we segment when you look at that business and that business done well.

Frank Guse: Both Canadian commercial and capital markets portfolio experience an increase in impaired PCLs. We do expect occasional episodic events in these portfolios and are comfortable just as not indicates systemic or sectoral risk. US commercial impaired PCL has seen improvements over the past few quarters with lower provisions in the office sector. Consisting with our past guidance, we do not expect the high level of losses we previously experienced to repeat. We remain comfortable with our full year mid 30th guidance for fiscal 20th.

Victor: The second piece is just the connectivity across our SPUs, our personal bank working with our capital markets business on FX, our commercial bank working with our wealth management business on making sure that we can manage the wealth of our clients and our entrepreneurs. All of those things are our only enhancing.

Speaker Change: The second thing is, you know, operating our CEG1 in the 12 and a half plus range. That's really our goal. Today we're at 13-3, we've announced the buyback, we think that over time, that will be our only enhancing.

Frank Guse: Kour, by 25 summarizes our growth impaired loans and formations. Growth impaired loans were down two basis points this quarter, mainly due to the disposition of US office loans, partially offset by an increase in Canadian residential mortgages.

Speaker Change: And then finally, we've made some real significant investments in technology over the last number of years. I think you've all been with us through that journey and our goal now is to scale those investments.

Speaker Change: to ensure that investments that we've made.

Frank Guse: Like 26 summarizers, the net write-offs in any plus-dadi-linquency rates of our Canadian consumer portfolios. An unemployment remains elevated and as clients continue to navigate this macroeconomic environment, our net write-off ratio has increased by three basis points. While net write-offs in credit cards and unsecured products are higher this quarter, we have seen the link-on-c rates decreasing for these products. We remain comfortable with the overall credit quality of these portfolios.

Speaker Change: Continuing to deliver real returns for our shareholders and with that, I think you work your way toward a better and better R-O-O-E number, a more premium R-O-O-E number over time, and doing it in a way that's consistent without volatility and meeting your expectations quarter in, quarter out, fiscal year in, fiscal year of.

Speaker Change: And is there one area you listen to or am and I appreciate all of that.

Speaker Change: The details here is there one area that you think is more creative to that early and I mean is this a five year journey and I get it that it's a hard question to take the answer in terms of time and given all the different movie pieces. But when you think back and look at the strategy that you've been doing this internally, like is this a five year timeframe or is this?

Frank Guse: Now mortgage portfolio, we continue to see positive trends in negatively amortizing mortgages. Balances were down from 38 billion in Q1 to 28 billion this quarter, impacting over 19,000 mortgages. Even with the help of two rate cards seen this past quarter, clients are continuing to voluntarily increase payments. Overall, we do not expect material losses from our real estate secured lending portfolio.

Speaker Change: See you guys.

Speaker Change: Look, it's a medium-term time-frame, clearly, every one of our business leaders at CIBC is focused and delivering a premium RW. You can go through every single business unit.

Frank Guse: In closing, we continue to manage through the current credit cycle with strong third quarter loan loss performance. As mentioned, we remain comfortable with our full-year guidance of mid-30s for impaired PCLs, and we will continue to proactively assess our portfolios and stay engaged with our clients. Our strong allowance coverage allows us to respond to any changes in the macro environment.

Speaker Change: I think what we need to do overall is to continue to simplify our business, simplify our processes, get some of the grit out of our cost base so that we can actually use that and bring that down to the bottom line for our shareholders.

Speaker Change: So, the business leaders are focused on are we, you can ask anyone of them and they'll tell you that that's what their goal is, is to generate capital and to generate...

Operator: With that, I will now turn the call back to the operator. Thank you.

Speaker Change: Returns in excess of their cost of capital, and then managing the business for connectivity, but managing the business for less friction, I think, over time, we'll deliver those results. And quite frankly, starting to see that in our next ratio as well, and our goal on delivering positive operating leverage pretty consistently.

Operator: Please press star one if you have a question. There will be a brief pass, more participants, for just a few questions. We thank you for your patience.

Ebrahim Poonawala: The first question is from Hibaheim Punawan from Bank of America. Please go ahead.

Speaker Change: Thank you. Thank you.

Speaker Change: Thank you. Following question is some Mario Mandonka from TD Security. Please go ahead.

Victor Dodig: Good morning. Maybe going back with two year old clean remarks around sentiment improving pipeline strong in Canada. Give us a sense of how do we move past the concerns around higher rates, impacting the Canadian consumer, housing market, and economic activity and things looking on the other side of that. I would love to be effective as you talk to your bankers, clients, around how likely it is that we do see the GDP debone next year. And maybe Frank would love your perspective on how that informs resolving in your outlook on credit. Thank you.

Mario Mandonka: How long this runway is? How many years left of this, let's say, elevated spending negative operating leverage, before missions accomplished, you can start to grow again in the U.S. I mean, grow pre-tax supervision profit because I see that NNN come was up this quarter.

Speaker Change: Good morning, Mario. Thanks for the question. So our expense growth, as you said, is part of a long-term strategy. It's continued investment.

Speaker Change: and our growth initiatives as well as in our infrastructure to drive client experience.

Victor Dodig: Morning, Hibaheim. Thank you for your question. I would say that we're in the transition to getting to a better place. You know, we've only had one rate cut, so I think that sentiment will continue to prove both on the consumer side, as well as on the business side, as we continue to see more and more relief, which we are expecting both in Canada and the United States. I think our commercial clients are feeling more buoyant.

Speaker Change: Bouncy enhancing our systems and technology aligned with both our business aspirations and regulatory expectations. And this quarter, it's about 50-50 between growth and performance-related expenses. And the other half being more related to our infrastructure build and sort of normal course growth, this quarter in particular.

Victor Dodig: I think our retail clients are consumer clients are feeling a little more tentative when it comes to borrowing. But with two or three rate cuts, and you know, five or fixed mortgages getting to a better rate. Price Point, maybe slightly below 4%, I think you'll see that sentiment become more solidified and we would see that as encouraging for the business going forward. Frank? Yeah, and Ebrahim, thanks for the question. From a credit perspective, we continue to maintain a prudent outlook on credit performance overall.

Speaker Change: Harry

Harry: I have your project delivery.

Harry: Tine Table, and so you see that in our results right now, we expect that to moderate.

Harry: and Quarter On Quarter, we're expecting a more like a flat expense number at Q4 over Q3.

Harry: But it is a longer term.

Harry: I journey, I think we've got certainly a number of quarters in front of us where we will continue on that pace of investment, but our objective.

Victor: Over time, I would echo Victor's comment over a median term horizon to get to that place where we are ultimately generating a positive operating leverage.

Victor Dodig: I think unemployment continues to be a headwind for a little while. It's very hard to say. When exactly that will peak and get better, we don't expect it to go out dramatically and that's what you see in our outlook and in our provisioning, but we continue to expect this to be a headwind. And then over time, interest rates will have a positive impact and will mitigate some of that pressures, but that will lagging will be lagging a little bit as well.

Speaker Change: and it'll require some level of constructive markets, obviously credit demand. Industry White has been lower, we are growing faster in CNI which is a...

Speaker Change: and strategic focus of ours. At the same time we're still pivoting on the commercial real estate side. It's still a very important business for us.

Speaker Change: but given the steps that we've taken in the portfolio, particularly around institutional and office.

Speaker Change: That's been a bit of a headwind to overall loan growth in the U.S. That'll take a few quarters to play out, but we expect to resume.

Victor Dodig: So, as I said, more cautious or still prudent outlook on credit, but we also don't expect any material increase or incentive increases in those portfolios. But I just want to follow up on capital so you announced the buyback or authorization on that, but Victor may also sell a lot of time in terms of capital and the patients, given the sense of the opportunity set ahead of you in terms of going off the group in Canada, there being a bunch of bills announced, if there are any dislocations that create that opportunity.

Speaker Change: wrote going forward in the loan book and then continue to invest in our wealth management platform, making that a bigger part of the overall business, all of that.

Speaker Change: should drive better revenue growth over time and drive towards that operating leverage target.

Speaker Change: and maybe slightly different. I think going this might be best for Robert. The several banks have reported this quarter that they're treasury.

Speaker Change: Activities were helpful to the NII and...

Victor Dodig: As well as in the U.S, that some of the pressure on the regional banks, are you doing more to private to gain market share and that could at some point, would you look at an organic opportunity as well? Thanks. Sure, Ian. So, just to clarify, if there were two cuts, not one cut, there's Jeff Lace reminded me, so thank you, Jeff. Now, look, on capital, our focus has been on building capital organically and delivering a premium ROE.

Robert: In a form of what I said, that statement, although helpful, is somewhat opaque to me. I'm not really sure what that means.

Speaker Change: What would be helpful then if you could address this in two ways. First, describe.

Speaker Change: DB from the example, what that is.

Speaker Change: and then secondly, the conditions that were in place in the quarter that led several banks to benefit from charter activities, those are the two things that they can understand.

Victor Dodig: And, you know, we're pleased with the results that we've been delivering so far. We're not going to rest on our laurels, as I mentioned in my remarks. We're going to continue executing against a strategy we've laid out, which we believe will generate capital, and we believe will generate a premium ROE. So, as we think about capital deployment and capital allocation, we as a team spend a great deal of time focusing first and foremost on organic growth and our business and how we can help our clients realize their growth ambitions by using our balance sheet prudently and working with them.

Rob: Good morning, Mary. That's Rob, so I obviously can't speak to the other banks, but I can't say in terms of ours. It's a number of things that add up to the roughly at 90 odd million that I called out in my prepared remarks.

Rob: So, first starters rates did come down during the period and we're talking about a balance sheet that has a trillion dollars on each side of it and our treasury is active daily in terms of positioning and hedging that balance sheet.

Rob: of effectively and so from an execution perspective they saw some opportunities and there was a benefit as rates were falling.

Victor Dodig: So, that remains focus number one. I think, as you've seen in my remarks in the Canadian commercial landscape and the private economy of Canada, you're starting to see sentiment improve. But we need more rate cuts, more clarity, a US election that gets behind us for people to see their confidence bolstered. I think in the capital markets business, you're starting to see constructive view. In our US business, what you're seeing is a shift, and I'm happy to have Sean talk about this shift from commercial real estate to CNI and growing with our clients.

Rob: and they took advantage of that. There's also, in any given quarter, you're going to get a series of market-related sort of esoteric items that matter only to treasures, things like, you know, hedge ineffectiveness and extinguishment accounting and all these kind of things.

Rob: that were also moved in the right direction for us this quarter.

Rob: and in our case, specifically we also had the reevaluation of a funding vehicle or a parameter update on a funding vehicle that added another 30 odd million to our revenues. So it was a series of things that were going in the right direction from a Treasury perspective, and so difficult to call out any one individual thing as the reason.

Victor Dodig: We're seeing that sentiment shift as well. Second priority is dividend growth. We will grow our dividends as we grow our earnings. We're going to announce those once a year as we've said to you earlier this year. Third is Share Buyback. So we've actually activated the Share Buyback. We believe there's an opportunity for us to both grow our earnings and deploy our capital prudently by returning capital to our shareholders. And the last piece is around opportunistic tuck-in M&A.

Rob: but I will say when Rachel moving and we are positioning ourselves in that environment.

Rob: Opportunities can present themselves.

Rob: and we took advantage of it. So it's very much in keeping with the strategy of the Treasury to try to keep the noise down as best as possible and keep it over the longer term, which is why I don't know that I would want to run rate the numbers that you saw this quarter, but the opportunities were there.

Victor Dodig: We are leading an organic growth strategy first and foremost. It is going to deliver that premium ROE. It is going to create capital for our shareholders. And we believe it will deliver strong share price performance over time. Thank you.

Speaker Change: Thank you.

Speaker Change: Following question is from John Haken, from Jeff Reef, please go ahead.

John Haken: Good morning. Frank, just a couple of quick clarifications on the commercial real estate exposure and I apologize I had to jump on and off so if you already answered this just the all of me and tell me to look at the transcript.

Matthew Lee: Following question is on Matthew Lee from Can I go to New York? Please go ahead. Good morning, guys. Thanks for taking my question. Maybe first on the Canadian banking loan growth side. Deposit growth was 5%, loan growth was just one. Is that a function of being more selective with customers or are there maybe some other person takes to consider there? Good morning, Matthew. Thanks for the question. I'll take it and I'll speak mostly to the personal side.

Speaker Change: On site 42, you mentioned the watch list, and you expect to see some new inflow. Is that additional loans onto the watch list? Or transition from the watch list onto gross impaired?

Speaker Change: Well, I think it is a little bit of both. We have seen very low, very strong performance. We have seen, goes and paid loan ratios as you see on the slide actually going down and we are quite pleased with those results.

Matthew Lee: I'm happy to have John speak to the commercial side of Canadian banking. I'll just remind everybody we have a very clear strategy. Victor spoke about this for the whole bank. It's the same in our personal bank. We have a focus strategy. We've always talked about building a relationship oriented bank. We're building a relationship oriented bank of the future. And that means selecting certain clients who need a deeper relationship and value a deeper relationship with the bank, winning with those clients, having the best solutions, leading with differentiated advice, leveraging our data and analytics and leveraging our imperial platform, and our digital capabilities to build deeper relationships with those clients.

Speaker Change: But what we're calling out here is in general, as we've said in previous quarters, we've put the worst behind us, but we do not think that the stress we've seen in the US office market as the market overall is over yet.

Speaker Change: As I said in my prepared remarks, the mayor missed. We are not expecting any of the large losses. We have seen previously to re-occur, but what we are saying here is there could be some that will still come.

Speaker Change: Thanks, Frank, and as you guys discussed, as you mentioned at the court volume, there was some disposition in this quarter. Can you give us a sense of whether or not you were in a game of losses associated with those dispositions?

Matthew Lee: And we're digitizing the business to drive efficiency and the front lines in the back end. That's our strategy. And we've talked about what that strategy will deliver. We believe that strategy will deliver aligned with Victor's comments, growth, that's above market. We've talked about high single digits revenue growth in our business and we've been delivering that. Operating leverage over time. Again, we've been delivering that and improving Nick Sonaroe, which are going to help the bank's profitability overall improve.

Speaker Change #100: Yeah, so generally there is, I think we used that a couple of times a few gifts and takes on those, but we did see, and in our strong result in the US was held by that, we did see some reverse hosts.

Speaker Change #100: On some of those dispositions over on Naday, very large number, but it's certainly contributed to the very strong results we've seen in the U.S. discordor.

Matthew Lee: And so that's the strategy we've been following rather than trying to grow loans or deposit. So what is that next day today? I think what you're seeing on our balance sheet and on our income statement is a direct result of that. Yes, long growth has been slow. Overall, consumer growth has been low single digits on the loan side. When you look at Canada, we've been a bit lower than that. We've been about stable on mortgages, on a year-over-year basis.

Speaker Change #100: Great thanks Frank, appreciate it. Thanks Drone.

Speaker Change #101: Thank you.

Niger: Following question is from Niger, the Cisza, from Verges Investment Research. Please go ahead.

Niger: Thank you for the morning, Edda, some follow-up, so you're on credit. When I look on slide 38, and you've been considering the cross-up on the trip mortgage, I'm noticing there is a enough tick there in the GTA category, and wondering if you could point to any...

Matthew Lee: We've been about 1% on loans overall, as you said. But we're winning where it matters. We're winning and money in. We referenced the ethic numbers in terms of long-term net sales. On deposits, when you dig into that 5% deposit number, you'll see particularly in the last few quarters, we're starting to win and demand deposits. We're margins are higher, where relationship value is higher. And we're being more selective on the GIC fronts where it's been competitive, margins are a bit smaller.

Speaker Change #103: Specific trends are segment that's driving that fixed versus variable. Oh, and I'll occupy it or any specific images that are driving hard to notice.

Speaker Change #104: Yeah, so in general what I would call out is that we do feel quite comfortable with the credit quality of our mortgage book, as I said in my prepared remarks. We do not expect material losses from these portfolios.

Matthew Lee: And frankly, they're not that relationship oriented in terms of the business with clients. And so we're going to continue doing that. We've got an amazing team. We've got great data and technology supporting that. We're going to keep rolling tools out to understand our clients needs better and to enable our team to serve those. And we think with that, we'll continue winning with revenue and ROE. And I'm less concerned about the numbers on volumes.

Speaker Change #104: I think it's on the slide, but from a segmental perspective, invest the mortgages tend to perform favorably, compared to our occupied mortgages, what we are seeing in the books.

Matthew Lee: But as Victor said, we think volumes will accelerate as confidence comes back as we get into next year. We'll pass it on. Thanks, Arach, and thank you, Matthew. We spoken a little bit about this on prior calls. Our view of commercial lending over the last year was more cautious. So as a result, our loan growth was slower than market, and that was a conscious choice. At the same time, our loan losses are flatter down versus history, while industry loan losses have gone up.

Speaker Change #104: I think if you're looking into it and if you're segmenting it, it's probably a little bit a higher-dolink-on-c rate on variable rate mortgages, it's a lower-dolink-on-c rate on fixed rate mortgages.

Speaker Change #104: But even in that, I would say nothing concerning going on there, what we have seen is just a very, very slow market and that of course supports a little bit off or drives a little bit off the delinquency rates.

Matthew Lee: So net net, we think that's a good trade off. Going forward, we see interest rates come down. We've seen inflation, more under control, our entrepreneurs' confidence level is increasing. So we have a more constructive view of the market. But I think you'll see going forward is loan growth that is higher than what we've had in the past. Our core role of our core role is an indication of that. So as you think about next year, higher loan growth, more driven by non-real estate business, in the real estate business, it continues to remain quiet.

Hratch Panossian: That's great. I'll pass my deck. Thank you for the wing question.

Speaker Change #104: talked about our discipline approach from a volume growth perspective and even that is contributing a little bit to our delinquency rates because our denominator is not growing as much.

Speaker Change #104: And if I said we are not concerned and we do believe our credit quality is quite strong.

Speaker Change #105: If I give you a couple of metrics, I'll liquid assets or liquid assets, I'll climb forward to cover payments in average of 7 to 10 times.

Speaker Change #106: The monthly payments depending on what segments you look at, let's then want to send about our unusual clients, we will classify as high risk, meaning they have high LTVs and low...

Gabriel Dechaine: If I'm Gabriel D'Shan from National Bank Financial, please go ahead. Quick one and then a more detailed one. The tax adjustment that was backed out of earnings or adjusted earnings, can you explain that one? Is that like some sort of true up of previously recognized tab revenues? It gave good warning. It's wrong. So yes, it is exactly that. So in the first couple of quarters, we had an adjusting item in the opposite direction related to the change in the dividends received deduction legislation.

Speaker Change #106: Beacon scores, and overall, even in those delinquent mortgages, the average LSD is less than 60%.

Speaker Change #106: We are very well covered from an exposure perspective, even if you assume some moderate house price declines could still happen from here.

Speaker Change #107: Thanks, Frank, and on the bottom of retail portfolio, are you seeing any differences in terms of between homeowners and the renters? Now what I'm getting at here is...

Gabriel Dechaine: It hadn't yet been substantively enacted. And so for the first couple of quarters, we continue to recognize that through our numbers. In Q3, it was substantively enacted. And so what you see on a year-to-date basis is a zero.

Speaker Change #108: Now, our strong balance sheets for homeowners, particularly on the asset side with real estate prices being stable, is that what's helping mitigate?

Speaker Change #109: the Lincoln Feezer or quite a lot in your portfolio or is there no noticeable difference between the two rockets with weak abores?

Rob Sedran: But this quarter is the reversal of the benefit we saw in Q1 and Q2. Okay, perfect. I actually rub what I got you here. I get the message from CIBC that you're balancing revenue and expense growth and that makes sense. If I look at the segments, I got a few here, commercial banking, US banking, cap markets, expenses growth is all mid-teens against the revenue growth that's high single digits will call it.

Speaker Change #110: Well, I would say there is some differences and generally homeowners perform better and would carry less unsecured dead and would perform stronger on the unsecured dead.

Speaker Change #111: I wouldn't say it's a dramatic difference, but there is a difference there and typically our unsecured losses would not be with clients that are homeowner, so carry a mortgage with us.

Rob Sedran: And if not for a good treasury quarter, it seems like it would have been nearly impossible to achieve the consolidated balance. So the balance that we saw at the all bank level between revenue and expense growth. I guess another way of asking, well, I don't know their statements, but my question is, how much of these segment expenses are cash versus accrual? Like you had some opportunistic gains in treasury and were able to step up some investment spending accrual, something like that.

Speaker Change #112: and last question, you're on your lapoliers on page 45. The unemployment rate right now is a bit higher than your base defense assumption and it's expected to trend a bit higher. So is there potential for awkward pressure on the performing provisions next order based on where unemployment currently is?

Speaker Change #113: And as always, as you as you can appreciate a little bit of timing in those numbers, you're also looking at an average over the next 12 months, so there is a little bit of an expectation that unemployment has not yet peaked.

Rob Sedran: Or if there's another perspective you want to share, I'm all ears. Yeah, I would say there's a few items this quarter that nuts what I reference as the puts and takes gate that were both positive and negative. We did have a couple of expense items that we show on slide 13, the expense slide in aggregate of 65 million. One was in the personal and business bank. One was in capital markets. And those would be the two that I would call out that sort of at least I would twin them against some of the unusual revenue from treasury this quarter.

Speaker Change #114: and Will Trent Higher from here.

Speaker Change #115: I wouldn't speculate yet on next quarters performing allowances because there would be way too early, but unemployment is certainly one area that we are watching closely because it has been in continuous to be a headwind in the overall economy.

Speaker Change #116: How does it for me, for sure, this way?

Speaker Change #117: Thank you for following questions from Doc Omyolick from RBFECUp.org.

Rob Sedran: On an overall basis, we like the 60 basis points of positive operating leverage. We're happy to have that streak continue. But we are trying to manage the bank with better visibility as best we can get it to deliver that operating leverage. So the other bigger piece is just the revenues were strong. And when the revenues are strong and particularly from where the revenues are coming, you do end up with some of the performance based compensation and variable expenses coming along for the right. Yeah. Okay.

Speaker Change #117: Hi, thank you. I wanted to go back to Sean Bieber for a moment on the US business and I just wanted to, when I look at this suggestion that you're sort of reshaping the portfolio mix, can you maybe provide a little more color or...

Speaker Change #118: and round that and how I'm just thinking about it.

Speaker Change #119: Long Grove parameters for the model and the name is associated with that. How long I think I heard you say it's a few quarters before you're repositioned.

Rob Sedran: Now, I just wanted to give a sense of, you know, how you can be so nimble not from a skeptical standpoint, but just appreciate that dynamic more on a go forward basis. Thanks. Thank you.

Speaker Change #120: So maybe you can just give us some bit more color on how far you need to run off commercial real estate.

Speaker Change #121: and what the puts and takes are to the NIM and revenue growth in the next three quarters based on this repositioning.

Meny Grauman: I'll follow in question.

Frank Guse: It's from Meny Grauman, some scooshabank. Please go ahead. Just a few questions on credit one in terms of clarification. Sequential growth on the credit card side. I'm not sure how much of that is the seasonality. I assume some of that is travel ramps up, but I just want to check if there's something there beyond seasonality and broader question just in terms of what you bring in that, just in terms of the health of your credit card customer. Are you seeing any trends there? Any signs of stress in that product in particular? Thank you, Meny.

Dr. Co: I think should a good question, Dr. Co. So in terms of where we are on the journey.

Dr. Co: We've had, I think, a positive impact on the portfolio through the steps that we have taken over the last several quarters. I think, as I mentioned, that's going to continue to play out. Depending on what happens with the rate environment with rate cuts.

Dr. Co: We might actually see some even further payoff activity or accelerated payoff activity in this year, or report folio at the same time.

Dr. Co: We're seeing encouraging signs on the CNI side. We have seen that loan recovery start a couple quarters ago that continued.

Frank Guse: I would say it is seasonality and there's nothing else really to call out. I would say still a modest increase that we are seeing there. And then overall from a health perspective on the credit card book, we do feel very confident with the credit quality of our book. We do see increases and we do think that is a reflection of where we are in economic environment. But if you look into a little bit more detail, utilization rates, revolve rates, payment rates, all of those are very strong and compare favorably to where we were pre-pandemic. So again speaking to good credit quality and good resilience in the book against the macroeconomic backdrop. Thanks for that.

Dr. Co: this quarter and based on the level of activity of discussion that we're seeing.

Dr. Co: The pipeline is improving.

Dr. Co: We're encouraged by what we're seeing in terms of being able to deliver.

Dr. Co: on the CNI growth. So the headwind that's the area's been to overall loan growth. I think we'll just paid over time.

Dr. Co: And to say it can still take a couple of quarters as a bitterly forgiving guidance.

Dr. Co: Thanks for watching, see you next quarter but I would say overall long growth.

Dr. Co: We had grown for this quarter

Speaker Change #123: Today I expect a level of continuation of that recovery and low-end demand assuming that we get the constructive or more constructive environment over the next couple quarters on the right side.

Speaker Change #123: and the overall macro background based on our outlook.

Speaker Change #123: In terms of NIMS, we're still calling for pretty stable NIMS. We're not anticipating just having a material impact on that and that also has to do it.

Frank Guse: And then think just a question about how we should view the renewal rate. You know, obviously it was a bigger concern before we saw rate cut happening, but how worried should we be about the renewal rate and can we say that it's an issue that's in the past or is it more nuanced about it? Yeah, so we are still watching watching that closely, of course, and it's still in our presentation in the appendix.

Speaker Change #123: and the deposit franchise and what we're doing there in terms of being proactive and responsive to the rate environment as we have been, so let's up and down and so again assuming rate cut environment comes through then we're anticipating being quite responsive to that balancing the competitive environment.

Speaker Change #123: and ultimately resulting in a stable nimm outcome. So long growth probably still modest over the next little bit and stable nimm.

Frank Guse: We did update our disclosures and what we did was we reflected that interest rates have come down so we now provide a 5% and a 6% scenario. And we continue to believe that renewal rates do do provide some discomfort to clients and yes, they are higher, but overall they are very manageable. And if you see, I think it's on slide 41 in terms of net income or in terms of income for our clients that we see at originations, the average increases peak at around 2% in that 5% scenario and there would be in 26. So overall, ever said, we are watching it closely and we are not calling it over, but we also believe it continues to be quite manageable. Thank you.

Speaker Change #123: Okay, that's very helpful. Thank you, Sean, if you could remind me, when I look at your balance sheet, 36 billion or so, call it of loans.

Speaker Change #124: You can just remind me like the moon.

Speaker Change #125: How much of that is actually syndicated in, and is that, that should be an area where you can press on the gas and hit the brakes where you like. Is that changed at all? Is that part of this build or this?

Speaker Change #126: Will you say infrastructure building so on? Is that what you're changing? How you originate the loans? Or, is how you originate? And the proportion of syndicated loans that you originate more or less the same?

Speaker Change #127: You know, pretty stable in terms of what we're originating, I mean, we are at the lead age in or as soul bank on the vast majority of our loans like more than three quarters.

Doug Young: Following question is from Doug Young from Desjardins Capital Market. Please go ahead. Hi, good morning, and thanks for taking my question. Victor, you mentioned a bunch of times, just premium RWE. And I guess the question is, you know, what needs to happen to get back to the 60% plus RWE target. You can kind of itemize some of those items and whether it's credit, expenses, capital. And then how long do you think it takes to get back there?

Speaker Change #127: of our loan, so that hasn't changed. The infrastructure build is really two-fold. It's driving better clients experience.

Speaker Change #127: Elevating, we just had a wires migration, we consolidated our well-platform on to a single much more modernized platform and completed that a couple of quarters ago. We continue investing that as we bring on new capabilities.

Speaker Change #127: I'm in support of our wealth business which strategically is one that we are quite focused on and looking to grow as a proportion of the overall bank.

Speaker Change #127: So, and the other part of the infrastructure build is, you know, the regulatory environment continues to evolve, we are looking to make sure that we are keeping pace with that and so that investment continues.

Doug Young: So, it's a good question, Doug, good morning to you. When we had our investor day, we outlined a strategy that was targeting an ROE of 16% plus at the time when the regulatory CT1 requirement was 11.5% since that time it is going up. If you actually look at it on a like-for-like basis, that number would be 14.5%. Now, we're not abandoning our goal of getting to a more premium ROE. You know, we saw an improvement this quarter to 14%.

Speaker Change #127: but in terms of the origination activity, I'd say fairly stable in terms of our approach to market.

Speaker Change #127: Okay, great. Thank you. That's very helpful. I have you to follow up, but they're very technical. I'll call Geoffrey after which thank you.

Speaker Change #128: Thank you. I'll follow in question if some sort of rub move ahead, from being woke up to all markets. Please go ahead.

Doug Young: And the question is, how do you get there? One way and the primary way to get there is to build deeper, more meaningful client relationships which by definition have a premium ROE, particularly when you have a balance with money in and money out. So, not as credit intensive and our affluent strategy, if you actually did all the math, that is the most premium ROE segment when you look at that business. And that business done well.

Speaker Change #128: Ok, thank you. I am a state also with Sean. Sean.

Speaker Change #129: I look at your sub-pack, the results of this quarter in US dollars 158, a couple of years ago, this quarter, 152.

Speaker Change #130: You are doing it on similar provision levels 28 couple of years ago versus 33 million.

Doug Young: The second piece is just the connectivity across SPUs, our personal bank working with our capital markets business on FX, our commercial bank working with our wealth management business on making sure that we can manage the wealth of our clients and our entrepreneurs, all of those things are ROE enhancing. The second thing is, you know, operating our CT1 in the 12.5-plus range. That's really our goal. Today we're at 13.3, we've announced a buyback, we think that over time that will be ROE enhancing.

Speaker Change #131: This quarter, and you're doing it with a couple of quarters of improving long dynamics from a volume growth perspective, but you're also doing it with quite a number more FTE.

Speaker Change #132: My question, I guess, just to kind of, uh, Delftail from Darkland, Marius is, are we now approaching a stable kind of earnings contribution level here from the segment, and it's been a good base to work off of, to go up, number one and number two.

Speaker Change #133: Have we seen a cloud join of this FTE build or do you anticipate?

Doug Young: And then finally, we've made some real significant investments in technology over the last number of years. I think you've all been with us through that journey. And our goal now is to scale those investments, to ensure that the investments that we've made continue to deliver real returns for our shareholders. And with that, I think you work your way toward a better and better ROE number, a more premium ROE number over time.

Doug Young: And doing it in a way that's consistent without volatility and meeting your expectations quarter in, quarter out fiscal year in fiscal year out. Is there one area you listed for them? And I appreciate all the detail here. Is there one area that you think is more creative to that ROE? I mean, is this a five-year journey? And I get it that, you know, it's a hard question to answer in terms of time and given all the different moving pieces.

Speaker Change #134: and that this plan I'm for structure continued in for structure and investment require for other FTE build and then number three is this FTE build going to have revenue benefits at some stage in the future.

Speaker Change #135: Thanks for the question.

Speaker Change #136: So, look, we are driving towards, I think it's a good starting point.

Speaker Change #136: from which we expect to grow. The infrastructure investments, you know, we will be absorbing that cost as we go. Part of that is...

Speaker Change #136: on the infrastructure side, but as I said, about half of the growth and expenses.

Speaker Change #136: that we've seen this quarter, and that would have been similar, last quarter has been around growth initiatives.

Speaker Change #136: and so we expect those to start paying off over the next coming quarters and so from here we would expect growth, the investment that we're making in FTE on both infrastructure and our growth initiatives we expect to continue.

Doug Young: But when you think back and you look at the strategy that you've linked as internally, like, is this a five-year timeframe or is this sooner? Oh, look, it's a medium-term timeframe clearly. Every one of our business leaders at CIBC is focused on delivering a premium ROE. You can go through every single business unit. I think what we need to do overall as a bank is continue to simplify our business, simplify our processes, get some of the grit out of our cost base so that we can actually use that and bring that down to the bottom line for our shareholders.

Speaker Change #136: But we don't expect the same pace of expense growth going forward.

Doug Young: So the business leaders are focused on ROE. You can ask any one of them and they'll tell you that that's what their goal is. It's to generate capital and to generate returns and excess of their cost of capital and then managing the business for connectivity, but managing the business for less friction I think over time will deliver those results. And quite frankly, starting to see that in our next ratio as well and our goal on delivering positive operating leverage pretty consistent. Thank you.

Speaker Change #136: So, I think it's a good starting point and from there, I continue growth, both on the infrastructure side and on the front office side as we had grow out the components of our business in the US.

Speaker Change #137: Thank you.

Speaker Change #138: Thank you. Our last question is from the more preferred, from comrade security.

Speaker Change #139: Please go ahead.

Speaker Change #140: Yes, thanks. Almost turned to credit for Frank. Obviously there's been a repositioning of the banks US office.

Speaker Change #141: Commercial Real Estate Portfolio, but even then I'd expect.

Speaker Change #142: Some reversion to a mean and US commercial PCLs.

Speaker Change #143: How should we think about losses in that business on a more normalized basis? Like, where I'm going out with this is I fully appreciate the mid-30s and pair of PCL guidance.

Mario Mendonca: A following question is from Mario Mendonca from TD Securities. Please go ahead. [inaudible] I'm going to go ahead. I'm going to go ahead. [inaudible] That led several banks to benefit from treasure activities. Those are the two things I would like to understand.

Speaker Change #144: If I were to plug in a more normal level of losses in that business, you'd be well above the mid-30s guy. And so, bottom line, could we be looking at a pair of PCLs meaningfully above that mid-30s guidance near turn or are there some takes across other businesses that you see?

Speaker Change #145: Yeah, so we put that guidance off mid-30s for the bank out because we see a very comfortable with that guidance, and that guidance does include some episodic events, we could see once in a while in the U.S. business or in other businesses as well.

Speaker Change #146: You're absolutely right. We do not expect the very strong performance we saw in the U.S. this quarter from our credit perspective to be the new normal. And in new normal run rate, I would say a little bit higher. I mean, pre-pandemic, we saw in the mid-double digit.

Speaker Change #147: Los Rates in the US portfolio and that's probably a long term timeline or run rate.

Speaker Change #147: and then in the short term it can be a little bit higher so not giving you a precise answer here because I don't think we give FBU guidance in particular quarter or quarter.

Speaker Change #148: But it will be lower than what we've seen in the past few quarters. It may be a little bit higher than what we've seen this quarter and overall it will fit very well with an our mid 30s guidance for the full thanks.

Speaker Change #149: Okay, and then maybe turning over to Rob, just a...

Rob: When looking at expense growth at the ABC, you're going to be running at this pretty tough cop quarters because there was a real slow down of expense growth towards the end of 2023. The bank went essentially from the upper single digits to the low single digits.

Speaker Change #150: When do you keep the walk-as through your thoughts and extents drills in the context of tougher comp orders and then also operating leverage if somebody's treasured gains don't materialize as you look forward.

Speaker Change #151: Thanks for the marketing worrying. So, you know, the reason we show the expenses that we do on slide 13

Speaker Change #152: is that that's actually how we manage the expenses, right? We focus on our operating expenses and we're automatically linking.

Speaker Change #152: are investment portfolio with generating the efficiencies to help fund it and that helps keep operating leverage in view.

Speaker Change #152: and while we may not get it every quarter, we're certainly happy with the four-quarter winning streak we're on and we do start the year expecting to get operating leverage based on our plans.

Speaker Change #153: You know this year revenues have been stronger and so total expense growth has actually been higher. So I appreciate your comment on some of the comps but we've been seeing expense growth trend higher as revenues have.

Speaker Change #154: I have come in better than originally planned so when we look forward we still think that construct a mid-Single digit rather a mid-Single digit expansion growth excuse me.

Speaker Change #154: is a reasonable assumption going forward and we plan for the operating leverage and we plan to work these things against each other so that if revenues don't come in the way we are hoping they come in, we have some levers to pull to maintain that operating leverage.

Speaker Change #154: Again, we're not going to get it every quarter, but it's certainly our goal to get it annually.

Speaker Change #155: Appreciate the time.

Speaker Change #155: Thank you. That concludes the question and information. I would like to turn a meeting back over to Victor. Thank you, operator, and thank you everyone for your questions. As you heard this morning, we delivered another strong quarter while positioning our bank for further success.

Rob Sedran: Good morning, Mario. That's Rob. I obviously can't speak to the other banks, but I can't say in terms of ours. It's a number of things that add up to the roughly at 90 odd million that I called out in my prepared remarks. So, for starters, rates did come down during the period. And, you know, we're talking about a balance sheet that has a trillion dollars on each side of it. And our treasury is active daily in terms of positioning.

Victor: Our performance builds on the consistency that we've demonstrated over the past several years. And we remain committed as a leadership team, producing reliable results for all of our stakeholders across all of our businesses.

Rob Sedran: And hedging that balance sheet effectively. And so, from an execution perspective, they saw some opportunities. And there was a benefit as rates were falling. And they took advantage of that. There's also in any given quarter, you're going to get a series of market related sort of esoteric items that matter only to treasures, things like, you know, if hedging effectiveness and extinguishment accounting and all these kind of things that were also moved in the right direction for the treasury for us this quarter.

Victor: Our bank has a dedicated, experienced leadership team in place, a differentiated strategy, and a healthy balance sheet. This time I also want to acknowledge those affected by the extreme weather events in Canada and the United States.

Speaker Change #156: The CIBC team has been proactively working with our affected clients for life financial relief, advice and support. I'm very proud of our teammates that bring our purpose to life each day to strengthen the communities where we work and serve them.

Rob Sedran: And in our case, specifically, we also had the the revaluation of a funding vehicle or a parameter update on a funding vehicle that added another 30 odd million to our revenues. So it was a series of things that were going in the right direction from a treasury perspective. And so it's difficult to call out any one individual thing as the reason. But I will say when rates are moving. And we are, you know, positioning ourselves in that environment.

Speaker Change #156: In closing, I'd like to extend a thank you to our dedicated CIBC team around the world, have a good day and enjoy the rest of the summer.

Speaker Change #156: Thank you.

Speaker Change #157: The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.

Rob Sedran: Opportunities can present themselves. And we took advantage of it. So it's very much in keeping with the strategy of the treasury to try to keep the noise down as best as possible. And keep it over the longer term, which is why I don't know that I would want to run rate the numbers that you saw this quarter, but the opportunities were there. Thank you.

Speaker Change #157: [inaudible]

John Hagen: Following question is some John Hagen from Jeffries. Please go ahead. Good morning, Frank. Just a couple of quick clarifications on the commercial road state exposure. I apologize. I had to jump on and off. So if you already answered this, just yell at me and tell me to look at the transcript. On site 42, you mentioned the watch list and expect to see some new inflow. Is that additional loans onto the watch list or transition from the watch list on to gross impaired?

Speaker Change #157: [inaudible]

John Hagen: Well, I think it is a little bit of both. We have seen very low, very strong performance. We have seen gross impaired loan ratios as you see on the slide actually going down. And we are quite pleased with those results. But what we are calling out here is, in general, as we said in previous quarters, we have put the worst behind us. But we do not think that the stress we have seen in the US office market as a market overall is over yet.

John Hagen: As I said in my prepared remarks that you may have missed, we are not expecting any of the large losses we have seen previously to reoccur. But what we are saying here is there could be some that will still come. Thanks, Frank. And as you guys have discussed, as you are managing the portfolio, there were some dispositions this quarter. Can you give us a sense of whether or not there were any gains or losses associated with those dispositions?

John Hagen: Yeah, so generally there is, I think we used it a couple of times, a few gifts and takes on those, but we did see an strong result in the US was helped by that. We did see some reversals on some of those dispositions. Overall, not a very large number, but it's certainly contributed to the very strong results we've seen in the US this quarter. Great. Thanks, Frank. I appreciate it. Thanks, John. Thank you.

Nigel D'Souza: Following question is from Nigel, this is from very just investment research. Please go ahead. Thank you.

Frank Guse: Good morning. I had some follow-ups here on credit. When I look on slide 38, and you've been considering across unentered mortgages, I'm noticing there is a bit of an uptake there in the GTA category and wondering if you could point to any specific trends or segments that's driving that fixed versus variable. Oh, not occupied versus not unoccupied or any specific entities that are driving hydro entities. Yeah, so in general, what I would call out is that we do feel quite comfortable with the credit quality of our mortgage book, as I said, in my prepared remarks.

Frank Guse: We do not expect material losses from these portfolios. I think it's on the slide, but from a segment perspective, invest the mortgages tend to perform favorably compared to unoccupied mortgages that what we're seeing in the books. I think if you're looking into it, and if you're segmenting it, it's probably a little bit of higher delinquency rate on variable rate mortgages. It's a lower delinquency rate on fixed rate mortgages. But even in that, I would say nothing concerning going on there.

Frank Guse: What we have seen is just a very, very slow market, and that of course supports a little bit off or drives a little bit off the delinquency rates. Haraj talked about our discipline approach from a volume growth perspective, and even that is contributing a little bit to our delinquency rates because our denominator is not growing as much. And as such, as I said, we are not concerned, and we do believe our credit quality is quite strong.

Frank Guse: If I give you a couple of metrics, our liquid assets, our liquid assets are client sold to cover payments. It's an average of 7 to 10 times. There must be payments depending on, again, what segments you look at. Less than 1% of our undergraduate clients, we would classify as high risk, meaning they have high LTVs and low beacon scores. And overall, even in those delinquent mortgages, the average LTV is less than 60%. But we are very well covered from an exposure perspective, even if you assume some moderate house price declines could still happen from here. Thanks, Rankin.

Frank Guse: And on the bottom retail portfolio, are you seeing any differences in terms between homeowners and the renters? Now, what I'm getting at here is, you know, arch-long balance sheets for homeowners, particularly on the asset side with real estate prices being stable. Is that what's helping mitigate the liquid fees or credit losses in your portfolio, or is there no noticeable difference between the two buckets with retail borrowers? Well, I would say there is some differences, and generally homeowners perform better and would carry less on secure debt and would perform stronger on the on secure debt. I wouldn't say it's a dramatic difference, but there is a difference there, and typically our unsecured losses would not be with clients that are homeowners or carry a mortgage.

Frank Guse: And last question, you're on your Apple Lies on page 45. The unemployment rate right now is a bit higher than your basic assumption, and it's expected to trend a bit higher. So is there potential for upward pressure on the performing provisions next quarter based on where unemployment currently is? Yeah, and that's always as you as you can appreciate a little bit of timing in those numbers. You're also looking at an average over the next 12 months.

Frank Guse: So there is a little bit of expectation that unemployment has not yet peaked, and we'll trend higher from here. I wouldn't speculate yet on on next quarter's performing allowances because that would be way too early, but unemployment is certainly one area that we are watching closely because it has been and continues to be a headwind in the overall economy.

Operator: I thought that's it for me. Appreciate it. Thank you.

Doc O'Neillic: A following question is from Doc O'Neillic from RBC Cup Don't Lock It. Please go ahead. Hi, thank you. I wanted to go back to Sean Bieber for a moment on on the US business, and I just wanted to when I look at the suggestion that you're sort of reshaping the portfolio mix, can you maybe provide a little more color around that in? How I'm just thinking about loan growth parameters for the model and the name associated with that? How long? I think I heard you say it's a few quarters before your repositioned.

Sean Beber: So maybe you can just give us some a bit more color on how far you need to run off commercial real estate and what the puts and takes are to the name and revenue growth in the next few quarters based on on this reposition. I think the question. So in terms of where we are on the journey, we've had, I think a positive impact on the portfolio through the steps that we have taken over the last several quarters.

Sean Beber: I think as I mentioned, that's going to continue to play out. We, depending on what happens with the rate environment with rate cuts, we might actually see some even further payoff activity or accelerate payoff activity in the CRE portfolio at the same time. We're seeing encouraging signs on the CNI side. We have seen that loan recovery start a couple quarters ago that continued this quarter and based on the level of activity of discussion that we're seeing the pipeline is improving.

Sean Beber: You know, we're we're encouraged by what we're seeing in terms of being able to deliver on the CNI growth. So the headwind that's the area is then to overall loan growth. I think we'll dissipate over time. As I say, it can still take a couple of quarters. It's a bit early to be giving guidance X quarter, but I would say overall loan growth. We had growth is quarter. I'd say I expect a level of continuation of that recovery in that loan demand, assuming that we get the constructive or more constructive environment over the next couple quarters on the rate side.

Sean Beber: And the overall macro backs up based on our outlook in terms of nims. We're still calling for pretty stable nims. We're not anticipating this may having a material impact on that and that also has to do with the deposit franchise and what we're doing there in terms of being proactive and responsive to the rate environment as we have been. So that's up and down. And so again, assuming rate cut environment comes through them.

Sean Beber: We were anticipating being quite responsive to that, balancing the competitive environment and ultimately resulting in a stable nims. Nim Elkham, Lone Growth, probably still modest over the next little bit, and stable Nim. Okay, that's very helpful. Thank you, Sean. If you could remind me, when I look at your balance sheets, 36 billion or so, call it of loans. You just remind me, how much of that is actually syndicated? And is that that should be an area where you can press on the gas and hit the brakes or do you like?

Sean Beber: Is that changed at all? Is that part of this build or this, when you say infrastructure build and so on, is that what you're changing, how you, how you originate the loans, or is, is how you originate and the proportion of syndicated loans that you originate more or less the same. And pretty stable in terms of what we're originating. I mean, we are either the lead agent or a soul bank on the vast majority of our loans, like more than three quarters of our loan.

Sean Beber: So that hasn't changed the infrastructure build is really twofold. It's driving better client experience, elevating. We just had a wires migration. We consolidated our wealth platform onto a single much more modernized platform. We completed that a couple of quarters. Years ago, we continue to invest in that as we bring on new capabilities in support of our wealth business, which strategically is one that we are quite focused on and looking to grow as a proportion of the overall bank.

Sean Beber: So in the other part of the infrastructure build is, you know, the regulatory environment continues to evolve. We are looking to make sure that we are keeping pace with that and so that investment continues. But in terms of the the origination activity, I'd say fairly stable in terms of our approach to market. Okay. Great. Thank you. That's very helpful. I have a few follow-ups, but they're very technical.

Operator: I'll call Jeff afterwards. Thank you.

Sohrab Movahedi: I'll follow in question if I'm so rabble over honey from BMO capital markets. Please go ahead. Okay.

Sean Beber: Thank you. I'm going to stay also with Sean. Sean, I look at your sub pack. The results this quarter in US dollars 158 a couple of years ago, this quarter 152. You are doing it on similar provision levels 28 a couple of years ago versus 33 million this quarter. And you're doing it with a couple of quarters of improving loan dynamics from a volume growth perspective, but you're also doing it with quite a number more FTE.

Sean Beber: My question, I guess, just to kind of dovetail from darkland areas is, are we now approaching a stable kind of earnings contribution level here from the segment and is this a good base to work off of to go up number one and number two. Have we seen a plateauing of this FTE build or do you anticipate that this kind of infrastructure continued infrastructure and best will require further FTE build and then number three is this FTE build going to have revenue benefits at some stage in the future.

Sean Beber: That's right, thanks for the question. So look, we are driving towards, I think, a good starting point from which we expect to grow. The infrastructure investment, you know, we will be absorbing that cost as we go. Part of that is on the infrastructure side, but as I said, about half of the growth and expenses that we've seen at this quarter and that would have been similar last quarter has been around growth initiatives.

Sean Beber: And so we expect those to start paying off over the next, you know, the coming quarters. And so from here, we would expect growth. The investment that we're making in FTE on both infrastructure and our growth initiatives, we expect to continue, but we don't expect the same pace of expense growth going forward. So I think it's a good starting point. And from there, continue growth. And both on the infrastructure side and on the front office side, as we had grow out the components of our business in the US.

Frank Guse: Thank you. Our last question is from the more person from comrades securities. Please go ahead. Yeah, thanks. I'll turn to credit for Frank. Obviously, there's been a repositioning of the banks, US office, commercial real estate portfolio, but even then I'd expect some reversion to a mean in US commercial PCL. So how should we think about losses in that business on a more normalized basis like where I'm going at with this is I fully appreciate the mid 30s impaired PCL guidance.

Frank Guse: But if I were to plug in a more normal level of losses in that business, you'd be well above the mid 30s guidance. So bottom line, like, could we be looking at and pair PCL is meaningfully above that mid 30s guidance near term or are there some takes across other businesses that you see. Yeah, so we put that guidance off mid 30s for the bank out because we feel very comfortable with that guidance and that guidance does include some episodic events that we could see once in a while in the US business or in other businesses as well.

Frank Guse: You're absolutely right. We do not expect the very strong performance we saw in the US this quarter from a credit perspective to be the new normal and a new normal run rate would be, I would say, a little bit higher. I mean, pre pandemic, we saw in the mid double digit loss rates in the US portfolio. And that's probably a longer term timeline or run rate. And then in the shorter term, it can be a little bit higher.

Frank Guse: So not giving you precise answer here because I don't think we give SBU guidance in particular quarter over quarter. But it will be lower than what we've seen in the past few quarters. It may be a little bit higher than what we've seen this quarter and overall it will fit very well within our mid 30s guidance for the full bank.

Rob Sedran: Okay. And then maybe maybe turning over to Rob, just when looking at expense growth at the IBC, you're going to be running into some pretty tough comp quarters because there was a real slowdown of expense growth towards the end of 2023, the bank went essentially from the upper single digits to low single digits. One of the people walking through your thoughts on expense growth in the context of tougher comp quarters and then also operating leverage if somebody's treasure gains don't materialize as you look forward.

Rob Sedran: Thanks, Lamar, good morning. So you know, the reason we show the expenses that we do on slide 13 is that that's actually how we manage the expenses, right? We focus on our operating expenses and we're thematically linking our investment portfolio with generating the efficiencies to help fund it and that helps keep operating leverage in view. And while we may not get it every quarter, we're certainly happy with the four quarter winning streak we're on and we do start the year expecting to get operating leverage based on our plans.

Rob Sedran: Now this year revenues have been stronger and so total expense growth has actually been higher. So I appreciate your comment on on some of the comps but we've been seeing expense growth trend higher as revenues have come in better than originally planned. So, you know, when we look forward, we still think that construct of mid single digit revenue, a mid single digit expense growth excuse me is a reasonable assumption going forward and we plan for we plan for the operating leverage and we plan to, you know, work these things against each other so that if revenues don't come in the way we are hoping they come in, we have some levers to pull to maintain that operating leverage. Again, we're not going to get it every quarter, but it's certainly our goal to get it annually. Appreciate the time.

Operator: Thank you.

Victor Dodig: That concludes the question and info session. I would like to turn the meeting back over to Victor. Thank you operator and thank you everyone for your questions. As you heard this morning, we delivered another strong quarter while positioning our bank for further success. Our performance builds on the consistency that we've demonstrated over the past several years and we remain committed as a leadership team to producing reliable results for all of our stakeholders across all of our businesses.

Victor Dodig: Our bank has a dedicated, experienced leadership team in place, a differentiated strategy and a healthy balance sheet. This time I also want to acknowledge those affected by the extreme weather events in Canada and the United States. The CIBC team has been proactively working with our affected clients to provide financial relief, advice, and support. I'm very proud of our teammates that bring our purpose to life each day to strengthen the communities where we work and serve them.

Victor Dodig: In closing, I'd like to extend a thank you to our dedicated CIBC team around the world, have a good day, and enjoy the rest of the summer. Thank you.

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