Canadian Imperial Bank of Commerce Q4 2024 Earnings Call Transcript

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

Question: Matthew Lee - Canaccord Genuity - Analyst : Hi. Thanks for taking my question. Maybe we can start with one on the mortgage business. It just sounds like the market has been pretty competitive on that front on pricing. So maybe can you talk about how you're balancing your objectives of profitability with making sure you maintain your share in that space, that particularly given the levels of renewals income that are coming back?

Question: Matthew Lee - Canaccord Genuity - Analyst : Alright. That's great color. I appreciate it.

Question: Ebrahim Poonawala - Bank of America - Analyst : Good morning. I guess maybe just wanted to follow up. So Hratch, thanks for the color, but I think, Victor, you said in your prepared remarks, mortgage growth and consumer discretionary spending to accelerate in 2025. We heard a bit of a more cautious commentary from one of your peers yesterday. I think as we try to figure out where the Canadian economy is going, are we -- is it safe to declare that the worst is behind us and things the cyclical rebound that the markets are discounting in these stocks is already underway, and we should feel confident about unemployment moving the right direction given your base case and the comment you made.

Question: Ebrahim Poonawala - Bank of America - Analyst : Got it. I need to follow Victor to that around. You said the regulators might level the playing field I think the expectation on the US is, you're right, I think we will see more predictable maybe capital neutral to positive outcomes. Does that mean we should anticipate maybe the floor factor could get permanently change or the DSB buffer? Is the range is reduced? Like how should we think about where the regulators may level the playing field? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 12:30PM, CM.TO - Q4 2024 Canadian Imperial Bank of Commerce Earnings Call

Question: Ebrahim Poonawala - Bank of America - Analyst : Perfect. Thank you.

Question: Doug Young - Desjardin Capital Markets - Analyst : Hi, good morning. I know Victor or Rob, maybe both. But just can you talk a bit more about your discussions around lowering the medium-term ROE target and you talked about higher regulatory capital. I fully get that. But can you talk about what your set one assumption was back at the Investor Day what the CET1 assumption is today? And where do you think you can run this because I -- when I run the math, it seems like you need to have a 12.5% to 12% to get that set on rate or that ROE back up into that 15%, 16% level. So I'm just trying to get some context and how much may even buybacks kind of factor into this? Thanks.

Question: Doug Young - Desjardin Capital Markets - Analyst : Appreciate the color. Thank you.

Question: Sorab Movahedi - BMO Capital Markets - Analyst : Okay. I just wanted to quickly go to Shawn Beber. Shawn, your business on an adjusted basis, pretax pre-provision was about [$230 million] or [$240 million], so call it run rate in close to about $1 billion. Is that a good number do you need for you looking ahead? Should you be able to do this around $240 million? Is most of the investing behind you now? And should we be -- should we start thinking about a bit more growth out of your segment looking ahead? Shawn Beber - Canadian Imperial Bank of Commerce - Senior Executive Vice President and Group Head - U.S. Region, President and Chief Executive Officer, CIBC Bank USA Thanks for the question, Sohrab. So our growth outlook is sort of consistent with what you've heard already today. There's an uncertainty out there today, we think we're very well positioned with our clients. And our team is ready to respond to the changing environment. But when we look at our pipeline, it's strong with the uncertainty out there, it's going to take a bit of time to figure out what the timing of that growth might be over the course of 2025, but we feel good about how we are positioned to continue to outperform. In terms of the quarter, we had good results this quarter. There's some temporary benefits, as Rob talked about in terms of net interest margin that we benefited from this quarter. That will play through over the next several quarters in terms of coming back down to a more normalized level in the sort of the 350 basis points range. But I'd say, we're in a -- from this point forward, we look at our performance from a PPPT perspective as being sort of steady growth going forward.

Question: Meny Grauman - Scotiabank - Analyst : Hi, good morning. Victor, during the Q3 call, I think you gave a very detailed answer in terms of capital deployment priorities. And you talked about a bias towards organic capital deployment and return of capital, but the world has changed a lot since then. The outlook for the US is very, very strong, and we have the question mark around tariffs and the impact on Canada. So the question is, does that impact your capital deployment thinking? And maybe put it more directly, why not get bigger in the US quickly and inorganically to take advantage of is likely to be a booming US economy, you already have a base there, but why not get more aggressive right now?

Question: Meny Grauman - Scotiabank - Analyst : So just if I could follow up on that. I guess what you're saying is you don't feel an added urgency to deploy capital in the US Is that correct here?

Question: Meny Grauman - Scotiabank - Analyst : Thanks, Victor. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 12:30PM, CM.TO - Q4 2024 Canadian Imperial Bank of Commerce Earnings Call

Question: Lemar Persaud - Cormark Securities - Analyst : Yeah, thank you. Just a point of clarification, Rob. When you said earlier, you see margin as a tailwind for the next couple of years. Are you talking about all bank net interest margins? Are you talking more along the lines of marginal growth? And then if I could squeeze another quick one in here, just the outlook for the tax rate moving forward.

Question: Lemar Persaud - Cormark Securities - Analyst : Appreciate the time.

Question: Gabriel Dechaine - National Bank Financial - Analyst : Good morning. Just first one on the credit guidance, that's been reiterated. And if I'm understanding you correctly it's that the loss rate will be higher in the start of the year and the grade down over the course of the year. It's consistent with what another bank said and in contrast with different banks. Just wondering why your outlook might be different? I know these portfolio trends and all that stuff that play a role. Is it largely because the -- that CRE office portfolio loss rate continues to decline and that's going to offset stuff over the course of the year?

Question: Gabriel Dechaine - National Bank Financial - Analyst : Okay. Great. And then a conceptual one, I guess, for Victor and or Rob or both. So this ROE target, it's I guess, one of the big moving -- one of the big factors affecting it is the regulatory capital requirement, which has changed since the Investor Day. We all know that -- so your -- I guess, your base assumption is maintaining a 12.5% to 13% core Tier 1 ratio. Like what if the domestic stability buffer has cut back substantially, do you change that management target range or do you keep it static because it could always go back up? I'm trying to get an understanding of how fluid your core Tier 1 ratio target is because, as I just mentioned, the capital requirements could be reduced, but they can also be held back because some might just say, hey, let's plan as if that maximum is an effect always.

Question: Gabriel Dechaine - National Bank Financial - Analyst : Yes, no, no. I'm talking more about the upside if it goes down. Is it -- so this is really a fluid management target range if it goes down? You react to a reduction if that were to happen and that's perfectly rational, but it's also perfectly rational to assume that the higher requirement is maintained. So it can make managing your ROE target difficult, I guess, is what I'm saying.

Question: Gabriel Dechaine - National Bank Financial - Analyst : Okay, great. Well, congrats on the full year. Take it easy.