Canadian Imperial Bank of Commerce (CM)
F4Q 2012 Earnings Call
December 6, 2012 08:00 am ET
Executives
Gerry McCaughey – President & Chief Executive Officer
Kevin Glass – Senior Executive Vice President & Chief Financial Officer
Tom Woods – Senior Executive Vice President & Chief Risk Officer
Victor Dodig – Senior Executive Vice President & Group Head, Wealth Management
Richard Nesbitt – Senior Executive Vice President & Group Head, Wholesale, International, Technology and Operations
David Williamson – Senior Executive Vice President & Group Head, Retail and Business Banking
Geoff Weiss – Senior Vice President, Investor Relations
Analysts
Steve Theriault – Bank of America Merrill Lynch
Gabriel Dechaine – Credit Suisse
Peter Routledge – National Bank Financial
John Aiken – Barclays Capital
Brad Smith – Stonecap Securities
Michael Goldberg – Desjardins Securities
Brian Klock – KBW
Darko Mihelic – Cormark Securities
Presentation
Operator
Good morning, ladies and gentlemen. Welcome to the CIBC F4Q Results Conference Call. Please be advised that this call is being recorded. (Operator instructions.) I would now like to turn the meeting over to Geoff Weiss. Please go ahead Mr. Weiss.
Geoff Weiss
Thank you. Good morning and thank you for joining us. This morning, CIBC’s senior executives will review CIBC’s F4Q and F2012 results that were released earlier this morning. The documents referenced on this call including CIBC’s F4Q news release, investor presentation, and financial supplement as well as CIBCS F2012 financial statements and MBNA can all be found on our website at www.cibc.com. In addition, an archive of this audio webcast will be available on our website later today along with CIBC’s full F2012 report which was released earlier this morning with our results.
This morning’s agenda will include opening remarks from Gerry McCaughey, CIBC’s President and Chief Executive Officer. Kevin Glass, our Chief Financial Officer, will follow with a financial review; and Tom Woods, our Chief Risk Officer will close the formal remarks with a risk management update. After the presentations there will be a question-and-answer period that will conclude by 9:00 AM. Also with us for the question-and-answer period are CIBC’s business leaders including Victor Dodig, Richard Nesbitt, and David Williamson as well as other senior officers.
Before we begin, let me remind you that any individuals speaking on behalf of CIBC on today’s call may make forward-looking statements that are subject to a variety of risks and uncertainties. These statements may include material factors or assumptions that could cause CIBC’s actual results in future periods to differ materially. For more information please refer to the note about forward-looking statements in today’s press release.
With that, let me now turn the meeting over to Gerry.
Gerry McCaughey
Thank you, Geoff, and good morning everyone. I will also remind you that my comments may contain forward-looking statements.
Today, CIBC reported net income for F4Q of $852 million and diluted earnings per share of $2.02. The return on equity for the quarter was 21.7%. Adjusting for items of note, earnings were $2.04, up 15% from a year ago. For F2012 overall, CIBC reported net income of $3.3 billion and diluted earnings per share of $7.85. Return on equity for the year was 22%.
During F2012 we strengthened our capital base while investing for strategic growth and returning capital to shareholders. We finished the quarter with a Basel III pro forma common equity ratio estimated at 9% and a Basel II tier one ratio of 13.8%. We increased our quarterly common dividend to $0.94 per share effective October, 2012; announced a normal course issuer bid to repurchase up to 8.1 million common shares or approximately 2% of shares outstanding. As of October 31, 2012, we have repurchased in excess of 2 million shares.
Our progress in F2012 reflects our strategy which is to be a lower risk bank, to deliver consistent and sustainable earnings; as well as our strategic plan, which has four work streams. The first two elements are conditions precedent to our strategic plan. The third, our strategic plan, is how we deliver value. Our strategic plan has four work streams: strengthening our core Canadian retail franchise, growing our wealth management business, growing our wholesale banking business and strengthening our Caribbean operations.
What unites each of these work streams is a focus on deepening the relationship we have with each of our clients. Our strategy balances our lower-risk approach with consistent and sustainable strategic growth. We believe this is the right strategy for this environment and we believe it is a strategy that will be proven to do well in the years to come.
Now, turning to our business results – retail and business banking. Retail and business banking reported net income of $569 million for F4Q 2012. Personal banking revenue of $1.6 billion was the highest reported revenue for a quarter on record. Credit quality in our retail portfolios continues to be strong. In F4Q provisions for credit losses decreased from a year ago largely due to lower losses in our credit card portfolio. Loss rates in our credit card portfolio are at the lowest level since F4Q 2008.
Strengthening our core Canadian retail franchise is centered on deepening client relationships with an emphasis on improving sales and service capabilities, cross-selling and acquiring and retaining clients. Retail and business banking made good progress in F2012.
We continued our leadership in mobile banking, announcing in partnership with [Rogers Communication] the first point of sale mobile credit card transaction in Canada. We continued to invest in our branch network with 28 new branches across the country this year and expanded hours of service. We launched our CIBC Total Banking Rebate to recognize and reward clients with fee discounts for a deeper relationship with CIBC. We were named “Best Commercial Bank in Canada” by World Finance Magazine for our strong client focus.
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