Canadian Imperial Bank of Commerce Q3 2019 Earnings Call Transcript

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

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : I just want to flip the deposit pricing impact question around a little bit here and it had a beneficial impact on your margins, whereby the promos ended, your margins went up. But I also see that deposit growth has been ramping up for a number of quarters. I'm just wondering where you expect deposit growth in Canada to end up since these promotions are gone? And have you seen any of that trend yet? Christina C. Kramer - Canadian Imperial Bank of Commerce - Senior EVP and Group Head of Personal & Small Business Banking-Canada So Gabriel, it's Christina speaking. Thank you for the question. We're pleased with the performance of our deposits business. And as you mentioned, we've achieved strong and profitable revenue growth driven by year-over-year balance growth of nearly 8%, and that's also with the benefit of expanding margins. So as we look to the second half of the year, so including Q3, we will see slower growth but with strong retention of balances, so that will result in compensating positive impact on margins for the year.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Then commercial real estate, a different question here. I just looked at the slide -- I hope I've get the right quarter here, 23, and if I add up real estate and construction plus non-resi mortgage, in Canada, it's about 36%, 37% of your wholesale loan book. And in the U.S., it's a bit over 30 -- sorry, it's in the high 30s and in Canada, it's in the low 30s. Just wondering do you have a limit on how big you want or are able to take CRE to in your total wholesale book? And by extension, how does that affect your M&A strategy in the U.S. because a lot of the targets could potentially have big CRE books? Is that an impediment?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Are you bumping up on any of those limits?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And on the M&A, like how does it affect the M&A? Michael G. Capatides - Canadian Imperial Bank of Commerce - Senior EVP & Group Head of US Region, President and CEO of CIBC Bank USA Well, I'll go back to Victor's comments about our 4 pillars of capital deployment and with all the caveats in terms of when and if we didn't do something on the M&A stuff -- side. But I will tell you that one of the very attractive aspects of the legacy PrivateBank was that, it was heavier in the C&I portfolio, and we would expect that emphasis to continue going forward with this 50-50 balance. To the extent anything -- I'd rather not speculate, but I think you'll see in the market M&A activity would involve acquisitions where CRE portfolios are run down. But again, that's pure speculation and we're not there at this point.