Canadian Imperial Bank of Commerce Q1 2022 Earnings Call Transcript

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

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : I just wanted to quickly go to Laura. Laura, the segment, the Canadian personal and small business segment improvement in efficiency ratio quarter-over-quarter versus last year and probably the lowest since, I don't know, Q1 '20 back then, you had much higher net interest margins. So can you just talk a little bit about how much of this is because of management of expenses as opposed to efficiency pickups from prior investments? And where do you think this may kind of trend understanding that it's hard to talk about a particular segment. But I'm just trying to understand how you're thinking about this. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2022 / 1:00PM, CM.TO - Q1 2022 Canadian Imperial Bank of Commerce Earnings Call Laura L. Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head of Personal and Business Banking - Canada Sohrab, thanks for the question. Look, as Hratch mentioned earlier when Ebrahim asked his question, so this is a bit of a derivative of that. A lot of what we're seeing is the investments and the hard work that the whole team at CIBC has put in, which is allowing us to deliver, I'd say, some real quality volume growth. So we're seeing great top line growth. We've put in a lot of work to ensure that, that will be consistent and sustainable. As Hratch mentioned, we're going to continue to do that. That said, we do expect to continue to spend and invest in our strategic initiatives. So I would expect we're going to see volatility quarter-to-quarter as we do that. But again, as Hratch said, we're going to be prudent in terms of what we do. We're pacing our investments. We are continually looking at ways to simplify how we do things in order to deliver more bottom line to our stakeholders. So hopefully, that answers your question.

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : And stuff like Tyl and nCino, these will be additive to the productivity? Laura L. Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head of Personal and Business Banking - Canada Absolutely. We need to -- I mean we need to start by implementing them, rolling them out. They are as good for us from a defensive perspective in terms of keeping our existing client base happy and bringing them the tools and experiences they need. And it's also about growth for us, and it will allow our team members to be more productive once we have those rolled out as well.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Question on your rate sensitivity. I'm not sure if you've mentioned this in the past, but when you give that, are you assuming -- can you give me what assumptions you've made about the surge deposits, so called surge deposits. Are those not included or excluded from your guidance? And then as far as the pace of rate hike, what do you assume as far as passing the deposit betas are you assuming 50% to 75% of volume I mean, we probably won't give me a specific number, but just to kind of get a sense of where that is? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2022 / 1:00PM, CM.TO - Q1 2022 Canadian Imperial Bank of Commerce Earnings Call

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Well, that's a lot to chew on. My next question is on the commercial growth, 18% in Canada. Jon, can you talk to me about the impact of lending to private equity sponsors, like the businesses they're acquiring and do you do any co-investment alongside these partners? Because I mean, I've heard about those types of borrowers being a pretty important influence on commercial loan growth from all the banks. So maybe throw some numbers around there? Jon Hountalas - Canadian Imperial Bank of Commerce - Senior EVP and Group Head of Commercial Banking & Wealth Management-Canada So thank you for the question. So we don't generally co-invest. So let's start with that. In terms of our growth this quarter, I'd say less -- it's not a big part of our business, right? We have an $80 billion loan book. This would be a very small part of that. It probably contributed a few points of growth but nothing material, everybody's focused on it is leverage on a bit higher. In some cases, yes, loan funds have come in. They've made the market more aggressive. We focus on a few sponsors. We're close to them. We get a big part of their business and loan book is in good shape. So they're active for sure. There's lots of private capital, as you know. So pick your sponsors, go deep with them, follow your clients, good things happen.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And what's the sign-up bonus going to be on the Costco card there? No, I'm just kidding. I'll wait for that one. Laura L. Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head of Personal and Business Banking - Canada I hope you have a card, Gabriel, or you should get one.