Canadian Imperial Bank of Commerce

All participants, please stand by. Your conference is ready to begin. 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. 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 Gruss, 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're all available to take questions following the prepared remarks. We do have a hard stop this morning at 8.30 p.m. So during the Q&A, please limit your questions to one to ensure you all get a chance to participate. We'll make ourselves available after the call for any follow-ups. 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. I realize it's a busy one for all of you, so with that in mind, there are really three key messages I want to leave with you today. The first message is that we made strong progress executing on our strategic growth priorities in 2023, and we delivered solid financial results despite normalizing credit losses. Our solid results are reflected in our healthy net interest margins, our positive operating leverage, and our strong capital liquidity. The second message is that we're advancing our competitive advantages by focusing on four key strategic priorities, which I'll elaborate on in a moment. And the third message is that while global economic growth is expected to continue to slow, our client-focused strategy, our disciplined resource allocation, and our experienced leadership team will deliver profitable growth in fiscal 2024 and beyond. Now, turning to our results, fiscal 2023 demonstrated our bank's strength and resiliency amid a challenging economic backdrop, with high interest rates and elevated inflation, all of which affects our clients to varying degrees. Guided by our purpose, we supported our clients with advice to navigate the challenging environment and to help make their ambitions real. We continue to benefit from our organic investments over the past several years, delivering record revenue of $23.4 billion and which was up 7 percent, and pre-provisioned pre-tax earnings of $10.2 billion, which were up 8 percent from last year. We achieved revenue growth across all of our businesses, where we prudently grew volumes, we remained disciplined on pricing to protect margins, and we generated incremental fee income through deeper relationship with our clients. Adjusted net earnings of $6.5 billion were down 2 percent as a result of higher provisions for credit losses as credit continues to normalize. Earnings per share of $6.72 were down 5% from the prior year, impacted by an increased number of shares outstanding, primarily due to the dividend reinvestment plan discount in effect since the first quarter. Adjusted operating leverage was positive 1.2% in fiscal 2023, in line with our guidance as we harvested the investments we made to deliver strong revenue growth while prudently managing our expenses. We proactively improved our capital position in every quarter of fiscal 2023 to the end of the year with a 12.4% CET1 ratio and have multiple levers available to continue accreting capital. As we communicated with our second quarter results, we have adopted an annual review of our dividend payment during fourth quarter earnings moving forward. So today we've announced a $0.03 dividend increase to our common shareholders. Our adjusted ROE was 13.3% for the year and was impacted by normalizing provisions for credit losses and higher capital levels. We continue to prioritize investments that support capital light, fee-based, and deposit-generating businesses that will be accretive to ROE. Our client-focused strategy is working. Our steady execution has enabled us to make good progress, and we have built momentum for our bank on a number of fronts. So as we go forward, our four key strategic priorities will build on our momentum and will advance our real competitive advantage. These four priorities are, first, we're committed to growing our mass affluent wealth franchise in Canada and the U.S. In Canada, we're well positioned with our differentiated mass affluent coverage model through Imperial Service. We have a great private wealth business. And in the U.S., we have a high-quality, scalable private wealth program that we want to grow. Second, we're further enhancing our digital banking offerings. We're a leader here today, and we intend to build on our market position. Third, we'll continue to leverage our connectivity for commercial and capital markets clients. We're uniquely positioned to bring this differentiated approach to the market, and our clients tell us that this sets us apart. Our model creates value by deepening client relationships. It generates recurring revenue, and it enhances our returns. Finally, our efforts to enable, simplify, and protect our bank are building the operational excellence, and efficiency required to drive higher returns for our stakeholders. With that, let's get into the segment results. In Canadian personal and business banking, we have been a leader in growing our retail client base. On a trailing 12-month basis, we grew over 650,000 net new clients across our CIBC and Simply brands, including successfully attracting many newcomers and students to our bank. We're leveraging our highly differentiated Imperial service offering to serve clients in the mass affluent segment. This year, we introduced a dedicated leadership structure to sharpen our focus on growing this business. Our success in client growth and franchising has been a product of a relentless focus on enhancing our client relationship experience. CIBC continued to maintain a leadership position with our digital offering. For the third time since 2020, we ranked number one in the 2023 JD Power Canada Banking Mobile App Satisfaction Study. In Canadian commercial banking, the effect of rapidly rising interest rates and inflationary pressures slowed growth across the Canadian commercial market. Against the backdrop of moderating economic growth, we achieved our third consecutive year of increasing client net promoter scores and in fact hit a record this year. We continue to improve the client experience and deliver our whole bank to each client, as evidenced by the $17 billion of referrals since fiscal 2019 across commercial banking and private wealth management. And in our CIBC Wood Gundy franchise, we ranked among the leaders for big six banks in the investment executive brokerage report card survey of advisors. In the U.S., higher interest rates also cooled lending demand. However, our highly connected franchise and the investments we've made to scale our footprint have enabled us to attract new clients in a tempered economic environment. Deposit volumes in the U.S. have stabilized, and we're focused on strengthening and diversifying our deposit base. Our efforts to build a best-in-class U.S. private wealth franchise was recognized again by Barron's, who ranked us in the top 10 of RIA firms in the United States for the fourth consecutive year. Now, looking ahead, we'll continue to grow our U.S. commercial banking franchise organically with a focus on industries that value high-touch service and specialized expertise. We'll also be expanding our U.S. private wealth platform by leveraging our talent and technology investments, and expanding into fast-growing affluent markets like southern Florida. In capital markets and direct financial services, our differentiated platform continued to generate consistently strong performance. Our double-digit revenue growth was enabled by our strong client focus and increased activity in global markets as we helped clients address their short- and long-term needs in a rising rate environment. In line with our strategy, more than 20% of total capital markets revenue was originated from the U.S. region, where we've almost tripled our capital markets revenue since 2017. We also further expanded our DFS business to generate growing recurring revenue and to attract new clients seeking convenient digital banking and investing solutions. Through continued growth of Simply Financial and our leading-edge FX and remittance capabilities, DFS revenues of $1.2 billion increased 26% year over year. Collectively, the strength of our diversified platform and strategic connectivity positions us well for more fluid market conditions in the year ahead. We closed out 2023 in a position of strength as a result of strategic investments in all of our core businesses. Looking ahead to 2024, we expect slowing consumer spending and continued solidness in global economic growth in response to monetary policy tightening. Amid this backdrop, we'll continue to prioritize financial strength and risk discipline while advancing our purpose-driven culture and our growth strategy. We're confident that this approach, combined with our client-focused strategy and strong execution, will deliver relative outperformance and top-tier shareholder returns over the years to come. And with that, I'll turn it over to my colleague, Haraj, for a detailed review of our financial results.