Good morning and welcome to the CIBC Quarterly Financial Results Conference call. Please be advised that this call is being recorded. I would now 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, followed by Hratch Panossian, our Chief Financial Officer, and Frank Goose, our Chief Risk Officer. Also on the call today are a number of our group heads including Shawn Beber, US region; Harry Culham, Capital Markets and Direct Financial Services; and Jon Hountalas, Canadian Banking. They are all available to take questions following the prepared remarks. We do have a hard stop this morning at 8.30. So during the Q&A, please limit your questions to one to ensure you all get a chance to participate. We'll make ourselves available after the call for any follow-ups. 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 will now turn the call over to Victor.

Thank you, Geoff, and good morning, everyone. I realize it's a busy one for all of you. So with that in mind, there are really three key messages I want to leave with you today. The first message is that we made strong progress executing on our strategic growth priorities in 2023, and we delivered solid financial results despite normalizing credit losses. Our solid results are reflected in our healthy net interest margins, our positive operating leverage, and our strong capital liquidity. The second message is that we're advancing our competitive advantages by focusing on four key strategic priorities, which I'll elaborate on in a moment. And the third message is that while global economic growth is expected to continue to slow, our client-focused strategy, our disciplined resource allocation, and our experienced leadership team will deliver profitable growth in fiscal 2024 and beyond. Now turning to our results, fiscal 2023 Demonstrated our bank's strength and resiliency amid a challenging economic backdrop with high interest rates and elevated inflation, all of which affects our clients to varying degrees, guided by our purpose we support our clients with advice to navigate the challenging environment and to help make their ambitions real. We continued to benefit from our organic investments over the past several years, delivering record revenue of $23.4 billion, which was up 7%, and pre-provisioned pre-tax earnings of $10.2 billion, which were up 8% from last year. We achieved revenue growth across all of our businesses, where we [presumably] (ph) grew volumes, we remained disciplined on pricing to protect margins, and we generated incremental fee income through deeper relationship with our clients. Adjusted net earnings of $6.5 billion were down 2% as a result of higher provisions for credit losses as credit continues to normalize. Earnings per share of $6.72 were…

Thanks, Victor, and good morning to you all. We delivered a solid fourth quarter to cap off 2023 as laid out on Slide 10. Echoing the themes we demonstrated throughout fiscal ‘23, our fourth quarter results reflect the resilience of our business, our ability to proactively manage through a dynamic environment and the strength of our balance sheet. Supported by revenue momentum across all of our business units and a continued focus on productivity, we generated robust operating leverage, strong pre-tax, pre-provision earnings growth, and diluted earnings per share of $1.53, which was up 22% over the prior year. Excluding items of note, adjusted EPS was $1.57 and ROE was 12.1%. Our capitalization and liquidity continued to improve during the quarter, coming in ahead of our in-year guidance on both fronts with a period-end CET1 ratio of 12.4% and average LCR of 135%. The balance of my presentation will refer to adjusted results which exclude items of note, starting with Slide 11. Adjusted net income of $1.5 billion increased 16% from the same quarter last year. Revenue of $5.8 billion was up 9%, supported broadly by higher NII, trading revenue, and fee income. And we grew pre-provision pretax earnings 18% by containing expense growth to 3% and generating over 6% operating leverage. Credit provisions of $541 million were up 24% from a year ago, which Frank will discuss in more detail. Slide 12 and 13 highlight key trends and drivers of net interest income. While trading income was 26% higher year-over-year in aggregate, we continue to see a shift in trading revenues from interest to non-interest income due to higher rates. Excluding trading, NII was up 8% over the year, driven by continued balance sheet growth and solid margins. Total bank NIM, excluding trading, was up 6 basis points from…

Thank you, Hratch, and good morning, everyone. During '23, as we navigated economic uncertainties, we saw our loan loss performance generally in line with our expectations with retail credit normalizing and sector-specific issues materializing in the business and government portfolio. Over the past few quarters, the headwinds in the US office sector have translated into higher impairments in our US commercial real estate portfolio. While the Canadian consumer remains resilient to higher interest costs, we are seeing excess savings accumulated during the pandemic decline, so clients adjust to a variety of inflationary pressures. Notwithstanding, our [allowance level] (ph) increase throughout fiscal '23 positions as well and will ensure we are prepared for uncertainty in the year ahead. Turning to Slide 25, our total provision for credit losses was $541 million in Q4 compared to $736 million last quarter. Total allowance coverage increased to 76 basis points this quarter, up from 73 basis points in Q3. Our performing provision was $63 million in Q4, mainly attributable to changes to our forward-looking indicators, some model parameter updates, portfolio growth and some credit migration. Provision on impaired loans was $478 million, which were flat quarter-over-quarter. And this was largely due to higher commercial and Canadian retail portfolios, was partially offset by lower impairments in the Canadian commercial portfolio and CIBC FirstCaribbean. While our impaired losses over the full year continued to perform in line with our expectations, we have seen elevated losses in the back of this fiscal year. Slide 26 summarizes our gross impaired loans and formations. Balances were up this quarter, mainly driven by business and government loans in the US and is specifically attributable to the office sector. Overall, new formations remained relatively stable with the increase in retail, mostly offset by a reduction in business and government loans. On…

Thank you. [Operator Instructions] Our first question is from Doug Young from Desjardins Capital Markets. Please go ahead.

Hi, good morning. Maybe Hratch, if we can talk a bit about expenses. It sounded like you had some restructuring charges in the US and capital markets. Can you quantify what those were? Can you confirm that was not backed out of cash EPS? And I do understand your position about looking to drive positive operating leverage over the medium term. I'm trying to get a sense of, is that something you think you can achieve? You did obviously very well this quarter. Is that something you think you can achieve through fiscal '24 and '25? Thank you.

Good morning, Doug. Thank you for the question. Happy to take that. So let me start with your immediate question, and we did disclose that, right? So we had about $114 million in severance. There was a few other things quarter that I referred to in terms of onetime charges that were in those businesses relating to some matters, some real estate, some software, et cetera across the bank. But that severance number that we disclosed was the majority of it. In terms of how it breaks down, I'm not going to get into a lot of detail. But there was -- the predominant pieces of it were in the Corporate and Other segment and in capital markets, and there was a piece of it in the US, the onetime in the US And given what I said in terms of the growth, excluding the onetime you can back into it, it's sort of about in the 10% of that number range that you had this quarter. And all of that is part of our journey, and it ties to the second part of your question as we've said we want to continue optimizing the bank as we go, making continuous improvements, investing, having the ability to move the team around and our resources around. So that's how we've delivered not just this quarter, for the full year, 1.2% operating average that we've shown over three years and five years around neutral despite significantly increasing investment levels over that period of time. And with that foundational capability now built, we have the ability to take out 1% to 2% of our expenses every year. This year, it was more around the 1% range. Going forward, we've got now visibility into the pipeline of efficiency savings we're getting, that's getting to that 2% number a year in '24 and beyond. So that's what allows us to manage our expenses to around mid-single digits, plus or minus, as we said we will do. And the plus or minus depends on the top line environment. So next year, we think it might be a tougher environment on the top line. And so as I said in my guidance, we are now managing to the minus side of mid-single digits on the expenses. But we can do that while actually investing and grows -- having expenses grow above mid-single digits through those investments, funding everything we've laid out in those four priorities that Victor spoke about, including further efficiency improvements through enabling and simplifying our bank. And so that's what allows us to continue generating that operating leverage on an ongoing basis.

I'll adhere to my one question limit. So, thank you very much.

Our following question is from Ebrahim Poonawala from Bank of America. Please go ahead.

Hey, good morning. I guess maybe on the macro and credit for maybe Victor and Frank, just talk to us going back to your comment around the impaired PCL outlook in the mid-30s for next year, one, assuming that the Bank of Canada and rates are done going higher for this cycle, just give us a sense of your expectations on weakness in the economy and the consumer that you expect over the coming quarters? And where is the downside risk? Like, what should we be -- what are you paying attention to, to ensure that impaired PCLs are not meaningfully above, Frank, the guidance that you provided? Thanks.

Sure. And in that guidance, I mean, as you can imagine, there is a couple of moving parts. As I said, we continue to expect some further normalization in our consumer portfolios, something we have seen and something we expect to continue to see. And then there is some others where we expect office to moderate in the next year in line with our maturity profile. And then give and take, that should lead us to that mid-30s range that we feel very confident with. I mean, if asking about downsides, and again, we have increases in unemployment factored in our high-now forward-looking information. If there is a more rapid shock to unemployment, that, of course, would change our outlook on impaired loan losses. But otherwise, given that we have started the fiscal year already and, as such, have a fairly good line of sight into the next few quarters, we feel very confident with our base case outlook, even though there is, as you said, risks to the downside. In particular, any sharp shocks to the economy, a sharp increase in unemployment, a sharp drop in GDP would certainly bring us closer to the downside. And now, Victor will jump in to follow-up.

Just really quick, because I know there are a lot of questions and we're on tight time. So we've architected CIBC to deal with the economic environment that might come in 2024. If things go slow, we'll manage accordingly. If things turn better, and there's a very good chance that we have this ‘soft landing’, we will capitalize on that as well. Thanks, Ebrahim.

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

Good morning. Just a question on capital here and you converted the US loan book to IRB, that's going to add 20 basis points next quarter. That's great. I'm just wondering how does that affect the proximity of your risk-weighted assets to triggering the output floor because the IRB deflates the RWA. So I think that might bring you closer to that for.

Yeah, thanks for the question, Gabe. I'll take that. And so, first let me clarify that the 20 basis points approximate number that we disclosed is proforma net of everything. So that is, we have more than that and benefit from the transition to IRB, it’s netted off by some fairly modest negatives from the combination of FRTB implementation and CVA changes as well as the negative amortization mortgages as well as taking into account any floor impact. And we don't see, at this point, even post IRB, floor being an impact in the foreseeable future. And so net, we would have that 20 basis points this quarter, and I don't anticipate any other impacts because of that in the short term.

Okay, so not a 2024 issue?

Not a material issue ‘24 or ‘25 even. I'm not going to comment beyond that.

Okay. All right, thanks a lot.

Thank you. Our following question is from Meny Grauman from the Scotiabank. Please go ahead.

Hi, good morning. Frank, I found the Slide 29 very helpful. Just a question in terms of the LTVs that you're showing. What are you assuming in terms of home prices to calculate those? Is there any sort of change in home prices that's being reflected?

Yeah, so those are our current LTV calculations. We're based on externally published indices. We adjust house prices to our best prediction of current LTVs. So that would include the more recent moderation we have seen in house prices. It does not include any forward-looking further moderation or recovery in the house prices. It's our current LTV calculations that are shown on the slide.

Got it. And then just in terms of some of the dynamics impacting the performing PCL line, especially in Canada, just wondering the role of expert credit judgment this quarter in determining that number and is there anything notable from a modeling perspective as well, that input into that?

Yeah, a lot smaller number this quarter. As we discussed last quarter, we adjusted our forward-looking indicators and our expectations to a more conservative scenario last quarter. This quarter, I wouldn't call out anything specific. It's a smaller number or number of smaller items impacting that number. It's our model results. It's our expert credit judgment and it's going through our processes that we go through every quarter to land in the right spot for our allowances. So nothing to call out specifically, I would say.

Okay, great. Thank you.

Thank you. A following question is from Darko Mihelic from RBC Capital Markets. Please go ahead.

Hi. Thank you very much. I'll be brief, Frank. I probably had a lot of follow-ups later, but -- and I do appreciate the extra disclosure. I have a question on the negatively amortizing variable mortgages. Coming down from $50 billion to $43 billion, you're showing some success there in getting people out of negatively amortizing. But what I'm interested in is the opposite effect, which is, of the $50 billion, how many of you contacted? And clearly we could see 14% reduction but how many people are electing not to increase their payments or reduce? And what would be the main reason for them not to move into a positively amortizing situation? Thanks.

Yeah. Thank you. Thank you, Darko, for the question. So we have had a proactive outreach program to our clients for quite some while. We started that early. We have now reached out or contacted most of our clients in their portfolio, and we do see strong results, and we've seen those results quarter-over-quarter. In this quarter alone, 13,000 clients took action to remove themselves from negative amortizing status, for the most part by increasing their monthly payments on a voluntary basis to remove their accounts off of negative amortization. Why are clients not electing? There's a couple of reasons for that. Some are just saying, well, I'm aware of the status, I do not have to take action right now, I expect interest rates to come down and I just want to wait for that. There may be other reasons for that. But in general, we are very pleased with the outcomes that we are seeing so far. We continue to expect seeing those outcomes, and we continue to expect that number to coming down as we keep up our outreach efforts and having conversations with our clients.

Okay, thank you.

Thank you. Our following question is from Lemar Persaud from Cormark Securities. Please go ahead.

Hi, thanks for taking my question. Questions for Frank. Can you talk about what gives you the confidence in your PCL outlook despite the continued increase in delinquencies in Canadian consumer? Like, does that assume normalization delinquencies to the Q1 ‘20 rate you're showing here, so the 34 basis points? Or are you assuming something above that 34 basis points you're showing on your Slide 27? Thanks.

Yeah, well, I would say, as I said before, there's a couple of moving parts. So we do expect some further normalization, and it's probably a little bit more product-specific. We talked a little bit about mortgages in our prepared remarks, where we expect normalization, but we are very confident with the quality of those books and that those renewals will remain very manageable for us. Cards performance continues to be very good. There is in part our co-brand portfolio that is supporting strong credit quality but there is underlying investments in risk management that we did in the cards book that is helping drive a real change in credit quality as well. And then in personal lending, again, that is a little bit a mix of different things, but we are seeing strong credit quality there, but there's also certain pockets like our unsecured lines book where we see normalization and we should expect to see normalization. So that gives us confidence with our base outlook because it's based on a bottoms-up assessment of all of those moving parts.

Thanks, I’ll adhere to the one question.

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

Okay, thank you. Capital ratio is going to look pretty strong. Maybe a question for Victor and/or Hratch. Can I get a sense of what are the priorities and at what sort of levels are you comfortable running the cap ratios for the bank, given the type of outlook that you've kind of presented to us? And I guess implicit in that, Hratch and Victor, is whether or not you intend to continue to keep the DRIP on? Thank you.

Good morning, Sohrab. Thanks for that question. We've been as a leadership team, very focused on accreting capital over the course of the year. And as I said in my opening remarks, we've done that every quarter through organic capital generation, through our DRIP, as well as through a strategic risk transaction. We continue to focus on a strong capital level. We look at it through three lenses. What is the regulatory stance today vis-a-vis the buffer that OSFI has put in place? How do we compare against our peer group? And three is how do we view the macroeconomic environment? Our goal is to continue to maintain a strong level of capital and liquidity. I'll hand it over to Hratch to take it through the numbers, how we think about the buffer, how we think about the DRIP. But you can rest assured that that focus of ours as a leadership team on capital is paramount.

Thanks for the question, Sohrab. Let me just add a little bit to what Victor said. First of all, we have very strong capital generation on an ongoing basis, and we do not need the DRIP on in order to continue growing our business and delivering on the EPS targets that we've laid out. If you look at any given quarter, we generate 25 basis points to 30 basis points of capital net of our dividend payments and our ROE is such that that allows us to grow our risk-weighted assets in the high single-digits and continue growing our business alongside with that. And so what that means is over -- the DRIP program over this year has been to absorb the headwinds and to drive our capital ratio up. And we talk about how much we've driven the capital ratio up year-over-year 70 basis points, but that is after having absorbed a significant amount of headwinds through some of the legal charges, some of the regulatory changes, and so forth that have happened. So that's what the DRIP has allowed us to do. We're in a good place now. If you look at those three factors Victor spoke about, there's still a little bit of uncertainty around regulatory requirements where they stabilize around the peer group and where it stabilizes, we're in a very good place entering north of [12.5%] (ph) and accreting from there in 2024. And we'll look at as we get more certainty on those factors. Once we're satisfied that we're stabilizing around these levels on a relative and absolute basis, we're able to shut down the DRIP and able to continue growing our business through our strong organic generation.

Thank you.

Thank you. Our following question is from Nigel D’Souza from Veritas Investment Research. Please go ahead. Nigel D’Souza: Thank you. Good morning. This is another question for Frank. On performing credit losses this quarter, a couple of factors here. First, it doesn't look like your FLIs fully reflect the recent softening macroeconomic outlook and specifically on home prices, I would understand your economic team has negatively revised the outlook for house prices for 2024. So just wondering how sensitive your performing PCLs would be to that downward revision in home prices and maybe some comments on why you elected not to apply management overlay to build more provisions given the challenging macroeconomic backdrop?

Yeah, so thanks for the question, Nigel. Overall, as I said, we feel very comfortable with our allowances. We reflected some of those adjustments last quarter and didn't feel like there was anything that we had to add materially this quarter for those outlooks. Generally, and across all products, I would say, it's probably debt service ratios, unemployment, GDP, that is more sensitive to actual PCLs. House prices, of course, would play a role in the mortgage allowances, but that is an area where we actually have built quite a lot of reserves. And then again, we are reflecting a variety of outcomes and have adequately reflected that in our allowance. Nigel D’Souza: Okay, that's my one question. Thank you.

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

Good morning. On this new Canadian mortgage charter, I've gone through it and I am having a little difficulty finding stuff that's brand new. Just high level from your perspective, is there anything in there that's new that affects CIBC that could affect earnings or capital? That's my first question.

You're right. It's very well aligned with previous guidance and expectations. It's something that we do. We work with clients in financial hardship and we try to get to the best possible outcomes with our clients wherever possible. So there's nothing new that I would say that sticks out and would impact us as we already have established practices of how we work with clients in financial hardship.

Two quick follow-ups on that then. So the notion that banks can't charge interest on interest, presumably that only applies to mortgages that fall under that relief category under the charter. It doesn't apply to existing mortgages that are a negative M. Is that appropriate? Is that fair?

That is our understanding.

And then finally on the hardship, when mortgages fall into hardship, does that necessarily increase the capital requirements and is that meaningful?

Well, it does increase capital requirements but it is a very small part that would actually be captured under the financial hardship rules. So overall it is not material or meaningful, but it would impact capital requirements for sure.

Thank you.

Thank you. We have no further questions registered at this time. I would now like to turn the meeting back over to Victor.

Thank you, operator, and thank you for the questions today. We're going to give you back some time. I know you got another call at 8.30 and another call today. I want to thank you all for your engagement with us throughout the fiscal year this past year on our quarterly calls and in the other forums where we get to engage with you. I said at the outset of my remarks that we have the right strategy at CIBC. We also know how to operate in a fluid and uncertain environment. Our proactive management in a more challenging environment this past year is an example of that. A year in which we generated positive operating leverage, a year in which we protected net interest margin, and a year in which we strengthened our balance sheet throughout the year, while continuing to make strategic investments to ensure our bank is well positioned for the future. I have full confidence, and our leadership team has full confidence in the deep bench of talent within our businesses, and our experienced leadership team is there to deliver on our strategic priorities that we've laid out here in all of our businesses in the upcoming year. Before we close the call, I'd also like to recognize our entire CIBC team for their contributions as they delivered on our purpose for our clients, our communities, and for one another and of course for our shareholders. This purpose comes to life each year at CIBC Miracle Day, taking place next week, next Wednesday, to raise funds for children's charities. I'm looking forward to the event. It's a big deal for us. It's a big deal for the community. It's something we started over three decades ago, and I hope you all participate. Wishing you all the best for the holiday season. Thank you.

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