CIBC's 2018 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 and supplementary regulatory capital reports which include fourth quarter financial information. All amounts are expressed in Canadian dollars, unless otherwise indicated. |
TORONTO, Nov. 29, 2018 /CNW/ - CIBC CM CM today announced its results for the fourth quarter and fiscal year ended October 31, 2018.
"In 2018, CIBC delivered record net income driven by strong performance across all of our strategic business units," says Victor G. Dodig, CIBC President and Chief Executive Officer. "We made excellent progress in continuing to embed a client-focused culture, investing in our cross-border platform and enhancing value for our shareholders. Looking forward, we are well positioned to continue to build a client-focused bank that delivers superior shareholder returns."
Fourth quarter highlights
Q4/18 | Q4/17 | Q3/18 | YoY Variance | QoQ Variance | |
Reported Net Income | $1,268 million | $1,164 million | $1,369 million | +9% | -7% |
Adjusted Net Income(1) | $1,364 million | $1,263 million | $1,399 million | +8% | -3% |
Reported Diluted Earnings Per Share (EPS) | $2.80 | $2.59 | $3.01 | +8% | -7% |
Adjusted Diluted EPS(1) | $3.00 | $2.81 | $3.08 | +7% | -3% |
Reported Return on Common Shareholders' Equity (ROE) | 15.3% | 15.8% | 16.7% | ||
Adjusted ROE(1) | 16.4% | 17.2% | 17.1% | ||
Basel III Common Equity Tier 1 (CET1) Ratio (all-in basis) | 11.4% | 10.6% | 11.3% |
(1) | For additional information, see the "Non-GAAP measures" section. |
CIBC's results for the fourth quarter of 2018 were affected by the following items of note aggregating to a negative impact of $0.20 per share:
- $89 million ($65 million after-tax and minority interest, or $0.15 per share) of incremental losses on debt securities and loans in FirstCaribbean International Bank Limited (CIBC FirstCaribbean) resulting from the Barbados government debt restructuring;
- $26 million ($19 million after-tax, or $0.04 per share) amortization of acquisition-related intangible assets; and
- $8 million ($7 million after-tax, or $0.01 per share) in transaction and integration-related costs net of purchase accounting adjustments associated with the acquisitions of The PrivateBank and Geneva Advisors.
For the year ended October 31, 2018, CIBC reported net income of $5.3 billion and adjusted net income(1) of $5.5 billion, compared with reported net income of $4.7 billion and adjusted net income(1) of $4.7 billion for 2017.
The following table summarizes our strong performance in 2018 against our key financial measures and targets:
Financial Measure | Target | 2018 Reported Results | 2018 Adjusted Results (1) |
Diluted EPS growth | 5% to 10% on average, annually | $11.65, up 4% from 2017 | $12.21, up 10% from 2017 |
ROE | 15% + | 16.6% | 17.4% |
Efficiency ratio | 55% by 2019 (2) | 57.5%, an improvement of 130 basis points from 2017 | 55.6%, an improvement of 160 basis points from 2017 |
Basel III CET1 ratio | Strong buffer to regulatory | 11.4% | |
Dividend payout ratio | 40% to 50% | 45.5% | 43.4% |
Total shareholder return | Outperform the S&P/TSX | CIBC – 60.6% S&P/TSX Composite Banks Index – 62.0% | |
(1) | For additional information, see the "Non-GAAP measures" section. |
(2) | CIBC has set a medium-term target of achieving a run rate efficiency ratio of 52% by 2022. |
Core business performance
F2018 Financial Highlights
(C$ million) | F2018 | F2017 | YoY Variance |
Canadian Personal and Small Business Banking | |||
Reported Net Income | $2,547 | $2,420 | up 5% |
Adjusted Net Income(1) | $2,556 | $2,250 | up 14% |
Canadian Commercial Banking and Wealth Management | |||
Reported Net Income | $1,307 | $1,138 | up 15% |
Adjusted Net Income(1) | $1,308 | $1,139 | up 15% |
U.S. Commercial Banking and Wealth Management | |||
Reported Net Income | $565 | $203 | up 178% |
Adjusted Net Income(1) | $592 | $222 | up 167% |
Capital Markets | |||
Reported Net Income | $1,069 | $1,090 | down 2% |
Adjusted Net Income(1) | $1,069 | $1,090 | down 2% |
(1) | For additional information, see the "Non-GAAP measures" section. |
Strong fundamentals
While investing in core businesses, CIBC has continued to strengthen key fundamentals. In 2018, CIBC maintained its capital strength, competitive productivity and sound risk management practices:
- CIBC's capital ratios were strong, with a Basel III CET1 ratio of 11.4% as noted above, and Tier 1 and Total capital ratios of 12.9% and 14.9% respectively, at October 31, 2018;
- Market risk, as measured by average Value-at-Risk, was $5.3 million in 2018 compared with $6.5 million in 2017; and
- We continued to have strong credit performance, with CIBC's loan loss ratio of 26 basis points compared with 25 basis points in 2017.
Making a difference in our Communities
CIBC is committed to building a bank that is relevant to our clients, our team members and our communities. During the fourth quarter of 2018:
- We celebrated 22 years as title sponsor of the Canadian Cancer Society CIBC Run for the Cure and helped raise $16 million, including $3 million contributed by Team CIBC, for breast cancer research and support programs; and
- We renewed our partnership with the Greater Toronto Airports Authority as official Financial Institution Partner at Toronto Pearson International Airport through October 2023.
Fourth quarter financial highlights
As at or for the | As at or for the | ||||||||||||||||||
three months ended | twelve months ended | ||||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
Unaudited | Oct. 31 | Jul. 31 | Oct. 31 | Oct. 31 | Oct. 31 | ||||||||||||||
Financial results ($ millions) | |||||||||||||||||||
Net interest income | $ | 2,539 | $ | 2,577 | $ | 2,464 | $ | 10,065 | $ | 8,977 | |||||||||
Non-interest income | 1,913 | 1,970 | 1,805 | 7,769 | 7,303 | ||||||||||||||
Total revenue | 4,452 | 4,547 | 4,269 | 17,834 | 16,280 | ||||||||||||||
Provision for credit losses | 264 | 241 | 229 | 870 | 829 | ||||||||||||||
Non-interest expenses | 2,591 | 2,572 | 2,570 | 10,258 | 9,571 | ||||||||||||||
Income before income taxes | 1,597 | 1,734 | 1,470 | 6,706 | 5,880 | ||||||||||||||
Income taxes | 329 | 365 | 306 | 1,422 | 1,162 | ||||||||||||||
Net income | $ | 1,268 | $ | 1,369 | $ | 1,164 | $ | 5,284 | $ | 4,718 | |||||||||
Net income attributable to non-controlling interests | 2 | 4 | 5 | 17 | 19 | ||||||||||||||
Preferred shareholders | 24 | 23 | 24 | 89 | 52 | ||||||||||||||
Common shareholders | 1,242 | 1,342 | 1,135 | 5,178 | 4,647 | ||||||||||||||
Net income attributable to equity shareholders | $ | 1,266 | $ | 1,365 | $ | 1,159 | $ | 5,267 | $ | 4,699 | |||||||||
Financial measures | |||||||||||||||||||
Reported efficiency ratio | 58.2 | % | 56.6 | % | 60.2 | % | 57.5 | % | 58.8 | % | |||||||||
Adjusted efficiency ratio (1) | 56.2 | % | 55.0 | % | 56.5 | % | 55.6 | % | 57.2 | % | |||||||||
Loan loss ratio (2) | 0.27 | % | 0.29 | % | 0.23 | % | 0.26 | % | 0.25 | % | |||||||||
Reported return on common shareholders' equity | 15.3 | % | 16.7 | % | 15.8 | % | 16.6 | % | 18.3 | % | |||||||||
Adjusted return on common shareholders' equity (1) | 16.4 | % | 17.1 | % | 17.2 | % | 17.4 | % | 18.1 | % | |||||||||
Net interest margin | 1.67 | % | 1.69 | % | 1.72 | % | 1.68 | % | 1.66 | % | |||||||||
Net interest margin on average interest-earning assets | 1.86 | % | 1.89 | % | 1.92 | % | 1.88 | % | 1.85 | % | |||||||||
Return on average assets | 0.83 | % | 0.90 | % | 0.81 | % | 0.88 | % | 0.87 | % | |||||||||
Return on average interest-earning assets | 0.93 | % | 1.00 | % | 0.91 | % | 0.99 | % | 0.97 | % | |||||||||
Total shareholder return | (3.18) | % | 7.39 | % | 6.19 | % | 4.70 | % | 18.30 | % | |||||||||
Reported effective tax rate | 20.6 | % | 21.0 | % | 20.8 | % | 21.2 | % | 19.8 | % | |||||||||
Adjusted effective tax rate (1) | 20.7 | % | 21.1 | % | 21.8 | % | 20.0 | % | 20.3 | % | |||||||||
Common share information | |||||||||||||||||||
Per share ($) | - basic earnings | $ | 2.81 | $ | 3.02 | $ | 2.60 | $ | 11.69 | $ | 11.26 | ||||||||
- reported diluted earnings | 2.80 | 3.01 | 2.59 | 11.65 | 11.24 | ||||||||||||||
- adjusted diluted earnings (1) | 3.00 | 3.08 | 2.81 | 12.21 | 11.11 | ||||||||||||||
- dividends | 1.36 | 1.33 | 1.30 | 5.32 | 5.08 | ||||||||||||||
- book value | 73.83 | 72.41 | 66.55 | 73.83 | 66.55 | ||||||||||||||
Share price ($) | - high | 124.59 | 118.72 | 114.01 | 124.59 | 119.86 | |||||||||||||
- low | 112.24 | 112.00 | 104.10 | 110.11 | 97.76 | ||||||||||||||
- closing | 113.68 | 118.72 | 113.56 | 113.68 | 113.56 | ||||||||||||||
Shares outstanding (thousands) | - weighted-average basic (3) | 443,015 | 444,081 | 437,109 | (4) | 443,082 | 412,636 | (4) | |||||||||||
- weighted-average diluted | 444,504 | 445,504 | 438,556 | (4) | 444,627 | 413,563 | (4) | ||||||||||||
- end of period (3) | 442,826 | 443,717 | 439,313 | (4) | 442,826 | 439,313 | (4) | ||||||||||||
Market capitalization ($ millions) | $ | 50,341 | $ | 52,678 | $ | 49,888 | $ | 50,341 | $ | 49,888 | |||||||||
Value measures | |||||||||||||||||||
Dividend yield (based on closing share price) | 4.7 | % | 4.4 | % | 4.5 | % | 4.7 | % | 4.5 | % | |||||||||
Reported dividend payout ratio | 48.4 | % | 43.9 | % | 50.1 | % | 45.5 | % | 45.6 | % | |||||||||
Adjusted dividend payout ratio (1) | 45.1 | % | 43.0 | % | 46.1 | % | 43.4 | % | 46.2 | % | |||||||||
Market value to book value ratio | 1.54 | 1.64 | 1.71 | 1.54 | 1.71 | ||||||||||||||
On- and off-balance sheet information ($ millions) | |||||||||||||||||||
Cash, deposits with banks and securities | $ | 119,355 | $ | 120,429 | $ | 107,571 | $ | 119,355 | $ | 107,571 | |||||||||
Loans and acceptances, net of allowance | 381,661 | 377,310 | 365,558 | 381,661 | 365,558 | ||||||||||||||
Total assets | 597,099 | 595,025 | 565,264 | 597,099 | 565,264 | ||||||||||||||
Deposits | 461,015 | 459,767 | 439,706 | 461,015 | 439,706 | ||||||||||||||
Common shareholders' equity | 32,693 | 32,131 | 29,238 | 32,693 | 29,238 | ||||||||||||||
Average assets | 603,726 | 605,220 | 568,905 | 598,441 | 542,365 | ||||||||||||||
Average interest-earning assets | 540,933 | 542,140 | 510,038 | 536,059 | 485,837 | ||||||||||||||
Average common shareholders' equity | 32,200 | 31,836 | 28,471 | 31,184 | 25,393 | ||||||||||||||
Assets under administration (AUA) (5)(6) | 2,303,962 | 2,400,407 | 2,192,947 | 2,307,116 | 2,192,947 | ||||||||||||||
Assets under management (AUM) (6) | 225,379 | 232,915 | 221,571 | 225,379 | 221,571 | ||||||||||||||
Balance sheet quality (All-in basis) and liquidity measures | |||||||||||||||||||
Risk-weighted assets (RWA) ($ millions) | |||||||||||||||||||
Common Equity Tier 1 (CET1) capital RWA | $ | 216,144 | $ | 211,820 | $ | 203,321 | $ | 216,144 | $ | 203,321 | |||||||||
Tier 1 capital RWA | 216,303 | 211,968 | 203,321 | 216,303 | 203,321 | ||||||||||||||
Total capital RWA | 216,462 | 212,116 | 203,321 | 216,462 | 203,321 | ||||||||||||||
Capital ratios | |||||||||||||||||||
CET1 ratio | 11.4 | % | 11.3 | % | 10.6 | % | 11.4 | % | 10.6 | % | |||||||||
Tier 1 capital ratio | 12.9 | % | 12.8 | % | 12.1 | % | 12.9 | % | 12.1 | % | |||||||||
Total capital ratio | 14.9 | % | 14.8 | % | 13.8 | % | 14.9 | % | 13.8 | % | |||||||||
Basel III leverage ratio | |||||||||||||||||||
Leverage ratio exposure ($ millions) | $ | 653,946 | $ | 649,169 | $ | 610,353 | $ | 653,946 | $ | 610,353 | |||||||||
Leverage ratio | 4.3 | % | 4.2 | % | 4.0 | % | 4.3 | % | 4.0 | % | |||||||||
Liquidity coverage ratio (LCR) | 128 | % | 126 | % | 120 | % | n/a | n/a | |||||||||||
Other information | |||||||||||||||||||
Full-time equivalent employees | 44,220 | 45,091 | 44,928 | 44,220 | 44,928 | ||||||||||||||
(1) | For additional information, see the "Non-GAAP measures" section. | ||||||||||||||||||
(2) | The ratio is calculated as the provision for credit losses on impaired loans to average loans and acceptances, net of allowance for credit losses. In 2018, following our adoption of IFRS 9 on November 1, 2017, provision for credit losses on impaired loans (stage 3) is calculated in accordance with IFRS 9. 2017 and prior amounts were calculated in accordance with IAS 39. | ||||||||||||||||||
(3) | Excludes 60,764 restricted shares as at October 31, 2018 (July 31, 2018: 68,084; October 31, 2017: 190,285). | ||||||||||||||||||
(4) | Excludes 2,010,890 common that were issued and outstanding but which have not been acquired by a third party as at October 31, 2017. These shares were issued as a component of our acquisition of The PrivateBank. | ||||||||||||||||||
(5) | Includes the full contract amount of AUA or custody under a 50/50 joint venture between CIBC and The Bank of New York Mellon of $1,834.0 billion (July 31, 2018: $1,915.6 billion; October 31, 2017: $1,723.9 billion). | ||||||||||||||||||
(6) | AUM amounts are included in the amounts reported under AUA. | ||||||||||||||||||
n/a | Not applicable. | ||||||||||||||||||
Review of Canadian Personal and Small Business Banking fourth quarter results
2018 | 2018 | 2017 | ||||||||
$ millions, for the three months ended | Oct. 31 | Jul. 31 | Oct. 31 | |||||||
Revenue | ||||||||||
Personal and small business banking | $ | 2,190 | $ | 2,165 | $ | 2,086 | ||||
Other | 11 | 11 | 7 | |||||||
Total revenue | 2,201 | 2,176 | 2,093 | |||||||
Provision for credit losses | ||||||||||
Impaired (1) | 182 | 199 | 181 | |||||||
Performing (1) | 9 | - | 2 | |||||||
Total provision for credit losses | 191 | 199 | 183 | |||||||
Non-interest expenses | 1,100 | 1,105 | 1,161 | |||||||
Income before income taxes | 910 | 872 | 749 | |||||||
Income taxes | 242 | 233 | 198 | |||||||
Net income | $ | 668 | $ | 639 | $ | 551 | ||||
Net income attributable to: | ||||||||||
Equity shareholders (a) | $ | 668 | $ | 639 | $ | 551 | ||||
Efficiency ratio | 50.0 | % | 50.8 | % | 55.5 | % | ||||
Return on equity (2) | 68.9 | % | 66.7 | % | 57.8 | % | ||||
Charge for economic capital (2) (b) | $ | (95) | $ | (94) | $ | (93) | ||||
Economic profit (2) (a+b) | $ | 573 | $ | 545 | $ | 458 | ||||
Full-time equivalent employees | 14,086 | 14,425 | 14,709 | |||||||
(1) | As a result of our adoption of IFRS 9 effective November 1, 2017, we now recognize provision for credit losses on both impaired and performing loans in the SBU. In prior periods, provision for credit losses on performing loans was recognized in Corporate and Other, with the exception of provision for credit losses on: (i) performing residential mortgages greater than 90 days delinquent; and (ii) performing personal loans and scored small business loans greater than 30 days delinquent, which was recognized in Canadian Personal and Small Business Banking. | |||||||||
(2) | For additional information, see the "Non-GAAP measures" section. | |||||||||
Net income was $668 million, up $117 million from the fourth quarter of 2017. Adjusted net income (2) was $669 million, up $46 million from the fourth quarter of 2017.
Revenue of $2,201 million was up $108 million from the fourth quarter of 2017. Personal and small business banking revenue increased primarily due to favourable spreads, higher volumes and higher fees.
Provision for credit losses of $191 million was up $8 million from the fourth quarter of 2017, mainly due to a higher provision for credit losses on performing loans as a result of portfolio growth in the personal lending portfolio.
Non-interest expenses of $1,100 million were down $61 million from the fourth quarter of 2017, mainly due to fees and charges related to the launch of Simplii Financial and the related wind-down of President's Choice Financial in 2017, shown as an item of note, partially offset by higher spending on strategic initiatives.
Review of Canadian Commercial Banking and Wealth Management fourth quarter results
2018 | 2018 | 2017 | ||||||||
$ millions, for the three months ended | Oct. 31 | Jul. 31 | Oct. 31 | |||||||
Revenue | ||||||||||
Commercial banking | $ | 386 | $ | 389 | $ | 348 | ||||
Wealth management | 600 | 599 | 574 | |||||||
Total revenue | 986 | 988 | 922 | |||||||
Provision for (reversal of) credit losses | ||||||||||
Impaired (1) | 8 | 2 | 11 | |||||||
Performing (1) | (1) | (6) | n/a | |||||||
Total provision for (reversal of) credit loss | 7 | (4) | 11 | |||||||
Non-interest expenses | 521 | 513 | 520 | |||||||
Income before income taxes | 458 | 479 | 391 | |||||||
Income taxes | 125 | 129 | 104 | |||||||
Net income | $ | 333 | $ | 350 | $ | 287 | ||||
Net income attributable to: | ||||||||||
Equity shareholders (a) | $ | 333 | $ | 350 | $ | 287 | ||||
Efficiency ratio | 52.8 | % | 51.9 | % | 56.4 | % | ||||
Return on equity (2) | 39.6 | % | 41.7 | % | 37.1 | % | ||||
Charge for economic capital (2) (b) | $ | (82) | $ | (83) | $ | (76) | ||||
Economic profit (2) (a+b) | $ | 251 | $ | 267 | $ | 211 | ||||
Full-time equivalent employees | 4,999 | 5,060 | 5,081 | |||||||
(1) | As a result of our adoption of IFRS 9 effective November 1, 2017, we now recognize provision for credit losses on both impaired and performing loans in the SBU. In prior periods, provision for credit losses on performing loans was recognized in Corporate and Other. | |||||||||
(2) | For additional information, see the "Non-GAAP measures" section. | |||||||||
n/a | Not applicable. | |||||||||
Net income for the quarter was $333 million, up $46 million from the fourth quarter of 2017. Adjusted net income(2) was $334 million, up $46 million from the fourth quarter of 2017.
Revenue of $986 million was up $64 million from the fourth quarter of 2017, driven by strong lending and deposit growth in commercial banking, and growth in fee-based revenue in our wealth management businesses.
Provision for credit losses was down $4 million from the fourth quarter of 2017, primarily due to lower losses in the commercial banking portfolio.
Non-interest expenses of $521 million were comparable with the fourth quarter of 2017.
Review of U.S. Commercial Banking and Wealth Management fourth quarter results
2018 | 2018 | 2017 | ||||||||
$ millions, for the three months ended | Oct. 31 | Jul. 31 | Oct. 31(1) | |||||||
Revenue | ||||||||||
Commercial banking | $ | 311 | $ | 304 | $ | 290 | ||||
Wealth management | 148 | 144 | 119 | |||||||
Other | (2) | - | 13 | |||||||
Total revenue (2)(3) | 457 | 448 | 422 | |||||||
Provision for (reversal of) credit losses | ||||||||||
Impaired (4) | 22 | 28 | 15 | |||||||
Performing (4) | 18 | (14) | 33 | |||||||
Total provision for credit losses | 40 | 14 | 48 | |||||||
Non-interest expenses | 264 | 246 | 235 | |||||||
Income before income taxes | 153 | 188 | 139 | |||||||
Income taxes (2) | 22 | 26 | 32 | |||||||
Net income | $ | 131 | $ | 162 | $ | 107 | ||||
Net income attributable to: | ||||||||||
Equity shareholders (a) | $ | 131 | $ | 162 | $ | 107 | ||||
Efficiency ratio | 57.6 | % | 55.0 | % | 55.7 | % | ||||
Return on equity (5) | 7.2 | % | 9.1 | % | 6.4 | % | ||||
Charge for economic capital (5) (b) | $ | (172) | $ | (170) | $ | (156) | ||||
Economic profit (5) (a+b) | $ | (41) | $ | (8) | $ | (49) | ||||
Full-time equivalent employees | 1,947 | 1,926 | 1,753 | |||||||
(1) | Certain information was reclassified to conform to the funds transfer pricing methodology adopted in the first quarter of 2018 relating to CIBC Bank USA. | |||||||||
(2) | Revenue and income taxes are reported on a taxable equivalent basis (TEB) basis. Accordingly, revenue and income taxes include a TEB adjustment of nil for the quarter ended October 31, 2018 (July 31, 2018: $1 million; October 31, 2017: nil). The equivalent amounts are offset in the revenue and income taxes of Corporate and Other. | |||||||||
(3) | Included $9 million of accretion of the acquisition date fair value discount on the acquired loans of The PrivateBank, shown as an item of note, for the quarter ended October 31, 2018 (July 31, 2018: $12 million; October 31, 2017: $31 million). | |||||||||
(4) | As a result of our adoption of IFRS 9 effective November 1, 2017, we now recognize provision for credit losses on both impaired and performing loans in the SBU. In prior periods, provision for credit losses on performing loans other than that of CIBC Bank USA was recognized in Corporate and Other. | |||||||||
(5) | For additional information, see the "Non-GAAP measures" section. | |||||||||
Net income for the quarter was $131 million, up $24 million from the fourth quarter of 2017. Adjusted net income(5) was $139 million, up $20 million from the fourth quarter of 2017.
Revenue of $457 million was up $35 million from the fourth quarter of 2017, primarily due to loan growth and margin expansion at CIBC Bank USA.
Provision for credit losses of $40 million was down $8 million from the fourth quarter of 2017. The provision for credit losses on impaired loans was up due to higher losses in CIBC Bank USA. The provision for credit losses on performing loans was down, primarily due to the establishment of a collective allowance (prior to our adoption of IFRS 9) for new loan originations and renewals of acquired loans relating to CIBC Bank USA in the fourth quarter of 2017, shown as an item of note.
Non-interest expenses of $264 million were up $29 million from the fourth quarter of 2017, primarily due to higher spending on growth initiatives.
Review of Capital Markets fourth quarter results
2018 | 2018 | 2017 | ||||||||
$ millions, for the three months ended | Oct. 31 | Jul. 31 | Oct. 31 | |||||||
Revenue | ||||||||||
Global markets | $ | 371 | $ | 408 | $ | 299 | ||||
Corporate and investment banking | 281 | 350 | 326 | |||||||
Other | (3) | (6) | (3) | |||||||
Total revenue (1) | 649 | 752 | 622 | |||||||
Provision for (reversal of) credit losses | ||||||||||
Impaired (2) | 2 | 1 | - | |||||||
Performing (2) | (6) | (2) | n/a | |||||||
Total reversal of credit losses | (4) | (1) | - | |||||||
Non-interest expenses | 356 | 384 | 320 | |||||||
Income before income taxes | 297 | 369 | 302 | |||||||
Income taxes (1) | 64 | 104 | 80 | |||||||
Net income | $ | 233 | $ | 265 | $ | 222 | ||||
Net income attributable to: | ||||||||||
Equity shareholders (a) | $ | 233 | $ | 265 | $ | 222 | ||||
Efficiency ratio | 55.0 | % | 50.9 | % | 51.3 | % | ||||
Return on equity (3) | 35.3 | % | 39.1 | % | 30.0 | % | ||||
Charge for economic capital (3) (b) | $ | (65) | $ | (66) | $ | (72) | ||||
Economic profit (3) (a+b) | $ | 168 | $ | 199 | $ | 150 | ||||
Full-time equivalent employees | 1,396 | 1,416 | 1,314 | |||||||
(1) | Revenue and income taxes are reported on a TEB basis. Accordingly, revenue and income taxes include a TEB adjustment of $30 million for the quarter ended October 31, 2018 (July 31, 2018: $43 million; October 31, 2017: $37 million). The equivalent amounts are offset in the revenue and income taxes of Corporate and Other. | |||||||||
(2) | As a result of our adoption of IFRS 9 effective November 1, 2017, we now recognize provision for credit losses on both impaired and performing loans in the SBU. In prior periods, provision for credit losses on performing loans was recognized in Corporate and Other. | |||||||||
(3) | For additional information, see the "Non-GAAP measures" section. | |||||||||
n/a | Not applicable. | |||||||||
Net income for the quarter was $233 million, compared with net income of $222 million for the fourth quarter of 2017. Adjusted net income(3) for the quarter was $233 million, compared with $222 million for the prior year quarter.
Revenue of $649 million was up $27 million from the fourth quarter of 2017. In global markets, higher revenue from our equity derivatives, foreign exchange and interest rate trading businesses was partially offset by the movement in reserves related to derivative client exposures. In corporate and investment banking, lower investment portfolio revenue and lower debt underwriting revenue was partially offset by higher corporate banking and advisory revenue.
Reversal of credit losses was $4 million, compared with nil in the fourth quarter of 2017.
Non-interest expenses of $356 million were up $36 million from the fourth quarter of 2017, primarily due to higher performance and employee-related compensation.
Review of Corporate and Other fourth quarter results
2018 | 2018 | 2017 | ||||||
$ millions, for the three months ended | Oct. 31 | Jul. 31 | Oct. 31 | |||||
Revenue | ||||||||
International banking | $ | 127 | $ | 172 | $ | 183 | ||
Other | 32 | 11 | 27 | |||||
Total revenue (1) | 159 | 183 | 210 | |||||
Provision for (reversal of) credit losses | ||||||||
Impaired (2) | 45 | 44 | 5 | |||||
Performing (2) | (15) | (11) | (18) | |||||
Total provision for (reversal of) credit losses | 30 | 33 | (13) | |||||
Non-interest expenses | 350 | 324 | 334 | |||||
Loss before income taxes | (221) | (174) | (111) | |||||
Income taxes (1) | (124) | (127) | (108) | |||||
Net loss | $ | (97) | $ | (47) | $ | (3) | ||
Net income (loss) attributable to: | ||||||||
Non-controlling interests | $ | 2 | $ | 4 | $ | 5 | ||
Equity shareholders | (99) | (51) | (8) | |||||
Full-time equivalent employees | 21,792 | 22,264 | 22,071 | |||||
(1) | Revenue and income taxes of Capital Markets and U.S. Commercial Banking and Wealth Management are reported on a TEB basis. The equivalent amounts are offset in the revenue and income taxes of Corporate and Other. Accordingly, revenue and income taxes include a TEB adjustment of $30 million for the quarter ended October 31, 2018 (July 31, 2018: $44 million; October 31, 2017: $37 million). | ||||||||
(2) | As a result of our adoption of IFRS 9 effective November 1, 2017, we now recognize provision for credit losses on both impaired and performing loans in the SBUs. In prior periods, provision for credit losses on performing loans was recognized in Corporate and Other, with the exception of provision for credit losses related to CIBC Bank USA, which was recognized in U.S. Commercial Banking and Wealth Management, and provision for credit losses on: (i) performing residential mortgages greater than 90 days delinquent; and (ii) performing personal loans and scored small business loans greater than 30 days delinquent, which was recognized in Canadian Personal and Small Business Banking. Provision for credit losses related to CIBC FirstCaribbean continues to be recognized in Corporate and Other. | ||||||||
(3) | For additional information, see the "Non-GAAP measures" section. | ||||||||
Net loss for the quarter was $97 million, compared with a net loss of $3 million in the same quarter last year, primarily due to lower revenue, higher credit losses and higher non-interest expenses. Adjusted net loss (3) for the quarter was $11 million, compared with adjusted net income of $11 million for the prior year quarter.
Revenue of $159 million was down $51 million from the fourth quarter of 2017, primarily due to losses recognized on debt securities in CIBC FirstCaribbean as a result of the Barbados government debt restructuring.
Provision for credit losses was $30 million, compared with a reversal of credit losses of $13 million in the fourth quarter of 2017, primarily due to higher loan losses in CIBC FirstCaribbean resulting from the Barbados government debt restructuring noted above.
Non-interest expenses of $350 million were up $16 million from the fourth quarter of 2017, mainly due to increased spending on strategic initiatives.
Income tax benefit was up $16 million from the fourth quarter of 2017, mainly due to the tax impact of the items noted above.
Consolidated balance sheet
$ millions, as at October 31 | 2018 | 2017 | ||||||
ASSETS | ||||||||
Cash and non-interest-bearing deposits with banks | $ | 4,380 | $ | 3,440 | ||||
Interest-bearing deposits with banks | 13,311 | 10,712 | ||||||
Securities (1) | 101,664 | 93,419 | ||||||
Cash collateral on securities borrowed | 5,488 | 5,035 | ||||||
Securities purchased under resale agreements | 43,450 | 40,383 | ||||||
Loans | ||||||||
Residential mortgages | 207,749 | 207,271 | ||||||
Personal | 43,058 | 40,937 | ||||||
Credit card | 12,673 | 12,378 | ||||||
Business and government | 109,555 | 97,766 | ||||||
Allowance for credit losses | (1,639) | (1,618) | ||||||
371,396 | 356,734 | |||||||
Other | ||||||||
Derivative instruments | 21,431 | 24,342 | ||||||
Customers' liability under acceptances | 10,265 | 8,824 | ||||||
Land, buildings and equipment | 1,795 | 1,783 | ||||||
Goodwill | 5,564 | 5,367 | ||||||
Software and other intangible assets | 1,945 | 1,978 | ||||||
Investments in equity-accounted associates and joint ventures | 526 | 715 | ||||||
Deferred tax assets | 601 | 727 | ||||||
Other assets | 15,283 | 11,805 | ||||||
57,410 | 55,541 | |||||||
$ | 597,099 | $ | 565,264 | |||||
LIABILITIES AND EQUITY | ||||||||
Deposits | ||||||||
Personal | $ | 163,879 | $ | 159,327 | ||||
Business and government | 240,149 | 225,622 | ||||||
Bank | 14,380 | 13,789 | ||||||
Secured borrowings | 42,607 | 40,968 | ||||||
461,015 | 439,706 | |||||||
Obligations related to securities sold short | 13,782 | 13,713 | ||||||
Cash collateral on securities lent | 2,731 | 2,024 | ||||||
Obligations related to securities sold under repurchase agreements | 30,840 | 27,971 | ||||||
Other | ||||||||
Derivative instruments | 20,973 | 23,271 | ||||||
Acceptances | 10,296 | 8,828 | ||||||
Deferred tax liabilities | 43 | 30 | ||||||
Other liabilities | 18,223 | 15,275 | ||||||
49,535 | 47,404 | |||||||
Subordinated indebtedness | 4,080 | 3,209 | ||||||
Equity | ||||||||
Preferred shares | 2,250 | 1,797 | ||||||
Common shares | 13,243 | 12,548 | ||||||
Contributed surplus | 136 | 137 | ||||||
Retained earnings | 18,537 | 16,101 | ||||||
Accumulated other comprehensive income (AOCI) | 777 | 452 | ||||||
Total shareholders' equity | 34,943 | 31,035 | ||||||
Non-controlling interests | 173 | 202 | ||||||
Total equity | 35,116 | 31,237 | ||||||
$ | 597,099 | $ | 565,264 | |||||
(1) | Securities balances have been aggregated in the current year, with prior periods amended to reflect this presentation. See Note 4 to the consolidated financial statements in our 2018 Annual Report, for additional details. | |||||||
Consolidated statement of income
For the three | For the twelve | |||||||||||||||
months ended | months ended | |||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
$ millions, except as noted | Oct. 31 | Jul. 31 | Oct. 31 | Oct. 31 | Oct. 31 | |||||||||||
Interest income | ||||||||||||||||
Loans | $ | 3,764 | $ | 3,598 | $ | 3,143 | $ | 13,901 | $ | 11,028 | ||||||
Securities | 583 | 612 | 479 | 2,269 | 1,890 | |||||||||||
Securities borrowed or purchased under resale agreements | 310 | 273 | 148 | 1,053 | 495 | |||||||||||
Deposits with banks | 79 | 73 | 55 | 282 | 180 | |||||||||||
4,736 | 4,556 | 3,825 | 17,505 | 13,593 | ||||||||||||
Interest expense | ||||||||||||||||
Deposits | 1,852 | 1,659 | 1,174 | 6,240 | 3,953 | |||||||||||
Securities sold short | 75 | 67 | 64 | 272 | 226 | |||||||||||
Securities lent or sold under repurchase agreements | 224 | 200 | 73 | 736 | 254 | |||||||||||
Subordinated indebtedness | 43 | 49 | 38 | 174 | 142 | |||||||||||
Other | 3 | 4 | 12 | 18 | 41 | |||||||||||
2,197 | 1,979 | 1,361 | 7,440 | 4,616 | ||||||||||||
Net interest income | 2,539 | 2,577 | 2,464 | 10,065 | 8,977 | |||||||||||
Non-interest income | ||||||||||||||||
Underwriting and advisory fees | 91 | 138 | 116 | 420 | 452 | |||||||||||
Deposit and payment fees | 223 | 217 | 214 | 877 | 843 | |||||||||||
Credit fees | 212 | 219 | 199 | 851 | 744 | |||||||||||
Card fees | 128 | 125 | 119 | 510 | 463 | |||||||||||
Investment management and custodial fees | 328 | 314 | 284 | 1,247 | 1,034 | |||||||||||
Mutual fund fees | 406 | 410 | 396 | 1,624 | 1,573 | |||||||||||
Insurance fees, net of claims | 105 | 109 | 107 | 431 | 427 | |||||||||||
Commissions on securities transactions | 89 | 85 | 86 | 357 | 349 | |||||||||||
Gains from financial instruments measured/designated at fair value | ||||||||||||||||
through profit or loss (FVTPL), net (2017: Trading income and | ||||||||||||||||
designated at fair value (FVO) gains, net) | 191 | 152 | 40 | (1) | 603 | 227 | (1) | |||||||||
Gains (losses) from debt securities measured at fair value through other | ||||||||||||||||
comprehensive income (FVOCI) and amortized cost, net (2017: | ||||||||||||||||
Available-for-sale (AFS) securities gains, net) | (58) | (9) | 37 | (35) | 143 | |||||||||||
Foreign exchange other than trading | 64 | 66 | 59 | 310 | 252 | |||||||||||
Income from equity-accounted associates and joint ventures | 27 | 36 | 26 | 121 | 101 | |||||||||||
Other | 107 | 108 | 122 | 453 | 695 | |||||||||||
1,913 | 1,970 | 1,805 | 7,769 | 7,303 | ||||||||||||
Total revenue | 4,452 | 4,547 | 4,269 | 17,834 | 16,280 | |||||||||||
Provision for credit losses | 264 | 241 | 229 | 870 | 829 | |||||||||||
Non-interest expenses | ||||||||||||||||
Employee compensation and benefits | 1,353 | 1,437 | 1,316 | 5,665 | 5,198 | |||||||||||
Occupancy costs | 228 | 218 | 215 | 875 | 822 | |||||||||||
Computer, software and office equipment | 467 | 441 | 450 | 1,742 | 1,630 | |||||||||||
Communications | 78 | 77 | 78 | 315 | 317 | |||||||||||
Advertising and business development | 95 | 83 | 89 | 327 | 282 | |||||||||||
Professional fees | 71 | 55 | 71 | 226 | 229 | |||||||||||
Business and capital taxes | 26 | 27 | 26 | 103 | 96 | |||||||||||
Other | 273 | 234 | 325 | 1,005 | 997 | |||||||||||
2,591 | 2,572 | 2,570 | 10,258 | 9,571 | ||||||||||||
Income before income taxes | 1,597 | 1,734 | 1,470 | 6,706 | 5,880 | |||||||||||
Income taxes | 329 | 365 | 306 | 1,422 | 1,162 | |||||||||||
Net income | $ | 1,268 | $ | 1,369 | $ | 1,164 | $ | 5,284 | $ | 4,718 | ||||||
Net income attributable to non-controlling interests | $ | 2 | $ | 4 | $ | 5 | $ | 17 | $ | 19 | ||||||
Preferred shareholders | $ | 24 | $ | 23 | $ | 24 | $ | 89 | $ | 52 | ||||||
Common shareholders | 1,242 | 1,342 | 1,135 | 5,178 | 4,647 | |||||||||||
Net income attributable to equity shareholders | $ | 1,266 | $ | 1,365 | $ | 1,159 | $ | 5,267 | $ | 4,699 | ||||||
Earnings per share (in dollars) | ||||||||||||||||
Basic | $ | 2.81 | $ | 3.02 | $ | 2.60 | $ | 11.69 | $ | 11.26 | ||||||
Diluted | 2.80 | 3.01 | 2.59 | 11.65 | 11.24 | |||||||||||
Dividends per common share (in dollars) | 1.36 | 1.33 | 1.30 | 5.32 | 5.08 | |||||||||||
(1) | Reclassified to conform to the presentation adopted in the current year. | |||||||||||||||
Consolidated statement of comprehensive income
For the three | For the twelve | ||||||||||||
months ended | months ended | ||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | |||||||||
$ millions | Oct. 31 | Jul. 31 | Oct. 31 | Oct. 31 | Oct. 31 | ||||||||
Net income | $ | 1,268 | $ | 1,369 | $ | 1,164 | $ | 5,284 | $ | 4,718 | |||
Other comprehensive income (OCI), net of income tax, that is subject to subsequent | |||||||||||||
reclassification to net income | |||||||||||||
Net foreign currency translation adjustments | |||||||||||||
Net gains (losses) on investments in foreign operations | 340 | 435 | 1,084 | 635 | (1,148) | ||||||||
Net gains (losses) on hedges of investments in foreign operations | (159) | (284) | (653) | (349) | 772 | ||||||||
181 | 151 | 431 | 286 | (376) | |||||||||
Net change in debt securities measured at FVOCI (2017: AFS debt and | |||||||||||||
equity securities) | |||||||||||||
Net gains (losses) on securities measured at FVOCI | (28) | (27) | 6 | (142) | 6 | ||||||||
Net (gains) losses reclassified to net income | - | (4) | (30) | (29) | (107) | ||||||||
(28) | (31) | (24) | (171) | (101) | |||||||||
Net change in cash flow hedges | |||||||||||||
Net gains (losses) on derivatives designated as cash flow hedges | (66) | 62 | 20 | (25) | 70 | ||||||||
Net (gains) losses reclassified to net income | 38 | (52) | (14) | (26) | (60) | ||||||||
(28) | 10 | 6 | (51) | 10 | |||||||||
OCI, net of income tax, that is not subject to subsequent reclassification to net income | |||||||||||||
Net gains (losses) on post-employment defined benefit plans | (95) | 219 | (125) | 226 | 139 | ||||||||
Net gains (losses) due to fair value change of FVO liabilities attributable | |||||||||||||
to changes in credit risk | (8) | 8 | (3) | (2) | (10) | ||||||||
Net gains (losses) on equity securities designated at FVOCI | 10 | 1 | n/a | 29 | n/a | ||||||||
Total OCI (1) | 32 | 358 | 285 | 317 | (338) | ||||||||
Comprehensive income | $ | 1,300 | $ | 1,727 | $ | 1,449 | $ | 5,601 | $ | 4,380 | |||
Comprehensive income attributable to non-controlling interests | $ | 2 | $ | 4 | $ | 5 | $ | 17 | $ | 19 | |||
Preferred shareholders | $ | 24 | $ | 23 | $ | 24 | $ | 89 | $ | 52 | |||
Common shareholders | 1,274 | 1,700 | 1,420 | 5,495 | 4,309 | ||||||||
Comprehensive income attributable to equity shareholders | $ | 1,298 | $ | 1,723 | $ | 1,444 | $ | 5,584 | $ | 4,361 | |||
(1) | Includes $3 million of losses for the quarter ended October 31, 2018 (July 31, 2018: $4 million; October 31, 2017: $7 million), relating to our investments in equity-accounted associates and joint ventures. | |||||||||||||
n/a | Not applicable. | |||||||||||||
For the three | For the twelve | ||||||||||||
months ended | months ended | ||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | |||||||||
$ millions | Oct. 31 | Jul.31 | Oct. 31 | Oct. 31 | Oct. 31 | ||||||||
Income tax (expense) benefit allocated to each component of OCI | |||||||||||||
Subject to subsequent reclassification to net income | |||||||||||||
Net foreign currency translation adjustments | |||||||||||||
Net gains (losses) on investments in foreign operations | $ | (2) | $ | (33) | $ | (34) | $ | (31) | $ | 42 | |||
Net gains (losses) on hedges of investments in foreign operations | 5 | 41 | 136 | 43 | (170) | ||||||||
3 | 8 | 102 | 12 | (128) | |||||||||
Net change in debt securities measured at FVOCI (2017: AFS debt and | |||||||||||||
equity securities) | |||||||||||||
Net gains (losses) on securities measured at FVOCI | 7 | (1) | (8) | 18 | (23) | ||||||||
Net (gains) losses reclassified to net income | - | 1 | 7 | 8 | 36 | ||||||||
7 | - | (1) | 26 | 13 | |||||||||
Net change in cash flow hedges | |||||||||||||
Net gains (losses) on derivatives designated as cash flow hedges | 22 | (21) | (5) | 8 | (23) | ||||||||
Net (gains) losses reclassified to net income | (14) | 18 | 5 | 9 | 22 | ||||||||
8 | (3) | - | 17 | (1) | |||||||||
Not subject to subsequent reclassification to net income | |||||||||||||
Net gains (losses) on post-employment defined benefit plans | 30 | (79) | 42 | (87) | (54) | ||||||||
Net gains (losses) due to fair value change of FVO liabilities attributable | |||||||||||||
to changes in credit risk | 3 | (3) | 1 | 1 | 4 | ||||||||
Net gains (losses) on equity securities designated at FVOCI | (4) | (1) | n/a | (11) | n/a | ||||||||
$ | 47 | $ | (78) | $ | 144 | $ | (42) | $ | (166) | ||||
n/a | Not applicable. | |||||||||||||
Consolidated statement of changes in equity
For the three | For the twelve | |||||||||||
months ended | months ended | |||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||
$ millions | Oct. 31 | Jul. 31 | Oct. 31 | Oct. 31 | Oct. 31 | |||||||
Preferred shares | ||||||||||||
Balance at beginning of period | $ | 2,250 | $ | 2,248 | $ | 1,796 | $ | 1,797 | $ | 1,000 | ||
Issue of preferred shares | - | - | - | 450 | 800 | |||||||
Treasury shares | - | 2 | 1 | 3 | (3) | |||||||
Balance at end of period | $ | 2,250 | $ | 2,250 | $ | 1,797 | $ | 2,250 | $ | 1,797 | ||
Common shares | ||||||||||||
Balance at beginning of period | $ | 13,201 | $ | 13,166 | $ | 12,197 | $ | 12,548 | $ | 8,026 | ||
Issued pursuant to the acquisition of The PrivateBank | - | - | - | 194 | 3,443 | |||||||
Issued pursuant to the acquisition of Geneva Advisors | - | - | 126 | - | 126 | |||||||
Issued pursuant to the acquisition of Wellington Financial | - | - | - | 47 | - | |||||||
Other issue of common shares | 94 | 94 | 241 | 555 | 957 | |||||||
Purchase of common shares for cancellation | (52) | (52) | - | (104) | - | |||||||
Treasury shares | - | (7) | (16) | 3 | (4) | |||||||
Balance at end of period | $ | 13,243 | $ | 13,201 | $ | 12,548 | $ | 13,243 | $ | 12,548 | ||
Contributed surplus | ||||||||||||
Balance at beginning of period | $ | 133 | $ | 137 | $ | 137 | $ | 137 | $ | 72 | ||
Issue of replacement equity-settled awards pursuant to the acquisition of The PrivateBank | - | - | - | - | 72 | |||||||
Compensation expense arising from equity-settled share-based awards | 8 | 9 | 3 | 31 | 7 | |||||||
Exercise of stock options and settlement of other equity-settled share-based awards | (4) | (14) | (3) | (32) | (15) | |||||||
Other | (1) | 1 | - | - | 1 | |||||||
Balance at end of period | $ | 136 | $ | 133 | $ | 137 | $ | 136 | $ | 137 | ||
Retained earnings | ||||||||||||
Balance at beginning of period under IAS 39 | n/a | n/a | $ | 15,535 | $ | 16,101 | $ | 13,584 | ||||
Impact of adopting IFRS 9 at November 1, 2017 | n/a | n/a | n/a | (144) | n/a | |||||||
Balance at beginning of period under IFRS 9 | $ | 18,051 | $ | 17,412 | n/a | 15,957 | n/a | |||||
Net income attributable to equity shareholders | 1,266 | 1,365 | 1,159 | 5,267 | 4,699 | |||||||
Dividends | ||||||||||||
Preferred | (24) | (23) | (24) | (89) | (52) | |||||||
Common | (602) | (589) | (569) | (2,356) | (2,121) | |||||||
Premium on purchase of common shares for cancellation | (163) | (150) | - | (313) | - | |||||||
Realized gains (losses) on equity securities designated at FVOCI reclassified from AOCI | 1 | 15 | n/a | 49 | n/a | |||||||
Other | 8 | (1) | 21 | (1) | - | 22 | (1) | (9) | ||||
Balance at end of period | $ | 18,537 | $ | 18,051 | $ | 16,101 | $ | 18,537 | $ | 16,101 | ||
AOCI, net of income tax | ||||||||||||
AOCI, net of income tax, that is subject to subsequent reclassification to net income | ||||||||||||
Net foreign currency translation adjustments | ||||||||||||
Balance at beginning of period | $ | 843 | $ | 692 | $ | 307 | $ | 738 | $ | 1,114 | ||
Net change in foreign currency translation adjustments | 181 | 151 | 431 | 286 | (376) | |||||||
Balance at end of period | $ | 1,024 | $ | 843 | $ | 738 | $ | 1,024 | $ | 738 | ||
Net gains (losses) on debt securities measured at FVOCI (2017: AFS debt and equity securities) | ||||||||||||
Balance at beginning of period under IAS 39 | n/a | n/a | $ | 84 | $ | 60 | $ | 161 | ||||
Impact of adopting IFRS 9 at November 1, 2017 | n/a | n/a | n/a | (28) | n/a | |||||||
Balance at beginning of period under IFRS 9 | $ | (111) | $ | (80) | n/a | 32 | n/a | |||||
Net change in securities measured at FVOCI | (28) | (31) | (24) | (171) | (101) | |||||||
Balance at end of period | $ | (139) | $ | (111) | $ | 60 | $ | (139) | $ | 60 | ||
Net gains (losses) on cash flow hedges | ||||||||||||
Balance at beginning of period | $ | 10 | $ | - | $ | 27 | $ | 33 | $ | 23 | ||
Net change in cash flow hedges | (28) | 10 | 6 | (51) | 10 | |||||||
Balance at end of period | $ | (18) | $ | 10 | $ | 33 | $ | (18) | $ | 33 | ||
AOCI, net of income tax, that is not subject to subsequent reclassification to net income | ||||||||||||
Net gains (losses) on post-employment defined benefit plans | ||||||||||||
Balance at beginning of period | $ | (48) | $ | (267) | $ | (244) | $ | (369) | $ | (508) | ||
Net change in post-employment defined benefit plans | (95) | 219 | (125) | 226 | 139 | |||||||
Balance at end of period | $ | (143) | $ | (48) | $ | (369) | $ | (143) | $ | (369) | ||
Net gains (losses) due to fair value change of FVO liabilities attributable to changes in credit risk | ||||||||||||
Balance at beginning of period | $ | (4) | $ | (12) | $ | (7) | $ | (10) | $ | - | ||
Net change attributable to changes in credit risk | (8) | 8 | (3) | (2) | (10) | |||||||
Balance at end of period | $ | (12) | $ | (4) | $ | (10) | $ | (12) | $ | (10) | ||
Net gains (losses) on equity securities designated at FVOCI | ||||||||||||
Impact of adopting IFRS 9 at November 1, 2017 | n/a | n/a | n/a | $ | 85 | n/a | ||||||
Balance at beginning of period under IFRS 9 | $ | 56 | $ | 70 | n/a | 85 | n/a | |||||
Net gains (losses) on equity securities designated at FVOCI | 10 | 1 | n/a | 29 | n/a | |||||||
Realized gains (losses) on equity securities designated at FVOCI reclassified to retained earnings (2) | (1) | (15) | n/a | (49) | n/a | |||||||
Balance at end of period | $ | 65 | $ | 56 | n/a | $ | 65 | n/a | ||||
Total AOCI, net of income tax | $ | 777 | $ | 746 | $ | 452 | $ | 777 | $ | 452 | ||
Non-controlling interests | ||||||||||||
Balance at beginning of period | n/a | n/a | $ | 190 | $ | 202 | $ | 201 | ||||
Impact of adopting IFRS 9 at November 1, 2017 | n/a | n/a | n/a | (4) | n/a | |||||||
Balance at beginning of period under IFRS 9 | $ | 173 | $ | 180 | n/a | 198 | n/a | |||||
Net income (loss) attributable to non-controlling interests | 2 | 4 | 5 | 17 | 19 | |||||||
Dividends | (2) | (4) | - | (31) | (8) | |||||||
Other | - | (7) | 7 | (11) | (10) | |||||||
Balance at end of period | $ | 173 | $ | 173 | $ | 202 | $ | 173 | $ | 202 | ||
Equity at end of period | $ | 35,116 | $ | 34,554 | $ | 31,237 | $ | 35,116 | $ | 31,237 | ||
(1) | Includes the recognition of loss carryforwards relating to foreign exchange translation amounts on CIBC's net investment in foreign operations that were previously reclassified to retained earnings as part of our transition to IFRS in 2012. | ||||||||||||||
(2) | Includes $1 million of gains reclassified to retained earnings for the quarter ended October 31, 2018 (July 31, 2018: $8 million of losses; October 31, 2017: n/a), relating to our investments in equity-accounted associates and joint ventures. | ||||||||||||||
n/a | Not applicable. | ||||||||||||||
Consolidated statement of cash flows
For the three | For the twelve | ||||||||||||||
months ended | months ended | ||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||
$ millions | Oct. 31 | Jul. 31 | Oct.31 | Oct. 31 | Oct. 31 | ||||||||||
Cash flows provided by (used in) operating activities | |||||||||||||||
Net income | $ | 1,268 | $ | 1,369 | $ | 1,164 | $ | 5,284 | $ | 4,718 | |||||
Adjustments to reconcile net income to cash flows provided by (used in) operating activities: | |||||||||||||||
Provision for credit losses | 264 | 241 | 229 | 870 | 829 | ||||||||||
Amortization and impairment (1) | 162 | 167 | 152 | 657 | 542 | ||||||||||
Stock options and restricted shares expense | 8 | 9 | 3 | 31 | 7 | ||||||||||
Deferred income taxes | (33) | (8) | 30 | 69 | 21 | ||||||||||
Losses (gains) from debt securities measured at FVOCI and amortized cost | |||||||||||||||
(2017: AFS debt and equity securities (gains), net) | 58 | 9 | (37) | 35 | (143) | ||||||||||
Net losses (gains) on disposal of land, buildings and equipment | - | (2) | 1 | (14) | (305) | ||||||||||
Other non-cash items, net | 10 | (79) | (32) | (292) | (15) | ||||||||||
Net changes in operating assets and liabilities | |||||||||||||||
Interest-bearing deposits with banks | 827 | (2,215) | 4,998 | (2,599) | 394 | ||||||||||
Loans, net of repayments | (4,999) | (1,971) | (7,392) | (16,155) | (30,547) | ||||||||||
Deposits, net of withdrawals | 1,151 | 10,502 | (938) | 20,770 | 18,407 | ||||||||||
Obligations related to securities sold short | 1,630 | (1,573) | 1,131 | 69 | 3,375 | ||||||||||
Accrued interest receivable | (176) | 37 | (144) | (341) | (34) | ||||||||||
Accrued interest payable | 126 | (11) | 152 | 205 | 90 | ||||||||||
Derivative assets | 467 | 2,047 | 2,097 | 2,780 | 3,588 | ||||||||||
Derivative liabilities | (800) | (526) | (4,881) | (2,084) | (5,549) | ||||||||||
Securities measured at FVTPL (2017: Trading and FVO securities) | (1,786) | 1,691 | (2,611) | (647) | (657) | ||||||||||
Other assets and liabilities designated at fair value (2017: Other FVO assets | |||||||||||||||
and liabilities) | (452) | 1,021 | (234) | (380) | 1,071 | ||||||||||
Current income taxes | 22 | 61 | (17) | (301) | (1,063) | ||||||||||
Cash collateral on securities lent | 269 | 471 | (37) | 707 | (494) | ||||||||||
Obligations related to securities sold under repurchase agreements | (2,145) | (5,388) | 5,418 | 2,869 | 16,277 | ||||||||||
Cash collateral on securities borrowed | (405) | 1,257 | 831 | (453) | 398 | ||||||||||
Securities purchased under resale agreements | 1,945 | (1,776) | 273 | (1,195) | (10,556) | ||||||||||
Other, net | 1,377 | (3,461) | 1,842 | (18) | 2,103 | ||||||||||
(1,212) | 1,872 | 1,998 | 9,867 | 2,457 | |||||||||||
Cash flows provided by (used in) financing activities | |||||||||||||||
Issue of subordinated indebtedness | - | 34 | - | 1,534 | - | ||||||||||
Redemption/repurchase/maturity of subordinated indebtedness | (19) | (619) | - | (638) | (55) | ||||||||||
Issue of preferred shares, net of issuance cost | - | - | - | 445 | 792 | ||||||||||
Issue of common shares for cash | 43 | 34 | 38 | 186 | 194 | ||||||||||
Purchase of common shares for cancellation | (215) | (202) | - | (417) | - | ||||||||||
Net sale (purchase) of treasury shares | - | (5) | (15) | 6 | (7) | ||||||||||
Dividends paid | (579) | (566) | (393) | (2,109) | (1,425) | ||||||||||
(770) | (1,324) | (370) | (993) | (501) | |||||||||||
Cash flows provided by (used in) investing activities | |||||||||||||||
Purchase of securities measured/designated at FVOCI and amortized cost | |||||||||||||||
(2017: Purchase of AFS securities) | (8,676) | (8,797) | (8,975) | (33,011) | (37,864) | ||||||||||
Proceeds from sale of securities measured/designated at FVOCI and amortized cost | |||||||||||||||
(2017: Proceeds from sale of AFS securities) | 6,865 | 3,277 | 1,923 | 12,992 | 18,787 | ||||||||||
Proceeds from maturity of debt securities measured at FVOCI and amortized cost | |||||||||||||||
(2017: Proceeds from maturity of AFS securities) | 4,619 | 3,467 | 4,645 | 12,402 | 19,368 | ||||||||||
Cash used in acquisitions, net of cash acquired | - | - | (27) | (315) | (2,517) | ||||||||||
Net cash provided by dispositions of investments in equity-accounted associates and | |||||||||||||||
joint ventures | - | 51 | 40 | 200 | 60 | ||||||||||
Net sale (purchase) of land, buildings and equipment | (132) | (38) | (66) | (255) | 201 | ||||||||||
2,676 | (2,040) | (2,460) | (7,987) | (1,965) | |||||||||||
Effect of exchange rate changes on cash and non-interest-bearing deposits with banks | 23 | 43 | 65 | 53 | (51) | ||||||||||
Net increase (decrease) in cash and non-interest-bearing deposits with banks | |||||||||||||||
during the period | 717 | (1,449) | (767) | 940 | (60) | ||||||||||
Cash and non-interest-bearing deposits with banks at beginning of period | 3,663 | 5,112 | 4,207 | 3,440 | 3,500 | ||||||||||
Cash and non-interest-bearing deposits with banks at end of period (2) | $ | 4,380 | $ | 3,663 | $ | 3,440 | $ | 4,380 | $ | 3,440 | |||||
Cash interest paid | $ | 2,071 | $ | 1,990 | $ | 1,209 | $ | 7,235 | $ | 4,526 | |||||
Cash interest received | 4,402 | 4,407 | 3,491 | 16,440 | 12,611 | ||||||||||
Cash dividends received | 158 | 186 | 191 | 724 | 949 | ||||||||||
Cash income taxes paid | 340 | 312 | 293 | 1,654 | 2,204 | ||||||||||
(1) | Comprises amortization and impairment of buildings, furniture, equipment, leasehold improvements, and software and other intangible assets. | ||||||||||||||||||
(2) | Includes restricted balance of $438 million (July 31, 2018: $407 million; October 31, 2017: $436 million). | ||||||||||||||||||
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 International Financial Reporting Standards (IFRS or 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 measures useful in understanding how management views underlying business performance.
The following table provides a quarterly reconciliation of non-GAAP to GAAP measures related to CIBC on a consolidated basis. For a more detailed discussion and for an annual reconciliation of non-GAAP to GAAP measures, see the "Non-GAAP measures" section of CIBC's 2018 Annual Report.
As at or for the | As at or for the | |||||||||||||||||
three months ended | twelve months ended | |||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
$ millions | Oct. 31 | Jul. 31 | Oct. 31 | Oct. 31 | Oct. 31 | |||||||||||||
Reported and adjusted diluted EPS | ||||||||||||||||||
Reported net income attributable to common shareholders | A | $ | 1,242 | $ | 1,342 | $ | 1,135 | $ | 5,178 | $ | 4,647 | |||||||
After-tax impact of items of note (1) | 91 | 30 | 99 | 252 | (53) | |||||||||||||
Adjusted net income attributable to common shareholders (2) | B | $ | 1,333 | $ | 1,372 | $ | 1,234 | $ | 5,430 | $ | 4,594 | |||||||
Diluted weighted-average common shares outstanding (thousands) | C | 444,504 | 445,504 | 438,556 | 444,627 | 413,563 | ||||||||||||
Reported diluted EPS ($) | A/C | $ | 2.80 | $ | 3.01 | $ | 2.59 | $ | 11.65 | $ | 11.24 | |||||||
Adjusted diluted EPS ($) (2) | B/C | 3.00 | 3.08 | 2.81 | 12.21 | 11.11 | ||||||||||||
Reported and adjusted return on common shareholders' equity | ||||||||||||||||||
Average common shareholders' equity | D | $ | 32,200 | $ | 31,836 | $ | 28,471 | $ | 31,184 | $ | 25,393 | |||||||
Reported return on common shareholders' equity | A/D | (3) | 15.3 | % | 16.7 | % | 15.8 | % | 16.6 | % | 18.3 | % | ||||||
Adjusted return on common shareholders' equity (2) | B/D | (3) | 16.4 | % | 17.1 | % | 17.2 | % | 17.4 | % | 18.1 | % | ||||||
Canadian | U.S. | ||||||||||||||
Canadian | Commercial | Commercial | |||||||||||||
Personal and | Banking and | Banking and | |||||||||||||
Small Business | Wealth | Wealth | Capital | Corporate | CIBC | ||||||||||
$ millions, for the three months ended | Banking | Management | Management | Markets | and Other | Total | |||||||||
Oct. 31 | Reported net income (loss) | $ | 668 | $ | 333 | $ | 131 | $ | 233 | $ | (97) | $ | 1,268 | ||
2018 | After-tax impact of items of note (1) | 1 | 1 | 8 | - | 86 | 96 | ||||||||
Adjusted net income (loss) (2) | $ | 669 | $ | 334 | $ | 139 | $ | 233 | $ | (11) | $ | 1,364 | |||
Jul. 31 | Reported net income (loss) | $ | 639 | $ | 350 | $ | 162 | $ | 265 | $ | (47) | $ | 1,369 | ||
2018 | After-tax impact of items of note (1) | 4 | - | 9 | - | 17 | 30 | ||||||||
Adjusted net income (loss) (2) | $ | 643 | $ | 350 | $ | 171 | $ | 265 | $ | (30) | $ | 1,399 | |||
Oct. 31 | Reported net income (loss) | $ | 551 | $ | 287 | $ | 107 | $ | 222 | $ | (3) | $ | 1,164 | ||
2017 | After-tax impact of items of note (1) | 72 | 1 | 12 | - | 14 | 99 | ||||||||
Adjusted net income (2) | $ | 623 | $ | 288 | $ | 119 | $ | 222 | $ | 11 | $ | 1,263 | |||
$ millions, for the twelve months ended | |||||||||||||||
Oct. 31 | Reported net income (loss) | $ | 2,547 | $ | 1,307 | $ | 565 | $ | 1,069 | $ | (204) | $ | 5,284 | ||
2018 | After-tax impact of items of note (1) | 9 | 1 | 27 | - | 220 | 257 | ||||||||
Adjusted net income (2) | $ | 2,556 | $ | 1,308 | $ | 592 | $ | 1,069 | $ | 16 | $ | 5,541 | |||
Oct. 31 | Reported net income (loss) | $ | 2,420 | $ | 1,138 | $ | 203 | $ | 1,090 | $ | (133) | $ | 4,718 | ||
2017 | After-tax impact of items of note (1) | (170) | 1 | 19 | - | 97 | (53) | ||||||||
Adjusted net income (loss) (2) | $ | 2,250 | $ | 1,139 | $ | 222 | $ | 1,090 | $ | (36) | $ | 4,665 | |||
(1) | Reflects impact of items of note under the "Financial results" section of the 2018 Annual Report. | ||||||||||||||||||||||||||||||||
(2) | Non-GAAP measure. | ||||||||||||||||||||||||||||||||
(3) | Annualized. | ||||||||||||||||||||||||||||||||
Items of note
For the three | For the twelve | |||||||||||
months ended | months ended | |||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||
$ millions | Oct. 31 | Jul. 31 | Oct. 31 | Oct. 31 | Oct. 31 | |||||||
Gain on the sale and lease back of certain retail properties | $ | - | $ | - | $ | - | $ | - | $ | (299) | ||
Amortization of acquisition-related intangible assets | 26 | 31 | 19 | 115 | 41 | |||||||
Incremental losses on debt securities and loans in CIBC FirstCaribbean resulting from the Barbados government | ||||||||||||
debt restructuring | 89 | - | - | 89 | - | |||||||
Fees and charges related to the launch of Simplii Financial and the related wind-down of President's Choice Financial | - | - | 98 | - | 98 | |||||||
Transaction and integration-related costs as well as purchase accounting adjustments associated with the | ||||||||||||
acquisitions of The PrivateBank and Geneva Advisors (1) | 8 | 9 | 46 | 16 | 104 | |||||||
Increase in legal provisions | - | - | - | - | 45 | |||||||
Increase (decrease) in collective allowance recognized in Corporate and Other (2) | - | - | (18) | - | (18) | |||||||
Pre-tax impact of items of note on net income | 123 | 40 | 145 | 220 | (29) | |||||||
Income tax impact on above items of note | (27) | (10) | (46) | (51) | (24) | |||||||
Charge from net tax adjustments resulting from U.S. tax reforms | - | - | - | 88 | - | |||||||
After-tax impact of items of note on net income | $ | 96 | $ | 30 | $ | 99 | $ | 257 | $ | (53) | ||
After-tax impact of items of note on non-controlling interests | (5) | - | - | (5) | - | |||||||
After-tax impact of items of note on net income attributable to common shareholders | 91 | 30 | 99 | 252 | (53) | |||||||
(1) | Transaction costs include legal and other advisory fees, financing costs associated with pre-funding the cash component of the merger consideration, and interest adjustments relating to the obligation payable to dissenting shareholders. Integration costs are comprised of direct and incremental costs incurred as part of planning for and executing the integration of the businesses of The PrivateBank (subsequently rebranded as CIBC Bank USA) and Geneva Advisors with CIBC, including enabling cross-sell opportunities and expansion of services in the U.S. market, the upgrade and conversion of systems and processes, project management, integration-related travel, severance, consulting fees and marketing costs related to rebranding activities. Purchase accounting adjustments, included as items of note beginning in the fourth quarter of 2017, include the accretion of the acquisition date fair value discount on the acquired loans of The PrivateBank, the collective allowance established for new loan originations and renewals of acquired loans (prior to the adoption of IFRS 9 in the first quarter of 2018), and changes in the fair value of contingent consideration relating to the Geneva Advisors acquisition. | |||||||||||||
(2) | Relates to collective allowance (prior to the adoption of IFRS 9), except for: (i) residential mortgages greater than 90 days delinquent; (ii) personal loans and scored small business loans greater than 30 days delinquent; (iii) net write-offs for the card portfolio; and (iv) the collective allowance related to CIBC Bank USA, which are all reported in the respective SBUs. | |||||||||||||
Basis of presentation
The interim consolidated financial information in this news release is prepared in accordance with IFRS and is unaudited whereas the annual consolidated financial information is derived from audited financial statements. These interim consolidated financial statements follow the same accounting policies and methods of application as CIBC's consolidated financial statements as at and for the year ended October 31, 2018.
Conference Call/Webcast
The conference call will be held at 8:00 a.m. (ET) and is available in English (416-340-2217, or toll-free 1-800-806-5484, passcode 8660945#) and French (514-861-2255, or toll-free 1-877-405-9213, passcode 1105464#). Participants are asked to dial in 10 minutes before the call. Immediately following the formal presentations, CIBC executives will be available to answer questions.
A live audio webcast of the conference call will also be available in English and French at www.cibc.com/en/about-cibc/investor-relations/quarterly-results.html
Details of CIBC's 2018 fourth quarter and fiscal year results, as well as a presentation to investors, will be available in English and French at www.cibc.com, Investor Relations section, prior to the conference call/webcast. We are not incorporating information contained on the website in this news release.
A telephone replay will be available in English (905-694-9451 or 1-800-408-3053, passcode 6527164#) and French (514-861-2272 or 1-800-408-3053, passcode 9609900#) until 11:59 p.m. (ET) December 6, 2018. The audio webcast will be archived at www.cibc.com/en/about-cibc/investor-relations/quarterly-results.html
About CIBC
CIBC is a leading North American financial institution with 10 million(1) personal banking, business, public sector and institutional clients. Across Personal and Small Business Banking, Commercial Banking and Wealth Management, and Capital Markets businesses, CIBC offers a full range of advice, solutions and services through its leading digital banking network, and locations across Canada, in the United States and around the world. Ongoing news releases and more information about CIBC can be found at www.cibc.com/en/about-cibc/media-centre.html.
(1) | Revised to consider clients that have banking relationships with both CIBC and Simplii Financial. |
______________________________________ | |
The information below forms a part of this news 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 news 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 news release, in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission and in other communications. All such statements are made pursuant to the "safe harbour" provisions of, and are intended to be forward-looking statements under applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements made in the "Core business performance", "Strong fundamentals", and "Making a difference in our Communities" sections of this news release, and the Management's Discussion and Analysis in our 2018 Annual Report under the heading "Financial performance overview – Outlook for calendar year 2019" and other statements about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies, the regulatory environment in which we operate and outlook for calendar year 2019 and subsequent periods. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate", "forecast", "target", "objective" 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, including the economic assumptions set out in the "Financial performance overview – Outlook for calendar year 2019" section of our 2018 Annual Report, as updated by quarterly reports, 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, insurance, operational, reputation and legal, regulatory and environmental risk; the effectiveness and adequacy of our risk management and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued and to be issued thereunder, the Organisation for Economic Co-operation and Development Common Reporting Standard, and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking Supervision's global standards for capital and liquidity reform, and those relating to bank recapitalization legislation and the payments system in Canada; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions, and interest rate and liquidity regulatory guidance; the resolution of legal and regulatory 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; changes to our credit ratings; political conditions and developments, including changes relating to economic or trade matters; the possible effect on our business of international conflicts and terrorism; natural disasters, public health emergencies, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; potential disruptions to our information technology systems and services; increasing cyber security risks which may include theft of assets, unauthorized access to sensitive information, or operational disruption; social media risk; losses incurred as a result of internal or external fraud; anti-money laundering; the accuracy and completeness of information provided to us concerning clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates or associates; intensifying competition from established competitors and new entrants in the financial services industry including through internet and mobile banking; technological change; global capital market activity; changes in monetary and economic policy; currency value and interest rate fluctuations, including as a result of market and oil price volatility; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations, including increasing Canadian household debt levels and global credit risks; 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; our ability to successfully execute our strategies and complete and integrate acquisitions and joint ventures; the risk that expected synergies and benefits of the acquisition of PrivateBancorp, Inc. will not be realized within the expected time frame or at all; 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. Any forward-looking statements contained in this news release represent the views of management only as of the date hereof and are presented for the purpose of assisting our shareholders and financial analysts in understanding our financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statement that is contained in this news release or in other communications except as required by law.
SOURCE CIBC - Investor Relations
View original content: http://www.newswire.ca/en/releases/archive/November2018/29/c3441.html
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