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'll begin this morning's presentation with opening remarks from Victor Dodig, our President and Chief Executive Officer; followed by Hratch Panossian, our Chief Financial Officer; and Shawn Beber, our Chief Risk Officer. Also on the call today are a number of our group heads, including Mike Capatides, U.S. Commercial Banking and Wealth Management; Harry Culham, Capital Markets and Direct Financial Services; Laura Dottori-Attanasio, Canadian Personal and Business Banking; and Jon Hountalas, Canadian Commercial Banking and Wealth Management. They're all available to take questions following the prepared remarks. As usual, during the Q&A to ensure we have enough time for everyone to participate, please limit your questions to one and then re-queue if need be. As noted on Slide 2 of our investor presentation, our comments may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results may differ materially. With that, I'd like to turn the meeting over to Victor.

Thank you, Geoff. Good morning, everyone, and thank you for joining us today. My remarks this morning will include comments about our third quarter results and the operating environment as well as a summary of our key strategic priorities, which we outlined to you on Investor Day. Hratch will then provide a more detailed review of the quarter, you on Investor Day. Hratch will then provide a more detailed review of the quarter, followed by Shawn, who'll cover our credit performance, after which all of us will be happy to take any questions you may have. Against an increasingly challenging macro environment, our CIBC team delivered solid third quarter results with earnings of CAD1.7 billion. Revenue growth of 10% was underpinned by strong net interest income and fee growth as well as a 19% year-over-year increase in our connectivity revenue. Our asset quality remains very strong with a net write-off ratio that is well below our pre-pandemic levels. Our earnings generated a return on equity of 15.1%, and our capital position remains strong with a CET1 ratio of 11.8%. The results were driven by organic growth in all of our businesses. We delivered solid volume growth in both consumer and commercial loans and deposits and higher fee income. We also had strong contributions from Direct Financial Services, a key differentiator for CIBC, which I'll speak to later. Let me turn now to our business segment highlights, starting with Personal and Business Banking. Our Consumer segment continues to see good momentum as we remain focused on executing against our strategy. Our priorities are to gain market share in the high-growth, high-touch affluent segment, while delivering exceptional client experiences to all of our clients through leading-to-edge technology. As a proof point, our strategic investments in providing personalized advice are contributing to solid…

Thank you, Victor, and good morning to all of you. Our team delivered yet another successful quarter in Q3, resulting in reported net income of $1.7 billion or diluted earnings per share of $1.78. Excluding items of note, adjusted EPS was $1.85. While provisions for credit losses against performing loans trended higher, driven by the negative shift in the economic outlook, credit performance remains strong as evidenced by an impaired loan loss ratio of 12 basis points. Shawn will cover credit provisions in further detail later in our presentation. The balance of my presentation will refer to adjusted results, which exclude items of note starting with Slide 8. Executing against the strategic priorities we outlined at our recent Investor Day, we maintained the strong growth momentum across our bank. Pre-provision pretax earnings of $2.5 billion and revenue of $5.6 billion were both up 10% from the prior year, supported by broad-based balance sheet growth, improving margins as well as higher trading and investment gains. The strength of our Canadian P&C franchise underpinned this quarter's results, delivering revenue and pre-provision pretax earnings growth of 16% and 19%, respectively, over the prior year. Total bank expenses were up 2% sequentially or 10% from the prior year as the impact of inflation and increased strategic investments begins to stabilize. As highlighted on Slide 9, net interest income growth continues to be strong, up 14%, excluding trading compared to the prior year. NII was helped by diversified loan and deposit growth across our franchise, up 16% and 12%, respectively, over the prior year. Total bank NIM was stable sequentially and up 4 basis points, excluding trading. Canadian Personal and Commercial Banking NIM was up 13 basis points, mainly due to product margins, which benefited from higher interest rates, partly offset by lower margins on…

Thank you, Hratch, and good morning. Our overall credit performance remained strong this quarter, reflecting the resilience of our portfolio, notwithstanding various headwinds impacting the overall economy. We've continued to support our clients while proactively managing our underwriting activity in response to the evolving environment, and we remain comfortable with our risk levels and coverages. Slide 21 details our provision for credit losses. Our PCL was $243 million in Q3 compared with a provision of $303 million last quarter on a reported basis or $209 million on an adjusted basis. Provision on impaired loans was $156 million in Q3. Impaired provisions were down quarter-over-quarter across our businesses. Other than in Canadian Commercial Banking and Wealth Management, we've had a small provision this quarter versus a recovery last quarter. The relatively low level of impaired provisions this quarter is partly driven by a few provision reversals in business and government loan portfolio. Impaired provisions in retail remained stable quarter-over-quarter and continue to perform better than pre-pandemic. Provision on performing loans was $87 million this quarter, driven by deterioration in our forward-looking indicators from last quarter and other portfolio movements. Turning to Slide 22. Our allowance coverage ratio remained flat at 58 basis points in Q3. Allowance dollars were up quarter-over-quarter, mainly due to an increase in performing allowance as mentioned earlier, partially offset by a decrease in the impaired allowance. We continue to be comfortable with our coverage ratios, which remain above pre-pandemic levels. Slide 23 details our lending portfolio mix. Consistent with previous quarters, our portfolio reflects good diversification and strong overall credit quality. Our total loan balances were $517 billion, of which 56% is real estate secured lending. Our variable rate mortgage portfolio accounts for a little over 1/3 of our mortgage portfolio and show strong credit quality and…

[Operator Instructions] And the first question is from John Aiken from Barclays. Please go ahead.

I was hoping that you could give us a bit of an update in terms of the Costco portfolio, how the performance has been working through the system and whether or not you can speak to any early wins in terms of cross-selling into that customer base?

John, it's Laura. Happy to take that question. Maybe I'll just start from a financial perspective to say that we do continue to track within our expectation of delivering positive net income within two years. So that's good. I'd tell you, we're really pleased with our strategic investment. As we've talked about, it really is a key part of our strategy to grow in the mass affluent segment. So when we look at the early client results, we're really encouraged. I'd tell you that the portfolio has performed well above our expectations and that's in terms of client migration, engagement, purchase volumes and new client acquisition. We're actually about 2x greater than we had expected when it comes to new client acquisition. So feeling really good about that. And when it comes to the strategic, if you will, value of this acquisition, it was all about franchising these affluent clients. What I'd tell you is, while the bulk of our activities really start to kick off this fall. We've already made some pretty encouraging progress. So we've franchised about 20,000 clients so far. So early days, we're only five months in, but we're really pleased with our momentum when we think how early on we are. So thanks for the question, John.

If I can just do a quick follow-on. With the plans that you have later on in the year, should we expect to see continued expenses to pursue that strategy?

I would tell you, yes, over the next few quarters. So we did show, I think, in our disclosures. So Costco contributed about 3.5% increase to our expenses. And so you can expect to see that in the next few quarters.

I think the most important thing, John, just to reaffirm what Laura was saying is, we strengthened our hand in the credit card segment, and we're a strong number three and we're chasing number two and number one. We've got an opportunity here with a very, very attractive client base. Things have gone really well. And the growth prospects over the medium term are what we're particularly encouraged by, especially with the franchising opportunities. This falls into the heart of our affluent segment growth strategy that we laid out at our Investor Day.

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

I guess maybe Hratch can just spend some time in terms of the margin outlook. A twofold question. One, when we think about the margin at the top of the house, give us a sense of the outlook for the trading NII. Is that inherently liability sensitive? So as rates keep going higher, that $141 million should continue to go down? And then just give us some color around the trajectory for the margin and the puts and takes both in Canadian and U.S. P&C and the deposit pricing pressure that you're seeing in the U.S. in particular?

Thank you, Ebrahim. Thanks for the question. In general, we feel very good about NII trajectory, as I said in my remarks, as well as the NIM outcomes over time a bit of color. And in terms of total bank, as you know, the mix across the business can affect that. And so, the mix this quarter on a sequential basis was actually a positive to total bank margins as was the P&c increases that we saw in the Canadian business. The trading side was negative. That's why we'd like looking at it from a non-trading perspective, right? Because the trading, what happens is between the NII line and the other income line, depending on what markets are doing and how our desks are positioned in terms of what the client flows are and the underlying and then what hedges on some of those trades would be sometimes the hedges are in the money, sometimes the underlying is more profitable. And so it can move around between those two. You have to look at trading overall. And so trading, I look at the results this quarter, which are more than $60 million up year-over-year. So a strong result there and we expect to see good trading volume going forward. Now let me go about non-trading side. On the non-trading side, the two big components are what we always highlight for you, the Canadian margin and the U.S. margin. Both of them will have long-term positive -- long-term and medium-term positive trajectory, benefiting from good strong margins in the product and rising interest rates. What we're seeing in Canada, as we said, is there's a few basis points positive per quarter is the underlying momentum from interest rates. We have some mix elements that helped us this quarter. We had some…

Just as a follow-up, if you can talk to what you see in terms of deposit spreads and pricing both in U.S. and Canada.

Yes. Maybe I'll start with that and maybe the businesses can jump in as well, Ebrahim. So, we are seeing very strong momentum on margins on deposits, so most of the benefit from rising rates comes in on the deposit side. You would have seen overall disclosure we provided. We have 25% of our deposits are non-interest-bearing. Those benefit from rising rates. If you look at the interest-bearing part of the portfolio, that's not term that 50 basis points, it splits half and half, right? Half sort of mid -- what we would call mid beta, so sensitive to betas and half of it really indexed and so not that much sensitivity to betas. Where we have beta sensitivity, we've held very well. I would say, at least as good as the assumptions in our interest rate sensitivity disclosures. And so we don't see anything in the short term that would change that. When you look at the U.S., particularly -- the U.S. mix is even better than that 35% of our deposits in the U.S. are non-interest-bearing, and that's been pretty stable. Balances have been growing, percentage has been pretty stable. And again, our betas seem to be holding. So if you feel comfortable about deposit margins going forward.

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

I've got three great questions, but I'll stick to one, it's not that great. I just want to delve into the expense commentary a little bit. If I look at the first half, excluding variable comp, it was a 10% growth this quarter. And I'm including the initiative spending all that of Costco, that we're at 11%. And it sounds like we could be running at that rate for the next little while. Just if you can kind of give me the glide path over the next four quarters because I figure some of that should fade if only because we've got easy comps.

Gabe, it's Hratch. Happy to take that. Let me backtrack for one second. Our approach to investing in our bank, investing in our strategy and the financial targets we're striving for it. It remains consistent. It's done that for the last couple of years. We have a well-thought-out strategic plan we outlined in our Investor Day. We're executing against that plan, and we're getting the results as you see. So financially, we've guided that, that will translate to accelerated revenue growth, share gains, 7% to 10% pre-provision earnings growth, positive operating leverage over the medium term. And we've been delivering on all of that. You mentioned some of the results on the expense side. But I would look at all of it, right? I'll have over the 12-month period, if you look at the last four quarters trailing, we've delivered revenues and that's been 10%. And we've been delivering expenses 11% on a 12-month basis, 10% this quarter, right? In terms of this quarter, happy to give you a little bit of color. Our increased expenses are a large part, as we highlighted in the presentation, still impacted by the investments as well as the inflation piece. In the quarter, 5% of it was the investments. About half of that, as we've highlighted, was Costco and the U.S. And so the number Laura gave 3.5%, Costco, call it, 3.5% of the PBB expenses on a total bank basis, it's about 1% and change and combined U.S. and Costcos at 2.5% we show. Both of those are plateauing. So I would look at those. We have a full quarter of expenses related to Costco this quarter. There's some variability going forward, but largely stable. And our U.S. investments are plateauing. And so we expect starting in Q4, the sequential expenses in the U.S. to also plateau. And so those will contribute to the stabilization. We are proactively managing the remaining part of the portfolio in order to solve for our operating target -- operating leverage targets. And the inflation elements as well we see over the next few quarters, that's probably about 1/3 to 1/2 of the remaining expenses we've highlighted there on the slide, and we see that moderating over time. So where do we go? We're focused on delivering what we've committed to. We've guided to high single-digit PPPT this year and neutral-ish operating leverage. We feel very good about delivering the pretax pre-provision and we continue to work on the operating leverage. This quarter, we delivered near neutral operating leverage despite some pressures on revenue from the markets that were unanticipated and we're focused on continuing on that positive operating leverage actually next quarter and going forward, and getting to that mid-single-digit expense growth over time that we've talked about at Investor Day as we get into next year.

Into next year?

It's well outlined. And Gabriel, just -- we have, as a leadership team, an overarching view on growth, profitable growth, and we need to invest to generate that growth across all our businesses. We have the goal of being top of class in everything that we're doing. Everything that we laid out for you on Investor Day, being number one in affluent client growth, being number one in client experience, investing in our future differentiators. All of these investments are driving the kind of results that you're seeing in our bank, market share gains, top line growth, margin expansion. And we will continue along that path. From time to time, you may see operating leverage lag in the U.S. business, that's the case. And I'm going to hand it off to Cap in a second. The bottom line is that our view on growth in the U.S. is quite optimistic, but our focus is on organic growth. And we're gearing up for more organic growth in the commercial bank, which is why we're investing. We're gearing up for more growth in our Wealth Management segment, which is why we're investing. So Cap, maybe you can just give a flavor as to what is going on in the U.S.? Why we -- where we're going into the new year when it comes to our financials and our strategic growth priorities?

So thank you, Victor. Again, as we outlined on Investor Day, we're simply making investments in our people, our technology, our product offers and our infrastructure teams in the U.S. And we're doing all that to fuel organic growth and -- that we've achieved and planned for, for the coming quarters and years. As Hratch mentioned, starting next quarter, we expect those expense levels to plateau. And combined with our robust revenue growth in all of our U.S. businesses, we hope to achieve in the U.S. Commercial and Wealth segment positive operating leverage by mid next year.

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

Maybe for Harry on Capital Markets, generally resilient on a segment basis, but one of your peers yesterday took a write-down on the leverage loan book. And I was wondering if you can comment on your kind of book in the U.S. and if you see any issues near term?

Well, thank you for the question. As I mentioned in the past at Investor Day and other calls, we really do have a differentiated platform that is highly connected with the rest of our bank. And we're building a true client-centric North America business that delivers relatively lower volatility pre-provision earnings. So with that backdrop, we're highly selective and disciplined with respect to the area you're referring to. It's a very small area, essentially a material part of our business, and we're really focused on our client needs. And so, we experienced no losses due to this exposure in quarter three and we really feel comfortable with our platform as we move forward in that respect.

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

Just a question on your estimate of the impact of the Canada recovery dividend based on the drop that was just made public, I believe, on August 9. I'm just wondering how much certainty do you have in that number given that it's a draft is the fact that you gave the number, I guess, a good indication that you don't see this changing too much by the time it gets finalized?

Thanks for the question, Meny. I wouldn't read that into it. In terms of how much certainty we have in the number, calculating the number is pretty easy given the draft legislation. So we have lots of certainty in the number given the draft legislation, as we said in our disclosures. But it's draft legislation. It's still up for public comment. And if the legislation changes then the number will change. But we felt it was important since we can calculate the number to disclose that to our shareholders at this point in time. And I will say our capital position, we're very comfortable can absorb that, right? If that were to come in all at once and impact capital, it's 18 to 20 basis points of capital and it still allows us to stay around the capital levels that we discussed at Investor Day, continue to invest in our business. So, it's not going to be that significant to us. And so we disclosed the number, we thought it was the right thing to do.

All right. That makes sense. So just to clarify, it's reasonable to assume that it could still change though, right? Is that a fair assumption?

I know as much as you do on that, it's draft legislation, and it will, at some point, presumably get finalized.

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

Just a quick one for you. I think you had some interesting stats here, one of which was the average credit quality of the business and government book is investment grade at BBB. Do you have a sense of what it would have been 5 or 10 years ago? And is there any reason to believe that in the next cycle, then because of the improving credit quality there? Also in retail, I suppose, being more secured that your through the cycle kind of PCL shouldn't be lower than would have been over the last 5 to 10 years?

Sohrab, thanks for the question. So we're very comfortable with the business and government portfolio across the board. Obviously, over the last several years, we had the acquisition of the Private Bank, now CIBC Bank U.S.A. And so its profile is very strong. We're very comfortable with the portfolio that we acquired. It's performed in line with our expectations. We've continued to maintain our underwriting discipline through cycles, including recent originations. We feel good about those originations across the commercial and corporate banking platforms. And similarly, with our retail portfolios, again strong and steady and consistent underwriting discipline. Our clients are in good shape coming into this -- whatever this new period may ultimately unfold, having come through the pandemic. We saw good client behavior. We saw deposit balances and investment balances and bureau scores all improve. So from an overall perspective, we've given some guidance during the Investor Day as to what we would expect our impaired losses to be over the coming years. And we don't -- we're not changing that perspective today.

Thank you. The next question is from Nigel D'Souza from Veritas Investment Research. Please go ahead.

I had a couple of questions for you on your forward-looking variables if you could bear with me that you outlined on Slide 37. The first was on your household debt service ratio outlook. It looks like that was revised lower this quarter relative to the last quarter. I'm wondering what led to that downward revision in the outlook. Has there been a change in the outlook for interest rates? Just trying to get a sense of why you expect the DSR to be lower?

So yes, there was a small change in the interest rate outlook in the outer years. And so that really impacted principally on the mortgage DSR calculations in the model. So that's really what's driven that change quarter-on-quarter.

Okay. And I assume that you're assuming or your revision which is a lower pace of interest rate hikes on interest rate costs, is that correct?

Yes.

Okay. And then sticking with the theme here. Looking at your downside scenario, or the HBI, you have a decline in the first 12 months, which makes sense. That's typical. But you also have a sustained decline in the remaining forecaster. So wondering what your rationale was there for the HBI to continue to decline, not just in the near term but over the medium term in your downside scenario?

Again, it's a downside scenario. So it anticipates a longer period of low growth. In fact, this quarter more of a recessionary sort of profile than it was in prior quarters. So, over that the period that the FLI cover, we saw some reduction there. And it's the outlook from our macroeconomics department. We build that into our models and incorporate that as part of our overall assessment of the quarter. But that's really what's driving the change quarter-on-quarter.

Okay. And last question for me on this, comparing Canadian versus U.S. GDP. Across all the scenarios, you have Canada GDP growth outperforming in the U.S. trying to get a sense of, again, what's the rationale there? I mean, what we're actually seeing right now is perhaps more interest rate sensitivity in the Canadian economy. So why do you expect Canada outperform even your downside scenario you have U.S. in a mild recession, but Canada not entering a recession, at least from a GDP standpoint?

I think there's a few things that the economists have been looking at, including sort of the starting point from where the recovery happened between Canada and the U.S. Canada was slower to recover. So we've got a bit of that, I would say, relative tailwind, if you would, between the geographies. We also have certain elements within the Canadian economy from a commodities perspective and strong employment that they continue to, I'd say, provide some level of cushion to the Canadian economy relative to some of the other headwinds. And so it's a bit of a relative call based on those factors that result in a bit of a different perspective on where GDP goes from here.

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

Could you help me reconcile two things that you've offered on this call so far, it's hard for me to see how they come together. One, you said that you don't expect a lot of margin improvement in Canada and the U.S. in those personal and business banking segment in the near term and fairly modest going forward. But your sensitivity suggests this is in your presentation, but there is meaningful upside in NII from changes in rates. Is the reconciliation of those two concepts really that the margin and the NII benefits will accrue to the center of the house in treasury and not the segment? Is that the right way to reconcile those two statements?

I wouldn't say so, Mario. So if you look at the sensitivity and you run the numbers on the $354 million plus $100 million, remember, that's over four quarters in the first year. And if you run the math on basis points to the total bank, right? So total bank NIM, that's 4 basis points. And so if you look at that on a segment basis and you look at it on a quarterly basis, you get to something that's again in that modest quarter-over-quarter impact perspective as that ramps up, right? And so when you look at even to date. If I look at what's happened from an interest rate perspective, if I look at quarter-over-quarter trajectory purely isolating the impact of interest rates as those have started coming up. That's what we've seen, a few basis points positive contribution to the margins in P&C to the margins overall to the bank. So that's what we expect from interest rates. And that's part of the gradual re-pricing of the balance sheet as we manage that interest rate sensitivity to our targets. So over time, it does add up, but we do expect good healthy momentum. It just comes slowly quarter-over-quarter.

And then the year two sensitivity, would you offer a similar and that it might just be slightly better in year two, but it's entirely consistent with your guidance then on what margins can do?

Yes, that's right. And actually, what happens, right, is you get -- it's slower the year two part. Because if you look at the first year, the amount of that we disclosed, that's due to short-term rates. That's basically the short resets, that happens within a quarter even. And then the rest of it is the longer-term repricing that takes several years to price through. Once you get to the second year in that interest rate sensitivity, it's just assumed that you get this 100 basis point increase and then rates stay there. So there's no more short-term impact. So it's just that ongoing repricing of the long exposure. So, it's even more gradual when you get into the second year.

I just add one other point is that our ability to grow market share is not factored into that. So if you actually look at the money in at CIBC, we're number two in the market today. And our goal is to be number one. So we are focused on continuing to grow deposits from our client base, continuing to grow investment management business from our client base. And as we go forward and we see the balance shifting perhaps away from loan growth and more continued deposit growth, we are going to be driving those numbers going forward, Mario, and just watch out for that across all of our businesses.

And Victor, do you -- now that you mentioned, do you believe that CIBC's 11.8% capital rates can support that type of markets they're going?

I think deposit growth actually contributes to capital origination as does investment management. We're very focused on that.

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

I'm just going to come back to some more detailed question on the soft pack, so page -- if I go to Page 6, non-interest income that other. Can you talk a bit about what drove that increase $114 million this quarter? Typically, it's below $70 million.

Yes. Thank you for the question, Lamar. Happy to take that one. So I'll say there's a little bit of accounting noise here and technicality between the different line items. So let me try to decompose that for you and leave you with the punch line. So the large fluctuation in that line this quarter, if you dig underneath it, it's specifically the subline that's gains and losses on non-trading derivatives. And that's where we had $76 million quarter-over-quarter increase, $53 million year-over-year increase. So that's basically the movement. There's two things that impact that. One is a lot of our treasury activities related to again non-trading derivatives used for hedging and that's hedging of interest rate positions, hedging or funding that we issue both on the interest rate and the currency side. And then also financing activities in capital markets. So sometimes derivatives are used in those structures where we're financing securities positions providing leverage to clients. And so that through that line item. And so the noise part, there's about $30 million to $35 million of that number, whether you look at it on a year-over-year or quarter-over-quarter, that's actually noise that's offset in other line items. So this is similar to what I was saying on the trading thing. Sometimes you've got an underlying position and that comes through NII and then there's a hedge on it with a derivative and that comes through this line item. So $30 million to $35 million of this is offset either in NII declines or declines in the FX other than trading line. So that I would consider as there's no net impact to our revenues. The remainder of it is real. And really, if you look at it quarter-over-quarter, about $40 million of that, that's related to our treasury hedging activities, which had a positive impact. So that's the only real net revenue benefit that I would highlight the rest of it is noise.

Okay. That's understood. And then just sticking with that same schedule and non-interest income, the card fees. I know this has come up in the past, but the lowest level in two years, you've added on the Costco portfolio, purchase volumes are increasing. So can you talk to me a little bit about why is that card fees line not increasing? And the number I'm referring to is the $98 million?

Yes. Thanks, Lamar. And good question on that one as well. So as the Costco portfolio has come in, it actually put some pressure on the card fees in PPB. And remember, we talked about this a little bit in the past. The way the revenue on that program works, there's revenue in the fee line item, but there's also expenses that go as a contra revenue on that line item related to points and so forth on the cards. So the Costco program on its own, as it came in, it's put about, call it, around a $30 million pressure on the fee line item. That's in now. On a go-forward basis, I don't expect it to put -- it's going to be neutral on the fee line item. So going forward quarter-over-quarter as we grow the program, no contribution to fees but also no further pressure. So that puts pressure on that line item if you look at it now relative to prior quarters, but it won't going forward. And on the NII side, it more than offsets that, and that's how the revenues of that particular program come in. So hopefully, that's helpful.

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

First question, just a couple of numbers questions, maybe for John. Just looking at the Canadian wealth. So I'm just taking your adjusted numbers. And correct me if I have the numbers wrong here. But when I calculate Canadian Wealth on its own. It looks like you had a pretty sizable decline quarter-over-quarter in the adjusted earnings number. And it looks like it's all revenue driven. Can you comment on Canada Wealth specifically this quarter?

Yes. So, the flow piece of the Canadian Wealth business was very good. On a retail mutual fund basis, we're in line with the industry. The industry is soft. In Gundy, we had our record flow. So we've had record flows in the third quarter, record flows year-over-year. What you see there is just market fluctuations. It's a Canadian business. Markets were choppy in Q3. And that's the -- nothing else, but the market and reasonable flows within that market.

Okay. I guess I'm just surprised by the magnitude. Just based on my numbers, it's $94 million this quarter, down from $139 million. It just seems like a sizable decline just even given the market conditions. Anything else in that? Is there anything related to mix or what the flows have been?

The close -- it's market. There's nothing else in there.

Okay. So, no difference in the flows that are coming in being maybe a little less profitable type or type?

So again, the industry and retail mutual funds, those are the best margin flows. The industry is negative on flows in Q3. I think we ranked number two in the industry, less redemptions than most. And our Gundy flows are at record levels. Now Gundy flows are always -- full service brokerage flows are lower margin. But that would not explain any of the drop. The drop is market.

Okay. Appreciate that. And then a quick one for Laura. I just wanted to ask about the Canadian residential mortgage book. And if you look at Page 34 of your report to shareholders, it shows that 22% of your book is greater than 35 years on amortization. And I think that was 12% last quarter. It was zero at the end of last year. And I don't know off the top of my head, I'm guessing that's probably higher than peers. But is there any reason to look at this and think that maybe CIBC's borrower base on the mortgage side in Canada, are just more highly levered than what we see with the peers. Any color on that would be appreciated.

Yes, Mike, I'm happy to answer that, and Shawn can add on if he likes. Yes, I don't see any issue with that. As you know, and Shawn talked about it with the rise in rates and the variable rate mortgages with how our book functions, you see increased capitalization as rates rise because our clients' payments that are under variable rate mortgage doesn't change until they hit a threshold. And so that's why you see higher amortization. Shawn talked that what we're seeing is our clients proactively start to make payments. So that's why you see increased amortization, but nothing to worry about, as Shawn pointed out. And a lot of that will get reset at renewal time from our clients, so not concerned. I don't know, Shawn, if you wanted to add. Go ahead, Mike.

Sorry. So -- sorry, go ahead, Shawn.

Look, I'd just say that this is a function of, as we talked about, it's a fixed payment, but the more -- as interest rates rise, more of the fixed monthly payment goes towards interest rather than principal, which then just mathematically extends the amortization. So -- and if that continues to a level, then clients can start to capitalize that interest, which we're not seeing at current rates, but the rates continue to rise, you could see some of that happen. And then as we've talked about in prior discussions, if that capitalization continues to a level it hits what we call the designated amount, which is 105% of the original principal amount then they did need to be an immediate payment to deal with that. But at this point, the 22% of the portfolio that has the amortization beyond is really the mathematical outcome of more monthly payment going towards interest rather than principal and automatically, therefore, extending out what the calculated amortization would be based on that payment.

Okay. Got it. And then just to your knowledge, Shawn or Laura, would you think that CIBC would have a higher number than peers? Because the structure on that variable product is pretty similar for most of the banks, I'm just wondering if it's something that's maybe a bit more elegant at CIBC and why that would be? It would suggest potentially maybe borrowers taking on a bit more leverage at least with respect to the most more recent originations. Any thoughts on that?

Yes. I haven't seen the other results. I'd just say that this is the way the product would work given that we've got the fixed monthly payment that doesn't adjust with interest rates. And as Laura said, we are seeing some clients just proactively making payments to keep that amortization flat. But we don't have concerns based on what we're seeing to date in terms of credit quality or issues building.

Thank you. The next question is from Doug Young from Desjardins Capital Markets. Please go ahead.

Hopefully, this will be relatively quick. Victor, at the very beginning, you talked about the addition of 300,000 clients. I think that was in Canadian Banking and you gave some stats around that. What I'm particularly interested in is where those clients are going? Are you having success attracting them into core deposit accounts where paychecks are going into? Is this more mortgage origination? Is it across all of it? And how much and how many of these clients would be multiple product clients? And how is the cross-selling on that side? Just trying to get a sense, could you talk about growth is obviously an important part of that. So just color would be much appreciated.

Thanks, Doug. And if you go back to first principles and our key strategic priorities to grow within the affluent segment and to over-index there. So as we took you through the data on Investor Day, in Laura's presentation, she outlined our current portfolio of clients, 11% of our households are in the affluent segment. Our strategy is to over-index on that and to grow our market share in that affluent segment. And when you see us bring in 300,000 clients, 25% of which are in the affluent segment, that strategy is on track. Overall, clients in the affluent segment tend to have deeper relationships with us. They go through the CIBC GoalPlanner platform. They tend to have business on both sides of the balance sheet. That is exactly the kind of business we're focused on. That is highly aligned with the strategy that Laura outlined at Investor Day, and we continue to deliver on that. Laura, I don't want to add anything to it. But we're highly encouraged that one of our key priorities is well on track, and we plan on delivering on that after quarter after quarter.

Well said, Victor, I would state that to your question, where we're seeing it, it's across all of our products, but really leading the way, and this is great is in the deposit side. So with everyday banking products, and so, that is how we real engagement with our clients. So we're really happy with how we're leading in that regard. So thanks for the question Doug.

And just Laura, on the deposit side, is this more on the term side? Is this more checking account? Can you give a little more granularity on that side?

Yes, it's across the board that we're seeing it. So again, very solid and we continue to see really impressive new client acquisition and retention in our everyday banking accounts. So those are our transactional accounts.

Thank you. Ladies and gentlemen, this all the time we have for your questions. I will now turn the call over to Victor.

Thank you, operator, and thank you all for your very insightful questions and we hope we answer them to your satisfaction. I just want to close by saying a couple of things. The solid results we reported this quarter demonstrate our strength and agility and a challenging economic environment. As we've laid out to you at Investor Day, we have a strategic plan that's built for sustainable growth and our continued capital strength enables us to focus on targeted, high return investments to deliver value to our shareholders over the long-term. Our senior leadership team at CIBC is highly focused on delivering against these objectives. We're going to continue to take a discipline approach to our risk and expense management. We're going to proactively calibrate our growth investments to changes in economic conditions. If things get better, we'll continue on the path. If things soften up, we'll adjust accordingly, but we're always focused on strategic growth for the long run, and we're going to continue to leverage technology to improve efficiency and the banking experience we offer to our clients. So in closing, I'd like to thank our entire CIBC team for being on purpose as we deliver for all of our stakeholders. And I want to thank you for your continued interest in our bank, your investment in our bank. And we look forward to speaking with you at the next quarter call and certainly in between them. Take care, enjoy the rest of summer.

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