Canadian Imperial Bank of Commerce Q4 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 : Just want to ask first about the U.S. margin. You mentioned the 3 Fed rate hikes. Is there any reason why the drop was sharper this quarter than it was in Q3? Is it just the lagged effect, it just jumped out at me. And then, sorry, where do you expect it to be in Q1 in 2020?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So a couple of basis points down over the next few quarters?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Then on the credit. I just want to better understand the guidance floor that you are giving. Full year loss on impaired loans -- loss rate on impaired loans of 29 basis points. So you're saying you're expecting that to be stable in 2020? I keep hearing the word normalization from banks and I'm just wondering if that means, no, we're actually going to move higher.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. And then just last one. How -- like this trend of higher provisions is going to -- you talked about a lot. How does it affect your risk appetite? I'm thinking about cards, which is a battleground and that's only going to intensify to the midyear of -- midpoint of 2020. Unsecured personal lending has been a growth area for a few banks in the last number of years. How does all of this change your appetite looking forward?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : A quick question for Jon Hountalas. Jon, if I look at just the commercial banking component of Canadian Commercial and Wealth, the margins in that business are down every quarter this year anyway. Can you just talk to me -- to us, I guess, a little bit about the dynamics there between volume growth and margin compression as you look into 2020? 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. DECEMBER 05, 2019 / 1:00PM, CM.TO - Q4 2019 Canadian Imperial Bank of Commerce Earnings Call Jon Hountalas - Canadian Imperial Bank of Commerce - Senior EVP and Group Head of Commercial Banking & Wealth Management-Canada Thank you for the question. So our model has been pretty consistent, and we don't compete on rates at all. Has the market gotten a little kind of more aggressive? Yes. But nothing material. A lot of the compression you see is just rate impact. So we haven't seen big client compression and whatever has existed, has been more on the deposit [than] the loan side. Going forward, I don't see -- again, from client pricing perspective, I don't see big deterioration. So could it move a basis point? A couple of basis points, perhaps, but nothing material.

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. And then maybe just a couple of quickies here. Hratch, you -- or Victor, I guess. I mean, we've talked about the capital ratios now on pro forma and potential for buyback. But generally speaking, is there a kind of level that you're going to try and run the bank with the capital ratio level? Is it 11.5%? Is it low 11s? Is it high 11s? Can you give us a kind of yardstick on that?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : That's excellent. Victor, do you think you will rethink the dividend policy from semiannual to an annual, just to give a bit more flexibility, given some of the kind of lack of transparency or visibility, I guess, into the outlook? Or you think there's no need for that? 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. DECEMBER 05, 2019 / 1:00PM, CM.TO - Q4 2019 Canadian Imperial Bank of Commerce Earnings Call