Building a Strong, Innovative and Relationship-Based Bank Q3 2016 S eptember 2016
2 Forward-Looking Statements From t ime t o t ime, we make writ t en or oral forward-looking st at ement s wit hin t he meaning of cert ain securit ies laws, including in t his present at ion, in ot her filings wit h Canadian securit ies regulat ors or t he U.S . S ecurit ies and Exchange Commission and in ot her communicat ions. All such st at ement s are made pursuant t o t he “ safe harbour” provisions of, and are int ended t o be forward-looking st at ement s under applicable Canadian and U.S . securit ies legislat ion, including t he U.S . Privat e S ecurit ies Lit igat ion Reform Act of 1995. These st at ement s include, but are not limit ed t o, st at ement s made about our operat ions, business lines, financial condit ion, risk management , priorit ies, t arget s, ongoing obj ect ives, st rat egies and out look for calendar year 2016 and subsequent periods. Forward-looking st at ement s are t ypically ident ified by t he words “ believe” , “ expect ” , “ ant icipat e” , “ int end” , “ est imat e” , “ forecast ” , “ t arget ” , “ obj ect ive” and ot her similar expressions or fut ure or condit ional verbs such as “ will” , “ should” , “ would” and “ could” . By t heir nat ure, t hese st at ement s require us t o make assumpt ions and are subj ect t o inherent risks and uncert aint ies t hat may be general or specific. A variet y of fact ors, many of which are beyond our cont rol, affect our operat ions, performance and result s, and could cause act ual result s t o differ mat erially from t he expect at ions expressed in any of our forward-looking st at ement s. These fact ors include: credit , market , liquidit y, st rat egic, insurance, operat ional, reput at ion and legal, regulat ory and environment al risk; t he effect iveness and adequacy of our risk management and valuat ion models and processes; legislat ive or regulat ory development s in t he j urisdict ions where we operat e, including t he Dodd-Frank Wall S t reet Reform and Consumer Prot ect ion Act and t he regulat ions issued and to be issued t hereunder, t he U.S . Foreign Account Tax Compliance Act and regulat ory reforms in t he Unit ed Kingdom and Europe, t he Basel Commit t ee on Banking S upervision’ s global st andards for capit al and liquidit y reform, and t hose relat ing t o t he payment s syst em in Canada; amendment s t o, and int erpret at ions of, risk-based capit al guidelines and report ing inst ruct ions, and int erest rat e and liquidit y regulat ory guidance; t he resolut ion of legal and regulat ory proceedings and relat ed mat t ers; t he effect of changes t o account ing st andards, rules and int erpret at ions; changes in our est imat es of reserves and allowances; changes in t ax laws; changes t o our credit rat ings; polit ical condit ions and development s; the possible effect on our business of int ernat ional conflict s and t he war on t error; nat ural disast ers, public healt h emergencies, disrupt ions t o public infrast ruct ure and ot her cat ast rophic event s; reliance on t hird part ies t o provide component s of our business infrast ruct ure; pot ent ial disrupt ions t o our informat ion t echnology syst ems and services; increasing cyber securit y risks which may include t heft of asset s, unaut horized access t o sensit ive informat ion, or operat ional disrupt ion; social media risk; losses incurred as a result of int ernal or ext ernal fraud; ant i-money laundering; t he accuracy and complet eness of informat ion provided t o us concerning client s and count erpart ies; t he failure of t hird part ies t o comply wit h t heir obligat ions t o us and our affiliat es or associat es; int ensifying compet it ion from est ablished compet it ors and new ent rant s in t he financial services indust ry including t hrough int ernet and mobile banking; t echnological change; global capit al market act ivit y; changes in monet ary and economic policy; currency value and int erest rat e fluct uat ions, including as a result of oil price volat ilit y; general business and economic condit ions worldwide, as well as in Canada, t he U.S . and ot her count ries where we have operat ions, including increasing Canadian household debt levels and Europe’ s sovereign debt crisis; our success in developing and int roducing new product s and services, expanding exist ing dist ribut ion channels, developing new dist ribut ion channels and realizing increased revenue from t hese channels; changes in client spending and saving habit s; our abilit y t o at t ract and ret ain key employees and execut ives; our abilit y t o successfully execut e our st rat egies and complet e and int egrat e acquisit ions and j oint vent ures; and our abilit y t o ant icipat e and manage t he risks associat ed wit h t hese fact ors. This list is not exhaust ive of t he fact ors t hat may affect any of our forward-looking st at ement s. These and ot her fact ors should be considered carefully and readers should not place undue reliance on our forward-looking st at ement s. Any forward-looking st at ement s cont ained in t his present at ion represent the views of management only as of t he dat e hereof and are present ed for t he purpose of assist ing our shareholders and financial analyst s in underst anding our financial posit ion, obj ect ives and priorit ies and ant icipat ed financial performance as at and for t he periods ended on t he dat es present ed, and may not be appropriat e for ot her purposes. We do not undert ake t o updat e any forward-looking st at ement t hat is cont ained in t his present at ion or in ot her communicat ions except as required by law. Invest or Relat ions cont act s: John Ferren, S enior Vice-President 416 980-2088 Invest or Relat ions Fax Number 416 980-5028 Visit t he Invest or Relat ions sect ion at www.cibc.com
3 Contents Macroeconomic Overview Regulatory Environment CIBC S trategy and Performance 3
4 Canadian Economy vs. G6 Countries FY2016E 3 ) 1 10-Year Average GDP Growth Rate 1 GDP Growth (% Germany 1.6 U.K. 1.6 U.S . 1.5 2.0% France 1.4 1.6% Canada 1.2 6.0 1.4% 1.4% G6 Avg. 1.2 1.3% 4.0 It aly 0.8 Japan 0.5 0.9% 1.0% 2.0 0.8% 0.5% 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -2.0 0.0% -4.0 -6.0 -0.5% -8.0 -1.0% Canada United St ates France Germany Canada US France Germany Italy Japan UK G6 Average Italy Japan UK G6 Average 2015 Canadian GDP by Industry 2 Government Net Debt to GDP 1 2015 It aly 133.1 Japan 128.5 140 10% Finance, Insurance & Real Est ate G6 Avg. 91.7 20% U.S . 88.5 120 3% Manufacturing U.K. 80.8 4% Wholesale & Ret ail Trade 100 France 75.5 Germany 43.7 Scientific, Technical & Educational Serv. 7% 80 Canada 30.8 Public Admin & Utilities 60 11% Mining, O&G Extraction 7% 40 Construction 20 Health Care & Social Assistance 8% 11% 0 Transportation & Warehousing 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 9% Information & Cultural Industries 11% Canada United St ates France Germany Other Italy Japan UK G6 Average 1) Source: OECD.Stat 4 2) Source: StatsCan 3) Source of FY2016 Estimates for GDP Growth: Consensus Economics Inc. Forecasts survey August 8, 2016
5 Canadian Labour Market vs. G6 Countries 1 July 31, 2016 ) ) Unemployment Rate (% It aly 11.4 10-Year Average Unemployment Rate (% France 10.3 G6 Avg. 6.8 Canada 6.9 9.3% 9.1% Germany 6.1 U.K. 4.9 7.7% U.S . 4.9 7.3% 7.1% 7.0% 6.7% Japan 3.0 4.2% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 7/ 31/ 16 Canada US France Germany Canada US France Germany Italy Japan UK G6 Average Italy Japan U.K. G6 Average July 31, 2016 ) Net Job Growth (% ) 10-Year Average Net Job Growth (% U.K. 4.7 U.S . 1.1 It aly 1.9 Japan 0.8 6.0% 1.8% Canada -0.3 4.0% France N/ A Germany N/ A 2.0% G6 Avg. N/ A 1.1% 0.0% -2.0% 0.6% 0.5% 0.4% -4.0% 0.2% 0.2% -6.0% -8.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 7/ 31/ 16 Canada US France Germany -0.6% Canada US France Germany Italy Japan UK G6 Average Italy Japan U.K. G6 Average 5 1) Source: Bloomberg
6 Canadian Housing Market and Consumer Debt 2015 ) 1 Canadian Home Price Index vs. G6 2 Bank of Canada Overnight & Prime Rate (% Germany 123.3 Canada 115.3 U.K. 111.1 Aug 2016 U.S . 109.8 BoC Overnight 0.5 Japan 104.7 Prime 2.7 France 95.7 Indexed to 100 in 2010 It aly 80.1 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Canada US France Germany BoC Overnight rates Prime Italy Japan U.K. Debt Service Ratio (Interest only) 3,4 (% ) 4 ) YoY Change in Household Equity (% 7.4 8.82 8.72 8.16 7.63 7.36 7.29 5.7 7.02 6.83 5.5 6.67 6.42 6.27 4.9 4.8 4.1 3.7 3.7 3 2.6 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2/ 16 Interest Only (1) S ource: Bloomberg (2) S ource: OECD.S t at 6 (3) Debt S ervice Rat io = disposable income/ debt service cost (4) S ource: S t at sCan
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