Good morning. Welcome to the CIBC Quarterly Financial Results Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Amy South, Senior Vice President, CFO, Functional Groups and Head of IR. Please go ahead, Amy.

Thank you, operator. Good morning and welcome to CIBC’s 2018 fourth quarter results conference call. My name is Amy South and I am Senior Vice President in charge of Investor Relations. This morning’s agenda will include opening remarks from Victor Dodig, CIBC’s President and Chief Executive Officer; Kevin Glass, our CFO will follow with a financial review; and Laura Dottori-Attanasio, our Chief Risk Officer will provide a risk management update. With us for the question-and-answer period following the formal remarks are CIBC’s business leaders, including Harry Culham, Jon Hountalas, Christina Kramer and Larry Richman as well as other senior officers. Before we begin, let me remind you of the caution regarding forward-looking statements in Slide 2 of our investor presentation. Our comments may contain forward-looking statements, which involve implying assumptions, which have inherent risks and uncertainties. Actual results may differ materially. With that, let me now turn the meeting over to Victor.

Thanks, Amy. Good morning, everyone and thank you for joining us. This morning, CIBC reported our fourth quarter and year end results. The quarter capped the strong year for our bank, where we made significant progress in executing our client-focused strategy and to deliver value for our shareholders. In the fourth quarter, we have reported adjusted earnings of $1.4 billion and adjusted earnings per share of $3, which is up 7% from last year. For the full fiscal year of 2018, we have reported record adjusted earnings of $5.5 billion or $12.21 per share. We met all of our financial targets that we set out for you on our Investor Day last December, with adjusted earnings per share of 10%, which is at the upper end of our 5% to 10% target range and an ROE of 17% meeting our target of delivering more than a 15% ROE. We successfully diversified our earnings by investing for organic growth in all four of our business units. Specifically in Personal & Small Business Banking, we achieved volume growth on both sides of the balance sheet. In Capital Markets, our expanded and innovative capabilities have helped us deepen relationships and deliver solutions to our clients across CIBC. These expanded capabilities also helped drive our Capital Markets revenue in the U.S., which grew by 20% over the year in 2018. This contributed to growth for our entire U.S. region, which also includes our U.S. Commercial Banking and Wealth Management franchise. Our U.S. region has grown from 9% of total CIBC earnings in 2017 to 16% this year showing we are well on our way to our target of 17% in 2020. In 2018, we increased dividends to our common shareholders twice bringing annual dividends to $5.32, which is up 5% from last year. Our…

Thanks, Victor. So my presentation will refer to the slides that are posted on our website. Starting with Slide 5, CIBC reported earnings of $1.3 billion and EPS of $2.80 for the fourth quarter of 2018. Adjusting for items of note, which are detailed in the appendix to this presentation. Our net income was $1.4 billion and EPS was $3 a share, up 7% from a year ago. All of our businesses performed well, and we benefited from strong volume growth as well as higher interest rates. We generated revenue of $4.5 billion for the quarter, which is up 6% year-over-year, and we managed our expenses well, delivering positive operating leverage and efficiency ratio of 56.2% for the quarter. Turning to capital on Slide 6, we ended the quarter with a strong CET1 ratio of 11.4%, up 10 basis points from the prior quarter and comfortably above our target range. Solid organic capital generation was partially offset by growth in risk-weighted assets and the impact of share repurchases. During the quarter, we repurchased 1.75 million common shares as part of our normal course issuer bid. Our leverage ratio was 4.3% and our liquidity coverage ratio was 128%. The balance of my presentation will be focused on adjusted results, which exclude items of note, so let me now turn to the performance of our business units. Slide 7 reflects the results of Canadian Personal & Small Business Banking, where net income for the quarter was $669 million, up 7% from last year. Revenue for the quarter was $2.2 billion, up 5% from last year, primarily driven by favorable rates, volume growth and higher fee income. Revenue continues to be well diversified, reflecting our focus on growth through client relationships. Cards, mortgages and other personal lending combine to make up just over…

Thank you, Kevin and good morning everyone. So overall, 2018 was another year of strong – and while there continue to be potential headwinds as it feels like we are entering the later stages. I apologize, I have got – here we go. We are having microphone difficulties. So let me start over here. So, overall, 2018 was another year of strong credit performance, reflecting the resiliency of the macro environment. While there continue to be potential headwinds as it feels like we’re entering the later part of the economic cycle. We remain confident in our strong underwriting practices and the quality of our credit portfolios. If you turn to Slide 14, you will see the strong credit performance in our core portfolios this year, and this is reflected in our impaired loss rate that has remained stable on a year-over-year basis at 23 basis points, excluding CIBC FirstCaribbean. You can see we had similar year-over-year performance in our Canadian businesses, as the portfolios continue to perform strongly. Our U.S. commercial lending portfolio also continues to perform well, with a slight increase year-over-year due to a few normal course provisions on impaired loans. As it relates to CIBC FirstCaribbean, our credit losses were up year-over-year, mainly due to the Government of Barbados debt restructuring that Kevin referenced earlier. And while the provision for performing is down overall on a year-over-year basis, there was some movement within that line in particular as it relates to our U.S. commercial lending portfolio, where we had a year-over-year increase and that is due to a combination of growth, a migration of accounts within the portfolio and maturing of our CIBC USA portfolio since the acquisition, whereby all loans were reset to either Stage 1 or Stage 3. Turning to the next slide, excluding CIBC, FirstCaribbean, our gross impaired loan ratio was up slightly year-over-year, driven by CIBC Bank USA, as a result of normal course movement of accounts to impaired along with some of the changes from IFRS 9. Slide 16 provides additional details of our net write-off rates. Overall, those rates remained flat year-over-year with a slight decrease in credit cards as a result of low Canadian unemployment and a slight increase in personal loans driven by a shift in our business mix. Overall, our total bank net write-off ratio continues to remain low and stable. On Slide 17, we have provided disclosure highlighting the relative stability in our delinquency rates. This was illustrated across our Canadian portfolios year-over-year in Personal Banking with mild increases mainly due to the adoption of IFRS 9 as we have discussed in previous quarters. So to conclude, while we may see some broader potential headwinds arise in 2019, we are very pleased with our credit performance this year, and we’re confident in our adjudication criteria and the credit quality of our portfolios as we enter the year ahead. And with that, I will turn things back to Amy.

Thank you, Laura. That concludes our prepared remarks. We will now move to questions.

Thank you. [Operator Instructions] Our first question is from John Aiken with Barclays. Please go ahead.

Good morning. Victor in terms of the strength of the capital ratio and the fact that your U.S. platform has been on the books for over a year now, when do you start thinking about actually adding on in terms of M&A? I am not asking is a deal being announced tomorrow, but when do you start the thought process of adding on scale and trying to further enhance the efficiencies that you are pulling out of the operations?

Good morning, John. Thanks for your questions. It’s a good question. We are pleased with the growth in our capital ratio over the past year, last year, we ended up at 10.6%, and this year we are at 11.4%. That’s really a function of our strong operating results. As we head into the first quarter, there’ll be some regulatory adjustments and some adjustments related to the Aeroplan portfolio, which will account for about 30 basis points in aggregate. So that’s something that I’d like our investors to know. The second thing is that, our capital deployment strategy remains the same. We’ve been very clear about multiple capital deployment levers, our primary focus is on organic growth, and with over indexing in Canadian and U.S. Commercial and Wealth Management, we have always said we are open to invest inorganically to the extent we believe it provides the best value for our shareholders, so that is a lever. Our dividends are important and being within our range is important, and buybacks are important. And you’ve indicated that to us, our management team felt strongly about that, we have repurchased shares in the first half of this year. So all four levers are important, and we will always look at it in terms of how best to deploy that capital at the right time for the long-term interest of our shareholders.

Thanks, Victor. But in terms of how time has progressed and as well in terms of the impact of the market has had on U.S. valuations, has that thinking moved at all or are we still just – basically we are still trying to continue the integration process of the U.S. platform?

Well, the integration process is moving along quite nicely. The organic growth that we are seeing in our U.S. business exceeds our expectations. We laid something out – we only closed last June, right. So that 16 months ago. So it hasn’t been all that long, but we have seen double-digit growth in loans, we have seen double-digit growth in deposits. We have opened 3 new commercial banking offices. We have hired a significant number of relationship managers in our Commercial Bank and our Wealth Management franchise. And yes, we see the valuations of compressed in terms of some of the regional banks. People have looked at our transaction and said you have managed it well. We like your culture, we like what you are doing, but for us it’s organic growth and we are always open to that opportunity as time progresses. Larry, maybe I can now hand it off to you for a second just to provide some color context on the U.S. business and how it is performing.

Good morning. Victor summarized it very well. I am pleased and it’s hard for me to be pleased, but I find great opportunities for future growth that we have really good momentum in the U.S. The team is executing well. Clients’ activity is growing. We have got a really good pipeline. We’re seeing client relationships consistent with the kinds of business that we have done, which is loans, deposits, other banking services and providing deep advice. So I think there is great opportunities for us to continue on the path that we’re going on. And our goal is to drive top-line revenue, clients – long-term client relationships, operating leverage and doing it in a very high-quality way, and it’s going well.

Great. Thanks for the color guys. I’ll re-queue.

Thank you. Our next question is from Meny Grauman with Cormark Securities. Please go ahead.

Hi, good morning. Also on the U.S., just wondering, I think we talked about it maybe 2 quarters ago, but the appropriate loan loss ratio level for this business, we saw that loan loss ratio tick up this quarter and you gave some of the reasons, but I’m wondering, as you look forward, what do you expect, is this a new run rate here, do we continue to trend higher, any color would be appreciated?

So I think – it’s Kevin. Loan losses were somewhat elevated this quarter as a result of Stage 1, Stage 2 migration. And I think we stressed this in the past, so you’ll continue to see that volatility. If we look at the impaired loans, we did have some impaired losses this quarter, but very much in line with what you would expect in the portfolio of this – of this nature. So there is nothing – nothing that is on the arise now, nothing that has come to our attention that would indicate any concerns at all.

Just in terms of the trend though is, would you expect the loan loss ratio to continue to move up that migration presumably continues naturally over time and continues to lift that loan loss ratio higher into 2019?

Yes. I think, I mean, just from an accounting point of view, when we did the – when we did the acquisition, everything was either Stage 1 or Stage 3, so you would see some migration, you would expect to see some migration from Stage 1 to Stage 2 over time, but that will play out over the course of this year and then stabilize. But from – as far as impaired loans, we wouldn’t expect any particular increase.

It’s Larry. Let me just add an overall comment to it, which is that the, the credit portfolio we believe is in a good place and credit quality is a very top priority for the team. And as we have continued to grow the U.S. business doing it with sound high-quality client relationships, and I’m seeing very good mix, I’m seeing very good diversification, and we’re also seeing very good selectivity and discipline in the underwriting process.

Thank you.

Thank you. Our next question is from Steve Theriault with Eight Capital. Please go ahead.

Thanks very much. Good morning. The – starting with Christina, Christina, it looks from the market share data, not unexpectedly you’ve lost about 50 basis points of share in the Canadian RESL [ph] business in over the last year, growth was down to 1% in Q4, ‘18. Again, not unexpected, but looking forward, are we now sort of at the trough levels here and when could we reasonably expect to start building back or getting back to market levels of growth?

Thank you, Steve. It’s Christina responding. Our RESL growth rate has slowed as expected as we had communicated and as you’re pointing out. There are – well there are always going to be some fluctuations in product-by-product results based on market factors. We are comfortable with what we’re actually seeing in terms of the progress we’re making in client relationships. Our retention rates remained strong and our CIBC brand commitment pipeline continues to be stronger than it was earlier this year. So in terms of outlook, our current expectation is for our mortgage portfolio to grow in line with where we see the overall market growth trending.

Okay. That’s helpful. Could you give a little color on retention rates, what you’re seeing relative to what was normal pre B20?

At the last call, we talked about retention rates being around the 90 rate – 90% rate and we continue to see consistency with that level. And we’re also seeing our mid-term pay downs also improved. So we are seeing more mortgages go to full term. So overall, we’re really pleased with what we’re seeing in terms of retention.

And the 90% is relative to sort of mid 80s or high 80s previously?

We’ve been very strong on retention for some time. So it’s been very consistent and the bigger difference we’ve been seeing is in that mid-term part of the mortgage cycle.

Okay. If I could ask a question on Aimia, obviously, you can’t talk about the terms of the new Air Canada Loyalty program, but now the negotiations have concluded, do you think that once it’s up and running, the new Air Canada related card will still be a pull product in terms of customers requesting the card or will it have a more prominent positioning on your shelf, where you’ll be more actively selling it, marketing it, how are you thinking about that?

We’re are pleased with the agreement that we announced earlier this week and for our overall travel rewards program, we believe that this further reinforces it and strengthens it. So for our Aeroplan clients, where they can continue to earn and redeem miles as usual and then they’ll be able to participate in the new Air Canada program when it launches in 2020. We have great travel card options for our clients and it reinforces those travel options and it also reinforces the momentum we’re actually seeing in our overall cards business. And as Victor mentioned in his remarks, we’ve seen great progress on our Aventura product itself. So we’re feeling good that this overall is a positive view for the cards business going forward.

And the other partner bank outlined the $100 million of setup costs, could you take a stab at what you think it will cost you guys to set up the new program?

We don’t think that will be a material cost for us at all, Steve.

Okay. Thank you.

Thank you. Our next question is from Gabriel Dechaine with National Bank Financial. Please go ahead.

Good morning. My first question is for Laura on the Stage 1 and Stage 2 provisioning. At the start of the year and this is based on, I guess end of year 2017 GDP data that was pretty good, you guys released some allowances in the Canadian business notably. I’m just wondering, is there any potential we see the opposite take place early next year? And maybe why haven’t we seen any of that type of additional buffering of the provisions this year, because the economy is – the economic outlook has not gotten better necessarily?

Yes. Hi, Gabriel. Well, I guess, I mean if we look at 2018 as I mentioned, we actually had a good economic performance. We also had strong credit portfolios. So I think that explains sort of some of that movement that we saw or didn’t see. When we look at our forward-looking indicators for the year out, they are really based off of consensus view and I would tell you that consensus view is actually moderates a little bit, but it’s not that negative such that we’re not seeing a large representation, if you will, in our provisions for performing relating to forward-looking indicators.

And that – okay, that’s interesting. That’s – you’re – like the judgment overlay in this process, you’re using consensus as opposed to taking maybe like for – your pessimistic scenario, you’re not taking additional or I guess, excess possibly conservatism there, just to play it safe?

Well, as you know, we do have management overlays, and look we would have likely had more of a release if we had gone just with the consensus views and our forward-looking indicators, and so we did include a management overlay in order to not have further releases.

Okay.

So if that helps, we do look at that very closely, of course, – and it does come into looking at sort of the base case downside, upside, where we look at that as well.

Okay. That perspective helps. And my next question is for, I guess Harry, probably Harry on the U.S. slide, you have this $6 billion balance in REF, is that real estate finance?

Yes. I’ll pass it over to Larry. It’s Harry here. That is real estate finance.

That is Larry?

Yes, that is the – that is the real estate, that’s the real estate business that – yes, that’s a real estate business headquartered in New York.

Okay. I am just – because if I look at U.S. loans in total that would include the legacy PrivateBancorp and Wholesale, Capital Markets, whatever you want to call. I guess the 30% plus of the loan book in CRE, it’s a much smaller number I think in the legacy PBTB business. I’m just wondering, what – where – what have been the growth drivers in that business and I see the balance has been flat over the past year, and does that suggest that you’re kind of cautious about your approach to CRE lending now?

Yes. Sure. The approach we’re taking to CRE is to look at CRE overall within the U.S. So it includes the – what was the legacy business in both parts of the U.S. organizations. The approach we’re taking is really – as I talked about before selectivity and discipline across it. And you will see that as we’ve brought both books together, we’ve said, not only do we expect and require good asset quality, but we also expect and require good deep quality relationships. And as we’ve looked at each of the books and particularly, the real estate finance book, which we’re very, very satisfied with. We found that there were certain relationships that weren’t really active relationships and really were more loans and not deeper relationships. And in some of those cases, when they matured, they repaid, and we were fine with that, because we felt that as we continue to manage the U.S. business, it’s all about high-quality loans, deep relationships driving as we talked about operating leverage. And that book will grow, but it probably won’t grow at the rate that the C&I book, because we’re seeing much better C&I opportunities and really like the balance of C&I being a higher proportion of the total U.S. book to commercial real estate. But we’ve got great teams, great leadership, common culture within the U.S. in CRE, and we’re pleased with the opportunities we’re seeing in both parts.

Is there much in a way of construction loans in there?

Very little in the RES business.

Thank you.

You’re welcome.

Thank you. Our next question is from Mario Mendonca with TD Securities. Please go ahead.

Good morning. If I could just follow up on commercial real estate, but just more on – in Canada and the total business. The growth in commercial real estate construction has been up fair bit, we’re not seeing anything in the form of GILs or formations there, so the business is obviously is still pretty good. But what is your thinking in terms of commercial real estate, this is perhaps for Laura. Maybe a split between commercial mortgages and construction development that would be helpful, because obviously, dynamics are different. If you could also talk about your exposure to Alberta in that context.

Okay. So I’ll take it. Hi, Mario, it’s Jon Hountalas. So I’ll take the first – I’ll answer and then Laura can follow up, if there’s anything I’ve missed. So our real estate number in Canada is about $22.7 million, and our SFI, we break it up about $6.5 million of that is what we call non-residential mortgages. Think of those as fixed rate fixed term commoditized type product. The rest of it, we lump together under real estate and construction. There’s about $16 billion of that and that includes many different assets, asset classes, mortgages that are on a short-term basis et cetera, etcetera. The construction book, again, we’ve seen, the performance has been stellar. It was stellar through ‘08, ‘09, we deal with few developers, top quality, lots of pre-sales when we do construction. So we’re very comfortable with the book, our clients have gotten quite wealthy over the last few years. We have recourse to non-real estate type assets. So generally, we feel very, very strong about our real estate. What we have done in Canada over the last several years, but certainly, the last 3 years, we’ve grown our non-real estate book faster than our real estate book. Q4 of this year was the exception. In the – in Q4, we had a few large and important clients ask us to do some transactions which we did. So our real estate book grew a little faster than our non-real estate book, but that was really an anomaly. Our high single-digit, low double-digit growth rate has largely be driven by our diversified book.

And can you speak to how large construction is in that $16 billion?

So I don’t break it down. I don’t think about it as construction, specifically, there’s operating lines in there, so I don’t have a construction number, and we all define construction a bit differently, so I can’t really quote a number.

And Alberta?

Sorry, having microphone difficulty here if I could just step in, just on construction, what we tend to do Mario as we focus on usually in construction the area that one would deem as higher risk and so that is why and path [indiscernible].

I guess the microphone was off.

Laura, we’re having trouble hearing you.

Yes, sorry about that I’m going to try another microphone here so in the condo exposure, what I was saying is that we monitor that one very closely so our drawns have gone from 1 billion to about 1.5 billion in the last 2 years we do not take much market risk as we look at pre-sales, we monitor those closely, and we’re quite comfortable with the risk that we’re taking there we have got really tight adjudication criteria as well, and we haven’t changed any of that so I don’t have concerns, if you will, as it relates to the growth that you’re seeing in those construction loans.

And are we built up any performing PCLs in this segment yet?

Well, I don’t know that we use the term building them up so.

Have we taken PCLs, performing loan PCLs?

Performing loans PCLs, we do take them the portfolio overall I wouldn’t have that breakdown in terms of which particular segments it relates to, but it would impact back as we look at the overall portfolio so it would get picked up in the number.

Okay and Victor, can I just follow up on one quick thing you had no trouble hitting the top end of your guidance this year as you offered last year, when we talked about this now Laura has offered some commentary on headwinds and that’s entirely consistent with the conversations that are happening outside the banks what is your outlook? Does 2019 feel like a year where you can be inside your guidance levels?

Yes, I think 2019 is another year, where we see ourselves inside our guidance levels the four parameters that we’ve outlined for our investors are earnings per share growth being between 5% and 10% that is a primary parameter that everybody looks at this year, we’re obviously at the top end of that as we head into this year, there is some economic headwinds, there’s some economic tailwinds, there’s significant political economic headwinds that, if those things get resolved, we’ll be more within the midpoint of that range if the political headwinds continue, we’ll still be within our range, but probably to the lower end so we will work diligently on our costs we will do it work diligently on building up our capital, and diligently on delivering those earnings irrespective of the market environment, over 2019 is likely to be a little more challenging macro economically speaking than 2018 was.

It’s very helpful thank you.

Thank you, our next question is from Doug Young with Desjardins Capital Markets. Please go ahead.

First question on the U.S. maybe two-part question I mean, Laura, what drove the migration from one to two, if you can maybe split out a little detail there and then Larry, maybe on the NIMs or Kevin, I’m surprised, a little bit that you’re guiding more towards flat, and I understand the deposit betas, but are you building in the expectation for rate increases and your expectations for NIM being flat over the next year? Or are you building that in and this is just a function of the deposit cost and the increase in high interest savings account or what not? Thank you.

Okay well, I’ll kick it off, Doug so your question on what drove migration, the combination of items, so in addition to volume growth, we did have a few downgrades in the portfolio, but nothing of concern worth highlighting and then as I mentioned in my prepared remarks, and Kevin had referenced, the balance of it was really that, I’m going to call it normal migration of accounts that moved from Stage 1 to Stage 2 after the acquisition, so that just relates, as I mentioned to the requirement, we had a purchase date to reset loans, and so that’s just that normal migration that we’ve seen throughout the year and that I would expect to see over the next few quarters.

It’s Larry and let me take the let me take the NIM question, and let me I guess, I can give you the variables, and you can then do your own level of math the loan book continues to be variable price, and it’s principally a variable mostly over LIBOR, and we’re holding relative loan spreads and mix to what we’ve seen and what we forecast we have about 5 little over 5 billion of non-interest bearing DDAs in our book, and we expect that, that level of DDAs are also tied to treasury management relationships should remain and the deposit costs will of course rise, as this is a commercial and wealth management deposit book so I think we’re being appropriately conservative but I think it’s fair to say, stable NIM and so we’re holding discipline in all cases.

So it’s not a function of loan yields? This is all coming on the deposit side.

Yes, it’s driven by an expectation that we’ve reached the threshold, and we’re seeing it across the U.S. banks and particularly in the mid-cap banks, that heavy commercial and wealth book, these rates are rising, clients that have excess cash are wanting to get paid for.

And Laura, just back to you the one the normal what’s normal migration between 1 to 2 like, what, can you quantify and I apologize, if it’s in the press release, but can you quantify what that normal migration meant in terms of PCL?

From a number perspective, I don’t know that we actually disclosed that actual detail, but it was probably on when maybe a third of the amount would have been in there for that particular segment.

Okay that’s helpful. Thank you very much.

Thank you, our next question is from Sumit Malhotra with Scotia Capital. Please go ahead.

Thanks, good morning first, a couple of clarification questions for Kevin Glass first off, Kevin on capital, Victor mentioned a couple of upcoming items of the top is it fair to say, it’s roughly 20 basis points impact from the counterparty and securitization update for WA, and 10 for Aeroplan and are those both in Q1?

Yes, that’s correct I mean, more like yes, 9, 10 for Aeroplan, 20 odd for the standardized approach.

I’m sorry, that’s both in the next quarter?

Yes, Q1.

Okay. And then secondly, just on the Barbados so you call out the 65 million after tax this quarter for the incremental losses, and I think it was about 30 in Q3 so we’re looking at ballpark $100 million after tax thus far is this do you feel you’ve accounted for the balance of it, you mentioned there might be some other part of the portfolio that could be impacted going forward just wanted to make sure I understand what the run rate is here?

No, I mean, Sumit, last quarter, I think it was just around between 20 and 25 in total pretax actually that we that we took, and so that was the prior quarter amount I would say that by and large, we have accounted for it there’s is still some work on the U.S. dollar portfolio, but we don’t see a material charge coming out of that the one point that I would note is, there’s been some change to the tax, there’d be recent tax reform in Barbados with rates coming down for the tax rate has come down so there will be an adjustment relating to deferred tax balances next quarter as well.

So, we’ll see a probably a write-down of the of that item?

Yes, so there is some noise around some of the write-offs and some of the tax adjustments, but the underlying business is actually performing extremely well.

And then last question, the actual business question is for Jon, obviously, a very strong year for your commercial business we have talked a lot about the lending side, but I’ve noticed your deposit growth in this business has really picked up quite significantly as well I don’t know if looking at the net interest margin here is strictly looking at commercial or whether it marries in the wealth, but wanted to get your view here, as the markets emphasis or the sectors emphasis has shifted more to the commercial book what are you seeing in terms of the outlook for your loan spreads in 2019, especially if the Bank of Canada opts to have a more measured approach and how exactly are you driving the level of deposit growth we’re seeing I think it’s something like 15% year-over-year this quarter?

Right, so let’s take the loan question first I think loan spreads will stay there is a little pressure on loan spreads, but nothing material so I would forecast loan spreads to stay roughly flat in terms of deposits, I think we’ve talked a lot about investing heavily in cash management over the last eight years, we’ve put a lot of money in that, we’ve added cash management support staff we have tried to change the culture across the whole relationship management and sales force to get us much more in tune to both sides of the balance sheet, and we’ve talked about trying to grow in the 9% to 11% range this was a particularly strong month, about 50% of deposits came from new clients so we’re working hard, we’ll keep going, and we want to grow in double digits on both sides of the balance sheet if we can.

And you think that’s possible in 2019?

We will yes, I think so we will we’ve led to that guidance before, we talked about that at Investor Day and based on what we’ve done first year of the three, nothing has changed.

Thanks for your time.

Thank you.

Thank you. Our next question is from Sohrab Movahedi with BMO Capital Markets. Please go ahead.

Thank you. Just wanted to get a couple of clarifications definition of GTA, does that include as far out as Oshawa?

Hi Sohrab it’s Laura I am happy to take that one yes, it does.

Okay and Christina, personal lending growth, particularly strong this quarter, what is that?

That is largely driven by the momentum we’re seeing in credit cards, but largely driven by the auto lending portfolio, where we have seen good growth, good levels of growth as we expanded our offer across the country.

And would that have been across the country, or would that have been a bit more concentrated any particular geography?

It’s across the country, and in 2018, we also launched it into Quebec so it is now across the country.

Okay. And just to be clear, I mean your cards, I think you reported credit card, you reported separately so this line item by itself was up 9%, does that sound reasonable? Yes.

Yes, you are correct.

Okay. And then Victor, I guess, just to come back to the capital very quickly, obviously, has been pretty good capital levels, you’re talking about it a little bit of headwinds, others are actually from a peer pressure perspective, they are growing their capital levels arguably quicker than you so you’re going to be kind of more in the mix now, is I’m just curious to get maybe a bit of a philosophical question as to whether or not you’re inclined to retain capital to actually get back up to kind of closer to peer leading or you’re okay to kind of lag in the bottom half?

I think everyone has their own specific look at specific capital management strategy we have our own as well we are comfortable where the level is, no one’s striving for some leading edge high level of CET1 we are comfortable where the level is, we’re comfortable with the adjustments in Q1, and we are confident in our ability to deliver earnings to replenish that capital over the course of 2019, right? Our goal, Sohrab, is always to make sure that we can use any one of the four levers that we’ve outlined for our investors again, one, is organic growth, where we’ve been investing in our businesses. And the growth that you’re seeing across our business lines is a function of that investment the second is to make sure that we’re growing our dividends consistently with earnings, and we see that we are well within our payout range the third is to make sure that we have the ability to buy back, and that we did execute on in the first two quarters and the fourth is inorganic growth, which is also a lever that we can use so for us, we’re comfortable with the level that we’re at we don’t really look at being the highest relative to a peer group we look at our business strategy, can we execute against that? And can we deliver to you the highest total shareholder return over the medium to long term? That’s how we think about capital.

That is incredibly helpful. But just to be crystal clear, where you’re at right now or where you’re going to be pro forma, the adjustments that Kevin talked about?

Anything over 10.5, I’m comfortable with, being over 11 is even better in this time in this market environment there is a bit of headwinds as we had discussed it is always good to have some buffer there, but for us, it’s all about growth over the medium to long term.

Thank you very much.

Thank you. Our next question is from Darko Mihelic with RBC Capital Markets. Please go ahead.

Hi, thank you. Good morning. My question is a little off the wall. I am hoping you could help me with it. It’s probably for Kevin. Every other bank that’s reported so far has told us what their Stage 1 and Stage 2 allowance for credit losses would be if it were 100% under the base case scenario. I can’t make heads or tails of yours, it doesn’t seem to – in the annual report it doesn’t seem to tell us. Do you have that information handy or is that something that you would be willing to provide to us?

I think with respect to disclosure, we are quite concerned about actually giving that level of disclosure Darko, because it’s not pure and it’s not 100% clean. I think what would be better is if we took it offline. What we do, do is we do report the downside. I think that’s certainly in our disclosure. But you are right, this is a complex area and I think that it’s more a detailed reconciliation type question that we should probably take offline.

Yes. And I just want to add like I think that if you do look at it, as Kevin pointed out, we have the downside, which I would have thought you would find quite helpful in terms of seeing what potential impact could be?

No. I guess, we are – I guess what I am using it for is a measurement of how much you are waiting downside base case and upside? So for example, your ACL on Stage 1 and 2 is $1.259 billion. With all the other banks, I can tell what their ACL looks relative to the base. And so then I can make a sort of a call on how much they are waiting downside versus upside.

Yes. I guess, what I would say is our base is very close and as Kevin mentioned, we will take it away – we would, I mean, quite frankly, we’d love to give you all the information that we have and then we could talk about sort of where we think things are headed. So we will take that away to see if we can change disclosure somewhat to make it easier for you.

Yes, that would be very helpful. Thank you very much. And just a question for Victor, there has been talk in Canada, I mean there has been a lot – let me rephrase that, not talk, there has actually been a lot of wealth management M&A happening in Canada. And just thought given that you have looked at wealth management and still would look at wealth management in the U.S., what about Canada?

We are comfortable with where our wealth management franchise is in Canada. If you look at sort of our fund flows right now, we were number two in the country of all the banks. Our investment performance continues to be robust. Our advisor base across the Imperial Service, CIBC Wood Gundy and private wealth management remains robust. So we are really pleased with the performance of our wealth management business, and really, if you look at CIBC’s wealth management strategy in Canada specifically, it’s about transformation, what you will see over the next quarter is just see more portfolios that are more sharply priced, more sharply structured for our clients, so that we can continue to compete and we will continue to transform our advisory businesses to meet up with that high touch, high-tech approach that our clients are looking for. In terms of capital deployment in the Canadian wealth management space, it’s not something that we are focused on. As opportunities arise, we always look at them, Darko. We have to be flexible in our business. We have to have a long-term perspective on it and our Canadian wealth management business is all about the transformation to stay more modern and more relevant to our clients as we go into the future. And when I can just make comment for our U.S. wealth management business, because again I’d like to remind our investors that just over four years ago, we had zero in terms of AUA in the United States. Today, we have a wealth management business that has over $50 billion in assets under administration. It has positive fund flows. We started adding private bankers across all our offices. So not only are we investing for clients, we are lending to them and we are taking their deposits as well. So we are very pleased with that and you should see continued investment on the inorganic front in the U.S. as well.

Thanks, Victor.

Thank you. This is all the time that we have for questions for today. I would now like to turn the meeting over to Victor for closing remarks.

So you give me again just for two more minutes, so just thanks operator. We had a very strong year in 2018, a very strong top line growth across all four of our business units, all driven by a very client-focused strategy. As we look into 2019, the macroeconomic environment in both Canada and the United States may moderate as we enter what we see as the mature end of the credit cycle. In addition, as we’ve talked about, during this call, there is geopolitical tension that we hope to get resolved. But if we don’t, we will manage – if they don’t, we will manage through them. As we go forward, we expect rising rate environment, which will be also compounded by GDP growth that will likely be moderated north and south of the border. We expect the United States to outperform Canada until some of our structural issues are resolved in this part of the world. Against this backdrop, we are just going to continue to focus on our strategy and focus on our clients, we are going to focus on profitable growth deepening client relationships, we are going to focus on transforming our cost base both to deliver earnings per share growth and to reinvest in our businesses. We have laid out for you targets at two Investor Days already, all of which have been met and/or exceeded on the cost side, and our medium-term goal for our NIX ratio is 52%, 22% is impossible. I don’t want to mislead any of you. We are going to hit the 55% next year and we get to 52% in 2022. When it comes to deploying our capital, we are going to make sure we are smart and diligent about our capital ratios. We want to make sure we have a strong CET1 to give us flexibility in challenging environments. We want to make sure we can deliver on dividend increases that are well within our payout range. And while we are cautious about the macroeconomic environment, we are confident that we will achieve our earnings growth in our target range of 5% to 10%. So we are well positioned for the future. In closing, I am very pleased with the progress we have made to building CIBC into a North American client-focused bank that understands where technology is going, but always maintains the interests of our clients at the forefront of everything that we do. So on behalf of our executive committee, our Board and our leadership team, I want to thank all of you, our investors and our shareholders for all your continued support. And I’d like to thank our 44,000 team members who are working for our clients each and everyday. And at this point in the year, I would also like to wish all of you a happy holiday season, best in the New Year and look forward to talking to you again in February. Cheers.

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