2nd Quarter, 2004 Investor Presentation
CIBC Second Quarter Investor Presentation
May 26, 2004
CIBC Overview
John S. Hunkin President and Chief Executive Officer
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2nd Quarter, 2004 Investor Presentation
Second Quarter, 2004 Financial Review
Tom Woods SEVP & CFO
tom.woods@cibc.ca 416-956-3305
May 26, 2004
Q2 Summary
EPS(1): ROE: $1.33 18.4% Results helped by: • Canadian New Issues and Retail Brokerage – record quarters • Merchant Banking and higher loan sales • good wholesale loan loss performance Results hurt by: • lower revenue and higher loan losses in Retail • higher project spending, particularly on governance-related initiatives • Retail interest reimbursement ($16MM pre-tax)
_______________________ (1) Reported basis; diluted, accrual EPS. Cash basis EPS are 1¢ higher, cash basis EPS are calculated by including the after-tax impact of goodwill and other intangibles in net income. See Note to Users page.
• Gross Impaired Loans down for 5th consecutive quarter – currently at $1.2B from $2.1B in Q2/03 • Retail / Wholesale Business mix increased to 67% / 33% • Strong capital ratios – Tier 1: 11.0% – Total Capital: 12.8% • Share repurchases of 6.2MM in Q2
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2nd Quarter, 2004 Investor Presentation
CIBC – Quarterly Financial Highlights
F ‘03 Q2 Net Income (MM) EPS (Diluted) ROE $320 $0.76 11.9% Q3 $788 $2.02 29.9% 67.3% 10.2% Q4 $510 $1.28 17.9% 69.4% 10.8% Q1 $609 $1.54 21.0% 64.7% 11.1% F ‘04 Q2 $531 $1.33 18.4% 67.2% 11.0%
Efficiency (NIX) Ratio (TEB)(1) 73.9% Tier 1 Capital Ratio 9.3%
(1)
Taxable equivalent basis (TEB). See Note to Users page. The non-TEB NIX ratio for the quarter was 68.0% (Q2/03: 74.8%; Q3/03: 68.1%; Q4/03: 70.4%; Q1/04: 65.5%)
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CIBC – Quarterly Income Statement
F ‘03 ($MM) Revenue Non-Interest Expenses Operating Income Provision for Credit Losses Net Income Before Tax Taxes and Minority Interest Net Income After Tax Q2 2,734 2,045 689 248 441 121 320 Q3 2,866 1,952 914 425 489 (299) 788 Q4 2,897 2,038 859 131 728 218 510 Q1 2,964 1,943 1,021 155 866 257 609 F ‘04 Q2 3,051 2,074 977 207 770 239 531
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2nd Quarter, 2004 Investor Presentation
CIBC Revenue
($MM) Net Interest Income Fees for Services Underwriting and Advisory Deposit and Payment Credit Card Investment Mgmt and Custodial Mutual Funds Insurance Commissions Trading Activities Investment Sec. Gains, Net Income from Securitized Assets Foreign Exchange other than Trading Other(1) Total Revenue
(1)
Q1/04
1,435 214 181 75 96 84 147 49 232 190 15 34 91 121 2,964
Q2/04
1,299 252 181 85 94 96 156 25 252 226 117 47 49 172 3,051
Change (136) 38 10 (2) 12 9 (24) 20 36 102 13 (42) 51 87
•narrower spreads; 2 fewer days
•several divestitures
•ineffective hedging/reclass
See slide 59 for details.
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CIBC Expenses
($MM) Employee Comp. and Benefits Occupancy Costs Computer and Office Equip. Communications Advertising and Bus. Development Professional Fees Business and Capital Taxes Restructuring Reversal Other Total Non-Interest Expenses Efficiency (NIX) Ratio (TEB) Comp/Rev Ratio
(1) (1)
Q1/04
1,123 135 271 82 56 40 27 209 1,943 64.7% 37.9%
Q2/04
1,174 163 279 81 71 72 35 (5) 204 2,074 67.2% 38.5%
Change 51 28 8 (1) 15 32 8 (5) (5) 131 250 bps 60 bps
•mainly governance projects •increase in revenuerelated comp. •re: New York premises
Taxable equivalent basis (TEB). See Note to Users page. The non-TEB NIX ratio for the quarter was 68.0% (Q2/03: 74.8%; Q3/03: 68.1%; Q4/03: 70.4%; Q1/04: 65.5%)
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2nd Quarter, 2004 Investor Presentation
CIBC – Reported EPS(1)
($)
2.02 1.28 0.76 1.54 1.33
1.11
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
(1)
F ‘04
Diluted, accrual basis.
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EPS(1)(3) by type of Business
($)
“Wholesale”
2.54 1.83 1.00
“Retail”(2)
0.42 1.04 0.61 0.88
3.08
3.38
3.65
3.66
(0.83)
F ‘00
(1) (2) (3)
F ‘01
F ‘02
F ‘03
Q1
Annual
F`04
Q2
Excludes notable items and Amicus. Wealth Management and Commercial Banking included in “Retail”. EPS shown here excludes earnings/losses not directly attributable to Wholesale/Retail businesses: F ‘00: $(0.16); F ‘01: $(0.02); F ‘02: $(0.26); F ‘03: $(0.44); Q1F ‘04: $(0.06); Q2F ‘04: $(0.16).
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2nd Quarter, 2004 Investor Presentation
CIBC - NIAT Components
F ‘03 ($MM) CIBC Retail Markets CIBC Wealth Management CIBC World Markets Corporate and Other Total Q2 159
(1)
F ‘04 Q4 204 Q1 282 Q2 205
Q3 247
69 115 (23) 320
87 3(2) 451(4) 788
89 126(3) 91(5) 510
92 194 41 609
99 259 (32) 531
Notable items (after-tax) include: (1) $81MM write-down on Air Canada contract. (2) $88MM loss on loans held for sale. (3) $64MM loss on loans held for sale. (4) $689MM recovery of income tax and ($232MM) future tax asset valuation adjustment. (5) $95MM reversal of general provision.
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CIBC Retail Markets - Revenue
($MM)
1,204 1,203 1,257 1,303 1,330 1,246
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
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2nd Quarter, 2004 Investor Presentation
CIBC Retail Markets – Revenue Components
F ‘03 ($MM) Personal Banking Sm. Bus. Banking Cards Mortgages Other Q2 454 130 324 156 139 1,203 Q3 487 137 311 195 127 1,257
(1)
F ‘04 Q4 507 140 330 192
(1)
Q1 497 143 347 122 221
(2) (2)
Q2 492 140 333 155 126 1,246
134 1,303
1,330
(1) (2)
Includes high securitization/hedging gains. Includes transfer of certain hedging costs associated with mortgage refinancing from Other to Mortgages, effective Q1/04.
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CIBC Retail Markets Revenue Components
F ‘03 F ‘04 Q4 Q1 Q2 492 140 333 155 126 1,246
($MM) Personal Banking Sm. Bus. Banking Cards Mortgages Other
Q2
Q3
Personal Banking + loan balances up 4% + mortgage commissions up – interest reimbursement ($12MM) – deposit balances down 1% – 2 less days – spreads down
454 130 324 156 139 1,203
487 137 311 195
(1)
507 140 330 192
(1)
497 143 347 122
(2)
127 1,257
134 1,303
221(2) 1,330
(1) (2)
Includes high securitization/hedging gains. Includes transfer of certain hedging costs associated with mortgage refinancing from Other to Mortgages, effective Q1/04.
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2nd Quarter, 2004 Investor Presentation
CIBC Retail Markets Revenue Components
F ‘03 F ‘04 Q4 Q1 Q2 492 140 333 155 126 1,246
($MM) Personal Banking Sm. Bus. Banking Cards Mortgages Other
Q2
Q3
454 130 324 156 139 1,203
487 137 311 195
(1)
507 140 330 192
(1)
497 143 347 122
(2)
Small Business + loan balances up 3% + mortgage commissions up – – – deposit balances down 1% spreads down 2 less days
127 1,257
134 1,303
221(2) 1,330
(1) (2)
Includes high securitization/hedging gains. Includes transfer of certain hedging costs associated with mortgage refinancing from Other to Mortgages, effective Q1/04.
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CIBC Retail Markets Revenue Components
F ‘03 F ‘04 Q4 Q1 Q2 492 140 333 155 126 1,246
($MM) Personal Banking Sm. Bus. Banking Cards Mortgages Other
Q2
Q3
454 130 324 156 139 1,203
487 137 311 195
(1)
507 140 330 192
(1)
497 143 347 122 221
(2) (2)
Cards + revolve rate up + FX up – balances down 3% – purchase volumes down – 2 less days – securitization revenue down
127 1,257
134 1,303
1,330
(1) (2)
Includes high securitization/hedging gains. Includes transfer of certain hedging costs associated with mortgage refinancing from Other to Mortgages, effective Q1/04.
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2nd Quarter, 2004 Investor Presentation
CIBC Retail Markets Revenue Components
F ‘03 F ‘04 Q4 Q1 Q2 492 140 333 155 126 1,246
($MM) Personal Banking Sm. Bus. Banking Cards Mortgages Other
Q2
Q3
Mortgages + securitization gains – core revenue $123MM ($125MM – Q1) – balances down 0.3% – 2 less days
454 130 324 156 139 1,203
487 137 311 195(1) 127 1,257
507 140 330 192(1) 134 1,303
497 143 347 122(2) 221
(2)
1,330
(1) (2)
Includes high securitization/hedging gains. Includes transfer of certain hedging costs associated with mortgage refinancing from Other to Mortgages, effective Q1/04.
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CIBC Retail Markets Revenue Components
F ‘03 F ‘04 Q4 Q1 Q2 492 140 333 155 126 1,246
($MM) Personal Banking Sm. Bus. Banking Cards Mortgages Other
Q2
Q3
Other – – – – – treasury allocations re-insurance student loans West Indies PCF
454 130 324 156 139 1,203
487 137 311 195
(1)
507 140 330 192
(1)
497 143 347 122 221
(2) (2)
127 1,257
134 1,303
1,330
(1) (2)
Includes high securitization/hedging gains. Includes transfer of certain hedging costs associated with mortgage refinancing from Other to Mortgages, effective Q1/04.
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2nd Quarter, 2004 Investor Presentation
CIBC Retail Markets - NIAT
($MM)
282 204 205
vs. Q1
+ costs down $12MM – revenue down $84MM – loan losses up $37MM (Ag., Personal Loans)
253 159(1)
247
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
Notable items (after-tax) include: (1) $81MM write-down on Air Canada contract.
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CIBC Retail Markets ROE & Efficiency (NIX) Ratio
ROE
38% 25% 38% 30% 44% 31%
71%
NIX
59% Q1 Q2 (1)
58% Q3
61%
56% Q1
59% Q2
Q4
F ‘03
F ‘04
Notable items (pre-tax) include: (1) $128MM write-down on Air Canada contract.
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2nd Quarter, 2004 Investor Presentation
CIBC Retail Markets Cards & Mortgages
($B; spot)
Residential Mortgages
74.6 71.0 72.3
76.7
77.9 79.6
Card Loans
9.9
9.5
9.7
9.9
9.9
9.9
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
Note: Includes assets under administration booked under Retail Markets only. See page 6 of the Supplementary Financial Information.
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CIBC Retail Markets Loan Balances(1)
($B; spot)
Personal Loans(2) Small Bus. Loans(3)
16.2
17.0
17.8
18.3
18.8 19.9
11.0
Q1
11.3
Q2
11.4 11.4
11.7
11.7
Q3
Q4
Q1
Q2
F ‘03
F ‘04
(1) (2) (3)
Includes loans booked under Retail Markets only. Personal loans excluding student and dealer plan loans. Small Business loans excluding dealer plan loans.
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2nd Quarter, 2004 Investor Presentation
CIBC Retail Markets - Market Share
Residential Mortgages
14.7% 14.8% 14.7% 14.8% 14.4% 14.6%
Consumer Deposits
19.5% 19.3% 19.1% 19.2% 19.3% 19.1%
Consumer Loans (excl. cards)
14.9% 15.0% 15.0% 15.0% 15.0% 14.9%
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
Source: OSFI (consumer deposits); Bank of Canada (all other). One or two month time lag depending on availability of disclosure.
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CIBC Retail Markets - Market Share (cont'd)
Cards, outstanding
21.4% 20.9% 20.3% 20.0% 19.8% 19.2%
Cards, purchase volumes
32.0% 32.3% 31.6% 31.8% 31.8%
30.9%
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
Source: CBA; excludes AMEX and proprietary cards. Two month time lag.
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2nd Quarter, 2004 Investor Presentation
CIBC Wealth Management Revenue
($MM)
738(1) 574 615 604
625
653
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
Notable items (pre-tax) include: (1) $52MM gain on sale of Oppenheimer Private Client and Asset Management businesses. Q1/03 includes 2 months of Oppenheimer revenues (before sale) of $77MM.
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CIBC Wealth Management Revenue Components
F ‘03 ($MM) Imperial Service Retail Brokerage Private Wealth Management Wealth Products Other Q2 173 245 35 124 (3) 574 Q3 180 250 39 128 18 615 Q4 189 246 30 123 16 604 Q1 188 258 35 119 25 625 F ‘04 Q2 187 294 37 120 15 653
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2nd Quarter, 2004 Investor Presentation
CIBC Wealth Management Revenue Components
F ‘03 ($MM) Imperial Service Retail Brokerage Private Wealth Management Wealth Products Other Q2 173 245 35 124 (3) 574 Q3 180 250 39 128 18 615 Q4 189 246 30 123 16 604 F ‘04 Q1 188 258 35 119 25 625 Q2 187 294 37 120 15 653
Imperial Service + funds managed up 2% (vs. Q1) and up 8% (vs. Q2/03) + product commissions – spreads down – interest reimbursement ($3MM) – 2 fewer days
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CIBC Wealth Management Revenue Components
F ‘03 ($MM) Imperial Service Retail Brokerage Private Wealth Management Wealth Products Other Q2 173 245 35 124 (3) 574 Q3 180 250 39 128 18 615 Q4 189 246 30 123 16 604 F ‘04 Q1 188 258 35 119 25 625 Q2 187 294 37 120 15 653
Retail Brokerage + CIBC Wood Gundy – record quarter – 1st mo. of Q3 well down
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2nd Quarter, 2004 Investor Presentation
CIBC Wealth Management Revenue Components
F ‘03 ($MM) Imperial Service Retail Brokerage Private Wealth Management Wealth Products Other Q2 173 245 35 124 (3) 574 Q3 180 250 39 128 18 615 Q4 189 246 30 123 16 604 F ‘04 Q1 188 258 35 119 25 625 Q2 187 294 37 120 15 653
Wealth Products + Mutual Funds up – GIC’s down
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CIBC Wealth Management - NIAT
($MM)
121(1) 87 69
– costs up $32MM
vs. Q1
89 92 99
+ revenue up $28MM + lower tax rate
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
Notable items (after-tax) include: (1) $28MM gain on sale of Oppenheimer Private Client and Asset Management businesses.
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2nd Quarter, 2004 Investor Presentation
CIBC Wealth Management ROE & Efficiency (NIX) Ratio
ROE
37% 21% 27% 26% 30% 35%
82%
NIX
74% Q1(1) Q2
78%
78%
75% Q1
77%
Q3
Q4
Q2
F ‘03
F ‘04
Notable items (pre-tax) include: (1) $52MM gain on sale of Oppenheimer Private Client and Asset Management businesses.
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AUA(1) & AUM
($B)
694 697 689 705 762 763
AUA
AUM
62 Q1
60 Q2
61 Q3
64 Q4
67 Q1
68 Q2
F ‘03
(1)
F ‘04
AUA includes Custodial Services assets administered (not part of Wealth Management). See page 16 of the Supplementary Financial Information.
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2nd Quarter, 2004 Investor Presentation
Mutual Fund AUM & Market Share
Mutual Fund AUM Canadian Market Share(1)
45 40 35 30 25 20 15 10 5 0
33.0 8.6
32.8 8.7
34.4 8.5
35.6 8.5
$ Billions
9 8.7 8.7 8 7 6
Q1
Q2
Q3
Q4
Q1
(2)
Q2
(3)
5
F ‘03
Source - Investment Funds Institute of Canada (IFIC). (1) Among banks and non-banks. (2) $1.2B included as of Q1/04 due to reclassification. (3) $0.5B included as of Q2/04 due to reclassification.
F ‘04
Market Share (%)
33
39.5
40.7
10
Fixed Term Investments & Market Share
Fixed Term Investments Canadian Market Share(1)
33.4
15.4
$ Billions
30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2
15.3 15.4 15.4 15.4 15.6
15 10 5
F ‘03
Note: Source – Bank of Canada. One month time lag. (1) Among the “Big 6” banks.
F ‘04
Market Share (%)
34
40
34.1
34.6
34.6
34.8
34.8
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2nd Quarter, 2004 Investor Presentation
Imperial Service
# Financial Advisers
1,029 1,027 1,059 887
Productivity
Funds Managed Per FA ($MM)
56.3 46.8
58.7
60.7
61.5
319
F '01 F ‘01
F '02 F ‘02
F '03 F ‘03
Q1F Q1
Q2F Q2
F ‘01 F ‘02 F ‘03 2001 2002 2003
Q1 Q1F
Q2 Q2F
Annual
F ‘04
Annual
F ‘04
Registered Reps in bank branches
Funds Managed Per FA
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Discount Brokerage
Active Accounts (000's) (left axis) Trades/Day (000's) 400 300 200 5.9 100 0 Q1 Q2 Q3 Q4 Q1 Q2 5.7 8.6 9.4 354 368 375 380 378 395 20 15 10 5 0
6.2
6.9
F ‘03
Note: Average over the quarter.
F ‘04
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2nd Quarter, 2004 Investor Presentation
CIBC Wood Gundy(1)
AUA ($B) AUA per Investment Adviser ($MM) 100 80 60 40 20 0 Q1 Q2 Q3 Q4 Q1 Q2 56.2 57.2 84.4 84.0 89.0 61.9 91.6 64.3 97.3 68.9 98.2 70.0 100 80 60 40 20 0
F ‘03
AUA includes client cash and short positions. (1) Canadian Full Service Brokerage.
F ‘04
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CIBC Retail & Wealth plus Commercial Banking
($MM) Revenue F ‘03 Q2 CIBC Retail Markets CIBC Wealth Management CIBC Retail & Wealth Plus: Commercial Banking F ‘04 Q1 Q2 1,246 653 1,899 111 2,010 F ‘03 Q2 159 69 228 16 244 NIAT F ‘04 Q1 Q2 282 92 374 31 405 205 99 304 30 334
1,203 1,330 574 625
1,777 1,955 108 119
1,885 2,074
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2nd Quarter, 2004 Investor Presentation
CIBC Retail & Wealth plus Commercial Banking
($MM)
Revenue
2,065 1,885 1,976 2,008 2,074 2,010
Efficiency (NIX) Ratio
64% 74% 64% 66% 62% 66%
NIAT
408 244 357 405 312 334
ROE
36% 22% 33% 27% 38% 31%
Q1
Q2
Q3
Q4
Q1 Q2
Q1
Q2
Q3
Q4
Q1 Q2
F ‘03
F ‘04
F ‘03
F ‘04
Note: Q1/03 includes gain from Oppenheimer sale; Q2/03 includes write-down on Air Canada contract.
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CIBC World Markets - Revenue
($MM)
1,021 818 796 838 864 1,018
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
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2nd Quarter, 2004 Investor Presentation
CIBC World Markets – Revenue Components
F ‘03 ($MM) Capital Markets Investment Banking & Credit Products Merchant Banking Commercial Banking Other Total Revenue Total Revenue
(1)
F ‘04 Q4 337 372 9 101 57 876 38 838 Q1 394 366 14 119 11 904 40 864 Q2 421 442 83 111 (4) 1,053 35 1,018
Q2 391 390 (67) 108 27 849 31 818
Q3 378 310 6 104 33 831 35 796
(TEB)
(1)
TEB Adjustment
1,049
Taxable equivalent basis. See Note to Users page.
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CIBC World Markets Revenue Components
F ‘03 ($MM) Capital Markets Investment Banking & Credit Products Merchant Banking Commercial Banking Other Q2 391 390 (67) 108 27 Q3 378 310 6 104 33 831 35 796 Q4 337 372 9 101 57 876 38 838 F ‘04 Q1 394 366 14 119 11 904 40 864 Q2 421 442 83 111 (4) 1,053 35 1,018
Capital Markets + Structured products + Canadian new equity issues – Foreign exchange
Total Revenue (TEB)(1) 849 TEB Adjustment Total Revenue 31 818
(1)
Taxable equivalent basis. See Note to Users page.
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2nd Quarter, 2004 Investor Presentation
CIBC World Markets Revenue Components
F ‘03 ($MM) Capital Markets Investment Banking & Credit Products Merchant Banking Commercial Banking Other Total Revenue (TEB) TEB Adjustment Total Revenue
(1)
F ‘04 Q4 337 372 9 101 57 876 38 838 Q1 394 366 14 119 11 904 40 864 Q2 421 442 83 111 (4) 1,053 35 1,018
Q2 391 390 (67) 108 27 849 31 818
Q3 378 310 6 104 33 831 35 796
Investment Banking & Credit + U.S. Real Estate Finance + Canada – record New Issue Equity + Europe – loan sales and M&A – U.S. Structured Finance – Q3 likely to be down
(1)
Taxable equivalent basis. See Note to Users page.
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CIBC World Markets Revenue Components
F ‘03 ($MM) Capital Markets Investment Banking & Credit Products Merchant Banking Commercial Banking Other Q2 391 390 (67) 108 27 Q3 378 310 6 104 33 831 35 796 Q4 337 372 9 101 57 876 38 838 F ‘04 Q1 394 366 14 119 11 904 40 864 Q2 421 442 83 111 (4) 1,053 35 1,018
Merchant Banking + Gains - $137MM + Q3 - $74MM GPN gain – Writedowns - $54MM – Q3 – likely loss on sale of Fund investments
Total Revenue (TEB)(1) 849 TEB Adjustment Total Revenue 31 818
(1)
Taxable equivalent basis. See Note to Users page.
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2nd Quarter, 2004 Investor Presentation
CIBC World Markets - NIAT
($MM)
259 194 129 115 3(1) Q1 Q2 Q3 Q4 Q1 Q2 126(2)
vs. Q1 + revenue up $154MM + lower tax rate – costs up $75MM
F ‘03
F ‘04
Notable items (after-tax) include: (1) $88MM loss on loans held for sale. (2) $64MM loss on loans held for sale.
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CIBC World Markets ROE & Efficiency (NIX) Ratio
ROE
11% 11% 16% -2% 28% 40%
NIX
(TEB)*
63% 67% 69% 71% Q1 Q2 Q3 (1) Q4
(2)
66%
64% Q2
Q1
F ‘03
*
F ‘04
Taxable equivalent basis (TEB). See Note to Users page. The non-TEB NIX ratio for the quarter was 65.8% (Q1/03: 64.4%; Q2/03: 69.3%; Q3/03: 72.4%; Q4/03: 74.1%; Q1/04: 68.8%).
Notable items (pre-tax) include: $16MM loss on loans held for sale. (2) $7MM loss on loans held for sale.
(1)
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2nd Quarter, 2004 Investor Presentation
CIBC World Markets U.S. Investment Banking
Equity Offerings
27 27 35
# of Deals
14
11
23
8.6
(US$B)
4.9 1.7 Q1 Q2
4.4
2.8 Q4 Q1
(1)
4.1
Q3
Q2
F ‘03
F ‘04
Lead and Co-lead managed equity offerings. (1) Approximately 39% of the total volume in Q1/04 resulted from participation in a single offering.
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CIBC World Markets – Merchant Banking
($MM)
2,702 Carrying Value 2,144
Q2/04 summary Carrying Value = $2,144MM as at April 30, 2004 Debt: 8%
Equity: 31% Funds: 61%
Q2 Q3 Q4
Q1 Q2 Q3 Q4
Q1 Q2
F ‘02
F ‘03
F ‘04
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2nd Quarter, 2004 Investor Presentation
CIBC World Markets Merchant Banking
(Carrying Value = $2,144MM as at April 30, 2004)
Total Portfolio Industry Diversification
Consumer Services Entertainment Financial Services Hardware & Software Healthcare Industrial Growth & Services Media & Publishing Real Estate Resource-based industries Retail Telecommunications and Cable Utilities Other
16.3% 3.3 7.3 8.8 4.6 18.8 8.1 3.6 2.4 6.2 10.1 4.2 6.3 100.0%
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CIBC World Markets – Market Share Equity Trading
Canada % of shares traded
10.8%
9.4%
11.7% 8.2%
10.5% 8.0%
US % of shares traded
1.2% 1.2% 1.2%
0.7%
1.3% 1.2%
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
Source: TSX (Canada); AUTEX (US). US volume represents listed exchange information.
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2nd Quarter, 2004 Investor Presentation
CIBC World Markets – Market Share Canadian Equity New Issues(1)
Market Share (% ) 20% 17.3% 18.7%18.7% 16.6% 15% 10% 5% 0% Q1 Q2 Q3
(2)
18.6%
17.5%
Q4
Q1
Q2
(2)
F ‘03
F ‘04
Note: Source - CIBC Equity Syndication. (1) Based on total amount underwritten. Includes equity deals greater than $30MM. (2) F `03 market share = 17.8%. F `04 year-to-date market share = 18.0%.
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CIBC - Competitive Balance Sheet Measures
($MM) Tier 1 Ratio CIBC 11.0% Unrealized Gains 648 General Allowance 1,100 GA as % of RWA(1) 0.94% Net Impaired Loans(2) 340
Bank Peer Group(3)
10.2%
582
1,234
0.88%
1,104
(1) (2) (3)
General Allowance as a percent of Risk-Weighted Assets. Net Impaired Loans = Gross Impaired Loans less Specific Allowance. Bank Peer Group consists of Q1/04 actual information for RBC, BMO, TD and BNS.
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2nd Quarter, 2004 Investor Presentation
CIBC - Share Repurchase Activity
(MM)
80 70 60 50 40 30 20 10 0 3.4 11.6 7.6 4.7 4.4 5.25.5 4.7 6.5 1.8 2.03.6 1.0 0.8 2.1 6.2 Quarter Cumulative
71.1MM
Q2
F ‘99
F ‘00
F ‘01
F ‘02
F ‘03
F ‘04
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Note: As of April 30/04, CIBC had 356.7MM shares outstanding.
Common Share Dividends
($ per share)
0.50 0.41 0.41 0.41 0.41 0.50
Q1
Q2
Q3
Q4
Q1
Q2
F ‘03
F ‘04
54
27
2nd Quarter, 2004 Investor Presentation
Economic Profit(1)(2)
($MM)
544 395 278 167 63 Q1 Q2 Q3 Q4 Q1 Q2 324
F ‘03
(1)
F ‘04
(2)
Q1/03 includes $28MM gain on sale of Oppenheimer Private Client and Asset Management businesses; Q2/03 includes $81MM write-down on Air Canada contract; Q3/03 includes $475MM recovery and adjustment of income taxes. The adjustment to net income for cost of equity for the quarter was $207MM (Q1/03: $278MM; Q2/03: $257MM; Q3/03: $244MM; Q4/03: $232MM; Q1/04: $214MM). See slide 5 for net income (net income for Q1/03 was $445MM). See Note to Users page.
55
Economic Profit(1)(2)
($MM)
F ‘03 Q2 CIBC Retail Markets CIBC Wealth Management CIBC World Markets Corporate and Other Total CIBC 81 30 (48) 63 Q3 165 48 (102) 433 544 Q4 120 47 31 80 278 F ‘04 Q1 201 53 106 35 395 Q2 124 63 178 (41) 324
(1)
(2)
Q1/03 includes $28MM gain on sale of Oppenheimer Private Client and Asset Management businesses; Q2/03 includes $81MM write-down on Air Canada contract; Q3/03 includes $475MM recovery and adjustment of income taxes. See the Supplementary Financial Information for the adjustment to net income for cost of equity. See slide 11 for net income. See Note to Users page, and for additional segmented information see the notes to the Q2/04 financial statements.
56
28
2nd Quarter, 2004 Investor Presentation
Behind the Reported NIMs
Q1/04 Q2/04
Reported NIM Reported NIM (TEB)(1)
− excluding fixed assets
(2)
2.03% 2.08% 2.47%
1.86% 1.91% 2.28%
NIMs up in
– cards – large corporate loans
NIMs down in
– personal loans and deposits – small business loans and deposits
&
− excluding trading assets and adding back securitizations(3) − excluding unusual NII(4)
(1) (2) (3) (4)
3.15% 3.16%
2.92% 2.94%
&
Taxable equivalent basis. See Note to Users page. And other non-interest earning assets. i.e., to assess NIM on all originated product, independent of securitization. e.g., interest on tax settlements; interest reimbursement program; interest on NY Premises.
57
Behind the 22 bps Decline in NIM(1)
(bps)
Rate Mortgages Personal loans Corporate loans Cards (revolve) (7) (5) (6) 2 (16) Mix Q1 Effect Student loans West Indies Other (2) (2) (2) (26)
(1)
Assets
Rate
Liabilities
Retail deposits Wholesale funding 2 4
(4)
Mix
(2)
4
i.e. Difference between 3.16% (Q1) and 2.94% (Q2) – see slide 57.
58
29
2nd Quarter, 2004 Investor Presentation
“Other” Non-Interest Income
F ‘03 Q3 (8) (1) 166 157 F ‘04 Q1 Q2 44 26 51 121 42 8 122 172
Q2 Gain (Loss) on Sale of Loans Limited Partnership Gains / (Losses) Other(1) 35 (23) 127 139
Q4 23 3 106 132
(1)
Includes other commissions and fees, etc.
59
Second Quarter, 2004 Risk Review
Wayne Fox Vice Chair and Chief Risk Officer Treasury, Balance Sheet and Risk Management
30
2nd Quarter, 2004 Investor Presentation
Key Messages
Credit quality continues to improve
• Business & Government loans reduced 16% year-over-year • Gross Impaired Loans reduced 41% year-over-year
Specific provision down year-over-year
• Business & Government provision of $33MM result of improvement in credit quality • Consumer provision of $174MM
Continued capital strength
• Tier 1 Ratio: 11.0%
Guidance Unchanged
• Specific Provisions: $800 - 850MM • General Allowance: 90 – 95 bps of RWAs
61
Specific Provision for Credit Losses
($MM)
400 350 300 250 200 150 100 50 0 -50 77 73 1999
*
Business & Government
Consumer
101 135 91 156 184 87
* * *
126 135 274 204 113 164 156 32 Q1/03 Q2/03 Q3/03
**
174 157 33
Q4/03
**
(2)
Q1/04 Q2/04
2000
2001
* Full Year /4. ** Excludes loan loss on transfer to Held for Sale: $135MM in Q3/03 and $93MM in Q4/03.
2002
62
31
2nd Quarter, 2004 Investor Presentation
Specific Provision for Credit Losses as % of Net Loans and Acceptances
2.00% Annualized % of Net Loans and Acceptances 1.50% 1.00% 0.50%
Total Bank
Expected Total Bank Range
Business & Government (incl. Reverse Repos) Consumer
0.00% -0.50% 1999 2000 2001 2002 Q1/03 Q2/03
Q3/03
Q4/03
Q1/04
*
Excludes loan loss on transfer to Held for Sale: $135MM in Q3/03 and $93MM in Q4/03.
Q2/04
*
*
63
Consumer Portfolio Specific Provisions
($MM)
130 110 90 70 50 30 10 (10) 1999 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04
Annualized % of Loan Balances 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% 1999 2000 2001 2002 Credit Card Loans
Credit Card Loans
Personal & Student Loans
Large credit card portfolio continues to represent the majority of the consumer specific provision
Residential Mortgages
Consumer specific provision rates stabilizing
Personal & Student Consumer
Residential Mortgages
Q1/03
Q2/03
Q3/03
Q4/03
Q1/04
Q2/04
64
32
2nd Quarter, 2004 Investor Presentation
Fiscal 2004 Guidance Unchanged
• Specific Provisions: $800 - 850MM • General Allowance: 90 - 95 bps of RWAs
65
Loan Portfolio Mix Shift to Consumer Credit Continues
(Net Loans and Acceptances - $140.2B*)
as at April 30, 2004
- 16.0% - 19.1%
$2.8
+ 12.4%
$22.3 $19.9
$43.1 $36.2
$2.3
Q2/03 Q2/04
Q2/03
Q2/04
Q2/03
Q2/04
+ 2.0%
$68.5 $69.9
Student Loans 2%
Business & Gov't Loans 26%
+ 14.4%
Personal Loans 16%
$8.2 $9.4
Q2/03
Q2/04
Residential Mortgages 49%
Credit Cards 7%
Q2/03
Q2/04
(* After General Allowance and excluding Reverse Repos)
66
33
2nd Quarter, 2004 Investor Presentation
Business/Consumer Loan Portfolio Mix
80% % of Loan Portfolio 70% 60% 50% 40% 30% 20% 10% 0% 1999 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04
56% 44% 59% 67% 62% 69% 70% 71% 73% 74% 74%
42%
39% 33% 31% 30% 29% 27% 26% 26%
Business & Government
Consumer
67
Business & Government Loans and BAs
$B - Net Loans and Acceptances (excl. Reverse Repos) 60 55 50 45 40 35 30 25 20
- 16 .0% Decli ne Y /Y
1999
2000
2001
2002
Q1/03
Q2/03
Q3/03
Q4/03
Q1/04
Unprotected
(Before General Allowance)
Credit Protected
Q2/04
68
34
2nd Quarter, 2004 Investor Presentation
Held for Sale Portfolio Update
Q3/03 Transfer 1,440 551 885 (135) (16) $734 Q4/03 Transfer 1,432 241 1,174 (93) (7) $1,074 Total Transfer 2,872 792 2,059 (228) (23) $1,808 19%
($MM) Total On and Off Balance Sheet Credits Off Balance Sheet Credits On Balance Sheet Credits (Net of Unamortized Fees) Credit Loss on Transfer Non-Credit Loss on Transfer Held-for-Sale Portfolio Remaining Outstandings Q2/04
69
Credit Protection Industry Diversification
($MM)
as at April 30, 2004 Oil & Gas Business Services Manufacturing (Capital Goods) Telecommunications and Cable Forest Products Retail Publishing, Printing and Broadcasting Manufacturing (Consumer Goods) Utilities Education, Health and Social Services Financial Institutions Other Industries Total (Net) As at Jan 31/04 On Balance Sheet $539 344 293 212 130 129 126 56 44 42 39 142 $2,096 $1,849 Total Bought $1,504 449 665 606 315 346 179 149 281 78 1,114 609 $6,295 $4,123
70
35
2nd Quarter, 2004 Investor Presentation
Business & Government Loan Diversification
as at April 30, 2004
Telecommunications & Cable 3% Publishing, Printing, & Broadcasting 3% Transportation 4% Utilities 2% Education, health and social services 4% Governments 2% Non-residential mortgages 13% Financial Institutions 9% Retail 6% Manufacturing (Capital) 5% Business Services 12%
(Net Loans and Acceptances excl. Reverse Repos - $36.2B*)
Hardware & Software 1% Forest products 2% Mining 1% Oil and gas 6% Agriculture 12% Real Estate and Construction 10% Manufacturing (Consumer) 5%
(*After General Allowance)
71
New Formations Continue Lower Trend
(Business & Government)
700 600 500 New Formations New Formations as a % of Loans & Acceptances ** 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5%
1999 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04
* * * *
$MM
400 300 200 100 0
0.0%
* Full year / 4 ** Includes Reverse Repos
72
36
2nd Quarter, 2004 Investor Presentation
Q2 New Formations
Canada 78%
(Business & Government - $161 million)
Other International 22%
Agriculture 39% Manufacturing 16% Service and Retail Industries 13% Resource 1%
Other 1% Real Estate Telecom, Media 3% & Technology Financial Utilities 21% Institutions 2% 1% Transportation 3%
73
Gross Impaired Loans Continue to Reduce
2.5 2.0 1.5 $B 1.0 0.5 0.0 1999 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04
Gross Impaired Loans Net Impaired Loans (excluding General Allowance) Net Impaired Loans as % of Loans & BAs
NIL as a % of Total Loans and BAs
1.9% 1.7% 1.5% 1.3% 1.1% 0.9% 0.7% 0.5% 0.3% 0.1% -0.1%
74
37
2nd Quarter, 2004 Investor Presentation
Business and Government Loans
Net Impaired Loans Improved $63MM
1,400 1,200 1,000 C$MM 800 600 400 200 0 1999 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04
Net Impaired Loans (excluding General Allowance) Net Impaired Loans as % of Loans & BA's
4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
75
Consumer Loans
Residential Mortgages Credit Card Loans
Net Impaired Loans Decreased $14MM
Personal Loans Student Loans Personal Loans NILs as % of Outstanding
Res Mtg NILs as % of Outstanding
200 150 100 C$MM 50 0 -50 -100 -150 -200 1999 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04
1.0% 0.8% 0.6% 0.4% 0.2% 0.0% -0.2% -0.4% -0.6% -0.8% -1.0%
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38
2nd Quarter, 2004 Investor Presentation
Trading Revenue vs. Risk
Backtesting of Trading Revenue vs. Total VaR Second Quarter, 2004
25.00 20.00 15.00 10.00 C$MM 5.00 (5.00) (10.00) 10-Mar-04 15-Mar-04 18-Mar-04 23-Mar-04 26-Mar-04 31-Mar-04 2-Mar-04 5-Mar-04 2-Feb-04 5-Feb-04 5-Apr-04 8-Apr-04 13-Apr-04 16-Apr-04 21-Apr-04 26-Apr-04 10-Feb-04 13-Feb-04 18-Feb-04 23-Feb-04 26-Feb-04 29-Apr-04 Trading Revenue Total VaR 22 18 14 10 6 2 (2) (6) (10)
77
Trading Risk
CIBC Trading Books – Total VaR
30 25 20 C$MM 15 10 5 0 1998 1999 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04
78
39
2nd Quarter, 2004 Investor Presentation
Non-Trading Risk
CIBC Non-Trading Books – Total VaR
120 100 80 C$MM 60 40 20 0 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04
79
Internal Capital Generation
(C$MM) NIAT 1999 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 1,029 2,060 1,686 653 445 320 788 510 609 531
Preferred Common Share Dividends Dividends Repurchases (112) (128) (121) (161) (44) (47) (46) (43) (49) (48) (492) (501) (536) (577) (147) (148) (148) (148) (181) (179) (500) (1,074) (867) (313)
Net Annual Quarterly (75) 357 162 (398) 254 125 594 319 236 (124)
1,292
(143) (428)
80
40
2nd Quarter, 2004 Investor Presentation
RWA and Capital Ratio Trends
150 145 140 135 $B 130 125 120 115 110 105 1998 1999 2000 2001 2002 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Risk Weighted Assets Tier 1 Capital 14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0%
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Note To Users
Performance measurement CIBC uses a number of financial measures to assess its performance. Some measures are calculated in accordance with generally accepted accounting principles (GAAP), such as net income and return on equity (ROE). Other measures are non-GAAP measures, such as net interest income on a taxable equivalent basis (TEB), economic profit, economic capital, and cash basis measures. These measures do not have a standardized meaning under GAAP and may not be comparable to similar measures used by other companies. Management reviews net interest income adjusted to reflect tax-exempt income on an equivalent before-tax basis. This measure enables comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income (TEB) is used to calculate the efficiency ratio, net interest margin, and net interest margin on average interest-earning assets on a taxable equivalent basis. Management believes these measures permit uniform measurement, which enables users of CIBC’s financial information to make comparisons more readily. Economic capital is the basis upon which CIBC attributes its consolidated legal capital to the business lines for the purpose of calculating economic profit. Economic capital is comprised of credit, market, operational, and strategic risk capital. From time to time, CIBC’s economic capital model may be enhanced as part of the risk measurement process. These changes are made prospectively. Management uses economic profit to measure the return generated by each business in excess of CIBC’s cost of equity, which enables users of this financial information to identify relative contributions to shareholder value. Cash basis measures are calculated by adding back the after-tax impact of goodwill and other intangible expenses to net income. Financial Statements and Supplementary Financial Information The Financial Statements and Supplementary Financial Information are available on CIBC’s website at www.cibc.com.
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41
2nd Quarter, 2004 Investor Presentation
Forward Looking Statements
This presentation contains forward-looking statements which are made pursuant to the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about the operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies and outlook of CIBC for 2004 and subsequent periods. Forwardlooking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate" and other similar expressions or future or conditional verbs such as "will", "should", "would" and "could". A forwardlooking statement is subject to inherent risks and uncertainties that may be general or specific. A variety of factors, many of which are beyond CIBC's control, affect the operations, performance and results of CIBC and its business lines, and could cause actual results to differ materially from the expectations expressed in any of CIBC's forward-looking statements. These factors include: current, pending and proposed legislative or regulatory developments in the jurisdictions where CIBC operates including pending developments in Canadian laws regulating financial institutions and US regulatory changes affecting foreign companies listed on a US exchange; as well as amendments to, and interpretations of, risk-based capital guidelines and reporting instructions; the resolution of legal proceedings and related matters; the effect of applying future accounting changes; changes in tax laws; political conditions and developments; intensifying competition from established competitors and new entrants in the financial services industry; technological change; global capital market activity; interest rate fluctuation; currency value fluctuation; general economic conditions worldwide, as well as in Canada, the United States and other countries where CIBC has operations; changes in market rates and prices which may adversely affect the value of financial products; CIBC's success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels, including electronic commerce-based efforts. This list is not exhaustive of the factors that may affect any of CIBC's forward-looking statements. These and other factors should be considered carefully and you should not place undue reliance on CIBC's forward-looking statements. CIBC does not undertake to update any forward-looking statement in this presentation. Investor Relations contacts: Kathy Humber, Senior Vice-President John Ferren, Director Katherine Young, Senior Financial Analyst Investor Relations Fax Number (416) (416) (416) (416) 980-3341 980-2088 980-8691 980-5028
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Q&A
42