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 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'll begin this morning's presentation with opening remarks from Victor Dodig, President and Chief Executive Officer, followed by Rob Sedran, our Chief Financial Officer, and Frank Goose, 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, John Huntalas, Canadian Banking, and Haraj Panosian, Personal and Business Banking. They're all available to take questions following the prepared remarks. We have a hard stop this morning at 8.30, so please limit your questions to one during the Q&A to allow everyone to participate. As usual, 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 will now turn the call over to Victor.

Thank you, Jeff, and good morning, everyone. I'll begin the call today with a brief overview of our second quarter results, followed by an update on our key operating segments and progress on our strategy. We delivered strong results this quarter that reflected our differentiated business model, our diversified portfolio, and our client-centric strategy, which we continue to consistently execute on. On an adjusted basis, we reported net income of $1.7 billion and earnings per share of $1.75. This performance was driven by 9% pre-tax, pre-provision earnings growth and a third consecutive quarter of positive operating leverage. Our capital position remains strong with a C2 on ratio of 13.1%. This provides us with flexibility to draw on excess capital, support our clients, and continue growing our businesses while also returning capital as shareholders. Our adjusted return on equity was 13.4%. as we maintain focus on profitability while holding elevated capital. Looking forward, our strategy is deliberately designed to deliver robust long-term return profile as we prioritize specific client segments, advance our digital capabilities, deepen client relationships, and realize efficiencies across our portfolio. Now, turning to our business units. Starting with Canadian personal and business banking franchise, we delivered a strong quarter as we continue to advance our strategic priorities. In CIBC Imperial Service, which serves the needs of the mass affluent segment in Canada, our client net promoter scores are trending higher and money in balance growth for Imperial Service clients was up 27% sequentially. With the support of AI, we're continuing to foster a cultural mindset of delivering an enhanced client experience. In one use case, we're using advanced analytics to compile a holistic client financial snapshot, which provides our advisors with deeper insights to guide more personalized conversations with their clients. We're also leveraging our digital capabilities to continue deepening relationships with our personal banking clients. Today, four out of ten core banking products are sold digitally, continuing to trend up from prior periods. In addition, we saw improved net promoter scores for our digital channel clients as well. So turning to our Canadian commercial banking and wealth management businesses, softer economic growth and lower levels of residential construction have dampened loan demand, while financial markets have benefited from expectations of interest rate reductions later in the year. Our emphasis on client relationship returns generated significant growth in referral volumes between commercial banking and wealth management, which are on track to increase 70% relative to fiscal 2023. In line with our strategic priorities, we recently launched a modernized platform for our investment advisors as we continue to evolve our wealth management capabilities. And during the quarter, our asset management business garnered first place out of our big six peer group in absolute long-term and total retail mutual fund net sales. We will continue to drive growth in this business as we execute on our strategy to lead in the mass affluent and high-net-worth client segments. In the U.S. region, our results reflected continued progress on our growth agenda. During the quarter, CNI loan growth was strong and broad-based, while we continued to de-emphasize certain segments of our institutional commercial real estate business. In our private wealth management business, we continued to invest in technology and infrastructure to scale our platform, attract new advisory teams, and drive connectivity. Cross-business referral volumes from the U.S. are tracking well above our targets, supported by our ECRM investments. Scaling our highly connected U.S. platform remains a critical imperative to our cross-border strategy and to our long-term enterprise earnings potential. Moving to capital markets and direct financial services, our differentiated platform delivered another strong quarter of results. We maintained our number one market share position among the Canadian peer group in equity trading, while also moving to the number one market share position for advisory fees. Revenue sourced from the U.S. region was up 20% year-on-year on a year-to-date basis. In our DFS business, our efforts to build a best-in-class digital experience were recognized as well, with CIBC Investors Edge ranking number one of the big five Canadian banks. in J.D. Power's self-directed investor satisfaction study. Underpinning our momentum are the investments that we've made to strengthen our bank. We're investing in technology to enhance our client experience, advance operational resilience, to protect our clients, and to deliver efficiencies in how we work. We're taking a thoughtful and proactive approach to how AI plays a role in advancing our client-focused strategy and in the governance required to do so effectively. We already use AI in key functions across our bank. Existing implementations include sophisticated risk and information security models that can detect fraud and enable our team to help prevent losses for our clients. We're also using generative AI solutions to enhance our frontline experience, to improve our contact center efficiency, and to make head-off activities easier and faster to perform. We've got many use cases currently in flight across our bank, all connected to our strategy and all with our clients at the center of our thinking. Delivering on our commitment to build a secure, equitable, and sustainable future, our efforts were recognized by several prominent third-party organizations again this quarter. For the second consecutive year, we were recognized by Global Finance as the best investment bank and for our leadership in sustainable finance. For the third consecutive year, we were recognized by Mediacorp as one of Canada's greenest employers. And finally, for the fourth consecutive year, we ranked number one in Canada for gender equality by equity. These recognitions further enforced the hallmark of consistency, where focus on delivering across our bank on a number of fronts. So in closing, we delivered another strong quarter to build on our recent momentum. We have a skilled, tenured, and connected management team that is laser-focused on the consistent execution of our clearly defined strategy. Going forward, our focus is to continue delivering on our strategic priorities, to remain disciplined with resource allocation, and to further improve the client experience. With that, I'm pleased to hand things over to our new CFO, Rob Sedran, to review our financial results. Rob has a deep understanding of the banking sector and will bring valuable perspective to our CIBC Executive Committee. This move, along with the other new and expanded roles announced during the quarter, are consistent with our approach to deliver a strong bench to draw from to lead our bank into the future. So, Rob, over to you.