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CIBC Announces Fourth Quarter and Fiscal 2020 Results

Press Release

TORONTO, Dec. 3, 2020 – CIBC (TSX: CM) (NYSE: CM) today announced its results for the fourth quarter and fiscal year ended October 31, 2020.

“We delivered resilient financial performance in fiscal 2020 against the backdrop of a global pandemic and an evolving geopolitical environment. Throughout this period, our team was guided by our purpose as we responded, ensuring that we supported our clients, team members and communities through a uniquely challenging time,” said Victor G. Dodig, CIBC President and Chief Executive Officer. “At the same time, we took steps to position our bank for the future, including making strategic investments in our people, processes and platforms, and taking steps to enhance our efficiency. As we enter fiscal 2021, our strong financial position will enable us to continue executing our client-focused strategy to deliver growth and generate value for all our stakeholders.”

Fourth quarter highlights

Q4/20

Q4/19

Q3/20

YoY
Variance

QoQ
Variance

Reported Net Income

$1,016 million

$1,193 million

$1,172 million

-15%

-13%

Adjusted Net Income (1)

$1,280 million

$1,309 million

$1,243 million

-2%

+3%

Reported Diluted Earnings Per Share (EPS)

$2.20

$2.58

$2.55

-15%

-14%

Adjusted Diluted EPS (1)

$2.79

$2.84

$2.71

-2%

+3%

Reported Return on Common Shareholders’ Equity (ROE)

10.7%

12.9%

12.1%

Adjusted ROE (1)

13.5%

14.2%

12.9%

Common Equity Tier 1 (CET1) Ratio

12.1%

11.6%

11.8%

(1)  For additional information, see the “Non-GAAP measures” section.

CIBC’s results for the fourth quarter of 2020 were affected by the following items of note aggregating to a negative impact of $0.59 per share:

  • $220 million ($220 million after-tax) goodwill impairment charge related to our controlling interest in CIBC FirstCaribbean;
  • $114 million ($84 million after-tax) charge related to the consolidation of our real estate portfolio;
  • $79 million ($58 million after-tax) gain as a result of plan amendments related to pension and other post-employment plans; and
  • $23 million ($18 million after-tax) amortization of acquisition-related intangible assets.

For the year ended October 31, 2020, CIBC reported net income of $3.8 billion and adjusted net income(1) of $4.4 billion, compared with reported net income of $5.1 billion and adjusted net income(1) of $5.4 billion for 2019.

The following table summarizes our performance in 2020 against our key financial measures and targets:

Financial Measure

Target

2020 Reported Results

2020 Adjusted Results (1)

Diluted EPS growth (2)

5% to 10% annually

$8.22, down 27% from 2019

$9.69, down 19% from 2019

ROE (2)

15% +

10.0%

11.7%

Efficiency ratio

52% run rate in 2022

60.6%, an increase of 230 basis

points from 2019

55.8%, a decline of 30 basis points

from 2019

CET1 ratio

Strong buffer to regulatory

minimum

12.1%

Dividend payout ratio (2)

40% to 50%

70.7%

60.0%

Total shareholder return

Outperform the S&P/TSX

Composite Banks Index over a

rolling five-year period

CIBC – 27.7%

S&P/TSX Composite Banks Index – 35.3%

(1)  For additional information, see the “Non-GAAP measures” section.

(2)  Through the cycle.

Core business performance(1)
F2020 Financial Highlights

(C$ million)

F2020

F2019

YoY Variance

Canadian Personal and Business Banking

Reported Net Income

$1,962

$2,289

down 14%

Adjusted Net Income (2)

$1,968

$2,463

down 20%

Canadian Commercial Banking and Wealth Management

Reported Net Income

$1,202

$1,287

down 7%

Adjusted Net Income (2)

$1,203

$1,288

down 7%

U.S. Commercial Banking and Wealth Management

Reported Net Income

$380

$682

down 44%

Adjusted Net Income (2)

$441

$722

down 39%

Capital Markets

Reported Net Income

$1,131

$954

up 19%

Adjusted Net Income (2)

$1,131

$954

up 19%

(1)

Certain prior period information has been revised due to enhancements made to our transfer pricing methodology. See the “External reporting changes” section of our 2020 Annual Report to Shareholders for additional details.

(2)

For additional information, see the “Non-GAAP measures” section.

Strong fundamentals
While investing in core businesses, CIBC has continued to strengthen key fundamentals. In 2020, CIBC maintained its capital strength and sound risk management practices:

  • Capital ratios were strong, with a Basel III CET1 ratio of 12.1% as noted above, and Tier 1 and Total capital ratios of 13.6% and 16.1%, respectively, at October 31, 2020;
  • Market risk, as measured by average Value-at-Risk, was $8.5 million in 2020 compared with $5.7 million in 2019;
  • We continued to have solid credit performance, with a loan loss ratio of 26 basis points compared with 29 basis points in 2019;
  • Average Liquidity Coverage Ratio was 145% for the three months ended October 31, 2020; and
  • Leverage Ratio was 4.7% at October 31, 2020.

Credit quality
Provision for credit losses was $291 million for the fourth quarter, down $111 million or 28% from the same quarter last year. Provision for credit losses on performing loans was up $41 million, primarily due to an unfavourable impact of model parameter updates in Canadian Personal and Business Banking and negative credit migration in U.S. Commercial Banking and Wealth Management. Provision for credit losses on impaired loans was down $152 million, due to lower insolvencies and write-offs in credit cards and personal lending, reflecting the impact of the client relief programs and government support.

Making a difference in our Communities
Part of being a genuinely caring bank means supporting the organizations and charities that keep our communities strong. In aggregate, we invested $75 million in community organizations across Canada and the U.S. during 2020.
In the fourth quarter:

  • Team CIBC rallied around a reimagined Canadian Cancer Society CIBC Run for the Cure, raising $2 million to help change the future of breast cancer, bringing our total funds raised in support of this cause to a total of $56 million over the past 24 years.
  • We announced several key donations to community organizations, including a commitment of $750,000 to Ronald McDonald House Canada over the next three years as part of its National Mission Partnership and $500,000 over three years to support educational and employment opportunities for persons with disabilities at Holland Bloorview.
  • Towards an inclusive future, we committed an additional $275,000 for youth-focused organizations in Canada and the U.S. that support the Black community; sponsored the second annual Startup & Slay digital series, hosted by How She Hustles, a network for diverse women entrepreneurs and leaders; and supported Actua, an organization that engages young Indigenous peoples for the future of work through transformational STEM programming as we recognized Orange Shirt Day honouring the First Nations, Inuit and Métis children who were forcibly removed from their communities and sent to Residential Schools.

Fourth quarter financial highlights

As at or for the

As at or for the

three months ended

twelve months ended

2020

2020

2019

2020

2019

Unaudited

Oct. 31

Jul. 31

Oct. 31

Oct. 31

Oct. 31

Financial results ($ millions)

Net interest income

$

2,792

$

2,729

$

2,801

$

11,044

$

10,551

Non-interest income

1,808

1,979

1,971

7,697

8,060

Total revenue

4,600

4,708

4,772

18,741

18,611

Provision for credit losses

291

525

402

2,489

1,286

Non-interest expenses

2,891

2,702

2,838

11,362

10,856

Income before income taxes

1,418

1,481

1,532

4,890

6,469

Income taxes

402

309

339

1,098

1,348

Net income

$

1,016

$

1,172

$

1,193

$

3,792

$

5,121

Net income attributable to non-controlling interests

1

2

8

2

25

Preferred shareholders and other equity instrument holders

30

31

32

122

111

Common shareholders

985

1,139

1,153

3,668

4,985

Net income attributable to equity shareholders

$

1,015

$

1,170

$

1,185

$

3,790

$

5,096

Financial measures

Reported efficiency ratio

62.9

%

57.4

%

59.5

%

60.6

%

58.3

%

Loan loss ratio (1)

0.17

%

0.29

%

0.33

%

0.26

%

0.29

%

Reported return on common shareholders’ equity (2)

10.7

%

12.1

%

12.9

%

10.0

%

14.5

%

Net interest margin

1.43

%

1.43

%

1.69

%

1.50

%

1.65

%

Net interest margin on average interest-earning assets (3)

1.60

%

1.61

%

1.90

%

1.69

%

1.84

%

Return on average assets (4)

0.52

%

0.62

%

0.72

%

0.52

%

0.80

%

Return on average interest-earning assets (3)(4)

0.58

%

0.69

%

0.81

%

0.58

%

0.89

%

Reported effective tax rate

28.3

%

20.9

%

22.1

%

22.5

%

20.8

%

Common share information

Per share ($)

– basic earnings

$

2.21

$

2.56

$

2.59

$

8.23

$

11.22

– reported diluted earnings

2.20

2.55

2.58

8.22

11.19

– dividends

1.46

1.46

1.44

5.82

5.60

– book value

84.05

83.17

79.87

84.05

79.87

Closing share price ($)

99.38

92.73

112.31

99.38

112.31

Shares outstanding (thousands)

– weighted-average basic

446,321

445,416

445,357

445,435

444,324

– weighted-average diluted

446,877

445,894

446,392

446,021

445,457

– end of period

447,085

446,009

445,342

447,085

445,342

Market capitalization ($ millions)

$

44,431

$

41,358

$

50,016

$

44,431

$

50,016

Value measures

Total shareholder return

8.74

%

14.24

%

9.60

%

(5.90)

%

4.19

%

Dividend yield (based on closing share price)

5.8

%

6.3

%

5.1

%

5.9

%

5.0

%

Reported dividend payout ratio

66.2

%

57.1

%

55.6

%

70.7

%

49.9

%

Market value to book value ratio

1.18

1.11

1.41

1.18

1.41

Selected financial measures – adjusted (5)

Adjusted efficiency ratio (6)

56.4

%

54.8

%

56.0

%

55.8

%

55.5

%

Adjusted return on common shareholders’ equity (2)

13.5

%

12.9

%

14.2

%

11.7

%

15.4

%

Adjusted effective tax rate

24.5

%

21.2

%

20.2

%

21.8

%

20.6

%

Adjusted diluted earnings per share

$

2.79

$

2.71

$

2.84

$

9.69

$

11.92

Adjusted dividend payout ratio

52.2

%

53.7

%

50.5

%

60.0

%

46.9

%

On- and off-balance sheet information ($ millions)

Cash, deposits with banks and securities

$

211,564

$

212,766

$

138,669

$

211,564

$

138,669

Loans and acceptances, net of allowance

416,388

414,457

398,108

416,388

398,108

Total assets

769,551

768,545

651,604

769,551

651,604

Deposits

570,740

566,135

485,712

570,740

485,712

Common shareholders’ equity

37,579

37,095

35,569

37,579

35,569

Average assets

778,933

757,589

655,971

735,492

639,716

Average interest-earning assets (3)

692,465

673,527

585,816

654,142

572,677

Average common shareholders’ equity

36,762

37,360

35,553

36,792

34,467

Assets under administration (AUA) (7)(8)

2,368,904

2,413,768

2,425,651

2,368,904

2,425,651

Assets under management (AUM) (8)

265,936

265,639

252,007

265,936

252,007

Balance sheet quality and liquidity measures

Risk-weighted assets (RWA) ($ millions)

$

254,871

$

256,683

$

239,863

$

254,871

$

239,863

CET1 ratio (9)

12.1

%

11.8

%

11.6

%

12.1

%

11.6

%

Tier 1 capital ratio (9)

13.6

%

13.0

%

12.9

%

13.6

%

12.9

%

Total capital ratio (9)

16.1

%

15.4

%

15.0

%

16.1

%

15.0

%

Leverage ratio

4.7

%

4.6

%

4.3

%

4.7

%

4.3

%

Liquidity coverage ratio (LCR)

145

%

150

%

125

%

n/a

n/a

Other information

Full-time equivalent employees

43,853

43,952

45,157

43,853

45,157

(1)

The ratio is calculated as the provision for credit losses on impaired loans to average loans and acceptances, net of allowance for credit losses.

(2)

Annualized.

(3)

Average interest-earning assets include interest-bearing deposits with banks, interest-bearing demand deposits with Bank of Canada, securities, cash collateral on securities borrowed, securities purchased under resale agreements, loans net of allowances, and certain sublease-related assets.

(4)

Net income expressed as a percentage of average assets or average interest-earning assets.

(5)

Adjusted measures are non-GAAP measures. Adjusted measures are calculated in the same manner as reported measures, except that financial information included in the calculation of adjusted measures is adjusted to exclude the impact of items of note. For additional information and a reconciliation of reported results to adjusted results, see the “Non-GAAP measures” section.

(6)

Calculated on a tax equivalent basis (TEB).

(7)

Includes the full contract amount of AUA or custody under a 50/50 joint venture between CIBC and The Bank of New York Mellon of $1,861.5 billion (July 31, 2020: $1,903.7 billion; October 31, 2019: $1,923.2 billion).

(8)

AUM amounts are included in the amounts reported under AUA.

(9)

Effective beginning in the second quarter of 2020, ratios reflect the expected credit loss transitional arrangement announced by OSFI on March 27, 2020.

n/a

Not applicable.

 

Review of Canadian Personal and Business Banking fourth quarter results

2020

Oct. 31

2020

Jul. 31

2019

Oct. 31(1)

$ millions, for the three months ended

Revenue

$

2,139

$

2,056

$

2,225

Provision for credit losses

Impaired

89

151

218

Performing

41

69

37

Total provision for credit losses

130

220

255

Non-interest expenses

1,149

1,146

1,156

Income before income taxes

860

690

814

Income taxes

226

182

213

Net income

$

634

$

508

$

601

Net income attributable to:

Equity shareholders

$

634

$

508

$

601

Efficiency ratio

53.8

%

55.7

%

52.0

%

Return on equity (2)

37.5

%

29.7

%

36.8

%

Average allocated common equity (2)

$

6,728

$

6,790

$

6,472

Full-time equivalent employees

12,879

12,739

13,431

Read More: http://cibc.mediaroom.com/2020-12-03-CIBC-Announces-Fourth-Quarter-and-Fiscal-2020-Results

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