Canadian Imperial Bank of Commerce Q3 2020 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 : First question, I want to talk about the all bank margin and margins overall. One aspect that's hitting all banks is that you're carrying a lot of excess liquidity and that's creating some negative carry in the treasury area. Wondering what I should look at -- in terms of excess liquidity, how do I measure that? And maybe a year from now, if things are okay, that comes back and we can start assuming elimination of that issue? And then the other one would be, aside from this factor, and Hratch, you mentioned the whole gradual impact of the yield curve getting reflected in your margin, can you walk us through the time line there? And how much that represents of NII erosion over the next few years as you reinvest your liquidity book?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Got you. And then just a question on the performing allowance. And Shawn, you mentioned you don't expect material additions to it going forward. I'm wondering -- if I look at performing allowances to performing loans, you're at the low end of the peer group. I'm wondering if that's something you're wanting to move closer to the peer group average or upper end? Or how are you thinking about building up the performing provision over time? Yes, let's go with that.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. I know mix -- comparing banks like that, it's a bit simplistic mix factors matter, but just trying to get a sense if there's any targets you have or -- but it doesn't sound like you're -- well, it sounds like you're comfortable, right? So anyway, I'll leave you there.

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Laura, a quick question for you. Your bank is obviously been very good at doing this as have other banks. You've got pretty good statistics here around basically the digital angle of your business. And your digital adoption rate, I think, on Page 27, is up to about 75%. I guess a 2 part question. Is there a saturation point on digital adoption? And when you look at some of these statistics that you give us on digital, is there any one in particular that you're focused on that will help drive your business forward? And how will that do that? Is it through top line growth? Or is that through improved efficiency through cost management? Just trying to kind of get a feel for how much benefit is still under come relative to that 75% digital adoption? Laura L. Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP, Group Head of Personal and Business Banking-Canada & Head of Risk Management Sure. Sohrab, well, I'd tell you that they're all important. In that, in a perfect world, 100% of our clients are actively using digital. And so that would be, call it, on the front end. Where I think we will get the most pickup is as we really work through -- not just our digital sales capabilities sort of at the front end, but the full end-to-end digitization and automation, if you will, to get to remote fulfillment. When we do that, we should see an increase in our productivity. And so I would hope we will start to see when you look at that slide, you've mentioned where we just see more from a self-serve transaction, you'll see more active mobile users. So we're going to keep going to try to get to 100%. That's always the target and everything that we do digitally, it's -- again, it's easier, and it adds to our bottom line if we can get more folks using digital and if we can do more

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : And if you get there, Laura, are we looking at a low 40% expense to revenue ratio for your business? Or is it still going to be in the mid- to high 40s? Laura L. Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP, Group Head of Personal and Business Banking-Canada & Head of Risk Management Well, what I... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2020 / 12:00PM, CM.TO - Q3 2020 Canadian Imperial Bank of Commerce Earnings Call

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. And just maybe just for a point of quick clarification, Shawn. I mean, I think you answered this to Doug's question. But if you -- if I can comment a little bit differently, can you give us a kind of yardstick of what's the RWA associated with the mortgages that are current, but in deferrals versus mortgages that are noncurrent? Just so that we have a sense of that. I think you mentioned that the $1 billion to $2 billion -- I think, $1 billion to $1.5 billion incremental RWA. But I was trying to kind of get a sense of how much more capital-intensive those mortgages could become if they're not -- I guess I could do the math, but if you have it handy, that would be helpful?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. So not that much more capital-intensive if 2% -- if that 98% of mortgages that are -- if the 2% pulls away or 1% gets further delayed it's not -- that's not going to cause a huge capital drag from an RWA perspective for you?