-------------------------------------------------------------------------
CIBC's 2010 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. 2 /CNW/ - CIBC announced net income of $500 million for the fourth quarter ended October 31, 2010, down from $644 million for the fourth quarter of 2009. Diluted earnings per share (EPS) of $1.17 and cash diluted EPS of $1.19(1) for the fourth quarter of 2010 compared with diluted EPS of $1.56 and cash diluted EPS of $1.59(1), respectively, for the same period last year.
CIBC's results for the fourth quarter of 2010 were affected by the following items of note aggregating to a negative impact of $0.49 per share:
- $122 million after-tax, or $0.31 per share, loss from the structured
credit run-off business;
- $117 million after-tax, or $0.30 per share, loss on capital
repatriation activities. These activities had no impact on CIBC's
shareholders' equity or on CIBC's Tier 1 capital ratio; and
- $45 million after-tax, or $0.12 per share, reversal of the provision
for credit losses in the general allowance.
CIBC's results for the fourth quarter of 2009 included items of note aggregating to a positive impact of $0.18 per share.
CIBC's net income of $500 million for the fourth quarter of 2010 compared with net income of $640 million for the third quarter ended July 31, 2010. Diluted EPS of $1.17 and cash diluted EPS of $1.19(1) for the fourth quarter of 2010 compared with diluted EPS of $1.53 and cash diluted EPS of $1.55(1) for the prior quarter, which included items of note aggregating to a negative impact of $0.11 per share.
For the year ended October 31, 2010, CIBC reported net income of $2.5 billion, diluted EPS of $5.87 and cash diluted EPS of $5.95(1), which included items of note aggregating to a negative impact of $0.50 per share. These results compared with net income of $1.2 billion, diluted EPS of $2.65 and cash diluted EPS of $2.73(1) for 2009, which included items of note aggregating to a negative impact of $3.15 per share.
CIBC reported a strong return on equity of 19.4% for the year ended October 31, 2010 and a strong Tier 1 capital ratio of 13.9% at October 31, 2010.
"2010 was a good year for CIBC and our stakeholders," says Gerry McCaughey, CIBC President and Chief Executive Officer. "Against the backdrop of economic and industry conditions that improved from 2009 but remained challenging, CIBC reported solid financial results including delivering the highest total shareholder return of the Canadian banks while furthering progress against our strategic priorities."
"Our improved financial performance in 2010 and strong position heading into 2011 reflect CIBC's focus on achieving and maintaining market leadership in core businesses, growing in select areas where we have proven capabilities and market opportunities, and supporting our growth with strong fundamentals," added McCaughey.
Performance Against Objectives
Medium-term objectives 2010 results
Earnings per Diluted EPS growth of 5% - 10% 2010 EPS of $5.87
share (EPS) per annum, on average, over the compared with 2009
growth next 3 - 5 years EPS of $2.65
Return on equity Return on average common equity ROE:
(ROE) of 20% through the cycle 19.4%
(calculated as net income less
preferred share dividends and
premium on redemptions expressed
as a percentage of average common
shareholders' equity)
Capital strength Tier 1 capital ratio target Tier 1 capital
of 8.5% ratio: 13.9%
Total capital ratio target Total capital
of 11.5% ratio: 17.8%
Business mix At least 75% retail (as measured 74%/26%
by economic capital(1)) retail/wholesale
(as measured by
economic
capital(1))
Risk Maintain provision for credit Loan loss ratio on
losses as a percentage of loans a managed
and bankers' acceptances (loan basis(1):
loss ratio) on a managed basis(1) 56 basis points
between 50 and 65 basis points
through the business cycle
Productivity Achieve a median ranking within Cash efficiency
our industry group, in terms of ratio, TEB(1):
our non-interest expense to total 57.6%
revenue (cash efficiency ratio,
taxable equivalent basis (TEB)(1))
Dividend payout 40% - 50% (common share dividends Dividend payout
ratio paid as a percentage of net income ratio:
after preferred share dividends 59.1%
and premium on redemptions)
Total shareholder Outperform the S&P/TSX Composite Five years ended
return Banks index (dividends October 31, 2010:
reinvested) on a rolling CIBC - 36.6%
five-year basis Index - 50.2%
(1) For additional information, see the "Non-GAAP measures" section.
Progress Against Priorities
Market leadership in our core businesses
CIBC Retail Markets reported net income in 2010 of $2.2 billion, up from $1.9 billion in 2009. Growth in profitability of 16% was driven by higher revenue in all three of CIBC Retail Markets' Canadian business segments - personal banking, business banking and wealth management - and lower loan losses.
CIBC Retail Markets strengthened its business on many fronts in 2010 in support of its strategic priorities of providing its clients with strong advisory solutions, an excellent client experience and competitive products. Key highlights included:
- Opening, relocating or expanding 35 branches, completing CIBC's
largest branch investment program on record a full year ahead of
schedule, while continuing a targeted approach to extending evening,
Saturday and Sunday hours for clients;
- Launching the first mobile banking App in Canada that enabled CIBC's
clients to perform many of their day-to-day banking transactions
anywhere, anytime;
- Acquiring a MasterCard portfolio from Citi Cards Canada Inc. (the
MasterCard portfolio), enhancing CIBC's market leadership in credit
cards and making CIBC the largest dual issuer of Visa and MasterCard
in Canada;
- Acquiring full ownership of CIT Business Credit Canada Inc., giving
CIBC a market leadership position in asset-based lending in Canada
and, combined with other initiatives, positioning CIBC for growth in
business banking;
- Launching several new products for clients, including the CIBC
eAdvantage Savings Account, the first Visa debit card in Canada with
the CIBC Advantage Card, and announcing lower trading fees for CIBC's
discount brokerage clients who have $100,000 in business with CIBC;
- Investing in new technology and tools to help CIBC's network of more
than 3,000 advisors across Canada better service client needs; and
- Continuing to invest in CIBC's national television brand advertising
campaign throughout 2010 that featured CIBC employees and their
commitment to providing value to CIBC's clients every day.
"As we head into 2011, we are well positioned to offer our clients strong financial advice and an excellent client experience with greater access and choice in how and when they bank with CIBC and with exciting innovations such as the introduction of mobile banking for clients on the go," says Sonia Baxendale, President of CIBC Retail Markets. "Across all of Retail Markets, we have made significant investments that provide added value and strengthen the relationships we have with our 11 million clients."
Wholesale Banking reported net income of $342 million in 2010, compared to a loss of $472 million in 2009. These results include losses from the structured credit run-off portfolio, which declined from $684 million in 2009 to $161 million in 2010.
Wholesale Banking's objective is to be the premier client-focused wholesale bank based in Canada by bringing Canadian capital markets products to Canada and the rest of the world and by also bringing the world to Canada. During 2010, Wholesale Banking's highlights included:
- Maintaining market leadership positions in Canada in key areas such
as equity trading, equity underwriting, corporate and government bond
underwriting and M&A;
- Leading or co-leading several key investment banking deals,
particularly in mining and oil & gas where CIBC has a long history of
expertise and strong client relationships;
- Strengthening and expanding its lending capability, adding several
new clients and expanding existing relationships that have
contributed to revenue growth and market share gains. Corporate
Credit Products is partnering closely with Business Banking to grow
CIBC's small business, commercial and corporate client relationships
in support of CIBC's priority to achieve a market leadership position
in these segments over the next 3-5 years; and
- Making significant investments in its trading and other technology
platforms, enabling better execution on behalf of CIBC's wholesale
banking clients and enhancing risk management capabilities.
"Wholesale Banking's results have continued to exhibit the greater consistency and risk control that we saw emerge in 2009 following the refocusing of our strategy," says Richard Nesbitt, Chairman and Chief Executive Officer of Wholesale Banking. "With the investments we are making and the strong client relationships we continue to expand, our business is well positioned for industry conditions that we expect will improve over the course of 2011."
During 2010, CIBC continued to actively manage and reduce its structured credit run-off portfolio. In 2010, notional exposures declined by $17 billion as a result of sales and terminations of positions, as well as settlements with financial guarantors. The remaining portfolio of primarily collateralized loan obligations and corporate debt has experienced minimal defaults in the underlying collateral and continues to benefit from significant levels of subordination.
As at October 31, 2010, the fair value, net of valuation adjustments, of purchased protection from financial guarantor counterparties was $0.7 billion (US$0.7 billion), down from $1.5 billion (US$1.4 billion) a year ago. Further significant losses could result, depending on the performance of both the underlying assets and the financial guarantors.
Strong fundamentals
While investing in its core businesses, CIBC has continued to strengthen key fundamentals. In 2010, CIBC enhanced its capital and funding strength, while maintaining competitive productivity and sound risk management:
- CIBC's capital ratios are strong, including Tier 1 and Tangible
Common Equity(1) ratios of 13.9% and 9.9% at October 31, 2010 that
have increased from 12.1% and 7.6% a year ago;
- In 2010, CIBC continued to strengthen and diversify its funding
profile by term, product and market;
- CIBC's non-interest expense to revenue ratio improved from 67.1% in
2009 to 58.1% in 2010 (66.4%(1) and 57.6%(1), respectively, on a
cash, taxable equivalent basis);
- Credit quality has improved significantly, with CIBC's loan loss
ratio on a managed basis declining from 70 basis points(1) in 2009 to
56 basis points(1) in 2010; and
- Market risk, as measured by Value at Risk (VaR), decreased from
$6.3 million in 2009 to $4.2 million in 2010;
In September, the Basel Committee on Banking Supervision (BCBS) announced new regulatory capital and liquidity standards for global banks. Canada's regulator, the Office of the Superintendent of Financial Institutions (OSFI), will be confirming the specific application of these standards for Canadian banks. CIBC is well positioned to exceed the new standards ahead of the implementation timelines that have been proposed by the BCBS, while continuing to invest for future growth.
Fourth Quarter Financial Highlights
-------------------------------------------------------------------------
As at or for the
three months ended
---------------------------------
2010 2010 2009
Unaudited Oct. 31 Jul. 31 Oct. 31
-------------------------------------------------------------------------
Financial results ($ millions)
Net interest income $ 1,645 $ 1,548 $ 1,419
Non-interest income 1,609 1,301 1,469
---------------------------------
Total revenue 3,254 2,849 2,888
Provision for credit losses 150 221 424
Non-interest expenses 1,860 1,741 1,669
---------------------------------
Income before taxes and
non-controlling interests 1,244 887 795
Income tax expense 742 244 145
Non-controlling interests 2 3 6
---------------------------------
Net income $ 500 $ 640 $ 644
-------------------------------------------------------------------------
Financial measures
Efficiency ratio 57.2% 61.1% 57.8%
Cash efficiency ratio, taxable
equivalent basis (TEB)(1) 56.4% 60.6% 57.3%
Return on equity 14.6% 19.8% 22.2%
Net interest margin 1.83% 1.74% 1.66%
Net interest margin on average
interest-earning assets 2.15% 2.03% 1.99%
Return on average assets 0.56% 0.72% 0.75%
Return on average interest-earning assets 0.66% 0.84% 0.90%
Total shareholder return 12.12% (4.17)% (5.25)%
-------------------------------------------------------------------------
Common share information
Per share
- basic earnings $ 1.17 $ 1.54 $ 1.57
- cash basic earnings(1) 1.19 1.55 1.59
- diluted earnings 1.17 1.53 1.56
- cash diluted earnings(1) 1.19 1.55 1.59
- dividends 0.87 0.87 0.87
- book value 32.17 31.36 28.96
Share price
- high 79.50 75.40 69.30
- low 66.81 65.91 60.22
- closing 78.23 70.60 62.00
Shares outstanding (thousands)
- average basic 391,055 388,815 382,793
- average diluted 392,063 389,672 383,987
- end of period 392,739 390,781 383,982
Market capitalization ($ millions) $ 30,724 $ 27,589 $ 23,807
-------------------------------------------------------------------------
Value measures
Dividend yield (based on closing
share price) 4.4% 4.9% 5.6%
Dividend payout ratio 74.3% 56.7% 55.4%
Market value to book value ratio 2.43 2.25 2.14
-------------------------------------------------------------------------
On- and off-balance sheet information
($ millions)
Cash, deposits with banks and securities $ 89,660 $ 92,049 $ 84,583
Loans and acceptances, net of allowance 184,576 184,987 175,609
Total assets 352,040 349,600 335,944
Deposits 246,671 238,102 223,117
Common shareholders' equity 12,634 12,256 11,119
Average assets 355,868 353,092 339,197
Average interest-earning assets 302,907 302,288 282,678
Average common shareholders' equity 12,400 11,994 10,718
Assets under administration 1,260,989 1,216,719 1,135,539
-------------------------------------------------------------------------
Balance sheet quality measures
Risk-weighted assets ($ billions) $ 106.7 $ 107.2 $ 117.3
Tangible common equity ratio(1) 9.9% 9.5% 7.6%
Tier 1 capital ratio 13.9% 14.2% 12.1%
Total capital ratio 17.8% 18.1% 16.1%
-------------------------------------------------------------------------
Other information
Retail/wholesale ratio 74%/26% 74%/26% 69%/31%
Full-time equivalent employees 42,354 42,642 41,941
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) For additional information, see the "Non-GAAP measures" section.
n/m Not meaningful.
Review of CIBC Fourth Quarter Results
Net income was $500 million, down $144 million from the fourth quarter of 2009 and down $140 million from the prior quarter.
Net interest income of $1,645 million was up $226 million from the fourth quarter of 2009, primarily due to higher treasury revenue, volume growth in most retail products including the impact of the MasterCard portfolio, and higher trading-related net interest income, partially offset by lower spreads in retail products.
Net interest income was up $97 million from the prior quarter, primarily due to volume growth in most retail products including the impact of the MasterCard portfolio, and higher trading-related net interest income.
Non-interest income of $1,609 million was up $140 million from the fourth quarter of 2009, primarily due to foreign exchange gains on capital repatriation activities, higher net realized gains on sale of AFS securities and lower write-downs, higher income from securitization activities, and higher mutual fund fees. These factors were partially offset by higher losses in the structured credit run-off business and lower underwriting and advisory fees.
Non-interest income was up $308 million from the prior quarter, primarily due to foreign exchange gains on capital repatriation activities, higher income from securitization activities, and higher commissions on securities transactions. These factors were partially offset by higher losses in the structured credit run-off business and lower underwriting and advisory fees.
Provision for credit losses of $150 million was down $274 million from the fourth quarter of 2009. The specific provision for credit losses was down $193 million, attributable to lower provisions in the consumer and business and government portfolios. The general provision for credit losses was down $81 million, driven by improvements in cards and personal lending, as well as a refinement in how we calculate our general allowance for small business, partially offset by changes in the provision for large corporate loans and the establishment of an allowance for the MasterCard portfolio.
Provision for credit losses was down $71 million from the prior quarter. The specific provision for credit losses was down $82 million, attributable to lower provisions in the consumer and business and government portfolios. The general provision for credit losses was up $11 million, driven by the establishment of an allowance for the MasterCard portfolio and changes in the provision for large corporate loans, largely offset by a refinement in how we calculate our general allowance for small business.
Non-interest expenses of $1,860 million were up $191 million from the fourth quarter of 2009, primarily due to higher performance-related compensation, pension expenses, computer-related costs, advertising and business development expenses, and the impact of the introduction of the Harmonized Sales Tax (HST) on these and other items.
Non-interest expenses were up $119 million from the prior quarter, primarily due to higher computer-related costs, advertising and business development expenses, professional fees, occupancy costs, and the impact of HST on these and other items.
Income tax expense of $742 million in the fourth quarter of 2010 was up from $145 million a year ago and $244 million in the prior quarter, primarily due to tax expense on the capital repatriation activities during the fourth quarter of 2010.
Review of CIBC Retail Markets Fourth Quarter Results
-------------------------------------------------------------------------
For the three months ended
---------------------------------
2010 2010 2009
$ millions Oct. 31 Jul. 31 Oct. 31(1)
-------------------------------------------------------------------------
Revenue
Personal banking $ 1,653 $ 1,605 $ 1,562
Business banking 355 350 334
Wealth management 355 336 337
FirstCaribbean 127 141 160
Other (10) 40 (37)
-------------------------------------------------------------------------
Total revenue (a) 2,480 2,472 2,356
Provision for credit losses 249 304 362
Non-interest expenses (b) 1,425 1,352 1,338
-------------------------------------------------------------------------
Income before taxes and
non-controlling interests 806 816 656
Income tax expense 228 214 182
Non-controlling interests 2 3 6
-------------------------------------------------------------------------
Net income (c) $ 576 $ 599 $ 468
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Efficiency ratio (b/a) 57.5% 54.7% 56.8%
Amortization of other intangible
assets (d) $ 8 $ 7 $ 7
Cash efficiency ratio(2) ((b-d)/a) 57.1% 54.4% 56.5%
Return on equity(2) 44.4% 45.9% 37.8%
Charge for economic capital(2) (e) $ (176) $ (179) $ (169)
Economic profit(2) (c+e) $ 400 $ 420 $ 299
Full-time equivalent employees 29,106 29,174 28,921
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Certain prior period information has been restated to conform to the
presentation of the current period.
(2) For additional information, see the "Non-GAAP measures" section.
Net income was $576 million, up $108 million from the fourth quarter of 2009.
Revenue of $2,480 million was up $124 million from the fourth quarter of 2009, primarily due to volume growth across most lines of business, the acquisition of the MasterCard portfolio, stronger equity markets and higher treasury revenue allocations, partially offset by lower spreads and the negative impact of a stronger Canadian dollar on FirstCaribbean revenue.
Provision for credit losses of $249 million was down $113 million from the fourth quarter of 2009, primarily driven by lower bankruptcies, write-offs, and delinquencies in the cards and personal lending portfolios.
Non-interest expenses of $1,425 million were up $87 million from the fourth quarter of 2009, primarily as a result of higher pension expense, the introduction of HST and higher advertising and business development expenses.
Income tax expense of $228 million was up $46 million from the fourth quarter of 2009, primarily due to higher pre-tax income.
Review of Wholesale Banking Fourth Quarter Results
-------------------------------------------------------------------------
For the three months ended
---------------------------------
2010 2010 2009
$ millions Oct. 31 Jul. 31 Oct. 31(1)
-------------------------------------------------------------------------
Revenue (TEB)(2)
Capital markets $ 218 $ 241 $ 261
Corporate and investment banking 136 146 161
Other (90) (61) 88
-------------------------------------------------------------------------
Total revenue (TEB)(2) (a) 264 326 510
TEB adjustment 26 11 7
-------------------------------------------------------------------------
Total revenue (b) 238 315 503
Provision for credit losses 8 29 82
Non-interest expenses (c) 327 258 245
-------------------------------------------------------------------------
(Loss) income before taxes (97) 28 176
Income taxes (41) 3 16
-------------------------------------------------------------------------
Net (loss) income (d) $ (56) $ 25 $ 160
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Efficiency ratio (c/b) n/m 81.4% 48.7%
Amortization of other intangible
assets (e) $ - $ - $ 1
Cash efficiency ratio (TEB)(2)
((c-e)/a) n/m 78.9% 47.9%
Return on equity(2) (14.1)% 4.4% 28.2%
Charge for economic capital(2) (f) $ (61) $ (61) $ (76)
Economic (loss) profit(2) (d+f) $ (117) $ (36) $ 84
Full-time equivalent employees 1,159 1,134 1,077
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Certain prior period information has been restated to conform to the
presentation of the current period.
(2) For additional information, see the "Non-GAAP measures" section.
n/m Not meaningful.
Net loss for the quarter was $56 million, compared to net income of $25 million for the third quarter of 2010.
Revenue of $238 million was down $77 million from the third quarter of 2010, primarily due to a higher loss from the structured credit run-off business, lower revenue from equity new issues, lower revenue from fixed income and foreign exchange trading, and higher mark-to-market losses on corporate loan hedges. These items were partially offset by higher interest income on tax reassessments.
Non-interest expenses of $327 million were up $69 million from the third quarter of 2010, primarily due to higher performance-related compensation, professional fees and severance costs.
Provision for credit losses of $8 million was down $21 million from the third quarter of 2010, primarily due to lower losses in the U.S. real estate finance and European run-off portfolios.
An income tax recovery of $41 million compared to an income tax expense of $3 million for the third quarter of 2010, primarily due to a pre-tax loss for the fourth quarter compared with pre-tax income for the third quarter.
Review of Corporate and Other Fourth Quarter Results
-------------------------------------------------------------------------
For the three months ended
---------------------------------
2010 2010 2009
$ millions Oct. 31 Jul. 31 Oct. 31
-------------------------------------------------------------------------
Total revenue $ 536 $ 62 $ 29
(Reversal of) provision for credit
losses (107) (112) (20)
Non-interest expenses 108 131 86
-------------------------------------------------------------------------
Income (loss) before taxes 535 43 (37)
Income taxes 555 27 (53)
-------------------------------------------------------------------------
Net (loss) income $ (20) $ 16 $ 16
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Full-time equivalent employees(1) 12,089 12,334 11,943
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Certain prior period information has been restated to conform to the
presentation of the current period.
Net loss for the quarter was $20 million, compared to net income of $16 million for the fourth quarter of 2009.
Revenue of $536 million was up $507 million from the fourth quarter of 2009, primarily due to foreign exchange gains on capital repatriation activities.
Reversal of credit losses of $107 million compared with a reversal of credit losses of $20 million for the fourth quarter of 2009, primarily due to higher reversals of credit losses in the general allowance for the cards and business and government portfolios.
Non-interest expenses of $108 million were up $22 million from the fourth quarter of 2009, primarily due to higher unallocated corporate support costs.
Income tax expense of $555 million for the fourth quarter of 2010 compared to an income tax benefit of $53 million for the fourth quarter of 2009, primarily due to the tax impact of capital repatriation activities during the quarter. In addition, the tax benefit in 2009 included a revaluation of future tax assets.
The capital repatriation activities during the fourth quarter of 2010 had no impact on CIBC's shareholders' equity or on CIBC's Tier 1 capital ratio.
Making a Difference in Our Communities
As a leader in community investment, CIBC is committed to supporting causes that matter to its clients, employees and communities. During the fourth quarter of 2010:
- The Canadian Breast Cancer Foundation CIBC Run for the Cure raised
more than $33 million, an increase of $6.3 million from the previous
year. More than 170,000 people in 60 communities across Canada
participated in the event. Team CIBC raised more than $3 million,
including pledges from employees, their families and friends and
proceeds from the 2010 CIBC Pink Collection(TM), bringing the total
amount of money raised by Team CIBC since 1992 to more than
$26 million;
- Together, 70 CIBC employees in Ottawa, Calgary and Toronto helped
raise more than $180,000 to fund research, treatment and care for
women's cancers through participation in The Weekend to End Women's
Cancers;
- Following the success of its 2010 FIFA World Cup(TM) broadcast
sponsorship, CIBC announced that it has entered into a sponsorship
agreement with Visa in the retail banking category for the 2014 FIFA
World Cup Brazil(TM);
- CIBC donated $15,000 to the Canadian Red Cross to provide assistance
to those in Newfoundland and Labrador affected by Hurricane Igor in
September;
- CIBC provided a $100,000 donation to the Canadian Red Cross to
support its work in helping the victims of flooding in Pakistan. In
addition to this contribution, CIBC's branches across the country
joined in the relief effort by collecting donations from the public;
and
- CIBC made a $500,000 donation to Memorial University to support
undergraduate bursaries for business students. For each of the next
10 years, the CIBC Bursary Program in Business Administration will
provide 15 $2,000 bursaries and 20 $1,000 bursaries, to undergraduate
students who demonstrate financial need, are active in community or
university life and display academic merit.
"I want to thank all CIBC employees for their contributions over the past year," says McCaughey. "The leadership, professionalism and dedication they show every day in serving our clients, shareholders and communities is the key to CIBC's ongoing progress."
(1) For additional information, see the "Non-GAAP measures" section.
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 Generally Accepted Accounting Principles (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 financial measures useful in analyzing financial performance. For a more detailed discussion on our non-GAAP measures, see page 42 of CIBC's 2010 Annual Report.
The following table provides a reconciliation of non-GAAP to GAAP measures related to CIBC on a consolidated basis. The reconciliations of the non-GAAP measures of our strategic business units are provided in their respective sections.
-------------------------------------------------------------------------
For the three months ended
---------------------------------
2010 2010 2009
$ millions, except per share amounts Oct. 31 Jul. 31 Oct. 31
-------------------------------------------------------------------------
Net interest income $ 1,645 $ 1,548 $ 1,419
Non-interest income 1,609 1,301 1,469
-------------------------------------------------------------------------
Total revenue per interim
financial statements A 3,254 2,849 2,888
TEB adjustment B 26 11 7
-------------------------------------------------------------------------
Total revenue (TEB)(1) C $ 3,280 $ 2,860 $ 2,895
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Non-interest expenses per interim
financial statements D 1,860 1,741 1,669
Less: amortization of other
intangible assets 11 9 10
-------------------------------------------------------------------------
Cash non-interest expenses(1) E $ 1,849 $ 1,732 $ 1,659
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income applicable to common
shares F $ 458 $ 598 $ 601
Add: after-tax effect of
amortization of other
intangible assets 8 7 8
-------------------------------------------------------------------------
Cash net income applicable to
common shares(1) G $ 466 $ 605 $ 609
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic weighted-average common
shares (thousands) H 391,055 388,815 382,793
Diluted weighted-average common
shares (thousands) I 392,063 389,672 383,987
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash efficiency ratio (TEB)(1) E/C 56.4% 60.6% 57.3%
Cash basic earnings per share(1) G/H $ 1.19 $ 1.55 $ 1.59
Cash diluted earnings per share(1) G/I $ 1.19 $ 1.55 $ 1.59
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Non-GAAP measure.
Basis of Presentation
The interim consolidated financial statements presented in this news release have been prepared in accordance with Canadian GAAP. The interim financial results for the quarters, as presented in these financial statements, are unaudited, whereas the annual financial results as at or for the year ended October 31 are 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, 2010.
CONSOLIDATED BALANCE SHEET
-------------------------------------------------------------------------
2010 2009
Unaudited, $ millions, as at Oct. 31 Oct. 31
------------------------------------------------------------- -----------
ASSETS
Cash and non-interest-bearing deposits
with banks $ 2,190 $ 1,812
------------------------------------------------------------- -----------
Interest-bearing deposits with banks 9,862 5,195
------------------------------------------------------------- -----------
Securities
Trading 28,557 15,110
Available-for-sale (AFS) 26,621 40,160
Designated at fair value (FVO) 22,430 22,306
------------------------------------------------------------- -----------
77,608 77,576
------------------------------------------------------------- -----------
Securities borrowed or purchased under
resale agreements 37,342 32,751
------------------------------------------------------------- -----------
Loans
Residential mortgages 93,568 86,152
Personal 34,335 33,869
Credit card 12,127 11,808
Business and government 38,582 37,343
Allowance for credit losses (1,720) (1,960)
------------------------------------------------------------- -----------
176,892 167,212
------------------------------------------------------------- -----------
Other
Derivative instruments 24,682 24,696
Customers' liability under acceptances 7,684 8,397
Land, buildings and equipment 1,660 1,618
Goodwill 1,913 1,997
Software and other intangible assets 609 669
Other assets 11,598 14,021
------------------------------------------------------------- -----------
48,146 51,398
------------------------------------------------------------- -----------
$ 352,040 $ 335,944
------------------------------------------------------------- -----------
------------------------------------------------------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Personal $ 113,294 $ 108,324
Business and government 127,759 107,209
Bank 5,618 7,584
------------------------------------------------------------- -----------
246,671 223,117
------------------------------------------------------------- -----------
Other
Derivative instruments 26,489 27,162
Acceptances 7,684 8,397
Obligations related to securities sold short 9,673 5,916
Obligations related to securities lent or
sold under repurchase agreements 28,220 37,453
Other liabilities 12,572 13,693
------------------------------------------------------------- -----------
84,638 92,621
------------------------------------------------------------- -----------
Subordinated indebtedness 4,773 5,157
------------------------------------------------------------- -----------
Preferred share liabilities - 600
------------------------------------------------------------- -----------
Non-controlling interests 168 174
------------------------------------------------------------- -----------
Shareholders' equity
Preferred shares 3,156 3,156
Common shares 6,803 6,240
Treasury shares 1 1
Contributed surplus 96 92
Retained earnings 6,095 5,156
Accumulated other comprehensive income (AOCI) (361) (370)
------------------------------------------------------------- -----------
15,790 14,275
------------------------------------------------------------- -----------
$ 352,040 $ 335,944
------------------------------------------------------------- -----------
------------------------------------------------------------- -----------
CONSOLIDATED STATEMENT OF OPERATIONS
-------------------------------------------------------------------------
For the twelve
For the three months ended months ended
----------------------------- -------------------
Unaudited, $ millions, 2010 2010 2009 2010 2009
except as noted Oct. 31 Jul. 31 Oct. 31 Oct. 31 Oct. 31
----------------------------------------------------- -------------------
Interest income
Loans $ 1,939 $ 1,868 $ 1,703 $ 7,288 $ 7,183
Securities borrowed or
purchased under resale
agreements 82 49 31 193 324
Securities 457 381 367 1,562 1,705
Deposits with banks 18 14 8 52 85
----------------------------------------------------- -------------------
2,496 2,312 2,109 9,095 9,297
----------------------------------------------------- -------------------
Interest expense
Deposits 636 558 527 2,192 2,879
Other liabilities 155 145 110 476 785
Subordinated indebtedness 48 54 45 188 208
Preferred share liabilities 12 7 8 35 31
----------------------------------------------------- -------------------
851 764 690 2,891 3,903
----------------------------------------------------- -------------------
Net interest income 1,645 1,548 1,419 6,204 5,394
----------------------------------------------------- -------------------
Non-interest income
Underwriting and
advisory fees 87 108 132 426 478
Deposit and payment fees 188 194 193 756 773
Credit fees 90 87 85 341 304
Card fees 62 72 68 304 328
Investment management
and custodial fees 115 117 112 459 419
Mutual fund fees 195 188 175 751 658
Insurance fees, net
of claims 72 72 63 277 258
Commissions on securities
transactions 125 108 124 474 472
Trading income (loss) 8 84 301 603 (531)
AFS securities gains, net 119 123 42 400 275
FVO income (loss) (184) (146) (155) (623) (33)
Income from securitized
assets 210 150 149 631 518
Foreign exchange other
than trading 452 88 63 683 496
Other 70 56 117 399 119
----------------------------------------------------- -------------------
1,609 1,301 1,469 5,881 4,534
----------------------------------------------------- -------------------
Total revenue 3,254 2,849 2,888 12,085 9,928
----------------------------------------------------- -------------------
Provision for credit
losses 150 221 424 1,046 1,649
----------------------------------------------------- -------------------
Non-interest expenses
Employee compensation
and benefits 994 973 886 3,871 3,610
Occupancy costs 173 161 157 648 597
Computer, software and
office equipment 274 246 251 1,003 1,010
Communications 72 73 70 290 288
Advertising and
business development 65 43 46 197 173
Professional fees 66 53 54 210 189
Business and capital taxes 22 22 28 88 117
Other 194 170 177 720 676
----------------------------------------------------- -------------------
1,860 1,741 1,669 7,027 6,660
----------------------------------------------------- -------------------
Income before income
taxes and non-
controlling interests 1,244 887 795 4,012 1,619
Income tax expense 742 244 145 1,533 424
----------------------------------------------------- -------------------
502 643 650 2,479 1,195
Non-controlling interests 2 3 6 27 21
----------------------------------------------------- -------------------
Net income $ 500 $ 640 $ 644 $ 2,452 $ 1,174
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
Weighted-average common
shares outstanding
(thousands) 391,055 388,815 382,793 387,802 381,677
Weighted-average
diluted common shares
outstanding
(thousands) 392,063 389,672 383,987 388,807 382,442
Earnings per share
(in dollars)
- Basic $ 1.17 $ 1.54 $ 1.57 $ 5.89 $ 2.65
- Diluted $ 1.17 $ 1.53 $ 1.56 $ 5.87 $ 2.65
Dividends per common
share (in dollars) $ 0.87 $ 0.87 $ 0.87 $ 3.48 $ 3.48
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
-------------------------------------------------------------------------
For the twelve
For the three months ended months ended
----------------------------- -------------------
2010 2010 2009 2010 2009
Unaudited, $ millions Oct. 31 Jul. 31 Oct. 31 Oct. 31 Oct. 31
----------------------------------------------------- -------------------
Net income $ 500 $ 640 $ 644 $ 2,452 $ 1,174
----------------------------------------------------- -------------------
Other comprehensive
income (OCI), net of tax
Net foreign currency
translation adjustments
Net gains (losses) on
investment in self-
sustaining foreign
operations 1,022 81 (10) 789 (388)
Net gains (losses) on
hedges of investment
in self-sustaining
foreign operations (930) (33) (8) (869) 250
----------------------------------------------------- -------------------
92 48 (18) (80) (138)
----------------------------------------------------- -------------------
Net change in AFS
securities
Net unrealized gains
(losses) on AFS
securities 94 255 179 303 462
Transfer of net (gains)
losses to net income (79) (109) (37) (230) (236)
----------------------------------------------------- -------------------
15 146 142 73 226
----------------------------------------------------- -------------------
Net change in cash flow
hedges
Net gains (losses) on
derivatives designated
as cash flow hedges 2 (9) (13) (9) (26)
Net (gains) losses on
derivatives designated
as cash flow hedges
transferred to net
income 4 3 4 25 10
----------------------------------------------------- -------------------
6 (6) (9) 16 (16)
----------------------------------------------------- -------------------
Total OCI $ 113 $ 188 $ 115 $ 9(1) $ 72(1)
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
(1) Includes non-controlling interest of $1 million for the year ended
October 31, 2010 (2009: $1 million).
The income tax benefit (expense) allocated to each component of OCI is
presented in the table below:
-------------------------------------------------------------------------
For the twelve
For the three months ended months ended
----------------------------- -------------------
2010 2010 2009 2010 2009
Unaudited, $ millions Oct. 31 Jul. 31 Oct. 31 Oct. 31 Oct. 31
----------------------------------------------------- -------------------
Net foreign currency
translation adjustments
Changes on investment
in self-sustaining
foreign operations $ (1) $ (5) $ (3) $ (1) $ 34
Changes on hedges of
investment in self-
sustaining foreign
operations 528 12 1 518 (16)
Net change in AFS
securities
Net unrealized gains
(losses) on AFS
securities (23) (96) (34) (100) (151)
Transfer of net (gains)
losses to net income 27 21 18 68 111
Net change in cash
flow hedges
Changes on derivatives
designated as cash
flow hedges (1) 4 6 3 13
Changes on derivatives
designated as cash flow
hedges transferred to
net income (1) - (5) (3) (9)
----------------------------------------------------- -------------------
$ 529 $ (64) $ (17) $ 485 $ (18)
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
-------------------------------------------------------------------------
For the twelve
For the three months ended months ended
----------------------------- -------------------
2010 2010 2009 2010 2009
Unaudited, $ millions Oct. 31 Jul. 31 Oct. 31 Oct. 31 Oct. 31
----------------------------------------------------- -------------------
Preferred shares
Balance at beginning
of period $ 3,156 $ 3,156 $ 3,156 $ 3,156 $ 2,631
Issue of preferred
shares - - - - 525
----------------------------------------------------- -------------------
Balance at end of
period $ 3,156 $ 3,156 $ 3,156 $ 3,156 $ 3,156
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
Common shares
Balance at beginning
of period $ 6,658 $ 6,508 $ 6,161 $ 6,240 $ 6,062
Issue of common shares 145 150 79 563 178
----------------------------------------------------- -------------------
Balance at end of
period $ 6,803 $ 6,658 $ 6,240 $ 6,803 $ 6,240
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
Treasury shares
Balance at beginning
of period $ 4 $ 1 $ 1 $ 1 $ 1
Net (purchases) sales (3) 3 - - -
----------------------------------------------------- -------------------
Balance at end of
period $ 1 $ 4 $ 1 $ 1 $ 1
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
Contributed surplus
Balance at beginning
of period $ 96 $ 94 $ 101 $ 92 $ 96
Stock option expense 3 2 2 11 12
Stock options exercised (2) - - (4) (1)
Net (discount) premium
on treasury shares
and other (1) - (11) (3) (15)
----------------------------------------------------- -------------------
Balance at end of
period $ 96 $ 96 $ 92 $ 96 $ 92
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
Retained earnings
Balance at beginning of
period, as previously
reported $ 5,972 $ 5,713 $ 4,886 $ 5,156 $ 5,483
Adjustment for change
in accounting policies - - - - (6)(1)
----------------------------------------------------- -------------------
Balance at beginning of
period, as restated 5,972 5,713 4,886 5,156 5,477
Net income 500 640 644 2,452 1,174
Dividends
Common (341) (338) (333) (1,350) (1,328)
Preferred (42) (42) (43) (169) (162)
Other 6 (1) 2 6 (5)
----------------------------------------------------- -------------------
Balance at end of
period $ 6,095 $ 5,972 $ 5,156 $ 6,095 $ 5,156
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
AOCI, net of tax
Balance at beginning
of period $ (474) $ (662) $ (485) $ (370) $ (442)
OCI 113 188 115 9 72
----------------------------------------------------- -------------------
Balance at end of
period $ (361) $ (474) $ (370) $ (361) $ (370)
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
Retained earnings
and AOCI $ 5,734 $ 5,498 $ 4,786 $ 5,734 $ 4,786
----------------------------------------------------- -------------------
Shareholders' equity
at end of period $ 15,790 $ 15,412 $ 14,275 $ 15,790 $ 14,275
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
(1) Represents the impact of changing the measurement date for employee
future benefits.
CONSOLIDATED STATEMENT OF CASH FLOWS
-------------------------------------------------------------------------
For the twelve
For the three months ended months ended
----------------------------- -------------------
2010 2010 2009 2010 2009
Unaudited, $ millions Oct. 31 Jul. 31 Oct. 31 Oct. 31 Oct. 31
----------------------------------------------------- -------------------
Cash flows provided by
(used in) operating
activities
Net income $ 500 $ 640 $ 644 $ 2,452 $ 1,174
Adjustments to reconcile
net income to cash flows
provided by (used in)
operating activities:
Provision for credit
losses 150 221 424 1,046 1,649
Amortization(1) 96 91 102 375 403
Stock option expense 3 2 2 11 12
Future income taxes 179 186 188 800 38
AFS securities gains,
net (119) (123) (42) (400) (275)
(Gains) losses on
disposal of land,
buildings and equipment - (1) (1) 1 2
Other non-cash items,
net (1,043) 760 (122) (520) (297)
Changes in operating
assets and liabilities
Accrued interest
receivable (185) (7) (72) (108) 266
Accrued interest
payable 71 49 (160) 42 (339)
Amounts receivable
on derivative
contracts (839) (2,209) 3,736 (292) 4,270
Amounts payable on
derivative contracts (34) 2,203 (4,095) (574) (6,063)
Net change in
trading
securities (7,719) (2,999) (719) (13,447) 22,278(2)
Net change in FVO
securities (3,669) (22) 1,203 (124) (445)
Net change in other
FVO assets and
liabilities 1,885 (813) (2,648) 118 100
Current income taxes 622 73 (129) 466 2,162
Other, net 1,138 (709) 1,181 2,178 -
----------------------------------------------------- -------------------
(8,964) (2,658) (508) (7,976) 24,935
----------------------------------------------------- -------------------
Cash flows provided by
(used in) financing
activities
Deposits, net of
withdrawals 6,931 12,690 11,428 24,588 (7,569)(3)
Obligations related to
securities sold short 802 (1,304) (259) 3,094 (2,082)
Net obligations related
to securities lent or
sold under repurchase
agreements (6,602) (1,587) (3,562) (9,233) (570)
Issue of subordinated
indebtedness - - - 1,100 -
Redemption/repurchase
of subordinated
indebtedness (1,300) - (524) (1,395) (1,419)
Issue of preferred
shares - - - - 525
Issue of common shares,
net 145 150 79 563 178
Net proceeds from
treasury shares
(purchased) sold (3) 3 - - -
Dividends (383) (380) (376) (1,519) (1,490)
Other, net (659) 1,232 25 (2,051) 596
----------------------------------------------------- -------------------
(1,069) 10,804 6,811 15,147 (11,831)
----------------------------------------------------- -------------------
Cash flows provided by
(used in) investing
activities
Interest-bearing deposits
with banks 2,528 (6,017) (152) (4,667) 2,206
Loans, net of repayments (2,885) (5,488) (6,803) (24,509) (12,496)
Proceeds from
securitizations 4,725 3,883 2,775 14,192 20,744
Purchase of AFS
securities (9,248) (18,531) (19,574) (55,392) (91,663)
Proceeds from sale of
AFS securities 11,986 6,637 9,040 41,144 30,205
Proceeds from maturity
of AFS securities 8,428 4,520 10,179 27,585 35,628
Net securities borrowed
or purchased under
resale agreements (5,258) 7,382 (1,722) (4,591) 2,845
Net cash used in
acquisitions - - - (297) -
Purchase of land,
buildings and equipment (71) (81) (89) (220) (272)
----------------------------------------------------- -------------------
10,205 (7,695) (6,346) (6,755) (12,803)
----------------------------------------------------- -------------------
Effect of exchange rate
changes on cash and
non-interest-bearing
deposits with banks (5) 9 3 (38) (47)
----------------------------------------------------- -------------------
Net increase (decrease)
in cash and non-interest-
bearing deposits with
banks during period 167 460 (40) 378 254
Cash and non-interest-
bearing deposits with
banks at beginning of
period 2,023 1,563 1,852 1,812 1,558
----------------------------------------------------- -------------------
Cash and non-interest-
bearing deposits with
banks at end of
period(4) $2,190(5) $ 2,023 $ 1,812 $2,190(5) $ 1,812
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
Cash interest paid $ 780 $ 715 $ 850 $ 2,849 $ 4,242
Cash income taxes paid
(recovered) $ (60) $ (15) $ 87 $ 267 $ (1,775)
----------------------------------------------------- -------------------
----------------------------------------------------- -------------------
(1) Includes amortization of buildings, furniture, equipment, leasehold
improvements, software and other intangible assets.
(2) Includes securities initially bought as trading securities and
subsequently reclassified to loans and AFS securities.
(3) Includes $1.6 billion of Notes purchased by CIBC Capital Trust.
(4) Includes restricted cash balance of $246 million (July 31, 2010: $255
million; October 31, 2009: $268 million).
(5) Includes cash reserved for payment on redemption of non-cumulative
preferred shares.
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. These statements include, but are not limited to, statements we make about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies and outlook for 2011 and subsequent periods. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate" and other similar expressions or future or conditional verbs such as "will", "should", "would" and "could". 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, operational, reputation and legal, regulatory and environmental risk; legislative or regulatory developments in the jurisdictions where we operate; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions; the resolution of legal 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; 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; the accuracy and completeness of information provided to us by 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; technological change; global capital market activity; changes in monetary and economic policy; currency value fluctuations; general economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations; changes in market rates and prices which may adversely affect the value of financial products; 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; 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.
%SEDAR: 00002543EF
For further information: Investor and analyst inquiries should be directed to John Ferren, Vice-President, Investor Relations, at 416-980-2088. Media inquiries should be directed to Rob McLeod, Senior Director, Communications and Public Affairs, at 416-980-3714, or to Mary Lou Frazer, Senior Director, Investor & Financial Communications, at 416-980-4111
Share this article