Canadian Imperial Bank of Commerce Q1 2025 Earnings Call Transcript

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

Question: Matthew Lee - Canaccord Genuity - Analyst : Really good margin expansion in the PMD business was a pretty nice driver of NII growth this quarter. If I'm reading it correctly, it looks like it's largely driven by a move from term to demand on the deposit side. Is the assumption here that money coming out of GICs eventually gets moved into the Vault business? Or are there a lot of people kind of sitting on the sidelines given the uncertainty here? And then maybe how that -- does that dictate your view on NIM going forward? Hratch Panossian - Canadian Imperial Bank of Commerce - Senior Executive Vice-President and Group Head, Personal and Business Banking, Canada Matthew, it's Hratch. I'll take that question. Yes, we're seeing some shift in the market. But I think what you're also seeing in our margins is the impact of our strategy. And as we've spoken about before, our strategy is focused on doing business in a way that benefits both our clients and our shareholders. And I think you're seeing the results of that across the entire business. We're seeing volume growth that has been more muted in the 2% range. But as you pointed out, strong margin expansion across all of our products, strong mix change. And because of that, the quality business is what's driving double-digit NII growth and the overall 9% revenue growth, which we're pleased to see being top of market. And so we're very proud of what our team is doing to execute against this, and it really comes down to advice. And so specifically to the space on liquid assets and investable assets, we're seeing clients come out of GIC portfolios with rates that were above 5%. And needing a device on what to do with those funds. And what our team has done really well, leveraging a lot of the investments in technology and planning tools that we've given them and leveraging the investments in the increased team with additions that we've made across the board in our mass affluent franchise as well as other advisers is to get in a timely way in front of those clients and serve them the solutions that they need and we're pleased to see that two things are happening. We are seeing a shift from GICs into demand. And we've done very well in demand. You would have noticed our number two position. We've grown demand deposits 9% year-over-year and we're seeing really good margins on those deposits. And so that's contributing to NIM expansion. And when you look beyond NIM to overall revenues, we're also benefiting by a very substantial portion of those deposits going into investments. So it really depends. It depends on the client situation, but whether it is a demand deposit or whether it's an investment solution, that's the right one for the client. We've got the tools and we've got the best advisers in the field to give the client that advice and to keep the funds with the bank. And overall, that's contributing to revenue growth, and it's contributing to client value. 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 27, 2025 / 12:30PM, CM.TO - Q1 2025 Canadian Imperial Bank of Commerce Earnings Call

Question: Meny Grauman - Scotiabank GBM - Analyst : I wanted to ask the first tariff question. We don't know if tariffs are coming down the pipeline, but we do know that tariff uncertainty is here. So I'm wondering how that tariff uncertainty is playing out across your footprint right now? And how do you expect that to evolve? And so really just focusing on that uncertainty in and of itself, ignoring whether tariffs do come in on.

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Victor, I guess they should have you negotiate the deal with United States. So I appreciate the color. Just talk to us, I think in your prepared remarks, you also mentioned client activity picking up. So if you don't mind identifying where you're seeing strength in terms of driving that client activity and then appreciating the macro uncertainty, remind us how you're managing capital relative to the 13.5% CET1 stock is cheap, Like would you still flex in? And could we see the pace of buybacks pick up from what you did in the first quarter?

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Yes, that is very comprehensive.

Question: Gabriel Dechaine - National Bank Financial - Analyst : On the margin question or topic that was brought up earlier, just to reiterate, the Canadian banking margin performance, you're suggesting that's primarily from growth in demand deposits. I'm trying to get a sense of that the wave of term deposit repricing and how beneficial that is this quarter and going forward. And then in the US, also good margin performance. Is there any timing issue there related to your deposits repricing ahead of your loans? And I'll sneak another one in there on the buybacks. You have been active we know what the environment is, will you remain as active. 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 27, 2025 / 12:30PM, CM.TO - Q1 2025 Canadian Imperial Bank of Commerce Earnings Call

Question: Gabriel Dechaine - National Bank Financial - Analyst : No, I could go to buyback.

Question: Doug Young - Desjardins Securities - Analyst : Just wanted to go to slide 28. And Frank, just it looks like the consumer, I think you mentioned this in your prepared remarks, but the consumer net write-offs and the delinquency trends around credit cards and unsecured lending is down, which is a bit surprising, and it seems to be a bit different than what we're hearing from some of the other banks. And so I'm just hoping you can dig into and provide a little bit of color around what you're seeing in the consumer credit card, consumer unsecured lending, specifically in Canada.

Question: Doug Young - Desjardins Securities - Analyst : And if I can just follow up, just separately on credit. Yes, your gross impaired loan formations picked up quite a bit sequentially in retail and commercial. We're not seeing to kind of go through the impaired PCL side. I assume it's because you've got good collateral and good coverage. But just hoping to get a kind of a put and take between those two kind of items like the gross impaired loans going up. You're not seeing it hugely coming through on the impaired PCLs. Like can you dig a little bit into what you're seeing there?

Question: Mario Mendonca - TD Cowen - Analyst : Victor, early in your prepared remarks, you referred to a normalization of the credit picture. I think it's in the context of your medium-term ROE drivers there is credit normalization. So in the quarter, impaired PCLs were around 31 basis points, looking over the very long term. For CIBC, we're probably looking at 35, 36 basis points. So what do you mean by normalization? Are you suggesting that CIBC's loan mix is different. CIBC is such a different bank than it was over the last 20 years ago that normal is what 25? Help me think through that.

Question: Mario Mendonca - TD Cowen - Analyst : Real quickly then on this provision, this legal provision. I've learned over time not to ignore these sorts of things because they can sometimes evolve as something kind of big. Is there anything you can tell us about that legal provision that would help us make our own assessment on how meaningful this could be over time?

Question: Lemar Persaud - Cormark Securities Inc. - Analyst : Frank, you mentioned you did a bottom-up stress test on the wholesale portfolio for the implication of these tariffs. Was that captured in the Q1 performing? Or would you have bumped up the Q1 performing provision after doing that kind of more detailed review? Like my question is really around timing. And if that bottom-up analysis was accounted for specifically in the $127 million you put through on performing? And then finally, when you scrub the wholesale portfolio, what industries gave you the most concern?

Question: Lemar Persaud - Cormark Securities Inc. - Analyst : So bottom line, you would have perhaps built a little bit more, but you're not overly concerned. Is that kind of the bottom line? 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 27, 2025 / 12:30PM, CM.TO - Q1 2025 Canadian Imperial Bank of Commerce Earnings Call