Q3 2024 Canadian Imperial Bank of Commerce Earnings Call

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Operator: Good morning and welcome to the CIBC quarterly financial revolves call. Please be advised that this call is being recorded.

Jeff Weiss: Good morning and welcome to the CIBC Quarterly Financial Results call. Please be advised that this call is being recorded. I would like to turn a meaning over to Jeff Weiss, Senior Vice President and Vester Relations. Please go ahead, Jeff.

Geoff Weiss: I would not like to turn a meeting over to Geoff Weiss, Senior Vice President and Vester Relations. Please go ahead, Geoff.

Geoff Weiss: Thank you and good morning.

Geoff Weiss: 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, Capitol Markets and Direct Financial Services, Jon Hountalas, Canadian Banking, and Hratch Panossian, Personal and Business Banking. They're all available to take questions following the prepared remarks.

Jeff 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 and 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 Huntales, Canadian Banking, and Rats Pernosian, Personal and Business Banking. They're all available to take questions following the prepared remarks.

Geoff Weiss: As noted on slide two of our investor presentation, our comments may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results may differ materially. I would also remind listeners that the bank uses non-GAAP 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: As noted on slide two of our investor presentation, our comments may contain forward-looking statements which involve assumptions and have inherent risks and uncertainties.

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.

Geoff Weiss: With that, I'll now turn the call over to Victor.

Victor Dodig: Thank you, Geoff.

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

Victor Dodig: 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 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 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. Our performance is supported by record earnings underpin by continued resilience in our credit performance.

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.

Victor: Our core results were strong again this quarter, demonstrating continued momentum and consistency and execution while positioning our bank for further relative performance.

Victor: 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, underpinned by continued resilience in our credit performance.

Victor Dodig: 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% CT1 ratio and a 126% LCR, both well above regulatory and internal minimums. This also gives us confidence to announce a normal course issue or 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.

Robin Frank: Our strong 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% CG1 ratio and a 126% LCR both well above regulatory and internal minimums.

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

Robin Frank: I just did 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.

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. 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.

Speaker Change: I'd like to highlight for you some of the areas of strength across our bank in the third quarter that I 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 trade to further strengthen our leadership position with priority client segments.

Victor Dodig: In Imperial Service, we continue to serve the needs of our Canadian mass affluent client base and deepen relationships. 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. 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 improved for another consecutive quarter and are tracking well above our fiscal year targets.

Speaker Change: and Imperial Service, we continue to serve the needs of our Canadian Mass-Affle and Client-Base and Deeper Relationships.

Speaker Change: Money in balance growth for our material 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 they're tracking well above our fiscal year targets.

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 de-emphasize certain areas of our institutional commercial real estate business. This continues to improve the overall credit quality of our US portfolio, and Frank will provide more details in his remarks.

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 climate 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.

Victor Dodig: 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.

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. I'm at further interest rate relief and strong economic growth.

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

Speaker Change: movie tour wealth platform which remains a key which remains key to our long-term growth strategy.

Speaker Change: Our Canadian wealth business is performing well, while strong equity markets have contributed to the 20% increase in 80 away from the prior year, our Canadian retail mutual fund net sales ranked number one within the Canadian bank group for the second consecutive quarter.

Speaker Change: 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.

Speaker Change: 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.

Victor Dodig: 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: to scale our teams. We added more relationship managers and target markets this quarter that are aligned with our culture and our strategy.

Speaker Change: 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.

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

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

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

Victor Dodig: Alexis. We also made 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, a 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. 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.

Speaker Change: We also made significant progress on our ambition to leverage AI as strategic enable for our bank.

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

Speaker Change: This custom built tool supports team members to improve productivity by providing access to powerful language models.

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

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

Victor Dodig: 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's much more transformative potential if it's utilized effectively.

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

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

Speaker Change: 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-town development programs.

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

Speaker Change: For the second consecutive year, CIBC received the Indigenous Reconciliation Award and the Innovation Award as part of the 2024 Employment Equity Achievement Awards.

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 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: 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.

Speaker Change: 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 call over to Rob. Thank you.

Victor Dodig: And with that, I'll now turn the call over to Rob. Thank you.

Robert Sedran: Thank you, Vector, and good morning, everyone.

Robert Sedran: I'll begin with three takeaways from our results. First, our underlying results were strong in 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-linked cost, 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.

Rob: Thank you, Victor 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.

Rob: Excluding the items I just referenced and revenue-linked costs, our operating expenses were in the mid-single digit range, which remains our guidance moving forward. And third, our balance sheet positions as well to navigate the current dynamic environment and supports our organic growth aspirations and those of our clients.

Robert 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. in his units. Adjusted EPS was $1.93 and adjusted RWE was 14%. Please turn to slide 10. Adjusted net income of $1.9 billion increased 28%. Pre-pervisioned 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.

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 that 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 our E 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, we're up 12%.

Speaker Change: Supported by improved spreading come, as well as continued growth across our fee-based businesses.

Robert Sedran: 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 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 visions for credit losses were down significantly from a year ago due to lower losses in the U.S. office portfolio. And so impaired low losses came in better than our annual guidance range.

Robert Sedran: Frank will discuss credit in detail in his presentation.

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

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

Frank: Lied 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.

Robert Sedran: 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.

Speaker Change: Canadian PNCNM 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.

Robert 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. Turning to slide 12, non-interesting income of 3.1 billion was up 17 percent from the prior year, amid growth in trading, as well as continued momentum in market-centred businesses that drove an 11 percent increase in market-related fees. Transaction-related fees were down 3 percent and represent the flip side of the NII discussion, as the decline was mainly due to the permanent shift of BA-related revenues into net interest income. By 13, highlights our balanced approach to expense management, excluding performance-based compensation linked to the stronger revenues and continued investments. Expenses grew 6 percent.

Speaker Change: In the US segment, NIMM of 342 basis points was stable to the prior quarter. As the 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, amid growth and 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.

Robert Sedran: Over the last year, we realized efficiencies while investing in our strategy. We expect expense growth to be in the mid-single-digit range for the full year, but we will manage; we will continue to manage expenses relative to revenue growth.

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

Robert Sedran: Slide 14 highlights the strength of our balance sheet. Our CET-1 ratio ended the quarter at 13.3 percent, up from 13.1 percent last quarter, and positioned us well to absorb volatility in the operating environment while supporting our clients. Collins, 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: Flight 14 highlights the strength of our balance sheet, our CT-1 ratio into the quarter at 13.3% up from 13.1% last quarter, and positions us well to absorb volatility in the operating environment while supporting our clients.

Speaker Change: Solid Organic Capital Generation was partially offset by RWA increases.

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

Robert 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-provision 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: 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-taxer and aims were up 6%. Reven use of 2.6 billion were also up 6%. Help by volume growth and higher margins.

Speaker Change: Extenses of 1.4 billion, we're up 7% and included higher revenue-related expenses and a software impairment charge.

Robert Sedran: On slide 16, we show pre-provision 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.

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

Speaker Change: Revenue's of 1.4 billion, we're up 7% driven by strong wealth management growth to 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.

Robert Sedran: Additional detail on our combined Canadian personal and commercial banking franchise has been included in the appendix.

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

Robert Sedran: Turning to U.S. commercial banking and wealth management on slide 17, 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. Revenues were up 6 percent, with non-interest income of 28 percent, mainly from strong syndication activity, as well as market performance in 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: Turning to U.S. Commercial Banking and Welp Management on slide 17.

Speaker Change: Net income of US-163 million was up significantly from the prior year, mainly due to lower low-most provisions in the office portfolio.

Speaker Change: Revenue's were up 6% with non-interest 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: Expenses were up 19% 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.

Robert Sedran: Turning to slide 18 and our capital markets and DFS 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 would 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: Turning to slide 18 and our capital markets and DFS segment.

Speaker Change: net income of 476 million was down, 4% year over year. Revenue of 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 with 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.

Robert 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 a parameter update in addition to episodic market-related gains for a total of roughly 90 million in revenue. and me. We are not changing our guidance of a loss of between 0 and 50 million, but we do expect to be closer to 0 in the coming quarter.

Speaker Change: By 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 gains 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.

Robert 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.

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. Hangover morning, everyone.

Frank Guse: With that, I'll turn it over to Frank. Thank you, Rob, and good morning, everyone. This quarter, our credit portfolios performed well, and loan losses remained moderate. Reflecting the diversified nature of our portfolio, our strategic efforts of building strong client relationships and focus on working proactively with those clients experiencing financial stress. We continue to monitor our portfolios closely and focus on reaching out early to pre-delinquent clients. In addition, we have made significant progress on downsizing the impaired balances of our US office book. Our strong allowance coverage reflects our prudent risk management approach against uncertainties that continue to exist in the macroeconomic outlook.

Frank: This quarter, our credit portfolios performed well and loan losses remain moderate. Reflecting the diversified nature of our portfolio, our strategic efforts of building strong time 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-delinquent clients. In addition, we have made significant progress on downsizing the impact balances of our U.S. office book.

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

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 write-off in retail, as well as increased provisions in Canadian commercial and capital markets. Turning to slide 24, total bank impaired PCL of this quarter was down to five basis points, with a few offsetting movements across the business units.

Frank: Turning to slide 23, our total provision for credit losses was 483 million into 3, compared to 514 million last quarter. With our allowance remaining flat quarter over quarter.

Frank: Our Performing Provision of 179, Maryandis Quarter, driven by both migration and changes to our economic outlook in the retail and business and government portfolios.

Frank: Provisions on impaired loans was 444 million, down 43 million quarter over 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 5 basis points with a few offsetting movements across the business units.

Frank Guse: 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. 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; this does not indicate systemic or sectoral risks. US commercial impaired PCL has seen improvements over the past few quarters with lower provisions in the office sector.

Frank: In personal and business banking, OMPF, PCL transit slightly higher as we guided to last quarter. We anticipate PCLs to remain elevated in 24.

Frank: Our business and government portfolio is collectively performed very well, but then pay at provisions down 71 million discorders, largely driven by strong performance in U.S. commercial banking.

Frank: Both Canadian commercial and capital markets portfolio experience and increase in impaired PFELs. We do expect occasional episodic events in these portfolios and are comfortable, this does not indicate systemic or sectoral risk.

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

Frank Guse: Consistent with our past guidance, we do not expect the high level of losses we previously experienced to repeat. We remain comfortable with our fully emit 30 guidance for fiscal 24.

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

Frank: We remain comfortable with our fully-yep mid-30s guidance for 5th-go 24.

Frank Guse: 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.

Frank: By 25 summarizes our growth in paid loans and formations.

Frank: 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 for more

Frank Guse: By 26 summarizes the net write-off and then plus daily linkancy rates of our Canadian consumer portfolios. As 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 and credit cards and unsecure products are higher this quarter, we have seen the linkancy rates decreasing for these products. We remain comfortable with the overall credit quality of these portfolios.

Frank: By 26 summarized with the net write-off and then class-stated link-in-series of all Canadian consumer portfolios

Frank: As an employment remains elevated and its claims continued to navigate this macroeconomic environment, on that right-off ratio has increased by three basis points.

Frank: While in that ride-offs in credit cards and unsecured products are higher this quarter, we have seen the Linquancy Rage decreasing for these products.

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

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.

Frank: Now mortgage portfolio we continue to see positive trends in negative, with the amortizing mortgage.

Frank: Valences were down from 38 billion in Q1 to 28 billion discordor, impacting over 19,000 mortgages.

Frank: Even with the help of two raidscads themed this past quarter, clients are continuing to voluntarily increase payments.

Frank: Overall, we do not expect material losses from our real estate secured landing portfolio.

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.

Frank: In closing, we continue to manage through the current credit cycle with strong third-quarter loan not performance.

Frank: As mentioned, we remain comfortable with our fully agitons of mid-30s for impaired PCLs and we will continue to proactively assess our portfolios and stay engaged with our clients.

Frank: Our strong allowance coverage allows us to respond to any changes in the macro environment.

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

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

Operator: Please press star one if you have a question. There will be a response while participants register for questions. We thank you for your patience.

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 thank you for your patience.

Ebrahim Poonawala: Our first question is from Hibahim Punawa from Bank of America. Please go ahead.

Speaker Change: A first question is from Hibahim Puna Wala, from Bank of America. Please go ahead.

Victor Dodig: Good morning. Maybe going back weekly, three other things: remarks around sentiment improving, pipeline strong in Canada. Give us a sense of how we move past 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 perspective as you talk to your bankers, clients around how likely it is that we do see the GDP debon next year.

Speaker Change: Good morning.

Speaker Change: Maybe going back, Victor Dodig thinks the mocks around sentiment, improving fight against strong in Canada.

Speaker Change: What do you think of like, Victor, have you moved fast?

Speaker Change: The concerns around higher rates, impacting the creating 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.

Frank Guse: And maybe thank you. We would love your perspective on how that informs resolving and your outlook on credit.

Frank: Liking, it is a BDCGDPNBone next year and maybe Frank would love your perspective on how that informs resolving in your oxygenated.

Ebrahim Poonawala: Thank you.

Victor Dodig: Morning, Hibahim. Thank you for your question. I would say that we're in the transition to getting to a better place. 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. 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 fixed mortgage is getting to a better rate.

Frank: 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...

Speaker Change: 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.

Speaker Change: 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: 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.

Speaker Change: and a 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.

Frank Guse: Frank. Yeah, and Ebrahim, thanks for the question. From a credit perspective, we continue to maintain a prudent outlook on credit performance overall. 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 opt 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: Frank

Ebrahim: Yeah, and Ebrahim, thanks for the question. From a credit perspective, we continue to maintain a Putin outlook on credit performance overall.

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.

Frank Guse: So, as I said, more cautious or still prudent outlook on credit, but we also don't expect any material increases or substantive increases in those portfolios.

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

Ebrahim Poonawala: But I just want to follow up on capital, so you announced the buyback or authorization on that. But Victor, I'm sure he's got a lot of time in terms of capital allocation, given the sense of the opportunity set ahead of you in terms of going off the growth in Canada. There've been a bunch of these announced if there are any dislocations that create that opportunity. As well as in the U.S. that some of the pressure on the visual banks are you doing more or too private to gain market share and that could at some point would you look at any organic opportunities as well.

Speaker Change: for the Centre for Increases in those portfolios.

Speaker Change: but just one follow-up on capital for you announced the buy-back or a...

Speaker Change: of Fair Exhibition on Earth.

Speaker Change: But Victor, I'm sorry, he's got a lot of time in terms of capital and occupation, he'll give us a sense of the...

Speaker Change: Opportunity set ahead of you in terms of going off a group in Canada. There have been a bunch of these announced if there are any dislocations that create that 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 be located in organic opportunities as well.

Victor Dodig: I'm sure he could have.

Geoff Weiss: So we're just a clarification. There were two cuts, not one cut, as Jeff Lacer reminded me. So thank you, Jeff.

Geoffrey: I'm sure you do him, so just a careful game, there are two cuts, not one cut is Geoffrey, sir, mine did me, so thank you Geoffrey

Victor Dodig: Now look on Capital. Our focus has been on building capital organically and delivering a premium ROE. And 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 the 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.

Speaker Change: Look, on Capitol, our focus has been on building Capitol organically.

Speaker Change: 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 ROI.

Speaker Change: So as we think about capital of deployment and capital allocation, we as a team spend a great field 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: 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 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 a constructive view.

Speaker Change: by using our balance sheet, prudently, and working with them, so that remains focused 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 to make cuts more clarity.

Speaker Change: 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.

Shawn Beber: In our U.S. business, what you're seeing is a shift. And I'm happy to have Sean talk about this shift from commercial real estate to C&I and glowing with our clients. We're seeing that sentiment shift as well.

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: 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 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.

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 Sheriff Byback, so we've actually activated the Sheriff Byback.

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

Victor Dodig: 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 ROE. It is going to create capital for our shareholders. And we believe it will deliver strong share price performance over time.

Speaker Change: And the last piece is around the 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.

Matthew Lee: Thank you. The following question is on Matthew Lee from Canacoginuity. Please go ahead.

Speaker Change: Gordon, thank you for that.

Speaker Change: Thank you for your question, if I'm matu Li from Canacoge Newt, please go ahead.

Matthew Lee: Good morning, guys. Thanks for taking my question. Maybe first on the Canadian banking loan growth side. Deposit growth is 5%; loan growth is just one. Is that a function of being more selective with customers? Or maybe some other person takes to consider there?

Unknown Executive: Good morning and welcome to the CIBC quarterly financial results call. Please be advised that this call is being recorded.

Speaker Change: Good morning, guys. Thanks for taking my questions. Maybe for some of the Canadian banking loan growth side. Deposit growth is 5% loan growth is just 1%. Is that a function of being more smacked in with customers or are there maybe some other pleasant takes to consider there?

Geoffrey Weiss: I would not like to turn a meeting over to Jeff Weiss, Senior Vice President and Vester Relations. Please go ahead, Jeff. Thank you and good morning.

Jon Hountalas: Good morning, Matthew. Thanks for the question. I'll take it, and I'll speak mostly to the personal side, and I'm happy to have Jon speak to the commercial side of Canadian banking. I've gone to personal side. 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 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, leveraging our data and analytics, and leveraging our imperial platform and our digital capabilities to build deeper relationships with those clients.

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.

Geoffrey Weiss: 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 Loose, 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. They're all available to take questions following the prepared remarks.

Speaker Change: A conduct personal side, I'll just remind everybody we have a very clear strategy.

Speaker Change: Victor spoke about this for the whole bank.

John: It's the same in our personal bank.

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.

Geoffrey Weiss: As noted on slide two of our investor presentation, our comments may contain forward-looking statements which involve assumptions and have inherent risks and uncertainties. Actual results may differ materially, 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.

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

Jon Hountalas: And we're digitizing the business to drive efficiency on the front lines and 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 sets above market. We've talked about high single that is revenue growth in our business, and we've been delivering that. Operating leverage over time. Again, we've been delivering that and improving mix and ROE, which are going to help the bank's profitability overall improve. And so that's the strategy we've been following, rather than trying to grow loans or deposits.

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 a line with Victor's comments. Growth, that's about market. We've talked about high single that is revenue growth in our business and we've been delivering that.

Victor Dodig: With that, I'll now turn the call over to Victor. Thank you, Jeff. 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 Rob Sedran, 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 performance.

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

John: And so that's the strategy we've been following, rather than trying to grow loans or the pub. So what does that meant today? I think what you're seeing on our balance sheet and on our income statement is a direct result, is that yes.

Jon Hountalas: So what is that next day today? I think what you're seeing on our balance sheet and on our income statement as a direct result is that yes, loan 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 ear over your basis. We've been about 1% on loans overall, as you said. But we're winning where it matters. We're winning in money in. We reference the ethic numbers in terms of long-term net sales on deposits.

Speaker Change: Longer has been slow, overall consumer growth has been low single of digits on the low on-site 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 more than about 1% on loans over all, as you said. But we're winning where it not is. We're winning in money in.

Victor Dodig: 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. Our performance is supported by record earnings, underpinned by continued resilience and our credit performance. Our strong 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% CT1 ratio and a 126% LCR, both well above regulatory and internal minimums.

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

Jon Hountalas: 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 where margins are higher, where relationship value is higher. And we're being more selective on the GIC front, 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. 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.

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

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

Victor Dodig: This also gives us confidence to announce a normal course issue or 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: We're margins are higher, where relationship value is higher.

Speaker Change: 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 revenue and RLE and I'm less concerned about the numbers on volumes, but I think volumes will accelerate as confidence comes back as we get into next year. That's it on John on commercial.

Jon Hountalas: And we think with that we'll continue winning with revenue and RLE. And I'm less concerned about the numbers on volumes. But, as Victor said, we think volumes will accelerate as confidence comes back as we get into next year.

Jon Hountalas: So pass it on, John. Thank you, Matthew. We spoke a little bit about this on prior calls. Our view of commercial lending over the last year was more cautious. In relation, more under control, our entrepreneurs' confidence level is increasing, so we have a more constructive view of the market. What I think you'll see going forward is long growth that is higher than what we've had in the past. Our portfolio of record growth is an indication of that. So as you think about next year, higher loan growth, more driven by non-reviewed state business, in the real estate business, it continues to remain quiet.

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: 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.

Speaker Change: 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.

Speaker Change: Going forward, we see interest rates come down, we see inflation, more under control, our entrepreneurs, confidence level is increasing. So we have a more constructive view of the market.

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 deepen relationships. 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. We're confident to our ABC 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.

Speaker Change: Well, I think you'll see going forward. It's long-goaf that is higher than what we've had in the past. A corridor over corridor, it's an indication of that. So, as you think about next year, higher-long growth, more driven by non-real estate business in the real estate business, it continues to remain quiet.

Unknown Executive: That's great.

Unknown Executive: I'll pass mine, then. Thank you for the wing question.

Speaker Change: [inaudible]

Speaker Change: So I'm going to say that's great, I'll pass mine, that's it.

Gabriel Dechaine: Is on Gabriel Dechaine from National Bank Financial? Please go ahead. Quick one and then a more detailed one. The tax adjustment that was backed out of adjusted earnings, can you find that one? Is that some sort of true-up of previously recognized tab revenues?

Speaker Change: Thank you for following question if some give me a little shame from National Bank Financial. Please go ahead.

Speaker Change: I quick went and then a, I don't know, detailed one. The tax adjustment that was back that of earnings, or adjusted earnings, can you explain that one? Is that like some sort of true up of previously recognized dead revenues?

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 de-emphasize certain areas of our institutional commercial real estate business.

Robert Sedran: It gave good morning, it's robbed. 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. It hadn't yet been substantively enacted, and so for the first couple of quarters, we continued to recognize that through our numbers. In Q3, it was substantively enacted. 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: 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 adoption legislation.

Speaker Change: 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.

Gabriel Dechaine: Okay, perfect.

Robert Sedran: 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, expensive growth is all mid-teens against the revenue growth that's high single digits, we'll call it. And if not for a good treasury quarter, it seems like it would have been nearly impossible to achieve a consolidated balance, so the balance that we saw at the all bank level, between revenue and expense growth. I guess another way of asking, or those are statements, but my question is, how much of these segment expenses are cash versus accrual?

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: Okay, perfect. I actually rub, but I got you here, you know, I get the message from CBC that your balancing revenue and expense growth and that makes sense.

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

Speaker Change: Against the revenue growth that you know high single digits will call it.

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: 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.

Speaker Change: I guess another way of asking, well, I'll have a look at the statements, but my question is, how much are these segment expenses or cash versus the cruel, like you had some opportunists against and treasury and, and we're able to, you know, step up some investment spending across something like that.

Robert Sedran: Like you had some opportunistic gains in treasury and were able to step up some investment spending accruals, something like that, 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 that's what I referenced as the puts and takes, gap that were both positive and negative. We did have a couple of expense items that we show on slide 13, the expense slide, an 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.

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: Or if they deny their perspective, you want to share? I'm all ears. Yeah, I would say there's a few items this quarter, that's what I referenced as the puts in takes. Okay, that were both positive and negative. We did have a couple of expense items.

Speaker Change: 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.

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

Victor Dodig: Moving to capital markets and direct financial services, our differentiated model delivered in 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: I would twin them against some of the unusual revenue from Treasury this quarter. 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.

Robert 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.

Speaker Change: with 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.

Robert Sedran: Yeah, okay, now I just wanted to get a sense of how you can be so nimble, not from a skeptical standpoint, but just appreciate that dynamic more on a go forward basis.

Speaker Change: Okay, now 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 for the basis. Thanks.

Victor Dodig: Justice. We also made 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, a 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.

Unknown Executive: Thanks.

Unknown Executive: Thank you.

Meny Grauman: I'll follow in question.

Meny Grauman: It's from Meny Grauman, from Scotia Bank. 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. And are you seeing any trends there? Any signs of stress in that product in particular?

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

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

Speaker Change: I'm not sure how much of that is a veganality. I assume some of that is travel and stuff, but I just want to check if there's something there beyond the veganality and broader questions is in terms of, if I'm going on what e-brain mask just in terms of this.

Speaker Change: the health of your credit card customer and you see any trends there and you find it's stress in that product in particular.

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 with the best Gen-AI Initiative Technology Award by Digital Banker. As an early adopter of AI, we continue to recognize there's much more transformative potential if it's utilized effectively. 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 Guse: Thank you, many. So, yeah, no, I would say it is seasonality, and there's nothing else really to call out. It's, 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 the economic environment. But if you look into a little bit more detailed utilization rates, revolve rates, payment rates, all of those are very strong and compare favorably to where we were pre-pandemic.

Speaker Change: Yeah, thank you, many. So yeah, no, I would say it is a feasibility and there's nothing else really to call out.

Speaker Change: It's I would say still a modest increase that we have seen there.

Speaker Change: 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 the reflection of where we are in economic environment.

Victor Dodig: Our track record of innovation extends to our commitment to removing barriers for the next generation of leaders from the Indigenous community as well. For the second consecutive year, CIBC received the Indigenous Reconciliation Award, and the Innovation Award as part of the 2024 Employment Equity Achievement Awards.

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 Guse: So again, speaking to a good credit quality and good resilience in the book against the macroeconomic backdrop.

Meny Grauman: Thanks for that.

Frank Guse: And then just a question about how we should view the renewal wave. You know, obviously it was a bigger concern before we saw a rate cut happening, but how should we be about the renewal wave? And can we say that, you know, 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, you know, presentation in the appendix. 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.

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 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: Thanks for that, and then, thanks just to the question about how we should do the renewal wave. Obviously, it was a bigger concern before we saw race cut happening.

Speaker Change: How worried should we be about the renewal wave and can you say that it's an issue that's in the past or is it more nuanced about it?

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

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

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

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 in cost, 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.

Frank Guse: And we continue to believe that renewal rates do provide some discomfort to clients, and yes, they are higher, but overall they are very manageable. And, as 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 that would be in 26. So overall, as I said, we are watching it closely, and we are not calling it over, but we also believe it continues to be quite manageable.

Speaker Change: 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

Speaker Change: 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%.

Speaker Change: in that five-thousand scenario and there would be in 26. So overall, as I said, we're watching it closely and we're not calling it over, but we also believe it continues to be quite manageable.

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 quarters on increase in net interest income, continued fee income growth, credit quality stabilization, and capital accretion with strong performance across all of our business, in his units. Adjusted EPS was $1.93 and adjusted RWE was 14%.

Unknown Executive: Thank you.

Speaker Change: Thank you.

Doug Young: Following questions from Doug Young, from the Jordan captain market, please go ahead. Hi, good morning, and thanks for taking my question. Victor, you mentioned a bunch of times, just Premium.

Speaker Change: Thank you.

Speaker Change: Following question from Doug Young, from Desjardee in Captain Market, please go ahead.

Doug Young: Hi, good morning and thanks for taking my question. Victor, you mentioned a bunch of times, just premium and I guess the question is, you know, what needs that happen to get back to the 60% plus or we target significant kind of itemized?

Victor Dodig: And I guess the question is, you know, what needs to happen to get back to the 16% plus our target, and 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?

Rob Sedran: Please turn to slide 10. Adjusted net income of $1.9 billion increased 28%, 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. Prevision 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: 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 Dodig: 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 has gone up. If you actually look at it on a like-for-like basis, that number would be 14.5.

Speaker Change: 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 R-O-O-E of 16% plus at the time when the regulatory CT1 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.

Victor Dodig: Now, we're not abandoning our goal of getting to a more premium ROE. We saw an improvement this quarter to 14%. 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 of 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. The second piece is just the connectivity across our SBUs, 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.

Speaker Change: Now, we're not abandoning our goal of getting to a more premium R-E. You know, we've saw an improvement this quarter to 14%.

Rob Sedran: Frank will discuss credit in detail in his presentation.

Speaker Change: and the question is how you get there. One way and the primary way to get there is to build deeper and more meaningful client relationships which by definition.

Rob Sedran: 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 name 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: 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.

Speaker Change: If you actually did all the math, that is the most premium or we segment when you look at that business and that business done well.

Speaker Change: 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 early enhancing.

Rob Sedran: We also saw benefit from market-related treasury revenues that added three basis points to the margin this quarter. Canadian PNC name 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. 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.

Victor Dodig: The second thing is operating our CT1 in the 12.5 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 ROE enhancing. 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.

Speaker Change: The second thing is, you know, operating our CET-1 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.

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 the investments that we've made.

Speaker Change: Continues to deliver real returns for our shareholders and with that, I think you work your way toward a better and better R-Oe number, a more premium R-Oe number over time, and doing it in a way that's consistent without volatility.

Victor Dodig: And doing it in a way that's consistent, without volatility, and meeting your expectations quarter in, quarter out, fiscal year and fiscal year out.

Rob Sedran: Turning to slide 12, non-interesting income of 3.1 billion was up 17 percent from the prior year, amid growth in trading, as well as continued momentum in market-centred businesses that drove an 11 percent increase in market-related fees. Transaction-related fees were down 3 percent and represent the flip side of the NII discussion, as the decline was mainly due to the permanent shift of BA-related revenues into net interest income. By 13, highlights our balanced approach to expense management, excluding performance-based compensation linked to the stronger revenues and continued investments expenses grew 6 percent.

Speaker Change: and meeting your expectations quarter in, quarter out, fiscal year in, fiscal year out.

Victor Dodig: Is there one area you listed for them? And I appreciate all the details. There's one area that you think is more creative to that ROE. And I mean, is this a five-year journey? And I get it that it's a hard question to answer in terms of time, given all the different moving pieces. But when you think back and you look at the strategy that you've laid out internally, is this a five-year time frame, or is this sooner? Oh, look, it's a medium-term time frame, clearly. Every one of our business leaders at CIBC is focused on delivering a premium ROE.

Speaker Change: And is there one area you listed for them, and I appreciate it.

Speaker Change: and the details and there's one area that you think is more creepy to us about our weekend.

Speaker Change: and I mean, is this a five-year journey and I get it that it's a hard question to answer in terms of time given all the different movie pieces. But when you think back and you look at the strategy that you've played there internally, is this a five-year timeframe or is this sooner?

Rob Sedran: Over the last year, we realized efficiencies while investing in our strategy. We expect expense growth to be in the mid-single-digit range for the full year, but we will manage, we will continue to manage expenses relative to revenue growth.

Speaker Change: Hello, it's a medium-term time flame clearly, every one of our business leaders at C.I.B.C. is focused and delivering a premium R-way. You can go through every single business unit.

Victor Dodig: 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. 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 access to 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.

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.

Rob Sedran: Slide 14 highlights the strength of our balance sheet. Our CET-1 ratio ended the quarter at 13.3 up from 13.1 percent last quarter and positioned us well to absorb volatility in the operating environment while supporting our clients. Dance. 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: So the business leaders are focused on our way, 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.

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, in our goal on delivering positive operating leverage pretty consistently.

Victor Dodig: And quite frankly, you're starting to see that in our next ratio as well, and our goal on delivering positive operating leverage is pretty consistent.

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-provision 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.

Mario Mendonca: Thank you. I'll follow in question is from Mario Mendonca from TD Securities. Please go ahead.

Speaker Change: Appreciate the color, thank you.

T.D.: [inaudible] T.D.

Shawn Beber: Good morning. Sean, please start with you in the US. I appreciate that the elevated expense growth is part of a longer term strategy, and I get what you're up to there. What I'd be helpful to understand is how long this runway is? Like how many years left of this? We'll say elevated spending, negative operating leverage before missions accomplished. You can start to grow again in the US. I mean, grow pre-taxed pre-position profit because I see that men's income was up this quarter.

Speaker Change #101: and you're up to there. What I'd be able to understand is

Speaker Change #102: How long this runway is, like 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 pre-production profit because I see that end-in-come was up this quarter

Rob Sedran: 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. 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 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.

Shawn Beber: 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 in our growth initiatives, as well as in our infrastructure to drive client experience, balancing and enhancing our systems and technology aligned with 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 is very normal. Of course, growth this quarter in particular had a heavier project delivery timetable. And so you see that in our results right now, we expect that to moderate, I think, quarter on quarter.

Speaker Change #102: 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 #103: and our growth initiatives as well as in our infrastructure to drive client experience.

Speaker Change #104: Bouncy enhancing our systems and technology aligned with 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 buildings, where normal course growth, this quarter in particular.

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 of 28 percent, mainly from strong syndication activity, as well as market performance in 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 #104: Harry.

Harry: and Toyota A heavier project delivery.

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

Shawn Beber: We're expecting more like a flat expense number Q4 over Q3, but it is a longer-term 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 over time. And I would echo pictures coming over a medium-term horizon to get to that place where we are ultimately generating a positive operating leverage. And it will require some level of constructive markets. Obviously, credit demand industry-wide has been lower. We are growing faster in CNI, which is a strategic focus of ours. At the same time, we're still pivoting on the commercial real estate side.

Harry: and Quarter On Quarter, we're expecting 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.

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

Rob Sedran: Turning to slide 18 and our capital markets and DFS 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.

Harry: and a little bit of a little bit of a

Victor Dodig: requires some level of constructive markets, obviously credit demand.

Victor Dodig: and the industry wife has been lower. We are growing faster in CNI which is a...

Victor Dodig: 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.

Shawn Beber: It's still a very important business for us, but given the steps that we've taken in the portfolio, particularly around institutional and office, that's been a bit of a headwind to overall loan growth in the US. That'll take a few quarters to play out, but we expect to resume growth going forward in the loan book and then continue investing our wealth management platform, making that a bigger part of the overall business. All of that should drive better revenue growth over time and drive towards that operating leverage target. Maybe slightly different.

Victor Dodig: and the given steps that we've taken in the portfolio, particularly around the institutional or in office.

Victor Dodig: Ratch.

Victor Dodig: in 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 growth 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.

Rob Sedran: Slide 19 reflects the results of the corporate another 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 a parameter update in addition to episodic market-related gains for a total of roughly 90 million in revenue.

Victor Dodig: should drive better revenue growth over time and drive towards that operating leverage target.

Robert Sedran: Going this might be best for Rob. Several banks have reported this quarter that their treasury activities were helpful to the NII. And from what I said, that statement, although helpful, is somewhat opaque to me. I'm not really sure what that means.

Speaker Change #107: and maybe play you different and they go on this might be best for Rob.

Speaker Change #108: The several banks have reported this quarter that their treasury activities were helpful to the NII and from what I said, that statement, although helpful, it's somewhat opaque to me. I'm not really sure what that means.

Frank Guse: 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 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 banks 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 With that, I'll turn it over to Frank Thank you Rob, and good morning everyone This quarter, our credit portfolios performed well and loan losses remained 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 have made significant progress on downsizing the impaired balances of our US office book Our strong allowance coverage reflects our prudent risk management approach against uncertainties that continue to exist in the macroeconomic outlook 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 write-offs in retail as well as increased provisions in Canadian commercial and capital markets Turning to slide 24, total bank impaired PCL of 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 Gradually driven by strong performance in US commercial banking Both Canadian commercial and capital markets portfolio experienced an increase in impaired PCLs We do expect occasional episodic events in these portfolios and are comfortable this does not indicate systemic or sectoral risks The US commercial impaired PCL has seen improvements over the past few quarters with lower provisions in the office sector Consistent 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 24 By 25 summarizes our growth-impaired loans and formations.

Robert Sedran: What would be helpful then if you could adjust this in two ways. First, describe maybe even with an example what that is. And then secondly, the conditions that were in place in the quarter. that led several banks to benefit from Treasury activities. Those are the two things I'd like to understand.

Speaker Change #109: What I would be helpful then, if you can adjust this in two ways. First, describe.

Speaker Change #110: Maybe even with an example, what that is?

Speaker Change #110: 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 I'd like to understand.

Robert Sedran: 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. 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 position in hedging that balance sheet effectively. And so, from an execution perspective, they saw some opportunities, and there was a benefit as rates were falling.

Speaker Change #110: Good morning, Mary, let's rock 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.

Speaker Change #111: So, first starter's 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.

Speaker Change #111: and our Treasury is active daily in terms of positioning and hedging balance sheet.

Speaker Change #111: of effectively and so from an execution perspective they saw some opportunities and there was a benefit as rates were falling.

Robert Sedran: 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 treasurers, things like, you know, if a hedging effectiveness and extinguishment accounting and all these kinds of things that were also moved in the right direction for us this quarter. And in our case, specifically, we also had 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.

Speaker Change #111: 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 a hedge in effectiveness and extinguishment accounting and all these kind of things.

Speaker Change #111: that we're also moved in the right direction for us this quarter.

Speaker Change #111: and in our case specifically we also had 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.

Robert Sedran: 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, 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.

Speaker Change #111: that we're going in the right direction from a Treasury perspective and so difficult to call out any one individual thing as the reason. But I will say when Rachel moving and we are positioning ourselves in that environment.

Speaker Change #111: Opportunities can present themselves.

Speaker Change #111: and we took advantage of it, so it's very much...

Speaker Change #111: and keeping with the strategy of the Treasury to try to keep the noise.

Speaker Change #111: Down as best as possible, and keep it over to longer term, which is why I don't know that I would want to run rate the numbers that you saw this quarter.

Speaker Change #111: but the opportunities go there.

Unknown Executive: Thank you.

John Hagen: Following question is from John Hagen from Jeffries. Please go ahead. Good morning, Frank. It's just a couple of quick clarifications on the commercial real estate 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 slide 42, you mentioned the watch list, and we expect to see some new inflow. Is that additional loans onto the watch list or transition from a watch list on to Rosenpaired? Well, I think it is a little bit of both. We have seen very low, very strong performance.

Speaker Change #112: Thank you.

Speaker Change #112: Following question is on John Haken from Jeff Reef, please go ahead.

John Haken: Good morning, Frank. It's just a couple of quick clarification on the commercial real estate exposure and I apologize that I said to jump on and off so if you already answered this, just yell at me and tell me, don't look at the transcript.

Speaker Change #114: 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 your watch list?

Frank: Well, I think it's a little bit of both. We have seen very low.

Frank Guse: We have seen close and paired 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. 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.

Speaker Change #115: Oh, there is strong performance. We have seen, of course, impaired loan ratios as you see on the slide, actually going down and we are quite pleased with those results.

Speaker Change #115: 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 a market overall is over yet.

Speaker Change #115: As I've said in my prepared remarks, you may have missed. We are not expecting any of the large losses we have seen previously to real curve. But what we're saying here is there could be some that will still come.

Frank Guse: 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? 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, and a 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.

Speaker Change #115: Thanks, Frank, and as you guys have discussed, the decision management portfolio, there was some dispositions this quarter. Can you give us a sense of whether or not they were in a game of losses associated with those dispositions?

Frank Guse: 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. Our net right-off ratio has increased by three basis points. While net right-offs in credit cards and unsecure products are higher this quarter, we have seen the frequency rates decreasing for these products. We remain comfortable with the overall credit quality of these portfolios. Now mortgage portfolio we continue to see positive trends in negatively amortizing mortgages.

Speaker Change #116: Yeah, so generally there is, I think we used it a couple of times a few different takes on those, but we did see, and how strong result in the US was held by that, we did see some reversals.

Speaker Change #117: 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 U.S. this quarter.

John Hagen: Great. Thanks, Frank. I appreciate it.

John Hagen: Thanks, John. Thank you.

Drone: Great thanks Frank, appreciate it. Thanks, Drone.

Nigel D'Souza: Following question is from Nigel D'Souza, from Veritas Investment Research. Please go ahead. Thank you. Good morning. I had some follow-ups here on credit. When I look on slide 38, and you've linked them to rates across, on the short mortgages. I'm noticing there's 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 non-unoccupied, or any specific advantages that are driving harder than the previous. Yeah, so, 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.

Speaker Change #119: Thank you.

Speaker Change #120: Following question is from Nigel De Cisza from Veritas Investment Research. Please go ahead.

Speaker Change #121: Thank you for the morning. I'd love to follow up on credit. When I look on slide 38, and you've been considering to cross on entered mortgages, I'm noticing there's...

Frank Guse: 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 #121: [inaudible]

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

Frank Guse: We do not expect material losses from these portfolios. I think it's on the slide, but from a sector segment perspective, investment. The mortgages tend to perform favorably compared to unoccupied mortgages, 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, nothing concerning going on there. What we have seen is just a very, very slow market. And that, of course, supports a little bit of, or drives a little bit of the delinquency rates.

Unknown Executive: With that, I will now turn the callback to the operator. Thank you. Please press star one. If you have a question, there will be a brief pause while participants register for questions. We thank you for your patience.

Ebrahim Poonawala: Our first question is from Abraham Puneva from Bank of America. Please go ahead. Good morning. We will be going back to the other things remarks around sentiment, improving pipeline strong in Canada. Do you have a sense of how we move past the concerns around higher rates, impacting the Canadian consumer, how to market and economic activity, and how things are looking on the other side of that. I would love to perspective, 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 and your outlook on credit. Thank you. Good morning, Abraham. Thank you for your question.

Frank Guse: 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. If I give you a couple of metrics, our liquid assets, our liquid assets, our client sold to cover payments is average of 7 to 10 times. The monthly payments, depending on, again, what segments you look at, less than 1% of our uninsured clients, we would classify as high risk, meaning they have high LTVs and low beacon scores.

Speaker Change #123: If I give you a couple of metrics our liquid assets were liquid assets all clients hold him to cover payments is an average of seven to 10 times.

Speaker Change #123: The monthly payments, depending on again, what segments, you look at less than 1% of our uninsured clients, we would classify as high risk, meaning they have high ltvs and low and beacon scores and overall I'm. Even in those are delinquent mortgages do you ever J O T V is less than 60.

Victor Dodig: I would say that we are in the transition to getting to a better place. We have only had one rate cut, so I think that sentiment will continue to improve 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. 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 five-year 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 Guse: And overall, even in those delinquent mortgages, the average LTV is less than 60%. So 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 #123: And but we are we're very well covered from from from an exposure perspective, even if you assume some some module with house price declines could still happen from here.

Frank Guse: Thanks, Rankin.

Speaker Change #124: Thanks, Frank and on the butter retail portfolio are you seeing any differences in trends between homeowners and renters and what I'm getting at here is our.

Frank Guse: And on the bottom retail portfolio, are you seeing any differences in terms of between homeowners and the renters? And what I'm getting at here is, you know, our strong balance sheets for homeowners, particularly on the outside with real estate prices being stable. So, with that, what's helping mitigate the liquid fees or credit losses in your portfolio, or is there no noticeable difference between the two buckets of retail borrowers? Well, I would say there are some differences, and generally homeowners perform better and would carry less unsecured debt and would perform stronger on the unsecured 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.

Speaker Change #125: Our strong balance sheets for homeowners, particularly on the asset side with the real estate prices being stable is that what's helping mitigate.

Frank Guse: Frank. Yeah, and Ebrahim, thanks for the question. From a credit perspective, we continue to maintain a prudent outlook on credit performance overall. 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 opt dramatically. And that's what you see in our outlook and in our provisioning. But we continue to expect this to be a headwind.

Frank Guse: And then over time, interest rates will have a positive impact and will mitigate some of that pressures. But that will be lagging a little bit as well. So as I said, more cautious or still prudent outlook on credit, but we also don't expect any material increases or substantive increases in those portfolios.

Speaker Change #126: Delinquencies or credit losses in your portfolio or is there no noticeable difference between the two buckets as our retail partners.

Speaker Change #127: I would say there is some differences and in generally homeowners performed better and would carry less unsecured debt and we'd performed stronger on the unsecured debt I Wouldnt say its a dramatic difference, but there is a difference there and typically our unsecured losses would not be.

Speaker Change #127: With clients at a homeowners carrier mortgage with us.

Frank Guse: with us.

Frank Guse: And last question, you're on your actual lives on page 45. The unemployment rate right now is a bit higher than your base case assumption, and it's expected to trend a bit higher. So is there potential for offer pressure on the performing provisions next quarter based on where unemployment currently is? Yeah, and that's always 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 expectation that unemployment has not yet peaked and we'll trend higher from here. I wouldn't speculate yet on next quarter's performing allowances because that would be way too early.

Speaker Change #128: Great and last question here on your ACA lives on page 40 45.

Speaker Change #129: Unemployment rates right now is a bit higher than your base case assumption and it's expected to trend a bit higher so is there potential upward pressure on the performing provision next quarter.

Speaker Change #130: Based on where unemployment is currently is.

Speaker Change #131: Yeah, and that's always if 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 and will trend higher from from here.

Victor Dodig: But I just want to follow up on capital so you announced the buyback or authorization on that. But Victor, I'm sure he's got a lot of time in terms of capital allocation, given the sense of the opportunity set ahead of you in terms of going off the growth in Canada. There've been a bunch of these announced. If there are any dislocations that create that opportunity, as well as in the U.S, that some of the pressure on the visual banks, are you doing more or too private to gain market share?

Speaker Change #131: I wouldn't speculate yet on next quarters are performing allowances because that would be way too early but unemployment is certainly one area that we're watching closely because it has been and continues to be.

Frank Guse: 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.

A headwind in the overall economy.

Victor Dodig: And that could at some point would you look at in organic opportunities as well? Thanks. I'm sure he could have. So we'll just declare if there were two cuts, not one cut as Jeff Lacer reminded me. So thank you, Jeff. Now look, on capital, our focus has been on building capital organically and delivering a premium ROE. And we're pleased with the results that we've been delivering so far. We're not going to rest on our laurels.

Frank Guse: Can I touch it for me to appreciate it? Thank you.

Speaker Change #132: Okay. That's it for me appreciate it.

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

Sohrab Movahedi: I'll find a way in question if I'm docomiotic from RBC Capital Markets. Please go ahead. Hi, thank you.

Darko <unk>: Hi, Thank you I wanted to go back to Shawn Beber for a moment on on the U S business and I just wanted to when I look at.

Shawn Beber: I wanted to go back to Shawn Beber for a moment on the US business, and I just wanted to, when I look at the suggestion that you're sort of reshaping the portfolio mix, and you may be providing a little more color around that. And 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 you're repositioned.

Speaker Change #134: The suggestion that you're sort of reshaping the portfolio mix.

Victor Dodig: 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.

Speaker Change #135: Can you maybe provide a little more color.

Speaker Change #136: Around that and how I should I'm just thinking about.

Speaker Change #137: Loan growth parameters for the model and the NIM associated with that.

Speaker Change #138: How long.

Speaker Change #139: I think I heard you say its a few quarters before you repositioned.

Shawn 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 this repositioning. Thanks for 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. 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, might actually see some even further payoff activity or accelerated payoff activity in the CRE portfolio.

Speaker Change #140: So maybe you can just give us some some a bit more color on you know how how far you need to run off commercial real estate.

Speaker Change #140: And what the puts and takes are to the NIM and revenue growth.

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 see an eye and and glowing with our clients. We're seeing that sentiment shift as well.

Speaker Change #141: The next few quarters based on on this repositioning.

Speaker Change #142: Thanks for the question Darko So in terms of of where we are on the journey.

Speaker Change #143: We've had a I think a positive impact on the portfolio through the steps that we've 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, we might actually see some even further payoff activity or accelerated payoff activity.

Speaker Change #143: And the CRE portfolio at the same time.

Shawn Beber: 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. We're encouraged by what we're seeing in terms of being able to deliver on the CNI growth. So the headwind that CRE has been into overall loan growth, I think will dissipate over time. I just say it can still take a couple of quarters. It's a bitterly to be giving guidance next quarter, but I would say overall loan growth.

Speaker Change #143: We're seeing encouraging signs on the C&I side, we have seen that loan recovery started a couple of quarters ago that continued this quarter and based on the level of activity or discussions that we're seeing the pipeline is improving.

Victor Dodig: 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 said to you earlier this year. Third is Share Buyback. So we've actually activated the Share Buyback. We believe that there's an opportunity for us to both grow our earnings and deploy our capital prudently by returning capital to our shareholders.

Speaker Change #143: We're we're encouraged by what we're seeing in terms of being able to deliver on the C&I growth. So the headwind that CRE has been overall loan growth I think will dissipate over time.

Victor Dodig: 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 ROE. It is going to create capital for our shareholders. And we believe it will deliver strong share price performance over time.

Speaker Change #143: You can still take a couple of quarters, it's a bit early to be giving guidance next quarter, but I would say overall loan growth we had growth this quarter.

Unknown Executive: Thank you.

Shawn Beber: We had growth this quarter. I'd say I expect a level of continuation of that recovery in loan demand, assuming that we get the constructive or more constructive. Environment over the next couple quarters on the rate side and the overall macro backdrop based on our outlook. 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 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.

Speaker Change #143: Say I expect a level of a continuation of that recovery in loan demand assuming that we get the constructive or more constructive environment over the next couple of quarters on the rate side.

Speaker Change #143: And the overall macro backdrop based on our outlook in terms of Nims were still calling for pretty stable Nims are we're not anticipating having a material impact on that and that also has to do with this.

Matthew Lee: The following question is from Matthew Lee, from Canacoginuity. Please go ahead.

Hratch Panossian: Good morning guys. Thanks for taking my question. Maybe first on the Canadian banking loan growth side. Deposit growth is 5%, loan growth is just one. Is that a function of being more selective with customers? Or maybe some other person takes to consider there?

Speaker Change #143: 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 a rate cut environment comes through than we were anticipating.

Shawn Beber: And so again, assuming a rate cut environment comes through, then we were anticipating being quite responsive to that, balancing the competitive environment and ultimately resulting in a stable NIMs. Soh, Lone Growth, you know, probably still modest over the next little bit, and stable in them.

Hratch Panossian: Good morning Matthew. Thanks for the question. I'll take it and I'll speak mostly to the personal side and happy to have Jon 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.

Speaker Change #143: Being quite responsive to that balancing the competitive environment and ultimately, resulting in a stable NIM a NIM outcome. So loan growth are you know probably still modest.

Speaker Change #143: Over the next little bit.

Speaker Change #143: And stable NIM.

Shawn Beber: Okay, that's very helpful. Thank you, Sean.

Speaker Change #143: Okay. That's very helpful. Thank you, Sean and just if you could remind me.

Shawn Beber: And just if you could remind me, when I look at your balance sheets, 36 billion or so, call it of loans, you just remind me like 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? Is that changed at all? Is that part of this build? Or you say infrastructure build and so on? Is that what you're changing? How you how you originate the loans or is how you originate and the proportion of syndicated loans that you originate more or less the same to pretty stable in terms of what we're originating.

Hratch Panossian: 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. And we're digitizing the business to drive efficiency and the front lines and the back end. That's our strategy. And we've talked about what that strategy will deliver.

Speaker Change #144: When I look at your balance.

Speaker Change #145: Our balance sheet at 36 billion or so call it the loans.

Speaker Change #146: Mind me like the how.

Speaker Change #147: How much of that is actually the syndicated and N is that that should be an area, where you can press on the gas and to hit the brakes might be like.

Speaker Change #146:

Speaker Change #148: Has that changed at all or is that part of this builder.

Speaker Change #149: When you say infrastructure build and so on is that what you're changing how you. How you originate the loans are or how you originate and the proportion of syndicated loans that you originate more or less the same thing yeah pretty pretty stable.

Hratch Panossian: We believe that strategy will deliver aligned with Victor's comments. Growth sets above market. We've talked about high single. They just revenue growth in our business and we've been delivering that. Operating leverage over time. Again, we've been delivering that and improving mix and ROE which are going to help the bank's profitability overall improve. And so that's the strategy we've been following rather than trying to grow loans or deposits. So what is that next day today?

Speaker Change #150: Stable in terms of what we're originating I mean, we we are either the lead agent or a sole bank on the vast majority of our loans like more than three quarters of our loans. So that hasn't changed the infrastructure build is really.

Shawn Beber: I mean, we are either the lead agent or sole bank on the vast majority of our loans, like more than three quarters of our loan. So that hasn't changed; the infrastructure build is really too full. 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 quarters 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.

Speaker Change #151: Two fold, it's driving better client experience and elevating we just had a a wires migration we've consolidated our wealth platform onto a single much more modernized platform and completed that a couple of quarters ago. We continue to invest in that as we bring on new capabilities.

Hratch Panossian: I think what you're seeing on our balance sheet and on our income statement as a direct result is that, yes. Loan goes 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. We've been about 1% on loans overall, as you said. But we're winning where it matters.

Speaker Change #151: In support of our wealth business, which strategically is one that we are quite focused on and looking to grow.

Hratch Panossian: We're winning and money in. We reference 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 in demand deposits where 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, and frankly they're not that relationship oriented in terms of the business with clients.

Speaker Change #151: As a proportion of the overall of the overall bank.

Shawn Beber: And the other part of the infrastructure build is 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 origination activity, I'd say fairly stable in terms of our approach to market.

Speaker Change #151: So and the other part of the infrastructure build as you know the regulatory environment continues to evolve we are looking to make sure that we are keeping pace with that and so that that investment continues.

Speaker Change #151: But in terms of the origination activity I'd say fairly stable in terms of our approach to market.

Unknown Executive: Okay. Great.

Speaker Change #152: Okay, great. Thank you that's very helpful. I Havent, you follow ups, but they're very technical I'll call. Jack afterwards, Thank you.

Unknown Executive: Thank you. That's very helpful.

Unknown Executive: I have a few follow-ups, but they're very technical.

Hratch Panossian: 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. But as Victor said, we think volumes will accelerate as confidence comes back as we get into next year.

Unknown Executive: I'll call Jack afterwards. Thank you.

Speaker Change #152: Thank you.

Sohrab Movahedi: I'll follow in question if I'm so rabble over honey from BMO Capital Markets. Please go ahead. Okay. Thank you. I'm going to stay also with Sean. Sean, Sean, I look at your sub back. 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.

Speaker Change #152: Following question is from Sohrab <unk> from BMO capital markets. Please go ahead.

Sohrab: Okay. Thank you I'm Gonna stay also with Sean.

Speaker Change #152: Sean.

Sohrab: I look at yourself pack the results this quarter in U S. Dollars 158, a couple of years ago was this quarter 152.

Shawn Beber: Thanks, Hratch, and thank you, Matthew. But 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. So net net, we think that's a good trade off.

Speaker Change #154: You are doing it on similar provision levels 28 couple of years ago versus $33 million this quarter.

Speaker Change #155: And Youre 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 S. T E.

Shawn Beber: My question, I guess just to kind of dovetail from dark one 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 invest will require further FTE build? And then, number three, is this FTE build going to have revenue benefits at some stage in the future? That's right. Thanks for the question. So look, we are driving towards, I think it's a good starting point from which we expect to grow.

Speaker Change #156: My question, I guess just to kind of dovetail.

Shawn Beber: 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. What I think you'll see going forward is loan growth that is higher than what we've had in the past. Our portfolio of record growth is an indication of that. So as you think about next year, higher loan growth, more driven by non-revestate business, in the real estate business, it continues to remain quiet.

Speaker Change #157: Dovetail from Dorkland areas is are we now approaching a stable kind of earnings contribution vessel here from the segment and is this a good base to work off of to go up number one.

Speaker Change #157: To.

Speaker Change #158: Have we seen a plateauing of the F T. He built.

Speaker Change #159: Or do you anticipate.

Speaker Change #160: Is that kind of infrastructure continued infrastructure and vegetable require further F. T. He built and then number three is this F. T. He built going to have revenue benefits at some stage in the future.

Unknown Executive: Oh, yeah, that's great. I'll pass mine.

Speaker Change #161: That's right. Thanks for the question.

Unknown Executive: Thank you for the wing question, if you want to give me a little chance on national bank financial, please go ahead. I, uh, quick one, and then, uh, were, uh, I don't know, detailed one. Um, the tax adjustment that was backed out of earnings or adjusted earnings, can you find that one? Is that like some sort of true up of previously recognized at that revenue?

Speaker Change #162: So we we are driving towards I think it's a good starting point from.

Speaker Change #162: From which we expect to grow the infrastructure investments we.

Shawn Beber: The infrastructure investment; 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. 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.

Speaker Change #163: 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 in expenses that we've seen this quarter and that would have been similar last quarter has been around growth initiatives and so we expect those to start paying off over the next you know they're.

Rob Sedran: It gave good morning. 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 adoption legislation. It hadn't yet been substantively enacted. And so for the first couple of quarters, we continue to recognize that through our numbers in two, three, it was, uh, it was substantively enacted. And so what you see on a year-to-date basis is a zero.

Speaker Change #163: Coming quarters, and so from here, we would expect growth.

Speaker Change #163: The investment that we're making in F. T E on both infrastructure and our growth initiatives, we expect to continue.

Speaker Change #163: But we don't expect the same pace of expense growth.

Speaker Change #163: Going forward.

Rob Sedran: Um, 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. Um, you know, 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, you know, commercial banking, US banking, cap markets, expensive growth is all, you know, mid teams against the revenue growth that's, you know, high single digits will call it.

Shawn Beber: So I think it's a good starting point. And from there, continue growth, both on the infrastructure side and on the front. On the front, off the side as we had grow out the components of our business in the U.S. Thank you.

Speaker Change #163: So I think it's a good starting point and from their continued growth.

Speaker Change #163: Both on the infrastructure side and on the front office side as we grow.

Speaker Change #163: Grow out the components of our business in the U S.

Okay.

Speaker Change #163: Yeah.

Speaker Change #164: Thank you.

Frank Guse: Our last question is from Lemar Persaud from Conrad Securities. Please go ahead. Yeah, thanks. I almost turned to credit for Frank. Obviously, there's been a repositioning of the bank's U.S. Office commercial real estate portfolio. But even then, I'd expect some reversion to a mean and U.S. Commercial PCL. So 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 paired PCL guidance. But if I were to plug in a more normal level of loss in that business, you'd be well above the mid 30s guidance.

Martha: Our last question is from the Martha shot.

ROC Securities. Please go ahead.

Martha: Yeah, Thanks, honest turn to credit for Frank.

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

Speaker Change #166: Obviously, there's been a repositioning of the bank's U S office.

Speaker Change #167: Commercial real estate portfolio, and even then I would expect some reversion to a mean U S commercial PCL. So.

Speaker Change #168: 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 thirties impaired PCL guidance, but if I went to plug in a more normal level of losses in that business you'd be well above the mid thirties guidance. Some bottomline like could we be looking at impaired PCL is meaningfully up.

Frank Guse: So bottom line, like could we be looking at a pair of PCL's 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 U.S. business or in other businesses as well. You're absolutely right. We do not expect the very strong performance we saw in the U.S. 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.

Rob Sedran: Or if they're prospective, you want to share on all ears? Yeah. I would say there's, there's a few items this quarter that that's what I referenced 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 one was in the personal and business bank. One was in capital markets.

Speaker Change #169: Does that mean.

Speaker Change #170: Mid thirties guidance near term or are there some takes across other businesses that you see.

Speaker Change #171: Yeah. So we we put that guidance of mid 30 for the bank out because we feel very comfortable with that guidance and that guidance does include some episodic events like we could see once in a while I'm in the U S business or in other businesses as well.

Rob Sedran: You know, 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. You know, on an, on an overall basis, we like the 60 basis points of positive operating leverage. We're happy to have that street continue. And it, but we are trying to manage the bank with better visibility as best we can get it to deliver that operating leverage.

Speaker Change #172: Youre absolutely right, we do not expect the very strong performance, we saw in the U S. This quarter from a credit perspective two to.

Speaker Change #172: 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.

Frank Guse: I mean, pre-pandemic, we saw in the mid double-digit loss rates in the U.S. 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.

Rob Sedran: So that the other bigger piece is just, you know, 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.

Loss rates in the U S portfolio, and that's probably a longer term timeline or a run rate and then in the shorter term it can be a little bit higher so I'm not giving you a precise answer here because I don't think we gave you guidance.

Frank Guse: So I'm not giving you a 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: Now I just wanted to get 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.

Speaker Change #172: In particular quarter over quarter.

Speaker Change #172: But it will be lower than what we've seen in the past few quarters.

Speaker Change #172: It maybe a little bit higher than what we've seen this quarter and overall it will fit very well within our mid thirty's guidance for the full bank.

Unknown Executive: Thank you.

Unknown Executive: I'll follow in question.

Meny Grauman: It's from Meny Grauman, from Scotia Bank, 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.

Robert Sedran: Okay, and then maybe turning over to Rob, just one looking at expense growth at CIDC, you're going to be running into some pretty tough comp quarters because there's 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 who walk us through your thoughts on expense growth in the context of tougher comp quarters and then also operating leverage if somebody's treasury gains don't materialize as you look forward. 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?

Speaker Change #172: Okay, and then maybe maybe turning over to Rob just said.

Rob: When looking at expense cuts at CIBC, youre going to be running into some pretty tough comp quarters, because there was a real slowdown.

Speaker Change #173: Hence growth towards the end of 2023, the bank line essentially friendly upper single digits to low single digits. I'm wondering if you can walk us through your thoughts on expense growth in the context of tougher comp quarters, and then also operating leverage if some of these treasury gains don't materialize as you look forward.

Frank Guse: 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 and are you seeing any trends there, any signs of stress in that product in particular. Thank you, many. I would say it is seasonality and there's nothing else really to call out.

Speaker Change #173: Thanks, a lot Mark good morning. So you know the reason we show the expenses the way we do on slide 13.

Speaker Change #174: Is that that's actually how we manage the expenses right, we focus on our operating expenses and worth fanatically linking.

Robert Sedran: 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. 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 come in better than originally planned.

Speaker Change #174: Our investment portfolio with generating the efficiencies to help fund it and not 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.

Frank Guse: 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 detailed utilization rates, revolve rates, payment rates, all of those are very strong and compare favorably to where we were pre-pandemic.

Speaker Change #175: 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'd been seeing expense growth trend higher as as revenues have have come in better than originally planned. So you know what.

Robert Sedran: So, you know, when we look forward, we still think that construct of mid single digit revenue, a mid single is 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. I appreciate the time.

Speaker Change #175: When we look forward, we still think that construct at mid single digit mid single digit expense growth excuse me, it's a reasonable assumption going forward and we planned for we planned for the operating leverage and we plan to work these things against each other so that if revenues don't come in.

Frank Guse: So again, speaking to a good credit quality and good resilience in the book against the macroeconomic backdrop. Thanks for that. And then just a question about how we should view the renewal wave. You know, obviously it was a bigger concern before we saw a rate cut happening, but how would should we be about the renewal wave and can we say that it's an issue that's in the past, or is it more nuanced about it?

Speaker Change #175: We are hoping they come in we have some leavers to pull to maintain that operating leverage.

Speaker Change #175: Again, we're not going to get it every quarter, but it is certainly our goal to get it annually.

Speaker Change #176: Appreciate the time.

Speaker Change #177: Thank you.

Unknown Executive: 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. Our bank has a dedicated, experienced leadership team in place, a differentiated strategy, and a healthy balance sheet.

Speaker Change #178: That concludes the question and answer session I would not like to kind of meeting back over to Victor.

Frank Guse: Yeah, so we are still watching, watching that closely, of course, and it's still in our presentation in the appendix. 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 provide some discomfort to clients and yes, they are higher, but overall they are very manageable. And as you see, I think it's on slide 41.

Victor Dodig: Thank you operator, and thank you everyone for your questions as you've 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.

Victor Dodig: Results for all of our stakeholders across all of our businesses. Our bank has a dedicated experienced leadership team in place a differentiated strategy and a healthy balance sheet.

Frank Guse: 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 that would be in 26. So overall, as I said, we are watching it closely, and we are not calling it over, but we also believe that it continues to be quite manageable. Thank you. Following question is from Doug Young from the Jordan capital markets.

Victor Dodig: 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: At this time I also want to acknowledge those affected by the extreme weather events in Canada, and the United States.

Speaker Change #179: I B T C. Our 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.

Speaker Change #179: I'd like to extend a thank you to our dedicated CIBC team around the world.

Speaker Change #179: Have a good day and enjoy the rest of the summer.

Speaker Change #179: Yeah.

Speaker Change #180: Thank you.

Frank Guse: Please go ahead. Hi, good morning, and thanks for taking my question. Victor, you mentioned a bunch of times, just premium. And I guess the question is, you know, what needs to happen to get back to the 16% plus our target, and 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? So, it's a good question, Doug, good morning to you.

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

Speaker Change #181: The conference has now ended.

Speaker Change #182: <unk> disconnect your lines at this time and we thank you for your participation.

Speaker Change #182: Okay.

Speaker Change #182: Yeah.

Speaker Change #182: Yeah.

Speaker Change #182: Okay.

Frank Guse: 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 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. Now, we're not abandoning our goal of getting to a more premium ROE. You know, we saw an improvement this quarter to 14% and the question is, how do you get there?

Speaker Change #182: Yeah.

Speaker Change #182: Yeah.

Speaker Change #182: Okay.

Speaker Change #182: Okay.

Speaker Change #182: Okay.

Speaker Change #182: Yeah.

Frank Guse: 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 of 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. 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.

Speaker Change #182: Yeah.

Speaker Change #182: Yeah.

Speaker Change #182: Yeah.

Speaker Change #182: Yeah.

Frank Guse: The second thing is, you know, operating our CT1 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 ROE enhancing. 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 live.

Frank Guse: 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. And doing it in a way that's consistent without volatility and meeting your expectations quarter out fiscal year and fiscal year out. Is there one area you listed for them, then I appreciate all the details. There's one area that you think is more creative to that ROE.

Frank Guse: And 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 given all the different moving pieces. But when you think back and you look at the strategy that you've laid out 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.

Frank Guse: 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. 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, is to generate capital and to generate returns and access to their cost of capital.

Frank Guse: 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, we're starting to see that in our next ratio as well. And our goal on delivering positive operating leverage pretty consistent. Thank you.

Rob Sedran: I'll follow in question if some Mario Mendonca from TD Securities. Please go ahead. Thank you for your elevated spending, negative operating leverage, before missions accomplished, you can start to grow again in the US. I mean, grow pre-tax preposition profit because I see that men in cum was up this quarter. 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 in our growth initiatives, as well as in our infrastructure to drive client experience, enhancing our systems and technology aligned with our business aspirations and regulatory expectations.

Rob Sedran: In this quarter, it's about 50-50 between growth and performance-related expenses and the other half being more related to our infrastructure buildings, or a normal course growth. This quarter in particular had a heavier project delivery timetable, and so you see that in our results right now. We expect that to moderate, I think, quarter on quarter. We're expecting more like a flat expense number at Q4 over Q3. But it is a longer term journey.

Rob Sedran: 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 over time. I would echo Victor's comment over a medium term horizon to get to that place where we are ultimately generating a positive operating leverage. And it will require some level of constructive markets. Obviously, credit demand industry wide has been lower. We are growing faster in CNI, which is a strategic focus of ours.

Rob Sedran: At the same time, we're still pivoting on the commercial real estate side. It's still a very important business for us. But given the steps that we've taken in the portfolio, particularly around institutional and office, that's been a bit of a headwind to overall loan growth in the US. That will take a few quarters to play out, but we expect to resume growth going forward in the loan book. And then continuing to invest in our wealth management platform, making that a bigger part of the overall business. All of that should drive better revenue growth over time and drive towards that operating leverage target.

Rob Sedran: Maybe slightly different. Going this might be best for Rob. Several banks have reported this quarter that their treasury activities were helpful to the NII. And from what I said, that statement, although helpful, is somewhat opaque to me. I'm not really sure what that means. What would be helpful then, if you could address this in two ways. First, describe, maybe even with an example, what that is. And then secondly, the conditions that were in place in the quarter, that led several banks to benefit from Treasury activities.

Rob Sedran: Those are the two things I'd like to understand. 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. 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.

Rob Sedran: And our Treasury is active daily in terms of position in 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 treasurers, things like hedging effectiveness and extinguishment accounting and all these kind of things that were also moved in the right direction for us this quarter.

Rob Sedran: And, in our case, specifically, we also had 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 opportunities can present themselves.

Rob Sedran: 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.

John Hagen: Following question is from John Hagen from Jeffries. Please go ahead.

Frank Guse: Good morning, Frank. It's 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've already answered this, just yell at me and tell me to look at the transcript. On site 42, you mentioned the watch list and we expect to see some new inflow. Is that additional loans onto the watch list or transition from a watch list on to Rosenpaired?

Frank Guse: Well, I think it is a little bit of both. We have seen very low, very strong performance. We have seen growth and paid 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've seen in the US office market as a market overall is over yet.

Frank Guse: 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.

Frank Guse: Thanks, Frank. And as you guys have discussed, as you are managing the portfolio, there was some dispositions this quarter. Can you give us a sense of whether or not there were any gains or losses associated with those dispositions? 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, and a 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.

John Hagen: Great, thanks, Frank, appreciate it. Thanks, Jon.

Unknown Executive: Thank you.

Nigel D'Souza: Following question is from Nigel D'Souza, from Veritas Investment Research. Please go ahead. Thank you. Good morning, I have some follow-ups here on credit. When I look on slide 38 and you've linked them to rates across on the short mortgages, I'm noticing there's, there's 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 non-unoccupied, or any specific advantages that are driving higher, don't you please?

Nigel D'Souza: Yeah, so in general, what I would call out is that we do feel quite comfortable with the credit quality of our mortgage group, as I said, in my prepared remarks. We do not expect material losses from these portfolios. I think it's on the slide, but from a segment perspective, investor mortgages tend to perform favorably compared to unoccupied mortgages, 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.

Nigel D'Souza: It's a lower delinquency rate on fixed rate mortgages. 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. 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.

Nigel D'Souza: And as such, as I said, we are not concerned, and we do believe our credit quality is quite strong. If I give you a couple of metrics, our liquid assets, or liquid assets, our client sold to cover payments is an average of 7 to 10 times. The monthly payments, depending on, again, what segments you look at, less than 1% of our unnatural clients. We would classify as high risk, meaning they have high LTVs and low beacon scores.

Nigel D'Souza: And overall, even in those delinquent mortgages, the average LTV is less than 60%. So we were very well covered from an exposure perspective, even if you assume some moderate house price declines could still happen from here.

Frank Guse: Thanks, Rankin. And on the bottom retail portfolio, are you seeing any differences in terms of between homeowners and the renters? And what I'm getting at here is, you know, our strong balance sheets for homeowners, particularly on the asset side with real estate prices being stable. So with that, what's helping mitigate the liquid fees or credit losses in your portfolio, or is there no noticeable difference between the two buckets of retail borrowers?

Frank Guse: Well, I would say there is some differences, and generally homeowners perform better, and would carry less unsecured debt, and would perform stronger on the unsecured 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, with us.

Frank Guse: And last question, you're on your athletics on page 45. The unemployment rate right now is a bit higher than your base case assumption, and it's expected to trend a bit higher. So is there potential for offer pressure on your 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 an 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 there 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.

Nigel D'Souza: Okay, that's it for me. I appreciate it. Thank you.

Shawn Beber: I'll follow in question if I'm Doc O'Mullick from RBC Capital Markets. Please go ahead. Hi, thank you. I wanted to go back to Shawn Beber for a moment on the US business, and I just wanted to look at the suggestion that you're sort of reshaping the portfolio mix. Can you maybe provide a little more color around that and how I'm just thinking about loan growth parameters for the model and the name associated with that? How long?

Shawn Beber: I think I heard you say it's a few quarters before your repositioned, 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 this repositioning. Thanks for the question, Dr. Koeh. 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.

Shawn Beber: I think, as I mentioned, that's going to continue to play out. Depending on what happens with the rate environment, with rate cuts, we might actually see some even further payoff activity or accelerated 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.

Shawn Beber: We're encouraged by what we're seeing in terms of being able to deliver on the CNI growth. So the headwind that CRE has been 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 next quarter, but I would say overall loan growth, we had growth as quarter. I'd say I expect a level of continuation of that recovery in loan demand assuming that we get the constructive or more constructive environment over the next couple quarters on the rate side.

Shawn Beber: And the overall macro backdrop 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 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 and ultimately resulting in a stable NIMS. So, Lone Growth, you know, probably still modest over the next little bit and stable in the name. Okay, that's very helpful. Thank you, Shawn.

Shawn Beber: 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? Is that changed at all? Is that part of this build or this, 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 to you know, pretty, pretty stable in terms of what we're originating.

Shawn Beber: I mean, we are either the lead agent or, you know, that sold bank on the vast majority of our loans, like more than three quarters of our loan. So that hasn't changed the infrastructure build is really too full. 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 ago. We continue to invest in that as we bring on new capabilities and for in support of our wealth business, which strategic is one that we are quite focused on and looking to grow as a proportion of the overall, the overall bank.

Shawn Beber: So any 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 that investment continues. But in terms of the the origination activity, I'd say fairly stable in terms of our approach to market.

Shawn Beber: Okay. Great. Thank you. That's very helpful.

Unknown Executive: I have a few follow-ups, but they're very technical. I'll call Jack 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. Thank you. I'm going to stay also with Sean. Sean, I look at your sub back. The results of 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.

Shawn Beber: My question, I guess, just to kind of dovetail from dark one 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 investment will require further. FTE build and then number three is this FTE build going to have revenue benefits at some stage in the future.

Shawn Beber: That's right, thanks for the question. So look, we are driving towards, I think it's a good starting point from which we expect to grow. The infrastructure investment, 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.

Shawn 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. Both on the infrastructure side and on the front office side as we had grow out the components of our business in the US. Thank you.

Lemar Persaud: Our last question is from Lemar Persaud, from ComRAC Security. Please go ahead. Yeah, thanks almost turn to credit for Frank. Obviously, there's been a repositioning of the bank's US office commercial real estate portfolio, but even then I'd expect some reversion to a mean and US commercial PCL. So 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 paired PCL guidance.

Lemar Persaud: But if I were to plug in a more normal level of loss in that business, you'd be well above the mid 30s guidance. So bottom line like could we be looking at a pair of PCL's 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.

Lemar Persaud: 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.

Lemar Persaud: So not giving you a 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. Okay, and then maybe maybe turning over to Rob just one looking at expense growth at CIDC.

Lemar Persaud: You're going to be running into some pretty tough comp quarters because there's 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 who walk us through your thoughts on expense growth in the context of tougher comp quarters, and then also operating leverage if some of these treasury gains don't materialize as you look forward. Thanks, Lamar.

Lemar Persaud: Good morning. So the reason we show the expenses that we do on slide 13 is that that's actually how we manage the expenses. 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.

Lemar Persaud: 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 come in better than originally planned. So when we look forward, we still think that construct of mid single digit revenue, a mid single is 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.

Lemar Persaud: Again, we're not going to get it every quarter, but it's certainly our goal to get it annually. Appreciate the time. Thank you. 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.

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