Good morning and welcome to the CIBC Quarterly Financial Results Call. Please be advised that this call is being recorded. I would like to turn the meeting over to Geoff Weiss, Senior Vice President, Investor Relations. Please go ahead, Geoff.

Thank you and good morning. We will begin this morning's presentation with opening remarks from Victor Dodig, our President and Chief Executive Officer. Following Victor, Hratch Panossian, our Chief Financial Officer, will review our operating results. Shawn Beber, our Chief Risk Officer will close out the prepared remarks with a risk management update. We are joined in the room by CIBC's business leaders including Harry Culham, Laura Dottori-Attanasio, and Jon Hountalas; as well as Mike Capatides, who is joining us remotely from the U.S. They are all available to take questions following the prepared remarks. When we get to the Q&A, to ensure we allow enough time for everyone to participate, I ask that you please limit your questions and re-queue. As noted on Slide 2 of our investor presentation, our comments may contain forward-looking statements which involve assumptions that have inherent risks and uncertainties. Actual results may differ materially. With that, I will now turn the meeting over to Victor.

Thank you, Geoff, and good morning, everyone. Thanks for joining us and we hope you are all keeping well. In an environment where pandemic related challenges continue to impact the economy, our diversified business model delivered record adjusted net income of $1.6 billion, which is up 11% from last year. We also continued to build on our capital strength, closing the quarter with a CET1 ration of 12.3%. Since the onset of the pandemic, we've clearly demonstrated our preparedness and our ability to manage the crisis at hand, while investing for the future, and we know that the economic recovery won't be a straight line, but we will emerge from the pandemic, and the CIBC team is well positioned to deliver growth as the recovery takes hold. As we execute on our strategy, we remain very connected to how the pandemic is affecting the lives of our clients and our team. Their well-being remains our top priority. Our strong performance is being driven by the execution of our client focused strategy, which has three key priorities. First, over the past year we've made significant enhancements to our Canadian consumer franchise as we accelerate growth. This includes adding new leaders and investing in our people, as well as continuing to innovate and enhance our products and our platforms.

Thank you, Hratch and good morning. In our first fiscal quarter of 2021, we've seen positive signs that point to an improving economic outlook and economic recovery in the second half of this year and into 2022. Credit performance this quarter was strong and better than we expected, due in part to continued low insolvencies and ongoing government support programs. That said, and consistent with our views last quarter, we expect to see impaired losses increase from here and peak in the middle of this year before reducing again over subsequent quarters, as economic performance improves. Overall, government support programs continue to help blunt the economic impacts of the pandemic and our clients continue to exhibit disciplined behavior in view of the economic uncertainty. Turning to Slide 18, provision for credit losses was $147 million in Q1, down from $291 million in the prior quarter, with lower provisions in performing loans, partially offset by an increase in impaired loans. Provision on impaired loans of $236 million was up $58 million from last quarter, largely due to higher provisions in both retail and business and government loans. In Canadian personal and business banking, this quarter saw a sequentially higher provision in personal lending from the unusually low levels in Q4, partially offset by lower write-offs experienced in credit cards. In our business and government portfolio, we experienced higher provisions in the utility sector of our capital markets business, and in CIBC First Caribbean, partially offset by a small decrease in both U.S. and Canadian commercial. This quarter we have a provision reversal of $89 million in our performing portfolio. Approximately one third of this reflects the net transfer of performing provision to impaired provision for loans that became impaired this quarter, and the balance of the reversal reflects our improved outlook…

Thank you. And the first question is from John Aiken from Barclays. Please go ahead.

Good morning Hratch. The expense performance in the quarter was quite good from my perspective. I was wondering, given the fact that you gave us some indications that you expected expenses to increase, particularly the domestic P&C, I think you said you expected to accelerate, what outlook or what are you budgeting for in terms of operating leverage through the remainder of the year?

Sure, good morning. I'd be happy to cover that and so, part of the color we wanted to give was that this quarter was a particularly good quarter, with the expenses being flat and there's a number of reasons for that that we don't think will continue in that way. So one, we had some timing differences, as we mentioned. So this is related to the acceleration of investments against our strategic priorities and as we plan those initiatives out some of those activities are increasing and the P&L impact of those will be increasing through the year. The second is, Q1 itself has a -- on a year-over-year basis over the last year has a benchmark that's pre-pandemic, and so on that basis once we get to Q2 and later in the year, we didn't have those decreased expenses due to decreased travel, business development advertising as the restrictions set in. So on a year-over-year basis, those are tougher comps, and so those are the things I would watch out for. And when you put all that together, what we're reiterating here is that that low single digit range for core expense growth, we think is the right level. We're committed to continuing to find investment opportunities and we're committed to find initiatives on efficiencies to fund that, and at the same time we're seeing some pretty good revenue performance. So I'd say that core, we think is low single digits and that can get pushed up, if the revenue linked expenses end up higher if we continue performing beyond our expectations. So that's the guidance I would give on expenses. And on the operating leverage, yes it’s a tough year for operating leverage. We're working towards positive operating leverage that we can sustain. I think this quarter is operating leverage as I spoke about, if you go through that dynamic and expenses, I wouldn't look for that to sustain through the rest of the year. But as we come out of the end of this year and accelerate on the revenue side as the economy opens up, we're looking for that positive operating leverage.

Thanks Hratch. And just as a quick follow on, when you talk about the strategic initiative spending, as we drill down into technology spend, would you say that your technology spend is accelerating, maintaining the same or decelerating?

We are accelerating on the technology front, and there's a number of things in that, it's defensive investment for the bank, its offensive in digital capabilities on the sales and service side it's across the board, but we do see when we talk about that transformation of the bank, we see technology playing a big role in that. And so there's investments on the technology side that will help us take out non-technology side expenses and get more efficient in that way.

Thanks Hratch. I'll re-queue.

Thank you. The next question is from Meny Grauman from Scotiabank. Please go ahead.

Hi, good morning. Shawn, it sounds like you're talking about impairments increasing, but at a slower pace than what you thought when you talked to us in Q4. I'm wondering if you could just translate that into the guidance you gave on the PCL ratio. The PCL ration on impairs, I think you talked about 40 basis points. It was 22 this quarter. So I'm just wondering what the outlook is, do you still hold to that 40, or is it lower in your mind?

Sure. Good morning, Meny. So our credit outperformed this quarter as I mentioned, particularly in the retail side. It's a combination of government supports, the Bank Relief Program that we had instituted last year, prudent client behavior, and also our activity in terms of proactively reaching out to clients who have shown early signs of stress. So, we still expect to see the peak in the middle of the year, but subject to the uncertainty caveat it is difficult. We're now looking at our impaired loss ratio coming in towards the mid 30s, so that would be down from where we were in Q4 and that's really driven by a number of elements the benefit in another quarter of data, what we've seen in the portfolios and our updated outlook.

Thanks, Shawn.

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

Hey good morning. I have a question on the mortgage business, it has been on fire for everybody and I see $17 billion of origination, did they pick up the highest ever for your bank. A lot of that's from the pent up demand phenomenon, buying second homes and stuff like that. I'm just wondering, is there, because we're missing the demand from Canada's immigration trends over the past few years. So, is there may be a big drop off in the mortgage business that you could see next year, if immigration levels don't return to the pre-COVID levels? And this isn’t just CIBC specific obviously.

Bonjour Gabriel. I'll take that question. So yes, the market remains hot. I'd like to believe the good performance you're seeing from CIBC also has a lot to do with a lot of the hard work that our team members have been putting into turning our performance around. I'd tell you from our side from an outlook perspective, we're continuing to expect high single digit mortgage growth. So we'd expect that for the remainder of 2021. We do expect immigration at some point is going to open back up too which will help. We're mostly focused on 2021 and I'd say that the rest of the year is looking good. Does that answer your question?

Yes, so I guess this, but year the outlook is, I think still pretty good, but what happens if immigration doesn't come back in the next year or two?

Gabriel, it's Victor here. I don't know where it's going, but I'm pretty certain that the government has announced a policy to increase immigration to well above 400,000 people.

Right.

I think that that will continue to provide a tailwind for us. The important thing to note about our mortgage growth is, we've closed the gap from where we were a year ago, just like we said we would. We did that through investments in technology, investments in our mobile advisor force, and continuing to be competitive in the marketplace, and we won back share on a relative basis over this past year. And I fully expect that our team will continue to lead that trend and as immigration opens up, we'll continue to capture more than our fair share.

Well certainly it's been a good turnaround and good performance in our business. Thanks.

Thank you. The next question is from Ebrahim Poonawala from Bank of America Securities. Please go ahead.

Good morning. Just moving maybe on the commercial side, I means it appears that the demand probably is slow in the first half of the year, both in Canada and the U.S. Just talk to us in terms of your view of your competitive positioning in both markets on the commercial lending side. And also in the U.S., we saw the retirement of Larry, does that change anything in terms of strategically things that you may or may not do in the U.S.?

Good morning, Ebrahim. So a couple of things there. Our commercial businesses are performing well in terms of both deposit and loan growth. The U.S. business is performing particularly well, because the economy is more opened up than it is in Canada. With the Canadian economy opening up, we would expect our performance to continue to capture again, more than our fair share in that growth. In terms of personnel changes, Larry became Chair last year, Mike Capatides, has been running the business for a year. It's all well in hand, Larry decided to retire. He's a good friend of the bank, and you can read the press release. He'll be helping us from the shadows in his retirement as we continue to grow the business. But to give you more color on our commercial banking businesses, let me start off with Jon Hountalas for Canada, and then we'll hand it off to Mike Capatides in the U.S.

So, good morning and thank you, Victor. I'd start with saying that our clients, I'm probably more optimistic than I've been in a few quarters, because our clients are more optimistic. In talking to them, I think the speed of the U.S. recovery has surprised over the last few months and most of Canada is kind of mid market and even smaller businesses, their growth was coming from the U.S. So entrepreneurs are optimists. They see the U.S. opening, they're ready to go. You couple that with private company M&A is pretty reasonable. Our good real estate clients are active. We're prudently following them. Our utilization rates have started to kind of bottom out and they've been on a drop for probably four quarters for sure. So you combine all that with the investments we've made over the last year in people and technology. We're ready. We were ready to support our clients through difficulties in March and April. We're ready when they're ready to grow and we're looking forward to getting back and calling on our prospects. It feels better than it did a few months ago. Mike, can I pass it over to you?

Yes, thank you, Jon. Well, in the U.S., we continue to see healthy loan growth from our clients, which has moderated a bit by the forgiveness process on the first grant in the PPP loans. Significantly over half our loan generation came from our new offices, our new products, our new initiatives that reflect the investments of the past several years and we added 210 new strategic clients in the past quarter alone. In fact, we could do more, but we're not compromising on our margins or our credit. But I also want to add that, the build out of our wealth and private banking platform, which has very healthy referral numbers between our commercial bank is also starting to come online, and helping fuel growth in all these areas. So looking forward, we have a strong pipeline, again moderated by the PPP forgiveness. But we do expect our growth and our performance to continue into the second half of this year as our clients continue to come online and private equity starts to accelerate the deployment of the large amounts of cash they have available for transactions.

Got it, thank you.

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

Good morning. A quick question on small business lending. I know it's a small portion of your overall lending, but we are seeing what was surprising to me at least, a pretty good spike in small business lending and also sort of perhaps connected an increase in credit fees. Could you talk to what's happening in small business lending at the bank and if in fact it is connected to the increase you're seeing in credit please?

Hi, Mario, it's Laura. It's a bit hard to hear the last part of your question. I believe it had to do with what we're seeing in our small business banking?

Yes.

So I'll tell you, we're not seeing a lot of lending or requests from a client acquisition or deposit growth perspective though, that is actually looking positive. Now a lot of that has to do with the various government funding programs that are in place and so deposit growth has actually been strong for us. It has been up about 25% year-over-year. What's interesting is, we're seeing our account open activity is actually up quite a bit at about 50%. So we see, I would say small business managing very prudently holding on to their dollars and monies they've received from the government, as many wait for the economy to reopen. And so, we think there's a measured opportunity on the business lending side as things start to open up again.

Okay, I had just observed that it was up sequentially, but again, from a small base. Maybe we could just turn to credit fees and if anyone could speak to the -- what's happened in the last couple of quarters of credit fees, they've moved materially higher. And, with loan growth, only now showing some momentum, I was a little surprised to see the move in credit fees, back to well above pre pandemic levels.

Hi, good morning, Mario, it’s Hratch. I'll take that on the credit fee side. And there's a number of things in that credit fee line that are driving it. One of the things I would point out is, is there are the BA related activity and so when you see clients in the commercial bank, particularly in Canada, as they grow or they draw their facilities via BAs and that does tend to skew by industry. So on the real estate side BAs tend to be utilized more. That shows up there rather than showing up into NII. So that's a big part of it when you look at the credit fees. The other side of it is syndication fees. And so in our U.S. business, we continue to have very strong syndication activity that is driving that as well. And so, when you look at that quarter-over-quarter for us, it was $22 million, year-over-year $33 million. A large part of that is coming from those two items, right, the BAs and commercial banking, about half of the year-over-year number, U.S. Commercial about a quarter of it, and the rest of it is sort of on the corporate banking side with fees on some of the lending and standby facilities that have been put in place.

Thank you.

Is that helpful?

Yes, thanks.

Thank you. The next question is from Doug Young from Desjardin Bank Securities. Please go ahead.

Hi, good morning. Just maybe starting on credit, just a decent bump in the commercial non-gross impaired loan formations. I think you mentioned real estate, but it looked like there were some in oil and gas and education, utilities. Maybe you can just unpack a little bit more about what you're seeing in there? Thank you.

Sure. Good morning, Doug. So we did see a handful of accounts go impaired this quarter, nothing out of our expectations in terms of how things have been progressing. There were a couple in the real estate sector, there were a couple in the utility sector. They were a bit chunky, so they would have moved the gross impaired loan number up this quarter. You've seen it, it's reflected now in our impaired provision number. And, they didn't they don't kick off, particularly large losses are impaired losses are continuing to perform well quarter-over-quarter and by historical. So I would say normal portfolio activity a handful of names that are contributing to that, and not outside of our expectations.

Okay, and then if I can just sneak a quick one and just on U.S. NIMs, I mean, they were much higher than what we expected. It seems like then this is across the group, not just for yourselves, but the PPP repayment activities having quite a big impact on NIMs. Can you quantify what that would be for the quarter and how you see that evolving over the next year?

Yes, certainly, good morning, it's Hratch. I would say the core dynamic in the U.S. NIM continues to be what we expected and what we had guided to, and so just quickly to cover that and I'll get specifically to your question in a second. So, on the core dynamic, we as you know, have in the high 90s percent of our assets there are LIBOR linked and so LIBOR didn't move much this quarter. It was down about a basis point. So the loan yields are pretty stable. The spreads on the loans are pretty stable. If you look at the deposit side, we've continued to see growth and we've continued to see the repricing activity. So we had said that we expect the core dynamic as we reprice deposits to be slightly up, but net of those two things pretty stable to slightly up and so we saw that. So you see on the slide, we had the deposits, 9 basis point help that we had, 2 basis points roughly of that 9 was that repricing and the rest is the growth and we've continued to see that good growth on deposits. On the prepayment side, you're right, that contributed, we had on the slide 14 basis points, right. And that's not just the PPP program. So we had the start of prepayment of PPP this quarter. And that was just a little bit over half of that 14 basis points number came from the PPP prepayments this quarter. So going forward, what do we expect? As I said in my remarks, we still think that core dynamic is the same stable to slightly up. We think deposit levels will stay elevated for a while here, may continue to go a bit further, but those are going to decline later in the year as deposits start getting deployed for growth in our clients balance sheets. And then on the prepayment side, there's going to be some noise, right? So we expect PPP prepayments or forgiveness to really accelerate here, going into the next quarter or so and then we're going to have the second wave of PPP that has already started coming in. So in the short term, I expect some continued activity there that will help NIM. But the way I would think about it is, if you strip that away, that core dynamic is stable to up as deposits grow.

Helpful, thank you.

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

Okay, thank you. Victor, maybe a bit of a higher level management question. It looks like you obviously have an investment schedule, you've got some plans to make investments this year or probably next year. It looks like it's hard, obviously hard to make the call, but it feels like it's going to be an abnormally low for the industry, abnormally low provisioning here, if you will. Is there an opportunity? Is there any discretion that you can, around the timing of future period expenses that could actually be loaded into this year to allow for a better growth trajectory into 2022?

Sohrab, that's a great question, you always ask the bit picture questions, which I appreciate. I think it's important to note where we've come from. I look at the bank over the last several years and what we've been able to do with our mix ratio, what we've been able to do to transform our businesses from a technology standpoint, what we've been able to do from deploying capital, and create a diversified durable bank that's prepared for growth irrespective of the environment that's ahead of us, and better relative competitive performance than we've delivered over the last year let's just say. As we look at the year ahead, the plans that we have, the investments that we're making, we're very comfortable that that will continue to deliver superior performance in all of our core business lines. If we see the economy pick up at a more rapid clip, then prognosticators are projecting, we would have the ability to continue to invest at maybe a more rapid clip. But I'm very comfortable with the investments that we're making today in the backbone of our technology, in the client user experience of our technology, and in our product portfolio. And I believe that what we have today Sohrab, will deliver that superior performance. You're seeing that across every single business line at CIBC. We said that we're going to go at market or above market and you're seeing it everywhere. It's not only emerging this past quarter, it's emerged in the last couple of quarters, and I think you're going to be able to see that in the quarters ahead.

Okay, thank you. I'll re-queue.

Thank you. The next question is from Scott Chan from Canaccord Genuity. Please go ahead.

Good morning. Hratch, you talked about overall expenses and increases on the Canadian side. But on the U.S. side, expenses were down 2% year-over-year and revenue growth was up 15. So how do you kind of view expenses on the U.S. side, especially calling out reduced business development spend. But I think Jon commented that you actually added 210 new clients in the quarter, so maybe kind of talk about that comment as well?

Sure, good morning, Scott. Happy to take that and I can also pass on afterwards to Mike if he wants to add anything on what is happening in the business. But the core dynamic in the U.S. is still that we are growing the business so we are hiring on the front lines. We are developing client relationships, and we are serving our clients. Some of what has happened though is the way you do that has changed since the pandemic restrictions have come in. And so that's what you're seeing there is some of the client development activities, the travel, the entertainment and so forth, the advertising, the sponsorship events, all of those things have taken a bit of a backseat. And so the way client development is done now is different. We haven't stopped. We continue to cover our clients and we continue to invest in the business as well. So the net of those at this point is providing a benefit. But we do see expense growth overall growing this year, particularly as we see the economy opening up and that client development going back to being done the way it was always done and it's going to be in the back half of the year. Hopefully, if the U.S. continues on the trajectory it is, on a year-over-year basis you're going to be comparing a period of restrictions on travel and so forth to a period with no restrictions. And so, we do expect that to accelerate and on a net basis like I said, expenses being up year-over-year. But maybe Mike can give you a bit more color on client development.

Yes, thank you Hratch. Just to go back to our basic approach in the U.S., we are a relationship oriented bank in both the commercial banking area and in the wealth area as well. And the team has done a fantastic job over the course of the past year bringing in new strategic relationships, in large part through referrals from other parts of the U.S. SBU and our Canadian and capital markets, colleagues. And so we have done a good job. We have expanded on those significant client relationships. But at the end of the day, because we're a relationship oriented bank, we have to get back out and see our clients. So that's what we're talking about the back half of the year, going out and again, sitting down with our clients, talking about new business, new business opportunities, and also going out and prospecting for new clients. Again, I'll go back to the build out of our private banking network in the U.S., which has had a spectacular success. We can hope to continue to build on that. And all that is going to entail us going out and visiting with our clients. So that's why we talked about increase in those types of expenses in the back half of the year.

Right, now that makes more sense to me now. Thank you very much.

Thank you. The next question is from Lemar Persaud from Cormark Securities. Please go ahead.

Thanks. Can you comment on what you're seeing in terms of narrowing the performance gap on domestic mortgage renewals? It looks like to me this quarter, a lot of it could have just been due to strong originations. But I'm just looking for an update and I think other performance gaps on the resi side that could cause your mortgage growth to actually outperform peers?

Good morning, Lamar. I'll take that one. As I said earlier, I think a lot of the changes that we've made, Victor talked about the investments that we made to our mortgage platform. We've also put new people in roles. We've made a number of process improvements. A lot of things that have helped to say increase our advisor productivity and our turnaround times. So not only are we seeing an increase in new originations that are up just under 100% on a year-over-year basis. We're seeing that we're doing better on the client retention front. So we're being more proactive with our reach out. We've got increased points of contact, all aimed at better anchoring our clients. So we're doing better on client retention. I would say a year ago, our retention numbers were sort of in the 80% plus area and now we're at retention where we're just at 90%. So we are making, I would say really good progress. We've got some strong performance indicators that we track weekly to ensure that we're headed in the right direction. So yes, the fact that the market is up and the market is hot is certainly helping. It's what we're seeing in the industry. But we are making changes to how we do things in such a way that I believe that we're going to be able to deliver, I'm going to say more consistent and sustainable performance over the long term. Does that answer your question?

It does. It does, thanks. I’ll re-queue, thanks.

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

Hi, thank you. Good morning. And I apologize if you've kind of gone over this. My phone kicked out while you were doing your opening remarks, Victor. So again, I apologize if you've already covered this, but my question is, there's two questions, the first one is, and they're both related. First question is what happens with FirstCaribbean now? Is it still for sale? Would you consider owning it again? And if not, you have to make some investments there. And what's your expectation there, leads into the next part of the question, which is with corporate. But I'll leave that second question for as a follow up after I hear your answer to this first one.

Okay. So let me take the first one, sorry about your phone service Darko. FirstCaribbean, as you know, we highlighted the complexity of the regulatory review process earlier to all of you. And, you all know that the regulator made the decision to turn down the change and control transaction. There was a -- and I think it's affected by the COVID pandemic, and the particularly acute impact on the economy in the Caribbean region. Our plan was to sell it to a regional investor, to transform the bank and to get more regional scale. Our alternate plan today, which was always, there was always a plan B for us, is to continue to transform our bank. It's a good franchise. We've been in there for 100 years. We have a plan to improve performance, improve profitability and make it the durable franchise for the long term that I know it is. I'm going to pass it on to Harry, because he oversees that business with our team down there and he can shed some additional light. And then I'll take your second question.

Thank you, Victor. Yes, hi Darko, good morning. As Victor said, we have a long history in the Caribbean. We have a strong team that's leading our business in the region, with a great client franchise, I might add. And so now the focus is truly on optimization of our business, and really positioning FCIB for a post-COVID world successfully. And I believe that we have the path forward now in execution to make that happen. So I'm rather optimistic on this team and on the client franchise and that's the plan, as Victor said the plan on the path forward.

Okay, great. Thank you for that. And my second question, takes FirstCaribbean and really what I want to ask Hratch about is, is really the corporate segment. There's a couple of things in there that I'm curious about. One is, you do mention there's going to be higher expenses because of strategic enterprise, what can you give me an example? I mean, why would corporate house a lot of the strategic spend? Why wouldn't the strategic spend be pushed out into the segments that are actually doing the spend? And then secondarily, so it might take, I mean, I've always maybe erroneously thought that you tried to work hard in the past to get corporate and other down to a very minimal sort of loss. But it sounds like what you're saying is, the loss in corporate will be larger from here, and maybe you can give me a hand with the model. If it -- if we're not getting more revenue from Treasury and FirstCaribbean, is it purely just higher expenses from here on? And is the loss going to be similar to last year's kind of quarterly run rate of losses in the corporate segment?

Sure, good morning, Darko. Happy to take that and, okay, you're right on the philosophy. We've historically guided to the segment as a small loss. But I would break that down and say there's a number of different components to it that happened to come up to that. So number one is, the FirstCaribbean business and that's a business, so overall that has, yes and that's a profitable business, the profitability of that business was in the segment. Treasury, we manage Treasury, not as a profit center. So we manage Treasury as a utility. And so we aim overall for net around zero profitability for Treasury. And, the reason for fluctuations is really always just noise, noise because of market factors and transfer pricing not catching up with the speed of movement in rates and so forth, things like that. But I would say noise that normalizes over time, that's why Treasury has ran historically in the plus or minus range. And so what ends up happening is, you've got the expense side and then last is a third component. And historically what we had is the profitability of FirstCaribbean actually offsetting almost entirely the expense side of what's not allocated and stays in corporate and other and that's why you have the results that you had. But the dynamic of each of those components is changing, right. So if we look at the expense side, it is accelerating. And just to give you some of the examples of the types of things, you're right, most of the things that are directly attributed to businesses we allocate out, there is some of the other corporate and other expenses that are related to enterprise kind of head office and overhead type costs that stay there that aren't allocated in the normal course. And when it comes to project, there is enterprise wide initiatives, whether it's through defense type technologies and so forth, that cut across the entire enterprise, some of those types of things are kept in the center or anything else that we deem is not directly sort of driving business results, those kinds of things would be staying in the center to some extent. So that's, what's driving that Darko. And when we look forward, I see that accelerating a little bit as we go through this year, nothing drastic, but accelerating a little bit. And then the decline in both Treasury and FCIB that has happened is going to be with us for a little while. And so net-net that's going to drive the loss in the segment a little bit higher than where it's been. Again, I think you had, you had last quarter at 110, this quarter at 68. Somewhere between those two is where I would guide you as a range. So this isn't a big shift we're talking about, but it's driven by those two items on the revenue side being a bit more unusual and they will normalize over time.

That's great. Thanks Hratch. Yes, that's very helpful, thank you very much.

Thank you. The next question is from Nigel D’Souza from Veritas. Please go ahead. Nigel D’Souza: Thank you. Good morning. I wanted to touch on deposits and it sounds like you expect deposits to normalize and to give back some of the benefit you're seeing on margins, but offset that with loan growth, so I'm trying to get a sense of the timing, do you expect the bulk of that loan growth to lag deposit normalization or do you think or do you expect loans to pick up and grow at the same time deposits normalized?

Let me take a crack at that Nigel. Good morning. I expect that as the economy opens up the deposits normalize as you outlined. And I would expect that our personal and business bank will see an uptick in credit card balances as consumers begin to spend, while continuing to maintain and grow market share in the mortgage segment. I expect that the notable changes in our commercial bank, particularly in Canada as the economy opens up will see an uptick in loans. And the corporate bank I think will continue to behave as it's behaving today. Corporate clients are topping the debt capital markets and we're participating meaningfully there and growing their bank debt kind of I think at the same level that you've seen over the past year or so. I'd see the most notable impact in the credit card balances and I would see that also in the Canadian Commercial Bank as the economy begins to open up. Nigel D’Souza: Got it. I appreciate the color.

Thank you. The next question is from Mike Rizvanovic from Credit Suisse. Please go ahead.

Hi, good morning. A question probably for Laura or maybe Hratch. I wanted to talk about the Canadian P&C NIM. And thanks for the added color, it's on Slide 8 of your presentation. And I guess when I look at the chart on the bottom left, what surprises me is the magnitude of the impact from business mix and I'm guessing that's the mortgage growth that we're seeing that's coming back. And so going back to maybe Laura's comment earlier, where you do continue to expect to see that gravitate toward industry levels, you're still about 200 basis points below your peers in terms of year-over-year growth. And so if I was to normalize rates, and then maybe assume the rate impact of five bps goes to zero, and deposit growth maybe doesn't provide the boost that you had this quarter sequentially, it sort of indicates, correct me if I'm thinking about this the wrong way, but you could see some pretty sizable margin compression just on business mix alone if the other two factors sort of wash each other out. Could you maybe see like a 10 basis point decline over the course of the rest of this year maybe on an aggregate basis? Is that too high or like what would mitigate that business mix impact if you continue to see this book grow?

Yes, sure. Thank you. It’s Hratch. I'll start and then Laura can maybe provide color on the business afterwards. So you've touched on some of the key elements. When you look at the margin and we had it right there on the slide, it's impacted by business mix, and it's impacted by rates. And it gets helped by deposits because as deposits grow, you get the NII, but you don't have an increase in your interest earning assets. So through deposits you have quite a bit of leverage on NIM because of that dynamic. So if I go through each of those components, number one, rates you touched on it. So we knew rates were going to be a headwind on this business. We had said in the past that rates alone is in the low single digit range if you will, on a quarter-over -quarter basis as we continue to track through the repricing of the longer term part of the balance sheet. And that dynamic is largely the same. It's a little bit better now. I mean, you've seen quite a bit of steepness. If you look at the three to five years swap rates, they are materially up. I mean, they're up even more than 10 basis points since quarter end to now. So that helps. So that takes a bit of the sting off, but that's a few basis points, it maybe it's a little bit lower now than what we expected. The other element of rates is the short term rate repricing, and that happens fairly quickly. So after Q2, Q3 when we did see those rates drop, there is I'd say about half of the rate impact that that business is feeling now is that short term repricing. So that impacts margin year-over-year, but that goes away once we get past Q2 and Q3. So the rate impact, think of it as getting to about half of what it is now and continuing unless rates continue to improve. Then the asset mix component, again has two pieces to it. So one is the mortgage is growing, but the other one is really the decline in card balances. And so when you look at the card balance side, you have a significant decline again from Q2 levels last year, but it has stabilized. We're not seeing growth again in card outstanding balances, but it's stabilized. So once again, once you get through Q2 and your comp on a year-over-year basis becomes a margin with the current call it and then maybe similar balances of cards, then that impact will be smaller too. So, you know, net-net of all of that, I expect a few basis points a quarter for the remainder of the year. But as you get to the tail end of the year, and as cards accelerate, you could see it be even better than that.

Okay, so a couple of basis points per quarter through the rest of the year and then some stability.

I think that currently, what you're seeing in terms of current a bit more than a couple is probably the next couple of quarters here and then better maybe after that, yes.

Okay, perfect. That's very helpful. Thanks very much.

Thank you. This will conclude the question-and-answer session. I'd like to turn the meeting back over to Victor.

Thank you, operator. I got to put my mic on. Our results this quarter demonstrate the strength of our core franchise, and the benefits from our diversified business mix and our client focused growth strategy. We're delivering for our stakeholders, and we're delivering by executing against our strategy. I hope that came through in the questions that you asked, and the answers that we provided. Our balance sheet position remains strong. It provides us with significant flexibility to continue to support our clients, to continue to grow our business, and fundamentally to drive shareholder value and return capital to our shareholders, which is what we've been doing for the last bit, and you see that in our numbers, you see that in our share price. We're going to continue to take a conservative approach to our risk and expense management. We're reinvesting our cost savings into organic growth and we are leveraging technology to improve efficiency and to improve client experience right across every business unit at CIBC. We remain well capitalized. We remain well provisioned and we're going to continue to sensibly adapt to the changing macroeconomic environment. I want to thank our 44,000 team members globally, for their unwavering support for our clients, for our communities and for one another, and for bringing our purpose to life each and every day. It's truly a team effort that makes CIBC a success. And to our shareholders, thank you again for your continued support. And to the analysts and investors on the call, thank you for your fine questions and we look forward to speaking with you again soon. Stay safe.

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