Canadian Imperial Bank of Commerce Q1 2019 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : I also want to ask about the mortgage growth. So you're saying that the decline in originations and the flat mortgage growth is really a function of market conditions. You didn't like the pricing, so you backed off. Is that something you're willing to do more than you were a few years ago? Because when Victor was talking about how you want the business to look, over-index commercial, over-index wealth, Canadian consumer is kind of excluded from that. Christina C. Kramer - Canadian Imperial Bank of Commerce - Senior EVP and Group Head of Personal & Small Business Banking-Canada Thank you for the question, Gabriel. When we take a look at our relative growth rate relative to peers, I talked a bit about our strategy and our expectations of moderating growth. Relative performance also was impacted by our strength in the GTA and GVA markets without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 28, 2019 / 1:00PM, CM.TO - Q1 2019 Canadian Imperial Bank of Commerce Earnings Call where we had pursued opportunities to serve client demand and growth over the last few years, and it was an opportunity for ourselves to grow our business. In those markets, we've seen a pullback in the real estate activity and the markets have seen double-digit sales -- unit sales declines in the last quarter. And so given our strength and our focus in these areas that has had a more pronounced impact on our growth rate. We definitely want to continue to see growth in our overall mortgage portfolio, and we'll continue to do that, grow in line with our strategy for deeper client relationships, and we'll continue to be active in this space.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And just a last quick one for Laura. Stage 1 and Stage 2, you gave the reasons for the additions for those reserves. Could we see that trend maybe continue? Because it seems like a few banks are making regular additions as they, I don't know, take a more conservative outlook in their assumptions?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : I just wanted to actually pick up where Mario left off. Christine, the headcount attributed to your business is down about 1,200 or thereabouts and steadily down. Is that -- and you've been able to keep your expenses, ex some of these one-timers, pretty steady and flat actually, not much growth. How sustainable is that? Christina C. Kramer - Canadian Imperial Bank of Commerce - Senior EVP and Group Head of Personal & Small Business Banking-Canada So over the quarter, we would have seen some FTE reductions in Personal and Small Business Banking, and they are a transfer to our Corporate and Other area. So it is not a reduction of FTE over the quarter. It is an organizational change. Those expenses are allocated back to Personal and Small Business Banking, and they have no impact on our financial results. In terms of our expenses and our outlook for expense growth, we had previously given guidance that on a normalized basis we would expect our expense growth to be in the range of 3%, and that's what we expect going forward. Over this quarter, I would say that the small expense growth isn't a good indication of our investment levels in the business. As Victor mentioned, we are repurposing some expenses and we have the benefit of some initiatives that have helped reduce some costs in the quarter. There are also some timing-related impacts where we see a slightly lower spend in Q1, which will be normalized going forward. And then there is the impact of IFRS 15, which resulted in some expenses being reclassified as contra revenue. So again, on a normalized basis, we would have been closer to our guidance of 3% and that's what we expect going forward.

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst :

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. And just maybe a couple of quarters -- or maybe it was a few quarters ago, I can't remember. You had provided some additional transparency as to the cross-sell success that -- or targets in what you're on the path of. Any updates as to how you're cross-selling some of that, mortgages that you originated a few years ago? Christina C. Kramer - Canadian Imperial Bank of Commerce - Senior EVP and Group Head of Personal & Small Business Banking-Canada Yes. Our growth strategy with mortgages over the past few years, I can speak to that. We're pleased with the market share that we've grown and the quality of the portfolio. 87% of the -- of our residential mortgage clients have multiple CIBC products with us, and that's been consistent over the past couple of years. And when we take a look at our current results and our overall portfolio, we see the business -- the core business performing very well. We continue to see strong client acquisition, even though we are changing the mix of our business, declining attrition (technical difficulty)

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : So the mix of CRE coming down, at least as your business is concerned probably over the next...