• Revenue: $7.3 billion, up 17% from the prior year.
• Adjusted Earnings Per Share (EPS): $2.20, up 22% from the prior year.
• Adjusted Return on Equity (ROE): 15.3%.
• Common Equity Tier 1 (CET1) Ratio: 13.5%, up from 13.3% last quarter.
• Non-Trading Margins: Up 17 basis points from the prior year.
• Non-Trading Fee Income: Up 11% from the prior year.
• Operating Leverage: Positive for the sixth consecutive quarter.
• Adjusted Net Income: $2.2 billion, up 23% from the prior year.
• Pre-Provision Pretax Earnings: Up 19% from the prior year.
• Net Interest Income (NII) Excluding Trading: Up 19% from the prior year.
• Noninterest Income: $3.5 billion, up 17% from the prior year.
• Expenses: Grew 9% from the prior year.
• Liquidity Coverage Ratio (LCR): 132%.
• Canadian Commercial Banking Loans and Deposits: Up 8% and 10%, respectively.
• US Commercial Banking and Wealth Management Net Income: USD 180 million, up $131 million from the prior year.
• Capital Markets Revenue: $1.6 billion, up 25% from the prior year.
• Total Provision for Credit Losses: $573 million, up from $419 million last quarter.

• Warning! GuruFocus has detected 5 Warning Signs with CM.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Canadian Imperial Bank of Commerce (NYSE:CM) reported record revenues of $7.3 billion, up 17% from the prior year, with strong performance across all business units.
• Adjusted earnings per share reached a record high of $2.20, marking a 22% increase from the previous year.
• The bank's CET1 ratio improved to 13.5%, reflecting strong capital management and share repurchase activities.
• Canadian Personal and Business Banking showed significant growth, with mass affluent clients growing 4.5 times faster than the rest of the client base.
• North American Wealth Management achieved strong results, ranking number one in long-term mutual fund net sales in Canada for the quarter.

Negative Points

• Trade tensions between Canada and the United States create uncertainty, potentially impacting sectors like forestry, auto parts, aluminum, steel, and agriculture.
• Expense growth was elevated, partly due to performance-based compensation and foreign exchange translation, impacting operating leverage.
• The bank increased its performing credit provisions, reflecting growing risks in the macroeconomic outlook.
• Gross impaired loans increased, particularly in Canadian residential mortgages and US commercial portfolios, though strong collateral mitigates potential losses.
• The bank faces ongoing uncertainty regarding potential tariffs, which could affect client activity and economic conditions.

Q & A Highlights

Q: Can you explain the margin expansion in the Personal and Business Banking segment and its impact on net interest income (NII) growth? A: Hratch Panossian, Senior Executive Vice-President and Group Head, Personal and Business Banking, Canada, explained that the margin expansion is driven by a strategic focus on client and shareholder benefits. This includes a shift from GICs to demand deposits, resulting in strong margin expansion and double-digit NII growth. The bank's strategy involves providing timely advice and solutions to clients, contributing to revenue growth and client value.

Q: How is tariff uncertainty affecting your business, and what measures are you taking to address it? A: Victor Dodig, President and CEO, noted that clients are tentative due to tariff uncertainty, affecting commitments. CIBC is well-positioned with strong capital, liquidity, and credit metrics. The bank is focused on understanding client risks and managing them prudently. Dodig emphasized the resilience of clients and the bank's preparedness to support them through potential tariff impacts.

Q: Can you discuss the capital management strategy, particularly regarding CET1 ratio and share buybacks? A: Victor Dodig stated that CIBC is managing its CET1 ratio above 12.5% and is currently at 13.5%. The bank plans to continue returning capital to shareholders through buybacks while maintaining flexibility to support client growth. The focus is on organic growth, and the bank is prepared to deploy capital as client activity picks up.

Q: What is driving the strong margin performance in both Canadian and US banking segments? A: Robert Sedran, CFO, explained that the margin performance is primarily driven by deposit volumes, mix, and balance sheet positioning. In Canada, demand deposits are a key factor, while in the US, seasonal deposit volumes have positively impacted margins. The bank expects stable to gradually higher margins going forward.

Q: How is the consumer credit portfolio performing, particularly in credit cards and unsecured lending? A: Frank Guse, Chief Risk Officer, highlighted that the consumer credit portfolio is showing resilience, with net write-offs and delinquencies trending down. The bank's focus on the mass affluent segment and investments in risk infrastructure are contributing to this performance. However, a cautious outlook is maintained, expecting gradual increases in PCLs over time.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.