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 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, followed by Raj Panosian, our Chief Financial Officer, and Frank Goose, our Chief Risk Officer. Also on the call today are our group heads, including Sean Bieber, U.S. Region, Harry Cullum, Capital Markets and Direct Financial Services, and John Huntalas, Canadian Banking. They are all available to take questions following the prepared remarks. As noted on slide two of our investor presentation, our comments may contain forward-looking statements which involve assumptions and have inherent risks and uncertainties. Actual results may differ materially. With that, I'll now turn the call over to Victor.

Thank you, Jeff, and good morning, everyone. On today's call, I'll provide an overview of our first quarter results, as well as an update on our strategy for successfully navigating the current economic environment with a clear path forward toward achieving our 2025 objectives and targets that we laid out at our Investor Day last year. Before we get to the results, let me begin with the senior leadership change we announced last month. Following a 14-year career with CIBC, Laura Dottori-Atanasio has retired from our bank, and we wish her well as she takes on new challenges. John Houtalis has been employed at Group Head Canadian Banking, with expanded responsibility of leading CIBC's personal and business bank, in addition to commercial banking and wealth management in Canada. John's a proven leader. He's had a positive impact in every business he's led at CIBC. His focus on execution, on talent, and on our clients will serve us well to build on the progress we've made in our Canadian retail business. Now, turning over to our first quarter results of 2023, amidst continued central bank tightening and geopolitical tensions, we had a good start to the year, growing revenue, and growing pre-provisioned pre-tax earnings to record levels. Adjusted net earnings were $1.8 billion, or $1.94 per share. Our capital position remains strong, with a CET1 ratio of 11.6%, comfortably above the regulatory minimum, and our return on equity improved to 15.5% for the quarter. This performance was supported by volume growth across all of our businesses, and underscores the ongoing successful execution of our client-focused strategy, our diversified portfolio, and contributions from our organic investments over the past few years. Our expenses declined sequentially, and as we indicated last quarter, with many of our key strategic investments completed or in flight, we expect expense growth to continue to moderate through the fiscal year. This should contribute to positive operating leverage as we realize the embedded revenue growth opportunities from our past investments. Looking at our Canadian consumer franchise, we delivered funds managed growth of 9%, almost matching last year's robust pace of 10%. Deposit growth outpaced loans for the first time in seven quarters, reflecting the shift in market sentiment given the higher interest rate environment. our credit card portfolios continue to perform well. Above and beyond the Costco co-brand acquisition that closed in March 2022, new account openings were up and were over 30% higher in the same period last year. This reflects our ongoing efforts to meet our clients' needs through new credit card products and enhanced client experience and expanded reward offerings. More broadly, over the past 12 months, we've driven strong client acquisition, totaling over half a million net new clients to CIBC. Our focused efforts to attract clients by leveraging the structural advantages we have built in this space will enable us to further scale our retail business in the years ahead. In our North American commercial banking and wealth management businesses, loans continued to see double-digit growth, while deposits were in the low single digits in both regions. clients continue to be cautiously optimistic about their businesses. And in light of the tougher operating environment, they're looking to strengthen their financial position through tighter working capital and through disciplined expense management. While our pipelines remain stable, we've seen slower lending growth due to both reduced client demand and from our prudent risk posture in this environment. Our capital markets franchise continues to deliver strong results. Driven by robust client activity in global markets, as well as strong top-line growth in our direct financial services or DFS platform. As well, we continue to play a leadership role in energy transition. New Project Media recently ranked CIBC the third largest lender to U.S. renewable energy projects in 2022. At CIBC, we have a longstanding focus on ESG as part of our commitment to create enduring value for our stakeholders. This quarter, our efforts continue to be recognized and validated by prominent third-party organizations. First, CIBC was named to the Dow Jones Sustainability Index North America for the 18th consecutive year. Second, we were included in Bloomberg's Gender Equality Index for the 8th consecutive year. And third, CIBC was named by Mediacorp as Canada's top 100 employers for the 11th consecutive year, all recognitions that we're extremely proud of. Sustainability continues to be an essential component of our strategy, and we remain focused on ESG matters of importance to CIBC and to our stakeholders. We're monitoring the global economy, and while pockets of strength exist, there are growing uncertainties driven by geopolitical tensions and persistent inflationary and interest rate pressures. This will have an impact on economic growth and on client activity in the near term. As the landscape evolves, we remain steadfast in our focus on our clients, in our long-term strategy of growing relationships with the high-growth, high-touch segments that we're focused on, advancing our digitization efforts, and investing in future growth differentiators, all while staying agile and adapting as needed to the economic environment. We'll leverage the investments we've made in the recent years to support organic growth, while taking a prudent and proactive approach to expense and risk management. So a couple of examples. In our retail business, our investments in a comprehensive suite of services and tools tailored towards the mass affluent market, which includes CIBC Gold Planner, have been successful in deepening client relationships. To date, just under half of our Imperial Service households have completed the CIBC Gold Planner process, and it's resulted in significantly higher growth in funds managed and favorable net promoter scores. We also continue to benefit from the investments we've made in recent years in our digitization strategy, incorporating AI, automation, and cloud to further increase connectivity across our businesses. Another example, the migration of online and mobile banking applications to the cloud have vastly improved our efficiency in software releases, going from two per month to multiple per week. In addition, cloud automation will reduce costs going forward, improve resilience, and enable faster change implementation to better serve our clients. We also continue to invest in our future growth differentiators, including our direct financial services platform, which has delivered three-year revenue CAGR of approximately 15%, with revenues over $1 billion for the last 12 months. We built a differentiated platform and a client-first culture that has allowed us to develop and deliver innovative products and services that enhance the client experience, grow our client base, improve efficiency, and drive stakeholder returns. We expect these benefits to continue to accrue into the future. The net-net is our investments are paying off in the businesses that we're investing in, and you should see this going forward. And with that, I'd like to pass the call over to Haraj for an update on our financials.