CIBC Announces Fourth Quarter and Fiscal 2014 Results

Dec 4, 2014

CIBC's 2014 audited annual consolidated financial statements and accompanying management's discussion & analysis (MD&A) will be available today at www.cibc.com, along with the supplementary financial information report which includes fourth quarter financial information.

 

TORONTO, Dec. 4, 2014 /CNW/ - CIBC (TSX: CM) (NYSE: CM) today announced its results for the fourth quarter and fiscal year ended October 31, 2014.

Fourth quarter highlights

  • Reported net income was $811 million, compared with $825 million for the fourth quarter a year ago, and $921 million for the prior quarter.
  • Adjusted net income(1) was $911 million, compared with $894 million for the fourth quarter a year ago, and $908 million for the prior quarter.
  • Reported diluted earnings per share (EPS) was $1.98, compared with $2.02 for the fourth quarter a year ago, and$2.26 for the prior quarter.
  • Adjusted diluted EPS(1) was $2.24, compared with $2.19 for the fourth quarter a year ago, and $2.23 for the prior quarter.
  • Reported return on common shareholders' equity (ROE) was 17.9% and adjusted ROE(1) was 20.1%.

CIBC's results for the fourth quarter of 2014 were affected by the following items of note aggregating to a negative impact of $0.26 per share:

  • $112 million ($82 million after-tax, or $0.21 per share) charge relating to the incorporation of funding valuation adjustments (FVA) into the valuation of our uncollateralized derivatives;
  • $18 million ($13 million after-tax, or $0.03 per share) costs relating to the development of our enhanced travel rewards program and in respect of the Aeroplan transactions with Aimia Canada Inc. (Aimia) and the Toronto-Dominion Bank (TD);
  • $10 million ($7 million after-tax, or $0.02 per share) amortization of intangible assets; and
  • $2 million ($2 million after-tax) gain from the structured credit run-off business.

For the year ended October 31, 2014, CIBC reported net income of $3.2 billion and record adjusted net income(1) of$3.7 billion, compared with reported net income of $3.4 billion and adjusted net income(1) of $3.6 billion for 2013. Reported diluted EPS of $7.86 and adjusted diluted EPS(1) of $8.94 for 2014 compared with reported diluted EPS of$8.11 and adjusted diluted EPS(1) of $8.65 for 2013.

CIBC's adjusted ROE(1) was 20.9% for the year ended October 31, 2014 and the Basel III Common Equity Tier 1 ratio was 10.3% as at October 31, 2014.

CIBC announced a quarterly dividend increase of 3 cents per common share to $1.03 per share.

"Our strong performance for the year was underpinned by record revenue," says Victor Dodig, CIBC President and Chief Executive Officer. "Our results show our client-focused strategies are delivering consistent and sustainable earnings."

"In 2015, we will continue to strive to be the leading bank for our clients," adds Mr. Dodig. "We will continue to invest in our businesses to better serve our clients."

Core business performance
Retail and Business Banking reported net income of $2.5 billion in 2014, up from $2.4 billion in 2013. Adjusting for items of note, net income was $2.4 billion, comparable with the prior year.

Retail and Business Banking made strategic investments throughout 2014 in areas that are enhancing the relationship we have with, and the value we provide to, our clients. Key highlights included:

  • The first phase of our branch-based technology platform called COMPASS was rolled out to all of our branches, enabling our advisors to strengthen and deepen relationships with new and existing clients. Early results from the rollout are positive; and
  • We continued to lead in delivering innovations for clients. CIBC was the first of the Big 5 banks to offer eDeposit and the first bank to deliver a cheque capture solution for business clients. CIBC was also recognized by Forrester Research for having the best mobile banking offer among the Big 5 banks.

Subsequent to the year-end, we announced a pilot program with Brink's Canada that will allow business clients to electronically deposit cash into their CIBC business account while it is still on their premises. The service uses a Brink's CompuSafe® which securely reports cash deposits to CIBC each business day, giving clients same-day credit for cash they collect from customers, before those funds reach the bank.

"This year we continued to be leaders in innovation to enhance the client experience, which contributed to deeper relationships with our clients," says David Williamson, SEVP and Group Head, Retail and Business Banking. "We also invested in our retail franchise to accelerate profitable revenue growth, and have delivered a number of new products and services over the last year that have been very well received by our clients."

Wealth Management reported net income of $471 million in 2014, compared with $385 million in 2013. Adjusting for items of note(1), net income of $486 million was up $97 million or 25% from $389 million in 2013.

Wealth Management strengthened its business on many fronts in 2014 in support of our strategic priorities to attract and deepen client relationships, seek new sources of domestic assets and pursue acquisitions and investments. Key highlights included:

  • Completion of the acquisition of U.S. private wealth management firm Atlantic Trust, which retained 99% of its clients through the transition and has increased assets by 28% from the deal announcement;
  • CIBC Investor's Edge made online investing even better for Canadians with new lower commission rates of $6.95 for all clients, and $4.95 for active traders(2); and
  • CIBC Asset Management achieved its 5th consecutive sales record for long-term mutual funds of $5.4 billion this year and surpassed the $100 billion assets under management milestone.

"Our Wealth Management businesses, including our 2014 acquisition of Atlantic Trust, are all performing well," saysSteve Geist, SEVP and Group Head, Wealth Management. "We will continue to invest in our platform in 2015 and beyond to enhance the client experience and further increase Wealth Management's contribution to CIBC's overall earnings."

Wholesale Banking delivered strong results, reporting net income of $895 million, compared with $699 million in 2013. Adjusting for items of note(1), net income of $913 million in 2014 compared with net income of $817 million in 2013.

Wholesale Banking provides integrated credit and capital markets products, investment banking advisory services and top-ranked research to corporate, government and institutional clients around the world. During 2014, Wholesale Banking was:

  • Named Canada Derivatives House Of The Year at the 2014 GlobalCapital Americas Derivatives Awards;
  • Ranked the #1 IPO underwriter in Canada by Bloomberg; and
  • Leader in Canadian equity trading including #1 in volume, value and number of trades by IRESS Market Technology, TSX and ATS market share report, 2009-present.

"In 2014 we continued to invest in our integrated suite of products and services to benefit our clients," says Harry Culham, Managing Director and Group Co-Head, Wholesale Banking. "We are leveraging our industry expertise to grow our global presence and support our clients as they access capital, grow and invest in Canada and in key markets around the world."

Strong fundamentals
While investing in core businesses, CIBC has continued to strengthen key fundamentals. In 2014, CIBC maintained its capital strength, competitive productivity and sound risk management practices:

  • CIBC's capital ratios are strong, with a Basel III Common Equity Tier 1 ratio of 10.3%, and Tier 1 and Total capital ratios of 12.2% and 15.5% at October 31, 2014, respectively;
  • Credit quality has improved, with CIBC's loan loss ratio of 38 basis points compared with 44 basis points in 2013; and
  • Market risk, as measured by average Value-at-Risk, was $3.5 million in 2014 compared with $4.6 million in 2013.

Making a difference in our Communities
CIBC is committed to investing in the social and economic development of communities across Canada. During the fourth quarter of 2014, CIBC:

  • Helped raise $25 million through the 2014 Canadian Breast Cancer Foundation CIBC Run for the Cure, including nearly $3 million contributed by Team CIBC through pledges, fundraising activities and donations to the CIBC Pink Collection;
  • Announced a $1 million investment in the CIBC Breast Cancer Research Scientist, an endowed scientist position at Mount Sinai Hospital's prestigious Lunenfeld-Tanenbaum Research Institute in Toronto; and
  • Marked the one-year countdown to the TORONTO 2015 Parapan Am Games with the help of CIBC Team Next mentors and athletes, inspiring kids at Variety Village and Holland-Bloorview Rehabilitation Centre to take part in sport.

During the quarter, CIBC was ranked among the top 10 Safest Banks in North America by Global Finance magazine and was also recognized by Mediacorp as one of Canada's Top 100 Employers for a third consecutive year. CIBC was once again named a constituent of the following widely regarded indices:

  • Dow Jones Sustainability World Index for a 13th consecutive year;
  • FTSE4Good Index since 2001; and
  • Jantzi Social Index since 2000.

 

(1) For additional information, see the "Non-GAAP measures" section.
(2) Active traders are clients who average 150 trades or more per quarter.
   

 

Fourth quarter financial highlights

  As at or for the         As at or for the  
        three months ended         twelve months ended  
  2014 2014   2013       2014 2013  
Unaudited Oct. 31 Jul. 31   Oct. 31 (1)     Oct. 31 Oct. 31 (1)
Financial results ($ millions)    
Net interest income $ 1,881       $ 1,875      $ 1,893       $ 7,459       $ 7,453  
Non-interest income   1,336      1,483     1,287         5,917      5,265  
Total revenue   3,217      3,358     3,180         13,376      12,718  
Provision for credit losses   194      195     271         937      1,121  
Non-interest expenses   2,087      2,047     1,930         8,525      7,621  
Income before taxes   936      1,116     979         3,914      3,976  
Income taxes   125      195     154         699      626  
Net income $ 811    $ 921   $ 825       $ 3,215    $ 3,350  
Net income (loss) attributable to non-controlling interests       3     (7)         (3)     (2)  
  Preferred shareholders   18      19     24         87      99  
  Common shareholders   791      899     808         3,131      3,253  
Net income attributable to equity shareholders $ 809    $ 918   $ 832       $ 3,218    $ 3,352  
Financial measures                                  
Reported efficiency ratio   64.9  %   61.0 %   60.7 %       63.7  %   59.9 %
Adjusted efficiency ratio (2)   60.4  %   59.5 %   56.7 %       59.1  %   56.5 %
Loan loss ratio   0.30  %   0.33 %   0.41 %       0.38  %   0.44 %
Reported return on common shareholders' equity   17.9  %   21.0 %   20.2 %       18.3  %   21.4 %
Adjusted return on common shareholders' equity (2)   20.1  %   20.7 %   21.9 %       20.9  %   22.9 %
Net interest margin   1.78  %   1.81 %   1.85 %       1.81  %   1.85 %
Net interest margin on average interest-earning assets   2.02  %   2.05 %   2.10 %       2.05  %   2.12 %
Return on average assets   0.77  %   0.89 %   0.81 %       0.78  %   0.83 %
Return on average interest-earning assets   0.87  %   1.01 %   0.91 %       0.89  %   0.95 %
Total shareholder return   2.66  %   4.65 %   15.15 %       20.87  %   18.41 %
Reported effective tax rate   13.4  %   17.5 %   15.9 %       17.9  %   15.8 %
Adjusted effective tax rate (2)   15.2  %   16.2 %   16.5 %       15.4  %   16.5 %
Common share information                                  
Per share ($) - basic earnings $ 1.99    $ 2.26   $ 2.02       $ 7.87    $ 8.11  
    - reported diluted earnings   1.98      2.26     2.02         7.86      8.11  
    - adjusted diluted earnings(2)   2.24      2.23     2.19         8.94      8.65  
                   -dividends   1.00      1.00     0.96         3.94      3.80  
    - book value   44.30      43.02     40.36         44.30      40.36  
Share price ($) - high   107.01      102.06     88.70         107.01      88.70  
    - low   95.93      95.66     76.91         85.49      74.10  
    - closing   102.89      101.21     88.70         102.89      88.70  
Shares outstanding (thousands) - weighted-average basic   397,009      397,179     399,819         397,620      400,880  
    - weighted-average diluted   397,907      398,022     400,255         398,420      401,261  
    - end of period   397,021      396,974     399,250         397,021      399,250  
Market capitalization ($ millions) $ 40,850    $ 40,178   $ 35,413       $ 40,850    $ 35,413  
Value measures                                  
Dividend yield (based on closing share price)   3.9  %   3.9 %   4.3 %       3.8  %   4.3 %
Reported dividend payout ratio   50.3  %   44.2 %   47.6 %       50.0  %   46.8 %
Adjusted dividend payout ratio (2)   44.6  %   44.8 %   43.8 %       44.0  %   43.9 %
Market value to book value ratio   2.32      2.35     2.20         2.32     2.20  
On- and off-balance sheet information ($ millions)                                  
Cash, deposits with banks and securities $ 73,089    $ 80,653   $ 78,363       $ 73,089    $ 78,363  
Loans and acceptances, net of allowance   268,240      262,489     256,380         268,240      256,380  
Total assets   414,903      405,422     398,006         414,903      398,006  
Deposits   325,393      322,314     315,164         325,393      315,164  
Common shareholders' equity   17,588      17,076     16,113         17,588      16,113  
Average assets   418,414      411,036     405,239         411,481      403,546  
Average interest-earning assets   370,020      363,422     357,757         362,997      351,687  
Average common shareholders' equity   17,528      16,989     15,885         17,067      15,167  
Assets under administration 1,717,563    1,713,076   1,513,126       1,717,563    1,513,126  
Balance sheet quality measures                                  
CET1 capital risk-weighted assets (RWA) ($ billions) $ 141,250    $ 139,920     136,747       $ 141,250      136,747  
Tier 1 capital RWA   141,446      140,174     136,747         141,446      136,747  
Total capital RWA   141,739      140,556     136,747         141,739      136,747  
CET1 ratio   10.3  %   10.1 %   9.4 %       10.3  %   9.4 %
Tier 1 capital ratio   12.2  %   12.2 %   11.6 %       12.2  %   11.6 %
Total capital ratio   15.5  %   14.8 %   14.6 %       15.5  %   14.6 %
Other information                                    
Full-time equivalent employees   44,424      45,161     43,039         44,424      43,039  


 

(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
(2) For additional information, see the "Non-GAAP measures" section.
n/a Not applicable.
 

 

Review of Retail and Business Banking fourth quarter results

      2014     2014     2013  
$ millions, for the three months ended   Oct. 31     Jul. 31     Oct. 31 (1)
Revenue                  
  Personal banking    $ 1,633       $ 1,614     $ 1,555  
  Business banking   393      389     386  
  Other   24      29     146  
Total revenue   2,050      2,032     2,087  
Provision for credit losses   171      177     215  
Non-interest expenses   1,076      1,067     1,055  
Income before taxes   803      788     817  
Income taxes   201      199     204  
Net income $ 602    $ 589   $ 613  
Net income attributable to:                  
  Equity shareholders  (a) $ 602    $ 589   $ 613  
Efficiency ratio   52.5  %   52.5 %   50.5 %
Return on equity (2)   60.1  %   60.3 %   61.5 %
Charge for economic capital (2) (b) $ (122)   $ (121)   $ (125)  
Economic profit (2) (a+b) $ 480    $ 468   $ 488  
Full-time equivalent employees   21,864      22,397     21,781  


 

(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
(2) For additional information, see the "Non-GAAP measures" section.
 

Net income was $602 million, down $11 million from the fourth quarter of 2013. Adjusted net income (2) was $616 million, down $16 million from the fourth quarter of 2013.

Revenue of $2,050 million was down $37 million from the fourth quarter of 2013. Excluding the impact of the sold Aeroplan portfolio, revenue was up $78 million from the fourth quarter of 2013. Personal banking and business banking revenue increased primarily due to volume growth across most products and higher fees, partially offset by narrower spreads. Other revenue was down primarily due to the sold Aeroplan portfolio and lower revenue in our exited FirstLine mortgage broker business.

Provision for credit losses of $171 million was down $44 million from the fourth quarter of 2013, mainly due to lower write-offs and bankruptcies in the card portfolio, the impact of an initiative to enhance account management practices as well as the sold Aeroplan portfolio, and lower losses in the business lending portfolio.

Non-interest expenses of $1,076 million were up $21 million from the fourth quarter of 2013, mainly due to higher spend on strategic initiatives.

 

Review of Wealth Management fourth quarter results

      2014     2014     2013  
$ millions, for the three months ended   Oct. 31     Jul. 31     Oct. 31 (1)
Revenue                  
  Retail brokerage    $ 302       $ 307    $ 272  
  Asset management   203      186     165  
  Private wealth management   79      75     33  
Total revenue   584      568     470  
Provision for credit losses       -     1  
Non-interest expenses   428      408     335  
Income before taxes   156      160     134  
Income taxes   37      39     31  
Net income $ 119    $ 121   $ 103  
Net income attributable to:                  
  Equity shareholders  (a) $ 119    $ 121   $ 103  
Efficiency ratio   73.1  %   71.9 %   71.4 %
Return on equity (2)   21.9  %   22.7 %   21.5 %
Charge for economic capital (2) (b) $ (65)   $ (65)   $ (59)  
Economic profit (2) (a+b) $ 54    $ 56   $ 44  
Full-time equivalent employees   4,169      4,176     3,840  


 

(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
(2) For additional information, see the "Non-GAAP measures" section.
 

Net Income for the quarter was $119 million, up $16 million from the fourth quarter of 2013.

Revenue of $584 million was up $114 million from the fourth quarter of 2013, primarily due to the acquisition of Atlantic Trust on December 31, 2013, higher average client assets under management driven by market appreciation and higher net sales of long-term mutual funds, and higher fee-based revenue in Retail Brokerage.

Non-interest expenses of $428 million were up $93 million from the fourth quarter of 2013, primarily due to the impact of the acquisition noted above and higher performance-based compensation.

 

Review of Wholesale Banking fourth quarter results

      2014     2014     2013  
$ millions, for the three months ended   Oct. 31     Jul. 31     Oct. 31 (1)
Revenue                  
  Capital markets    $ 196     $ 336    $ 279  
  Corporate and investment banking   265      330     246  
  Other       4     (5)  
Total revenue (2)   468      670     520  
Provision for (reversal of) credit losses   14      6     (1)  
Non-interest expenses   293      279     271  
Income before taxes   161      385     250  
Income taxes (2)   25      103     41  
Net income $ 136    $ 282   $ 209  
Net income attributable to:                  
  Equity shareholders  (a) $ 136    $ 282   $ 209  
Efficiency ratio   62.6  %   41.5 %   52.3 %
Return on equity (3)   21.8  %   47.5 %   36.5 %
Charge for economic capital (3) (b) $ (75)   $ (73)   $ (72)  
Economic profit (3) (a+b) $ 61    $ 209   $ 137  
Full-time equivalent employees   1,304      1,327     1,273  


 

(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
(2) Revenue and income taxes are reported on a taxable equivalent basis (TEB) basis. Accordingly, revenue and income taxes include a TEB adjustment of $85 million for the quarter ended October 31, 2014 (July 31, 2014: $102 million; October 31, 2013: $78 million).
(3) For additional information, see the "Non-GAAP measures" section.
   

Net income for the quarter was $136 million, compared with net income of $282 million for the third quarter of 2014. Adjusted net income (3) for the quarter was $216 million, compared with $254 million for the prior quarter.

Revenue of $468 million was down $202 million from the third quarter, primarily due to lower Capital markets revenue, including a $112 million ($82 million after-tax) charge relating to the incorporation of FVA into the valuation of our uncollateralized derivatives - identified as an item of note - and lower revenue from Corporate and investment banking.

Provision for credit losses of $14 million compared with a provision for credit losses of $6 million in the third quarter, mainly due to losses in our U.S. real estate finance portfolio.

Non-interest expenses of $293 million were up $14 million from the third quarter, primarily due to higher performance-based compensation.

Income tax expense of $25 million was down $78 million from the third quarter, due to lower income and a decrease in the relative proportion of income earned in higher tax jurisdictions.

 

Review of Corporate and Other fourth quarter results

  2014 2014 2013  
$ millions, for the three months ended Oct. 31 Jul. 31 Oct. 31 (1)
Revenue              
  International banking $ 150     $ 151 $ 148  
  Other   (35)   (63)   (45)  
Total revenue (2)   115    88   103  
Provision for credit losses     12   56  
Non-interest expenses   290    293   269  
Loss before taxes   (184)   (217)   (222)  
Income taxes (2)   (138)   (146)   (122)  
Net loss $ (46) $ (71) $ (100)  
Net income (loss) attributable to:              
  Non-controlling interests $ $ 3 $ (7)  
  Equity shareholders   (48)   (74)   (93)  
Full-time equivalent employees   17,087    17,261   16,145  


 

(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
(2) TEB adjusted. See footnote 2 in "Wholesale Banking" section for additional details.
   

 

Net loss was down $54 million from the fourth quarter of 2013 as a result of higher revenue and a lower provision for credit losses.

Revenue was up $12 million from the fourth quarter of 2013.

Provision for credit losses was down $47 million from the fourth quarter of 2013 primarily due to lower losses in CIBC FirstCaribbean.

Non-interest expenses were up $21 million from the fourth quarter of 2013, mainly due to higher unallocated support costs.

Income tax benefit was up $16 million from the fourth quarter of 2013 mainly due to an increase in the relative proportion of income earned in lower tax jurisdictions and a higher TEB adjustment.



Consolidated balance sheet

$ millions, as at October 31           2014            2013 (1)
ASSETS                        
Cash and non-interest-bearing deposits with banks         $ 2,694          $ 2,211
Interest-bearing deposits with banks           10,853            4,168
Securities                        
Trading           47,061            44,070
Available-for-sale (AFS)           12,228            27,627
Designated at fair value (FVO)           253            287
            59,542            71,984
Cash collateral on securities borrowed           3,389            3,417
Securities purchased under resale agreements           33,407            25,311
Loans                        
Residential mortgages           157,526            150,938
Personal           35,458            34,441
Credit card           11,629            14,772
Business and government           56,075            48,207
Allowance for credit losses           (1,660)           (1,698)
            259,028            246,660
Other                        
Derivative instruments           20,680            19,947
Customers' liability under acceptances           9,212            9,720
Land, buildings and equipment           1,797            1,719
Goodwill           1,450            1,733
Software and other intangible assets           967            756
Investments in equity-accounted associates and joint ventures           1,923            1,695
Deferred tax assets           506            526
Other assets           9,455            8,159
            45,990            44,255
          $ 414,903          $ 398,006
LIABILITIES AND EQUITY                        
Deposits                        
Personal         $ 130,085          $ 125,034
Business and government           148,793            134,736
Bank           7,732            5,592
Secured borrowings           38,783            49,802
            325,393            315,164
Obligations related to securities sold short           12,999            13,327
Cash collateral on securities lent           903            2,099
Obligations related to securities sold under repurchase agreements           9,862            4,887
Other                        
Derivative instruments           21,841            19,724
Acceptances           9,212            9,721
Deferred tax liabilities           29            33
Other liabilities           10,903            10,829
            41,985            40,307
Subordinated indebtedness           4,978            4,228
Equity                        
Preferred shares           1,031            1,706
Common shares           7,782            7,753
Contributed surplus           75            82
Retained earnings           9,626            8,318
Accumulated other comprehensive income (AOCI)           105            (40)
Total shareholders' equity           18,619            17,819
Non-controlling interests           164            175
Total equity           18,783            17,994
          $ 414,903          $ 398,006


 

(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.  
     

 

Consolidated statement of income

  For the three       For the twelve  
  months ended       months ended  
  2014 2014   2013       2014 2013  
$ millions, except as noted Oct. 31 Jul. 31   Oct. 31 (1)     Oct. 31 Oct. 31 (1)
Interest income                              
Loans $ 2,410  $ 2,389   $ 2,453       $ 9,504  $ 9,795  
Securities   403    397     407         1,628    1,631  
Securities borrowed or purchased under resale agreements   82    82     91         320    347  
Deposits with banks     5     8         25    38  
    2,899    2,873     2,959         11,477    11,811  
Interest expense                              
Deposits   842    821     903         3,337    3,679  
Securities sold short   86    81     84         327    334  
Securities lent or sold under repurchase agreements   35    36     25         127    102  
Subordinated indebtedness   45    44     45         178    193  
Other   10    16     9         49    50  
    1,018    998     1,066         4,018    4,358  
Net interest income   1,881    1,875     1,893         7,459    7,453  
Non-interest income                              
Underwriting and advisory fees   128    150     88         444    389  
Deposit and payment fees   210    221     215         848    824  
Credit fees   123    124     117         478    462  
Card fees   106    108     133         414    535  
Investment management and custodial fees   186    181     126         677    474  
Mutual fund fees   337    317     267         1,236    1,014  
Insurance fees, net of claims   92    85     93         369    358  
Commissions on securities transactions   98    99     98         408    412  
Trading income (loss)   (123)   (42)     (9)         (176)   27  
AFS securities gains, net   44    24     9         201    212  
FVO gains (losses), net   (1)   2     6         (15)   5  
Foreign exchange other than trading     10     5         43    44  
Income from equity-accounted associates and joint ventures   35    98     45         226    140  
Other   101    106     94         764    369  
    1,336    1,483     1,287         5,917    5,265  
Total revenue   3,217    3,358     3,180         13,376    12,718  
Provision for credit losses   194    195     271         937    1,121  
Non-interest expenses                              
Employee compensation and benefits   1,167    1,176     1,070         4,636    4,324  
Occupancy costs   180    187     181         736    700  
Computer, software and office equipment   319    304     285         1,200    1,052  
Communications   80    78     75         312    307  
Advertising and business development   78    70     79         285    236  
Professional fees   61    43     59         201    179  
Business and capital taxes   15    17     16         59    62  
Other   187    172     165         1,096    761  
    2,087    2,047     1,930         8,525    7,621  
Income before income taxes   936    1,116     979         3,914    3,976  
Income taxes   125    195     154         699    626  
Net income $ 811     $ 921      $ 825       $ 3,215     $ 3,350  
Net income (loss) attributable to non-controlling interests    $ $ 3   $ (7)       $ (3) $ (2)  
  Preferred shareholders $ 18  $ 19   $ 24       $ 87  $ 99  
  Common shareholders   791    899     808         3,131    3,253  
Net income attributable to equity shareholders $ 809  $ 918   $ 832       $ 3,218  $ 3,352  
Earnings per share (in dollars)                              
  Basic $ 1.99  $ 2.26   $ 2.02       $ 7.87  $ 8.11  
  Diluted   1.98    2.26     2.02         7.86    8.11  
Dividends per common share (in dollars)   1.00    1.00     0.96         3.94    3.80  


 

(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
   

 

Consolidated statement of comprehensive income

      For the three       For the twelve  
      months ended       months ended  
      2014   2014   2013         2014   2013  
$ millions Oct. 31   Jul. 31   Oct. 31 (1)       Oct. 31   Oct. 31 (1)
Net income $ 811  $ 921 $ 825       $ 3,215  $ 3,350  
Other comprehensive income (OCI), net of tax, that is subject to subsequent                            
  reclassification to net income                            
  Net foreign currency translation adjustments                            
  Net gains (losses) on investments in foreign operations   296    (48)   143         694    369  
  Net gains (losses) on hedges of investments in foreign operations   (165)   26   (93)         (425)   (237)  
        131    (22)   50         269    132  
  Net change in AFS securities                            
  Net gains (losses) on AFS securities   36    47   74         152    57  
  Net (gains) losses on AFS securities reclassified to net income   (37)   (15)   (7)         (146)   (155)  
        (1)   32   67           (98)  
  Net change in cash flow hedges                            
  Net gains (losses) on derivatives designated as cash flow hedges   13    20   60         94    62  
  Net (gains) losses on derivatives designated as cash flow hedges reclassified to net income     (13)   (21)   (47)         (81)   (51)  
      (1)   13         13    11  
OCI, net of tax, that is not subject to subsequent reclassification to net income                            
  Net gains (losses) on post-employment defined benefit plans   (7)   (87)   50         (143)   280  
Total OCI   123    (78)   180         145    325  
Comprehensive income $ 934  $ 843 $ 1,005       $ 3,360  $ 3,675  
Comprehensive income (loss) attributable to non-controlling interests $ $ 3 $ (7)       $ (3) $ (2)  
  Preferred shareholders $ 18  $ 19 $ 24       $ 87  $ 99  
  Common shareholders   914    821   988         3,276    3,578  
Comprehensive income attributable to equity shareholders $ 932  $ 840 $ 1,012       $ 3,363  $ 3,677  
                             
(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
                                 
                                 
                                 
                                 
      For the three       For the twelve  
      months ended       months ended  
        2014   2014   2013         2014   2013  
$ millions   Oct. 31   Jul. 31   Oct. 31 (1)       Oct. 31   Oct. 31 (1)
Income tax (expense) benefit                            
Subject to subsequent reclassification to net income                            
  Net foreign currency translation adjustments                            
  Net gains (losses) on investments in foreign operations $ (23) $ 3 $ (9)       $ (52) $ (26)  
  Net gains (losses) on hedges of investments in foreign operations   29    (4)   19         67    44  
          (1)   10         15    18  
  Net change in AFS securities                            
  Net gains (losses) on AFS securities     (37)   (14)         (71)   (51)  
  Net (gains) losses on AFS securities reclassified to net income     9   2         59    57  
        12    (28)   (12)         (12)   6  
  Net change in cash flow hedges                            
  Net gains (losses) on derivatives designated as cash flow hedges   (5)   (7)   (22)         (34)   (22)  
  Net (gains) losses on derivatives designated as cash flow hedges reclassified to net income       7   17         29    18  
          (5)         (5)   (4)  
Not subject to subsequent reclassification to net income                            
  Net foreign currency translation adjustments     32   (19)         54    (101)  
      $ 23  $ 3 $ (26)       $ 52  $ (81)  
                                 
(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
   


 

Consolidated statement of changes in equity

 
    For the three       For the twelve  
    months ended       months ended  
      2014   2014   2013         2014   2013  
$ millions   Oct. 31   Jul. 31   Oct. 31 (1)       Oct. 31   Oct. 31 (1)
Preferred shares                            
Balance at beginning of period $ 1,281  $ 1,381 $ 1,706       $ 1,706  $ 1,706  
Issue of preferred shares     400   -         400    -  
Redemption of preferred shares   (250)   (500)   -         (1,075)   -  
Balance at end of period $ 1,031  $ 1,281 $ 1,706       $ 1,031  $ 1,706  
Common shares                            
Balance at beginning of period $ 7,758  $ 7,745 $ 7,757       $ 7,753  $ 7,769  
Issue of common shares   27    33   14         96    114  
Purchase of common shares for cancellation   (5)   (15)   (18)         (65)   (130)  
Treasury shares     (5)   -         (2)   -  
Balance at end of period $ 7,782  $ 7,758 $ 7,753       $ 7,782  $ 7,753  
Contributed surplus                            
Balance at beginning of period $ 78  $ 82 $ 82       $ 82  $ 85  
Stock option expense     1   1           5  
Stock options exercised   (4)   (5)   (2)         (14)   (9)  
Other     -   1           1  
Balance at end of period $ 75  $ 78 $ 82       $ 75  $ 82  
Retained earnings                            
Balance at beginning of period $ 9,258  $ 8,820 $ 7,954       $ 8,318  $ 7,009  
Net income attributable to equity shareholders   809    918   832         3,218    3,352  
Dividends                            
  Preferred   (18)   (19)   (24)         (87)   (99)  
  Common   (398)   (397)   (384)         (1,567)   (1,523)  
Premium on purchase of common shares for cancellation   (24)   (59)   (59)         (250)   (422)  
Other   (1)   (5)   (1)         (6)   1  
Balance at end of period $ 9,626  $ 9,258 $ 8,318       $ 9,626  $ 8,318  
AOCI, net of tax                            
AOCI, net of tax, that is subject to subsequent reclassification to net income                        
  Net foreign currency translation adjustments                            
  Balance at beginning of period $ 182  $ 204 $ (6)       $ 44  $ (88)  
  Net change in foreign currency translation adjustments   131    (22)   50         269    132  
  Balance at end of period $ 313  $ 182 $ 44       $ 313  $ 44  
  Net gains (losses) on AFS securities                            
  Balance at beginning of period $ 259  $ 227 $ 185       $ 252  $ 350  
  Net change in AFS securities   (1)   32   67           (98)  
  Balance at end of period $ 258  $ 259 $ 252       $ 258  $ 252  
  Net gains (losses) on cash flow hedges                            
  Balance at beginning of period $ 26  $ 27 $ -       $ 13  $ 2  
  Net change in cash flow hedges     (1)   13         13    11  
  Balance at end of period $ 26  $ 26 $ 13       $ 26  $ 13  
AOCI, net of tax, that is not subject to subsequent reclassification to net income                        
  Net gains (losses) on post-employment defined benefit plans                          
  Balance at beginning of period $ (485) $ (398) $ (399)       $ (349) $ (629)  
  Net change in post-employment defined benefit plans   (7)   (87)   50         (143)   280  
  Balance at end of period $ (492) $ (485) $ (349)       $ (492) $ (349)  
Total AOCI, net of tax $ 105  $ (18) $ (40)       $ 105  $ (40)  
Non-controlling interests                            
Balance at beginning of period $ 155  $ 156 $ 166       $ 175  $ 170  
Net income (loss) attributable to non-controlling interests     3   (7)         (3)   (2)  
Dividends     (2)   -         (4)   (4)  
Other     (2)   16         (4)   11  
Balance at end of period $ 164  $ 155 $ 175       $ 164  $ 175  
Equity at end of period $ 18,783  $ 18,512 $ 17,994       $ 18,783  $ 17,994  
                             
(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.


 

Consolidated statement of cash flows

      For the three       For the twelve  
      months ended     months ended  
      2014         2014         2013       2014         2013  
$ millions   Oct. 31         Jul. 31         Oct. 31 (1)     Oct. 31         Oct. 31 (1)
Cash flows provided by (used in) operating activities                                            
Net income $ 811        $ 921       $ 825     $ 3,215        $ 3,350  
Adjustments to reconcile net income to cash flows provided by (used in) operating activities:                                            
  Provision for credit losses   194          195         271       937          1,121  
  Amortization and impairment (2)   96          101         95       813          354  
  Stock option expense           1         1               5  
  Deferred income taxes           52         (21)       57          49  
  AFS securities gains, net   (44)         (24)         (9)       (201)         (212)  
  Net losses (gains) on disposal of land, buildings and equipment           -         1               (2)  
  Other non-cash items, net   (22)         (96)         (128)       (637)         (338)  
  Net changes in operating assets and liabilities                                            
    Interest-bearing deposits with banks   (2,636)         (402)         1,734       (6,685)         (2,054)  
    Loans, net of repayments   (5,003)         (5,033)         (3,394)       (16,529)         (5,887)  
    Deposits, net of withdrawals   3,151          8,169         1,888       10,213          13,460  
    Obligations related to securities sold short   196          540         72       (328)         292  
    Accrued interest receivable   (25)         8         (51)       79          44  
    Accrued interest payable   241          (174)         260       (32)         (147)  
    Derivative assets   (2,460)         1,218         644       (688)         6,917  
    Derivative liabilities   3,895          (894)         (636)       2,032          (7,241)  
    Trading securities   1,034          (2,947)         (1,183)       (2,991)         (3,730)  
    FVO securities           26         (1)       34          17  
    Other FVO assets and liabilities   (107)         95         69       (14)         349  
    Current income taxes   (28)         79         29       (27)         (532)  
    Cash collateral on securities lent   (456)         123         399       (1,196)         506  
    Obligations related to securities sold under repurchase agreements   425          1,026         (1,461)       4,975          (1,744)  
    Cash collateral on securities borrowed   (151)         (347)         1,001       28          (106)  
    Securities purchased under resale agreements   (8,302)         (671)         1,768       (8,096)         (186)  
    Other, net   (42)         (1,923)         770       (1,542)         901  
      (9,221)         43         2,943       (16,575)         5,186  
Cash flows provided by (used in) financing activities                                            
Issue of subordinated indebtedness   1,000          -         -       1,000          -  
Redemption/repurchase of subordinated indebtedness   (250)         (14)         -       (264)         (561)  
Issue of preferred shares           400         -       400          -  
Redemption of preferred shares   (250)         (500)         -       (1,075)         -  
Issue of common shares for cash   23          28         12       82          105  
Purchase of common shares for cancellation   (29)         (74)         (77)       (315)         (552)  
Net proceeds from treasury shares           (5)         -       (2)         -  
Dividends paid   (416)         (416)         (408)       (1,654)         (1,622)  
Share issuance costs           (5)         -       (5)         -  
      80          (586)         (473)       (1,833)         (2,630)  
Cash flows provided by (used in) investing activities                                            
Purchase of AFS securities   (7,091)         (6,222)         (7,821)       (27,974)         (27,451)  
Proceeds from sale of AFS securities   11,659          2,030         2,674       29,014          14,094  
Proceeds from maturity of AFS securities   4,337          4,942         2,516       14,578          10,550  
Net cash used in acquisitions           (46)         -       (190)         -  
Net cash provided by dispositions           -         3       3,611          49  
Net purchase of land, buildings and equipment   (96)         (51)         (110)       (247)         (248)  
      8,809          653         (2,738)       18,792          (3,006)  
Effect of exchange rate changes on cash and non-interest-bearing deposits with banks   51          (8)         17       99          48  
Net increase (decrease) in cash and non-interest-bearing deposits with banks during period   (281)         102         (251)       483          (402)  
Cash and non-interest-bearing deposits with banks at beginning of period   2,975          2,873         2,462       2,211          2,613  
Cash and non-interest-bearing deposits with banks at end of period $ 2,694        $ 2,975       $ 2,211     $ 2,694        $ 2,211   
Cash interest paid $ 777        $ 1,172       $ 806     $ 4,050        $ 4,505  
Cash income taxes paid   150          64         146       669          1,109  
Cash interest and dividends received   2,874          2,881         2,909       11,556          11,856  


 

(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
(2) Comprises amortization and impairment of buildings, furniture, equipment, leasehold improvements, and software and other intangible assets.  In addition, the year ended October 31, 2014 included the goodwill impairment charge.


 

Non-GAAP measures

We use a number of financial measures to assess the performance of our business lines. Some measures are calculated in accordance with International Financial Reporting Standards (IFRS or GAAP), while other measures do not have a standardized meaning under GAAP, and accordingly, these measures may not be comparable to similar measures used by other companies. Investors may find these non-GAAP measures useful in analyzing financial performance.

The following table provides a quarterly reconciliation of non-GAAP to GAAP measures related to CIBC on a consolidated basis. For a more detailed discussion and for an annual reconciliation of non-GAAP to GAAP measures, see the "Non-GAAP measures" section of CIBC's 2014 Annual Report.

            2014           2014         2013  
$ millions, as at or for three months ended           Oct. 31           Jul. 31         Oct. 31 (1)
Reported and adjusted diluted EPS                                    
Reported net income attributable to diluted common shareholders   A     $ 791          $ 899       $ 808  
After-tax impact of items of note           100            (13)         69  
Adjusted net income attributable to diluted common shareholders (2)   B     $ 891          $ 886       $ 877  
Diluted weighted-average common shares outstanding (thousands)   C       397,907            398,022         400,255  
Reported diluted EPS ($)   A/C     $ 1.98          $ 2.26       $ 2.02  
Adjusted diluted EPS ($) (2)   B/C       2.24            2.23         2.19  
Reported and adjusted efficiency ratio                                    
Reported total revenue   D     $ 3,217          $ 3,358       $ 3,180  
Pre-tax impact of items of note           118            (49)         20  
TEB           85            102         78  
Adjusted total revenue (2)   E     $ 3,420          $ 3,411       $ 3,278  
Reported non-interest expenses   F     $ 2,087          $ 2,047       $ 1,930  
Pre-tax impact of items of note           (20)           (17)         (70)  
Adjusted non-interest expenses (2)   G     $ 2,067          $ 2,030       $ 1,860  
Reported efficiency ratio   F/D       64.9    %       61.0 %       60.7 %
Adjusted efficiency ratio (2)   G/E       60.4    %       59.5 %       56.7 %
Reported and adjusted dividend payout ratio                                    
Reported net income attributable to common shareholders   H     $ 791          $ 899       $ 808  
After-tax impact of items of note           100            (13)         69  
Adjusted net income attributable to common shareholders (2)   I     $ 891          $ 886       $ 877  
Dividends paid to common shareholders   J     $ 398          $ 397       $ 384  
Reported dividend payout ratio   J/H       50.3    %       44.2 %       47.6 %
Adjusted dividend payout ratio (2)   J/I       44.6    %       44.8 %       43.8 %
Reported and adjusted return on common shareholders' equity                                    
Average common shareholders' equity   L     $ 17,528          $ 16,989       $ 15,885  
Reported return on common shareholders' equity (%)   I / L       17.9    %       21.0 %       20.2 %
Adjusted return on common shareholders' equity (%) (2)   J / L       20.1    %       20.7 %       21.9 %
Reported and adjusted effective tax                                    
Reported income before income taxes   M     $ 936          $ 1,116       $ 979  
Pre-tax impact of items of note           138            (32)         90  
Adjusted income before income taxes (2)   N     $ 1,074          $ 1,084       $ 1,069  
Reported income taxes   O     $ 125          $ 195       $ 154  
Tax impact of items of note           38            (19)         21  
Adjusted income taxes (2)   P     $ 163          $ 176       $ 175  
Reported effective tax rate (%)   O / M       13.4    %       17.5 %       15.9 %
Adjusted effective tax rate (%) (2)   P / N       15.2    %       16.2 %       16.5 %
 

 

        Retail and                
        Business   Wealth     Wholesale     Corporate CIBC
$ millions, for the three months ended Banking    Management Banking and Other Total
Oct. 31 Reported net income (loss) $ 602  $ 119  $ 136  $ (46)    $ 811 
2014 After-tax impact of items of note   14      80      100 
    Adjusted net income (loss) (2) $ 616  $ 124  $ 216  $ (45) $ 911 
Jul. 31 Reported net income (loss) $ 589 $ 121 $ 282 $ (71) $ 921
2014 After-tax impact of items of note   8   3   (28)   4   (13)
    Adjusted net income (loss) (2) $ 597 $ 124 $ 254 $ (67) $ 908
Oct. 31 Reported net income (loss) $ 613 $ 103 $ 209 $ (100) $ 825
2013 (1) After-tax impact of items of note   19   2   8   40   69
    Adjusted net income (loss) (2) $ 632 $ 105 $ 217 $ (60) $ 894


 

(1) Certain information has been restated to reflect the changes in accounting policies stated in Note 1 to the consolidated financial statements and to conform to the presentation in the current period.
(2) Non-GAAP measure.
   

 

Basis of presentation
The interim consolidated financial information in this news release is prepared in accordance with IFRS and is unaudited whereas the annual consolidated financial information is derived from audited financial statements. These interim financial statements follow the same accounting policies and methods of application as CIBC's consolidated financial statements for the year ended October 31, 2014.

_______________________________________________

The information below forms a part of this press release.

Nothing in CIBC's corporate website (www.cibc.com) should be considered incorporated herein by reference.

(The board of directors of CIBC reviewed this press release prior to it being issued.)

A NOTE ABOUT FORWARD-LOOKING STATEMENTS:
From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this press release, in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission and in other communications. All such statements are made pursuant to the "safe harbour" provisions of, and are intended to be forward-looking statements under, applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements made in the "Core business performance", "Strong fundamentals" and "Making a difference in our Communities" sections of this press release, and other statements about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies and outlook for calendar year 2015 and subsequent periods. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate", "forecast", "target", "objective" and other similar expressions or future or conditional verbs such as "will", "should", "would" and "could". By their nature, these statements require us to make assumptions and are subject to inherent risks and uncertainties that may be general or specific. A variety of factors, many of which are beyond our control, affect our operations, performance and results and could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements. These factors include: credit, market, liquidity, strategic, insurance, operational, reputation and legal, regulatory and environmental risk; the effectiveness and adequacy of our risk management  and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued and to be issued thereunder, the U.S. Foreign Account Tax Compliance Act and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking Supervision's global standards for capital and liquidity reform and those relating to the payments system in Canada; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions, and interest rate and liquidity regulatory guidance; the resolution of legal and regulatory proceedings and related matters; the effect of changes to accounting standards, rules and interpretations; changes in our estimates of reserves and allowances; changes in tax laws; changes to our credit ratings; political conditions and developments; the possible effect on our business of international conflicts and the war on terror; natural disasters, public health emergencies, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; potential disruptions to our information technology systems and services, including the evolving risk of cyber attack; social media risk; losses incurred as a result of internal or external fraud; the accuracy and completeness of information provided to us concerning clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates; intensifying competition from established competitors and new entrants in the financial services industry including through internet and mobile banking; technological change; global capital market activity; changes in monetary and economic policy; currency value and interest rate fluctuations; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations, including increasing Canadian household debt levels and the high U.S. fiscal deficit; our success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels; changes in client spending and saving habits; our ability to attract and retain key employees and executives; our ability to successfully execute our strategies and complete and integrate acquisitions and joint ventures; and our ability to anticipate and manage the risks associated with these factors. This list is not exhaustive of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. We do not undertake to update any forward-looking statement that is contained in this press release or in other communications except as required by law.

SOURCE CIBC World Markets

For further information:

Investor Relations: Geoff Weiss, 416-980-5093,geoffrey.weiss@cibc.com; Media Inquiries: Kevin Dove, 416-980-8835,kevin.dove@cibc.com; Erica Belling, 416-594-7251,erica.belling@cibc.com


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