Canadian Imperial Bank of Commerce (NYSE:CM) Q3 2025 Earnings Call Transcript

Canadian Imperial Bank of Commerce (NYSE:CM) Q3 2025 Earnings Call Transcript August 28, 2025

Canadian Imperial Bank of Commerce beats earnings expectations. Reported EPS is $1.57, expectations were $1.43.

Operator: Good morning. Welcome to the CIBC Q3 Quarterly Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Geoff Weiss, Senior Vice President, Investor Relations. Please go ahead, Geoff.

Geoffrey M. Weiss: Thank you, and good morning. We’ll begin this morning’s call with opening remarks from Victor Dodig, our President and Chief Executive Officer; followed by Rob Sedran, our Chief Financial Officer; and Frank Guse, our Chief Risk Officer. Also on the call today are a number of our senior executives, including Harry Culham, our Chief Operating Officer; Shawn Beber, U.S. Commercial and Wealth Management; Hratch Panossian, Personal and Business Banking; and Susan Rimmer, Canadian Commercial Banking and Wealth Management. They are all available to take questions following the prepared remarks. We have a hard stop at 8:30, and we’d like to give everyone a chance to participate. So as usual, we ask that you please limit your questions to one and requeue in the Q&A.

We’ll make ourselves available after the call for any follow-ups. As noted on Slide 2 of our investor presentation, our comments may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results may differ materially. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. Management measures performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. With that, I’ll now turn the call over to Victor.

Victor G. Dodig: Thanks, Geoff, and good morning, everyone. I’d like to begin the call today with three key messages. The first message is that our client focus and execution mindset has culminated into another clean quarter with strong performance across all of our business units in the third quarter. The second message is that our strategy is working and we’re well positioned to continue relative outperformance. The depth of our client relationships, our strong balance sheet and our robust capital position are serving us well. We’re resilient and we’re prepared for shifts in economic conditions. And the third message is our CEO transition continues to progress very well. Today marks my final earnings call as CEO of CIBC. And on November 1, I’ll pass the baton to Harry Culham with confidence, knowing that our bank is in good hands.

The leadership announcements we made earlier this month will further accelerate the execution of our strategy under Harry’s leadership and provide strong continuity across our leadership team entering the new fiscal year. So let’s move on to highlights from our adjusted third quarter results. We delivered net income of $2.1 billion, which is up 11% from the prior year and earnings per share of $2.16, up 12%. Pre-provision, pre-tax earnings were also up 12%, supported by broad-based growth across all of our operating units, healthy margin expansion and the 8th consecutive quarter of positive operating leverage. Our credit portfolios are resilient, and they are performing at the favorable end of the guidance that we provided at the start of the year.

The relative and absolute strength of our credit quality is a direct result of prudent underwriting and advanced analytics. It’s equally a reflection of our disciplined client focus and deep client relationships. We know our clients well. We know their businesses, their industries and their growth ambitions. And this allows us to make thoughtful credit decisions with a long-term view. Now moving to capital. We ended the quarter with a robust 13.4% CET1 ratio, while repurchasing 5.5 million common shares during the quarter. Our excess capital position provides us with flexibility. We have the resources to support our clients’ growth ambitions going forward, while continuing to optimize our capital position. And to that end, as we continue to return capital to our shareholders, we’ve also announced our intention to launch another normal course issuer bid for 2% of our outstanding common shares.

Even with our elevated capital buffer and cyclically higher PCLs, we generated a return on equity of 14.2% this quarter, which is up 20 basis points from the prior year. This marked the 5th consecutive quarter of year-over-year ROE improvement. And our team remains laser-focused on achieving our ROE target over the medium term, and we have the full confidence in the earnings power of our bank. By consistently executing against our client-focused strategy, we will continue to deliver the profitable growth that our stakeholders expect from us. So here are a few recent examples of our progress. The first relates to launching innovative solutions to bolster our advisory businesses, particularly in our Mass Affluent & Private Wealth Franchise. This quarter, our Asset Management team launched the CIBC Education Portfolios.

A suite of five portfolio solutions designed to simplify education savings for Canadian families. We also launched — announced the launch of a new dedicated Business Banking program that’s tailored for skilled trades professionals. Our differentiated solutions for key client segments will continue to support our growth momentum in capital-light fee income-based businesses. And this week, we announced an innovative new checking account that recognizes our clients’ relationship with us at each stage of their financial journey, reflecting our relationship-oriented approach, the tiered CIBC Smart Account, provides clients with more benefits as they deepen their relationships with us. The second example relates to our focus on expanding our digital-first banking capabilities for our clients.

Earlier this quarter, we were recognized with the highest ranking in customer satisfaction for both Online Banking and Mobile Banking among Canada’s five big banks in the latest J.D. Power study. Our deliberate client-centric digital focus ensures that we exceed our clients’ evolving expectations in a rapidly changing technology landscape. Our Digital Registration hit an important milestone this quarter, surpassing 10 million clients and encompassing 81% of our eligible client base, both highest to date. And finally, the third example is we’re delivering connectivity and differentiation to our clients, that benefit from everything that CIBC offers to meet their unique needs. This commitment to connectivity is driving real results. On a year-to-date basis, CIBC Capital Markets has a leading market share position with our strategic clients.

Our capital markets franchise is also seeing strong momentum in the U.S. as we build our North American platform with revenue growth in the region, up 37% year-to-date. This franchising focus is also growing cross business referral volumes in the U.S. business, which are performing well above our targets and up 25% on an annualized year-to-date basis. These achievements underscore the impact of our collaborative approach at CIBC and our ability to deliver value across geographies and across our businesses. Underpinning this progress is our commitment to enabling, to simplifying and to protecting our bank. This quarter, our AI-powered voice assistant was recognized with the 2025 Digital CX Award for the Best Use of AI for Customer Experience.

Our CIBC AI platform, which we call CAI, C-A-I, was also recognized with the Best Gen-AI Initiative Award, marking the 2nd consecutive year we received this honor. Since its launch, this platform has transformed the way our CIBC team members across our businesses work and has saved an estimated 600,000 hours. And going forward, we’re going to continue to drive further innovation across our bank in our AI journey under Harry’s leadership. We’re moving our bank forward, even as the operating environment remains uncertain. Global trade tensions may result in slower growth and higher inflation in many countries, including Canada and the United States. However, we anticipate that declining interest rates will help support economic growth. While fiscal policy will offer targeted relief to the sectors most affected by trade negotiations.

As the global trade environment becomes clearer, we expect increased client activity and we remain well positioned to capture emerging opportunities through our diversified platform. And regardless of what the macroeconomic environment serves up, we’re going to continue to execute against our strategy. We’re going to continue to support our clients. We’re going to continue to control what we control and position CIBC for continued strength. So in summary, we are continuing to outperform through the cycle. I mean trade disputes, geopolitical tensions and economic uncertainty, the CIBC team has demonstrated improving profitability, top-tier credit quality and robust top line growth. Our core businesses have clear momentum and plenty of runway to continue delivering for all of our stakeholders.

And with that, I’ll pass it off to Rob to review our financial results in greater detail. Over to you, Rob.

Robert Sedran: Thank you, Victor, and good morning, everyone. I’m also going to start with three takeaways from our financials. First, we produced another quarter of broad-based double-digit organic revenue growth and earnings growth as well as strong returns driven by the focused execution of our strategy. Second, we continue to deliver positive operating leverage, enabled by business momentum and the benefits of our long-term investments in digitization, AI and other technology as well as prudent expense management. Third, we completed our normal course issuer bid for 20 million shares in Q3 and have announced a new program as we continue our balanced approach to capital management. Our balance sheet remains strong with ratios that are well above our normal course operating targets.

Please turn to Slide 8. For the third quarter of 2025, earnings per share were $2.15 or $2.16 on an adjusted basis, supported by strong revenue growth in each business, expense control and stable credit trends. Our profitability continues to improve with an adjusted ROE of 14.2%, up from 14% in the same quarter last year. Year-to-date adjusted ROE is 14.6% compared with 13.8% for the same period last year. Let’s move on to a detailed review of our performance. I’m on Slide 9. Adjusted net income of $2.1 billion increased 11%. Expanding margins, volume growth and disciplined expense management allowed us to maintain revenue growth momentum, deliver positive operating leverage and continue to drive strong pre-provision earnings growth at 12%.

The total provision for credit losses was up 16% from a year ago, though with impaired losses remaining well within our previous guidance range. Frank will discuss credit in detail in his presentation. Slide 10 highlights key drivers of net interest income. Excluding trading, NII was up 13% driven by continued balance sheet growth and expanding margins. All bank margin ex-trading was up 10 basis points from the prior year and up 6 basis points sequentially. Canadian P&C NIM of 281 basis points was up 8 basis points sequentially, reflecting the ongoing execution of our strategy. The key driver of the increase was deposit margin expansion supported by higher rates as well as the impact of favorable business mix as we continue to effectively balance volume and profitability, while deepening relationships with our key clients.

In the U.S. segment, NIM of 378 basis points was up 6 basis points from the prior quarter, owing to continued strength in deposits. In both Canada and the United States, we expect margins to move gradually higher from these levels based on the current forward curve. Turning to Slide 11. Non-interest income of $3.2 billion was up 4%, helped by constructive markets, market-related fees increased 10%, with particularly strong growth in underwriting and advisory fees and mutual fund fees. Transaction-related fees were down 6%, owing to last year’s benchmark reform, partly offset by higher card and deposit fees. Slide 12 highlights our ongoing balanced approach to expense management. Excluding performance-based compensation linked to the strong revenues, expenses grew 4% as investments and core operating costs were partly offset by the benefits of prior initiatives to improve efficiency while still investing for growth.

Slide 13 highlights the strength of our balance sheet, strength that gives us the flexibility to support our client-focused strategy and return capital to shareholders. Our CET1 ratio at the end of the quarter was 13.4%, stable quarter-over-quarter. Solid organic capital generation was offset by our ongoing share purchase program. During the quarter, we returned $1.4 billion in capital to our shareholders, including over $500 million of share repurchases. Our liquidity position remains very strong with an average LCR of 127%. Starting with Slide 14, with Canadian Personal and Business Banking, we highlight our strategic business unit results. Adjusted net income of $817 million increased 17% due to higher revenue growth, partially offset by higher expenses and the total provision for credit losses.

Supported by core business momentum, pre-provision, pre-tax earnings were up 18% as our client-focused strategy continues to deliver results. Revenues were up 10%, helped by margin expansion, loan growth and stable deposit balances. Net interest margin was up 27 basis points year-over-year and 11 basis points sequentially, reflecting the continued benefit from the rate environment and the successful execution of our strategy. Beyond the benefit from rates, we are seeing tangible results from our focus on deep and profitable client relationships, selective balance sheet deployment and disciplined pricing decisions. We continue to expect margins in this segment to trend higher. Expenses were up 3% due to investments in strategic initiatives and higher employee-related compensation.

On Slide 15, we show Canadian Commercial Banking and Wealth Management, where net income and pre-provision, pre-tax earnings were up 19% and 16% from a year ago, respectively. Revenues were up 13% from last year. Wealth Management revenue growth of 15% was driven by higher average fee-based assets resulting from market appreciation and net sales and increased client activity driving higher commissions. CIBC Asset Management ranked 2nd among the big six banks and retail mutual fund long-term net sales in the current quarter and on a year-to-date basis, demonstrating the power of our distribution network and advice-driven strategy. Commercial Banking revenues were up 10%, driven by volume growth and margin expansion. Commercial loan and deposit volumes were up 10% and 8%, respectively, from a year ago.

Expenses increased 11% from a year ago, mainly from higher compensation linked to the strong Wealth Management revenues as well as higher spending on technology and other strategic initiatives. Turning to U.S. Commercial Banking and Wealth Management on Slide 16. Net income was up 15% from the prior year, mainly due to lower loan loss provisions and a 7% increase in pre-provision, pre-tax earnings. Revenues were up 8% from last year. Deposit growth of 13% and loan growth of 3% resulted in net interest income that was 14% higher than the prior year. Expenses were up 8% with the increase largely related to performance-based compensation. Turning to Slide 17 and our Capital Markets segment. Net income was up 43% year-over-year. Revenues were up 24% from the same quarter last year as Global Markets revenues were up 18%.

Corporate Banking benefited from higher volumes and margins and Investment Banking achieved record revenues on the back of higher underwriting and advisory activity. We continue to expand in the U.S., where year-over-year revenue growth of 32% contributed 34% of total segment revenues this quarter. Our highly connected platform continues to deliver for our clients and for our bank. Expenses were up 11%, largely due to higher performance-based compensation, continued investments and higher volume-driven expenses. Slide 18 reflects the results of the Corporate and Other business unit. A net loss of $108 million compares with the unusually high net income of $96 million in the prior year, a move that comes from a normalization of treasury revenues from the elevated level we described last year and non-core securities write-downs at CIBC Caribbean, as well as the impact of foreign currency translation.

Were it not for the write-downs we would have been inside our guidance range and so maintain our medium-term guidance of a loss of between $0 and $50 million for this segment. In closing, we had a very strong third quarter. Amidst the dynamic operating environment, we remain focused on executing our strategy, delivering sustainable results and strengthening our bank’s position for the long term. With that, I’ll turn it over to Frank.

Frank Guse: Thank you, Rob, and good morning, everyone. Our Credit portfolio performed well in Q3 despite the evolving macroeconomic backdrop. We are actively monitoring our portfolios and taking management actions to mitigate risks. Our teams remain close to our clients to ensure they have the support they need to effectively navigate through the uncertainties. Our allowance for credit losses remains robust, preparing us to manage a variety of potential risks or challenges ahead. We remain comfortable with our impaired loss ratio that continues to be at the lower end of our guidance. Turning to Slide 22. Our total provision for credit losses was $559 million in Q3, down from $605 million last quarter. Our robust allowance coverage further increased quarter-over-quarter by 1 basis point to 78 basis points.

And year-to-date, our total allowance is up by $474 million or 12%. Our performing provision was $78 million this quarter as we continue to reflect the evolving economic environment. Our provision on impaired loans was $481 million, up $18 million quarter-over-quarter. This was due to higher provisions in Capital Markets, partially offset by lower provisions in the other SBUs. Turning to Slide 23. Overall, Q3 portfolio performance remained stable and in line with our expectations, with our impaired provisions at 33 basis points. Personal and Business Banking impaired PCL was flat with higher write-offs experienced in the quarter, offset by a lower allowance increase for impaired balances. Capital Markets impaired PCL was up in Q3, mainly driven by one name.

The balance of this portfolio continues to perform well with no systemic risk seen in any specific sectors. Both Canadian and U.S. commercial, we saw improved performance with a lower impaired PCL in Q3. Slide 24 summarizes our gross impaired loans and formations. Our gross impaired loan ratio was 56 basis points, down 1 basis point quarter-over-quarter, with the decrease in business and government loans, partially offset by an increase in retail. While mortgages experienced a moderate increase this quarter, our current loan-to-value ratio for the mortgage book is at 54% with impaired balances remaining low at 63% LTV, and we do not expect any material increase in losses. Slide 25 summarizes the net write-offs and 90-plus day delinquency rates of our Canadian consumer portfolios.

Our net write-off ratio remained flat quarter-over-quarter. So we continue to see this impacted by elevated unemployment rates. The 90-plus day delinquencies of our credit cards and personal lending portfolios trended lower, while mortgages was up moderately. We are pleased with the performance of our personal banking book, and we are confident we will continue to see resilience given the strength of our Canadian consumer portfolios. In closing, we are pleased with our credit performance in Q3. With the dynamic changes in the macro environment, we remain disciplined and prudent when managing our portfolios. Our robust allowance levels provides coverage for ongoing headwinds and we remain well within our full year guidance on impaired losses.

I will now ask the operator to open the line for questions.

Q&A Session

Operator: [Operator Instructions] Our first question comes from Sohrab Movahedi, BMO Capital Markets.

Sohrab Movahedi: Firstly, Victor, congratulations and thank you for putting up with me over the years. A quick question is that, Rob, you completed the NCIB, you’ve renewed it. Is it your intention to complete the renewed one? And is this, I don’t know, should I interpret this as confidence in the earnings trajectory of the bank?

Robert Sedran: It’s Rob. Yes. So we bought back, as you pointed out, 5.5 million shares during the quarter. We completed it and have re-upped. When it comes to the buyback, we kind of view it the same way we view the rest of the strategy, consistent, relatively predictable execution that’s going to position us for success over the long term. And clearly, the top priority for us is organic growth, and we think we have ample opportunity to deploy over time. So when Victor says in his prepared remarks that we think the strategy is working. We see the results as evidence of that across a number of different areas. Each quarter that we see strong revenue performance, strong margin evolution, good client acquisition, rising client satisfaction, expense discipline that’s driving operating leverage and well-controlled loan losses, particularly on a relative basis.

And I think most importantly, an upward sloping ROE. Our conviction in the earnings power and the fact that we have the right strategy just grows stronger and stronger. So we do expect to use the buyback. The nice thing about a buyback is that we can go faster or we can go slower depending on how the environment evolves. But as that ROE continues to rise, we can return capital to shareholders through dividend increases and buybacks, and we expect to continue to do so.

Operator: Our next question comes from Ebrahim Poonawala, Bank of America.

Ebrahim Huseini Poonawala: So yes, I guess, first of all, Victor, congratulations. I think everyone hopes to do this. You are truly leading commerce in a better place than what you inherited, so in terms of consistency, stability. So credit to you and the rest of the team.

Victor G. Dodig: And you know what, Ebrahim, just before you start with your question and too many complements, the team that we have is an incredible team to take it forward as well. And that’s what gives me great confidence.

Ebrahim Huseini Poonawala: No doubt, but it does require a strong leader. So you’ve done that and you’re a humble person, but well done and all the best to you in retirement. But I guess the question maybe following up as we think about where we go from here. And Rob, to your point, ROE drifting higher as they look towards the returns you all have delivered, combine that with the outlook on margin expansion going forward. And I know we kind of recalibrated the ROE target to about 15% plus over the last year. But just talk to us in terms of the true ROE potential of the company. Do you think about sort of the rhythm you have in operating leverage where margin is headed? And at some point, there may be probably a little bit of capital flex too, is 15% plus more like 16% plus the way you see the world and if things are macro-wise getting better?

Robert Sedran: Ebrahim, it’s Rob. I’ll give it a shot here. I think — and we did just as you pointed out, reduce the ROE target, but it was more about the capital load we were carrying. The conviction in our strategy and the fact that, that ROE is an upward sloping one, has never wavered. In fact, the ROE is even outperforming what we would have suggested at our 2022 Investor Day, considering the capital load that we’re carrying, and we’re earning through that extra capital that we have now within continuing to show the better ROE performance. When we think of each of our businesses, there’s a focus on driving that ROE higher and over the medium term, we expect that to continue. Now the markets are favorable and those can always change.

These are issues that would affect the industry, not just us. But from what we can see today, again, the conviction in the strategy is rising. We’re not going to change our ROE target back to what it was. But it’s safe to say that as we get to 15% and beyond, we expect it to continue to migrate higher based on the execution of our strategy. And we do want to target ongoing growth from there. So I think what you’re seeing in our numbers and our strategy is a balance between margin and volume growth, a balance between expense efficiencies and investing for the future and just balance in terms of our execution. That’s going to continue and should lead to better things over time.

Operator: Our next question comes from Gabriel Dechaine, National Bank Financial.

Gabriel Dechaine: National Bank Financial, Inc., Research Division Yes, Victor, congrats on the retirement. And if you want to meet up for a glass of rakia at some point, then your post-CEO phase, let me know.

Victor G. Dodig: For all those who don’t know what a glass of rakia is, it’s like a shot of plum brandy, they should only have after 6:00 p.m. and only one a day — one a week, sorry.

Gabriel Dechaine: National Bank Financial, Inc., Research Division Okay. Well, we can stick to that limit. The margin guidance, I know there’s always some conservatism embedded in forward statements and all that. Last quarter was stable to up a bit and it sounds a little bit similar, but maybe a bit more optimistic. And this quarter, you did outperform your guidance. And I’m assuming several factors, deposit mix, competitive dynamics, all kind of went in the right direction. Like of those elements, what do you think is a sustainable trend? Because — and as we look ahead to 2026, when you got a bunch of mortgages refinancing, and I also see the chart that has new mortgages coming on the balance sheet are at higher spreads than the ones leaving. Is this — are we cautiously optimistic, maybe too much, though?

Robert Sedran: It’s Rob. I’ll get started, and I think I’m going to hand it off to Hratch to talk a little bit about what the business is doing because the Personal and Business Bank, it’s our largest business, and it’s the biggest driver of what’s happening to our margin overall. Part of the reason I gave stable to up in terms of the margin guidance in the past has been to capture things like what happened last quarter, which was the margin was down a basis point. And so when we give the guidance, it’s not intended to be quarter-on-quarter linked quarter guidance. But the more optimistic take on the margin from here is based on what we saw this quarter doesn’t feel unsustainable or unusual to us. I’ve often talked about the margin in kind of three buckets.

And the tractoring strategy, the balance sheet positioning part of the strategy is kind of doing what we expected it to do. The competitive dynamic is relatively stable. We had some pricing benefit this quarter from some promo offers that rolled off. But that business mix partly client choice, but also a very intentional business strategy that’s happening largely in our Retail Bank. And maybe that’s a good place to hand it off to Hratch to talk about what he thinks going forward.

Hratch Panossian: Thanks, Rob. Thank you for the question. Look, as Rob said, this is both the environment and a result of our strategy. And so from the environment perspective, certainly, rates still pricing into the balance sheet helps and margins, particularly on the deposit side are on the increase. But — and I do think that’s sustainable for the next little while. More importantly, I think, is our strategy. And so, when you think about the strategy, it’s been both individual product margins increasing as well as the business mix increasing to the positive. And those two things are also sustainable because we believe in our strategy, and we’re continuing. And just to give you a bit more flavor, when we talk about being a relationship-based bank, for us, particularly in the retail business, that means being a leader in the day-to-day banking products and being a leader in advice and investments.

And you’ve seen that in the results. That’s what we’re doing. We’re focused on specific target client segments where we’re trying to win, we are winning. We’re focused on specific products, which are day-to-day banking products like checking, and you saw the launch today as part of our road map to continue evolving our products on that side. You’ve seen the launch of our Adapta product. We’ve got the great credit card lineup. And so, you’re seeing the momentum in the demand deposit products, the momentum in the credit card product, the momentum in the investment side and all of those things are helping margins. So in each of those areas, we’re seeing good margins on the product level. But also those are our higher-margin products, and the mix is shifting more towards that because of our strategy.

The mortgage is an interesting example you bring up, right? And I think that in that case, it showcases all of these things. So you’re right, mortgage margins coming in are higher than the outflows. And on pricing side, as you’ve seen in market, we are not leading with price. We are leading with advice. We’re leading with the relationship, and that’s allowing us to capture more margin on mortgages, and we’re up about 20% on the portfolio margin year-over-year as a result of that. We’re also seeing mortgage book be more focused. So today, mortgages represent about 10% of our revenue. It used to be a lot higher than that. When you look at some of the stats, 93% of our clients have another product with us. Almost 80% of our clients that have mortgages with us have a checking account.

And most of those clients were the primary bank for. All of those numbers are all-time highs, because we’re focused on that relationship-based strategy rather than doing low-margin products individually on a transactional basis with clients. And we’ll keep doing that. So I think the momentum on margin will continue going.

Operator: Our next question is from Doug Young, Desjardins Capital Markets.

Doug Young: I guess for Frank, it seems like Canadian personal unsecured credit trends are improving and it seems like that’s been the case across a lot of the banks that have been reported. But can you touch on a little bit what you’re seeing and expectations over the coming year? And obviously, the big risk right now, especially in Canada, depending USMCA renegotiations that are coming eventually. And can you talk a bit about how you kind of factor that risk into your expert credit judgment or your performing loan allowances or whatnot?

Frank Guse: Doug, thanks for the question. I mean, unpacking it a little bit, as you see in the results, and if you heard us talking about, we are very pleased with our credit performance. We have a strong book, our Canadian Consumer portfolios, are very resilient. And if you heard, that is part of our business strategy, that is part of very targeted investments, we did in risk management actions and risk management strategies along the way. Working with our clients when there is troubles, finding a good solution and working it out with them. But then again, as expected, those numbers continue to trend up. There is a little bit of potential seasonality you’re seeing this quarter where it’s coming down. And that’s just as you highlighted, a reflection of the current macro environment.

It’s a reflection of unemployment, interest rates still being high and we factored that in into our guidance and into our expectations. So I would say we are pleased with the impaired provisions. You asked a little bit about how we are factoring that into our performing provisions as well. The point I made in the prepared remarks and what we did is, we continue to keep a little bit of prudent weighting to our downside scenarios. You see our downside scenario getting a little worse this quarter. We have kept some weight on it. And that’s why you see us continuing a little bit of a moderate build in our performing allowances. Nothing overly material, I would say, but just a continued reflection of all of those scenarios, including a renegotiation of USMCA in our outlook.

Operator: Next question is from Mario Mendonca, TD Securities.

Mario Mendonca: Victor, let me add my congratulations and it’s very impressive, what 10-year plus CEO.

Victor G. Dodig: Team effort. I just got to emphasize again, it’s been a team effort, and it’s been a privilege to be a captain of this wonderful team.

Mario Mendonca: Good stuff. Frank, going to you. So I totally agree with Doug just offered that the unsecured Canadian credit looks a little better. That’s true mostly across the industry might be maybe one modest exception there. But for your bank specifically, given that, let’s call it, stabilization in unsecured consumer, is there any reason why you would move off of the mid-30s guidance, impaired PCLs going forward, like thinking about 2026 and going forward? Is there anything that’s happening? And let’s leave USMCA negotiations aside. Because we all know if that falls apart, then we’ve got a bigger issue. So leaving that aside, is there any reason why you changed that guidance?

Frank Guse: Well, we can certainly give more specific guidance, in particular, for ’26 next quarter. But you’re right, at this point, I think we could expect this trend to continue, and we could expect to trend with that guidance or as we did this year, even at the lower end of that guidance.

Mario Mendonca: All right. And then, is there any concern on the mortgage side, I see that 90 delinquencies up a little bit on a total bank basis, but GVA, GTA did look more stressful. Does that cause you any concern that the uninsured mortgages in Toronto and Vancouver are more — are showing more stress than the rest of the book?

Frank Guse: So we remain very comfortable with the exposure with the overall health of our clients and the portfolio. I mean, as you pointed out, delinquency rates moving up and in particular, in those markets, it’s very well in line with what we expected. It’s a reflection of higher unemployment, the high interest rates and the continued weakness in housing sales in those markets. I would come back to very strong LTVs even in our impaired book. We have a healthy amount of provisions on the impaired side. And I’m not overly concerned that, that would translate into material losses.

Mario Mendonca: All right. I’ll be really quick on this one. So maybe to Rob. The move in this all-bank margin, no matter how you calculate it, has been huge since Q4 ’22. I’m talking big moves in the all-bank margin. There’s so many reasons why this focus on pricing over volume rates, mix, product margins. There’s a ton of reasons why. But as we think about the next 12 months, would it be fair to suggest that this huge move we’ve seen over the last couple of years, that was special? And that we get a little bit more of a pedestrian improvement in the margin going forward?

Robert Sedran: Yes. Thanks, Mario. It’s Rob. So I do — I agree it’s been quite the move in the margin, I think, for all the reasons that we’ve described. ’26, I mean again, it’s a bit early to give an overall outlook for ’26, and it’s always subject to what the forward curve does. But we continue to expect a tailwind in our Personal and Business Banking business, in particular, when it comes to the tractoring strategy. I don’t think we’re changing the strategic focus that Hratch described earlier on the call. I think, it’s fair to say that when I say increases from here, we’re talking about gradual increases. So I don’t think we’d be looking for the kind of increases we had this year. But I do think the direction of travel is still a positive one.

Operator: Next question is from Matthew Lee, Canaccord Genuity.

Matthew James Lee: Canaccord Genuity Corp., Research Division I’ll echo my congratulations to everyone on team. There was a bit of a contrast in commercial loan growth between Canada and the U.S. And I’ve sort of been under the impression that the underlying trend in the U.S. economy was somewhat stronger than domestically. So maybe just contrast those two businesses and help us understand what’s driving the outsized Canadian note book growth in commercial?

Susan Rimmer: Yes. Thank you for the question. It’s Susan speaking. I’ll speak to the Canadian side of the business. So in the Canadian Commercial Banking, as you’ve noted, our loan to deposit growth was really strong for Q3, up 10% and 8%, respectively. I will note that over 43% of our growth on both sides of the balance sheet actually came from new clients to CIBC, and really, our strategy continues. We’re really prioritizing relationship banking we always have. We have deep client relationships, and we’re really focused on the connectivity between our Commercial Banking business as well as our Wealth Management business. The deep industry specialization and the disciplined coverage efforts just continue to drive momentum in the business.

I will say that the trade rhetoric has eased in the industry segments that we really prioritized. These are the segments that are actually covered by the USMCA. These segments actually make up most of our C&I loan book. So we do expect to continue to see momentum in that side of the business. So that’s really how I’d position it and how I would see it on the Canadian side. Perhaps, Shawn, if you’d like to comment on the U.S. side, please?

Shawn Beber: Thanks, Susan, and good morning, Matthew. So on the U.S. side, it’s a bit more of a reflection of two components of the portfolio. So C&I growth versus CRE growth. C&I growth has been strong. It’s sort of 7% year-over-year. That’s been pretty consistent throughout the year. In CRE, as you know, we’ve been executing a strategy to move away from certain elements and deemphasize elements of our institutional commercial real estate book, and that continued to play out this quarter. We had slightly higher payoff activity this quarter, much of it relates to that strategic decision. But the pipeline is solid. We had some reduced utilization rate. I think that is an expression of some caution that clients have. We’ve seen deposit builds.

Clients are building liquidity. There, I think there is some optimism growing, but they’re still taking a bit of a wait-and-see approach as these macro factors play out. But as I said, the pipeline are solid. We do expect to meet our earlier guidance for the year for mid to single — low to mid-single-digit loan growth for the year.

Operator: Our last question is from Darko Mihelic, RBC Capital Markets.

Darko Mihelic: I have one question and one compliment. So I’ll start with the compliment Victor, all the best, and I have a special slice of pizza to have later on. So hopefully, you can take me up on that offer.

Victor G. Dodig: I mean, thank you.

Darko Mihelic: A question for you. I did hear in your prepared remarks that you were #2, let’s say, in net sales in the quarter. I wanted to ask about — because I haven’t heard a bit of an update here on where you stand with Imperial Service. I know you were hiring advisers. Maybe you can provide a bit of an update on where you are with respect to that and where you are, let’s say, also with how productive they are? Or are they just hitting stride? Or — so maybe you can just give me an overall view on what we should expect from the Imperial Service and how it’s helping presumably not just mutual fund sales, but generally, Wealth. I’d like to hear that if you have anything that you could offer.

Victor G. Dodig: I have to just make a few remarks here, Darko, because the Imperial Service is really a core driver of our Mass Affluent strategy. It’s been a real focus of Hratch and the leadership team from front end to back end, which includes the technology, how we’re applying artificial intelligence, how we’re improving productivity and how we’re focused on growing our adviser base. And I might add just before I pass it on, Hratch, that we’ve had the highest Net Promoter Score within Imperial Service like in living memory. And that is a reflection of our team, our strategic focus, the technology investments, the strength of our Asset Management business, the strength of our financial planning approach. And with that, Hratch, you should opine on some of those comments and your thoughts overall?

Hratch Panossian: Thank you, Victor. I’m going to go back to — Look, I’m extremely proud of what our entire team in PBB has been delivering, including the Imperial Service team, but it is a broader effort that’s delivering the results that you see, and we do see that continuing, right? As I said earlier, we’re building a relationship-focused bank, and we’re building it for the future. And so for us, that entails being a leader in day-to-day banking for all Canadians being a leader for the Mass Affluence and Advice and in the Investment space. And simplifying everything to take the friction out for our clients, for our team as well as for our shareholders, creating efficiency. And that’s what we’ve been executing. And Imperial Service is a core pillar of that second part.

And while it’s been a big driver, I do want to call out here, when you look at the IFIC results that we’ve produced, the vast majority of that has come from the retail distribution. And again, I’m proud of the entire team, about 2/3 of it is Imperial. But there’s also outside of Imperial, our entire frontline team has been contributing to that. When I look at the Imperial Service platform, we are just getting started. We’re making a lot of investments. So yes, we continue to grow the team and we are hiring, but we are also looking to, as I said, one of our priorities is take the friction out. We’re investing in digitizing processes. We’re investing and taking processes out of the front line where we can and making themselves service. We’re investing in providing tools for our advisers to provide better advice to be more efficient, in preparing for meetings to be more efficient, after meetings to be more efficient with compliance requirements, and all of that is leveraging technologies, including generative AI and the CAI platform, as Victor mentioned in his remarks.

So all of that is playing dividends. We will continue to grow the team. We will continue to make them more productive. And when we look at our adviser to client ratio that is heading upwards, and we think we have continued to have opportunity to do that. And we have a lot of opportunity to move more clients into Imperial Service. When you look at our overall client base of over 13 million on the consumer side in Canada, we’ve barely started scratching the surface of consumers who are not in the Imperial Service offer who, based on our analytics, we know deserve to be in the Imperial Service offer. And the math we have so far is, we have moved less than 10% of those clients into Imperial Service. When we get them to the right adviser, with the right tools, do a complete planning for them, we see increase in funds managed that is more than 50% in the first year of that relationship.

And as I said, there’s a lot more to do there. So as we create capacity and bring advisers on, we’ll keep having more clients be able to access that offer and you’re going to see the power of the franchise continue to grow.

Operator: There are no further questions registered at this time. I would now like to turn the meeting over to Harry.

Harry K. Culham: Thank you, operator, and thank you all for your engagement today. Before we conclude the call, I would just like to thank Shawn Beber, who is sitting beside me here at CIBC SQUARE. Shawn will be retiring after 23 years at CIBC. And amongst his many contributions, Shawn has played a vital role, a pivotal role in our U.S. growth strategy, including our acquisition of the Private Bank. And later through his leadership of the U.S. region since 2022. At the same time, I’m excited to welcome Christian Exshaw and Kevin Lee, to our group executive leadership team in the new fiscal year. And then finally, on behalf of the Board and our entire bank, I want to thank Victor for his strategic vision, outstanding leadership and steady hand over his 11 years as our CEO.

I am grateful for his guidance and partnership and for the support as we continue to undergo this leadership transition. Victor has transformed our bank and will leave behind a remarkable legacy that will continue to inspire us all. We are deeply grateful to you, Victor, and wish you all the best. And with that, I’ll now pass it back to Victor to close off his 44th and final earnings call at CIBC.

Victor G. Dodig: Thank you, Harry, for those very kind words. I haven’t blushed this much in a conference call in my life. So I want to thank all of you for your kind comments. And I have a few more months left, like 61 days, before I retire as CEO and become a very proud and supportive alumnus of our bank. I’d like to close out my last earnings call by saying thank you. I’d like to thank our 50,000 employees who collectively and passionately get out of bed every day and represent CIBC and our brand purpose with dedication to our clients each and every day. I’d like to thank our leadership team whose commitment, execution and contributions have helped lead CIBC and drive the synchronized momentum we’re experiencing today. I’d like to thank the buy-side and sell-side investment community, those of you who are on the call, your questions and insights have helped sharpen us, have helped shape me and shape our perspective through the years.

I’d like to thank our engaged Board who have been a tremendous support and guide during my time as CEO. Particularly I’d like to thank our clients, without which we wouldn’t have the franchise that we have. Their voice and how they feel about our bank is something that we measure each and every day. And I can tell you it’s getting better. It will get better from here. And I’d like to thank everyone for joining us and for your interest in CIBC. I look forward to remaining a shareholder, to being a client, to be an alumnus of our bank, and a friend of our bank, knowing that the best is still yet to come. Thank you, and have a good day.

Operator: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.