Canadian Imperial Bank of Commerce

Good morning and welcome to the CIBC Quarterly Financial Results Conference 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, followed by Hrach Panosian, our Chief Financial Officer, and Frank Guse, our Chief Risk Officer. Also on the call today are a number of our group heads, including Sean Bieber, U.S. Region, Harry Cullum, Capital Markets and Direct Financial Services, and John Huntalis, Canadian Banking. They are all available to take questions following the prepared remarks. For those participating on the Q&A, given you have a hard stop to get to another presentation at 8.30, please limit your questions to one so we can allow as many of you as possible to participate. We will make ourselves accessible after the call for questions or follow-ups. As noticed on slide two of our investor presentation, our comments may contain forward-looking statements which involve assumptions and have inherent risks and uncertainties. Actual results may differ materially. With that, I will now turn the call over to Victor.

Thank you, Jeff, and good morning, everyone. I'll start our call today with an overview of our second quarter performance. followed by insights on the current financial sector dynamics as well as CIBC's resilience as we navigate a fluid economic environment. This morning, we announced adjusted second quarter revenue of $5.7 billion, which is up 6% from the prior year. Our strong performance is a testament to our client-focused strategy and the hard work of our CIBC team members to create value for all our stakeholders. During the quarter, we continued to leverage past investments while moderating expense growth. Expenses of $3.2 billion were down 1% sequentially and up 7% year over year. And this is within the previous guidance that we've provided you. Pre-provisioned pre-tax earnings of $2.5 billion were up 6% from the prior year, while net income of $1.6 billion was 2% lower as impaired credit provisions continued to normalize. Again, as expected. We are vigilant in our risk management and continue to closely monitor our asset classes and client segments for signs of stress, taking proactive steps to address potential exposures. Broadly speaking, our loan portfolio continues to perform well in an evolving economic environment. We're comfortable with what we're seeing despite market-wide challenges in certain pockets of commercial real estate, particularly in the U.S. office sector. Overall, our portfolio has prudent and disciplined lending standards with conservative caps on loan-to-value ratios and good debt service coverage. Frank will provide additional details on our portfolio in a few minutes. Earnings per share were $1.70 this quarter, and we have announced a $0.02 dividend increase to our common shareholders. Going forward, we will adopt an annual review of our dividend payment instead of the semi-annual pattern of the past. We will review our dividend in our fourth quarter earnings call and annually thereafter. We intend to continue increasing dividends in line with earnings growth while maintaining a dividend payout ratio of between 40% and 50% over the long term. Our capital position remains strong with a C21 ratio of 11.9%. I'll have further comments on our capital and liquidity following comments on our core businesses. So I'll turn to the core businesses now. First, our Canadian consumer franchise. Our investments here are deepening client relationships. They're driving strong client acquisition and robust volume growth. Over the last 12 months, net personal client acquisition totaled approximately 500,000 net new clients to our bank. We're pleased with the progress we're making franchising co-brand cardholders who've also joined our bank last year. To date, these clients have brought over $3 billion of incremental funds managed to CIVC beyond their credit card balances. Our North American commercial banking and wealth management businesses continue to see year-over-year loan growth in the 9% to 10% range, albeit at a slower pace than prior quarters, again, something we expected. Not surprisingly, client sentiment is more cautious, as macroeconomic headwinds weigh on the near-term investment outlooks. Given the environment, we're focusing on supporting our clients and helping them navigate this period of increased volatility, something that the CIBC does through the ups and downs of the economic cycle. We remain thoughtful and maintain a disciplined and prudent approach to capital deployment. In wealth management, while challenging market conditions tempered client activity during the quarter, our unique structure of commercial banking and wealth management teams working together will continue to drive strong referral activity to serve both the business and personal needs of the entrepreneurs we serve within our bank. In capital markets, our franchise continues to deliver top-line growth despite a slower underwriting environment. In line with our strategic objectives in this business, we continue to grow our revenues in the United States and play a leadership role in sustainable financing. This quarter, Direct Financial Services reported strong results as currency conversion activity increased with travel recovery and simply financial benefited from higher deposit margins. So now let me spend a moment on the current banking sector environment. In recent months, isolated challenges emerged for several banks outside of Canada. Over the past several years, armed with lessons learned and the resolve to be a more durable bank for our stakeholders, we've been executing on our long-term strategy to build a strong and resilient bank that CIBC is today. We have a strong, well-capitalized balance sheet and we have the capabilities required to generate capital on an ongoing basis while also supporting our growth. We continue to build on our capital position this quarter, and at 11.9%, our CET1 ratio is now approximately $3 billion above the current regulatory requirement. We also have a sustainable funding strategy that's underpinned by a well-diversified, high-quality client deposit franchise, and supplemented by wholesale funding that's purposefully constructed across investor types, across geographies, across currency maturities, and across funding instruments. Helped by our stable funding base, we ended the quarter with a liquidity coverage ratio of 124%, including $177 billion in high-quality liquid assets, which represents $34 billion of surplus over our cash flow obligations under a 30-day stress scenario. Also embedded in our strategy and our approach to doing business is our commitment to enable a more secure, equitable, and sustainable future. We continue to make good progress on our ESG initiatives across the spectrum this quarter. We are recognized as one of Canada's best diversity employers for the 13th consecutive year, and we rank number one in Canada for gender equality by equity for the third consecutive year. These recognitions are testaments to the work we're doing to drive positive change, and we're committed to continuing our efforts using our resources and our technology investments for good. In closing, while the near-term macroeconomic environment remains challenging, I think we all see that, with expected headwinds to economic growth and geopolitical instabilities, we have the strength to weather periods of uncertainty in the near term, and importantly, the right strategy to drive solid results over the long term. And with that, I'd like to pass the call over to Hrach for a detailed review of our financial results. Hrach?