Canadian Imperial Bank of Commerce Q4 2025 Earnings Call (English, French) Transcript

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

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hey, good morning. I guess Rob's prepared remarks set this up, but maybe both from Harry and Rob for both of you. When we think about you mentioned the 15% ROE, which I think is better than expected for this year. I guess, Harry, for you, I think the question is when you look at the franchise and hear you loud and clear, there's no big dramatic change in the strategy. But when we think about the Canadian banks, there are banks that are clearly earning much superior ROEs, 17%, 18%, and there are others who are trying to catch up to get closer to that. Given kind of your guidance for 2026 and what you see within the franchise. Just talk to us in terms of is there an opportunity for commerce to have a best-in-class ROE? Or are there structural disadvantages the bank faces to get to that point? And if so, what do you need to do differently to get there? Thank you. Harry Culham - Canadian Imperial Bank of Commerce - Senior Executive Vice-President and Group Head, Capital Markets, Global Asset Management and Enterprise Strategy Thank you, Ibrahim, and good morning. I'll take it first, and I'll pass it over to Rob. It's Harry here. So as I said in my opening remarks, we are on a journey here. Our strategy and our unique competitive advantages that really position us well to deliver profitable growth. And that LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 04, 2025 / 12:30PM, CM.TO - Q4 2025 Canadian Imperial Bank of Commerce Earnings Call (English, French) will lead to a premium ROE. We're targeting the right client segments where we can deepen relationships and be meaningful to our clients. We have the right product focus. We're focused on deposits, investments, transaction accounts across each of our businesses. And we believe we have the right technology. We've invested in AI-enabled technology, such as Cortex, which I mentioned at the outset, in the retail and our cash management systems in corporate and commercial. And I believe we have the right culture to take us to the next level. Our team members are focused on delivering all of our connected bank to our clients, and that will lead to this trajectory that we're forecasting moving forward to move higher from an ROE perspective. Rob, do you want to jump in with some more specifics?

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : That's helpful. Thank you both.

Question: Doug Young - Desjardins Securities Inc - Analyst : Hi, good morning. Just a few things on capital, Rob. First, you said there's a 20 basis point benefit you're getting in Q2 of '26. What's driving that? And is there anything else coming down the pipe to think about? And then like the focus for excess capital, I assume it's buybacks and tuck-ins. And then like thinking about capital and you're looking at a 15% plus ROE. Like what CET1 are you triangulating to for fiscal '26? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 04, 2025 / 12:30PM, CM.TO - Q4 2025 Canadian Imperial Bank of Commerce Earnings Call (English, French)

Question: Doug Young - Desjardins Securities Inc - Analyst : Appreciate the color thank you.

Question: Mario Mendonca - Cowen and Company LLC - Analyst : Good morning. I think Rob and Harry, when you were referring to the potential ROE improvement, one segment that was left out was the US. And what I'm observing there for the quarter and for a few years now is that expense growth has been very elevated. And I appreciate it's things like comp and tech spending and but it seems like there's a major project going on in the US, perhaps it's compliance-related spending. Can you talk about what's going on there and when you expect that spending to become a little more in line with the revenue growth, so that business can contribute as well?

Question: Mario Mendonca - Cowen and Company LLC - Analyst : Okay. That's helpful. Let's drill down something else. The capital markets business, the loan growth there has been exceptional. By my math, 22% year-over-year this quarter. Last couple of quarters have been running very hot. Can you speak to what's growing there and address the notion that sometimes growth in this area just leads to grief 2, 3 years later. We've seen this at banks in the past. So talk about what's going on there and maybe address the concern that this is going to be an issue 2 or 3 years from now. Unidentified Company Representative Thanks for the question, Mario. This is Christian. So I'll just take it back to the US strategy. So as Rob mentioned, the US has been growing quite considerably for us. The US now is roughly 34%, 35% of the Capital Markets revenue. It's roughly double what it was actually five years ago, and we continue to, I would say, invest in this business. When you look at, I would say, the corporate credit book, it actually generates now more revenue in the US than it does in Canada. And that just means that we've been onboarding many, many more, I would say, clients, so just in line with our strategy. And remind you that when it comes, I would say, to looking at this loan book, it really is about having an anchor product, so we can actually cross-sell, whether it's advisory services or hedging product. The other area, which has been growing considerably, as you noted, has been the business that we call global credit financing business. We created this business a number of years ago. And for risk purposes, we put all these businesses together. So it encompasses businesses such as repos, ABS, MBS, securitization, CLOs and loan warehousing. And we actually like this business very much, I would say, because it scores strongly on three metrics. Number one, as I said, is that it is client-driven and therefore, aligned with our strategy. And we -- in that business, you deal mainly with the highest quality sponsors, pension plans, asset managers, insurers and some wealth firms. And we deepen the share of wallet with those clients with, call it, 8 to 10 different products, as I said, from advisory to hedging products. Number two, returns strong balance sheet returns. We, on average, make comfortably over 20% ROE in these businesses. And then number three, which, as you pointed out, we actually like the risk in these businesses. Transactions are written in most of the business to a single A or AA equivalent. In securitization, it's more AA to AAA. So we like this. Well, in the loan warehousing facilities or CLO businesses we're always second loss, so obviously, it protects the bank. Now what's also very important is the quality of the people looking after these businesses. Most of the senior leaders have over 20 years of experience, and they either have a credit risk management background. So they actually originally had this in their experience, in their CV. And number two, if not, they are, I would say, highly experienced traders.

Question: Sohrab Movahedi - Bank of Montreal - Analyst : Sorry about that. Thank you, yeah, sorry about that. Thank you, Rob, just looking at your slide 13, you've given us the capital waterfall here. We've just talked a little bit about the good loan growth that comes across all the businesses. And as you think about next year, as you think about that ROE kind of build, could we see a situation where your RWA growth is exceeding your internal capital generation? .

Question: Sohrab Movahedi - Bank of Montreal - Analyst : Okay, thank you.

Question: Gabriel Dechaine - National Bank Financial Research - Analyst : Hi, good morning. First for Frank. Your outlook for impaired provisions lower than losses than we saw this year. I get that. Just wondering what the influence of USMCA difficulties would be, how that would affect that outlook? And then about the capital deployment strategy. No mention of M&A. And I'm just bringing this up to kind of check a box on the list, but just to feel the pulse given the new leadership. What's your appetite for M&A? It can spice things up but can also lead to heartburn.

Question: Gabriel Dechaine - National Bank Financial Research - Analyst : Probably not you wouldn't get the back half improvement if the negotiations break down perhaps?

Question: Gabriel Dechaine - National Bank Financial Research - Analyst : Great for the thanks for the clarity, Harry. Harry Culham - Canadian Imperial Bank of Commerce - Senior Executive Vice-President and Group Head, Capital Markets, Global Asset Management and Enterprise Strategy You're welcome.

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Hi, thank you very much. Just wanted to follow on the question that Mario asked. Christian, you gave a lot of detail, and thank you very much for slide 44 on essentially private credit sort of exposures. It does elicit a couple of questions for me, though, just to help build the mosaic around these exposures. The first question, Christian, is it's been great growth. It's been very low losses. I suspect you probably would tell me that a stress test loss will also be relatively low. So what is your risk appetite here? You did say it's client-driven. So if this continues to be an area that's hot, how far are you willing to push the envelope and make this a bigger part of your total balance sheet? Harry Culham - Canadian Imperial Bank of Commerce - Senior Executive Vice-President and Group Head, Capital Markets, Global Asset Management and Enterprise Strategy Good morning. It's Harry, Darko. I'm just going to jump in quickly because I think this the support of our clients in this segment, the nonbank financial institutions, touches all of our SBUs, but I'll pass it over to Christian to answer your question in a second. The first thing I'd say is, this business reference is really core to our client-focused strategy. We are delivering robust risk-adjusted returns, and it's really aligned to our client activity as clients move from public to private markets, which we're all seeing. This is a broad-based portfolio. And as Christian pointed out, it's highly diversified across geographies, business segments and products and clients. And the underlying loans and structures have a meaningful risk mitigants that we are very comfortable with. We have grown at a very rapid pace over the last while. We came from a very small franchise over years to deepen these relationships with the most prominent players in the space. But Christian, why don't you just take it from there, please? Unidentified Company Representative Yeah, no, So, I think, Harry, you're right. Thank you for the question. As Harry stated, that number I would say, encompasses the entire space of what it is we do at CIBC. You are not going to see, I would say, so much growth going forward. As Harry said, we have been playing a catch-up. We are building a number of businesses in the US, power trading. We've applied for primary dealership. We're building a futures trading capability. So we need, I would say, to diversify the resources. We don't want from a risk perspective to concentrate all of our funding, all of our capital in one area. So we're pretty happy where it is. And we should see, I would say the, I would say, low to sorry, high single-digit growth in this year. Harry Culham - Canadian Imperial Bank of Commerce - Senior Executive Vice-President and Group Head, Capital Markets, Global Asset Management and Enterprise Strategy Okay, thank you. That's helpful, and I will likely follow-up, afterwards, so thanks very much for that color. Thank you.