Canadian Imperial Bank of Commerce

Good morning, and welcome to the CIBC quarterly financial results call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Jeff Weiss, Senior Vice President, Investor Relations. Please go ahead, Jeff.

Thank you, and good morning, everyone. We will begin this morning's presentation with opening remarks from Victor Dodig, our President and Chief Executive Officer. Following Victor, Raj Panosian, our Chief Financial Officer, will review our operating results. Sean Bieber, our Chief Risk Officer, will close out the prepared remarks with a risk management update. We're also joined in the room by CIBC's business leaders, including Harry Cullum, Laura DeTore Atanasio, and John Hantalis, as well as Mike Kapitides, who has joined us remotely from the USA. They will be available to take questions following the prepared remarks. As noted on slide two of our investor presentation, Our comments may contain forward-looking statements which involve assumptions that have inherent risks and uncertainties. Actual results may differ materially. With that, I will now turn the meeting over to Victor.

Thank you, Jeff, and good morning, everyone. Thanks for joining us, and we hope you and your families are well. Over the last six months, we've seen significant change in the market as a result of the COVID-19 pandemic. Initially, our focus was on the urgent response required to deliver relief to individuals and to businesses. as we navigated through a period of great uncertainty. More recently, our focus has shifted towards recovery, maintaining our commitment to our clients as we reignite our long-term strategic growth plans and to do our part to support the recovery of our economies. With that context, I'd like to share three key messages with you. The first is our CIBC team has responded to this pandemic with professionalism, with dedication, with purpose, and they are the foundation for our growth efforts moving forward. There's no substitute for a purpose-driven culture, and our entire team remains focused on making our clients' ambitions a reality. The second is that we're investing for the long term to position CIBC for success as we emerge from the pandemic stronger and prepared to capture growth. And the third is that the investments that we've made over the past several years to simplify and to modernize our bank and deepen client relationships have positioned us well. The results this quarter reflect the resilience of our bank. Since our second quarter call with you in May, Canada's economy has seen some signs of recovery with the cautious reopening of many sectors. However, many businesses are still operating far from pre-pandemic levels. The Bank of Canada's message last month underscored the path to a full recovery could be both lengthy and uncertain. In the U.S., while many states reopened during the quarter, the continued spread of the virus could translate into a prolonged recovery. Against this backdrop, we remain cautiously optimistic and believe that our strong core franchise, client-centric focus, and diversified business will enable us to get back to pre-COVID levels of profitability. To that end, I'm pleased to report that CIBC achieved adjusted earnings of $1.2 billion Canadian dollars and earnings per share of $2.71 in the third quarter. The resilience of our core business and continued expense discipline resulted in stable pre-provision earnings, despite a more challenging and lower interest rate environment. Included in these results is a provision for credit losses of $525 million, which is significantly lower than the $1.4 billion provision last quarter. Harach and Sean will provide more detail on this shortly. On the balance sheet, our balance sheet and capital position remains strong, with a CET1 ratio of 11.8%. Our excess capital provides significant flexibility to continue to support our clients, to invest in our business, and maintain dividends to our shareholders. We rose to the challenge of supporting our clients with much needed financial relief during the first phase of the pandemic. After peaking in early April, requests for payment relief have been on a steady decline. In the last six weeks, the number of new requests have been de minimis and averaged around only 1% of peak levels. Now I'd like to turn to our business units. On the retail side, overall consumer spending has recovered somewhat, though it remains below pre-pandemic levels. In line with this, personal and business banking credit card purchase volumes have trended upwards since the trough in April. July volumes were down 6% year-over-year compared to a decline of 33% in April over the previous year. We drove year-over-year growth in mortgage balances of 3% on a spot basis, as the real estate market started to recover in June and July. And while our performance is not yet where we want it to be, our recent growth has returned closer to market levels, supported by additions to our mobile advisor team and a streamlined application process. We continue to see very high levels of digital engagement, with digital banking sessions and transactions up approximately 25% from pre-pandemic levels. Our North American commercial banking businesses continued to see strong deposit growth in the third quarter as our clients emphasized liquidity amidst the economic uncertainty. Within our North American wealth businesses, we're seeing good momentum with more than $8 billion of net year-to-date client inflows across our Canadian and U.S. wealth platforms. Our capital markets business had a very good quarter, driven by strong trading activity across most asset classes, continued strength in debt underwriting, and improved equity underwriting. Our emphasis on building deep client relationships and connectivity with other areas of our bank is delivering strong client-focused results. This includes our focus on growing our U.S. market share, which is progressing well with revenue up 43% in this region on a year-to-date basis. As we navigate through the pandemic, we remain well-positioned to balance short-term actions necessary to fully support our clients and the economic recovery while advancing our long-term strategy. We have a number of key strategic initiatives underway to further streamline operations, improve our efficiency, and enable us to reinvest strategically to further strengthen our market position. As you recall, we announced the workforce restructuring earlier this year. We expect to complete this restructuring in the fourth quarter and deliver the previously disclosed run rate savings of $260 million by the beginning of fiscal 2021. We are repurposing a portion of the expected savings towards targeted strategic investments. To that end, we continue to invest in technology and innovation to simplify our bank and create an engaging and modern banking experience for our clients. These investments build on the foundational work we've done over the last five-plus years to build an industry-leading digital banking platform. As clients increasingly shift to these alternate platforms, We're pleased to be ranked number one among the big five banks for customer satisfaction and mobile banking, as ranked by J.D. Power this quarter. We will continue to make investments in this area to further cement our leadership position. During this pandemic, we continue to prioritize the well-being of our clients and our CIBC team. And as more communities reopen, we are taking a measured approach to how we manage our business. We continue to employ many precautions in our physical space, including ensuring physical distancing, adding signage and installing physical barriers as needed. In addition, approximately 60% of our team continues to work remotely, and we anticipate that the majority of these colleagues will continue to work off-site into 2021. We are aligning our decisions and timing around our long-term real estate plans, including CIBC Square. The work that was already underway to prepare for our new headquarters proved very valuable when the pandemic set in, as our tech-enabled team was able to stay connected and productive throughout. Going forward, CIBC Square will afford us greater flexibility and the opportunity to be nimble as we adapt to the environment we operate in. We'll keep you apprised of our evolving workplace transformation in the coming quarters. Now, before I turn the call over to Haraj, I'd like to highlight our commitment to diversity and inclusion. Since our last earnings call, the issue of systemic racism has come to the fore. It's incumbent on all of us as individuals and organizations to look inward and understand what we can do to address social injustice, which disproportionately affects the black and indigenous communities. For CIBC, our success hinges on our people. We're part of a singularly connected team, and inclusion is foundational to the way we do business. While we've made good progress on building a more inclusive bank, it's important to acknowledge that we have more work to do. We are committed to addressing systemic racism in all its forms within our bank, and to being a force for good in our communities. And with that, I'd like to turn the call over to Haraj for a more detailed review of our financial results.