• Net Earnings: $7.3 billion for fiscal 2024.
• Earnings Per Share (EPS): $7.40, up 10% year-over-year.
• Revenue: $25.6 billion, up 10% year-over-year.
• Pre-Provision Pretax Earnings: $11.3 billion, up 11%.
• Return on Equity (ROE): 13.7%, up 30 basis points from the prior year.
• CET1 Ratio: 13.3%.
• Dividend Increase: 8% or $0.07 increase in quarterly dividend.
• Adjusted Net Income: $1.9 billion for Q4, up 24%.
• Provisions for Credit Losses: $419 million in Q4.
• Net Interest Income (NII): Up 17% excluding trading.
• Non-Interest Income: $3 billion, up 13% from the prior year.
• Operating Leverage: 180 basis points.
• Share Repurchase: 5 million shares bought back.
• Liquidity Coverage Ratio (LCR): 129%.

• Warning! GuruFocus has detected 7 Warning Signs with CM.

Release Date: December 05, 2024

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 strong financial performance with net earnings of $7.3 billion and earnings per share of $7.40, up 10% year-over-year.
• The bank achieved a robust capital position with a CET1 ratio of 13.3% and announced an 8% increase in its quarterly dividend.
• CM's digital banking offerings were ranked number one by Surviscor for the best mobile banking experience among Canada's big banks.
• The bank's wealth management platform captured new client business, with new client AUM flows up 43% in the US.
• CM delivered positive operating leverage for the fifth consecutive quarter, demonstrating effective expense management and investment in growth initiatives.

Negative Points

• The competitive mortgage market has pressured pricing, requiring CM to balance profitability with maintaining market share.
• Client activity in North American Commercial Banking slowed due to elevated interest rates and limited global economic growth.
• The bank's US commercial portfolio saw an increase in gross impaired loans, although new formations were down year-over-year.
• CM's medium-term ROE target was adjusted to 15% plus, reflecting higher regulatory capital requirements.
• The bank anticipates slightly higher impaired provisions in retail due to macroeconomic uncertainties, although US commercial provisions are expected to decrease.

Q & A Highlights

Q: Can you discuss how CIBC is balancing profitability with maintaining market share in the mortgage business, especially given the competitive pricing environment? A: Victor Dodig, President and CEO, explained that CIBC focuses on acquiring clients with whom they can build long-term relationships. The bank has been selective in the mortgage business, prioritizing profitability over market share. They have improved inflow spreads, contributing to an 18 basis point increase in net interest margin (NIM). CIBC plans to maintain this approach while preparing for increased renewal volumes in 2025.

Q: With expectations of mortgage growth and consumer spending acceleration in 2025, is it safe to say the worst is behind us for the Canadian economy? A: Victor Dodig noted that while the regulatory environment is expected to loosen, and interest rates are moving in a favorable direction, uncertainties remain, particularly geopolitical ones. CIBC focuses on building relationships rather than competing on price, positioning itself to benefit from market upsides.

Q: Can you elaborate on the decision to lower the medium-term ROE target and the assumptions behind it? A: Robert Sedran, CFO, stated that the new ROE target of 15% plus reflects higher regulatory capital requirements. The previous target was based on an 11.5% CET1 ratio, while the current guidance assumes a 12.75% to 13% CET1 ratio. The bank plans to achieve this through strategic execution, margin improvements, efficiency gains, and dynamic balance sheet management, including share buybacks.

Q: What is the outlook for the US Commercial Banking and Wealth Management segment, and is most of the investing behind you now? A: Shawn Beber, Group Head of the US Region, indicated that while there is uncertainty, the segment is well-positioned for growth. The current quarter benefited from temporary net interest margin improvements, but steady growth is expected moving forward.

Q: How does CIBC plan to approach capital deployment given the strong US economic outlook and potential changes in tariffs affecting Canada? A: Victor Dodig emphasized a focus on organic growth and balanced capital deployment between Canada and the US. While there is no urgency for inorganic expansion in the US, CIBC remains open to tuck-in acquisitions, particularly in the US wealth space, to strengthen its business.

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