TORONTO, May 29, 2014 /CNW/ - CIBC (TSX: CM) (NYSE: CM) today announced its financial results for the
second quarter ended April 30, 2014.
Second quarter highlights:
-
Reported net income was $306 million, compared with $862 million for the
second quarter a year ago, and $1,177 million for the prior quarter.
-
Adjusted net income(1) was $887 million, compared with $862 million for
the second quarter a year ago, and $951 million for the prior quarter.
-
Reported diluted earnings per share (EPS) was $0.73, compared with $2.09
for the second quarter a year ago, and $2.88 for the prior quarter.
-
Adjusted diluted EPS(1) was $2.17, compared with $2.09 for the second
quarter a year ago, and $2.31 for the prior quarter.
-
Reported return on common shareholders' equity (ROE) was 7.0% and
adjusted ROE(1) was 20.6%.
Results for the second quarter of 2014 were affected by the following
items of note aggregating to a negative impact of $1.44 per share:
-
$543 million ($543 million after-tax, or $1.34 per share) of charges
relating to FirstCaribbean International Bank Limited (CIBC
FirstCaribbean), comprising a non-cash goodwill impairment charge of
$420 million ($420 million after-tax) and loan losses of $123 million
($123 million after-tax), reflecting revised expectations on the extent
and timing of the anticipated economic recovery in the Caribbean
region;
-
$22 million ($16 million after-tax, or $0.04 per share) expenses
relating to the development of our enhanced travel rewards program and
in respect of the Aeroplan transactions with Aimia Canada Inc. (Aimia)
and The Toronto-Dominion Bank (TD);
-
$22 million ($12 million after-tax, or $0.03 per share) loan losses in
our exited U.S. leveraged finance portfolio;
-
$9 million ($7 million after-tax, or $0.02 per share) amortization of
intangible assets; and
-
$4 million ($3 million after-tax, or $0.01 per share) loss from the
structured credit run-off business.
CIBC's Basel III Common Equity Tier 1 ratio at April 30, 2014 was 10.0%,
and our Tier 1 and Total capital ratios were 12.1% and 14.9%,
respectively, on an all-in basis compared with Basel III Common Equity
Tier 1 ratio of 9.5%, Tier 1 capital ratio of 11.5% and Total capital
ratio of 14.2% in the prior quarter.
CIBC announced a quarterly dividend increase of 2 cents per common share
to $1.00 per share.
"In the quarter, CIBC's core businesses delivered solid results,
reflecting our strong focus on clients," says Gerald T. McCaughey, CIBC
President and Chief Executive Officer. "The strength of our underlying
fundamentals allows us to generate strong and consistent returns for
our shareholders."
Core business performance
Retail and Business Banking reported net income of $546 million for the second quarter, down $26
million or 5% from the second quarter a year ago. Adjusting for the
items of note shown above, adjusted net income(1) was $563 million, down $10 million or 2% from the second quarter a year ago as a
result of lower cards revenue due to the Aeroplan transactions with
Aimia and TD, partially offset by volume growth across most products
and lower loan losses.
During the second quarter of 2014, Retail and Business Banking continued
to make progress against our objectives of accelerating profitable
revenue growth and enhancing the client experience:
-
We were the first bank in Canada to launch eDeposit™ for business
banking clients, enabling them to quickly scan, securely upload and
deposit a large number of cheques in a single transaction using a
desktop cheque scanner;
-
We opened our first CIBC location at Pearson Airport - part of an
innovative new partnership with the Greater Toronto Airports Authority
as the exclusive Financial Institution sponsor at Canada's largest
airport; and
-
Sales of CIBC's Aventura® Travel rewards credit cards remained strong
and have already exceeded expectations for the full year.
Wealth Management reported net income of $117 million for the second quarter, up $26
million or 29% from the second quarter a year ago.
Revenue of $548 million was up $105 million or 24% compared with the
second quarter of 2013. This was primarily due to higher client assets
under management driven by market appreciation and net sales of
long-term mutual funds, higher fee-based and commission revenue, the
acquisition of Atlantic Trust and higher contribution from our stake in
American Century Investments.
During the second quarter of 2014, Wealth Management continued its
progress in support of our strategic priority to build our wealth
management platform:
-
We achieved our 21st consecutive quarter of positive net retail sales of long-term mutual
funds;
-
CIBC Wood Gundy client satisfaction continued to strengthen with an
overall rating of 91%, which is among the industry leaders; and
-
The Atlantic Trust integration has progressed well and overall net flows
continue to be solid.
Wholesale Banking reported net income of $213 million for the second quarter, down $51
million or 19% from the prior quarter. Excluding items of note,
adjusted net income(1) was $228 million, up $13 million or 6% from the prior quarter.
As a leading wholesale bank in Canada, active in core Canadian
industries in the rest of the world, Wholesale Banking acted as:
-
Joint bookrunner for Enbridge Inc.'s $1.4 billion three-tranche offering
of Medium Term Notes;
-
Lead manager for a $300 million 10-year offering by the Province of
Manitoba;
-
Joint bookrunner on PIMCO Global Income Opportunities Fund's $690
million unit offering;
-
Joint bookrunner and co-lead arranger on US$2.5 billion in credit
facilities related to the acquisition of any or all of the outstanding
shares of Brookfield Office Properties Inc. by Brookfield Property
Partners L.P. and its indirect subsidiaries; and
-
Financial advisor to the Special Committee of Atrium Innovations on its
sale to Permira Holdings for US$966 million.
"In summary, our businesses performed well this quarter," says Mr.
McCaughey. "We continued to execute our growth strategy and remain
focused on deepening client relationships to deliver consistent and
sustainable earnings growth."
Making a difference in our Communities
CIBC is committed to supporting causes that matter to our clients, our
employees and our communities. During the quarter we:
-
Committed $2 million to support the next generation of leaders through
scholarships and diversity education at Rotman School of Management,
Richard Ivey School of Business and HEC Montréal;
-
Announced donations of $1.65 million to support those affected by
cancer, including $1 million towards pediatric oncology at CHU
Sainte-Justine Hospital in Montréal; and
-
Hosted Welcome Home events in our branches for our Sochi 2014
Paralympians, as Premier Partner of the Canadian Paralympic Team.
During the quarter CIBC was named:
-
One of the 50 Most Engaged Workplaces in Canada by Achievers;
-
One of Canada's Best Diversity Employers 2014 by Mediacorp; and
-
A Top Employer for Canadians over 40 by Mediacorp.
In addition:
-
CIBC was recognized for the best mobile banking offer among the big 5
Canadian banks by Forrester Research; and
-
CIBC won multiple awards for Project Finance from Project Finance
Magazine and Project Finance International Magazine.
(1) For additional information, see the "Non-GAAP measures" section.
|
The information on the following pages forms a part of this press
release.
(The board of directors of CIBC reviewed this press release prior to it
being issued. CIBC's controls and procedures support the ability of the
President and Chief Executive Officer and the Chief Financial Officer
of CIBC to certify CIBC's second quarter financial report and controls
and procedures. CIBC's CEO and CFO will voluntarily provide to the
Securities and Exchange Commission a certification relating to CIBC's
second quarter financial information, including the attached unaudited
interim consolidated financial statements, and will provide the same
certification to the Canadian Securities Administrators.)
Management's discussion and analysis
Management's discussion and analysis (MD&A) is provided to enable
readers to assess CIBC's financial condition and results of operations
as at and for the quarter and six months ended April 30, 2014, compared
with corresponding periods. The MD&A should be read in conjunction with
our 2013 Annual Report and the unaudited interim consolidated financial
statements included in this report. Unless otherwise indicated, all
financial information in this MD&A has been prepared in accordance with
International Financial Reporting Standards (IFRS or GAAP) and all
amounts are expressed in Canadian dollars. This MD&A is current as of
May 28, 2014. Additional information relating to CIBC is available on
SEDAR at www.sedar.com and on the U.S. Securities and Exchange Commission's (SEC) website at www.sec.gov. No information on CIBC's website (www.cibc.com) should be considered incorporated herein by reference. A glossary of
terms used throughout this quarterly report can be found on pages 164
to 168 of our 2013 Annual Report.
A NOTE ABOUT FORWARD-LOOKING STATEMENTS: From time to time, we make written or oral forward-looking statements
within the meaning of certain securities laws, including in this
report, in other filings with Canadian securities regulators or the
U.S. Securities and Exchange Commission and in other communications.
All such statements are made pursuant to the "safe harbour" provisions
of, and are intended to be forward-looking statements under applicable
Canadian and U.S. securities legislation, including the U.S. Private
Securities Litigation Reform Act of 1995. These statements include, but
are not limited to, statements made in the "External reporting
changes", "Overview - Financial results", "Overview - Significant
events", "Overview - Outlook for calendar year 2014", "Strategic
business units overview - Business unit allocations", "Financial
condition - Capital resources", "Management of risk - Risk overview",
"Management of risk - Credit risk", "Management of risk - Market risk",
"Management of risk - Liquidity risk", "Accounting and control matters
- Critical accounting policies and estimates", "Accounting and control
matters - Regulatory developments" and "Accounting and control matters
- Controls and procedures" sections of this report and other statements
about our operations, business lines, financial condition, risk
management, priorities, targets, ongoing objectives, strategies and
outlook for calendar year 2014 and subsequent periods. Forward-looking
statements are typically identified by the words "believe", "expect",
"anticipate", "intend", "estimate", "forecast", "target", "objective"
and other similar expressions or future or conditional verbs such as
"will", "should", "would" and "could". By their nature, these
statements require us to make assumptions, including the economic
assumptions set out in the "Overview - Outlook for calendar year 2014"
section of this report, and are subject to inherent risks and
uncertainties that may be general or specific. A variety of factors,
many of which are beyond our control, affect our operations,
performance and results, and could cause actual results to differ
materially from the expectations expressed in any of our
forward-looking statements. These factors include: credit, market,
liquidity, strategic, insurance, operational, reputation and legal,
regulatory and environmental risk; the effectiveness and adequacy of
our risk management and valuation models and processes; legislative or
regulatory developments in the jurisdictions where we operate,
including the Dodd-Frank Wall Street Reform and Consumer Protection Act
and the regulations issued and to be issued thereunder, the Basel
Committee on Banking Supervision's global standards for capital and
liquidity reform, and those relating to the payments system in Canada;
amendments to, and interpretations of, risk-based capital guidelines
and reporting instructions, and interest rate and liquidity regulatory
guidance; the resolution of legal and regulatory proceedings and
related matters; the effect of changes to accounting standards, rules
and interpretations; changes in our estimates of reserves and
allowances; changes in tax laws; changes to our credit ratings;
political conditions and developments; the possible effect on our
business of international conflicts and the war on terror; natural
disasters, public health emergencies, disruptions to public
infrastructure and other catastrophic events; reliance on third parties
to provide components of our business infrastructure; potential
disruptions to our information technology systems and services,
including the evolving risk of cyber attack; losses incurred as a
result of internal or external fraud; the accuracy and completeness of
information provided to us concerning clients and counterparties; the
failure of third parties to comply with their obligations to us and our
affiliates; intensifying competition from established competitors and
new entrants in the financial services industry; technological change;
global capital market activity; changes in monetary and economic
policy; currency value and interest rate fluctuations; general business
and economic conditions worldwide, as well as in Canada, the U.S. and
other countries where we have operations, including increasing Canadian
household debt levels, the high U.S. fiscal deficit and Europe's
sovereign debt crisis; our success in developing and introducing new
products and services, expanding existing distribution channels,
developing new distribution channels and realizing increased revenue
from these channels; changes in client spending and saving habits; our
ability to attract and retain key employees and executives; our ability
to successfully execute our strategies and complete and integrate
acquisitions and joint ventures; and our ability to anticipate and
manage the risks associated with these factors. This list is not
exhaustive of the factors that may affect any of our forward-looking
statements. These and other factors should be considered carefully and
readers should not place undue reliance on our forward-looking
statements. We do not undertake to update any forward-looking statement
that is contained in this report or in other communications except as
required by law.
External reporting changes
The following external reporting changes were made in the first quarter
of 2014. Prior period amounts were restated accordingly.
Amendments to IAS 19 "Employee Benefits"
We adopted amendments to IAS 19 "Employee Benefits" commencing November
1, 2011, which require us to recognize: (i) actuarial gains and losses
in Other comprehensive income (OCI) in the period in which they arise;
(ii) interest income on plan assets in net income using the same rate
as that used to discount the defined benefit obligation; and (iii) all
past service costs (gains) in net income in the period in which they
arise.
Adoption of IFRS 10 "Consolidated Financial Statements"
We adopted IFRS 10 "Consolidated Financial Statements" commencing
November 1, 2012, which replaces IAS 27 "Consolidated and Separate
Financial Statements" and Standards Interpretation Committee (SIC) - 12
"Consolidated - Special Purpose Entities". The adoption of IFRS 10
required us to deconsolidate CIBC Capital Trust from the consolidated
financial statements, which resulted in a replacement of Capital Trust
securities issued by CIBC Capital Trust with Business and government
deposits for the senior deposit notes issued by us to CIBC Capital
Trust.
Sale of Aeroplan portfolio
On December 27, 2013, we sold approximately 50 percent of our Aerogold
VISA portfolio, consisting primarily of credit card only customers, to
the Toronto-Dominion Bank (TD). Accordingly, the revenue related to the
sold credit card portfolio was moved from Personal Banking to the Other
line of business within Retail and Business Banking.
Allocation of Treasury activities
Treasury-related transfer pricing continues to be charged or credited to
each line of business within our Strategic Business Units (SBUs). We
changed our approach to allocating the residual financial impact of
Treasury activities. Certain fees are charged directly to the lines of
business, and the residual net revenue is retained in Corporate and
Other.
Income statement presentation
We reclassified certain amounts associated with our self-managed credit
card portfolio from Non-interest expenses to Non-interest income. There
was no impact on consolidated net income due to this reclassification.
Second quarter financial highlights
|
|
|
|
|
|
As at or for the three
|
|
|
|
As at or for the six
|
|
|
|
|
|
|
months ended
|
|
|
|
months ended
|
|
|
|
2014
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Unaudited
|
|
Apr. 30
|
|
Jan. 31
|
|
Apr. 30
|
|
|
Apr. 30
|
|
Apr. 30
|
|
Financial results ($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
1,798
|
|
$
|
1,905
|
|
$
|
1,822
|
|
|
$
|
3,703
|
|
$
|
3,677
|
|
Non-interest income
|
|
|
1,369
|
|
|
1,729
|
|
|
1,302
|
|
|
|
3,098
|
|
|
2,612
|
|
Total revenue
|
|
|
3,167
|
|
|
3,634
|
|
|
3,124
|
|
|
|
6,801
|
|
|
6,289
|
|
Provision for credit losses
|
|
|
330
|
|
|
218
|
|
|
265
|
|
|
|
548
|
|
|
530
|
|
Non-interest expenses
|
|
|
2,412
|
|
|
1,979
|
|
|
1,825
|
|
|
|
4,391
|
|
|
3,813
|
|
Income before taxes
|
|
|
425
|
|
|
1,437
|
|
|
1,034
|
|
|
|
1,862
|
|
|
1,946
|
|
Income taxes
|
|
|
119
|
|
|
260
|
|
|
172
|
|
|
|
379
|
|
|
299
|
|
Net income
|
|
$
|
306
|
|
$
|
1,177
|
|
$
|
862
|
|
|
$
|
1,483
|
|
$
|
1,647
|
|
Net income (loss) attributable to non-controlling interests
|
|
$
|
(11)
|
|
$
|
3
|
|
$
|
2
|
|
|
$
|
(8)
|
|
$
|
4
|
|
Preferred shareholders
|
|
|
25
|
|
|
25
|
|
|
25
|
|
|
|
50
|
|
|
50
|
|
Common shareholders
|
|
|
292
|
|
|
1,149
|
|
|
835
|
|
|
|
1,441
|
|
|
1,593
|
|
Net income attributable to equity shareholders
|
|
$
|
317
|
|
$
|
1,174
|
|
$
|
860
|
|
|
$
|
1,491
|
|
$
|
1,643
|
|
Financial measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported efficiency ratio
|
|
|
76.2
|
%
|
|
54.5
|
%
|
|
58.4
|
%
|
|
|
64.6
|
%
|
|
60.6
|
%
|
Adjusted efficiency ratio (1)
|
|
|
59.6
|
%
|
|
56.7
|
%
|
|
56.9
|
%
|
|
|
58.1
|
%
|
|
56.7
|
%
|
Loan loss ratio
|
|
|
0.51
|
%
|
|
0.38
|
%
|
|
0.47
|
%
|
|
|
0.44
|
%
|
|
0.44
|
%
|
Reported return on common shareholders' equity
|
|
|
7.0
|
%
|
|
27.5
|
%
|
|
23.0
|
%
|
|
|
17.2
|
%
|
|
21.7
|
%
|
Adjusted return on common shareholders' equity (1)
|
|
|
20.6
|
%
|
|
22.1
|
%
|
|
23.0
|
%
|
|
|
21.3
|
%
|
|
23.0
|
%
|
Net interest margin
|
|
|
1.81
|
%
|
|
1.84
|
%
|
|
1.85
|
%
|
|
|
1.83
|
%
|
|
1.84
|
%
|
Net interest margin on average interest-earning assets
|
|
|
2.07
|
%
|
|
2.09
|
%
|
|
2.13
|
%
|
|
|
2.08
|
%
|
|
2.13
|
%
|
Return on average assets
|
|
|
0.31
|
%
|
|
1.14
|
%
|
|
0.88
|
%
|
|
|
0.73
|
%
|
|
0.82
|
%
|
Return on average interest-earning assets
|
|
|
0.35
|
%
|
|
1.29
|
%
|
|
1.01
|
%
|
|
|
0.83
|
%
|
|
0.95
|
%
|
Total shareholder return
|
|
|
14.05
|
%
|
|
(1.36)
|
%
|
|
(2.02)
|
%
|
|
|
12.51
|
%
|
|
4.97
|
%
|
Reported effective tax rate
|
|
|
28.1
|
%
|
|
18.1
|
%
|
|
16.6
|
%
|
|
|
20.4
|
%
|
|
15.3
|
%
|
Adjusted effective tax rate (1)
|
|
|
13.5
|
%
|
|
16.5
|
%
|
|
16.6
|
%
|
|
|
15.1
|
%
|
|
16.3
|
%
|
Common share information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share ($)
|
- basic earnings
|
|
$
|
0.73
|
|
$
|
2.88
|
|
$
|
2.09
|
|
|
$
|
3.62
|
|
$
|
3.97
|
|
|
- reported diluted earnings
|
|
|
0.73
|
|
|
2.88
|
|
|
2.09
|
|
|
|
3.61
|
|
|
3.96
|
|
|
- adjusted diluted earnings (1)
|
|
|
2.17
|
|
|
2.31
|
|
|
2.09
|
|
|
|
4.48
|
|
|
4.20
|
|
|
- dividends
|
|
|
0.98
|
|
|
0.96
|
|
|
0.94
|
|
|
|
1.94
|
|
|
1.88
|
|
|
- book value
|
|
|
42.04
|
|
|
42.59
|
|
|
37.09
|
|
|
|
42.04
|
|
|
37.09
|
|
Share price ($)
|
- high
|
|
|
97.72
|
|
|
91.58
|
|
|
84.70
|
|
|
|
97.72
|
|
|
84.70
|
|
|
- low
|
|
|
85.49
|
|
|
86.57
|
|
|
77.02
|
|
|
|
85.49
|
|
|
76.70
|
|
|
- closing
|
|
|
97.72
|
|
|
86.57
|
|
|
80.57
|
|
|
|
97.72
|
|
|
80.57
|
|
Shares outstanding (thousands)
|
- weighted-average basic
|
|
|
397,758
|
|
|
398,539
|
|
|
400,400
|
|
|
|
398,155
|
|
|
401,890
|
|
|
- weighted-average diluted
|
|
|
398,519
|
|
|
399,217
|
|
|
400,812
|
|
|
|
398,861
|
|
|
402,315
|
|
|
- end of period
|
|
|
397,375
|
|
|
398,136
|
|
|
399,811
|
|
|
|
397,375
|
|
|
399,811
|
|
Market capitalization ($ millions)
|
|
$
|
38,832
|
|
$
|
34,467
|
|
$
|
32,213
|
|
|
$
|
38,832
|
|
$
|
32,213
|
|
Value measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend yield (based on closing share price)
|
|
|
4.1
|
%
|
|
4.4
|
%
|
|
4.8
|
%
|
|
|
4.0
|
%
|
|
4.7
|
%
|
Reported dividend payout ratio
|
|
|
133.5
|
%
|
|
33.3
|
%
|
|
44.9
|
%
|
|
|
53.6
|
%
|
|
47.3
|
%
|
Adjusted dividend payout ratio (1)
|
|
|
45.2
|
%
|
|
41.4
|
%
|
|
44.9
|
%
|
|
|
43.2
|
%
|
|
44.6
|
%
|
Market value to book value ratio
|
|
|
2.32
|
|
|
2.03
|
|
|
2.17
|
|
|
|
2.32
|
|
|
2.17
|
|
On- and off-balance sheet information ($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, deposits with banks and securities
|
|
$
|
77,892
|
|
$
|
77,290
|
|
$
|
78,363
|
|
|
$
|
77,892
|
|
$
|
78,363
|
|
Loans and acceptances, net of allowance
|
|
|
258,680
|
|
|
256,819
|
|
|
252,298
|
|
|
|
258,680
|
|
|
252,298
|
|
Total assets
|
|
|
397,102
|
|
|
400,955
|
|
|
397,219
|
|
|
|
397,102
|
|
|
397,219
|
|
Deposits
|
|
|
314,023
|
|
|
314,336
|
|
|
309,040
|
|
|
|
314,023
|
|
|
309,040
|
|
Common shareholders' equity
|
|
|
16,707
|
|
|
16,955
|
|
|
14,827
|
|
|
|
16,707
|
|
|
14,827
|
|
Average assets
|
|
|
406,285
|
|
|
410,019
|
|
|
404,303
|
|
|
|
408,183
|
|
|
403,162
|
|
Average interest-earning assets
|
|
|
356,492
|
|
|
361,844
|
|
|
350,144
|
|
|
|
359,212
|
|
|
348,565
|
|
Average common shareholders' equity
|
|
|
17,173
|
|
|
16,581
|
|
|
14,913
|
|
|
|
16,872
|
|
|
14,804
|
|
Assets under administration (2)
|
|
|
1,663,858
|
|
|
1,603,022
|
|
|
1,468,429
|
|
|
|
1,663,858
|
|
|
1,468,429
|
|
Balance sheet quality measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All-in basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted assets (RWA) ($ billions)
|
|
$
|
135.9
|
|
$
|
140.5
|
|
$
|
125.9
|
|
|
$
|
135.9
|
|
$
|
125.9
|
|
Common Equity Tier 1 (CET1) ratio
|
|
|
10.0
|
%
|
|
9.5
|
%
|
|
9.7
|
%
|
|
|
10.0
|
%
|
|
9.7
|
%
|
Tier 1 capital ratio
|
|
|
12.1
|
%
|
|
11.5
|
%
|
|
12.2
|
%
|
|
|
12.1
|
%
|
|
12.2
|
%
|
Total capital ratio
|
|
|
14.9
|
%
|
|
14.2
|
%
|
|
15.5
|
%
|
|
|
14.9
|
%
|
|
15.5
|
%
|
Other information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-time equivalent employees
|
|
|
43,907
|
|
|
43,573
|
|
|
43,057
|
|
|
|
43,907
|
|
|
43,057
|
|
(1)
|
|
For additional information, see the "Non-GAAP measures" section.
|
(2)
|
|
Includes the full contract amount of assets under administration or
custody under a 50/50 joint venture between CIBC and The Bank of New
York Mellon.
|
Overview
Financial results
Reported net income for the quarter was $306 million, compared with $862
million for the same quarter last year and $1,177 million for the prior
quarter. Reported net income for the six months ended April 30, 2014
was $1,483 million, compared with $1,647 million for the same period in
2013.
Adjusted net income(1) for the quarter was $887 million, compared with $862 million for the
same quarter last year and $951 million for the prior quarter. Adjusted
net income(1) for the six months ended April 30, 2014 was $1,838 million, compared
with $1,744 million for the same period in 2013.
Reported diluted earnings per share (EPS) for the quarter was $0.73,
compared with $2.09 for the same quarter last year and $2.88 for the
prior quarter. Reported diluted EPS for the six months ended April 30,
2014 was $3.61, compared with $3.96 for the same period in 2013.
Adjusted diluted EPS(1) for the quarter was $2.17, compared with $2.09 for the same quarter
last year and $2.31 for the prior quarter. Adjusted diluted EPS(1) for the six months ended April 30, 2014 was $4.48, compared with $4.20
for the same period in 2013.
Net income for the current quarter was affected by the following items
of note:
-
$543 million ($543 million after-tax) of charges relating to
FirstCaribbean International Bank Limited (CIBC FirstCaribbean),
comprising a goodwill impairment charge of $420 million ($420 million
after-tax) and loan losses of $123 million ($123 million after-tax),
reflecting revised expectations on the extent and timing of the
anticipated economic recovery in the Caribbean region (Corporate and
Other);
-
$22 million ($16 million after-tax) expenses relating to the development
of our enhanced travel rewards program and in respect of the Aeroplan
transactions with Aimia Canada Inc. and TD (Retail and Business
Banking);
-
$22 million ($12 million after-tax) loan losses in our exited U.S.
leveraged finance portfolio (Wholesale Banking);
-
$9 million ($7 million after-tax) amortization of intangible assets(2) ($1 million after-tax in Retail and Business Banking, $4 million
after-tax in Wealth Management, and $2 million after-tax in Corporate
and Other); and
-
$4 million ($3 million after-tax) loss from the structured credit
run-off business (Wholesale Banking).
The above items of note decreased revenue by $8 million, increased
provision for credit losses by $145 million, non-interest expenses by
$447 million, and decreased income tax expenses by $19 million. In
aggregate, these items of note decreased net income by $581 million.
Net interest income(3)
Net interest income was down $24 million or 1% from the same quarter
last year, primarily due to lower card-related net interest income as a
result of the Aeroplan transactions with Aimia Canada Inc. (Aimia) and
TD in the first quarter of 2014, lower treasury-related net interest
income and lower revenue from our exited FirstLine mortgage broker
business. These factors were partially offset by volume growth across
most retail products and higher revenue from corporate banking.
Net interest income was down $107 million or 6% from the prior quarter,
primarily due to fewer days in the quarter, lower card-related net
interest income as a result of the Aeroplan transactions and lower
treasury-related net interest income.
Net interest income for the six months ended April 30, 2014 was up $26
million or 1% from the same period in 2013, primarily due to volume
growth across most retail products, and higher revenue from corporate
banking and U.S. real estate finance. These factors were partially
offset by lower card-related net interest income as a result of the
Aeroplan transactions, lower treasury-related net interest income and
lower revenue from our exited FirstLine mortgage broker business.
Non-interest income(3)
Non-interest income was up $67 million or 5% from the same quarter last
year, primarily due to higher mutual fund and investment management and
custodial fees, partially offset by lower card fees as a result of the
Aeroplan transactions noted above.
Non-interest income was down $360 million or 21% from the prior quarter.
The prior quarter included the gains relating to the Aeroplan
transactions and the sale of an equity investment in our exited
European leveraged finance portfolio, both shown as items of note.
Non-interest income for the six months ended April 30, 2014 was up $486
million or 19% from the same period in 2013, primarily due to the gains
relating to the Aeroplan transactions, the sale of an equity
investment, higher mutual fund and investment management and custodial
fees, partially offset by lower card fees as a result of the Aeroplan
transactions.
(1)
|
For additional information, see the "Non-GAAP measures" section.
|
(2)
|
Beginning in the fourth quarter of 2013, also includes amortization of
intangible assets for equity-accounted associates.
|
(3)
|
Trading activities and related risk management strategies can
periodically shift trading income between net interest income and
non-interest income. Therefore, we view total trading income as the
most appropriate measure of trading performance.
|
Provision for credit losses
Provision for credit losses was up $65 million or 25% from the same
quarter last year. In Retail and Business Banking, the provision was
down mainly due to lower write-offs and bankruptcies in the card
portfolio, including the impact of the sold Aeroplan portfolio, and
lower losses in the business lending portfolio. In Wholesale Banking,
the provision was comparable with the same quarter last year. In
Corporate and Other, the provision was up due to the loan losses
relating to CIBC FirstCaribbean, shown as an item of note.
Provision for credit losses was up $112 million or 51% from the prior
quarter. In Retail and Business Banking, the provision was down
primarily due to a charge resulting from operational changes in the
processing of write-offs in the prior quarter, shown as an item of
note, and lower losses due to the impact of the sold Aeroplan
portfolio. In Wholesale Banking, the provision was up mainly due to
higher losses in our exited U.S. leveraged finance portfolio, shown as
an item of note. In Corporate and Other, the provision was up primarily
due to the loan losses relating to CIBC FirstCaribbean noted above. The
prior quarter had a reduction in the collective allowance reported in
this segment, including lower estimated credit losses relating to the
Alberta floods, shown as an item of note.
Provision for credit losses for the six months ended April 30, 2014 was
up $18 million or 3% from the same period in 2013. In Retail and
Business Banking, the provision was down mainly due to lower write-offs
and bankruptcies in the card portfolio, including the impact of the
sold Aeroplan portfolio, and lower losses in the business lending
portfolio, partially offset by the charge relating to the write-offs
noted above. In Wholesale Banking, the provision was down due to lower
losses in the U.S. real estate finance portfolio. In Corporate and
Other, the provision was up due to the loan losses relating to CIBC
FirstCaribbean, partially offset by the reduction in the collective
allowance noted above.
Non-interest expenses
Non-interest expenses were up $587 million or 32% from the same quarter
last year, primarily due to the goodwill impairment charge relating to
CIBC FirstCaribbean, shown as an item of note, higher employee-related
compensation, computer, software and office equipment expenses, and
costs relating to the development of our enhanced travel rewards
program and to the Aeroplan transactions, shown as an item of note.
Non-interest expenses were up $433 million or 22% from the prior
quarter, primarily due to the goodwill impairment charge relating to
CIBC FirstCaribbean.
Non-interest expenses for the six months ended April 30, 2014 were up
$578 million or 15% from the same period in 2013, primarily due to the
goodwill impairment charge relating to CIBC FirstCaribbean, higher
employee-related compensation, computer, software and office equipment
expenses and costs relating to development of our enhanced travel
rewards program and to the Aeroplan transactions. The same period last
year had higher expenses in the structured credit run-off business,
which included the Lehman-related settlement charge shown as an item of
note.
Income taxes
Income tax expense was down $53 million or 31% from the same quarter
last year, and down $141 million or 54% from the prior quarter,
primarily due to lower income. No tax recovery was booked in the
current quarter in respect of the CIBC FirstCaribbean goodwill
impairment charge and loan losses.
Income tax expense for the six months ended April 30, 2014 was up $80
million or 27% from the same period in 2013. Income tax expense was up
notwithstanding lower income, primarily due to no tax recovery being
booked in the current year period in respect of the CIBC FirstCaribbean
goodwill impairment charge and loan losses.
In prior years, the Canada Revenue Agency issued reassessments
disallowing the deduction of approximately $3 billion of the 2005 Enron
settlement payments and related legal expenses. The matter is currently
in litigation. The Tax Court of Canada trial on the deductibility of
the Enron payments is scheduled to commence in October 2015.
Should we successfully defend our tax filing position in its entirety,
we would recognize an additional accounting tax benefit of $214 million
and taxable refund interest of approximately $202 million. Should we
fail to defend our position in its entirety, we would incur an
additional tax expense of approximately $866 million and non-deductible
interest of approximately $124 million.
Foreign exchange
The estimated impact of U.S. dollar translation on key lines of our
interim consolidated statement of income, as a result of changes in
average exchange rates, is as follows:
|
|
|
|
|
|
|
|
For the three
|
|
|
For the six
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
months ended
|
|
|
|
|
|
|
|
|
Apr. 30, 2014
|
|
Apr. 30, 2014
|
|
|
Apr. 30, 2014
|
|
|
|
|
|
|
|
|
|
vs.
|
|
|
vs.
|
|
|
|
vs.
|
|
$ millions
|
|
|
|
|
|
Apr. 30, 2013
|
|
Jan. 31, 2014
|
|
|
Apr. 30, 2013
|
|
Estimated (decrease) increase in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
|
$
|
40
|
|
$
|
11
|
|
|
$
|
78
|
|
|
Provision for credit losses
|
|
|
|
|
|
|
13
|
|
|
3
|
|
|
|
16
|
|
|
Non-interest expense
|
|
|
|
|
|
|
49
|
|
|
14
|
|
|
|
64
|
|
|
Income taxes
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
2
|
|
|
Net income
|
|
|
|
|
|
|
(22)
|
|
|
(6)
|
|
|
|
(4)
|
|
Average US$ appreciation relative to C$
|
|
|
|
|
|
|
8.3
|
%
|
|
2.1
|
%
|
|
|
8.4
|
%
|
Impact of items of note in prior periods
Net income for the prior quarters was affected by the following items of
note:
Q1, 2014
-
$239 million ($183 million after-tax) gain in respect of the Aeroplan
transactions with Aimia and TD, net of costs relating to the
development of our enhanced travel rewards program ($123 million
after-tax in Retail and Business Banking, and $60 million after-tax in
Corporate and Other);
-
$78 million ($57 million after-tax) gain, net of associated expenses, on
the sale of an equity investment in our exited European leveraged
finance portfolio (Wholesale Banking);
-
$26 million ($19 million after-tax) reduction in the portion of the
collective allowance recognized in Corporate and Other(1), including lower estimated credit losses relating to the Alberta floods
(Corporate and Other);
-
$26 million ($19 million after-tax) charge resulting from operational
changes in the processing of write-offs in Retail and Business Banking;
-
$11 million ($8 million after-tax) loss from the structured credit
run-off business (Wholesale Banking); and
-
$8 million ($6 million after-tax) amortization of intangible assets ($1
million after-tax in Retail and Business Banking, $3 million after-tax
in Wealth Management, and $2 million after-tax in Corporate and Other).
The above items of note increased revenue by $353 million, non-interest
expenses by $55 million, and income tax expenses by $72 million. In
aggregate, these items of note increased net income by $226 million.
Q2, 2013
-
$27 million ($20 million after-tax) income from the structured credit
run-off business (Wholesale Banking);
-
$21 million ($15 million after-tax) loan losses in our exited European
leveraged finance portfolio (Wholesale Banking); and
-
$6 million ($5 million after-tax) amortization of intangible assets ($1
million after-tax in Retail and Business Banking, $1 million after-tax
in Wealth Management, and $3 million after-tax in Corporate and Other).
The above items of note increased revenue by $29 million, provision for
credit losses by $21 million and non-interest expenses by $8 million.
In aggregate, the impact of these items of note on net income was nil.
(1)
|
Relates to collective allowance, except for (i) residential mortgages
greater than 90 days delinquent; (ii) personal loans and scored small
business loans greater than 30 days delinquent, and (iii) net
write-offs for the card portfolio, which are all reported in the
respective SBUs.
|
Q1, 2013
-
$148 million ($109 million after-tax) loss from the structured credit
run-off business, including the charge in respect of a settlement of
the U.S. Bankruptcy Court adversary proceeding brought by the Estate of
Lehman Brothers Holdings, Inc. (Wholesale Banking);
-
$16 million ($16 million after-tax) gain, net of associated expenses, on
the sale of our Hong Kong and Singapore-based private wealth management
business (Corporate and Other); and
-
$5 million ($4 million after-tax) amortization of intangible assets ($2
million after-tax in Retail and Business Banking and $2 million
after-tax in Corporate and Other).
The above items of note increased revenue by $28 million, non-interest
expenses by $165 million, and decreased income tax expenses by $40
million. In aggregate, these items of note decreased net income by $97
million.
Significant events
Goodwill impairment
During the quarter, we recognized a goodwill impairment charge of $420
million relating to CIBC FirstCaribbean. This impairment reflects
revised expectations on the extent and timing of the anticipated
economic recovery in the Caribbean region. For additional information,
see Accounting and control matters section and Note 6 to our interim
consolidated financial statements.
Aeroplan Agreements and enhancements to CIBC travel rewards program
On December 27, 2013, CIBC completed the transactions contemplated by
the tri-party agreements with Aimia and TD that were announced on
September 16, 2013.
CIBC sold to TD approximately 50% of its existing Aerogold VISA credit
card portfolio, consisting primarily of credit card only customers.
Consistent with its strategy to invest in and deepen client
relationships, CIBC retained the Aerogold VISA credit card accounts
held by clients with broader banking relationships at CIBC.
The portfolio divested by CIBC consisted of $3.3 billion of credit card
receivables. Upon closing, CIBC received a cash payment from TD equal
to the credit card receivables outstanding being acquired by TD.
CIBC also received upon closing, in aggregate, $200 million in upfront
payments from TD and Aimia.
In addition to these amounts, CIBC released $81 million of allowance for
credit losses related to the sold portfolio, and incurred $3 million in
direct costs related to the transaction in the three months ended
January 31, 2014. The net gain on sale of the sold portfolio recognized
in the three months ended January 31, 2014, which included the upfront
payments, release of allowance for credit losses and costs related to
the transaction, was $278 million ($211 million after-tax).
Under the terms of the agreements:
-
CIBC continues to have rights to market the Aeroplan program and
originate new Aerogold cardholders through its CIBC branded channels.
-
The parties have agreed to certain provisions to compensate for the risk
of cardholder migration from one party to another. There is potential
for payments of up to $400 million by TD/Aimia or CIBC for net
cardholder migration over a period of 5 years.
-
CIBC expects to receive annual commercial subsidy payments from TD of
approximately $38 million per year in each of the three years after
closing.
-
The CIBC and Aimia agreement includes an option for either party to
terminate the agreement after the third year and provides for penalty
payments due from CIBC to Aimia if holders of Aeroplan credit cards
from CIBC's retained portfolio switch to other CIBC credit cards above
certain thresholds.
-
CIBC is working with TD under an interim servicing agreement to effect a
smooth transition of the cardholders moving to TD.
In conjunction with the completion of the Aeroplan transaction, CIBC has
fully released Aimia and TD from any potential claims in connection
with TD becoming Aeroplan's primary financial credit card partner.
Separate from the tri-party agreements, CIBC continues with its plan to
provide enhancements to our proprietary travel rewards program,
delivering on our commitment to give our clients access to a market
leading travel rewards program. The enhanced program is built on
extensive research and feedback from our clients and from Canadians
about what they want from their travel rewards card.
CIBC incurred incremental costs of $22 million ($16 million after-tax)
relating to the development of our enhanced travel rewards programs and
in respect of supporting the tri-party agreements in the three months
ended April 30, 2014 ($39 million ($28 million after-tax) in the three
months ended January 31, 2014).
Atlantic Trust Private Wealth Management
On December 31, 2013, CIBC completed the acquisition of Atlantic Trust
Private Wealth Management (Atlantic Trust) from its parent company,
Invesco Ltd., for $224 million (US$210 million) plus working capital
and other adjustments. Atlantic Trust provides integrated wealth
management solutions for high-net-worth individuals, families,
foundations and endowments in the United States. The results of the
acquired business have been consolidated from the date of close and are
included in the Wealth Management SBU. For additional information, see
Note 3 to our interim consolidated financial statements.
Sale of equity investment
On November 29, 2013, CIBC sold an equity investment that was previously
acquired through a loan restructuring in CIBC's exited European
leveraged finance business. The transaction resulted in an after-tax
gain, net of associated expenses, of $57 million.
Review of quarterly financial information
$ millions, except per share amounts,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for the three months ended
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
2012
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
Jan. 31
|
|
|
|
Oct. 31
|
|
|
|
Jul. 31
|
|
|
|
Apr. 30
|
|
|
|
Jan. 31
|
|
|
|
Oct. 31
|
|
|
|
Jul. 31
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail and Business Banking
|
|
|
|
$
|
1,939
|
|
|
$
|
2,255
|
|
|
$
|
2,087
|
|
|
$
|
2,067
|
|
|
$
|
1,985
|
|
|
$
|
2,010
|
|
|
$
|
2,012
|
|
|
$
|
2,014
|
|
Wealth Management
|
|
|
|
|
548
|
|
|
|
502
|
|
|
|
470
|
|
|
|
458
|
|
|
|
443
|
|
|
|
432
|
|
|
|
420
|
|
|
|
401
|
|
Wholesale Banking (1)
|
|
|
|
|
606
|
|
|
|
680
|
|
|
|
520
|
|
|
|
589
|
|
|
|
574
|
|
|
|
557
|
|
|
|
567
|
|
|
|
519
|
|
Corporate and Other (1)
|
|
|
|
|
74
|
|
|
|
197
|
|
|
|
103
|
|
|
|
135
|
|
|
|
122
|
|
|
|
166
|
|
|
|
140
|
|
|
|
201
|
Total revenue
|
|
|
|
$
|
3,167
|
|
|
$
|
3,634
|
|
|
$
|
3,180
|
|
|
$
|
3,249
|
|
|
$
|
3,124
|
|
|
$
|
3,165
|
|
|
$
|
3,139
|
|
|
$
|
3,135
|
Net interest income
|
|
|
|
$
|
1,798
|
|
|
$
|
1,905
|
|
|
$
|
1,893
|
|
|
$
|
1,883
|
|
|
$
|
1,822
|
|
|
$
|
1,855
|
|
|
$
|
1,848
|
|
|
$
|
1,883
|
Non-interest income
|
|
|
|
|
1,369
|
|
|
|
1,729
|
|
|
|
1,287
|
|
|
|
1,366
|
|
|
|
1,302
|
|
|
|
1,310
|
|
|
|
1,291
|
|
|
|
1,252
|
Total revenue
|
|
|
|
|
3,167
|
|
|
|
3,634
|
|
|
|
3,180
|
|
|
|
3,249
|
|
|
|
3,124
|
|
|
|
3,165
|
|
|
|
3,139
|
|
|
|
3,135
|
Provision for credit losses
|
|
|
|
|
330
|
|
|
|
218
|
|
|
|
271
|
|
|
|
320
|
|
|
|
265
|
|
|
|
265
|
|
|
|
328
|
|
|
|
317
|
Non-interest expenses
|
|
|
|
|
2,412
|
|
|
|
1,979
|
|
|
|
1,930
|
|
|
|
1,878
|
|
|
|
1,825
|
|
|
|
1,988
|
|
|
|
1,823
|
|
|
|
1,830
|
Income before income taxes
|
|
|
|
|
425
|
|
|
|
1,437
|
|
|
|
979
|
|
|
|
1,051
|
|
|
|
1,034
|
|
|
|
912
|
|
|
|
988
|
|
|
|
988
|
Income taxes
|
|
|
|
|
119
|
|
|
|
260
|
|
|
|
154
|
|
|
|
173
|
|
|
|
172
|
|
|
|
127
|
|
|
|
145
|
|
|
|
156
|
Net income
|
|
|
|
$
|
306
|
|
|
$
|
1,177
|
|
|
$
|
825
|
|
|
$
|
878
|
|
|
$
|
862
|
|
|
$
|
785
|
|
|
$
|
843
|
|
|
$
|
832
|
Net income (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
|
|
|
$
|
(11)
|
|
|
$
|
3
|
|
|
$
|
(7)
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Equity shareholders
|
|
|
|
|
317
|
|
|
|
1,174
|
|
|
|
832
|
|
|
|
877
|
|
|
|
860
|
|
|
|
783
|
|
|
|
840
|
|
|
|
830
|
EPS
|
- basic
|
|
|
|
$
|
0.73
|
|
|
$
|
2.88
|
|
|
$
|
2.02
|
|
|
$
|
2.13
|
|
|
$
|
2.09
|
|
|
$
|
1.88
|
|
|
$
|
2.00
|
|
|
$
|
1.98
|
|
|
- diluted
|
|
|
|
|
0.73
|
|
|
|
2.88
|
|
|
|
2.02
|
|
|
|
2.13
|
|
|
|
2.09
|
|
|
|
1.88
|
|
|
|
2.00
|
|
|
|
1.98
|
(1)
|
Wholesale Banking revenue and income taxes are reported on a taxable
equivalent basis (TEB) with an equivalent offset in the revenue
and income taxes of Corporate and Other.
|
Our quarterly results are modestly affected by seasonal factors. The
second quarter has fewer days as compared with the other quarters,
generally leading to lower earnings. The summer months (July - third
quarter and August - fourth quarter) typically experience lower levels
of capital markets activity, which affects our brokerage, investment
management, and wholesale banking activities.
Revenue
Retail and Business Banking revenue has benefitted from volume growth
across most retail products, largely offset by the impact of the sold
Aeroplan portfolio from the first quarter of 2014, the continued low
interest rate environment, and attrition in our exited FirstLine
mortgage broker business. The first quarter of 2014 also included the
gain relating to the Aeroplan transactions with Aimia and TD.
Wealth Management revenue has benefitted from the impact of the
acquisition of Atlantic Trust from the first quarter of 2014, higher
average assets under management (AUM), higher contribution from our
equity-accounted investment in American Century Investments (ACI) and
strong net sales of long-term mutual funds.
Wholesale Banking revenue is influenced, to a large extent, by capital
markets conditions and growth in the equity derivatives business which
has resulted in higher tax-exempt income. Revenue has also been
impacted by the volatility in the structured credit run-off business.
The first quarter of 2014 included a gain on the sale of an equity
investment in our exited European leveraged finance portfolio, while
the fourth quarter of 2013 included impairment of an equity position
associated with our exited U.S. leveraged finance portfolio. The fourth
quarter of 2012 included a gain on sale of interests in entities in
relation to the acquisition of TMX Group Inc. and the loss relating to
the change in valuation of collateralized derivatives to an overnight
index swap (OIS) basis.
Corporate and Other includes the offset related to tax-exempt income
noted above. The first quarter of 2014 included the gain relating to
the Aeroplan transactions noted above and the first quarter of 2013
included the gain on sale of the private wealth management business
(Asia).
Provision for credit losses
Provision for credit losses is dependent upon the credit cycle in
general and on the credit performance of the loan portfolios. In Retail
and Business Banking, losses in the card portfolio declined throughout
2012, 2013 and the first half of 2014. The losses in the card portfolio
also declined as a result of the sold Aeroplan portfolio in the first
quarter of 2014. A charge resulting from operational changes in the
processing of write-offs was included in the first quarter of 2014, and
a charge resulting from a revision of estimated loss parameters on our
unsecured lending portfolios was included in the third quarter of 2013.
In Wholesale Banking, the current quarter and the fourth quarter of
2012 included losses in the exited U.S. leveraged finance portfolio.
The second and third quarter of 2013 had higher losses in the exited
European leveraged finance portfolio. 2012 included higher losses in
the U.S. real estate finance portfolio. In Corporate and Other, the
current quarter had loan losses relating to CIBC FirstCaribbean. The
third quarter of 2013 had an increase in the collective allowance,
which included estimated credit losses relating to the Alberta floods,
while the first quarter of 2014 included a decrease in collective
allowance, including partial reversal of the credit losses relating to
the Alberta floods.
Non-interest expenses
Non-interest expenses have fluctuated over the period largely due to
changes in employee-related compensation and benefits, including
pension expense. The current quarter had a goodwill impairment charge
and the fourth quarter of 2013 had a restructuring charge relating to
CIBC FirstCaribbean. The first half of 2014 and the fourth quarter of
2013 had expenses relating to the development of our enhanced travel
rewards program, and to the Aeroplan transactions with Aimia and TD.
The first quarter of 2013 also had higher expenses in the structured
credit run-off business.
Income taxes
Income taxes vary with changes in income subject to tax, and the
jurisdictions in which the income is earned. Taxes can also be affected
by the impact of significant items. Tax-exempt income has generally
been trending higher for the periods presented in the table above. No
tax recovery was booked in the current quarter in respect of the CIBC
FirstCaribbean goodwill impairment charge and loan losses.
Outlook for calendar year 2014
Global growth is expected to improve in the latter half of 2014, helped
by a diminished burden from fiscal tightening in both the U.S. and
Europe, and a continuation of stimulative monetary policy. U.S. real
gross domestic product (GDP) is expected to accelerate to 2.6% as we
move past the drag from tax hikes that affected 2013 and adverse first
quarter weather. A pick-up in capital spending, and the lift to
household incomes and credit quality from ongoing job creation should
also help U.S. real GDP. Europe has emerged from recession, while
emerging markets, after a slow start to the year, will benefit from
improved global trade volumes. Canada's growth rate should improve to
the 2.0% to 2.5% range, as firmer global conditions support exports,
offsetting slower growth in housing construction and continued
restraint in government program spending. Consumer demand will be
sustained at moderate growth rates by job creation. Both the U.S.
Federal Reserve and the Bank of Canada are likely to wait until 2015
before raising short term interest rates, although longer term rates
could increase later in the year in anticipation of that future policy
turn.
Retail banking is likely to see little change from the recent modest
growth rates trend in demand for household and mortgage credit given
existing levels of debt and the past few years' policy changes in
mortgages. Demand for business credit should continue to grow at a
healthy pace. A further drop in the unemployment rate should support
household credit quality, but there is little room for business and
household insolvency rates to drop from what are already very low
levels. Wealth management should see an improvement in demand for
equities and other higher risk assets as global growth improves.
Wholesale banking should benefit from rising capital spending and
greater M&A activity that increases the demand for corporate lending
and debt financing, and provincial governments will still have elevated
borrowing needs, including those related to infrastructure projects. A
sturdier global climate could reduce uncertainties that held back
equity issuance in the prior year.
Non-GAAP measures
We use a number of financial measures to assess the performance of our
business lines. Some measures are calculated in accordance with GAAP
(IFRS), while other measures do not have a standardized meaning under
GAAP, and accordingly, these measures may not be comparable to similar
measures used by other companies. Investors may find these non-GAAP
measures useful in analyzing financial performance. For a more detailed
discussion on our non-GAAP measures, see page 12 of the 2013 Annual
Report. The following table provides a reconciliation of non-GAAP to
GAAP measures related to CIBC on a consolidated basis.
|
|
|
|
|
|
|
|
|
|
|
|
As at or for the three
|
|
|
|
As at or for the six
|
|
|
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
|
months ended
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
2013
|
|
$ millions
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
Reported and adjusted diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income attributable to diluted common shareholders
|
|
|
|
A
|
|
|
|
$
|
292
|
|
$
|
1,149
|
|
$
|
835
|
|
|
$
|
1,441
|
|
$
|
1,593
|
|
After-tax impact of items of note (1)
|
|
|
|
|
|
|
|
|
581
|
|
|
(226)
|
|
|
-
|
|
|
|
355
|
|
|
97
|
|
After-tax impact of items of note on non-controlling interests
|
|
|
|
|
|
|
|
|
(10)
|
|
|
-
|
|
|
-
|
|
|
|
(10)
|
|
|
-
|
|
Adjusted net income attributable to diluted common shareholders (2)
|
|
|
|
B
|
|
|
|
$
|
863
|
|
$
|
923
|
|
$
|
835
|
|
|
$
|
1,786
|
|
$
|
1,690
|
|
Diluted weighted-average common shares outstanding (thousands)
|
|
|
|
C
|
|
|
|
|
398,519
|
|
|
399,217
|
|
|
400,812
|
|
|
|
398,861
|
|
|
402,315
|
|
Reported diluted EPS ($)
|
|
|
|
A/C
|
|
|
|
$
|
0.73
|
|
$
|
2.88
|
|
$
|
2.09
|
|
|
$
|
3.61
|
|
$
|
3.96
|
|
Adjusted diluted EPS ($) (2)
|
|
|
|
B/C
|
|
|
|
|
2.17
|
|
|
2.31
|
|
|
2.09
|
|
|
|
4.48
|
|
|
4.20
|
|
Reported and adjusted efficiency ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported total revenue
|
|
|
|
D
|
|
|
|
$
|
3,167
|
|
$
|
3,634
|
|
$
|
3,124
|
|
|
$
|
6,801
|
|
$
|
6,289
|
|
Pre-tax impact of items of note (1)
|
|
|
|
|
|
|
|
|
8
|
|
|
(353)
|
|
|
(29)
|
|
|
|
(345)
|
|
|
(57)
|
|
TEB
|
|
|
|
|
|
|
|
|
124
|
|
|
110
|
|
|
97
|
|
|
|
234
|
|
|
189
|
|
Adjusted total revenue (2)
|
|
|
|
E
|
|
|
|
$
|
3,299
|
|
$
|
3,391
|
|
$
|
3,192
|
|
|
$
|
6,690
|
|
$
|
6,421
|
|
Reported non-interest expenses
|
|
|
|
F
|
|
|
|
$
|
2,412
|
|
$
|
1,979
|
|
$
|
1,825
|
|
|
$
|
4,391
|
|
$
|
3,813
|
|
Pre-tax impact of items of note (1)
|
|
|
|
|
|
|
|
|
(447)
|
|
|
(55)
|
|
|
(8)
|
|
|
|
(502)
|
|
|
(173)
|
|
Adjusted non-interest expenses (2)
|
|
|
|
G
|
|
|
|
$
|
1,965
|
|
$
|
1,924
|
|
$
|
1,817
|
|
|
$
|
3,889
|
|
$
|
3,640
|
|
Reported efficiency ratio
|
|
|
|
F/D
|
|
|
|
|
76.2
|
%
|
|
54.5
|
%
|
|
58.4
|
%
|
|
|
64.6
|
%
|
|
60.6
|
%
|
Adjusted efficiency ratio (2)
|
|
|
|
G/E
|
|
|
|
|
59.6
|
%
|
|
56.7
|
%
|
|
56.9
|
%
|
|
|
58.1
|
%
|
|
56.7
|
%
|
Reported and adjusted dividend payout ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income attributable to common shareholders
|
|
|
|
H
|
|
|
|
$
|
292
|
|
$
|
1,149
|
|
$
|
835
|
|
|
$
|
1,441
|
|
$
|
1,593
|
|
After-tax impact of items of note attributable to common shareholders (1)
|
|
|
|
|
|
|
|
|
571
|
|
|
(226)
|
|
|
-
|
|
|
|
345
|
|
|
97
|
|
Adjusted net income attributable to common shareholders (2)
|
|
|
|
I
|
|
|
|
$
|
863
|
|
$
|
923
|
|
$
|
835
|
|
|
$
|
1,786
|
|
$
|
1,690
|
|
Dividends paid to common shareholders
|
|
|
|
J
|
|
|
|
$
|
390
|
|
$
|
382
|
|
$
|
376
|
|
|
$
|
772
|
|
$
|
755
|
|
Reported dividend payout ratio
|
|
|
|
J/H
|
|
|
|
|
133.5
|
%
|
|
33.3
|
%
|
|
44.9
|
%
|
|
|
53.6
|
%
|
|
47.3
|
%
|
Adjusted dividend payout ratio (2)
|
|
|
|
J/I
|
|
|
|
|
45.2
|
%
|
|
41.4
|
%
|
|
44.9
|
%
|
|
|
43.2
|
%
|
|
44.6
|
%
|
Reported and adjusted return on common shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shareholders' equity
|
|
|
|
K
|
|
|
|
$
|
17,173
|
|
$
|
16,581
|
|
$
|
14,913
|
|
|
$
|
16,872
|
|
$
|
14,804
|
|
Reported return on common shareholders' equity
|
|
|
|
H/K
|
|
|
|
|
7.0
|
%
|
|
27.5
|
%
|
|
23.0
|
%
|
|
|
17.2
|
%
|
|
21.7
|
%
|
Adjusted return on common shareholders' equity (2)
|
|
|
|
I/K
|
|
|
|
|
20.6
|
%
|
|
22.1
|
%
|
|
23.0
|
%
|
|
|
21.3
|
%
|
|
23.0
|
%
|
Reported and adjusted effective tax rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported income before income taxes
|
|
|
|
L
|
|
|
|
$
|
425
|
|
$
|
1,437
|
|
$
|
1,034
|
|
|
$
|
1,862
|
|
$
|
1,946
|
|
Pre-tax impact of items of note (1)
|
|
|
|
|
|
|
|
|
600
|
|
|
(298)
|
|
|
-
|
|
|
|
302
|
|
|
137
|
|
Adjusted income before income taxes (2)
|
|
|
|
M
|
|
|
|
$
|
1,025
|
|
$
|
1,139
|
|
$
|
1,034
|
|
|
$
|
2,164
|
|
$
|
2,083
|
|
Reported income taxes
|
|
|
|
N
|
|
|
|
$
|
119
|
|
$
|
260
|
|
$
|
172
|
|
|
$
|
379
|
|
$
|
299
|
|
Tax impact of items of note (1)
|
|
|
|
|
|
|
|
|
19
|
|
|
(72)
|
|
|
-
|
|
|
|
(53)
|
|
|
40
|
|
Adjusted income taxes (2)
|
|
|
|
O
|
|
|
|
$
|
138
|
|
$
|
188
|
|
$
|
172
|
|
|
$
|
326
|
|
$
|
339
|
|
Reported effective tax rate
|
|
|
|
N/L
|
|
|
|
|
28.1
|
%
|
|
18.1
|
%
|
|
16.6
|
%
|
|
|
20.4
|
%
|
|
15.3
|
%
|
Adjusted effective tax rate (2)
|
|
|
|
O/M
|
|
|
|
|
13.5
|
%
|
|
16.5
|
%
|
|
16.6
|
%
|
|
|
15.1
|
%
|
|
16.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
|
|
|
Wealth
|
|
|
|
Wholesale
|
|
|
|
Corporate
|
|
|
|
|
|
CIBC
|
$ millions, for the three months ended
|
|
|
|
|
Banking
|
|
Management
|
|
|
|
Banking
|
|
|
|
and Other
|
|
|
|
|
|
Total
|
2014
|
Reported net income
|
|
|
|
$
|
546
|
|
$
|
117
|
|
|
$
|
213
|
|
|
$
|
(570)
|
|
|
$
|
|
|
306
|
Apr. 30
|
After-tax impact of items of note (1)
|
|
|
|
|
17
|
|
|
4
|
|
|
|
15
|
|
|
|
545
|
|
|
|
|
|
581
|
|
|
Adjusted net income (loss) (2)
|
|
|
|
$
|
563
|
|
$
|
121
|
|
|
$
|
228
|
|
|
$
|
(25)
|
|
|
$
|
|
|
887
|
2014
|
Reported net income
|
|
|
|
$
|
746
|
|
$
|
114
|
|
|
$
|
264
|
|
|
$
|
53
|
|
|
$
|
|
|
1,177
|
Jan. 31
|
After-tax impact of items of note (1)
|
|
|
|
|
(103)
|
|
|
3
|
|
|
|
(49)
|
|
|
|
(77)
|
|
|
|
|
|
(226)
|
|
|
Adjusted net income (loss) (2)
|
|
|
|
$
|
643
|
|
$
|
117
|
|
|
$
|
215
|
|
|
$
|
(24)
|
|
|
$
|
|
|
951
|
2013
|
Reported net income
|
|
|
|
$
|
572
|
|
$
|
91
|
|
|
$
|
192
|
|
|
$
|
7
|
|
|
$
|
|
|
862
|
Apr. 30
|
After-tax impact of items of note (1)
|
|
|
|
|
1
|
|
|
1
|
|
|
|
(5)
|
|
|
|
3
|
|
|
|
|
|
-
|
|
|
Adjusted net income (2)
|
|
|
|
$
|
573
|
|
$
|
92
|
|
|
$
|
187
|
|
|
$
|
10
|
|
|
$
|
|
|
862
|
$ millions, for the six months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
Reported net income
|
|
|
|
$
|
1,292
|
|
$
|
231
|
|
|
$
|
477
|
|
|
$
|
(517)
|
|
|
$
|
|
|
1,483
|
Apr. 30
|
After-tax impact of items of note (1)
|
|
|
|
|
(86)
|
|
|
7
|
|
|
|
(34)
|
|
|
|
468
|
|
|
|
|
|
355
|
|
|
Adjusted net income (loss) (2)
|
|
|
|
$
|
1,206
|
|
$
|
238
|
|
|
$
|
443
|
|
|
$
|
(49)
|
|
|
$
|
|
|
1,838
|
2013
|
Reported net income
|
|
|
|
$
|
1,152
|
|
$
|
180
|
|
|
$
|
278
|
|
|
$
|
37
|
|
|
$
|
|
|
1,647
|
Apr. 30
|
After-tax impact of items of note (1)
|
|
|
|
|
3
|
|
|
1
|
|
|
|
104
|
|
|
|
(11)
|
|
|
|
|
|
97
|
|
|
Adjusted net income (2)
|
|
|
|
$
|
1,155
|
|
$
|
181
|
|
|
$
|
382
|
|
|
$
|
26
|
|
|
$
|
|
|
1,744
|
(1)
|
Reflects impact of items of note under "Financial results" section.
|
(2)
|
Non-GAAP measure.
|
Strategic business units overview
CIBC has three SBUs - Retail and Business Banking, Wealth Management and
Wholesale Banking. These SBUs are supported by six functional groups -
Technology and Operations, Corporate Development, Finance, Treasury,
Administration, and Risk Management, which form part of Corporate and
Other. The expenses of these functional groups are generally allocated
to the business lines within the SBUs. Corporate and Other also
includes our International banking operations comprising mainly CIBC
FirstCaribbean, strategic investments in the CIBC Mellon joint ventures
and The Bank of N.T. Butterfield & Son Limited, and other income
statement and balance sheet items not directly attributable to the
business lines.
Business unit allocations
Treasury activities impact the reported financial results of the SBUs.
Each line of business within our SBUs is charged or credited with a
market-based cost of funds on assets and liabilities, respectively,
which impacts the revenue performance of the SBUs. Once the interest
and liquidity risk inherent in our client-driven assets and liabilities
is transfer priced into Treasury, it is managed within CIBC's risk
framework and limits. The residual financial results associated with
Treasury activities are reported in Corporate and Other. Capital is
attributed to the SBUs in a manner that is intended to consistently
measure and align economic costs with the underlying benefits and risks
associated with SBU activities. Earnings on unattributed capital remain
in Corporate and Other. We review our transfer pricing methodologies on
an ongoing basis to ensure they reflect changing market environments
and industry practices.
To measure and report the results of operations of the lines of business
within our Retail and Business Banking and Wealth Management SBUs, we
use a Manufacturer/Customer Segment/Distributor Management Model. The
model uses certain estimates and allocation methodologies in the
preparation of segmented financial information. Under this model,
internal payments for sales and trailer commissions and distribution
service fees are made among the lines of business and SBUs.
Periodically, the sales and trailer commission rates paid to customer
segments for certain products are revised and applied prospectively.
Non-interest expenses are attributed to the SBUs to which they relate
based on appropriate criteria. Revenue, expenses, and other balance
sheet resources related to certain activities are fully allocated to
the lines of business within the SBUs.
The individual allowances and related provisions are reported in the
respective SBUs. The collective allowances and related provisions are
reported in Corporate and Other except for: (i) residential mortgages
greater than 90 days delinquent; (ii) personal loans and scored small
business loans greater than 30 days delinquent; and (iii) net
write-offs for the card portfolio, which are all reported in the
respective SBUs. All allowances and related provisions for CIBC
FirstCaribbean are reported in Corporate and Other.
Retail and Business Banking
Retail and Business Banking provides clients across Canada with financial advice, banking,
investment, and authorized insurance products and services through a
strong team of advisors and more than 1,100 branches, as well as our
ABMs, mobile sales force, telephone banking, online and mobile banking.
Results(1)
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
|
|
For the six
|
|
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
|
months ended
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
2013
|
|
$ millions
|
|
|
|
|
|
|
Apr. 30
|
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal banking
|
|
|
|
|
|
$
|
1,539
|
|
$
|
1,576
|
|
$
|
1,463
|
|
|
$
|
3,115
|
|
$
|
2,945
|
|
|
Business banking
|
|
|
|
|
|
|
368
|
|
|
380
|
|
|
374
|
|
|
|
748
|
|
|
757
|
|
|
Other (2)
|
|
|
|
|
|
|
32
|
|
|
299
|
|
|
148
|
|
|
|
331
|
|
|
293
|
|
Total revenue
|
|
|
|
|
|
|
1,939
|
|
|
2,255
|
|
|
1,985
|
|
|
|
4,194
|
|
|
3,995
|
|
Provision for credit losses
|
|
|
|
|
|
|
173
|
|
|
210
|
|
|
233
|
|
|
|
383
|
|
|
474
|
|
Non-interest expenses
|
|
|
|
|
|
|
1,040
|
|
|
1,055
|
|
|
988
|
|
|
|
2,095
|
|
|
1,985
|
|
Income before taxes
|
|
|
|
|
|
|
726
|
|
|
990
|
|
|
764
|
|
|
|
1,716
|
|
|
1,536
|
|
Income taxes
|
|
|
|
|
|
|
180
|
|
|
244
|
|
|
192
|
|
|
|
424
|
|
|
384
|
|
Net income
|
|
|
|
|
|
$
|
546
|
|
$
|
746
|
|
$
|
572
|
|
|
$
|
1,292
|
|
$
|
1,152
|
|
Net income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders (a)
|
|
|
|
|
|
$
|
546
|
|
$
|
746
|
|
$
|
572
|
|
|
$
|
1,292
|
|
$
|
1,152
|
|
Efficiency ratio
|
|
|
|
|
|
|
53.6
|
%
|
|
46.8
|
%
|
|
49.8
|
%
|
|
|
49.9
|
%
|
|
49.7
|
%
|
Return on equity (3)
|
|
|
|
|
|
|
58.1
|
%
|
|
77.9
|
%
|
|
61.0
|
%
|
|
|
68.1
|
%
|
|
62.4
|
%
|
Charge for economic capital (3) (b)
|
|
|
|
|
|
$
|
(117)
|
|
$
|
(119)
|
|
$
|
(118)
|
|
|
$
|
(236)
|
|
$
|
(233)
|
|
Economic profit (3) (a+b)
|
|
|
|
|
|
$
|
429
|
|
$
|
627
|
|
$
|
454
|
|
|
$
|
1,056
|
|
$
|
919
|
|
Full-time equivalent employees
|
|
|
|
|
|
|
22,306
|
|
|
22,243
|
|
|
21,987
|
|
|
|
22,306
|
|
|
21,987
|
|
(1)
|
For additional segmented information, see the notes to the interim
consolidated financial statements.
|
(2)
|
Includes run-off portfolios relating to FirstLine mortgage broker
business, student loans and cards.
|
(3)
|
For additional information, see the "Non-GAAP measures" section.
|
Financial overview
Net income for the quarter was $546 million, down $26 million from the
same quarter last year, primarily due to higher non-interest expenses
and lower revenue, partially offset by lower provision for credit
losses.
Net income was down $200 million from the prior quarter, mainly due to
lower revenue partially offset by lower provision for credit losses.
Net income for the six months ended April 30, 2014 was $1,292 million,
up $140 million from the same period in 2013, primarily due to higher
revenue and lower provision for credit losses, partially offset by
higher non-interest expenses.
Revenue
Revenue was down $46 million or 2% from the same quarter last year.
Personal banking revenue was up $76 million, mainly due to volume growth
across most products.
Business banking revenue was down $6 million, mainly due to narrower
spreads, partially offset by volume growth.
Other revenue was down $116 million, mainly due to lower cards revenue
as a result of the Aeroplan transactions with Aimia and TD, and lower
revenue from our exited FirstLine mortgage broker business.
Revenue was down $316 million or 14% from the prior quarter.
Personal banking revenue was down $37 million, primarily due to fewer
days in the quarter.
Business banking revenue was down $12 million, primarily due to fewer
days in the quarter.
Other revenue was down $267 million, due to the gain relating to the
Aeroplan transactions in the prior quarter, shown as an item of note,
and lower cards revenue as a result of these transactions.
Revenue for the six months ended April 30, 2014 was up $199 million or
5% from the same period in 2013.
Personal banking revenue was up $170 million, due to volume growth
across most products, higher fees and wider spreads.
Business banking revenue was down $9 million, mainly due to narrower
spreads, partially offset by volume growth.
Other revenue was up $38 million, mainly due to the gain relating to the
Aeroplan transactions noted above, partially offset by lower cards
revenue as a result of these transactions, and lower revenue from our
exited FirstLine mortgage broker business.
Provision for credit losses
Provision for credit losses was down $60 million from the same quarter
last year, mainly due to lower write-offs and bankruptcies in the card
portfolio, including the impact of the sold Aeroplan portfolio, and
lower losses in the business lending portfolio.
Provision for credit losses was down $37 million from the prior quarter,
primarily due to a charge resulting from operational changes in the
processing of write-offs in the prior quarter, shown as an item of
note, and lower losses in the card portfolio as a result of the sold
Aeroplan portfolio.
Provision for credit losses for the six months ended April 30, 2014 was
down $91 million from the same period in 2013, mainly due to lower
write-offs and bankruptcies in the card portfolio, including the impact
of the sold Aeroplan portfolio, and lower losses in the business
lending portfolio, partially offset by the charge relating to the
write-offs noted above.
Non-interest expenses
Non-interest expenses were up $52 million or 5% from the same quarter
last year, primarily due to costs relating to the development of our
enhanced travel rewards program, shown as an item of note, and higher
spending on strategic initiatives.
Non-interest expenses were down $15 million from the prior quarter. The
prior quarter had costs relating to the Aeroplan transactions,
partially offset by higher costs relating to the development of our
enhanced travel rewards program in the current quarter.
Non-interest expenses for the six months ended April 30, 2014 were up
$110 million or 6% from the same period in 2013, primarily due to costs
relating to development of our enhanced travel rewards program and to
the Aeroplan transactions noted above, and higher spending on strategic
initiatives.
Income taxes
Income taxes were down $12 million and $64 million from the same quarter
last year and the prior quarter, respectively, primarily due to lower
income.
Income taxes for the six months ended April 30, 2014 were up $40 million
from the same period in 2013, primarily due to higher income.
Wealth Management
Wealth Management provides relationship-based advisory services and an extensive suite of
leading investment solutions to meet the needs of institutional, retail
and high net worth clients. Our asset management, retail brokerage and
private wealth management businesses combine to create an integrated
offer, delivered through more than 1,500 advisors across Canada and the
U.S.
Results(1)
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
|
|
For the six
|
|
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
|
months ended
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
2013
|
|
$ millions
|
|
|
|
|
|
|
Apr. 30
|
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail brokerage
|
|
|
|
|
|
$
|
292
|
|
$
|
284
|
|
$
|
262
|
|
|
$
|
576
|
|
$
|
521
|
|
|
Asset management
|
|
|
|
|
|
|
181
|
|
|
172
|
|
|
153
|
|
|
|
353
|
|
|
297
|
|
|
Private wealth management
|
|
|
|
|
|
|
75
|
|
|
46
|
|
|
28
|
|
|
|
121
|
|
|
57
|
|
Total revenue
|
|
|
|
|
|
|
548
|
|
|
502
|
|
|
443
|
|
|
|
1,050
|
|
|
875
|
|
Provision for (reversal of) credit losses
|
|
|
|
|
|
|
1
|
|
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
Non-interest expenses
|
|
|
|
|
|
|
395
|
|
|
351
|
|
|
324
|
|
|
|
746
|
|
|
640
|
|
Income before taxes
|
|
|
|
|
|
|
152
|
|
|
152
|
|
|
119
|
|
|
|
304
|
|
|
235
|
|
Income taxes
|
|
|
|
|
|
|
35
|
|
|
38
|
|
|
28
|
|
|
|
73
|
|
|
55
|
|
Net income
|
|
|
|
|
|
$
|
117
|
|
$
|
114
|
|
$
|
91
|
|
|
$
|
231
|
|
$
|
180
|
|
Net income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
|
|
|
|
|
$
|
1
|
|
$
|
1
|
|
$
|
-
|
|
|
$
|
2
|
|
$
|
-
|
|
|
Equity shareholders (a)
|
|
|
|
|
|
|
116
|
|
|
113
|
|
|
91
|
|
|
|
229
|
|
|
180
|
|
Efficiency ratio
|
|
|
|
|
|
|
72.2
|
%
|
|
69.9
|
%
|
|
72.9
|
%
|
|
|
71.1
|
%
|
|
73.1
|
%
|
Return on equity (2)
|
|
|
|
|
|
|
22.4
|
%
|
|
22.5
|
%
|
|
19.8
|
%
|
|
|
22.4
|
%
|
|
19.4
|
%
|
Charge for economic capital (2) (b)
|
|
|
|
|
|
$
|
(63)
|
|
$
|
(62)
|
|
$
|
(56)
|
|
|
$
|
(125)
|
|
$
|
(114)
|
|
Economic profit (2) (a+b)
|
|
|
|
|
|
$
|
53
|
|
$
|
51
|
|
$
|
35
|
|
|
$
|
104
|
|
$
|
66
|
|
Full-time equivalent employees
|
|
|
|
|
|
|
4,108
|
|
|
4,056
|
|
|
3,792
|
|
|
|
4,108
|
|
|
3,792
|
|
(1)
|
For additional segmented information, see the notes to the interim
consolidated financial statements.
|
(2)
|
For additional information, see the "Non-GAAP measures" section.
|
Financial overview
Net income for the quarter was $117 million, up $26 million from the
same quarter last year, and up $3 million from the prior quarter,
primarily due to higher revenue, partially offset by higher
non-interest expenses.
Net income for the six months ended April 30, 2014 was $231 million, up
$51 million from the same period in 2013, primarily due to higher
revenue, partially offset by higher non-interest expenses.
Revenue
Revenue was up $105 million or 24% from the same quarter last year, and
up $46 million or 9% from the prior quarter.
Retail brokerage revenue was up $30 million from the same quarter last
year, mainly due to higher fee-based and commission revenue, and up $8
million from the prior quarter, primarily due to higher fee-based
revenue.
Asset management revenue was up $28 million from the same quarter last
year, and up $9 million from the prior quarter, primarily due to higher
client AUM driven by market appreciation and net sales of long-term
mutual funds, and higher contribution from our equity-accounted
investment in ACI.
Private wealth management revenue was up $47 million from the same
quarter last year, and up $29 million from the prior quarter, mainly
due to the acquisition of Atlantic Trust on December 31, 2013, and
higher AUM driven by client balance growth.
Revenue for the six months ended April 30, 2014 was up $175 million or
20% from the same period in 2013.
Retail brokerage revenue was up $55 million, mainly due to higher
fee-based and commission revenue.
Asset management revenue was up $56 million, primarily due to higher
client AUM driven by market appreciation and net sales of long-term
mutual funds, and higher contribution from our equity-accounted
investment in ACI.
Private wealth management revenue was up $64 million, mainly due to the
acquisition noted above and higher AUM driven by client balance growth.
Non-interest expenses
Non-interest expenses were up $71 million or 22% from the same quarter
last year, and up $44 million or 13% from the prior quarter, primarily
due to the impact of the acquisition noted above and higher
employee-related compensation.
Non-interest expenses for the six months ended April 30, 2014 were up
$106 million or 17% from the same period in 2013, primarily due to the
impact of the acquisition noted above and higher employee-related
compensation.
Income taxes
Income taxes were up $7 million from the same quarter last year mainly
due to higher income.
Income taxes were comparable with the prior quarter.
Income taxes for the six months ended April 30, 2014 were up $18 million
from the same period in 2013 mainly due to higher income.
Wholesale Banking
Wholesale Banking provides a wide range of credit, capital markets, investment banking
and research products and services to government, institutional,
corporate and retail clients in Canada and in key markets around the
world.
Results(1)
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
|
|
For the six
|
|
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
|
months ended
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
2013
|
|
$ millions
|
|
|
|
|
|
|
Apr. 30
|
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital markets
|
|
|
|
|
|
$
|
331
|
|
$
|
330
|
|
$
|
311
|
|
|
$
|
661
|
|
$
|
638
|
|
|
Corporate and investment banking
|
|
|
|
|
|
|
275
|
|
|
250
|
|
|
222
|
|
|
|
525
|
|
|
433
|
|
|
Other
|
|
|
|
|
|
|
-
|
|
|
100
|
|
|
41
|
|
|
|
100
|
|
|
60
|
|
Total revenue (2)
|
|
|
|
|
|
|
606
|
|
|
680
|
|
|
574
|
|
|
|
1,286
|
|
|
1,131
|
|
Provision for credit losses
|
|
|
|
|
|
|
21
|
|
|
2
|
|
|
21
|
|
|
|
23
|
|
|
31
|
|
Non-interest expenses
|
|
|
|
|
|
|
318
|
|
|
329
|
|
|
298
|
|
|
|
647
|
|
|
743
|
|
Income before taxes
|
|
|
|
|
|
|
267
|
|
|
349
|
|
|
255
|
|
|
|
616
|
|
|
357
|
|
Income taxes (2)
|
|
|
|
|
|
|
54
|
|
|
85
|
|
|
63
|
|
|
|
139
|
|
|
79
|
|
Net income
|
|
|
|
|
|
$
|
213
|
|
$
|
264
|
|
$
|
192
|
|
|
$
|
477
|
|
$
|
278
|
|
Net income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders (a)
|
|
|
|
|
|
$
|
213
|
|
$
|
264
|
|
$
|
192
|
|
|
$
|
477
|
|
$
|
278
|
|
Efficiency ratio (2)
|
|
|
|
|
|
|
52.6
|
%
|
|
48.3
|
%
|
|
52.0
|
%
|
|
|
50.3
|
%
|
|
65.7
|
%
|
Return on equity (3)
|
|
|
|
|
|
|
36.0
|
%
|
|
44.9
|
%
|
|
38.6
|
%
|
|
|
40.5
|
%
|
|
26.9
|
%
|
Charge for economic capital (3) (b)
|
|
|
|
|
|
$
|
(73)
|
|
$
|
(73)
|
|
$
|
(61)
|
|
|
$
|
(146)
|
|
$
|
(128)
|
|
Economic profit (3) (a+b)
|
|
|
|
|
|
$
|
140
|
|
$
|
191
|
|
$
|
131
|
|
|
$
|
331
|
|
$
|
150
|
|
Full-time equivalent employees
|
|
|
|
|
|
|
1,248
|
|
|
1,244
|
|
|
1,245
|
|
|
|
1,248
|
|
|
1,245
|
|
(1)
|
For additional segmented information, see the notes to the interim
consolidated financial statements.
|
(2)
|
Revenue and income taxes are reported on a TEB basis. Accordingly,
revenue and income taxes include
a TEB adjustment of $124 million for the quarter ended April 30, 2014
(January 31, 2014: $110 million;
April 30, 2013: $97 million) and $234 million for the six months ended
April 30, 2014 (April 30, 2013:
$189 million). The equivalent amounts are offset in the revenue and
income taxes of Corporate and Other.
|
(3)
|
For additional information, see the "Non-GAAP measures" section.
|
Financial overview
Net income for the quarter was $213 million, up $21 million from the
same quarter last year, mainly due to higher revenue, partially offset
by higher non-interest expenses.
Net income was down $51 million from the prior quarter, mainly due to
lower revenue and a higher provision for credit losses, partially
offset by lower non-interest expenses.
Net income for the six months ended April 30, 2014 was $477 million, up
$199 million from the same period in 2013, mainly due to higher revenue
and lower non-interest expenses.
Revenue
Revenue was up $32 million or 6% from the same quarter last year.
Capital markets revenue was up $20 million, primarily due to higher
revenue from equity derivatives and fixed income trading, partially
offset by lower commodities trading revenue.
Corporate and investment banking revenue was up $53 million, mainly due
to higher revenue from corporate banking and U.S. real estate finance
and higher investment portfolio gains, partially offset by lower
advisory revenue.
Other revenue was down $41 million, primarily due to losses in the
structured credit run-off business compared with gains in the prior
year quarter.
Revenue was down $74 million or 11% from the prior quarter.
Capital markets revenue was comparable with the prior quarter.
Corporate and investment banking revenue was up $25 million, primarily
due to higher investment portfolio gains and higher revenue from
corporate banking and U.S. real estate finance.
Other revenue was down $100 million from the prior quarter, primarily
due to the gain on the sale of an equity investment in our exited
European leveraged finance portfolio in the prior quarter, shown as an
item of note.
Revenue for the six months ended April 30, 2014 was up $155 million or
14% from the same period in 2013.
Capital markets revenue was up $23 million, primarily due to higher
equity derivatives and foreign exchange trading revenue, partially
offset by a lower reversal of credit valuation adjustments (CVA)
against credit exposures to derivative counterparties (other than
financial guarantors).
Corporate and investment banking revenue was up $92 million, mainly due
to higher revenue from corporate banking and U.S. real estate finance
and higher investment portfolio gains, partially offset by lower
advisory revenue.
Other revenue was up $40 million, primarily due to the gain on the sale
of an equity investment noted above, partially offset by losses in the
structured credit run-off business compared with gains in the prior
year period.
Provision for credit losses
Provision for credit losses was comparable with the same quarter last
year. Loan losses in our exited U.S. leveraged finance portfolio in the
current quarter were offset by loan losses in our exited European
leveraged finance portfolio in the same quarter last year, both shown
as items of note.
Provision for credit losses was up $19 million from the prior quarter,
mainly due to higher losses in our exited U.S. leveraged finance
portfolio, shown as an item of note.
Provision for credit losses for the six months ended April 30, 2014 was
down $8 million from the same period in 2013 due to lower losses in the
U.S. real estate finance portfolio. Loan losses in our exited U.S.
leveraged finance portfolio in the current year period were offset by
loan losses in our exited European leveraged finance portfolio in the
prior year period, as noted above.
Non-interest expenses
Non-interest expenses were up $20 million or 7% from the same quarter
last year, mainly due to increased spending on strategic initiatives.
Non-interest expenses were down $11 million or 3% from the prior
quarter, mainly due to lower performance-based compensation.
Non-interest expenses for the six months ended April 30, 2014 were down
$96 million or 13% from the same period in 2013, as the prior period
included expenses in the structured credit run-off business related to
the charge in respect of a settlement of the U.S. Bankruptcy Court
adversary proceeding brought by the Estate of Lehman Brothers Holdings,
Inc., shown as an item of note.
Income taxes
Income taxes for the quarter were down $9 million from the same quarter
last year, primarily due to the impact of changes in the proportion of
income subject to varying rates of tax in different jurisdictions.
Income taxes for the quarter were down $31 million from the prior
quarter, primarily due to lower income and the impact of changes in the
proportion of income subject to varying rates of tax in different
jurisdictions.
Income taxes for the six months ended April 30, 2014 were up $60 million
from the same period in 2013, primarily due to higher income, partially
offset by the impact of changes in the proportion of income subject to
varying rates of tax in different jurisdictions.
Structured credit run-off business
The results of the structured credit run-off business are included in
the Wholesale Banking SBU.
Results
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
|
For the six
|
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
months ended
|
|
|
|
|
|
|
|
2014
|
|
|
|
2014
|
|
|
|
2013
|
|
|
2014
|
|
|
|
2013
|
$ millions
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
Jan. 31
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
Net interest income (expense)
|
|
|
|
|
|
$
|
(10)
|
|
|
$
|
(13)
|
|
|
$
|
(9)
|
|
$
|
(23)
|
|
|
$
|
(23)
|
Trading income
|
|
|
|
|
|
|
24
|
|
|
|
5
|
|
|
|
35
|
|
|
29
|
|
|
|
53
|
Designated at fair value (FVO) losses
|
|
|
|
|
|
|
(17)
|
|
|
|
(2)
|
|
|
|
(3)
|
|
|
(19)
|
|
|
|
(6)
|
Other income
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
|
-
|
|
|
|
11
|
Total revenue
|
|
|
|
|
|
|
(3)
|
|
|
|
(10)
|
|
|
|
29
|
|
|
(13)
|
|
|
|
35
|
Non-interest expenses
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
2
|
|
|
|
156
|
Income (loss) before taxes
|
|
|
|
|
|
|
(4)
|
|
|
|
(11)
|
|
|
|
27
|
|
|
(15)
|
|
|
|
(121)
|
Income taxes
|
|
|
|
|
|
|
(1)
|
|
|
|
(3)
|
|
|
|
7
|
|
|
(4)
|
|
|
|
(32)
|
Net income (loss)
|
|
|
|
|
|
$
|
(3)
|
|
|
$
|
(8)
|
|
|
$
|
20
|
|
$
|
(11)
|
|
|
$
|
(89)
|
Net loss for the quarter was $3 million (US$3 million), compared with
net income of $20 million (US$20 million) for the same quarter last
year and net loss of $8 million (US$7 million) for the prior quarter.
The net loss for the six months ended April 30, 2014 was $11 million
(US$10 million), down $78 million (US$77 million) from the same period
in 2013.
Net loss for the quarter was mainly due to net interest expense, the
result of transactions completed to reduce our structured credit
positions, and a decrease in the value of receivables related to
protection purchased from financial guarantors (on loan assets that are
carried at amortized cost), resulting from an increase in the
mark-to-market (MTM) of the underlying positions. These were partially
offset by gains on unhedged positions and a reduction in CVA relating
to financial guarantors.
During the quarter, terminations reduced the notional of the purchased
credit derivatives with financial guarantors by US$243 million. The
completion of these transactions resulted in an aggregate pre-tax loss
of $9 million (US$9 million), or $7 million (US$6 million) after-tax.
Position summary
The following table summarizes our positions within our structured
credit run-off business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written credit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivatives, liquidity
|
|
|
Credit protection purchased from
|
US$ millions, as at April 30, 2014
|
|
|
Investments and loans
|
(1)
|
|
and credit facilities
|
|
|
Financial guarantors
|
|
|
Other counterparties
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
Carrying
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of
|
|
|
value of
|
|
|
value of
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
trading, AFS
|
|
|
securities
|
|
|
securities
|
|
|
|
|
|
value of
|
|
|
|
|
|
Fair value
|
|
|
|
|
|
Fair value
|
|
|
|
|
|
|
and FVO
|
|
|
classified
|
|
|
classified
|
|
|
|
written credit
|
|
|
|
|
|
net of
|
|
|
|
|
|
net of
|
|
|
|
Notional
|
|
|
securities
|
|
|
as loans
|
|
|
as loans
|
|
|
Notional
|
|
|
derivatives
|
|
|
Notional
|
|
|
CVA
|
|
|
Notional
|
|
|
CVA
|
USRMM - CDO
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
224
|
|
$
|
157
|
|
$
|
-
|
|
$
|
-
|
|
$
|
224
|
|
$
|
157
|
CLO
|
|
|
2,061
|
|
|
1
|
|
|
1,999
|
|
|
2,011
|
|
|
1,910
|
|
|
29
|
|
|
3,517
|
|
|
47
|
|
|
99
|
|
|
2
|
Corporate debt
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,064
|
|
|
6
|
|
|
-
|
|
|
-
|
|
|
4,064
|
|
|
9
|
Other
|
|
|
642
|
|
|
436
|
|
|
32
|
|
|
32
|
|
|
438
|
|
|
35
|
|
|
25
|
|
|
3
|
|
|
12
|
|
|
2
|
Unmatched
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
456
|
|
|
1
|
|
|
$
|
2,703
|
|
$
|
437
|
|
$
|
2,031
|
|
$
|
2,043
|
|
$
|
6,636
|
|
$
|
227
|
|
$
|
3,542
|
|
$
|
50
|
|
$
|
4,855
|
|
$
|
171
|
October 31, 2013
|
|
$
|
3,269
|
|
$
|
494
|
|
$
|
2,497
|
|
$
|
2,507
|
|
$
|
7,543
|
|
$
|
269
|
|
$
|
4,718
|
|
$
|
87
|
|
$
|
5,145
|
|
$
|
188
|
(1)
|
Excluded from the table above are equity available-for-sale (AFS)
securities that we obtained in consideration for commutation of our
U.S. residential
mortgage market (USRMM) contracts with financial guarantors with a
carrying value of US$18 million (October 31, 2013: US$10 million).
|
USRMM - collateralized debt obligation (CDO)
Our net USRMM position, consisting of a written credit derivative,
amounted to US$67 million. This position was hedged through protection
purchased from a large U.S.-based diversified multinational insurance
and financial services company with which we have market-standard
collateral arrangements.
Collateralized loan obligation (CLO)
CLO positions consist of senior tranches of CLOs backed by diversified
pools of primarily U.S. (63%) and European-based (34%) senior secured
leveraged loans. As at April 30, 2014, approximately 35% of the total
notional amount of the CLO tranches was rated equivalent to AAA, 62%
was rated between the equivalent of AA+ and AA-, and the remainder was
the equivalent of A or lower. As at April 30, 2014, approximately 17%
of the underlying collateral was rated equivalent to BB- or higher, 59%
was rated between the equivalent of B+ and B-, 5% was rated equivalent
to CCC+ or lower, with the remainder unrated. The CLO positions have a
weighted-average life of 2.1 years and average subordination of 31%.
Corporate debt
Corporate debt exposure consists of a large matched super senior
derivative, where CIBC has purchased and sold credit protection on the
same reference portfolio. The reference portfolio consists of highly
diversified, predominantly investment grade corporate credit. Claims on
these contracts do not occur until cumulative credit default losses
from the reference portfolio exceed 30% during the remaining 32-month
term of the contract. On this reference portfolio, we have sold
protection to an investment dealer.
Other
Our significant positions in the Investments and loans section within
Other, as at April 30, 2014, include:
-
Variable rate Class A-1/A-2 notes classified as trading securities with
a notional value of US$264 million and a fair value of US$238 million,
tracking notes classified as AFS with a notional value of US$5 million
and a fair value of US$2 million, and loans with a notional value of
US$56 million and fair value and carrying value of nil. These notes
were originally received in exchange for our non-bank sponsored
asset-backed commercial paper (ABCP) in January 2009, upon the
ratification of the Montreal Accord restructuring;
-
US$151 million notional value of CDOs consisting of trust preferred
securities (TruPs) collateral, which are Tier I Innovative Capital
Instruments issued by U.S. regional banks and insurers. These
securities are classified as FVO securities and had a fair value of
US$124 million;
-
US$68 million notional value of CDO trading securities with collateral
consisting of high-yield corporate debt portfolios with a fair value of
US$65 million; and
-
US$35 million notional value of an asset-backed security (ABS)
classified as a loan, with fair value of US$33 million and carrying
value of US$32 million.
Our significant positions in the Written credit derivatives, liquidity
and credit facilities section within Other, as at April 30, 2014,
include:
-
US$275 million notional value of written credit derivatives with a fair
value of US$34 million, on inflation-linked notes, and CDO tranches
with collateral consisting of non-U.S. residential mortgage-backed
securities and TruPs; and
-
US$108 million of undrawn Margin Funding Facility related to the
Montreal Accord restructuring.
Unmatched
The underlying in our unmatched position is a reference portfolio of
corporate debt.
Credit protection purchased from financial guarantors and other
counterparties
The following table presents the notional amounts and fair values of
credit protection purchased from financial guarantors and other
counterparties by counterparty credit quality, based on external credit
ratings (Standard & Poor's (S&P) and/or Moody's Investors Service
(Moody's)), and the underlying referenced assets. Excluded from the
table below are certain performing loans and tranched securities
positions in our continuing businesses, with a total notional amount of
approximately US$3 million, which are partly secured by direct
guarantees from financial guarantors or by bonds guaranteed by
financial guarantors.
|
|
|
|
|
|
|
|
|
|
|
|
Credit protection purchased
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from financial guarantors
|
|
|
|
|
|
Notional amounts of referenced assets
|
|
and other counterparties
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
CDO -
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Fair value
|
|
|
|
|
|
|
|
Fair value
|
US$ millions, as at April 30, 2014
|
|
|
|
|
|
CLO
|
|
|
debt
|
|
|
USRMM
|
|
|
|
Other
|
|
|
Unmatched
|
|
|
notional
|
|
before CVA
|
|
|
|
|
CVA
|
|
net of CVA
|
Financial guarantors (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment grade
|
|
|
|
$
|
|
2,203
|
|
$
|
-
|
|
$
|
-
|
|
$
|
|
25
|
|
$
|
-
|
|
$
|
2,228
|
|
$
|
45
|
|
$
|
|
|
(8)
|
|
$
|
37
|
|
Unrated
|
|
|
|
|
|
1,314
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
1,314
|
|
|
19
|
|
|
|
|
(6)
|
|
|
13
|
|
|
|
|
|
|
|
3,517
|
|
|
-
|
|
|
-
|
|
|
|
25
|
|
|
-
|
|
|
3,542
|
|
|
64
|
|
|
|
|
(14)
|
|
|
50
|
Other counterparties (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment grade
|
|
|
|
|
|
99
|
|
|
10
|
|
|
224
|
|
|
|
12
|
|
|
-
|
|
|
345
|
|
|
160
|
|
|
|
|
1
|
|
|
161
|
|
Unrated
|
|
|
|
|
|
-
|
|
|
4,054
|
|
|
-
|
|
|
|
-
|
|
|
456
|
|
|
4,510
|
|
|
10
|
|
|
|
|
-
|
|
|
10
|
|
|
|
|
|
|
|
99
|
|
|
4,064
|
|
|
224
|
|
|
|
12
|
|
|
456
|
|
|
4,855
|
|
|
170
|
|
|
|
|
1
|
|
|
171
|
|
|
|
|
$
|
|
3,616
|
|
$
|
4,064
|
|
$
|
224
|
|
$
|
|
37
|
|
$
|
456
|
|
$
|
8,397
|
|
$
|
234
|
|
$
|
|
|
(13)
|
|
$
|
221
|
October 31, 2013
|
|
|
|
$
|
|
4,642
|
|
$
|
4,271
|
|
$
|
241
|
|
$
|
|
229
|
|
$
|
480
|
|
$
|
9,863
|
|
$
|
312
|
|
$
|
|
|
(37)
|
|
$
|
275
|
(1)
|
In cases where more than one credit rating agency provides ratings and
those ratings differ, we use the lowest rating.
|
The unrated other counterparty is a Canadian conduit. The conduit is in
compliance with collateral posting arrangements and has posted
collateral exceeding current market exposure. The fair value of the
collateral as at April 30, 2014 was US$273 million relative to US$10
million of net exposure.
Lehman Brothers bankruptcy proceedings
During the six months ended April 30, 2013, we recognized a US$150
million charge (US$110 million after-tax) in respect of the full
settlement of the U.S. Bankruptcy Court adversary proceeding brought by
the Estate of Lehman Brothers Holdings, Inc. challenging the reduction
to zero of our unfunded commitment on a variable funding note. In 2008,
we recognized a US$841 million gain on the variable funding note.
Corporate and Other
Corporate and Other includes the six functional groups - Technology and Operations,
Corporate Development, Finance, Treasury, Administration, and Risk
Management - that support CIBC's SBUs. The expenses of these functional
groups are generally allocated to the business lines within the SBUs.
Corporate and Other also includes our International banking operations
comprising mainly CIBC FirstCaribbean, strategic investments in the
CIBC Mellon joint ventures and The Bank of N.T. Butterfield & Son
Limited, and other income statement and balance sheet items not
directly attributable to the business lines.
Results(1)
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
For the six
|
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
months ended
|
|
|
|
|
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
$ millions
|
|
|
|
|
|
|
Apr. 30
|
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
Apr. 30
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International banking
|
|
|
|
|
|
$
|
146
|
|
$
|
154
|
|
$
|
140
|
|
$
|
300
|
|
$
|
303
|
|
Other
|
|
|
|
|
|
|
(72)
|
|
|
43
|
|
|
(18)
|
|
|
(29)
|
|
|
(15)
|
Total revenue (2)
|
|
|
|
|
|
|
74
|
|
|
197
|
|
|
122
|
|
|
271
|
|
|
288
|
Provision for credit losses
|
|
|
|
|
|
|
135
|
|
|
7
|
|
|
11
|
|
|
142
|
|
|
25
|
Non-interest expenses
|
|
|
|
|
|
|
659
|
|
|
244
|
|
|
215
|
|
|
903
|
|
|
445
|
Loss before taxes
|
|
|
|
|
|
|
(720)
|
|
|
(54)
|
|
|
(104)
|
|
|
(774)
|
|
|
(182)
|
Income taxes (2)
|
|
|
|
|
|
|
(150)
|
|
|
(107)
|
|
|
(111)
|
|
|
(257)
|
|
|
(219)
|
Net income (loss)
|
|
|
|
|
|
$
|
(570)
|
|
$
|
53
|
|
$
|
7
|
|
$
|
(517)
|
|
$
|
37
|
Net income (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
|
|
|
|
|
$
|
(12)
|
|
$
|
2
|
|
$
|
2
|
|
$
|
(10)
|
|
$
|
4
|
|
Equity shareholders
|
|
|
|
|
|
|
(558)
|
|
|
51
|
|
|
5
|
|
|
(507)
|
|
|
33
|
Full-time equivalent employees
|
|
|
|
|
|
|
16,245
|
|
|
16,030
|
|
|
16,033
|
|
|
16,245
|
|
|
16,033
|
(1)
|
For additional segmented information, see the notes to the interim
consolidated financial statements.
|
(2)
|
TEB adjusted. See footnote 2 in "Wholesale Banking" section for
additional details.
|
Financial overview
Net loss for the quarter was $570 million, compared with net income of
$7 million from the same quarter last year and net income of $53
million in the prior quarter, primarily due to higher non-interest
expenses and provision for credit losses, and lower revenue.
Net loss for the six months ended April 30, 2014 was $517 million,
compared with net income of $37 million in the same period last year,
primarily due to higher non-interest expenses and provision for credit
losses.
Revenue
Revenue was down $48 million or 39% from the same quarter last year.
International banking revenue was up $6 million, due to higher revenue
from favourable foreign exchange rates.
Other revenue was down $54 million, due to lower treasury revenue and a
higher TEB adjustment.
Revenue was down $123 million or 62% from the prior quarter.
International banking revenue was down $8 million, due to lower revenue
from CIBC FirstCaribbean.
Other revenue was down $115 million. The prior quarter included the gain
relating to the Aeroplan transactions with Aimia and TD, shown as an
item of note, and the current quarter had lower treasury revenue and a
higher TEB adjustment.
Revenue for the six months ended April 30, 2014 was down $17 million or
6% from the same period last year.
International banking revenue was comparable with the same period last
year as the gain on the sale of our private wealth management (Asia)
business, shown as an item of note in the prior year period, was
largely offset by higher revenue from favourable foreign exchange
rates.
Other revenue was down $14 million, primarily due to lower treasury
revenue and a higher TEB adjustment, partially offset by the gain
relating to the Aeroplan transactions noted above.
Provision for credit losses
Provision for credit losses was up $124 million from the same quarter
last year, due to the loan losses relating to CIBC FirstCaribbean,
shown as an item of note.
Provision for credit losses was up $128 million from the prior quarter,
primarily due to the loan losses relating to CIBC FirstCaribbean noted
above. The prior quarter had a reduction in the collective allowance,
including lower estimated credit losses relating to the Alberta floods,
shown as an item of note.
Provision for credit losses for the six months ended April 30, 2014 was
up $117 million from the same period in 2013, primarily due to the loan
losses relating to CIBC FirstCaribbean, partially offset by the
reduction in the collective allowance noted above.
Non-interest expenses
Non-interest expenses were up $444 million and $415 million compared
with the same quarter last year and the prior quarter, respectively,
primarily due to the goodwill impairment charge relating to CIBC
FirstCaribbean, shown as an item of note.
Non-interest expenses for the six months ended April 30, 2014 were up
$458 million from the same period in 2013, primarily due to the charge
noted above.
Income taxes
Income tax benefit was up $39 million from the same quarter last year,
and up $43 million from the prior quarter, primarily due to a higher
TEB adjustment and lower income. No tax recovery was booked in the
current quarter in respect of the CIBC FirstCaribbean goodwill
impairment charge and loan losses.
Income tax benefit for the six months ended April 30, 2014 was up $38
million from the same period in 2013, primarily due to a higher TEB
adjustment. No tax recovery was booked in the current year period in
respect of the CIBC FirstCaribbean goodwill impairment charge and loan
losses.
Financial condition
Review of condensed consolidated balance sheet
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
$ millions, as at
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
Oct. 31
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and deposits with banks
|
|
|
|
|
|
$
|
|
10,688
|
|
|
$
|
|
6,379
|
Securities
|
|
|
|
|
|
|
|
67,204
|
|
|
|
|
71,984
|
Securities borrowed or purchased under resale agreements
|
|
|
|
|
|
|
|
27,325
|
|
|
|
|
28,728
|
Loans and acceptances, net of allowance
|
|
|
|
|
|
|
|
258,680
|
|
|
|
|
256,380
|
Derivative instruments
|
|
|
|
|
|
|
|
19,346
|
|
|
|
|
19,947
|
Other assets
|
|
|
|
|
|
|
|
13,859
|
|
|
|
|
14,588
|
|
|
|
|
|
|
$
|
|
397,102
|
|
|
$
|
|
398,006
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
$
|
|
314,023
|
|
|
$
|
|
315,164
|
Obligations related to securities lent or sold short or under repurchase
agreements
|
|
|
|
|
|
|
|
21,910
|
|
|
|
|
20,313
|
Derivative instruments
|
|
|
|
|
|
|
|
18,746
|
|
|
|
|
19,724
|
Other liabilities
|
|
|
|
|
|
|
|
19,953
|
|
|
|
|
20,583
|
Subordinated indebtedness
|
|
|
|
|
|
|
|
4,226
|
|
|
|
|
4,228
|
Equity
|
|
|
|
|
|
|
|
18,244
|
|
|
|
|
17,994
|
|
|
|
|
|
|
$
|
|
397,102
|
|
|
$
|
|
398,006
|
Assets
As at April 30, 2014, total assets were down by $904 million from
October 31, 2013.
Cash and deposits with banks increased by $4.3 billion or 68%, mostly
due to higher treasury deposit placements.
Securities decreased by $4.8 billion or 7%, primarily due to a decrease
in AFS securities, partially offset by an increase in trading
securities. AFS securities decreased primarily due to lower Canadian
government securities and public corporate debt, partially offset by an
increase in U.S. Treasury and agencies securities. Trading securities
increased primarily due to an increase in corporate equities, partially
offset by a decrease in Canadian government securities.
Securities borrowed or purchased under resale agreements decreased by
$1.4 billion or 5%, primarily due to treasury investment management
activities.
Net loans and acceptances increased by $2.3 billion or 1%. Business and
government loans and acceptances were up $3.6 billion, largely due to
an increase in our domestic lending portfolio. Residential mortgages
were up $1.6 billion, primarily due to growth in CIBC-branded
mortgages, partially offset by attrition in the exited FirstLine
mortgage broker business. Personal loans were up $303 million, due to
volume growth. These increases were partially offset by credit card
loans, which were down $3.1 billion, primarily due to the Aeroplan
transactions with Aimia and TD.
Derivative instruments decreased by $601 million or 3%, largely driven
by the decrease in interest rate derivatives valuation, partially
offset by an increase in foreign exchange derivatives valuation.
Other assets decreased by $729 million or 5%, primarily due to the
goodwill impairment relating to CIBC FirstCaribbean and a decrease in
collateral pledged for derivatives, partially offset by the assets
acquired as a result of the acquisition of Atlantic Trust.
Liabilities
As at April 30, 2014, total liabilities were down by $1.2 billion from
October 31, 2013.
Deposits decreased by $1.1 billion, primarily due to lower outstanding
secured borrowings, partially offset by retail volume growth. Further
details on the composition of deposits are provided in Note 8 to the
interim consolidated financial statements.
Obligations related to securities lent or sold short or under repurchase
agreements increased by $1.6 billion or 8%, primarily due to
client-driven activities.
Derivative instruments decreased by $978 million or 5%, largely driven
by a decrease in interest rate derivatives valuation, partially offset
by an increase in foreign exchange derivatives valuation.
Other liabilities decreased by $630 million or 3%, mainly due to lower
acceptances.
Equity
As at April 30, 2014, equity increased by $250 million or 1% from
October 31, 2013, primarily due to a net increase in retained earnings
and accumulated other comprehensive income (AOCI). These were partially
offset by the redemption of our preferred shares and repurchase and
cancellation of common shares under the normal course issuer bid, as
explained in the "Significant capital management activity" section
below.
Capital resources
We actively manage our capital to maintain a strong and efficient
capital base, to maximize risk-adjusted returns to shareholders, and to
meet regulatory requirements. For additional details on capital
resources, see pages 29 to 36 of the 2013 Annual Report.
Regulatory capital requirements under Basel III
Our regulatory capital requirements are determined in accordance with
guidelines issued by the Office of the Superintendent of Financial
Institutions (OSFI) which are based on the risk-based capital standards
developed by the Basel Committee on Banking Supervision (BCBS).
OSFI mandated all institutions to have established a target CET1 ratio
of 7%, comprised of the 2019 all-in minimum ratio plus a conservation
buffer effective the first quarter of 2013. For the Tier 1 and Total
capital ratios, the all-in targets are 8.5% and 10.5%, respectively,
effective the first quarter of 2014. "All-in" is defined by OSFI as
capital calculated to include all of the regulatory adjustments that
will be required by 2019, but retaining the phase-out rules for
non-qualifying capital instruments. Certain deductions from CET1
capital are phased in at 20% per year from 2014. Amounts not yet
deducted from capital under OSFI's transitional rules are risk
weighted, creating a difference between RWAs on a transitional and
all-in basis.
A comparison of the BCBS transitional capital ratio requirements and the
OSFI all-in target capital ratio requirements is as follows.
To view "Transitional basis (BCBS)" and "All-in basis (OSFI)" chart,
please click http://files.newswire.ca/256/CIBC1.pdf
CET1 capital includes common shares, retained earnings and AOCI
(excluding AOCI relating to cash flow hedges), less regulatory
adjustments for items such as goodwill and other intangible assets,
deferred tax assets, assets related to defined benefit pension plans as
reported on our consolidated balance sheet, and certain investments.
Additional Tier 1 capital primarily includes preferred shares and
innovative Tier 1 notes, and Tier 2 capital consists primarily of
subordinated debentures, subject to phase-out rules for capital
instruments that are non-qualifying.
OSFI has released its guidance on domestic systemically important banks
(D-SIBs) and the associated capital surcharge. CIBC is considered to be
a D-SIB in Canada along with the Bank of Montreal, the Bank of Nova
Scotia, the National Bank of Canada, the Royal Bank of Canada, and TD.
D-SIBs will be subject to a 1% CET1 surcharge commencing January 1,
2016.
Basel leverage ratio requirement
The Basel III capital reforms included a non-risk-based capital metric,
the leverage ratio, to supplement risk-based capital requirements. On
January 12, 2014, the BCBS issued the full text of its leverage ratio
framework.
The leverage ratio is defined as the Capital Measure (Tier 1 capital)
divided by the Exposure Measure. The Exposure Measure includes the sum
of:
(i)
|
On-balance sheet assets;
|
(ii)
|
Adjustments for securities financing transaction exposures with a
limited form of netting available if certain conditions are met;
|
(iii)
|
Derivative exposures as specified under the rules; and
|
(iv)
|
Other off-balance sheet exposures, such as credit commitments and direct
credit substitutes, converted into credit exposure equivalents using
Basel Standardized Approach credit conversion factors.
|
Items deducted from Tier 1 capital will be excluded from the Exposure
Measure.
The BCBS requires banks to disclose their leverage ratio beginning in
2015. The document states that the BCBS will continue to test whether a
minimum requirement of 3% for the leverage ratio is appropriate. Any
final adjustments to the rule will be made by 2017, for implementation
on January 1, 2018.
OSFI has indicated that it will issue a new leverage guideline later
this year. The guideline will be effective in January 2015 and will
replace the current assets-to-capital multiple (ACM) test with the
Basel III leverage ratio test. Federally regulated deposit-taking
institutions will be expected to have Basel III leverage ratios in
excess of 3%.
Continuous enhancement to risk-based capital requirements
Last year the BCBS published a number of proposals for changes to the
existing risk-based capital requirements (see page 30 of the 2013
Annual Report), and continues to do so with the objective of clarifying
and increasing the capital requirements for certain business
activities. In addition to the leverage ratio document discussed above,
since the start of the fiscal year, the BCBS has published an updated
proposal: "Revisions to the securitisation framework - consultative document", and finalized three standards for implementation in 2017 as discussed
below.
"Capital requirements for banks' equity investments in funds - final
standard" was published in December 2013. The final revised framework
applies to banks' investments in the equity of funds that are held in
the banking book. The implementation date is January 1, 2017. Banks
should look-through to the underlying assets of the fund in order to
more properly reflect the risk of those investments.
In addition to the above, the BCBS has also recently finalized two other
standards which will be implemented on January 1, 2017. "The standardized approach for measuring counterparty credit risk
exposures" provides a non-modelled approach to the treatment of derivatives-related transactions, which will replace
both the existing Current Exposure and Standardized Methods.
"Capital requirements for bank exposures to central counterparties" sets
out the rules for calculating regulatory capital for bank exposures to
central counterparties, and will replace interim requirements published
in July 2012.
Regulatory capital
Our capital ratios and ACM are presented in the table below:
|
|
|
|
|
|
|
|
2014
|
|
|
|
2014
|
|
|
|
2013
|
|
$ millions, as at
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
Jan. 31
|
|
|
|
Oct. 31
|
|
Transitional basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CET1 capital
|
|
|
|
|
|
|
$
|
16,532
|
|
|
$
|
16,705
|
|
|
$
|
16,698
|
|
Tier 1 capital
|
|
|
|
|
|
|
|
18,076
|
|
|
|
17,851
|
|
|
|
17,830
|
|
Total capital
|
|
|
|
|
|
|
|
21,581
|
|
|
|
21,295
|
|
|
|
21,601
|
|
RWA
|
|
|
|
|
|
|
|
152,044
|
|
|
|
153,245
|
|
|
|
151,338
|
|
CET1 ratio
|
|
|
|
|
|
|
|
10.9
|
%
|
|
|
10.9
|
%
|
|
|
11.0
|
%
|
Tier 1 capital ratio
|
|
|
|
|
|
|
|
11.9
|
%
|
|
|
11.6
|
%
|
|
|
11.8
|
%
|
Total capital ratio
|
|
|
|
|
|
|
|
14.2
|
%
|
|
|
13.9
|
%
|
|
|
14.3
|
%
|
ACM
|
|
|
|
|
|
|
|
18.1
|
x
|
|
|
18.4
|
x
|
|
|
18.0
|
x
|
All-in basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CET1 capital
|
|
|
|
|
|
|
$
|
13,641
|
|
|
$
|
13,347
|
|
|
$
|
12,793
|
|
Tier 1 capital
|
|
|
|
|
|
|
|
16,488
|
|
|
|
16,189
|
|
|
|
15,888
|
|
Total capital
|
|
|
|
|
|
|
|
20,206
|
|
|
|
19,890
|
|
|
|
19,961
|
|
RWA
|
|
|
|
|
|
|
|
135,883
|
|
|
|
140,505
|
|
|
|
136,747
|
|
CET1 ratio
|
|
|
|
|
|
|
|
10.0
|
%
|
|
|
9.5
|
%
|
|
|
9.4
|
%
|
Tier 1 capital ratio
|
|
|
|
|
|
|
|
12.1
|
%
|
|
|
11.5
|
%
|
|
|
11.6
|
%
|
Total capital ratio
|
|
|
|
|
|
|
|
14.9
|
%
|
|
|
14.2
|
%
|
|
|
14.6
|
%
|
CET1 ratio (All-in basis)
CET1 ratio increased 0.5% from January 31, 2014. During the quarter,
CET1 capital after regulatory adjustments increased. While the earnings
were impacted by the write-down of the CIBC FirstCaribbean goodwill,
its impact on the CET1 capital was neutral. RWAs decreased by $4.6
billion from January 31, 2014 as a result of refinements to the
treatment of our over-the-counter (OTC) derivatives, reductions in our
AFS portfolios, and positive impacts from foreign exchange and interest
rates.
CET1 ratio increased 0.6% from October 31, 2013. CET1 capital increased
due to internal capital generation (net income less dividends and
shares repurchased for cancellation) and a reduction in regulatory
deductions such as the pension related deduction. While the earnings
were impacted by the write-down of CIBC FirstCaribbean goodwill, its
impact on the capital was neutral. The ratio also benefited from a
decline in RWAs during the same period. RWAs decreased $0.8 billion
during the six months ended April 30, 2014. RWAs decreased due to the
sale of the Aeroplan portfolio, portfolio quality improvements, and
increasing portfolio insurance, refinements to the treatment of our OTC
derivatives, and reductions in our AFS portfolios. These factors were
largely offset by foreign exchange, commencement of the phase-in of the
credit valuation charge in the first quarter of 2014, refinements to
the calculation of RWA in our retail lending portfolio, and business
growth.
ACM
The ACM decreased 0.3 times from January 31, 2014, primarily due to an
increase in capital.
The ACM increased 0.1 times from October 31, 2013. Capital for ACM
purposes decreased due to an additional 10% reduction in the inclusion
of non-qualifying capital instruments, while gross assets for ACM
purposes increased.
Significant capital management activity
Normal course issuer bid
On September 5, 2013, we announced that the Toronto Stock Exchange had
accepted the notice of CIBC's intention to commence a new normal course
issuer bid. Purchases under this bid commenced on September 18, 2013
and will terminate upon the earlier of (i) CIBC purchasing up to a
maximum of 8 million common shares, (ii) CIBC providing a notice of
termination, or (iii) September 8, 2014.
During the quarter ended April 30, 2014, we purchased and cancelled an
additional 914,600 common shares under this bid at an average price of
$92.89 for a total amount of $85 million. For the six months ended
April 30, 2014, we purchased and cancelled 2,329,700 common shares
under this bid at an average price of $91.05 for a total amount of $212
million. Since the inception of this bid, we have purchased and
cancelled 3,253,600 common shares at an average price of $88.87 for a
total amount of $289 million.
Dividends
On May 28, 2014, the Board of Directors approved an increase in our
quarterly common share dividend from $0.98 per share to $1.00 per share
from the quarter ending July 31, 2014.
Our quarterly common share dividend was increased from $0.96 per share
to $0.98 per share from the quarter ended April 30, 2014.
Preferred shares
On April 30, 2014, we redeemed all of our 13 million Non-cumulative Rate
Reset Class A Series 35 Preferred Shares with a par value and
redemption price of $25.00 per share for cash.
Off-balance sheet arrangements
We enter into off-balance sheet arrangements in the normal course of our
business. We consolidate all of our sponsored trusts that securitize
our own assets with the exception of the commercial mortgage
securitization trust.
We sponsor a single-seller conduit and several multi-seller conduits
(collectively, the conduits) in Canada.
As at April 30, 2014, the underlying collateral for various asset types
in our non-consolidated sponsored multi-seller conduits amounted to
$2.1 billion (October 31, 2013: $2.1 billion). The estimated
weighted-average life of these assets was 1 year (October 31, 2013: 1.1
years). Our holdings of commercial paper issued by our non-consolidated
sponsored multi-seller conduits that offer commercial paper to external
investors were $6 million (October 31, 2013: $9 million). Our committed
backstop liquidity facilities to these conduits were $3.6 billion
(October 31, 2013: $3.2 billion). We also provided credit facilities of
$30 million (October 31, 2013: $30 million) to these conduits as at
April 30, 2014.
We participated in a syndicated facility for a 3-year commitment of $575
million to our single-seller conduit that provides funding to
franchisees of a major Canadian retailer. Our portion of the commitment
was $105 million (October 31, 2013: $110 million). As at April 30,
2014, we funded $95 million (October 31, 2013: $81 million) through the
issuance of bankers' acceptances.
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
2013
|
|
$ millions, as at
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
|
|
|
|
Oct. 31
|
|
|
|
|
|
|
|
|
|
|
Undrawn
|
|
|
|
|
|
|
|
|
Undrawn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
liquidity
|
|
|
Written
|
|
|
|
|
|
liquidity
|
|
|
Written
|
|
|
|
|
|
|
|
Investment
|
|
|
and credit
|
|
|
credit
|
|
|
Investment
|
|
|
and credit
|
|
|
credit
|
|
|
|
|
|
|
|
and loans
|
(1)
|
|
facilities
|
|
|
derivatives
|
(2)
|
|
and loans
|
(1)
|
|
facilities
|
|
|
derivatives
|
(2)
|
CIBC-sponsored conduits
|
|
|
|
$
|
101
|
|
$
|
2,083
|
|
$
|
-
|
|
$
|
90
|
|
$
|
2,151
|
|
$
|
-
|
|
CIBC-structured CDO vehicles
|
|
|
|
|
103
|
|
|
46
|
|
|
145
|
|
|
135
|
|
|
43
|
|
|
134
|
|
Third-party structured vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structured credit run-off
|
|
|
|
|
3,100
|
|
|
119
|
|
|
2,435
|
|
|
3,456
|
|
|
236
|
|
|
2,966
|
|
|
Continuing
|
|
|
|
|
1,106
|
|
|
840
|
|
|
-
|
|
|
756
|
(3)
|
|
534
|
(3)
|
|
-
|
|
Pass-through investment structures
|
|
|
|
|
2,639
|
|
|
-
|
|
|
-
|
|
|
3,090
|
|
|
-
|
|
|
-
|
|
Commercial mortgage securitization trust
|
|
|
|
|
12
|
|
|
-
|
|
|
-
|
|
|
5
|
|
|
-
|
|
|
-
|
|
(1)
|
Excludes securities issued by, retained interest in, and derivatives
with entities established by Canada Mortgage and Housing Corporation
(CMHC), Federal National Mortgage Association (Fannie Mae), Federal Home
Loan Mortgage Corporation (Freddie Mac), Government
National Mortgage Association (Ginnie Mae), Federal Home Loan Banks,
Federal Farm Credit Bank, and Student Loan Marketing
Association (Sallie Mae). $2.5 billion (October 31, 2013: $3.0 billion)
of the exposures related to CIBC-structured vehicles and third-party
structured vehicles - structured credit run-off were hedged.
|
(2)
|
The negative fair value recorded on the interim consolidated balance
sheet was $315 million (October 31, 2013: $368 million). Notional of
$2.1 billion (October 31, 2013: $2.7 billion) was hedged with credit
derivatives protection from third parties. The fair value of these
hedges
net of CVA was $199 million (October 31, 2013: $213 million). An
additional notional of $147 million (October 31, 2013: $161 million)
was
hedged through a limited recourse note. Accumulated fair value losses
were $8 million (October 31, 2013: $15 million) on unhedged
written credit derivatives.
|
(3)
|
Restated to include certain revolving loans and associated unutilized
credit commitments.
|
Additional details of our structured entities are provided in Note 7 to
the interim consolidated financial statements. Details of our other
off-balance sheet arrangements are provided on pages 36 and 37 of the
2013 Annual Report.
Management of risk
Our approach to management of risk, and our governance structure, have
not changed significantly from that described on pages 38 to 72 of the
2013 Annual Report. Certain disclosures in this section have been
shaded as they are required under IFRS 7 "Financial Instruments -
Disclosures" and form an integral part of the interim consolidated
financial statements.
Risk overview
Most of CIBC's business activities involve, to a varying degree, a
variety of risks, and effective management of risks is fundamental to
CIBC's success. Our objective is to balance the level of risk with our
business objectives for growth and profitability in order to achieve
consistent and sustainable performance while remaining within our risk
appetite.
Our risk appetite defines tolerance levels for various risks. This is
the foundation for our risk management culture, and our risk management
framework. Our risk management framework includes:
-
The Board-approved risk appetite statement;
-
Risk policies, procedures and limits to align activities with our risk
appetite;
-
Regular risk reports to identify and communicate risk levels;
-
An independent control framework to identify and test compliance with
key controls;
-
Stress testing to consider potential impacts of changes in the business
environment on capital, liquidity and earnings;
-
Proactive consideration of risk mitigation options in order to optimize
results; and
-
Oversight through our risk-focused committees and governance structure.
Managing risk is a shared responsibility at CIBC. Business units and
risk management professionals work in collaboration to ensure that
business strategies and activities are consistent with our risk
appetite. CIBC's approach to enterprise-wide risk management aligns
with the three lines of defence model:
(1)
|
CIBC's lines of business are responsible for all risks associated with
their activities - this is the first line of defence;
|
(2)
|
As the second line of defence, CIBC's risk management, compliance and
other control functions are responsible for independent oversight of
the enterprise-wide risks inherent in CIBC's business activities; and
|
(3)
|
As the third line of defence, CIBC's Internal Audit function provides an
independent assessment of the design and operating effectiveness of
risk management controls, processes and systems.
|
We continuously monitor our risk profile against our defined risk
appetite and related limits, taking actions as needed to maintain an
appropriate balance of risk and return. Monitoring our risk profile
includes forward-looking analysis of sensitivity to local and global
market factors, economic conditions, and political and regulatory
environments that influence our overall risk profile.
Regular and transparent risk reporting and discussion at senior
management committees facilitate communication of risks and discussion
of risk management strategies across the organization.
Additional information on our risk governance, risk management process
and risk culture are provided on pages 39 to 43 of the 2013 Annual
Report.
Risk management structure
The Risk Management group, led by our Chief Risk Officer, is responsible
for setting risk strategies and for providing independent oversight of
the businesses. Risk Management works to identify, assess, mitigate,
monitor and control the risks associated with business activities and
strategies, and is responsible for providing an effective challenge to
the lines of businesses.
There were changes made during the year to the Risk Management
structure. The current structure is illustrated below.
To view the "Risk Management Structure" chart, please click http://files.newswire.ca/256/CIBC2.pdf
The Risk Management group performs several important activities
including:
-
Developing CIBC's risk appetite and associated management control
metrics;
-
Setting risk strategy to manage risks in alignment with our risk
appetite and business strategy;
-
Establishing and communicating risk policies, procedures and limits to
control risks in alignment with risk strategy;
-
Measuring, monitoring and reporting on risk levels;
-
Identifying and assessing emerging and potential strategic risks; and
-
Deciding on transactions that fall outside of risk limits delegated to
business lines.
The ten key groups within Risk Management, independent of the
originating businesses, contribute to our management of risk:
-
Global Regulatory Affairs and Risk Control - This team provides expertise in risk, controls and regulatory
reporting, and oversees regulatory interactions across CIBC to ensure
coordinated communication and the effective development of and
adherence to action plans.
-
Capital Markets Risk Management - This unit provides independent oversight of the measurement,
monitoring and control of market risks (both trading and non-trading),
and trading credit risk across CIBC's portfolios.
-
Balance Sheet, Liquidity and Pension Risk Management - This unit has primary global accountability for providing an
effective challenge and sound risk oversight to the treasury/liquidity
management function within CIBC.
-
Global Credit Risk Management - This unit is responsible for the adjudication and oversight of credit
risks associated with our commercial and wholesale lending activities
globally, management of the risks in our investment portfolios, as well
as management of special loan portfolios.
-
Wealth Risk Management - This unit is responsible for the independent governance and oversight
of the wealth management business/activities in CIBC globally.
-
Retail Lending Risk Management - This unit primarily oversees the management of credit and fraud risk
in the retail lines of credit and loans, residential mortgage, and
small business loan portfolios, including the optimization of credit
portfolio quality.
-
Card Products Risk Management - This unit oversees the management of credit risk in the card products
portfolio, including the optimization of credit portfolio quality.
-
Global Operational Risk Management - This team has global accountability for the identification,
measurement and monitoring of all operational risks, including
locations, people, insurance, technology, subsidiaries/affiliates and
vendors.
-
Enterprise Risk Management - This unit is responsible for enterprise-wide analysis, including
enterprise-wide stress testing and reporting, risk systems and models,
as well as economic capital methodologies.
-
Special Initiatives - This unit is responsible for assisting in the design, delivery and
implementation of new initiatives aligned with Risk Management's
strategic plan, while enhancing internal client partnerships and
efficiency.
Top and emerging risks
We monitor and review top and emerging risks that may affect our future
results, and take action to mitigate potential risks if required. We
perform an in-depth analysis, which can include stress testing our
exposures relative to the risks, and provide updates and related
developments to the Board on a regular basis. The main top and emerging
risks that we consider with potential negative implications, that are
material for CIBC, have not changed significantly from those described
on pages 43 to 44 of the 2013 Annual Report.
Risks arising from business activities
The chart below shows our business activities and related risk measures
based upon regulatory RWAs and economic capital as at April 30, 2014:
To view the chart, please click http://files.newswire.ca/256/CIBC3.pdf
Credit risk
Credit risk is defined as the risk of financial loss due to a borrower
or counterparty failing to meet its obligations in accordance with
contractual terms.
Credit risk arises mainly from our Retail and Business Banking and our
Wholesale lending businesses. Other sources of credit risk include our
trading activities, including our OTC derivatives, debt securities, and
our repo-style transaction activity. In addition to losses on the
default of a borrower or counterparty, unrealized gains or losses may
occur due to changes in the credit spread of the counterparty, which
could impact the carrying or fair value of our asset.
Exposure to credit risk
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
$ millions, as at
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
Oct. 31
|
Business and government portfolios-advanced internal ratings-based
(AIRB) approach
|
|
|
|
|
|
|
|
|
|
|
|
Drawn
|
|
|
|
$
|
|
85,826
|
|
|
$
|
|
84,016
|
Undrawn commitments
|
|
|
|
|
|
37,655
|
|
|
|
|
35,720
|
Repo-style transactions
|
|
|
|
|
|
58,451
|
|
|
|
|
57,975
|
Other off-balance sheet
|
|
|
|
|
|
69,577
|
|
|
|
|
51,885
|
OTC derivatives
|
|
|
|
|
|
13,155
|
|
|
|
|
13,255
|
Gross exposure at default (EAD) on business and government portfolios
|
|
|
|
|
|
264,664
|
|
|
|
|
242,851
|
Less: repo collateral
|
|
|
|
|
|
53,220
|
|
|
|
|
51,613
|
Net EAD on business and government portfolios
|
|
|
|
|
|
211,444
|
|
|
|
|
191,238
|
Retail portfolios-AIRB approach
|
|
|
|
|
|
|
|
|
|
|
|
Drawn
|
|
|
|
|
|
194,444
|
|
|
|
|
195,796
|
Undrawn commitments
|
|
|
|
|
|
63,965
|
|
|
|
|
65,424
|
Other off-balance sheet
|
|
|
|
|
|
290
|
|
|
|
|
417
|
Gross EAD on retail portfolios
|
|
|
|
|
|
258,699
|
|
|
|
|
261,637
|
Standardized portfolios
|
|
|
|
|
|
11,808
|
|
|
|
|
10,798
|
Securitization exposures
|
|
|
|
|
|
15,195
|
|
|
|
|
16,799
|
Gross EAD
|
|
|
|
$
|
|
550,366
|
|
|
$
|
|
532,085
|
Net EAD
|
|
|
|
$
|
|
497,146
|
|
|
$
|
|
480,472
|
Forbearance policy
We employ forbearance techniques to manage customer relationships and to
minimize credit losses due to default, foreclosure or repossession. In
certain circumstances, it may be necessary to modify a loan for
economic or legal reasons related to a borrower's financial
difficulties and we may grant a concession in the form of below-market
rates or terms that would not otherwise be considered, for the purpose
of maximizing recovery of our exposure to the loan. In circumstances
where the concession is considered below market, the modification is
reported as a troubled debt restructuring (TDR). TDRs are subject to
our normal quarterly impairment review which considers, amongst other
factors, covenants and/or payment delinquencies. An appropriate level
of loan loss provision by portfolio segment is then established.
In retail lending, forbearance techniques include interest
capitalization, amortization amendments and debt consolidations. We
have a set of eligibility criteria which allow our Client Account
Management team to determine suitable remediation strategies and
propose products based on each borrower's situation. These solutions
are intended to increase the ability of borrowers to service their
obligation by providing often more favourable conditions than those
originally provided.
The solutions available to corporate and commercial clients vary based
on the individual nature of the client's situation and are undertaken
selectively where it has been determined that the client has or is
likely to have repayment difficulties servicing its obligations.
Covenants often reveal changes in the client's financial situation
before there is a change in payment behaviour and typically allow for a
right to reprice or accelerate payments. Solutions may be temporary in
nature or may involve other special management options.
During the quarter and six months ended April 30, 2014, $48 million and
$68 million, respectively ($16 million and $19 million for the quarter
and six months ended April 30, 2013, respectively) of loans have
undergone TDR.
Real estate secured personal lending
Real estate secured personal lending comprises residential mortgages and
personal loans and lines secured by residential property (HELOC). This
portfolio is low risk as we have a first charge on the majority of the
properties, and second lien on only a small portion of the portfolio.
We use the same lending criteria in the adjudication of both first lien
and second lien loans.
The following table provides details on our Canadian and international
residential mortgage and HELOC portfolios. Our international portfolio
comprises CIBC FirstCaribbean.
|
|
|
|
Residential mortgages
|
|
HELOC (1)
|
|
Total
|
$ billions, as at April 30, 2014
|
|
|
|
Insured
|
|
|
Uninsured
|
|
Uninsured
|
|
Insured
|
|
|
Uninsured
|
Ontario
|
|
|
|
$
|
46.9
|
|
|
69
|
%
|
|
|
$
|
|
21.3
|
|
|
31
|
%
|
|
$
|
|
9.4
|
|
|
100
|
%
|
|
$
|
46.9
|
|
|
60
|
%
|
|
|
$
|
|
30.7
|
|
|
40
|
%
|
British Columbia
|
|
|
|
|
19.0
|
|
|
64
|
|
|
|
|
|
10.5
|
|
|
36
|
|
|
|
|
3.9
|
|
|
100
|
|
|
|
19.0
|
|
|
57
|
|
|
|
|
|
14.4
|
|
|
43
|
|
Alberta
|
|
|
|
|
17.2
|
|
|
75
|
|
|
|
|
|
5.8
|
|
|
25
|
|
|
|
|
2.7
|
|
|
100
|
|
|
|
17.2
|
|
|
67
|
|
|
|
|
|
8.5
|
|
|
33
|
|
Quebec
|
|
|
|
|
7.8
|
|
|
72
|
|
|
|
|
|
3.0
|
|
|
28
|
|
|
|
|
1.5
|
|
|
100
|
|
|
|
7.8
|
|
|
64
|
|
|
|
|
|
4.5
|
|
|
36
|
|
Other
|
|
|
|
|
11.9
|
|
|
77
|
|
|
|
|
|
3.6
|
|
|
23
|
|
|
|
|
1.8
|
|
|
100
|
|
|
|
11.9
|
|
|
69
|
|
|
|
|
|
5.4
|
|
|
31
|
|
Canadian portfolio (2)(3)
|
|
|
|
|
102.8
|
|
|
70
|
|
|
|
|
|
44.2
|
|
|
30
|
|
|
|
|
19.3
|
|
|
100
|
|
|
|
102.8
|
|
|
62
|
|
|
|
|
|
63.5
|
|
|
38
|
|
International portfolio (2)
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
2.2
|
|
|
100
|
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
2.2
|
|
|
100
|
|
Total portfolio
|
|
|
|
$
|
102.8
|
|
|
69
|
%
|
|
|
$
|
|
46.4
|
|
|
31
|
%
|
|
$
|
|
19.3
|
|
|
100
|
%
|
|
$
|
102.8
|
|
|
61
|
%
|
|
|
$
|
|
65.7
|
|
|
39
|
%
|
October 31, 2013 (4)
|
|
|
|
$
|
102.6
|
|
|
71
|
%
|
|
|
$
|
|
42.9
|
|
|
29
|
%
|
|
$
|
|
19.3
|
|
|
100
|
%
|
|
$
|
102.6
|
|
|
62
|
%
|
|
|
$
|
|
62.2
|
|
|
38
|
%
|
(1)
|
We did not have any insured HELOCs as at April 30, 2014 and October 31,
2013.
|
(2)
|
Geographical allocation is based on the address of the property managed.
|
(3)
|
93% (October 31, 2013: 94%) of insurance on Canadian residential
mortgages is provided by CMHC and the remaining by two
private Canadian insurers, both rated at least AA (low) by DBRS.
|
(4)
|
Excludes international portfolio.
|
The average loan-to-value (LTV) ratios(1) for our uninsured Canadian residential mortgages and HELOCs originated
during the quarter and period to-date are provided in the following
table. The LTV ratio(1) of our uninsured international residential mortgages originated during
the quarter was 63%. We did not originate HELOCs for our international
portfolio during the quarter. We did not acquire uninsured residential
mortgages and HELOCs from a third party for the periods presented in
the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
|
|
|
|
|
|
For the six
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
|
|
|
|
|
months ended
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
Apr. 30
|
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
Residential
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
mortgages
|
|
|
|
HELOC
|
|
|
mortgages
|
|
|
|
HELOC
|
|
|
mortgages
|
|
|
|
HELOC
|
|
|
mortgages
|
|
|
|
HELOC
|
|
|
mortgages
|
|
|
|
HELOC
|
|
Ontario
|
71
|
%
|
|
|
70
|
%
|
|
71
|
%
|
|
|
70
|
%
|
|
71
|
%
|
|
|
70
|
%
|
|
71
|
%
|
|
|
70
|
%
|
|
71
|
%
|
|
|
70
|
%
|
British Columbia
|
67
|
|
|
|
66
|
|
|
66
|
|
|
|
65
|
|
|
67
|
|
|
|
66
|
|
|
66
|
|
|
|
66
|
|
|
67
|
|
|
|
66
|
|
Alberta
|
73
|
|
|
|
72
|
|
|
72
|
|
|
|
71
|
|
|
71
|
|
|
|
70
|
|
|
73
|
|
|
|
71
|
|
|
72
|
|
|
|
70
|
|
Quebec
|
73
|
|
|
|
72
|
|
|
72
|
|
|
|
72
|
|
|
72
|
|
|
|
71
|
|
|
72
|
|
|
|
72
|
|
|
72
|
|
|
|
71
|
|
Other
|
74
|
|
|
|
73
|
|
|
74
|
|
|
|
73
|
|
|
73
|
|
|
|
72
|
|
|
74
|
|
|
|
73
|
|
|
73
|
|
|
|
72
|
|
Total Canadian portfolio (2)
|
71
|
%
|
|
|
70
|
%
|
|
70
|
%
|
|
|
70
|
%
|
|
71
|
%
|
|
|
69
|
%
|
|
71
|
%
|
|
|
70
|
%
|
|
71
|
%
|
|
|
69
|
%
|
(1)
|
LTV ratios for newly originated residential mortgages and HELOCs are
calculated based on weighted average.
|
(2)
|
Geographical allocation is based on the address of the property managed.
|
The following table provides the average LTV ratios on our total
Canadian residential mortgage portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insured
|
|
|
|
|
Uninsured
|
|
April 30, 2014 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59
|
%
|
|
|
|
60
|
%
|
October 31, 2013 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59
|
%
|
|
|
|
60
|
%
|
(1)
|
LTV ratios for residential mortgages are calculated based on weighted
average. The house price estimates for October 31, 2013 and April 30,
2014 are based on Teranet - National Bank National Composite House
Price Index (Teranet) as of September 30, 2013 and March 31, 2014,
respectively. Teranet is an independent estimate of the rate of change
of Canadian home prices. The sale prices are based on the property
records of public land registries. The monthly indices cover eleven
Canadian metropolitan areas which are combined to form a national
composite index.
|
The tables below summarize the remaining amortization profile of our
total Canadian and international residential mortgages. The first table
provides the remaining amortization periods based on the minimum
contractual payment amounts. The second table provides the remaining
amortization periods based upon current customer payment amounts, which
incorporate payments larger than the minimum contractual amount and/or
higher frequency of payments.
Contractual payment basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
|
|
|
5-10
|
|
|
10-15
|
|
|
15-20
|
|
|
20-25
|
|
|
25-30
|
|
|
30-35
|
|
|
35 years
|
|
|
|
|
5 years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
and above
|
Canadian portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2014
|
|
|
|
-
|
%
|
|
|
1
|
%
|
|
|
3
|
%
|
|
|
11
|
%
|
|
|
20
|
%
|
|
|
44
|
%
|
|
|
21
|
%
|
|
|
-
|
%
|
October 31, 2013
|
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
3
|
%
|
|
|
12
|
%
|
|
|
19
|
%
|
|
|
39
|
%
|
|
|
25
|
%
|
|
|
-
|
%
|
International portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2014
|
|
|
|
7
|
%
|
|
|
16
|
%
|
|
|
24
|
%
|
|
|
26
|
%
|
|
|
17
|
%
|
|
|
8
|
%
|
|
|
2
|
%
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current customer payment basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
|
|
|
5-10
|
|
|
10-15
|
|
|
15-20
|
|
|
20-25
|
|
|
25-30
|
|
|
30-35
|
|
|
35 years
|
|
|
|
|
5 years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
and above
|
Canadian portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2014
|
|
|
|
3
|
%
|
|
|
6
|
%
|
|
|
11
|
%
|
|
|
14
|
%
|
|
|
26
|
%
|
|
|
30
|
%
|
|
|
10
|
%
|
|
|
-
|
%
|
October 31, 2013
|
|
|
|
3
|
%
|
|
|
6
|
%
|
|
|
11
|
%
|
|
|
15
|
%
|
|
|
24
|
%
|
|
|
28
|
%
|
|
|
12
|
%
|
|
|
1
|
%
|
International portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2014
|
|
|
|
7
|
%
|
|
|
16
|
%
|
|
|
24
|
%
|
|
|
26
|
%
|
|
|
16
|
%
|
|
|
8
|
%
|
|
|
2
|
%
|
|
|
1
|
%
|
We have two types of condominium exposures in Canada: mortgages and
developer loans. Both are primarily concentrated in the Toronto and
Vancouver areas. As at April 30, 2014, our Canadian condominium
mortgages were $16.7 billion (October 31, 2013: $16.6 billion) of which
73% (October 31, 2013: 74%) were insured. Our drawn developer loans
were $791 million (October 31, 2013: $920 million) or 2% of our
business and government portfolio and our related undrawn exposure was
$1.8 billion (October 31, 2013: $2.1 billion). The condominium
developer exposure is diversified across 73 projects.
We stress test our mortgage and HELOC portfolio to determine the
potential impact of different economic events. Our stress tests can use
variables such as GDP, unemployment, bankruptcy rates, debt service
ratios and delinquency trends, which are reflective of potential ranges
of housing price declines, to model potential outcomes for a given set
of circumstances. The stress testing involves variables that could
behave differently in certain situations. Our main tests use economic
variables that are more severe than in the early 1980s and early 1990s
when Canada experienced economic downturns. Our results show that in an
economic downturn, our strong capital position should be sufficient to
absorb mortgage and HELOC losses.
Counterparty credit exposure
We have counterparty credit exposure that arises from our interest rate,
foreign exchange, equity, commodity, and credit derivatives trading,
hedging, and portfolio management activities, as explained in Note 12
of the 2013 annual consolidated financial statements.
The following table shows the rating profile of OTC derivative MTM
receivables (after derivative master netting agreements, but before any
collateral):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
2013
|
|
$ billions, as at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
|
|
|
|
Oct. 31
|
|
|
|
|
|
|
|
|
|
|
|
|
Exposure (1)
|
Investment grade
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
5.08
|
|
84.9
|
%
|
|
|
$
|
|
|
4.59
|
|
85.0
|
%
|
Non-investment grade
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.90
|
|
14.9
|
|
|
|
|
|
|
0.78
|
|
14.5
|
|
Watchlist
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
0.1
|
|
|
|
|
|
|
0.03
|
|
0.5
|
|
Unrated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
0.1
|
|
|
|
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
6.00
|
|
100.0
|
%
|
|
|
$
|
|
|
5.40
|
|
100.0
|
%
|
(1)
|
MTM of the OTC derivative contracts is after the impact of master
netting
agreements, but before any collateral.
|
The following table provides details of our impaired loans and
allowances for credit losses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at or for the three
months ended
|
|
|
|
|
|
|
|
|
|
|
As at or for the six
months ended
|
|
2014
|
2014
|
2013
|
|
|
2014
|
2013
|
$ millions
|
Apr. 30
|
Jan. 31
|
Apr. 30
|
|
|
Apr. 30
|
Apr. 30
|
|
Business and
|
|
|
|
|
|
Business and
|
|
|
|
|
|
Business and
|
|
|
|
|
|
|
|
Business and
|
|
|
|
|
|
Business and
|
|
|
|
|
|
|
|
government
|
|
Consumer
|
|
|
government
|
|
Consumer
|
|
|
government
|
|
Consumer
|
|
|
|
|
government
|
|
Consumer
|
|
|
government
|
|
Consumer
|
|
|
|
|
|
loans
|
|
loans
|
|
|
Total
|
loans
|
|
loans
|
|
|
Total
|
loans
|
|
loans
|
|
|
Total
|
|
loans
|
|
loans
|
|
|
Total
|
loans
|
|
loans
|
|
|
Total
|
Gross impaired
loans (GIL)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
$
|
841
|
|
$
|
746
|
|
$
|
1,587
|
$
|
843
|
|
$
|
704
|
|
$
|
1,547
|
$
|
992
|
|
$
|
757
|
|
$
|
1,749
|
|
|
$
|
843
|
|
$
|
704
|
|
$
|
1,547
|
$
|
1,128
|
|
$
|
739
|
|
$
|
1,867
|
|
Classified as impaired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
during the period
|
|
46
|
|
|
291
|
|
|
337
|
|
65
|
|
|
352
|
|
|
417
|
|
112
|
|
|
369
|
|
|
481
|
|
|
|
111
|
|
|
643
|
|
|
754
|
|
177
|
|
|
745
|
|
|
922
|
|
Transferred to not
impaired during
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the period
|
|
(2)
|
|
|
(31)
|
|
|
(33)
|
|
(3)
|
|
|
(20)
|
|
|
(23)
|
|
(2)
|
|
|
(16)
|
|
|
(18)
|
|
|
|
(5)
|
|
|
(51)
|
|
|
(56)
|
|
(4)
|
|
|
(31)
|
|
|
(35)
|
|
Net repayments
|
|
(50)
|
|
|
(54)
|
|
|
(104)
|
|
(85)
|
|
|
(60)
|
|
|
(145)
|
|
(56)
|
|
|
(106)
|
|
|
(162)
|
|
|
|
(135)
|
|
|
(114)
|
|
|
(249)
|
|
(188)
|
|
|
(179)
|
|
|
(367)
|
|
Amounts written-off
|
|
(34)
|
|
|
(214)
|
|
|
(248)
|
|
(22)
|
|
|
(255)
|
|
|
(277)
|
|
(121)
|
|
|
(247)
|
|
|
(368)
|
|
|
|
(56)
|
|
|
(469)
|
|
|
(525)
|
|
(188)
|
|
|
(516)
|
|
|
(704)
|
|
Recoveries of loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and advances
previously written off
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
Disposals of loans
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
Foreign exchange
and other
|
|
(11)
|
|
|
(7)
|
|
|
(18)
|
|
43
|
|
|
25
|
|
|
68
|
|
6
|
|
|
4
|
|
|
10
|
|
|
|
32
|
|
|
18
|
|
|
50
|
|
6
|
|
|
3
|
|
|
9
|
Balance at end of period
|
$
|
790
|
|
$
|
731
|
|
$
|
1,521
|
$
|
841
|
|
$
|
746
|
|
$
|
1,587
|
$
|
931
|
|
$
|
761
|
|
$
|
1,692
|
|
|
$
|
790
|
|
$
|
731
|
|
$
|
1,521
|
$
|
931
|
|
$
|
761
|
|
$
|
1,692
|
Allowance for
impairment (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
$
|
348
|
|
$
|
227
|
|
$
|
575
|
$
|
323
|
|
$
|
224
|
|
$
|
547
|
$
|
458
|
|
$
|
233
|
|
$
|
691
|
|
|
$
|
323
|
|
$
|
224
|
|
$
|
547
|
$
|
492
|
|
$
|
229
|
|
$
|
721
|
|
Amounts written-off
|
|
(34)
|
|
|
(214)
|
|
|
(248)
|
|
(22)
|
|
|
(255)
|
|
|
(277)
|
|
(121)
|
|
|
(247)
|
|
|
(368)
|
|
|
|
(56)
|
|
|
(469)
|
|
|
(525)
|
|
(188)
|
|
|
(516)
|
|
|
(704)
|
|
Recoveries of
amounts written-off
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in previous periods
|
|
3
|
|
|
47
|
|
|
50
|
|
5
|
|
|
45
|
|
|
50
|
|
3
|
|
|
43
|
|
|
46
|
|
|
|
8
|
|
|
92
|
|
|
100
|
|
6
|
|
|
84
|
|
|
90
|
|
Charge to income
statement
|
|
59
|
|
|
263
|
|
|
322
|
|
36
|
|
|
207
|
|
|
243
|
|
68
|
|
|
219
|
|
|
287
|
|
|
|
95
|
|
|
470
|
|
|
565
|
|
103
|
|
|
453
|
|
|
556
|
|
Interest accrued
on impaired loans
|
|
(2)
|
|
|
(6)
|
|
|
(8)
|
|
(6)
|
|
|
(3)
|
|
|
(9)
|
|
(5)
|
|
|
(4)
|
|
|
(9)
|
|
|
|
(8)
|
|
|
(9)
|
|
|
(17)
|
|
(11)
|
|
|
(7)
|
|
|
(18)
|
|
Disposals of loans
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
Foreign exchange
and other
|
|
(6)
|
|
|
(12)
|
|
|
(18)
|
|
12
|
|
|
9
|
|
|
21
|
|
-
|
|
|
3
|
|
|
3
|
|
|
|
6
|
|
|
(3)
|
|
|
3
|
|
1
|
|
|
4
|
|
|
5
|
Balance at end of period
|
$
|
368
|
|
$
|
305
|
|
$
|
673
|
$
|
348
|
|
$
|
227
|
|
$
|
575
|
$
|
403
|
|
$
|
247
|
|
$
|
650
|
|
|
$
|
368
|
|
$
|
305
|
|
$
|
673
|
$
|
403
|
|
$
|
247
|
|
$
|
650
|
Net impaired loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
$
|
493
|
|
$
|
519
|
|
$
|
1,012
|
$
|
520
|
|
$
|
480
|
|
$
|
1,000
|
$
|
534
|
|
$
|
524
|
|
$
|
1,058
|
|
|
$
|
520
|
|
$
|
480
|
|
$
|
1,000
|
$
|
636
|
|
$
|
510
|
|
$
|
1,146
|
|
Net change in gross
impaired
|
|
(51)
|
|
|
(15)
|
|
|
(66)
|
|
(2)
|
|
|
42
|
|
|
40
|
|
(61)
|
|
|
4
|
|
|
(57)
|
|
|
|
(53)
|
|
|
27
|
|
|
(26)
|
|
(197)
|
|
|
22
|
|
|
(175)
|
|
Net change in
allowance
|
|
(20)
|
|
|
(78)
|
|
|
(98)
|
|
(25)
|
|
|
(3)
|
|
|
(28)
|
|
55
|
|
|
(14)
|
|
|
41
|
|
|
|
(45)
|
|
|
(81)
|
|
|
(126)
|
|
89
|
|
|
(18)
|
|
|
71
|
Balance at end of period
|
$
|
422
|
|
$
|
426
|
|
$
|
848
|
$
|
493
|
|
$
|
519
|
|
$
|
1,012
|
$
|
528
|
|
$
|
514
|
|
$
|
1,042
|
|
|
$
|
422
|
|
$
|
426
|
|
$
|
848
|
$
|
528
|
|
$
|
514
|
|
$
|
1,042
|
GIL less allowance for
impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a percentage of
related assets (2)
|
|
|
|
|
|
|
|
0.30%
|
|
|
|
|
|
|
|
0.36%
|
|
|
|
|
|
|
|
0.37%
|
|
|
|
|
|
|
|
|
|
0.30%
|
|
|
|
|
|
|
|
0.37%
|
(1)
|
Includes collective allowance relating to personal, scored small
business and mortgage impaired loans that are greater than 90 days
delinquent, and individual allowance.
|
(2)
|
The related assets include loans, securities borrowed or purchased under
resale agreements, and acceptances.
|
Gross impaired loans
As at April 30, 2014, gross impaired loans were down $171 million from
April 30, 2013 and down $66 million from January 31, 2014.
The decrease in the gross impaired loans as compared to the same period
last year was primarily due to a decrease in the personal lending
portfolio as a result of a revision of estimated loss parameters
implemented in the third quarter of 2013, and decreases in the
publishing, printing and broadcasting, business services, and real
estate and construction sectors in business and government loans.
The decrease in the gross impaired loans as compared to the prior
quarter was primarily due to decreases in residential mortgages in
consumer loans, and the business services sector in business and
government loans.
After experiencing an increase during the 2009 recession, GIL stabilized
in 2011 and showed some improvements in 2012, 2013 and the first half
of 2014. Almost half of the consumer GIL in this quarter were from
Canada, in which insured mortgages accounted for the majority, and
where losses are expected to be minimal. The remaining consumer GIL
were in CIBC FirstCaribbean. GIL in business and government loans were
down from both the prior quarter and the same quarter last year due to
improvements in the credit quality of the overall business and
government portfolio, as well as write-offs of U.S. real estate finance
accounts originated before 2009 and write-offs of impaired accounts
across other various sectors.
Allowance for Impairment
The allowance for impairment was $673 million, up $23 million or 4% from
the same quarter last year.
The individually assessed allowance for business and government loans
decreased by $21 million or 6%, mainly relating to decreases in the
publishing, printing and broadcasting, and real estate and construction
sectors, partially offset by an increase in the transportation sector
in the U.S. leveraged finance portfolio. The decrease in the real
estate and construction sector was primarily in the U.S. The decrease
in the publishing, printing and broadcasting sector was attributable to
the write-off of an account in the fourth quarter of 2013. The
individually assessed allowance for consumer loans was comparable with
the same quarter last year. The collectively assessed allowance for
business and government loans was down $14 million due to a revision of
estimated loss parameters on unsecured lending portfolios implemented
in the third quarter of 2013.
The collectively assessed allowance for consumer loans was up $58
million or 24%, due to an increase in the residential mortgage
portfolio of CIBC FirstCaribbean, reflecting revised expectations on
the extent and timing of the anticipated economic recovery in the
Caribbean region, partially offset by a decrease resulting from the
revision of estimated loss parameters on unsecured lending portfolios
noted above.
The allowance for impairment was up $98 million or 17% from the prior
quarter.
The individually assessed allowance for business and government loans
increased by $23 million or 7%, largely due to an increase in the
transportation sector in the U.S. leveraged finance portfolio. The
individually assessed allowance for consumer loans was comparable with
the prior quarter.
The collectively assessed allowance for business and government loans
was comparable with the prior quarter. The collectively assessed
allowance for consumer loans was up $78 million or 36%, mainly due to
an increase in the residential mortgage portfolio of CIBC
FirstCaribbean, as noted above.
Exposure to certain countries and regions
Several European countries, especially Greece, Ireland, Italy, Portugal,
and Spain, have continued to experience credit concerns. The following
tables provide our exposure to these and other European countries, both
within and outside the Eurozone. Except as noted in our indirect
exposures section below, we do not have any other exposure through our
special purpose entities (SPEs) to the countries included in the tables
below.
We do not have material exposure to the countries in the Middle East and
North Africa that have either experienced or may be at risk of unrest.
These countries include Algeria, Bahrain, Egypt, Jordan, Lebanon,
Libya, Morocco, Oman, Saudi Arabia, Syria, Tunisia, and Yemen.
Direct exposures to certain countries and regions
Our direct exposures presented in the tables below comprise (A) funded -
on-balance sheet loans (stated at amortized cost net of allowances, if
any), deposits with banks (stated at amortized cost net of allowances,
if any) and securities (stated at fair value); (B) unfunded -
unutilized credit commitments, letters of credit, and guarantees
(stated at notional amount net of allowances, if any) and sold credit
default swap (CDS) contracts where we do not benefit from subordination
(stated at notional amount less fair value); and (C) derivative MTM
receivables (stated at fair value) and repo-style transactions (stated
at fair value).
Of our total direct exposures to Europe, approximately 93% (2013: 96%)
is to entities in countries with Aaa/AAA ratings from at least one of
Moody's or S&P.
The following tables provide a summary of our positions in this
business:
|
|
|
|
|
|
Direct exposures
|
|
|
|
|
|
|
Funded
|
|
Unfunded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
funded
|
|
|
|
|
|
|
|
|
|
unfunded
|
$ millions, as at April 30, 2014
|
|
|
|
|
|
|
Corporate
|
|
|
Sovereign
|
|
|
Bank
|
|
|
(A)
|
|
|
Corporate
|
|
|
|
Bank
|
|
|
(B)
|
Austria
|
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
|
-
|
|
$
|
-
|
Belgium
|
|
|
|
|
|
|
3
|
|
|
-
|
|
|
15
|
|
|
18
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Finland
|
|
|
|
|
|
|
202
|
|
|
1
|
|
|
2
|
|
|
205
|
|
|
66
|
|
|
|
-
|
|
|
66
|
France
|
|
|
|
|
|
|
51
|
|
|
-
|
|
|
25
|
|
|
76
|
|
|
226
|
|
|
|
6
|
|
|
232
|
Germany
|
|
|
|
|
|
|
221
|
|
|
17
|
|
|
3
|
|
|
241
|
|
|
13
|
|
|
|
-
|
|
|
13
|
Greece
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Ireland
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Italy
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Luxembourg
|
|
|
|
|
|
|
22
|
|
|
-
|
|
|
167
|
|
|
189
|
|
|
13
|
|
|
|
-
|
|
|
13
|
Malta
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Netherlands
|
|
|
|
|
|
|
15
|
|
|
127
|
|
|
107
|
|
|
249
|
|
|
-
|
|
|
|
1
|
|
|
1
|
Portugal
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Spain
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
1
|
|
|
1
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Total Eurozone
|
|
|
|
|
|
$
|
514
|
|
$
|
145
|
|
$
|
320
|
|
$
|
979
|
|
$
|
318
|
|
$
|
|
7
|
|
$
|
325
|
Czech Republic
|
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
|
-
|
|
$
|
-
|
Denmark
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
1
|
|
|
1
|
|
|
-
|
|
|
|
9
|
|
|
9
|
Norway
|
|
|
|
|
|
|
-
|
|
|
113
|
|
|
116
|
|
|
229
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Russia
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Sweden
|
|
|
|
|
|
|
217
|
|
|
98
|
|
|
313
|
|
|
628
|
|
|
39
|
|
|
|
-
|
|
|
39
|
Switzerland
|
|
|
|
|
|
|
229
|
|
|
-
|
|
|
121
|
|
|
350
|
|
|
134
|
|
|
|
-
|
|
|
134
|
Turkey
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
155
|
|
|
155
|
|
|
-
|
|
|
|
8
|
|
|
8
|
United Kingdom
|
|
|
|
|
|
|
632
|
|
|
328
|
|
|
357
|
|
|
1,317
|
|
|
2,136
|
(1)
|
|
|
242
|
|
|
2,378
|
Total non-Eurozone
|
|
|
|
|
|
$
|
1,078
|
|
$
|
539
|
|
$
|
1,063
|
|
$
|
2,680
|
|
$
|
2,309
|
|
$
|
|
259
|
|
$
|
2,568
|
Total Europe
|
|
|
|
|
|
$
|
1,592
|
|
$
|
684
|
|
$
|
1,383
|
|
$
|
3,659
|
|
$
|
2,627
|
|
$
|
|
266
|
|
$
|
2,893
|
October 31, 2013
|
|
|
|
|
|
$
|
1,610
|
|
$
|
815
|
|
$
|
1,548
|
|
$
|
3,973
|
|
$
|
1,910
|
|
$
|
|
220
|
|
$
|
2,130
|
(1)
|
Includes $193 million of exposure (notional value of $221 million and
fair value of $28 million) on a CDS sold on a bond
issue of a U.K. corporate entity, which is guaranteed by a financial
guarantor. We currently hold the CDS sold as part of
our structured credit run-off business. A payout on the CDS sold would
be triggered by the bankruptcy of the reference
entity, or a failure of the entity to make a principal or interest
payment as it is due; as well as failure of the financial
guarantor to meet its obligation under the guarantee.
|
|
|
|
|
|
|
Direct exposures (continued)
|
|
|
|
|
|
|
Derivative MTM receivables and repo-style transactions
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
direct
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
Collateral
|
|
|
exposure
|
|
|
exposure
|
$ millions, as at April 30, 2014
|
|
|
|
|
|
|
Corporate
|
|
|
Sovereign
|
|
|
|
Bank
|
|
|
exposure
|
(1)
|
|
held
|
(2)
|
|
(C)
|
|
|
(A)+(B)+(C)
|
Austria
|
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
|
25
|
|
$
|
25
|
|
$
|
24
|
|
$
|
1
|
|
$
|
1
|
Belgium
|
|
|
|
|
|
|
-
|
|
|
1
|
|
|
|
34
|
|
|
35
|
|
|
34
|
|
|
1
|
|
|
19
|
Finland
|
|
|
|
|
|
|
1
|
|
|
-
|
|
|
|
3
|
|
|
4
|
|
|
-
|
|
|
4
|
|
|
275
|
France
|
|
|
|
|
|
|
2
|
|
|
291
|
|
|
|
766
|
|
|
1,059
|
|
|
1,054
|
|
|
5
|
|
|
313
|
Germany
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
2,330
|
|
|
2,330
|
|
|
2,074
|
|
|
256
|
|
|
510
|
Greece
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Ireland
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
136
|
|
|
136
|
|
|
133
|
|
|
3
|
|
|
3
|
Italy
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
4
|
|
|
4
|
|
|
-
|
|
|
4
|
|
|
4
|
Luxembourg
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
2
|
|
|
2
|
|
|
-
|
|
|
2
|
|
|
204
|
Malta
|
|
|
|
|
|
|
-
|
|
|
1
|
|
|
|
-
|
|
|
1
|
|
|
-
|
|
|
1
|
|
|
1
|
Netherlands
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
109
|
|
|
109
|
|
|
96
|
|
|
13
|
|
|
263
|
Portugal
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Spain
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
25
|
|
|
25
|
|
|
25
|
|
|
-
|
|
|
1
|
Total Eurozone
|
|
|
|
|
|
$
|
3
|
|
$
|
293
|
|
$
|
|
3,434
|
|
$
|
3,730
|
|
$
|
3,440
|
|
$
|
290
|
|
$
|
1,594
|
Czech Republic
|
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
Denmark
|
|
|
|
|
|
|
9
|
|
|
-
|
|
|
|
5
|
|
|
14
|
|
|
11
|
|
|
3
|
|
|
13
|
Norway
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
93
|
|
|
93
|
|
|
93
|
|
|
-
|
|
|
229
|
Russia
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
1
|
|
|
1
|
|
|
-
|
|
|
1
|
|
|
1
|
Sweden
|
|
|
|
|
|
|
1
|
|
|
-
|
|
|
|
115
|
|
|
116
|
|
|
115
|
|
|
1
|
|
|
668
|
Switzerland
|
|
|
|
|
|
|
-
|
|
|
17
|
|
|
|
1,180
|
|
|
1,197
|
|
|
1,155
|
|
|
42
|
|
|
526
|
Turkey
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
163
|
United Kingdom
|
|
|
|
|
|
|
254
|
|
|
5
|
|
|
|
4,255
|
|
|
4,514
|
|
|
4,188
|
|
|
326
|
|
|
4,021
|
Total non-Eurozone
|
|
|
|
|
|
$
|
264
|
|
$
|
22
|
|
$
|
|
5,649
|
|
$
|
5,935
|
|
$
|
5,562
|
|
$
|
373
|
|
$
|
5,621
|
Total Europe
|
|
|
|
|
|
$
|
267
|
|
$
|
315
|
|
$
|
|
9,083
|
|
$
|
9,665
|
|
$
|
9,002
|
|
$
|
663
|
|
$
|
7,215
|
October 31, 2013
|
|
|
|
|
|
$
|
177
|
|
$
|
317
|
|
$
|
|
5,336
|
|
$
|
5,830
|
|
$
|
5,346
|
|
$
|
484
|
|
$
|
6,587
|
(1)
|
The amounts are shown net of CVA.
|
(2)
|
Collateral on derivative MTM receivables was $1.6 billion (October 31,
2013: $1.4 billion), collateral on repo-style transactions was
$7.4 billion (October 31, 2013: $4.0 billion), and both are comprised of
cash and investment-grade debt securities.
|
Indirect exposures to certain countries and regions
Our indirect exposures comprise securities (primarily CLOs classified as
loans on our consolidated balance sheet), and written credit protection
on securities in our structured credit run-off business where we
benefit from subordination to our position. Our gross exposure before
subordination is stated at carrying value for securities and notional,
less fair value for derivatives where we have written protection. We
have no indirect exposures to Portugal, Turkey, or Russia.
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
indirect
|
$ millions, as at April 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
exposure
|
Austria
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
Belgium
|
|
|
|
|
|
|
|
|
|
|
|
35
|
Finland
|
|
|
|
|
|
|
|
|
|
|
|
22
|
France
|
|
|
|
|
|
|
|
|
|
|
|
335
|
Germany
|
|
|
|
|
|
|
|
|
|
|
|
226
|
Greece
|
|
|
|
|
|
|
|
|
|
|
|
11
|
Ireland
|
|
|
|
|
|
|
|
|
|
|
|
19
|
Italy
|
|
|
|
|
|
|
|
|
|
|
|
70
|
Luxembourg
|
|
|
|
|
|
|
|
|
|
|
|
84
|
Malta
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Netherlands
|
|
|
|
|
|
|
|
|
|
|
|
215
|
Portugal
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Spain
|
|
|
|
|
|
|
|
|
|
|
|
146
|
Total Eurozone
|
|
|
|
|
|
|
|
|
|
|
$
|
1,163
|
Denmark
|
|
|
|
|
|
|
|
|
|
|
$
|
13
|
Norway
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Sweden
|
|
|
|
|
|
|
|
|
|
|
|
35
|
Switzerland
|
|
|
|
|
|
|
|
|
|
|
|
9
|
United Kingdom
|
|
|
|
|
|
|
|
|
|
|
|
323
|
Total non-Eurozone
|
|
|
|
|
|
|
|
|
|
|
$
|
381
|
Total exposure
|
|
|
|
|
|
|
|
|
|
|
$
|
1,544
|
October 31, 2013
|
|
|
|
|
|
|
|
|
|
|
$
|
1,888
|
In addition to the indirect exposures above, we have indirect exposures
to European counterparties when we have taken debt or equity securities
issued by European entities as collateral for our securities lending
and borrowing activity, from entities that are not in Europe. Our
indirect exposure was $256 million (October 31, 2013: $211 million).
Selected exposures in certain selected activities
In response to the recommendations of the Financial Stability Board,
this section provides information on our other selected activities
within our continuing and exited businesses that may be of particular
interest to investors based on their risk characteristics and the
current market environment. For additional information on these
selected exposures, refer to pages 57 to 58 of the 2013 Annual Report.
U.S. real estate finance
The following table provides a summary of our positions in this
business:
$ millions, as at April 30, 2014
|
|
|
|
|
|
|
|
Drawn
|
|
|
|
Undrawn
|
Construction program
|
|
|
|
|
|
$
|
|
148
|
|
|
$
|
48
|
Interim program
|
|
|
|
|
|
|
|
5,859
|
|
|
|
370
|
Permanent program
|
|
|
|
|
|
|
|
105
|
|
|
|
9
|
Exposure, net of allowance
|
|
|
|
|
|
$
|
|
6,112
|
|
|
$
|
427
|
Of the above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impaired
|
|
|
|
|
|
$
|
|
97
|
|
|
$
|
-
|
|
On credit watch list
|
|
|
|
|
|
|
|
202
|
|
|
|
-
|
Exposure, net of allowance, as at October 31, 2013
|
|
|
|
|
|
$
|
|
5,938
|
|
|
$
|
467
|
As at April 30, 2014, the allowance for credit losses for this portfolio
was $42 million (October 31, 2013: $55 million). During the quarter
ended April 30, 2014, the net reversal of credit losses was $1 million,
and during the six months ended April 30, 2014, we recorded provision
for credit losses of $2 million ($4 million and $13 million provision
for credit losses for the quarter and six months ended April 30, 2013,
respectively).
The business also maintains commercial mortgage-backed securities (CMBS)
trading and distribution capabilities. As at April 30, 2014, we had
CMBS inventory with a notional amount of $9 million and a fair value of
less than $1 million (October 31, 2013: notional of $9 million and fair
value of less than $1 million).
Leveraged finance
The exposures in our leveraged finance activities in Europe and U.S. are
discussed below.
European leveraged finance
The following table provides a summary of our positions in this exited
business:
$ millions, as at April 30, 2014
|
|
|
|
|
|
|
|
Drawn
|
|
|
|
Undrawn
|
Manufacturing - capital goods
|
|
|
|
|
|
$
|
|
199
|
|
|
$
|
7
|
Publishing, printing and broadcasting
|
|
|
|
|
|
|
|
5
|
|
|
|
-
|
Utilities
|
|
|
|
|
|
|
|
10
|
|
|
|
-
|
Transportation
|
|
|
|
|
|
|
|
4
|
|
|
|
4
|
Exposure, net of allowance
|
|
|
|
|
|
$
|
|
218
|
|
|
$
|
11
|
Of the above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impaired
|
|
|
|
|
|
$
|
|
5
|
|
|
$
|
-
|
|
On credit watch list
|
|
|
|
|
|
|
|
176
|
|
|
|
7
|
Exposure, net of allowance, as at October 31, 2013 (1)
|
|
|
|
|
|
$
|
|
359
|
|
|
$
|
28
|
(1)
|
Excludes $21 million of carrying value relating to equity received
pursuant to a
reorganization. We sold this equity investment during the first quarter
ended
January 31, 2014.
|
As at April 30, 2014, the allowance for credit losses for this portfolio
was $37 million (October 31, 2013: $35 million). During the quarter and
six months ended, April 30, 2014, the net reversal of credit losses was
nil and $1 million, respectively (provision for credit losses of $21
million for the quarter and six months ended April 30, 2013,
respectively).
U.S. leveraged finance
The following table provides a summary of our positions in this
business:
$ millions, as at April 30, 2014
|
|
|
|
|
|
|
|
Drawn
|
|
|
|
Undrawn
|
Transportation
|
|
|
|
|
|
$
|
|
14
|
|
|
$
|
-
|
Publishing, printing and broadcasting
|
|
|
|
|
|
|
|
8
|
|
|
|
-
|
Exposure, net of allowance
|
|
|
|
|
|
$
|
|
22
|
|
|
$
|
-
|
Of the above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impaired
|
|
|
|
|
|
$
|
|
14
|
|
|
$
|
-
|
|
On credit watch list
|
|
|
|
|
|
|
|
8
|
|
|
|
-
|
Exposure, net of allowance, as at October 31, 2013
|
|
|
|
|
|
$
|
|
44
|
|
|
$
|
4
|
As at April 30, 2014, the allowance for credit losses for this portfolio
was $24 million (October 31, 2013: $2 million). During the quarter and
six months ended April 30, 2014, the provision for credit losses was
$23 million (net reversal of $5 million and $6 million for the quarter
and six months ended April 30, 2013, respectively).
Market risk
Market risk arises from positions in currencies, securities and
derivatives held in our trading portfolios, and from our retail banking
business, investment portfolios, and other non-trading activities.
Market risk is defined as the potential for financial loss from adverse
changes in underlying market factors, including interest and foreign
exchange rates, credit spreads, and equity and commodity prices.
Risk measurement
The following table provides balances on the interim consolidated
balance sheet which are subject to market risk. Certain differences
between accounting and risk classifications are detailed in the
footnotes below:
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
$ millions, as at
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 31
|
|
|
|
|
|
|
|
Subject to market risk
|
|
|
|
|
|
|
|
Subject to market risk
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
Not
|
|
Consolidated
|
|
|
|
|
|
|
|
Not
|
|
Non-traded risk
|
|
|
balance
|
|
|
|
|
|
Non-
|
|
subject to
|
|
balance
|
|
|
|
|
|
Non-
|
|
subject to
|
|
primary risk
|
|
sheet
|
|
|
Trading
|
|
|
trading
|
|
market risk
|
|
sheet
|
|
|
Trading
|
|
|
trading
|
|
market risk
|
|
sensitivity
|
Cash and non-interest-bearing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
deposits with banks
|
$
|
2,873
|
|
$
|
-
|
|
$
|
1,616
|
|
$
|
1,257
|
|
$
|
2,211
|
|
$
|
-
|
|
$
|
1,165
|
|
$
|
1,046
|
|
Foreign exchange
|
Interest-bearing deposits with banks
|
|
7,815
|
|
|
5
|
|
|
7,810
|
|
|
-
|
|
|
4,168
|
|
|
111
|
|
|
4,057
|
|
|
-
|
|
Interest rate
|
Securities
|
|
67,204
|
|
|
44,060
|
(1)
|
|
23,144
|
|
|
-
|
|
|
71,984
|
|
|
43,160
|
(1)
|
|
28,824
|
|
|
-
|
|
Equity, interest rate
|
Cash collateral on securities borrowed
|
|
2,891
|
|
|
-
|
|
|
2,891
|
|
|
-
|
|
|
3,417
|
|
|
-
|
|
|
3,417
|
|
|
-
|
|
Interest rate
|
Securities purchased under resale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agreements
|
|
24,434
|
|
|
-
|
|
|
24,434
|
|
|
-
|
|
|
25,311
|
|
|
-
|
|
|
25,311
|
|
|
-
|
|
Interest rate
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgages
|
|
152,569
|
|
|
-
|
|
|
152,569
|
|
|
-
|
|
|
150,938
|
|
|
-
|
|
|
150,938
|
|
|
-
|
|
Interest rate
|
|
Personal
|
|
34,746
|
|
|
-
|
|
|
34,746
|
|
|
-
|
|
|
34,441
|
|
|
-
|
|
|
34,441
|
|
|
-
|
|
Interest rate
|
|
Credit card
|
|
11,545
|
|
|
-
|
|
|
11,545
|
|
|
-
|
|
|
14,772
|
|
|
-
|
|
|
14,772
|
|
|
-
|
|
Interest rate
|
|
Business and government
|
|
52,246
|
|
|
3,923
|
(2)
|
|
48,323
|
|
|
-
|
|
|
48,207
|
|
|
2,148
|
(2)
|
|
46,059
|
|
|
-
|
|
Interest rate
|
|
Allowance for credit losses
|
|
(1,726)
|
|
|
-
|
|
|
(1,726)
|
|
|
-
|
|
|
(1,698)
|
|
|
-
|
|
|
(1,698)
|
|
|
-
|
|
Interest rate
|
Derivative instruments
|
|
19,346
|
|
|
16,762
|
(3)
|
|
2,584
|
|
|
-
|
|
|
19,947
|
|
|
17,626
|
(3)
|
|
2,321
|
|
|
-
|
|
Interest rate,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign exchange
|
Customers' liability under acceptances
|
|
9,300
|
|
|
-
|
|
|
9,300
|
|
|
-
|
|
|
9,720
|
|
|
-
|
|
|
9,720
|
|
|
-
|
|
Interest rate
|
Other assets
|
|
13,859
|
|
|
1,323
|
|
|
5,882
|
|
|
6,654
|
|
|
14,588
|
|
|
1,226
|
|
|
6,537
|
|
|
6,825
|
|
Interest rate, equity,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign exchange
|
|
|
$
|
397,102
|
|
$
|
66,073
|
|
$
|
323,118
|
|
$
|
7,911
|
|
$
|
398,006
|
|
$
|
64,271
|
|
$
|
325,864
|
|
$
|
7,871
|
|
|
Deposits
|
$
|
314,023
|
|
$
|
385
|
(4)
|
$
|
279,419
|
|
$
|
34,219
|
|
$
|
315,164
|
|
$
|
388
|
(4)
|
$
|
281,027
|
|
$
|
33,749
|
|
Interest rate
|
Obligations related to securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sold short
|
|
12,263
|
|
|
11,980
|
|
|
283
|
|
|
-
|
|
|
13,327
|
|
|
13,144
|
|
|
183
|
|
|
-
|
|
Interest rate
|
Cash collateral on securities lent
|
|
1,236
|
|
|
-
|
|
|
1,236
|
|
|
-
|
|
|
2,099
|
|
|
-
|
|
|
2,099
|
|
|
-
|
|
Interest rate
|
Obligations related to securities sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
under repurchase agreements
|
|
8,411
|
|
|
-
|
|
|
8,411
|
|
|
-
|
|
|
4,887
|
|
|
-
|
|
|
4,887
|
|
|
-
|
|
Interest rate
|
Derivative instruments
|
|
18,746
|
|
|
17,106
|
(3)
|
|
1,640
|
|
|
-
|
|
|
19,724
|
|
|
18,220
|
(3)
|
|
1,504
|
|
|
-
|
|
Interest rate,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign exchange
|
Acceptances
|
|
9,300
|
|
|
-
|
|
|
9,300
|
|
|
-
|
|
|
9,721
|
|
|
-
|
|
|
9,721
|
|
|
-
|
|
Interest rate
|
Other liabilities
|
|
10,653
|
|
|
668
|
|
|
4,286
|
|
|
5,699
|
|
|
10,862
|
|
|
872
|
|
|
4,143
|
|
|
5,847
|
|
Interest rate
|
Subordinated indebtedness
|
|
4,226
|
|
|
-
|
|
|
4,226
|
|
|
-
|
|
|
4,228
|
|
|
-
|
|
|
4,228
|
|
|
-
|
|
Interest rate
|
|
|
$
|
378,858
|
|
$
|
30,139
|
|
$
|
308,801
|
|
$
|
39,918
|
|
$
|
380,012
|
|
$
|
32,624
|
|
$
|
307,792
|
|
$
|
39,596
|
|
|
(1)
|
Excludes structured credit run-off business of $827 million (October 31,
2013: $837 million). These are considered non-trading for market risk
purposes.
|
(2)
|
Excludes $105 million (October 31, 2013: $63 million) of loans that are
warehoused for future securitization purposes. These are considered
non-trading for market risk purposes.
|
(3)
|
Excludes derivatives relating to the structured credit and other run-off
businesses which are considered non-trading for market risk purposes.
|
(4)
|
Comprises FVO deposits which are considered trading for market risk
purposes.
|
Trading activities
During the current quarter, we implemented a full revaluation method to
compute value at risk (VaR), stressed VaR and the Incremental Risk
Charge (IRC) using the historical simulation approach, replacing the
parametric approach. In aggregate, this model change resulted in a
slight increase in the risk measures. At an individual component level,
VaR remained at the same level, stressed VaR decreased slightly and IRC
increased.
The following three tables show VaR, stressed VaR and IRC for our
trading activities based on risk type under an internal models-based
approach.
Trading revenue (TEB) comprises both trading net interest income and
non-interest income and excludes underwriting fees and commissions.
Trading revenue (TEB) for the purposes of these tables excludes
positions described in the "Structured credit run-off business" section
of the MD&A and certain other exited portfolios.
Average total VaR for the three months ended April 30, 2014 was down 23%
from the last quarter, driven mainly by a decrease in our equity and
debt specific risks, partially offset by an increase in interest rate,
credit spread, foreign exchange and commodities risks.
Average total stressed VaR for the three months ended April 30, 2014 was
up 23% from the last quarter. During the current stressed VaR period
from July 1, 2008 to June 29, 2009, the market exhibited not only
increased volatility in interest rates but also increased volatility in
equity prices combined with a reduction in the level of interest rates,
and an increase in credit spreads.
Average incremental risk charge for the three months ended April 30,
2014 was down 8% from the last quarter, mainly due to a decrease in the
investment grade trading inventory.
VaR by risk type - trading portfolio
|
|
|
As at or for the three
months ended
|
|
As at or for the six
months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
$ millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
(1)
|
|
|
|
|
|
Jan. 31
|
|
|
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
(1)
|
|
Apr. 30
|
|
|
|
|
|
High
|
|
|
|
Low
|
|
|
|
As at
|
|
|
Average
|
|
|
|
As at
|
|
|
Average
|
|
|
|
As at
|
|
|
Average
|
|
|
Average
|
|
|
Average
|
Interest rate risk
|
|
|
$
|
|
3.8
|
|
$
|
|
1.7
|
|
$
|
|
3.8
|
|
$
|
2.7
|
|
$
|
|
1.6
|
|
$
|
1.2
|
|
$
|
|
4.5
|
|
$
|
4.0
|
|
$
|
2.0
|
|
$
|
3.5
|
Credit spread risk
|
|
|
|
|
2.5
|
|
|
|
1.4
|
|
|
|
1.7
|
|
|
1.9
|
|
|
|
1.2
|
|
|
1.1
|
|
|
|
1.6
|
|
|
1.5
|
|
|
1.5
|
|
|
1.6
|
Equity risk
|
|
|
|
|
3.2
|
|
|
|
1.3
|
|
|
|
1.6
|
|
|
1.8
|
|
|
|
1.9
|
|
|
2.6
|
|
|
|
2.3
|
|
|
1.9
|
|
|
2.2
|
|
|
2.1
|
Foreign exchange risk
|
|
|
|
|
1.6
|
|
|
|
0.5
|
|
|
|
0.8
|
|
|
0.9
|
|
|
|
0.6
|
|
|
0.6
|
|
|
|
1.1
|
|
|
1.0
|
|
|
0.7
|
|
|
0.8
|
Commodity risk
|
|
|
|
|
1.9
|
|
|
|
0.8
|
|
|
|
1.1
|
|
|
1.3
|
|
|
|
0.9
|
|
|
0.9
|
|
|
|
1.5
|
|
|
0.9
|
|
|
1.1
|
|
|
1.0
|
Debt specific risk
|
|
|
|
|
2.7
|
|
|
|
1.9
|
|
|
|
2.3
|
|
|
2.4
|
|
|
|
3.0
|
|
|
2.5
|
|
|
|
2.6
|
|
|
2.4
|
|
|
2.4
|
|
|
2.5
|
Diversification effect (2)
|
|
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
(7.3)
|
|
|
(7.6)
|
|
|
|
(4.9)
|
|
|
(4.5)
|
|
|
|
(8.1)
|
|
|
(6.8)
|
|
|
(6.0)
|
|
|
(6.5)
|
Total VaR (one-day measure)
|
|
|
$
|
|
4.3
|
|
$
|
|
2.5
|
|
$
|
|
4.0
|
|
$
|
3.4
|
|
$
|
|
4.3
|
|
$
|
4.4
|
|
$
|
|
5.5
|
|
$
|
4.9
|
|
$
|
3.9
|
|
$
|
5.0
|
(1)
|
Beginning in the current quarter, we have implemented the full
revaluation method of computing VaR using the historical simulation
approach in
place of the parametric VaR approach.
|
(2)
|
Total VaR is less than the sum of the VaR of the different market risk
types due to risk offsets resulting from portfolio diversification
effect.
|
n/m
|
Not meaningful. It is not meaningful to compute a diversification effect
because the high and low may occur on different days for different risk
types.
|
Stressed VaR by risk type - trading portfolio
|
|
|
As at or for the three
months ended
|
|
As at or for the six
months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
$ millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
(1)
|
|
|
|
|
|
Jan. 31
|
|
|
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
(1)
|
|
Apr. 30
|
|
|
|
|
|
High
|
|
|
|
Low
|
|
|
|
As at
|
|
|
Average
|
|
|
|
As at
|
|
|
Average
|
|
|
|
As at
|
|
|
Average
|
|
|
Average
|
|
|
Average
|
Interest rate risk
|
|
|
$
|
|
9.3
|
|
$
|
|
4.8
|
|
$
|
|
7.3
|
|
$
|
6.7
|
|
$
|
|
18.0
|
|
$
|
7.1
|
|
$
|
|
11.2
|
|
$
|
8.9
|
|
$
|
6.9
|
|
$
|
9.2
|
Credit spread risk
|
|
|
|
|
10.1
|
|
|
|
6.1
|
|
|
|
6.8
|
|
|
7.6
|
|
|
|
7.1
|
|
|
6.8
|
|
|
|
5.7
|
|
|
4.9
|
|
|
7.2
|
|
|
5.0
|
Equity risk
|
|
|
|
|
14.1
|
|
|
|
0.7
|
|
|
|
1.3
|
|
|
1.9
|
|
|
|
1.1
|
|
|
4.8
|
|
|
|
3.1
|
|
|
2.6
|
|
|
3.4
|
|
|
2.8
|
Foreign exchange risk
|
|
|
|
|
7.2
|
|
|
|
0.7
|
|
|
|
1.0
|
|
|
2.6
|
|
|
|
0.7
|
|
|
1.0
|
|
|
|
2.4
|
|
|
1.1
|
|
|
1.8
|
|
|
1.4
|
Commodity risk
|
|
|
|
|
14.1
|
|
|
|
2.1
|
|
|
|
14.1
|
|
|
6.6
|
|
|
|
1.2
|
|
|
3.0
|
|
|
|
1.6
|
|
|
0.9
|
|
|
4.8
|
|
|
1.1
|
Debt specific risk
|
|
|
|
|
4.4
|
|
|
|
2.5
|
|
|
|
3.2
|
|
|
3.2
|
|
|
|
3.0
|
|
|
2.2
|
|
|
|
1.2
|
|
|
1.4
|
|
|
2.7
|
|
|
1.4
|
Diversification effect (2)
|
|
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
(22.6)
|
|
|
(16.2)
|
|
|
|
(15.3)
|
|
|
(14.8)
|
|
|
|
(12.2)
|
|
|
(10.3)
|
|
|
(15.6)
|
|
|
(10.3)
|
Total stressed VaR (one-day measure)
|
|
|
$
|
|
22.7
|
|
$
|
|
6.7
|
|
$
|
|
11.1
|
|
$
|
12.4
|
|
$
|
|
15.8
|
|
$
|
10.1
|
|
$
|
|
13.0
|
|
$
|
9.5
|
|
$
|
11.2
|
|
$
|
10.6
|
(1)
|
Beginning in the current quarter, we have implemented the full
revaluation method of computing VaR using the historical simulation
approach in place of
the parametric VaR approach.
|
(2)
|
Total stressed VaR is less than the sum of the VaR of the different
market risk types due to risk offsets resulting from portfolio
diversification effect.
|
n/m
|
Not meaningful. It is not meaningful to compute a diversification effect
because the high and low may occur on different days for different risk
types.
|
Incremental risk charge - trading portfolio
|
|
|
As at or for the three
months ended
|
|
As at or for the six
months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
$ millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
(1)
|
|
|
|
|
|
Jan. 31
|
|
|
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
(1)
|
|
Apr. 30
|
|
|
|
|
|
High
|
|
|
|
Low
|
|
|
|
As at
|
|
|
Average
|
|
|
|
As at
|
|
|
Average
|
|
|
|
As at
|
|
|
Average
|
|
|
Average
|
|
|
Average
|
Default risk
|
|
|
$
|
|
98.1
|
|
$
|
|
64.3
|
|
$
|
|
68.0
|
|
$
|
77.6
|
|
$
|
|
86.6
|
|
$
|
86.5
|
|
$
|
|
54.5
|
|
$
|
47.0
|
|
$
|
82.0
|
|
$
|
49.4
|
Migration risk
|
|
|
|
|
56.6
|
|
|
|
28.5
|
|
|
|
43.1
|
|
|
42.7
|
|
|
|
51.3
|
|
|
43.9
|
|
|
|
26.9
|
|
|
37.4
|
|
|
43.3
|
|
|
39.8
|
Incremental risk charge (one-year measure)
|
|
|
$
|
|
147.6
|
|
$
|
|
96.1
|
|
$
|
|
111.1
|
|
$
|
120.3
|
|
$
|
|
137.9
|
|
$
|
130.4
|
|
$
|
|
81.4
|
|
$
|
84.4
|
|
$
|
125.3
|
|
$
|
89.2
|
(1)
|
Beginning in the current quarter, we have implemented the full
revaluation method of computing VaR using the historical simulation
approach in place of the
parametric VaR approach.
|
Trading revenue
The trading revenue (TEB) versus VaR graph below shows the current
quarter and the three previous quarters' actual daily trading revenue
(TEB) against the previous day close of business VaR measures. Trading
revenue distribution on which VaR is calculated is not on a TEB basis.
During the quarter, trading revenue (TEB) was positive for 100% of the days. During the quarter, the largest gain
of $17.9 million occurred on April 22, 2014. It was attributable to the
normal course of business within our capital markets group, notably in
the equity derivatives business. Average daily trading revenue (TEB)
was $4.5 million during the quarter and the average daily TEB was $2.0
million.
Trading revenue (TEB)(1) versus VaR
To view the "Trading revenue (TEB)(1) versus VaR" graph, please click
http://files.newswire.ca/256/CIBC4.pdf
(1) Certain fair value adjustments such as OIS are recorded only at
month end but allocated throughout the month for the table above.
Non-trading activities
Interest rate risk
Non-trading interest rate risk consists primarily of risk inherent in
asset/liability management activities and the activities of domestic
and foreign subsidiaries. Interest rate risk results from differences
in the maturities or repricing dates of assets and liabilities, both
on- and off-balance sheet, as well as from embedded optionality in
retail products. This optionality arises predominantly from the
prepayment exposures of mortgage products, mortgage commitments and
some GIC products with early redemption features; this optionality is
measured consistent with our actual experience. A variety of cash
instruments and derivatives, principally interest rate swaps, futures
and options, are used to manage and control these risks.
The following table shows the potential impact over the next 12 months,
adjusted for structural assumptions (excluding shareholders' equity),
estimated prepayments and early withdrawals, of an immediate 100 and
200 basis point increase or decrease in interest rates. In addition, we
have a floor in place in the downward shock to accommodate for the
current low interest rate environment (i.e. the analysis uses the floor
to stop interest rates from going into a negative position in the lower
rate scenarios).
Interest rate sensitivity - non-trading (after-tax)
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
2013
|
$ millions, as at
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
|
|
|
|
Jan. 31
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
|
|
C$
|
|
|
US$
|
|
|
Other
|
|
|
C$
|
|
|
US$
|
|
|
Other
|
|
|
C$
|
|
|
US$
|
|
|
Other
|
100 basis points increase in interest rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to equity shareholders
|
|
|
|
$
|
153
|
|
$
|
(9)
|
|
$
|
5
|
|
$
|
150
|
|
$
|
(1)
|
|
$
|
5
|
|
$
|
169
|
|
$
|
1
|
|
$
|
3
|
Increase (decrease) in present value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders' equity
|
|
|
|
|
22
|
|
|
(116)
|
|
|
(39)
|
|
|
(4)
|
|
|
(141)
|
|
|
(41)
|
|
|
79
|
|
|
(132)
|
|
|
(41)
|
100 basis points decrease in interest rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to equity shareholders
|
|
|
|
|
(206)
|
|
|
11
|
|
|
(4)
|
|
|
(216)
|
|
|
-
|
|
|
(4)
|
|
|
(228)
|
|
|
(1)
|
|
|
(2)
|
Increase (decrease) in present value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders' equity
|
|
|
|
|
(29)
|
|
|
94
|
|
|
41
|
|
|
(16)
|
|
|
114
|
|
|
42
|
|
|
(172)
|
|
|
100
|
|
|
42
|
200 basis points increase in interest rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to equity shareholders
|
|
|
|
$
|
294
|
|
$
|
(17)
|
|
$
|
10
|
|
$
|
279
|
|
$
|
(1)
|
|
$
|
10
|
|
$
|
330
|
|
$
|
1
|
|
$
|
6
|
Increase (decrease) in present value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders' equity
|
|
|
|
|
31
|
|
|
(231)
|
|
|
(79)
|
|
|
(37)
|
|
|
(282)
|
|
|
(81)
|
|
|
120
|
|
|
(264)
|
|
|
(82)
|
200 basis points decrease in interest rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to equity shareholders
|
|
|
|
|
(424)
|
|
|
12
|
|
|
(7)
|
|
|
(424)
|
|
|
(8)
|
|
|
(7)
|
|
|
(422)
|
|
|
(8)
|
|
|
(5)
|
Increase (decrease) in present value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders' equity
|
|
|
|
|
(167)
|
|
|
128
|
|
|
64
|
|
|
(140)
|
|
|
155
|
|
|
64
|
|
|
(502)
|
|
|
118
|
|
|
64
|
Liquidity risk
Liquidity risk is the risk of having insufficient cash resources to meet
financial obligations as they fall due, in their full amount and
stipulated currencies, without raising funds at adverse rates or
selling assets on a forced basis.
Our liquidity risk management strategies seek to maintain sufficient
liquid financial resources and diversified funding sources to
continually fund our balance sheet and contingent obligations under
both normal and stressed market environments.
Liquid and encumbered assets
Our policy is to hold a pool of high quality unencumbered liquid assets
that will be immediately available to meet outflows determined under
the stress scenario. Liquid assets are cash, short-term bank deposits,
high quality marketable securities and other assets that can be readily
pledged at central banks and in repo markets or converted into cash in
a timely fashion. Encumbered assets comprise assets pledged as
collateral and other assets that we consider restricted for legal or
other reasons. Unencumbered assets comprise assets that are readily
available in the normal course of business to secure funding or meet
collateral needs and other assets that are not subject to any
restrictions on their use to secure funding or as collateral.
Liquid assets net of encumbrances constitute our unencumbered pool of
liquid assets and are summarized in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
$ millions, as at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
Oct. 31
|
|
|
|
|
Gross liquid assets
|
|
Encumbered liquid assets (1)
|
|
Unencumbered liquid assets
|
|
|
|
|
CIBC owned assets
|
|
|
Third-party assets
|
|
CIBC owned assets
|
|
|
Third-party assets
|
|
|
|
|
|
|
Cash and deposits with banks
|
|
|
|
$
|
10,636
|
(2)
|
|
$
|
-
|
|
$
|
308
|
|
|
$
|
-
|
|
$
|
10,328
|
|
$
|
5,527
|
Securities
|
|
|
|
|
65,600
|
(3)
|
|
|
55,596
|
(4)
|
|
17,247
|
|
|
|
34,415
|
|
|
69,534
|
|
|
77,368
|
NHA mortgage-backed securities
|
|
|
|
|
55,642
|
(5)
|
|
|
-
|
|
|
25,143
|
|
|
|
-
|
|
|
30,499
|
|
|
22,671
|
Mortgages
|
|
|
|
|
13,480
|
(6)
|
|
|
-
|
|
|
13,480
|
|
|
|
-
|
|
|
-
|
|
|
-
|
Credit cards
|
|
|
|
|
4,295
|
(7)
|
|
|
-
|
|
|
4,295
|
|
|
|
-
|
|
|
-
|
|
|
-
|
Other assets
|
|
|
|
|
2,675
|
(8)
|
|
|
-
|
|
|
2,261
|
|
|
|
-
|
|
|
414
|
|
|
334
|
|
|
|
|
$
|
152,328
|
|
|
$
|
55,596
|
|
$
|
62,734
|
|
|
$
|
34,415
|
|
$
|
110,775
|
|
$
|
105,900
|
(1)
|
Excludes intraday pledges to the Bank of Canada related to the Large
Value Transfer System as these are normally released at the end of the
settlement
cycle each day.
|
(2)
|
Comprises cash, non-interest bearing deposits and interest-bearing
deposits with contractual maturities of less than 30 days.
|
(3)
|
Comprises trading, AFS and FVO securities. Excludes securities in our
structured credit run-off business, private debt and private equity
securities of
$1,604 million (October 31, 2013: $1,621 million).
|
(4)
|
Comprises $2,891 million (October 31, 2013: $3,417 million) of cash
collateral on securities borrowed, $24,434 million (October 31, 2013:
$25,311 million)
of securities purchased under resale agreements, $26,150 million
(October 31, 2013: $24,157 million) of securities borrowed against
securities lent, and
$2,121 million (October 31, 2013: $759 million) of securities received
for derivative collateral.
|
(5)
|
Includes securitized and transferred residential mortgages under the
Canada Mortgage Bond and the Government of Canada's Insured Mortgage
Purchase
programs, and securitized mortgages that were not transferred to
external parties. These are reported in Loans on our interim
consolidated balance sheet.
|
(6)
|
Comprises mortgages included in the Covered Bond Programme.
|
(7)
|
Comprises assets held in consolidated trusts supporting funding
liabilities.
|
(8)
|
Comprises $2,261 million (October 31, 2013: $2,727 million) of cash
pledged for derivatives collateral and $414 million (October 31, 2013:
$334 million)
of gold and silver certificates.
|
In the course of our regular business activities, a portion of our total
assets are pledged for collateral management purposes, including those
necessary for day-to-day clearing and settlement of payments and
securities. For additional details, see Note 22 to the 2013 annual
consolidated financial statements.
Our unencumbered liquid assets increased by $4.9 billion or 5% from
October 31, 2013, primarily due to a decrease in the encumbrances
related to NHA mortgage-backed securities, and higher interest-bearing
deposits with banks, partially offset by a decrease in the unencumbered
securities.
In addition to the above, we have access to the Bank of Canada Emergency
Lending Assistance (ELA) program through the pledging of non-mortgage
assets. We do not include ELA borrowing capacity as a source of
available liquidity when evaluating surplus liquidity.
The following table summarizes unencumbered liquid assets held by CIBC
parent bank and significant subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
$ millions, as at
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
Oct. 31
|
CIBC parent bank
|
|
|
|
|
|
|
|
|
|
|
$
|
|
82,677
|
|
|
$
|
|
78,761
|
Broker/dealer (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
14,953
|
|
|
|
|
15,049
|
Other significant subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
13,145
|
|
|
|
|
12,090
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
110,775
|
|
|
$
|
|
105,900
|
(1)
|
Relates to CIBC World Markets Inc. and CIBC World Markets Corp.
|
Asset encumbrance
The following table provides a summary of our total encumbered and
unencumbered assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Encumbered
|
|
Unencumbered
|
|
|
|
|
|
|
|
|
|
CIBC owned
|
|
Third-party
|
|
|
|
|
Pledged as
|
|
|
|
|
Available as
|
|
|
|
$ millions, as at
|
|
|
assets
|
|
assets
|
|
Total assets
|
|
collateral
|
|
|
Other
|
|
collateral
|
|
|
Other
|
2014
|
|
|
Cash and deposits with banks
|
|
|
$
|
10,688
|
|
$
|
-
|
|
$
|
10,688
|
|
$
|
11
|
|
$
|
297
|
|
$
|
10,380
|
(1)
|
$
|
-
|
Apr. 30
|
|
|
Securities
|
|
|
|
67,204
|
|
|
-
|
|
|
67,204
|
|
|
17,247
|
|
|
-
|
|
|
48,353
|
|
|
1,604
|
|
|
|
|
Securities borrowed or purchased under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
resale agreements
|
|
|
|
-
|
|
|
27,325
|
|
|
27,325
|
|
|
14,126
|
|
|
-
|
|
|
13,199
|
|
|
-
|
|
|
|
|
Loans
|
|
|
|
249,380
|
|
|
-
|
|
|
249,380
|
|
|
42,918
|
|
|
288
|
|
|
30,499
|
|
|
175,675
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
|
|
|
|
19,346
|
|
|
-
|
|
|
19,346
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
19,346
|
|
|
|
|
|
Customers' liability under acceptances
|
|
|
|
9,300
|
|
|
-
|
|
|
9,300
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9,300
|
|
|
|
|
|
Land, buildings and equipment
|
|
|
|
1,741
|
|
|
-
|
|
|
1,741
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,741
|
|
|
|
|
|
Goodwill
|
|
|
|
1,438
|
|
|
-
|
|
|
1,438
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,438
|
|
|
|
|
|
Software and other intangible assets
|
|
|
|
897
|
|
|
-
|
|
|
897
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
897
|
|
|
|
|
|
Investments in equity-accounted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
associates and joint ventures
|
|
|
|
1,766
|
|
|
-
|
|
|
1,766
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,766
|
|
|
|
|
|
Other assets
|
|
|
|
8,017
|
|
|
-
|
|
|
8,017
|
|
|
2,261
|
|
|
-
|
|
|
414
|
|
|
5,342
|
|
|
|
|
|
|
|
|
|
$
|
369,777
|
|
$
|
27,325
|
|
$
|
397,102
|
|
$
|
76,563
|
|
$
|
585
|
|
$
|
102,845
|
|
$
|
217,109
|
2013
|
|
|
Cash and deposits with banks
|
|
|
$
|
6,379
|
|
$
|
-
|
|
$
|
6,379
|
|
$
|
11
|
|
$
|
771
|
|
$
|
5,597
|
(1)
|
$
|
-
|
Oct. 31
|
|
|
Securities
|
|
|
|
71,984
|
|
|
-
|
|
|
71,984
|
|
|
14,103
|
|
|
-
|
|
|
56,260
|
|
|
1,621
|
|
|
|
|
Securities borrowed or purchased under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
resale agreements
|
|
|
|
-
|
|
|
28,728
|
|
|
28,728
|
|
|
17,166
|
|
|
-
|
|
|
11,562
|
|
|
-
|
|
|
|
|
Loans
|
|
|
|
246,660
|
|
|
-
|
|
|
246,660
|
|
|
50,107
|
|
|
422
|
|
|
22,671
|
|
|
173,460
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
|
|
|
|
19,947
|
|
|
-
|
|
|
19,947
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
19,947
|
|
|
|
|
|
Customers' liability under acceptances
|
|
|
|
9,720
|
|
|
-
|
|
|
9,720
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9,720
|
|
|
|
|
|
Land, buildings and equipment
|
|
|
|
1,719
|
|
|
-
|
|
|
1,719
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,719
|
|
|
|
|
|
Goodwill
|
|
|
|
1,733
|
|
|
-
|
|
|
1,733
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,733
|
|
|
|
|
|
Software and other intangible assets
|
|
|
|
756
|
|
|
-
|
|
|
756
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
756
|
|
|
|
|
|
Investments in equity-accounted associates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and joint ventures
|
|
|
|
1,695
|
|
|
-
|
|
|
1,695
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,695
|
|
|
|
|
|
Other assets
|
|
|
|
8,685
|
|
|
-
|
|
|
8,685
|
|
|
2,727
|
|
|
-
|
|
|
334
|
|
|
5,624
|
|
|
|
|
|
|
|
|
|
$
|
369,278
|
|
$
|
28,728
|
|
$
|
398,006
|
|
$
|
84,114
|
|
$
|
1,193
|
|
$
|
96,424
|
|
$
|
216,275
|
(1)
|
Includes $52 million (October 31, 2013: $70 million) of interest-bearing
deposits with contractual maturities greater than 30 days.
|
Funding
We manage liquidity to meet both short- and long-term cash requirements.
Reliance on wholesale funding is maintained at prudent levels and
within approved limits, consistent with our desired liquidity profile.
Our funding strategy includes access to funding through retail deposits
and wholesale funding and deposits. Personal deposits are a significant
source of funding and totalled $128.1 billion as at April 30, 2014
(October 31, 2013: $125.0 billion).
The following table provides the contractual maturities at carrying
values of funding sourced by CIBC from the wholesale market:
|
|
|
|
|
Less than
|
|
|
1 - 3
|
|
|
3 - 6
|
|
|
6 - 12
|
|
|
Less than
|
|
|
1 - 2
|
|
|
Over
|
|
|
|
$ millions, as at April 30, 2014
|
|
|
|
|
1 month
|
|
|
months
|
|
|
months
|
|
|
months
|
|
1 year total
|
|
|
years
|
|
|
2 years
|
|
|
Total
|
Deposits from banks
|
|
|
|
$
|
3,444
|
|
$
|
1,155
|
|
$
|
150
|
|
$
|
-
|
|
$
|
4,749
|
|
$
|
-
|
|
$
|
-
|
|
$
|
4,749
|
Certificates of deposit and commercial paper
|
|
|
|
|
1,159
|
|
|
3,330
|
|
|
4,413
|
|
|
2,491
|
|
|
11,393
|
|
|
5,482
|
|
|
5,914
|
|
|
22,789
|
Bearer deposit notes and bankers acceptances
|
|
|
|
|
4,177
|
|
|
405
|
|
|
781
|
|
|
571
|
|
|
5,934
|
|
|
-
|
|
|
-
|
|
|
5,934
|
Asset-backed commercial paper
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Senior unsecured medium-term notes
|
|
|
|
|
6
|
|
|
2,139
|
|
|
800
|
|
|
4,063
|
|
|
7,008
|
|
|
7,791
|
|
|
13,386
|
|
|
28,185
|
Senior unsecured structured notes
|
|
|
|
|
5
|
|
|
13
|
|
|
124
|
|
|
177
|
|
|
319
|
|
|
223
|
|
|
-
|
|
|
542
|
Covered bonds/Asset-backed securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage securitization
|
|
|
|
|
-
|
|
|
-
|
|
|
3,368
|
|
|
1,613
|
|
|
4,981
|
|
|
2,595
|
|
|
17,289
|
|
|
24,865
|
|
Covered bonds
|
|
|
|
|
-
|
|
|
-
|
|
|
2,299
|
|
|
2,299
|
|
|
4,598
|
|
|
5,231
|
|
|
3,651
|
|
|
13,480
|
|
Cards securitization
|
|
|
|
|
-
|
|
|
-
|
|
|
1,096
|
|
|
-
|
|
|
1,096
|
|
|
1,514
|
|
|
1,685
|
|
|
4,295
|
Subordinated liabilities
|
|
|
|
|
-
|
|
|
-
|
|
|
260
|
|
|
-
|
|
|
260
|
|
|
-
|
|
|
3,966
|
|
|
4,226
|
Other
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
$
|
8,791
|
|
$
|
7,042
|
|
$
|
13,291
|
|
$
|
11,214
|
|
$
|
40,338
|
|
$
|
22,836
|
|
$
|
45,891
|
|
$
|
109,065
|
Of which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
6,763
|
|
$
|
3,912
|
|
$
|
10,675
|
|
$
|
9,340
|
|
$
|
22,625
|
|
$
|
42,640
|
|
Unsecured
|
|
|
|
|
8,791
|
|
|
7,042
|
|
|
6,528
|
|
|
7,302
|
|
|
29,663
|
|
|
13,496
|
|
|
23,266
|
|
|
66,425
|
|
|
|
|
$
|
8,791
|
|
$
|
7,042
|
|
$
|
13,291
|
|
$
|
11,214
|
|
$
|
40,338
|
|
$
|
22,836
|
|
$
|
45,891
|
|
$
|
109,065
|
October 31, 2013
|
|
|
|
$
|
11,705
|
|
$
|
9,081
|
|
$
|
9,316
|
|
$
|
15,126
|
|
$
|
45,228
|
|
$
|
20,419
|
|
$
|
55,271
|
|
$
|
120,918
|
The following table provides a currency breakdown, in Canadian dollar
equivalent, of funding sourced by CIBC in the wholesale market:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
$ billions, as at
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
Oct. 31
|
|
CAD
|
|
|
|
|
|
|
|
|
|
|
$
|
58.9
|
|
|
|
54
|
%
|
|
|
|
$
|
69.2
|
|
|
|
57
|
%
|
USD
|
|
|
|
|
|
|
|
|
|
|
|
43.9
|
|
|
|
40
|
|
|
|
|
|
44.2
|
|
|
|
37
|
|
EUR
|
|
|
|
|
|
|
|
|
|
|
|
1.3
|
|
|
|
1
|
|
|
|
|
|
1.3
|
|
|
|
1
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
5.0
|
|
|
|
5
|
|
|
|
|
|
6.2
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
109.1
|
|
|
|
100
|
%
|
|
|
|
$
|
120.9
|
|
|
|
100
|
%
|
Our funding and liquidity levels remained stable and sound over the six
months ended April 30, 2014 and we do not anticipate any events,
commitments or demands that will materially impact our liquidity risk
position.
Impact on collateral if there is a downgrade of CIBC's credit rating
We are required to deliver collateral to certain derivative
counterparties in the event of a downgrade to our current credit risk
rating. The collateral requirement is based on MTM exposure, collateral
valuations, and collateral arrangement thresholds as applicable. The
following table presents the additional collateral requirements
(cumulative) for rating downgrades:
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
$ billions, as at
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
Oct. 31
|
One-notch downgrade
|
|
|
|
|
|
|
|
|
|
|
$
|
0.1
|
|
|
$
|
|
0.1
|
Two-notch downgrade
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
0.3
|
Three-notch downgrade
|
|
|
|
|
|
|
|
|
|
|
|
0.7
|
|
|
|
|
0.9
|
Liquidity Coverage Ratio Disclosure Standards
In January 2014, the BCBS published the Liquidity Coverage Ratio (LCR)
Disclosure Standards. The document outlines the minimum standards
applicable for public disclosure of the LCR by all internationally
active banks. Banks will be required to disclose quantitative
information about the LCR using a common template, supplemented by
qualitative discussion, as appropriate, on key elements of the
liquidity metric. These standards are effective for the first reporting
period after January 1, 2015. OSFI has indicated that additional
implementation guidance, applicable to Canadian banks, will be provided
in due course. We are currently updating processes and systems to meet
the stipulated timeline and requirements.
Contractual obligations
Contractual obligations give rise to commitments of future payments
affecting our short- and long-term liquidity and capital resource
needs. These obligations include financial liabilities, credit and
liquidity commitments, and other contractual obligations.
Assets and liabilities
The following table provides the contractual maturity profile of our
on-balance sheet assets and liabilities at their carrying values. CIBC
models the behaviour of both assets and liabilities on a net cash flow
basis by applying recommended regulatory stress assumptions,
supplemented by business experience, against contractual maturities and
contingent exposures to construct its behavioural balance sheet. The
behavioural balance sheet is a key component of CIBC's liquidity risk
management framework and is the basis by which CIBC manages its
liquidity risk profile.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No
|
|
|
|
|
|
|
|
Less than
|
|
|
1 - 3
|
|
|
3 - 6
|
|
|
6 - 9
|
|
|
9 - 12
|
|
|
1 - 2
|
|
|
2 - 5
|
|
|
Over
|
|
|
specified
|
|
|
|
$ millions, as at April 30, 2014
|
|
|
1 month
|
|
|
months
|
|
|
months
|
|
|
months
|
|
|
months
|
|
|
years
|
|
|
years
|
|
|
5 years
|
|
|
maturity
|
|
|
Total
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and non-interest bearing deposits with banks
|
|
|
$
|
2,873
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
2,873
|
Interest bearing deposits with banks
|
|
|
|
7,763
|
|
|
-
|
|
|
5
|
|
|
47
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,815
|
Securities
|
|
|
|
2,738
|
|
|
4,546
|
|
|
1,173
|
|
|
711
|
|
|
1,694
|
|
|
3,851
|
|
|
9,268
|
|
|
9,733
|
|
|
33,490
|
|
|
67,204
|
Cash collateral on securities borrowed
|
|
|
|
2,891
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,891
|
Securities purchased under resale agreements
|
|
|
|
14,504
|
|
|
7,411
|
|
|
1,733
|
|
|
424
|
|
|
362
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
24,434
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgages
|
|
|
|
46
|
|
|
85
|
|
|
91
|
|
|
1,256
|
|
|
2,286
|
|
|
17,287
|
|
|
86,825
|
|
|
44,693
|
|
|
-
|
|
|
152,569
|
|
Personal
|
|
|
|
1,533
|
|
|
549
|
|
|
835
|
|
|
908
|
|
|
1,201
|
|
|
93
|
|
|
184
|
|
|
669
|
|
|
28,774
|
|
|
34,746
|
|
Credit card
|
|
|
|
231
|
|
|
462
|
|
|
693
|
|
|
693
|
|
|
693
|
|
|
2,771
|
|
|
6,002
|
|
|
-
|
|
|
-
|
|
|
11,545
|
|
Business and government
|
|
|
|
5,629
|
|
|
2,156
|
|
|
2,636
|
|
|
2,343
|
|
|
1,825
|
|
|
5,818
|
|
|
16,396
|
|
|
15,443
|
|
|
-
|
|
|
52,246
|
|
Allowance for credit losses
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,726)
|
|
|
(1,726)
|
Derivative instruments
|
|
|
|
881
|
|
|
930
|
|
|
543
|
|
|
1,206
|
|
|
495
|
|
|
2,702
|
|
|
4,834
|
|
|
7,755
|
|
|
-
|
|
|
19,346
|
Customers' liability under acceptances
|
|
|
|
7,854
|
|
|
1,443
|
|
|
-
|
|
|
-
|
|
|
3
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9,300
|
Other assets
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
13,859
|
|
|
13,859
|
|
|
|
|
$
|
46,943
|
|
$
|
17,582
|
|
$
|
7,709
|
|
$
|
7,588
|
|
$
|
8,559
|
|
$
|
32,522
|
|
$
|
123,509
|
|
$
|
78,293
|
|
$
|
74,397
|
|
$
|
397,102
|
October 31, 2013
|
|
|
$
|
43,037
|
|
$
|
16,420
|
|
$
|
10,578
|
|
$
|
14,461
|
|
$
|
11,500
|
|
$
|
44,524
|
|
$
|
140,137
|
|
$
|
44,355
|
|
$
|
72,994
|
|
$
|
398,006
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits (1)
|
|
|
$
|
18,701
|
|
$
|
14,153
|
|
$
|
17,503
|
|
$
|
15,938
|
|
$
|
17,854
|
|
$
|
26,768
|
|
$
|
35,405
|
|
$
|
25,955
|
|
$
|
141,746
|
|
$
|
314,023
|
Obligations related to securities sold short
|
|
|
|
12,263
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,263
|
Cash collateral on securities lent
|
|
|
|
1,236
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,236
|
Obligations related to securities sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
under repurchase agreements
|
|
|
|
7,973
|
|
|
438
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
8,411
|
Derivative instruments
|
|
|
|
647
|
|
|
974
|
|
|
514
|
|
|
657
|
|
|
676
|
|
|
2,561
|
|
|
5,276
|
|
|
7,441
|
|
|
-
|
|
|
18,746
|
Acceptances
|
|
|
|
7,854
|
|
|
1,443
|
|
|
-
|
|
|
-
|
|
|
3
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9,300
|
Other liabilities
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10,653
|
|
|
10,653
|
Subordinated indebtedness
|
|
|
|
-
|
|
|
-
|
|
|
260
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
34
|
|
|
3,932
|
|
|
-
|
|
|
4,226
|
|
|
|
$
|
48,674
|
|
$
|
17,008
|
|
$
|
18,277
|
|
$
|
16,595
|
|
$
|
18,533
|
|
$
|
29,329
|
|
$
|
40,715
|
|
$
|
37,328
|
|
$
|
152,399
|
|
$
|
378,858
|
October 31, 2013
|
|
|
$
|
50,494
|
|
$
|
15,659
|
|
$
|
19,347
|
|
$
|
13,414
|
|
$
|
18,836
|
|
$
|
31,600
|
|
$
|
55,290
|
|
$
|
28,371
|
|
$
|
147,001
|
|
$
|
380,012
|
(1)
|
Comprises $128.1 billion (October 31, 2013: $125.0 billion) of personal
deposits of which $123.1 billion (October 31, 2013: $120.4 billion) are
in Canada and $5.0 billion
(October 31, 2013: $4.6 billion) in other countries; $178.7 billion
(October 31, 2013: $182.9 billion) of business and government deposits
of which $143.2 billion
(October 31, 2013: $149.0 billion) are in Canada and $35.5 billion
(October 31, 2013: $33.9 billion) in other countries; and $7.2 billion
(October 31, 2013: $5.6 billion)
of bank deposits of which $3.0 billion (October 31, 2013: $2.0 billion)
are in Canada and $4.2 billion (October 31, 2013: $3.6 billion) in
other countries.
|
Our net asset position remained unchanged relative to October 31, 2013.
The changes in the contractual maturity profile were primarily due to
the natural migration of maturities and also reflect the impact of our
regular business activities.
Credit-related commitments
The following table provides the contractual maturity of notional
amounts of credit-related commitments. Since a significant portion of
commitments are expected to expire without being drawn upon, the total
of the contractual amounts is not representative of future liquidity
requirements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No
|
|
|
|
|
|
|
|
|
Less than
|
|
1 - 3
|
|
3 - 6
|
|
6 - 9
|
|
9 - 12
|
|
1 - 2
|
|
2 - 5
|
|
Over
|
|
|
specified
|
|
|
|
$ millions, as at April 30, 2014
|
|
|
|
|
1 month
|
|
|
months
|
|
|
months
|
|
|
months
|
|
|
months
|
|
|
years
|
|
|
years
|
|
|
5 years
|
|
|
maturity
|
(1)
|
|
Total
|
Securities lending(2)
|
|
|
|
$
|
26,150
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
26,150
|
Unutilized credit commitments
|
|
|
|
|
671
|
|
|
4,628
|
|
|
1,189
|
|
|
1,031
|
|
|
1,721
|
|
|
6,301
|
|
|
26,283
|
|
|
1,506
|
|
|
111,712
|
|
|
155,042
|
Backstop liquidity facilities
|
|
|
|
|
-
|
|
|
-
|
|
|
124
|
|
|
3,558
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,682
|
Standby and performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
letters of credit
|
|
|
|
|
682
|
|
|
1,463
|
|
|
1,144
|
|
|
2,602
|
|
|
1,505
|
|
|
389
|
|
|
952
|
|
|
336
|
|
|
-
|
|
|
9,073
|
Documentary and commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
letters of credit
|
|
|
|
|
49
|
|
|
191
|
|
|
11
|
|
|
5
|
|
|
-
|
|
|
-
|
|
|
23
|
|
|
-
|
|
|
-
|
|
|
279
|
Underwriting commitments
|
|
|
|
|
405
|
|
|
110
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
515
|
Other
|
|
|
|
|
260
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
260
|
|
|
|
|
|
$
|
28,217
|
|
$
|
6,392
|
|
$
|
2,468
|
|
$
|
7,196
|
|
$
|
3,226
|
|
$
|
6,690
|
|
$
|
27,258
|
|
$
|
1,842
|
|
$
|
111,712
|
|
$
|
195,001
|
October 31, 2013
|
|
|
|
$
|
26,147
|
|
$
|
9,615
|
|
$
|
3,343
|
|
$
|
3,035
|
|
$
|
2,528
|
|
$
|
5,435
|
|
$
|
25,942
|
|
$
|
2,051
|
|
$
|
116,487
|
|
$
|
194,583
|
(1)
|
Includes $89.5 billion (October 31, 2013: $94.7 billion) of personal,
home equity and credit card lines which are unconditionally cancellable
at our discretion.
|
(2)
|
Excludes securities lending of $1.2 billion (October 31, 2013: $2.1
billion) for cash because it is reported on the interim consolidated
balance sheet.
|
Other contractual obligations
The following table provides the contractual maturities of other
contractual obligations affecting our funding needs:
|
|
|
|
|
Less than
|
|
|
1 - 3
|
|
|
3 - 6
|
|
|
6 - 9
|
|
|
9 - 12
|
|
|
1 - 2
|
|
|
2 - 5
|
|
|
Over
|
|
|
|
$ millions, as at April 30, 2014
|
|
|
|
|
|
1 month
|
|
|
months
|
|
|
months
|
|
|
months
|
|
|
months
|
|
|
years
|
|
|
years
|
|
|
5 years
|
|
|
Total
|
Operating leases
|
|
|
|
|
$
|
34
|
|
$
|
67
|
|
$
|
101
|
|
$
|
100
|
|
$
|
100
|
|
$
|
381
|
|
$
|
944
|
|
$
|
1,234
|
|
$
|
2,961
|
Purchase obligations (1)
|
|
|
|
|
|
44
|
|
|
113
|
|
|
160
|
|
|
182
|
|
|
132
|
|
|
503
|
|
|
1,058
|
|
|
459
|
|
|
2,651
|
Pension contributions (2)
|
|
|
|
|
|
5
|
|
|
10
|
|
|
15
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
30
|
|
|
|
|
|
$
|
83
|
|
$
|
190
|
|
$
|
276
|
|
$
|
282
|
|
$
|
232
|
|
$
|
884
|
|
$
|
2,002
|
|
$
|
1,693
|
|
$
|
5,642
|
October 31, 2013
|
|
|
|
|
$
|
68
|
|
$
|
221
|
|
$
|
341
|
|
$
|
357
|
|
$
|
274
|
|
$
|
809
|
|
$
|
1,716
|
|
$
|
1,599
|
|
$
|
5,385
|
(1)
|
Obligations that are legally binding agreements whereby we agree to
purchase products or services with specific minimum or
baseline quantities defined at fixed, minimum or variable prices over a
specified period of time are defined as purchase obligations.
Purchase obligations are included through to the termination date
specified in the respective agreements, even if the contract is
renewable. Many of the purchase agreements for goods and services
include clauses that would allow us to cancel the agreement
prior to expiration of the contract within a specific notice period.
However, the amount above includes our obligations without regard
to such termination clauses (unless actual notice of our intention to
terminate the agreement has been communicated to the
counterparty). The table excludes purchases of debt and equity
instruments that settle within standard market timeframes.
|
(2)
|
Includes estimated minimum pension contributions, and expected benefit
payments for post-retirement medical and dental plans,
the long-term disability plan, and related medical and dental benefits
for disabled employees. Subject to change as contribution
decisions are affected by various factors, such as market performance,
regulatory requirements, and management's ability to
change funding policy. Also, funding requirements after 2014 are
excluded due to the significant variability in the assumptions
required to project the timing of cash flows.
|
Other risks
We also have policies and processes to measure, monitor and control
other risks, including strategic, insurance, operational, technology,
reputation and legal, regulatory, and environmental risks. These risks
and related policies and processes have not changed significantly from
those described on pages 70 to 72 of the 2013 Annual Report.
Accounting and control matters
Critical accounting policies and estimates
A summary of significant accounting policies is presented in Note 1 to
the consolidated financial statements of the 2013 Annual Report. The
interim consolidated financial statements have been prepared using the
same accounting policies as CIBC's consolidated financial statements
for the year ended October 31, 2013, except as described in Note 1 to
the interim consolidated financial statements. Certain accounting
policies require us to make judgments and estimates, some of which may
relate to matters that are uncertain. The key management judgments and
estimates remain substantially unchanged from those described on pages
73 to 77 of the 2013 Annual Report, except for asset impairment, as
well as the valuation of financial instruments, securitizations and
structured entities and post-employment and other long-term benefit
plan assumptions, which have been impacted by the adoption of new and
amended accounting standards as described below.
Valuation of financial instruments
Debt and equity trading securities, trading business and government
loans, obligations related to securities sold short, derivative
contracts, AFS securities and FVO financial instruments are carried at
fair value. FVO financial instruments include certain debt securities,
structured deposits and business and government deposits. Retail
mortgage interest rate commitments are also designated as FVO financial
instruments.
Effective November 1, 2013, CIBC adopted IFRS 13 "Fair Value
Measurement". Adoption of this standard did not result in changes to
how we measure fair value. Fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability at
the measurement date in an orderly arm's length transaction between
market participants in the principal market at the measurement date
under current market conditions (i.e. the exit price). Fair value
measurements are categorized into levels within a fair value hierarchy
based on the nature of the valuation inputs (Level 1, 2 or 3). We have
an established and well-documented process for determining fair value.
Fair value is based on unadjusted quoted prices in an active market for
the same instrument, where available (Level 1). If active market prices
or quotes are not available for an instrument, fair value is then based
on valuation models using only significant inputs that are observable
(Level 2) or one of more significant non-observable inputs (Level 3).
Estimating fair value requires the application of judgment. The type
and level of judgment required is largely dependent on the amount of
observable market information available. For instruments valued using
internally developed models that use significant non-observable market
inputs and are therefore classified within Level 3 of the hierarchy,
the judgment used to estimate fair value is more significant than when
estimating the fair value of instruments classified within Levels 1 and
2. To ensure that valuations are appropriate, a number of policies and
controls are put in place. Independent validation of fair value is
performed at least on a monthly basis. Valuation inputs are verified to
external sources such as exchange quotes, broker quotes or other
management-approved independent pricing sources.
The following table presents amounts, in each category of financial
instruments, which are fair valued using valuation techniques based on
one or more significant non-observable market inputs (Level 3), for the
structured credit run-off business and total consolidated CIBC. For
further details of the valuation of and sensitivity associated with
Level 3 financial assets and liabilities, see Note 2 to the interim
consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
$ millions, as at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
|
|
|
|
|
|
Oct. 31
|
|
|
|
|
|
|
|
Structured credit
|
|
|
|
|
Total
|
|
Total
|
|
|
Structured credit
|
|
|
|
|
Total
|
|
Total
|
|
|
|
|
|
|
|
run-off business
|
|
|
|
|
CIBC
|
|
CIBC
|
(1)
|
|
run-off business
|
|
|
|
|
CIBC
|
|
CIBC
|
(1)
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading securities and loans
|
|
|
|
|
|
$
|
827
|
|
$
|
|
|
827
|
|
1.7
|
%
|
|
$
|
837
|
|
$
|
|
|
837
|
|
1.8
|
%
|
AFS securities
|
|
|
|
|
|
|
20
|
|
|
|
|
826
|
|
3.8
|
|
|
|
13
|
|
|
|
|
913
|
|
3.3
|
|
FVO securities
|
|
|
|
|
|
|
136
|
|
|
|
|
136
|
|
47.4
|
|
|
|
147
|
|
|
|
|
147
|
|
51.2
|
|
Derivative instruments
|
|
|
|
|
|
|
242
|
|
|
|
|
291
|
|
1.5
|
|
|
|
295
|
|
|
|
|
341
|
|
1.7
|
|
|
|
|
|
|
|
$
|
1,225
|
|
$
|
|
|
2,080
|
|
2.3
|
%
|
|
$
|
1,292
|
|
$
|
|
|
2,238
|
|
2.4
|
%
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits and other liabilities (2)
|
|
|
|
|
|
$
|
536
|
|
$
|
|
|
834
|
|
31.2
|
%
|
|
$
|
510
|
|
$
|
|
|
737
|
|
29.9
|
%
|
Derivative instruments
|
|
|
|
|
|
|
350
|
|
|
|
|
419
|
|
2.2
|
|
|
|
413
|
|
|
|
|
474
|
|
2.4
|
|
|
|
|
|
|
|
$
|
886
|
|
$
|
|
|
1,253
|
|
3.7
|
%
|
|
$
|
923
|
|
$
|
|
|
1,211
|
|
3.4
|
%
|
(1)
|
Represents percentage of Level 3 assets and liabilities in each reported
category that are carried at fair value on the interim
consolidated financial statements.
|
(2)
|
Includes FVO deposits and bifurcated embedded derivatives.
|
Fair value adjustments
We apply judgment in establishing valuation adjustments that take into
account various factors that may have an impact on the valuation of
financial instruments that are carried at fair value on the
consolidated balance sheet. Such factors include, but are not limited
to, the bid-offer spread, illiquidity due to lack of market depth and
other market risks, parameter uncertainty, model risk, credit risk, and
future administration costs.
The establishment of fair value adjustments and the determination of the
amount of write-downs involve estimates that are based on accounting
processes and judgments by management. We evaluate the adequacy of the
fair value adjustments and the amount of write-downs on an ongoing
basis. The levels of fair value adjustments and the amount of the
write-downs could change as events warrant and may not reflect ultimate
realizable amounts.
The following table summarizes our valuation adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
2013
|
$ millions, as at
|
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
|
Oct. 31
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market risk
|
|
|
|
|
|
|
|
|
|
|
$
|
2
|
|
|
|
$
|
|
5
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market risk
|
|
|
|
|
|
|
|
|
|
|
|
53
|
|
|
|
|
|
57
|
Credit risk
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
42
|
Administration costs
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
5
|
Total valuation adjustments
|
|
|
|
|
|
|
|
|
|
|
$
|
69
|
|
|
|
$
|
|
109
|
Allowance for credit losses
We establish and maintain an allowance for credit losses that is
considered the best estimate of probable credit-related losses existing
in our portfolio of on- and off-balance sheet financial instruments,
giving due regard to current conditions.
The allowance for credit losses consists of individual and collective
components.
Individual allowances
The majority of our business and government loan portfolios are assessed
on an individual loan basis. Individual allowances are established when
impaired loans are identified within the individually assessed
portfolios. A loan is classified as impaired when we are of the opinion
that there is no longer a reasonable assurance of the full and timely
collection of principal and interest. The individual allowance is the
amount required to reduce the carrying value of an impaired loan to its
estimated realizable amount. This is determined by discounting the
expected future cash flows at the effective interest rate inherent in
the loan.
Individual allowances are not established for portfolios that are
collectively assessed, including most retail portfolios.
Collective allowances
Consumer and certain small business allowances
Residential mortgages, credit card loans, personal loans, and certain
small business loan portfolios consist of large numbers of homogeneous
balances of relatively small amounts, for which we take a portfolio
approach to establish the collective allowance. As it is not practical
to review each individual loan, we utilize a formula basis, by
reference to historical ratios of write-offs to current accounts and
balances in arrears. For residential mortgages, personal loans and
certain small business loans, this historical loss experience enables
CIBC to determine appropriate probability of default (PD) and loss
given default (LGD) parameters, which are used in the calculation of
the portion of the collective allowance for current accounts. The PDs
determined by this process that correspond to the risk levels in our
retail portfolios are disclosed on page 48 of the 2013 Annual Report.
For credit card loans, non-current residential mortgages, personal
loans and certain small business loans, the historical loss experience
enables CIBC to calculate flows to write-off in our roll-rate models
that determine the collective allowance that pertain to these loans.
We also consider estimates of the time periods over which losses that
are present would be identified and a provision taken, our view of
current economic and portfolio trends, evidence of credit quality
improvements or deterioration, and events such as the 2013 Alberta
floods. On a regular basis, the parameters that affect the allowance
calculation are updated, based on our experience and the economic
environment.
Business and government allowances
For groups of individually assessed loans for which no objective
evidence of impairment has been identified on an individual basis, a
collective allowance is provided for losses which we estimate are
inherent in the portfolio at the reporting date, but not yet
specifically identified from an individual assessment of the loan.
The methodology for determining the appropriate level of the collective
allowance incorporates a number of factors, including the size of the
portfolios, expected loss rates, and relative risk profiles. We also
consider estimates of the time periods over which losses that are
present would be identified and a provision taken, our view of current
economic and portfolio trends, and evidence of credit quality
improvements or deterioration. On a regular basis, the parameters that
affect the collective allowance calculation are updated, based on our
experience and the economic environment. Expected loss rates for
business loan portfolios are based on the risk rating of each credit
facility and on the PD factors associated with each risk rating, as
well as estimates of LGD. The PD factors reflect our historical loss
experience and are supplemented by data derived from defaults in the
public debt markets. Our risk-rating method and categories are
disclosed on page 47 of the 2013 Annual Report. Historical loss
experience is adjusted based on observable data to reflect the effects
of current conditions. LGD estimates are based on our experience over
past years.
For further details on the allowance for credit losses, see Note 5 to
the interim consolidated financial statements.
Securitizations and structured entities
Securitization of our own assets
Effective November 1, 2013, with retrospective application to November
1, 2012, CIBC adopted IFRS 10 "Consolidated Financial Statements" which
replaced IAS 27 "Consolidated and Separate Financial Statements" and
SIC 12 "Consolidation - Special Purpose Entities". Under IFRS 10,
judgment is exercised in determining whether an investor controls an
investee including assessing whether the investor has: (i) power over
the investee; (ii) exposure, or rights, to variable returns from its
involvement with the investee; and (iii) the ability to affect those
returns through its power over the investee.
We sponsor several structured entities that purchase and securitize our
own assets including the Cards II Trust, Broadway Trust and Crisp
Trust, which we continue to consolidate under IFRS 10.
We also securitize our own mortgage assets through a
government-sponsored securitization program. We sell these securitized
assets to a government-sponsored securitization vehicle that we do not
consolidate, as well as to other third parties. IAS 39 "Financial
Instruments - Recognition and Measurement" provides guidance on when to
derecognize financial assets. A financial asset is derecognized when
the contractual rights to receive cash flows from the asset have
expired, or when we have transferred the rights to receive cash flows
from the asset such that:
-
We have transferred substantially all the risks and rewards of the
asset; or
-
We have neither transferred nor retained substantially all the risks and
rewards of the asset, but have transferred control of the asset.
We have determined that our securitization activities related to
residential mortgages and cards receivables are accounted for as
secured borrowing transactions because we have not met the
aforementioned criteria.
In addition, we sell and derecognize commercial mortgages through a
pass-through arrangement with a trust that securitizes these mortgages
into ownership certificates held by various external investors. We
continue to perform special servicing of the mortgages in exchange for
a market-based fee and do not consolidate the trust. We also sell
certain U.S. commercial mortgages to third-parties which qualify for
derecognition because we have transferred substantially all the risks
and rewards of the mortgages and have no continuous involvement after
the transfer.
Securitization of third-party assets
We also sponsor several structured entities that purchase pools of
third-party assets. We consider a number of factors in determining
whether CIBC controls these structured entities. We monitor the extent
to which we support these structured entities, through direct
investment in the debt issued by the structured entities and through
the provision of liquidity protection to the other debtholders, to
assess whether we should consolidate these entities.
Where we consider that CIBC should consolidate a structured entity, IFRS
10 requires that we reconsider this assessment if facts and
circumstances indicate that there are changes to one or more of the
three elements of control described above, for example, when any of the
parties gains or loses power to direct relevant activities of the
investee, or when there is a change in the parties' exposure or rights
to variable returns from its involvement with the investee.
Specifically, in relation to our multi-seller conduits, we reconsider
our consolidation assessment whenever our level of interest in the ABCP
issued by the conduits changes significantly, or in the rare event that
the liquidity facility we provide to the conduits is drawn or amended.
A significant increase in our holdings of the outstanding commercial
paper by the conduits would become more likely in a scenario in which
the market for bank-sponsored ABCP suffered a significant deterioration
such that the conduits were unable to roll their ABCP.
For additional information on the securitizations of our own assets and
third-party assets, see the "Off-balance sheet arrangements" section
and Note 7 to the interim consolidated financial statements.
Asset impairment
Goodwill, other intangible assets and long-lived assets
As at April 30, 2014, we had goodwill of $1,438 million (October 31,
2013: $1,733 million) and other intangible assets with an indefinite
life of $138 million (October 31, 2013: $136 million). Goodwill is not
amortized, but is tested, at least annually, for impairment by
comparing the recoverable amount of the cash-generating unit (CGU) to
which goodwill has been allocated, with the carrying amount of the CGU
including goodwill. Any deficiency is recognized as impairment of
goodwill. The recoverable amount of a CGU is defined as the higher of
its estimated fair value less cost to sell or value in use. Goodwill is
also required to be tested for impairment whenever there are indicators
that it may be impaired.
Acquired intangible assets are separately recognized if the benefits of
the intangible assets are obtained through contractual or other legal
rights, or if the intangible assets can be sold, transferred, licensed,
rented, or exchanged. Determining the useful lives of intangible assets
requires judgment and fact-based analysis. Intangibles with an
indefinite life are not amortized but are assessed for impairment by
comparing the recoverable amount to the carrying amount.
Long-lived assets and other identifiable intangibles with a definite
life are amortized over their estimated useful lives. These assets are
tested for impairment whenever events or changes in circumstances
indicate that the carrying amount is higher than the recoverable
amount. The recoverable amount is defined as the higher of its
estimated fair value less cost to sell and value in use. In calculating
the recoverable amount we estimate the future cash flows expected to
result from the use of the asset and its eventual disposition.
We performed our annual impairment testing of goodwill and indefinite
life intangible assets in the fourth quarter of 2013 and did not record
any impairment at that time. During the second quarter of 2014, we
identified indicators that goodwill relating to the CIBC FirstCaribbean
CGU may be impaired. We performed an impairment test and determined
that the carrying amount of the CIBC FirstCaribbean CGU exceeded its
recoverable amount. As a result, we recognized a goodwill impairment
charge of $420 million during the three months ended April 30, 2014,
which reduced the carrying amount of the goodwill relating to CIBC
FirstCaribbean to $344 million as at April 30, 2014.
The recoverable amount of our CIBC FirstCaribbean CGU is based on a
value in use calculation that was estimated using a five year cash flow
projection and an estimate of the capital required to be maintained in
the region to support ongoing operations. The five year cash flow
projection is consistent with CIBC FirstCaribbean's three year internal
plan that was previously reviewed by its Board of Directors, adjusted
in the current quarter to reflect management's belief that the economic
recovery expected in the Caribbean region will occur over a longer
period of time than originally forecasted and that estimated realizable
values of underlying collateral for non-performing loans will be lower
than previously expected. A terminal growth rate of 2.5% (2.5% as at
August 1, 2013) was applied to the years after the five year forecast.
All of the forecast cash flows were discounted at an after-tax rate of
13% (13.62% pre-tax) which we believe to be a risk-adjusted interest
rate appropriate to CIBC FirstCaribbean (we used an identical after-tax
rate of 13% as at August 1, 2013). The determination of a discount rate
and a terminal growth rate require the exercise of judgment. The
discount rate was determined based on the following primary factors: i)
the risk-free rate, ii) an equity risk premium, iii) beta adjustment to
the equity risk premium based on a review of betas of comparable
publicly traded financial institutions in the region, and iv) a country
risk premium. The terminal growth rate was based on the forecast
inflation rates and management's expectations of real growth.
Estimation of the recoverable amount is an area of significant judgment.
Reductions in the estimated recoverable amount could arise from various
factors, such as, reductions in forecasted cash flows, an increase in
the assumed level of required capital, and any adverse changes to the
discount rate or the terminal growth rate either in isolation or in any
combination thereof. We have estimated that a 10% decrease in each of
the terminal year's and subsequent years' forecasted cash flows would
result in a reduction in the estimated recoverable amount of the CIBC
FirstCaribbean CGU by approximately $115 million. We have also
estimated that a 50 basis point increase in the after-tax discount rate
would result in a reduction in the estimated recoverable amount of the
CIBC FirstCaribbean CGU by approximately $65 million. These
sensitivities are indicative only and should be considered with
caution, as the effect of the variation in each assumption on the
estimated recoverable amount is calculated in isolation without
changing any other assumptions. In practice, changes in one factor may
result in changes in another, which may magnify or counteract the
disclosed sensitivities. For additional details, see Note 6 to our
interim consolidated financial statements.
Economic conditions in the Caribbean region remain challenging and we
continue to monitor our investment. Reductions in the estimated
recoverable amount of our CIBC FirstCaribbean CGU could result in
additional goodwill impairment charges in future periods.
Income taxes
We are subject to income tax laws in the various jurisdictions where we
operate, and the tax laws in those jurisdictions are potentially
subject to different interpretations by us and the relevant taxation
authority. We use judgment in the estimation of income taxes and
deferred income tax assets and liabilities. As a result, management
judgment is applied in the interpretation of the relevant tax laws and
in estimating the provision for current and deferred income taxes. A
deferred tax asset or liability is determined for each temporary
difference based on the tax rates that are expected to be in effect in
the period that the asset is realized or the liability is settled.
Where the temporary differences will not reverse in the foreseeable
future, no deferred tax amount is recognized.
As at April 30, 2014, we had a deferred tax asset of $536 million
(October 31, 2013: $526 million) and a deferred tax liability of $30
million (October 31, 2013: $33 million). We are required to assess
whether it is probable that our deferred income tax asset will be
realized prior to its expiration and, based on all the available
evidence, determine if any portion of our deferred income tax asset
should not be recognized. The factors used to assess the probability of
realization are our past experience of income and capital gains,
forecast of future net income before taxes, available tax planning
strategies that could be implemented to realize the deferred income tax
asset, and the remaining expiration period of tax loss carryforwards.
Although realization is not assured, we believe, based on all the
available evidence, it is probable that the remaining deferred income
tax asset will be realized.
Income tax accounting impacts all our reporting segments. For further
details of our income taxes, see Note 11 to the interim consolidated
financial statements.
Contingent liabilities and provision
In the ordinary course of its business, CIBC is a party to a number of
legal proceedings, including regulatory investigations, in which claims
for substantial monetary damages are asserted against CIBC and its
subsidiaries. Legal provisions are established if, in the opinion of
management, it is both probable that an outflow of economic benefits
will be required to resolve the matter, and a reliable estimate can be
made of the amount of the obligation. If the reliable estimate of
probable loss involves a range of potential outcomes within which a
specific amount within the range appears to be a better estimate, that
amount is accrued. If no specific amount within the range of potential
outcomes appears to be a better estimate than any other amount, the
mid-point in the range is accrued. In some instances, however, it is
not possible either to determine whether an obligation is probable or
to reliably estimate the amount of loss, in which case no accrual can
be made.
While there is inherent difficulty in predicting the outcome of legal
proceedings, based on current knowledge and in consultation with legal
counsel, we do not expect the outcome of these matters, individually or
in aggregate, to have a material adverse effect on our consolidated
financial statements. However, the outcome of these matters,
individually or in aggregate, may be material to our operating results
for a particular reporting period. We regularly assess the adequacy of
CIBC's litigation accruals and make the necessary adjustments to
incorporate new information as it becomes available.
The provisions disclosed in Note 23 to the 2013 annual consolidated
financial statements included all of CIBC's accruals for legal matters
as at that date, including amounts related to the significant legal
proceedings described in that note and to other legal matters.
CIBC considers losses to be reasonably possible when they are neither
probable nor remote. It is reasonably possible that CIBC may incur
losses in addition to the amounts recorded when the loss accrued is the
mid-point of a range of reasonably possible losses, or the potential
loss pertains to a matter in which an unfavourable outcome is
reasonably possible but not probable.
CIBC believes the estimate of the aggregate range of reasonably possible
losses, in excess of the amounts accrued, for its significant legal
proceedings, where it is possible to make such an estimate, is from nil
to approximately $240 million as at April 30, 2014. This estimated
aggregate range of reasonably possible losses is based upon currently
available information for those significant proceedings in which CIBC
is involved, taking into account CIBC's best estimate of such losses
for those cases for which an estimate can be made. CIBC's estimate
involves significant judgment, given the varying stages of the
proceedings and the existence of multiple defendants in many of such
proceedings whose share of the liability has yet to be determined. The
range does not include potential punitive damages and interest. The
matters underlying the estimated range as at April 30, 2014 consist of
the significant legal matters disclosed in Note 23 to the 2013 annual
consolidated financial statements as updated below. The matters
underlying the estimated range will change from time to time, and
actual losses may vary significantly from the current estimate. For
certain matters, CIBC does not believe that an estimate can currently
be made as many of them are in preliminary stages and certain matters
have no specific amount claimed. Consequently, these matters are not
included in the range.
The following developments related to our significant legal matters
occurred since the issuance of our 2013 annual consolidated financial
statements:
-
Marcotte Visa Class Action: The appeal was heard by the Supreme Court of
Canada in February 2014. The court reserved its decision.
-
Green Secondary Market Class Action: In February 2014 the Ontario Court
of Appeal released its decision overturning the lower court and
allowing the matter to proceed as a certified class action. CIBC and
the individual defendants have sought leave to appeal to the Supreme
Court of Canada.
-
Brown Overtime Class Action: The plaintiffs' appeal to the Ontario Court
of Appeal was heard in May 2014. The court reserved its decision.
-
Watson Credit Card Class Action: On March 27, 2014 the court released
its decision granting class certification. The plaintiffs and
defendants have filed Notices of Appeal.
Other than the items described above, there are no significant
developments in the matters identified in Note 23 to our 2013 annual
consolidated financial statements, and no significant new matters have
arisen since the issuance of our 2013 annual consolidated financial
statements.
Post-employment and other long-term benefit plan assumptions
We sponsor a number of benefit plans to eligible employees, including
registered and supplemental pension plans, and post-retirement medical
and dental plans (other post-employment benefit plans). We also
continue to sponsor a long-term disability income replacement plan and
associated medical and dental benefits (collectively, other long-term
benefit plans). The long-term disability plan was closed to new claims
effective June 1, 2004.
Effective November 1, 2013, with retrospective application to November
1, 2011, CIBC adopted amendments to IAS 19 "Employee Benefits". The
amendments require the following: (i) recognition of actuarial gains
and losses in OCI in the period in which they arise; (ii) recognition
of interest income on plan assets in net income using the same rate as
that used to discount the defined benefit obligation; and (iii)
recognition of all past service costs (gains) in net income in the
period in which they arise. See Note 1 to the interim consolidated
financial statements for further details on the impact of the adoption
of the amendments to IAS 19 on prior periods.
The calculation of net defined benefit plan expense and obligations
depends on various actuarial assumptions such as discount rates,
health-care cost trend rates, turnover of employees, projected salary
increases, retirement age, and mortality rates. The actuarial
assumptions used for determining the net defined benefit expense for a
fiscal year are set at the beginning of the annual reporting period,
are reviewed in accordance with accepted actuarial practice and are
approved by management.
The discount rate assumption used in measuring the net defined benefit
expense and defined benefit obligations reflects market yields, as of
the measurement date, on high quality debt instruments with a currency
and term to maturity that match the currency and expected timing of
benefit payments. Our discount rate is estimated by developing a yield
curve based on high quality corporate bonds. While there is a deep
market of high quality corporate bonds denominated in Canadian dollars
with short and medium terms to maturity, there is not a deep market in
bonds with terms to maturity that match the timing of all the expected
benefit payments for all of our Canadian plans. As a result, for our
Canadian pension, other post-employment and other long-term benefit
plans, we estimate the yields of high quality corporate bonds with
longer term maturities by extrapolating current yields on bonds with
short- and medium-term durations along the yield curve. Judgment is
required in constructing the yield curve, and as a result, different
methodologies applied in constructing the yield curve can give rise to
different discount rates.
As a result of adopting the amendments to IAS 19, commencing in the
first quarter of 2014, with retrospective application for fiscal 2013
and 2012, we remeasure our Canadian post-employment benefit plans on a
quarterly basis for changes in the discount rate and for actual assets
returns, with the actuarial gains and losses recognized in OCI (see
Note 1 to the interim consolidated financial statements for further
details).
For further details of our annual pension and other post-employment
expense and obligations, see Note 19 to the 2013 annual consolidated
financial statements and Note 1 to the interim consolidated financial
statements.
Regulatory developments
Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the
"Dodd-Frank Act") was enacted in the U.S. in July 2010. The Dodd-Frank
Act contains many broad reforms impacting the financial services
industry, including, among other things, increased consumer protection,
regulation of the OTC derivative markets, heightened capital, liquidity
and prudential standards, and restrictions on proprietary trading by
banks. The Dodd-Frank Act will affect every financial institution in
the U.S. and many financial institutions that operate outside the U.S.
As many aspects of the Dodd-Frank Act are subject to rulemaking that
U.S. regulators have not finalized, the full impact on CIBC is
difficult to anticipate until all the regulations are finalized and
released. CIBC continually monitors developments to prepare for
rulemakings that have the potential to impact our operations in the
U.S. and elsewhere.
In December 2012, CIBC registered as a swap dealer with the U.S.
Commodity Futures Trading Commission (CFTC) and adopted processes and
procedures necessary to comply with newly-promulgated U.S. regulations
in trading swaps with U.S. persons. The CFTC has issued final rules on
most areas relating to swaps, including cross-border guidance that
impacts CIBC's swap trading with non-U.S. counterparties. The CFTC has
not yet issued final rules on clearing, capital and margin, and the
CFTC has not issued a determination of the extent to which it will rely
on substituted compliance with Canadian swap trading regulations. CIBC
will continue to monitor and prepare for developments by the CFTC in
this area. Additionally, the SEC is expected to implement parallel
reforms applying to the securities-based swaps markets. While these
far-reaching reforms have increased our cost of regulatory compliance
and may restrict our ability to continue to engage in certain types of
trading activity, we do not expect them to have a significant impact on
our results.
On February 18, 2014, the Federal Reserve Board released final enhanced
prudential standards for large U.S. bank holding companies and foreign
banking organizations (FBOs) with total consolidated assets of $50
billion or more. The new enhanced prudential standards include six
primary requirements: risk-based capital and leverage requirements;
liquidity requirements; single counterparty exposure limits; internal
risk management standards; debt-to-equity limits; and annual stress
testing. The new rules also require FBOs to maintain liquidity buffers
in their U.S. branches and agencies and, if certain asset thresholds
are met, to create a U.S. intermediate holding company which will also
be subject to enhanced prudential standards. CIBC believes the new
rules will not have a material impact on our operations.
The Dodd-Frank Act also mandates the so-called Volcker Rule, which
restricts certain proprietary trading and private equity fund
activities of banking entities operating in the U.S. In December 2013,
five U.S. regulatory agencies jointly published final regulations
implementing the Volcker rule. The final regulations and the
accompanying materials are complex and will require CIBC to implement
new controls and to develop new systems to ensure compliance with the
rule's reporting obligations and restrictions. Banking entities must
engage in good-faith efforts that will result in conformance with the
rule by July 21, 2015. CIBC is actively assessing the impact of the
Volcker rule on our operations and developing a conformance plan for
full implementation. The new regulations also contain various
provisions that enable banks to seek extensions in certain
circumstances and CIBC may seek such extensions where necessary or
appropriate.
The Foreign Account Tax Compliance Act
The Foreign Account Tax Compliance Act (FATCA) is U.S. legislation, the
intent of which is to discourage tax evasion by U.S. taxpayers who have
placed assets in financial accounts outside of the U.S. - either
directly or indirectly through foreign entities such as trusts and
corporations.
Under the final FATCA regulations, non-U.S. financial institutions will
be required to identify and report accounts owned or controlled by U.S.
taxpayers, including citizens of the U.S. worldwide (U.S. Accounts). In
addition, identification and reporting will also be required on
accounts of financial institutions that do not comply with FATCA
regulations. On February 5, 2014, the Government of Canada announced
the signing of an Intergovernmental Agreement (IGA) with the U.S., to
facilitate FATCA information reporting by Canadian financial
institutions. Under proposed legislation to implement the provisions of
the IGA, Canadian financial institutions must report information on
certain U.S. Accounts directly to the Canada Revenue Agency. Other
countries in which CIBC operates have signed, or are in the process of
negotiating and signing, IGAs with the U.S. CIBC will meet all FATCA
obligations, in accordance with local law.
The provisions of FATCA and the related Canadian legislation come into
effect on July 1, 2014.
Principles for Effective Risk Data Aggregation and Risk Reporting
In January 2013, the BCBS published "Principles for Effective Risk Data
Aggregation and Risk Reporting". The Principles outline BCBS's
expectations to enhance risk data governance oversight and to improve
risk data aggregation and reporting practices, thereby facilitating
timely, consistent, and accurate decision making. It is expected that
we will be subject to greater reporting scrutiny and may incur
increased operating costs as a result of the Principles. We have begun
an enterprise-wide Risk Data Aggregation initiative to be compliant
with the Principles.
Global systemically important banks public disclosure requirements
The BCBS paper "Global systemically important banks: updated assessment
methodology and the higher loss absorbency requirement" dated July 3,
2013 describes the annual assessment methodology and the 12 indicators
used to identify global systemically important banks (G-SIBs). The
document also provides annual public disclosure requirements applicable
to large globally-active banks.
In March 2014, OSFI published an Advisory on the implementation of the
G-SIB public disclosure requirements in Canada. Federally-regulated
banks which have not been identified as G-SIBs, and which have Basel
III leverage ratio exposure measures greater than the equivalent of
€200 billion at year-end, are required to publicly disclose the 12
indicators (in Canadian equivalent values) annually. Such banks must
publicly disclose both year-end 2014 and comparative 2013 data by the
time the first quarterly financial report of 2015 is released.
Controls and procedures
Disclosure controls and procedures
CIBC's management, with the participation of the President and Chief
Executive Officer and the Chief Financial Officer, has evaluated the
effectiveness of CIBC's disclosure controls and procedures as at April
30, 2014 (as defined in the rules of the SEC and the Canadian
Securities Administrators) and has concluded that such disclosure
controls and procedures were effective.
Changes in internal control over financial reporting
There have been no changes in CIBC's internal control over financial
reporting during the quarter and six months ended April 30, 2014, that
have materially affected, or are reasonably likely to materially
affect, its internal control over financial reporting.
Interim consolidated financial statements
(Unaudited)
Consolidated balance sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
(1)
|
Unaudited, $ millions, as at
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
Oct. 31
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and non-interest-bearing deposits with banks
|
|
|
|
|
|
$
|
2,873
|
|
|
$
|
|
2,211
|
|
Interest-bearing deposits with banks
|
|
|
|
|
|
|
7,815
|
|
|
|
|
4,168
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading
|
|
|
|
|
|
|
45,148
|
|
|
|
|
44,070
|
|
Available-for-sale (AFS) (Note 4)
|
|
|
|
|
|
|
21,769
|
|
|
|
|
27,627
|
|
Designated at fair value (FVO)
|
|
|
|
|
|
|
287
|
|
|
|
|
287
|
|
|
|
|
|
|
|
|
67,204
|
|
|
|
|
71,984
|
|
Cash collateral on securities borrowed
|
|
|
|
|
|
|
2,891
|
|
|
|
|
3,417
|
|
Securities purchased under resale agreements
|
|
|
|
|
|
|
24,434
|
|
|
|
|
25,311
|
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgages
|
|
|
|
|
|
|
152,569
|
|
|
|
|
150,938
|
|
Personal
|
|
|
|
|
|
|
34,746
|
|
|
|
|
34,441
|
|
Credit card
|
|
|
|
|
|
|
11,545
|
|
|
|
|
14,772
|
|
Business and government
|
|
|
|
|
|
|
52,246
|
|
|
|
|
48,207
|
|
Allowance for credit losses (Note 5)
|
|
|
|
|
|
|
(1,726)
|
|
|
|
|
(1,698)
|
|
|
|
|
|
|
|
|
249,380
|
|
|
|
|
246,660
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
|
|
|
|
|
|
|
19,346
|
|
|
|
|
19,947
|
|
Customers' liability under acceptances
|
|
|
|
|
|
|
9,300
|
|
|
|
|
9,720
|
|
Land, buildings and equipment
|
|
|
|
|
|
|
1,741
|
|
|
|
|
1,719
|
|
Goodwill (Note 6)
|
|
|
|
|
|
|
1,438
|
|
|
|
|
1,733
|
|
Software and other intangible assets
|
|
|
|
|
|
|
897
|
|
|
|
|
756
|
|
Investments in equity-accounted associates and joint ventures
|
|
|
|
|
|
|
1,766
|
|
|
|
|
1,695
|
|
Deferred tax asset
|
|
|
|
|
|
|
536
|
|
|
|
|
526
|
|
Other assets
|
|
|
|
|
|
|
7,481
|
|
|
|
|
8,159
|
|
|
|
|
|
|
|
|
42,505
|
|
|
|
|
44,255
|
|
|
|
|
|
|
|
$
|
397,102
|
|
|
$
|
|
398,006
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits (Note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
|
|
|
|
|
$
|
128,128
|
|
|
$
|
|
125,034
|
|
Business and government
|
|
|
|
|
|
|
136,073
|
|
|
|
|
134,736
|
|
Bank
|
|
|
|
|
|
|
7,182
|
|
|
|
|
5,592
|
|
Secured borrowings
|
|
|
|
|
|
|
42,640
|
|
|
|
|
49,802
|
|
|
|
|
|
|
|
|
314,023
|
|
|
|
|
315,164
|
|
Obligations related to securities sold short
|
|
|
|
|
|
|
12,263
|
|
|
|
|
13,327
|
|
Cash collateral on securities lent
|
|
|
|
|
|
|
1,236
|
|
|
|
|
2,099
|
|
Obligations related to securities sold under repurchase agreements
|
|
|
|
|
|
|
8,411
|
|
|
|
|
4,887
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
|
|
|
|
|
|
|
18,746
|
|
|
|
|
19,724
|
|
Acceptances
|
|
|
|
|
|
|
9,300
|
|
|
|
|
9,721
|
|
Deferred tax liability
|
|
|
|
|
|
|
30
|
|
|
|
|
33
|
|
Other liabilities
|
|
|
|
|
|
|
10,623
|
|
|
|
|
10,829
|
|
|
|
|
|
|
|
|
38,699
|
|
|
|
|
40,307
|
|
Subordinated indebtedness
|
|
|
|
|
|
|
4,226
|
|
|
|
|
4,228
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares
|
|
|
|
|
|
|
1,381
|
|
|
|
|
1,706
|
|
Common shares (Note 9)
|
|
|
|
|
|
|
7,745
|
|
|
|
|
7,753
|
|
Contributed surplus
|
|
|
|
|
|
|
82
|
|
|
|
|
82
|
|
Retained earnings
|
|
|
|
|
|
|
8,820
|
|
|
|
|
8,318
|
|
Accumulated other comprehensive income (AOCI)
|
|
|
|
|
|
|
60
|
|
|
|
|
(40)
|
|
Total shareholders' equity
|
|
|
|
|
|
|
18,088
|
|
|
|
|
17,819
|
|
Non-controlling interests
|
|
|
|
|
|
|
156
|
|
|
|
|
175
|
|
Total equity
|
|
|
|
|
|
|
18,244
|
|
|
|
|
17,994
|
|
|
|
|
|
|
|
$
|
397,102
|
|
|
$
|
|
398,006
|
|
(1)
|
Certain information has been reclassified to conform to the presentation
adopted in the current period.
|
The accompanying notes and shaded sections in "MD&A - Management of
risk" are an integral part of these interim consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
For the six
|
|
|
|
|
|
|
months ended
|
|
months ended
|
|
|
|
|
|
|
|
2014
|
|
|
|
2014
|
|
|
|
2013
|
|
|
2014
|
|
|
|
2013
|
Unaudited, $ millions, except as noted
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
Jan. 31
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
|
|
|
$
|
2,282
|
|
|
$
|
2,423
|
|
|
$
|
2,389
|
|
$
|
4,705
|
|
|
$
|
4,863
|
Securities
|
|
|
|
|
|
|
399
|
|
|
|
429
|
|
|
|
409
|
|
|
828
|
|
|
|
812
|
Securities borrowed or purchased under resale agreements
|
|
|
|
|
|
|
74
|
|
|
|
82
|
|
|
|
86
|
|
|
156
|
|
|
|
174
|
Deposits with banks
|
|
|
|
|
|
|
8
|
|
|
|
8
|
|
|
|
10
|
|
|
16
|
|
|
|
21
|
|
|
|
|
|
|
|
2,763
|
|
|
|
2,942
|
|
|
|
2,894
|
|
|
5,705
|
|
|
|
5,870
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
801
|
|
|
|
873
|
|
|
|
903
|
|
|
1,674
|
|
|
|
1,841
|
Securities sold short
|
|
|
|
|
|
|
78
|
|
|
|
82
|
|
|
|
82
|
|
|
160
|
|
|
|
165
|
Securities lent or sold under repurchase agreements
|
|
|
|
|
|
|
28
|
|
|
|
28
|
|
|
|
27
|
|
|
56
|
|
|
|
57
|
Subordinated indebtedness
|
|
|
|
|
|
|
45
|
|
|
|
44
|
|
|
|
50
|
|
|
89
|
|
|
|
102
|
Other
|
|
|
|
|
|
|
13
|
|
|
|
10
|
|
|
|
10
|
|
|
23
|
|
|
|
28
|
|
|
|
|
|
|
|
965
|
|
|
|
1,037
|
|
|
|
1,072
|
|
|
2,002
|
|
|
|
2,193
|
Net interest income
|
|
|
|
|
|
|
1,798
|
|
|
|
1,905
|
|
|
|
1,822
|
|
|
3,703
|
|
|
|
3,677
|
Non-interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting and advisory fees
|
|
|
|
|
|
|
88
|
|
|
|
78
|
|
|
|
97
|
|
|
166
|
|
|
|
203
|
Deposit and payment fees
|
|
|
|
|
|
|
205
|
|
|
|
212
|
|
|
|
195
|
|
|
417
|
|
|
|
386
|
Credit fees
|
|
|
|
|
|
|
114
|
|
|
|
117
|
|
|
|
109
|
|
|
231
|
|
|
|
227
|
Card fees
|
|
|
|
|
|
|
87
|
|
|
|
113
|
|
|
|
127
|
|
|
200
|
|
|
|
265
|
Investment management and custodial fees
|
|
|
|
|
|
|
168
|
|
|
|
142
|
|
|
|
117
|
|
|
310
|
|
|
|
229
|
Mutual fund fees
|
|
|
|
|
|
|
300
|
|
|
|
282
|
|
|
|
249
|
|
|
582
|
|
|
|
489
|
Insurance fees, net of claims
|
|
|
|
|
|
|
95
|
|
|
|
97
|
|
|
|
86
|
|
|
192
|
|
|
|
171
|
Commissions on securities transactions
|
|
|
|
|
|
|
108
|
|
|
|
103
|
|
|
|
107
|
|
|
211
|
|
|
|
208
|
Trading income (loss)
|
|
|
|
|
|
|
(12)
|
|
|
|
1
|
|
|
|
1
|
|
|
(11)
|
|
|
|
15
|
AFS securities gains, net
|
|
|
|
|
|
|
76
|
|
|
|
57
|
|
|
|
83
|
|
|
133
|
|
|
|
155
|
FVO gains (losses), net
|
|
|
|
|
|
|
(21)
|
|
|
|
5
|
|
|
|
-
|
|
|
(16)
|
|
|
|
(3)
|
Foreign exchange other than trading
|
|
|
|
|
|
|
12
|
|
|
|
21
|
|
|
|
17
|
|
|
33
|
|
|
|
21
|
Income from equity-accounted associates and joint ventures
|
|
|
|
|
|
|
52
|
|
|
|
41
|
|
|
|
29
|
|
|
93
|
|
|
|
55
|
Other
|
|
|
|
|
|
|
97
|
|
|
|
460
|
|
|
|
85
|
|
|
557
|
|
|
|
191
|
|
|
|
|
|
|
|
1,369
|
|
|
|
1,729
|
|
|
|
1,302
|
|
|
3,098
|
|
|
|
2,612
|
Total revenue
|
|
|
|
|
|
|
3,167
|
|
|
|
3,634
|
|
|
|
3,124
|
|
|
6,801
|
|
|
|
6,289
|
Provision for credit losses (Note 5)
|
|
|
|
|
|
|
330
|
|
|
|
218
|
|
|
|
265
|
|
|
548
|
|
|
|
530
|
Non-interest expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
|
|
|
|
|
1,133
|
|
|
|
1,160
|
|
|
|
1,056
|
|
|
2,293
|
|
|
|
2,156
|
Occupancy costs
|
|
|
|
|
|
|
190
|
|
|
|
179
|
|
|
|
180
|
|
|
369
|
|
|
|
348
|
Computer, software and office equipment
|
|
|
|
|
|
|
294
|
|
|
|
283
|
|
|
|
251
|
|
|
577
|
|
|
|
498
|
Communications
|
|
|
|
|
|
|
79
|
|
|
|
75
|
|
|
|
80
|
|
|
154
|
|
|
|
157
|
Advertising and business development
|
|
|
|
|
|
|
72
|
|
|
|
65
|
|
|
|
51
|
|
|
137
|
|
|
|
98
|
Professional fees
|
|
|
|
|
|
|
52
|
|
|
|
45
|
|
|
|
39
|
|
|
97
|
|
|
|
75
|
Business and capital taxes
|
|
|
|
|
|
|
12
|
|
|
|
15
|
|
|
|
14
|
|
|
27
|
|
|
|
31
|
Other (1)
|
|
|
|
|
|
|
580
|
|
|
|
157
|
|
|
|
154
|
|
|
737
|
|
|
|
450
|
|
|
|
|
|
|
|
2,412
|
|
|
|
1,979
|
|
|
|
1,825
|
|
|
4,391
|
|
|
|
3,813
|
Income before income taxes
|
|
|
|
|
|
|
425
|
|
|
|
1,437
|
|
|
|
1,034
|
|
|
1,862
|
|
|
|
1,946
|
Income taxes
|
|
|
|
|
|
|
119
|
|
|
|
260
|
|
|
|
172
|
|
|
379
|
|
|
|
299
|
Net income
|
|
|
|
|
|
$
|
306
|
|
|
$
|
1,177
|
|
|
$
|
862
|
|
$
|
1,483
|
|
|
$
|
1,647
|
Net income (loss) attributable to non-controlling interests
|
|
|
|
|
|
$
|
(11)
|
|
|
$
|
3
|
|
|
$
|
2
|
|
$
|
(8)
|
|
|
$
|
4
|
|
Preferred shareholders
|
|
|
|
|
|
$
|
25
|
|
|
$
|
25
|
|
|
$
|
25
|
|
$
|
50
|
|
|
$
|
50
|
|
Common shareholders
|
|
|
|
|
|
|
292
|
|
|
|
1,149
|
|
|
|
835
|
|
|
1,441
|
|
|
|
1,593
|
Net income attributable to equity shareholders
|
|
|
|
|
|
$
|
317
|
|
|
$
|
1,174
|
|
|
$
|
860
|
|
$
|
1,491
|
|
|
$
|
1,643
|
Earnings per share (in dollars) (Note 12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
$
|
0.73
|
|
|
$
|
2.88
|
|
|
$
|
2.09
|
|
$
|
3.62
|
|
|
$
|
3.97
|
|
Diluted
|
|
|
|
|
|
|
0.73
|
|
|
|
2.88
|
|
|
|
2.09
|
|
|
3.61
|
|
|
|
3.96
|
Dividends per common share (in dollars)
|
|
|
|
|
|
|
0.98
|
|
|
|
0.96
|
|
|
|
0.94
|
|
|
1.94
|
|
|
|
1.88
|
(1)
|
Includes the goodwill impairment charge recognized during the current
period. See Note 6 for additional information.
|
The accompanying notes and shaded sections in "MD&A - Management of
risk" are an integral part of these interim consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
For the six
|
|
|
|
|
months ended
|
|
months ended
|
|
|
|
|
|
2014
|
|
|
|
2014
|
|
|
|
2013
|
|
|
2014
|
|
|
|
2013
|
Unaudited, $ millions
|
|
|
|
|
Apr. 30
|
|
|
|
Jan. 31
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
Net income
|
|
|
|
$
|
306
|
|
|
$
|
1,177
|
|
|
$
|
862
|
|
$
|
1,483
|
|
|
$
|
1,647
|
Other comprehensive income (OCI), net of tax, that is subject to
subsequent reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments in foreign operations
|
|
|
|
|
(153)
|
|
|
|
599
|
|
|
|
82
|
|
|
446
|
|
|
|
61
|
|
Net gains (losses) on hedges of investments in foreign operations
|
|
|
|
|
82
|
|
|
|
(368)
|
|
|
|
(53)
|
|
|
(286)
|
|
|
|
(42)
|
|
|
|
|
|
(71)
|
|
|
|
231
|
|
|
|
29
|
|
|
160
|
|
|
|
19
|
|
Net change in AFS securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on AFS securities
|
|
|
|
|
24
|
|
|
|
45
|
|
|
|
77
|
|
|
69
|
|
|
|
97
|
|
Net (gains) losses on AFS securities reclassified to net income
|
|
|
|
|
(56)
|
|
|
|
(38)
|
|
|
|
(60)
|
|
|
(94)
|
|
|
|
(112)
|
|
|
|
|
|
(32)
|
|
|
|
7
|
|
|
|
17
|
|
|
(25)
|
|
|
|
(15)
|
|
Net change in cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on derivatives designated as cash flow hedges
|
|
|
|
|
66
|
|
|
|
(5)
|
|
|
|
(33)
|
|
|
61
|
|
|
|
(5)
|
|
Net (gains) losses on derivatives designated as cash flow hedges
reclassified to net income
|
|
|
|
|
(50)
|
|
|
|
3
|
|
|
|
27
|
|
|
(47)
|
|
|
|
7
|
|
|
|
|
|
16
|
|
|
|
(2)
|
|
|
|
(6)
|
|
|
14
|
|
|
|
2
|
OCI, net of tax, that is not subject to subsequent reclassification to
net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on post-employment defined benefit plans
|
|
|
|
|
9
|
|
|
|
(58)
|
|
|
|
(163)
|
|
|
(49)
|
|
|
|
(123)
|
Total OCI (1)
|
|
|
|
|
(78)
|
|
|
|
178
|
|
|
|
(123)
|
|
|
100
|
|
|
|
(117)
|
Comprehensive income
|
|
|
|
$
|
228
|
|
|
$
|
1,355
|
|
|
$
|
739
|
|
$
|
1,583
|
|
|
$
|
1,530
|
Comprehensive income (loss) attributable to non-controlling interests
|
|
|
|
$
|
(11)
|
|
|
$
|
3
|
|
|
$
|
2
|
|
$
|
(8)
|
|
|
$
|
4
|
|
Preferred shareholders
|
|
|
|
$
|
25
|
|
|
$
|
25
|
|
|
$
|
25
|
|
$
|
50
|
|
|
$
|
50
|
|
Common shareholders
|
|
|
|
|
214
|
|
|
|
1,327
|
|
|
|
712
|
|
|
1,541
|
|
|
|
1,476
|
Comprehensive income attributable to equity shareholders
|
|
|
|
$
|
239
|
|
|
$
|
1,352
|
|
|
$
|
737
|
|
$
|
1,591
|
|
|
$
|
1,526
|
(1)
|
Includes $4 million of gains for the quarter ended April 30, 2014
(January 31, 2014: $9 million of gains; April 30, 2013: $3 million of
gains) and $13 million
of gains for the six months ended April 30, 2014 (April 30, 2013: $4
million of gains) relating to our investments in equity-accounted
associates and
joint ventures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
For the six
|
|
|
|
|
months ended
|
|
months ended
|
|
|
|
|
|
2014
|
|
|
|
2014
|
|
|
|
2013
|
|
|
2014
|
|
|
|
2013
|
Unaudited, $ millions
|
|
|
|
|
Apr. 30
|
|
|
|
Jan. 31
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
Income tax (expense) benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to subsequent reclassification to net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments in foreign operations
|
|
|
|
$
|
11
|
|
|
$
|
(43)
|
|
|
$
|
(6)
|
|
$
|
(32)
|
|
|
$
|
(5)
|
|
Net gains (losses) on hedges of investments in foreign operations
|
|
|
|
|
(13)
|
|
|
|
55
|
|
|
|
10
|
|
|
42
|
|
|
|
8
|
|
|
|
|
|
(2)
|
|
|
|
12
|
|
|
|
4
|
|
|
10
|
|
|
|
3
|
|
Net change in AFS securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on AFS securities
|
|
|
|
|
(7)
|
|
|
|
(30)
|
|
|
|
(19)
|
|
|
(37)
|
|
|
|
(31)
|
|
Net (gains) losses on AFS securities reclassified to net income
|
|
|
|
|
20
|
|
|
|
21
|
|
|
|
22
|
|
|
41
|
|
|
|
42
|
|
|
|
|
|
13
|
|
|
|
(9)
|
|
|
|
3
|
|
|
4
|
|
|
|
11
|
|
Net change in cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on derivatives designated as cash flow hedges
|
|
|
|
|
(24)
|
|
|
|
2
|
|
|
|
12
|
|
|
(22)
|
|
|
|
2
|
|
Net (gains) losses on derivatives designated as cash flow hedges
reclassified to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net income
|
|
|
|
|
18
|
|
|
|
(1)
|
|
|
|
(10)
|
|
|
17
|
|
|
|
(3)
|
|
|
|
|
|
(6)
|
|
|
|
1
|
|
|
|
2
|
|
|
(5)
|
|
|
|
(1)
|
Not subject to subsequent reclassification to net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on post-employment defined benefit plans
|
|
|
|
|
(3)
|
|
|
|
20
|
|
|
|
58
|
|
|
17
|
|
|
|
44
|
|
|
|
|
$
|
2
|
|
|
$
|
24
|
|
|
$
|
67
|
|
$
|
26
|
|
|
$
|
57
|
The accompanying notes and shaded sections in "MD&A - Management of
risk" are an integral part of these interim consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of changes in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
For the six
|
|
|
|
|
months ended
|
|
months ended
|
|
|
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Unaudited, $ millions
|
|
|
|
|
Apr. 30
|
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
Apr. 30
|
Preferred shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
$
|
1,706
|
|
$
|
1,706
|
|
$
|
1,706
|
|
$
|
1,706
|
|
$
|
1,706
|
Redemption of preferred shares
|
|
|
|
|
(325)
|
|
|
-
|
|
|
-
|
|
|
(325)
|
|
|
-
|
Balance at end of period
|
|
|
|
$
|
1,381
|
|
$
|
1,706
|
|
$
|
1,706
|
|
$
|
1,381
|
|
$
|
1,706
|
Common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
$
|
7,750
|
|
$
|
7,753
|
|
$
|
7,765
|
|
$
|
7,753
|
|
$
|
7,769
|
Issue of common shares
|
|
|
|
|
12
|
|
|
24
|
|
|
26
|
|
|
36
|
|
|
85
|
Purchase of common shares for cancellation
|
|
|
|
|
(18)
|
|
|
(27)
|
|
|
(48)
|
|
|
(45)
|
|
|
(112)
|
Treasury shares
|
|
|
|
|
1
|
|
|
-
|
|
|
-
|
|
|
1
|
|
|
1
|
Balance at end of period
|
|
|
|
$
|
7,745
|
|
$
|
7,750
|
|
$
|
7,743
|
|
$
|
7,745
|
|
$
|
7,743
|
Contributed surplus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
$
|
82
|
|
$
|
82
|
|
$
|
79
|
|
$
|
82
|
|
$
|
85
|
Stock option expense
|
|
|
|
|
2
|
|
|
3
|
|
|
1
|
|
|
5
|
|
|
2
|
Stock options exercised
|
|
|
|
|
(2)
|
|
|
(3)
|
|
|
(1)
|
|
|
(5)
|
|
|
(7)
|
Other
|
|
|
|
|
-
|
|
|
-
|
|
|
1
|
|
|
-
|
|
|
-
|
Balance at end of period
|
|
|
|
$
|
82
|
|
$
|
82
|
|
$
|
80
|
|
$
|
82
|
|
$
|
80
|
Retained earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
$
|
8,985
|
|
$
|
8,318
|
|
$
|
7,183
|
|
$
|
8,318
|
|
$
|
7,009
|
Net income attributable to equity shareholders
|
|
|
|
|
317
|
|
|
1,174
|
|
|
860
|
|
|
1,491
|
|
|
1,643
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
|
|
|
|
|
(25)
|
|
|
(25)
|
|
|
(25)
|
|
|
(50)
|
|
|
(50)
|
|
Common
|
|
|
|
|
(390)
|
|
|
(382)
|
|
|
(376)
|
|
|
(772)
|
|
|
(755)
|
Premium on purchase of common shares for cancellation
|
|
|
|
|
(67)
|
|
|
(100)
|
|
|
(158)
|
|
|
(167)
|
|
|
(363)
|
Other
|
|
|
|
|
-
|
|
|
-
|
|
|
2
|
|
|
-
|
|
|
2
|
Balance at end of period
|
|
|
|
$
|
8,820
|
|
$
|
8,985
|
|
$
|
7,486
|
|
$
|
8,820
|
|
$
|
7,486
|
AOCI, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOCI, net of tax, that is subject to subsequent reclassification to net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
$
|
275
|
|
$
|
44
|
|
$
|
(98)
|
|
$
|
44
|
|
$
|
(88)
|
|
Net change in foreign currency translation adjustments
|
|
|
|
|
(71)
|
|
|
231
|
|
|
29
|
|
|
160
|
|
|
19
|
|
Balance at end of period
|
|
|
|
$
|
204
|
|
$
|
275
|
|
$
|
(69)
|
|
$
|
204
|
|
$
|
(69)
|
|
Net gains (losses) on AFS securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
$
|
259
|
|
$
|
252
|
|
$
|
318
|
|
$
|
252
|
|
$
|
350
|
|
Net change in AFS securities
|
|
|
|
|
(32)
|
|
|
7
|
|
|
17
|
|
|
(25)
|
|
|
(15)
|
|
Balance at end of period
|
|
|
|
$
|
227
|
|
$
|
259
|
|
$
|
335
|
|
$
|
227
|
|
$
|
335
|
|
Net gains (losses) on cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
$
|
11
|
|
$
|
13
|
|
$
|
10
|
|
$
|
13
|
|
$
|
2
|
|
Net change in cash flow hedges
|
|
|
|
|
16
|
|
|
(2)
|
|
|
(6)
|
|
|
14
|
|
|
2
|
|
Balance at end of period
|
|
|
|
$
|
27
|
|
$
|
11
|
|
$
|
4
|
|
$
|
27
|
|
$
|
4
|
AOCI, net of tax, that is not subject to subsequent reclassification to
net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on post-employment defined benefit plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
$
|
(407)
|
|
$
|
(349)
|
|
$
|
(589)
|
|
$
|
(349)
|
|
$
|
(629)
|
|
Net change in post-employment defined benefit plans
|
|
|
|
|
9
|
|
|
(58)
|
|
|
(163)
|
|
|
(49)
|
|
|
(123)
|
|
Balance at end of period
|
|
|
|
$
|
(398)
|
|
$
|
(407)
|
|
$
|
(752)
|
|
$
|
(398)
|
|
$
|
(752)
|
Total AOCI, net of tax
|
|
|
|
$
|
60
|
|
$
|
138
|
|
$
|
(482)
|
|
$
|
60
|
|
$
|
(482)
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
$
|
226
|
|
$
|
175
|
|
$
|
164
|
|
$
|
175
|
|
$
|
170
|
Net income (loss) attributable to non-controlling interests
|
|
|
|
|
(11)
|
|
|
3
|
|
|
2
|
|
|
(8)
|
|
|
4
|
Dividends
|
|
|
|
|
-
|
|
|
(2)
|
|
|
-
|
|
|
(2)
|
|
|
(2)
|
Other
|
|
|
|
|
(59)
|
(1)
|
|
50
|
(1)
|
|
-
|
|
|
(9)
|
(1)
|
|
(6)
|
Balance at end of period
|
|
|
|
$
|
156
|
|
$
|
226
|
|
$
|
166
|
|
$
|
156
|
|
$
|
166
|
Equity at end of period
|
|
|
|
$
|
18,244
|
|
$
|
18,887
|
|
$
|
16,699
|
|
$
|
18,244
|
|
$
|
16,699
|
(1)
|
The quarter ended January 31, 2014 had an increase in non-controlling
interests of $40 million relating to certain mutual funds that we
launched and consolidated. These funds were deconsolidated in the
current quarter due to a reduction in our ownership, resulting in a
decrease in non-controlling interests of $56 million.
|
The accompanying notes and shaded sections in "MD&A - Management of
risk" are an integral part of these interim consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
For the six
|
|
months ended
|
|
months ended
|
|
|
2014
|
|
|
|
2014
|
|
|
|
2013
|
|
|
2014
|
|
|
|
2013
|
Unaudited, $ millions
|
|
Apr. 30
|
|
|
|
Jan. 31
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
Cash flows provided by (used in) operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
306
|
|
|
$
|
1,177
|
|
|
$
|
862
|
|
$
|
1,483
|
|
|
$
|
1,647
|
Adjustments to reconcile net income to cash flows provided by (used in)
operating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit losses
|
|
330
|
|
|
|
218
|
|
|
|
265
|
|
|
548
|
|
|
|
530
|
|
Amortization and impairment (1)
|
|
521
|
|
|
|
95
|
|
|
|
86
|
|
|
616
|
|
|
|
168
|
|
Stock option expense
|
|
2
|
|
|
|
3
|
|
|
|
1
|
|
|
5
|
|
|
|
2
|
|
Deferred income taxes
|
|
11
|
|
|
|
(9)
|
|
|
|
90
|
|
|
2
|
|
|
|
72
|
|
AFS securities gains, net
|
|
(76)
|
|
|
|
(57)
|
|
|
|
(83)
|
|
|
(133)
|
|
|
|
(155)
|
|
Net losses (gains) on disposal of land, buildings and equipment
|
|
1
|
|
|
|
-
|
|
|
|
(1)
|
|
|
1
|
|
|
|
(3)
|
|
Other non-cash items, net
|
|
(51)
|
|
|
|
(468)
|
|
|
|
(43)
|
|
|
(519)
|
|
|
|
(116)
|
|
Net changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits with banks
|
|
(3,781)
|
|
|
|
134
|
|
|
|
(1,030)
|
|
|
(3,647)
|
|
|
|
(2,250)
|
|
|
Loans, net of repayments
|
|
(3,509)
|
|
|
|
(2,984)
|
|
|
|
(1,543)
|
|
|
(6,493)
|
|
|
|
(1,094)
|
|
|
Deposits, net of withdrawals
|
|
121
|
|
|
|
(1,228)
|
|
|
|
753
|
|
|
(1,107)
|
|
|
|
6,941
|
|
|
Obligations related to securities sold short
|
|
(951)
|
|
|
|
(113)
|
|
|
|
1,251
|
|
|
(1,064)
|
|
|
|
531
|
|
|
Accrued interest receivable
|
|
(11)
|
|
|
|
107
|
|
|
|
(30)
|
|
|
96
|
|
|
|
37
|
|
|
Accrued interest payable
|
|
181
|
|
|
|
(280)
|
|
|
|
165
|
|
|
(99)
|
|
|
|
(131)
|
|
|
Derivative assets
|
|
5,089
|
|
|
|
(4,535)
|
|
|
|
(355)
|
|
|
554
|
|
|
|
1,572
|
|
|
Derivative liabilities
|
|
(3,484)
|
|
|
|
2,515
|
|
|
|
501
|
|
|
(969)
|
|
|
|
(2,035)
|
|
|
Trading securities
|
|
169
|
|
|
|
(1,247)
|
|
|
|
(4,968)
|
|
|
(1,078)
|
|
|
|
(5,468)
|
|
|
FVO securities
|
|
7
|
|
|
|
(7)
|
|
|
|
(5)
|
|
|
-
|
|
|
|
(4)
|
|
|
Other FVO assets and liabilities
|
|
(253)
|
|
|
|
251
|
|
|
|
160
|
|
|
(2)
|
|
|
|
214
|
|
|
Current income taxes
|
|
(106)
|
|
|
|
28
|
|
|
|
(122)
|
|
|
(78)
|
|
|
|
(537)
|
|
|
Cash collateral on securities lent
|
|
60
|
|
|
|
(923)
|
|
|
|
121
|
|
|
(863)
|
|
|
|
(12)
|
|
|
Obligations related to securities sold under repurchase agreements
|
|
2,015
|
|
|
|
1,509
|
|
|
|
1,186
|
|
|
3,524
|
|
|
|
(929)
|
|
|
Cash collateral on securities borrowed
|
|
159
|
|
|
|
367
|
|
|
|
(230)
|
|
|
526
|
|
|
|
(396)
|
|
|
Securities purchased under resale agreements
|
|
(289)
|
|
|
|
1,166
|
|
|
|
2,802
|
|
|
877
|
|
|
|
2,384
|
|
|
Other, net
|
|
1,338
|
|
|
|
(915)
|
|
|
|
402
|
|
|
423
|
|
|
|
722
|
|
|
(2,201)
|
|
|
|
(5,196)
|
|
|
|
235
|
|
|
(7,397)
|
|
|
|
1,690
|
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption/repurchase of subordinated indebtedness
|
|
-
|
|
|
|
-
|
|
|
|
(11)
|
|
|
-
|
|
|
|
(11)
|
Redemption of preferred shares
|
|
(325)
|
|
|
|
-
|
|
|
|
-
|
|
|
(325)
|
|
|
|
-
|
Issue of common shares for cash
|
|
10
|
|
|
|
21
|
|
|
|
25
|
|
|
31
|
|
|
|
78
|
Purchase of common shares for cancellation
|
|
(85)
|
|
|
|
(127)
|
|
|
|
(206)
|
|
|
(212)
|
|
|
|
(475)
|
Net proceeds from treasury shares
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
1
|
|
|
|
1
|
Dividends paid
|
|
(415)
|
|
|
|
(407)
|
|
|
|
(401)
|
|
|
(822)
|
|
|
|
(805)
|
|
|
(814)
|
|
|
|
(513)
|
|
|
|
(593)
|
|
|
(1,327)
|
|
|
|
(1,212)
|
Cash flows provided by (used in) investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of AFS securities
|
|
(5,697)
|
|
|
|
(8,964)
|
|
|
|
(6,094)
|
|
|
(14,661)
|
|
|
|
(12,736)
|
Proceeds from sale of AFS securities
|
|
6,203
|
|
|
|
9,122
|
|
|
|
4,310
|
|
|
15,325
|
|
|
|
7,012
|
Proceeds from maturity of AFS securities
|
|
3,157
|
|
|
|
2,142
|
|
|
|
2,461
|
|
|
5,299
|
|
|
|
5,254
|
Net cash used in acquisitions
|
|
3
|
|
|
|
(147)
|
|
|
|
-
|
|
|
(144)
|
|
|
|
-
|
Net cash provided by dispositions
|
|
24
|
|
|
|
3,587
|
|
|
|
-
|
|
|
3,611
|
|
|
|
41
|
Net purchase of land, buildings and equipment
|
|
(15)
|
|
|
|
(85)
|
|
|
|
(47)
|
|
|
(100)
|
|
|
|
(86)
|
|
|
3,675
|
|
|
|
5,655
|
|
|
|
630
|
|
|
9,330
|
|
|
|
(515)
|
Effect of exchange rate changes on cash and non-interest-bearing
deposits with banks
|
|
(26)
|
|
|
|
82
|
|
|
|
12
|
|
|
56
|
|
|
|
10
|
Net increase (decrease) in cash and non-interest-bearing deposits with
banks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
during the period
|
|
634
|
|
|
|
28
|
|
|
|
284
|
|
|
662
|
|
|
|
(27)
|
Cash and non-interest-bearing deposits with banks at beginning of period
|
|
2,239
|
|
|
|
2,211
|
|
|
|
2,302
|
|
|
2,211
|
|
|
|
2,613
|
Cash and non-interest-bearing deposits with banks at end of period (2)
|
$
|
2,873
|
|
|
$
|
2,239
|
|
|
$
|
2,586
|
|
$
|
2,873
|
|
|
$
|
2,586
|
Cash interest paid
|
$
|
784
|
|
|
$
|
1,317
|
|
|
$
|
906
|
|
$
|
2,101
|
|
|
$
|
2,323
|
Cash income taxes paid
|
|
214
|
|
|
|
241
|
|
|
|
204
|
|
|
455
|
|
|
|
764
|
Cash interest and dividends received
|
|
2,752
|
|
|
|
3,049
|
|
|
|
2,864
|
|
|
5,801
|
|
|
|
5,907
|
(1)
|
Comprises amortization and impairment of buildings, furniture,
equipment, leasehold improvements, and software and other intangible
assets.
In addition, the current period includes the goodwill impairment charge.
|
(2)
|
Includes restricted balance of $286 million (January 31, 2014: $286
million; April 30, 2013: $266 million).
|
The accompanying notes and shaded sections in "MD&A - Management of
risk" are an integral part of these interim consolidated financial
statements.
Notes to the interim consolidated financial statements
(Unaudited)
The interim consolidated financial statements of CIBC are prepared in
accordance with Section 308(4) of the Bank Act, which states that,
except as otherwise specified by the Office of the Superintendent of
Financial Institutions (OSFI), the financial statements are to be
prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board
(IASB). There are no accounting requirements of OSFI that are
exceptions to IFRS.
These interim consolidated financial statements have been prepared in
accordance with International Accounting Standard (IAS) 34 "Interim
Financial Reporting" and do not include all of the information required
for full annual consolidated financial statements. These interim
consolidated financial statements follow the same accounting policies
and methods of application as CIBC's consolidated financial statements
for the year ended October 31, 2013, except as noted.
All amounts in these interim consolidated financial statements are
presented in Canadian dollars, unless otherwise indicated. These
interim consolidated financial statements were authorized for issue by
the Board of Directors on May 28, 2014.
1. Changes in accounting policies
Effective November 1, 2013, CIBC adopted several new and amended
accounting pronouncements as described below.
(a) Retrospective application of new and amended standards
The amendments to IAS 19 "Employee Benefits" and IFRS 10 "Consolidated
Financial Statements" were adopted retrospectively as described below.
IAS 19 "Employee Benefits" - In June 2011, the IASB published an amended
version of IAS 19. The amendments require the following: (i)
recognition of actuarial gains and losses in OCI in the period in which
they arise; (ii) recognition of interest income on plan assets in net
income using the same rate as that used to discount the defined benefit
obligation; and (iii) recognition of all past service costs (gains) in
net income in the period in which they arise. We adopted the amendments
to IAS 19 on a retrospective basis effective November 1, 2011.
Consistent accounting policies are applied for the purposes of applying
the equity-method for our investments in equity-associates and joint
ventures, and therefore the retrospective application of the amendments
also impacted the accounting for certain of our equity-accounted
investments in associates.
IFRS 10 "Consolidated Financial Statements", issued in May 2011,
replaces the consolidation guidance in IAS 27 "Consolidated and
Separate Financial Statements" and Standards Interpretation Committee
(SIC) - 12 "Consolidation - Special Purpose Entities". IFRS 10
introduces a single consolidation model for all entities based on
control, irrespective of the nature of the investee. Under IFRS 10, an
investor controls an investee when an investor has: (i) power over the
investee; (ii) exposure, or rights, to variable returns from its
involvement with the investee; and (iii) the ability to use its power
over the investee to affect the amount of the investor's returns. We
adopted IFRS 10 on a retrospective basis effective November 1, 2012.
The adoption of IFRS 10 required us to deconsolidate CIBC Capital Trust
from our consolidated financial statements. Although we have the
ability to direct the relevant activities of CIBC Capital Trust, we do
not have exposure to variable returns from our involvement in CIBC
Capital Trust as we pass our credit risk into the Trust by issuing
senior deposit notes to CIBC Capital Trust.
The deconsolidation of CIBC Capital Trust resulted in us removing
Capital Trust securities issued by CIBC Capital Trust from our
consolidated balance sheet effective November 1, 2012, and instead
recognizing the senior deposit notes issued by CIBC to CIBC Capital
Trust in Business and government deposits. We recognized an increase in
shareholders' equity as at November 1, 2012 and October 31, 2013 due to
the reversal of losses previously recognized on Capital Trust
securities repurchased by CIBC.
The impact on the consolidated balance sheets as a result of the
retrospective application of the amendments to IAS 19 and IFRS 10 was
as follows:
|
|
|
|
|
|
|
|
|
|
Reported as at
|
Post-employment
|
Restated as at opening
|
$ millions
|
October 31, 2011
|
benefits
|
November 1, 2011
|
ASSETS (1)
|
|
|
|
|
|
|
Deferred tax asset
|
$
|
270
|
$
|
51
|
$
|
321
|
Other assets
|
|
8,609
|
|
(234)
|
|
8,375
|
Asset line items not impacted by accounting changes
|
|
374,879
|
|
-
|
|
374,879
|
|
$
|
383,758
|
$
|
(183)
|
$
|
383,575
|
LIABILITIES AND EQUITY (1)
|
|
|
|
|
|
|
Deferred tax liability
|
$
|
51
|
$
|
(2)
|
$
|
49
|
Other liabilities
|
|
11,653
|
|
(1)
|
|
11,652
|
Liability line items not impacted by accounting changes
|
|
355,963
|
|
-
|
|
355,963
|
Equity
|
|
|
|
|
|
|
Preferred shares, common shares and contributed surplus
|
|
10,225
|
|
-
|
|
10,225
|
Retained earnings
|
|
5,457
|
|
(3)
|
|
5,454
|
AOCI
|
|
245
|
|
(175)
|
|
70
|
Total shareholders' equity
|
|
15,927
|
|
(178)
|
|
15,749
|
Non-controlling interests
|
|
164
|
|
(2)
|
|
162
|
Total equity
|
|
16,091
|
|
(180)
|
|
15,911
|
|
$
|
383,758
|
$
|
(183)
|
$
|
383,575
|
(1)
|
Certain information has been reclassified to conform to the presentation
adopted in the current period.
|
|
|
Reported as at
|
Post-employment
|
Restated as at
|
CIBC
|
Restated as at opening
|
$ millions
|
October 31, 2012
|
benefits
|
October 31, 2012
|
Capital Trust
|
November 1, 2012
|
ASSETS (1)
|
|
|
|
|
|
|
|
|
|
|
Securities - Trading
|
$
|
40,330
|
$
|
-
|
$
|
40,330
|
$
|
10
|
$
|
40,340
|
Loans - Business and government
|
|
43,624
|
|
-
|
|
43,624
|
|
9
|
|
43,633
|
Investments in equity-accounted associates and joint ventures
|
|
1,635
|
|
(17)
|
|
1,618
|
|
(1)
|
|
1,617
|
Deferred tax asset
|
|
457
|
|
226
|
|
683
|
|
(3)
|
|
680
|
Other assets
|
|
8,947
|
|
(475)
|
|
8,472
|
|
-
|
|
8,472
|
Asset line items not impacted by accounting changes
|
|
298,392
|
|
-
|
|
298,392
|
|
-
|
|
298,392
|
|
$
|
393,385
|
$
|
(266)
|
$
|
393,119
|
$
|
15
|
$
|
393,134
|
LIABILITIES AND EQUITY (1)
|
|
|
|
|
|
|
|
|
|
|
Deposits - Business and government
|
$
|
125,055
|
$
|
-
|
$
|
125,055
|
$
|
1,685
|
$
|
126,740
|
Capital Trust securities
|
|
1,678
|
|
-
|
|
1,678
|
|
(1,678)
|
|
-
|
Deferred tax liability
|
|
37
|
|
(2)
|
|
35
|
|
-
|
|
35
|
Other liabilities
|
|
10,634
|
|
407
|
|
11,041
|
|
1
|
|
11,042
|
Liability line items not impacted by accounting changes
|
|
238,943
|
|
-
|
|
238,943
|
|
-
|
|
238,943
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Preferred shares, common shares and contributed surplus
|
|
9,560
|
|
-
|
|
9,560
|
|
-
|
|
9,560
|
Retained earnings
|
|
7,042
|
|
(40)
|
|
7,002
|
|
7
|
|
7,009
|
AOCI
|
|
264
|
|
(629)
|
|
(365)
|
|
-
|
|
(365)
|
Total shareholders' equity
|
|
16,866
|
|
(669)
|
|
16,197
|
|
7
|
|
16,204
|
Non-controlling interests
|
|
172
|
|
(2)
|
|
170
|
|
-
|
|
170
|
Total equity
|
|
17,038
|
|
(671)
|
|
16,367
|
|
7
|
|
16,374
|
|
$
|
393,385
|
$
|
(266)
|
$
|
393,119
|
$
|
15
|
$
|
393,134
|
(1)
|
Certain information has been reclassified to conform to the presentation
adopted in the current period.
|
|
|
Reported as at
|
Post-employment
|
CIBC
|
Restated as at
|
$ millions
|
October 31, 2013
|
benefits
|
Capital Trust
|
October 31, 2013
|
ASSETS (1)
|
|
|
|
|
|
|
|
|
Securities - Trading
|
$
|
44,068
|
$
|
-
|
$
|
2
|
$
|
44,070
|
Loans - Business and government
|
|
48,201
|
|
-
|
|
6
|
|
48,207
|
Investments in equity-accounted associates and joint ventures
|
|
1,713
|
|
(19)
|
|
1
|
|
1,695
|
Deferred tax asset
|
|
383
|
|
146
|
|
(3)
|
|
526
|
Other assets
|
|
8,675
|
|
(516)
|
|
-
|
|
8,159
|
Asset line items not impacted by accounting changes
|
|
295,349
|
|
-
|
|
-
|
|
295,349
|
|
$
|
398,389
|
$
|
(389)
|
$
|
6
|
$
|
398,006
|
LIABILITIES AND EQUITY (1)
|
|
|
|
|
|
|
|
|
Deposits - Business and government
|
$
|
133,100
|
$
|
-
|
$
|
1,636
|
$
|
134,736
|
Capital Trust securities
|
|
1,638
|
|
-
|
|
(1,638)
|
|
-
|
Deferred tax liability
|
|
34
|
|
(1)
|
|
-
|
|
33
|
Other liabilities
|
|
10,774
|
|
54
|
|
1
|
|
10,829
|
Liability line items not impacted by accounting changes
|
|
234,414
|
|
-
|
|
-
|
|
234,414
|
Equity
|
|
|
|
|
|
|
|
|
Preferred shares, common shares and contributed surplus
|
|
9,541
|
|
-
|
|
-
|
|
9,541
|
Retained earnings
|
|
8,402
|
|
(91)
|
|
7
|
|
8,318
|
AOCI
|
|
309
|
|
(349)
|
|
-
|
|
(40)
|
Total shareholders' equity
|
|
18,252
|
|
(440)
|
|
7
|
|
17,819
|
Non-controlling interests
|
|
177
|
|
(2)
|
|
-
|
|
175
|
Total equity
|
|
18,429
|
|
(442)
|
|
7
|
|
17,994
|
|
$
|
398,389
|
$
|
(389)
|
$
|
6
|
$
|
398,006
|
(1)
|
Certain information has been reclassified to conform to the presentation
adopted in the current period.
|
The increase (decrease) on the consolidated statements of income and
consolidated statements of comprehensive income as a result of the
retrospective application of the amendments to IAS 19 and IFRS 10 was
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended April 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
|
Post-employment
|
|
CIBC
|
|
|
|
$ millions
|
as reported
|
benefits(1)
|
|
Capital Trust
|
Reclassification(2)
|
|
Restated
|
Interest income
|
$
|
2,894
|
$
|
-
|
|
$
|
-
|
$
|
-
|
|
$
|
2,894
|
Interest expense
|
|
1,071
|
|
-
|
|
|
1
|
|
-
|
|
|
1,072
|
Net interest income
|
|
1,823
|
|
-
|
|
|
(1)
|
|
-
|
|
|
1,822
|
Non-interest income
|
|
1,316
|
|
-
|
|
|
1
|
|
(15)
|
|
|
1,302
|
Provision for credit losses
|
|
265
|
|
-
|
|
|
-
|
|
-
|
|
|
265
|
Non-interest expenses
|
|
1,821
|
|
19
|
|
|
-
|
|
(15)
|
|
|
1,825
|
Income before taxes
|
|
1,053
|
|
(19)
|
|
|
-
|
|
-
|
|
|
1,034
|
Income taxes
|
|
177
|
|
(5)
|
|
|
-
|
|
-
|
|
|
172
|
Net income
|
|
876
|
|
(14)
|
|
|
-
|
|
-
|
|
|
862
|
Net income attributable to non-controlling interests
|
|
2
|
|
-
|
|
|
-
|
|
-
|
|
|
2
|
Net income attributable to equity shareholders
|
|
874
|
|
(14)
|
|
|
-
|
|
-
|
|
|
860
|
Net income
|
|
876
|
|
(14)
|
|
|
-
|
|
-
|
|
|
862
|
OCI, net of tax, that is subject to subsequent reclassification to net
income
|
|
40
|
|
-
|
|
|
-
|
|
-
|
|
|
40
|
OCI, net of tax, that is not subject to subsequent reclassification to
net income
|
|
-
|
|
(163)
|
|
|
-
|
|
-
|
|
|
(163)
|
Comprehensive income
|
$
|
916
|
$
|
(177)
|
|
$
|
-
|
$
|
-
|
|
$
|
739
|
(1)
|
Represents an increase in Non-interest expenses - Employee compensation
and benefits of $19 million.
|
(2)
|
Certain amounts associated with our self-managed credit card portfolio
have been reclassified from Non-interest expenses - Other to
Non-interest income - Card fees.
|
For the six months ended April 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
|
Post-employment
|
|
CIBC
|
|
|
|
$ millions
|
as reported
|
benefits(1)
|
|
Capital Trust
|
Reclassification(2)
|
|
Restated
|
Interest income
|
$
|
5,870
|
$
|
-
|
|
$
|
-
|
$
|
-
|
|
$
|
5,870
|
Interest expense
|
|
2,192
|
|
-
|
|
|
1
|
|
-
|
|
|
2,193
|
Net interest income
|
|
3,678
|
|
-
|
|
|
(1)
|
|
-
|
|
|
3,677
|
Non-interest income
|
|
2,642
|
|
-
|
|
|
2
|
|
(32)
|
|
|
2,612
|
Provision for credit losses
|
|
530
|
|
-
|
|
|
-
|
|
-
|
|
|
530
|
Non-interest expenses
|
|
3,808
|
|
37
|
|
|
-
|
|
(32)
|
|
|
3,813
|
Income before taxes
|
|
1,982
|
|
(37)
|
|
|
1
|
|
-
|
|
|
1,946
|
Income taxes
|
|
308
|
|
(9)
|
|
|
-
|
|
-
|
|
|
299
|
Net income
|
|
1,674
|
|
(28)
|
|
|
1
|
|
-
|
|
|
1,647
|
Net income attributable to non-controlling interests
|
|
4
|
|
-
|
|
|
-
|
|
-
|
|
|
4
|
Net income attributable to equity shareholders
|
|
1,670
|
|
(28)
|
|
|
1
|
|
-
|
|
|
1,643
|
Net income
|
|
1,674
|
|
(28)
|
|
|
1
|
|
-
|
|
|
1,647
|
OCI, net of tax, that is subject to subsequent reclassification to net
income
|
|
6
|
|
-
|
|
|
-
|
|
-
|
|
|
6
|
OCI, net of tax, that is not subject to subsequent reclassification to
net income
|
|
-
|
|
(123)
|
|
|
-
|
|
-
|
|
|
(123)
|
Comprehensive income
|
$
|
1,680
|
$
|
(151)
|
|
$
|
1
|
$
|
-
|
|
$
|
1,530
|
(1)
|
Represents an increase in Non-interest expenses - Employee compensation
and benefits of $37 million.
|
(2)
|
Certain amounts associated with our self-managed credit card portfolio
have been reclassified from Non-interest expenses - Other to
Non-interest income - Card fees.
|
For the year ended October 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
|
Post-employment
|
|
CIBC
|
|
|
|
$ millions
|
as reported
|
benefits(1)
|
|
Capital Trust
|
Reclassification(2)
|
|
Restated
|
Interest income
|
$
|
11,811
|
$
|
-
|
|
$
|
-
|
$
|
-
|
|
$
|
11,811
|
Interest expense
|
|
4,356
|
|
-
|
|
|
2
|
|
-
|
|
|
4,358
|
Net interest income
|
|
7,455
|
|
-
|
|
|
(2)
|
|
-
|
|
|
7,453
|
Non-interest income
|
|
5,328
|
|
(1)
|
|
|
2
|
|
(64)
|
|
|
5,265
|
Provision for credit losses
|
|
1,121
|
|
-
|
|
|
-
|
|
-
|
|
|
1,121
|
Non-interest expenses
|
|
7,614
|
|
71
|
|
|
-
|
|
(64)
|
|
|
7,621
|
Income before taxes
|
|
4,048
|
|
(72)
|
|
|
-
|
|
-
|
|
|
3,976
|
Income taxes
|
|
648
|
|
(22)
|
|
|
-
|
|
-
|
|
|
626
|
Net income
|
|
3,400
|
|
(50)
|
|
|
-
|
|
-
|
|
|
3,350
|
Net loss attributable to non-controlling interests
|
|
(3)
|
|
1
|
|
|
-
|
|
-
|
|
|
(2)
|
Net income attributable to equity shareholders
|
|
3,403
|
|
(51)
|
|
|
-
|
|
-
|
|
|
3,352
|
Net income
|
|
3,400
|
|
(50)
|
|
|
-
|
|
-
|
|
|
3,350
|
OCI, net of tax, that is subject to subsequent reclassification to net
income
|
|
45
|
|
-
|
|
|
-
|
|
-
|
|
|
45
|
OCI, net of tax, that is not subject to subsequent reclassification to
net income
|
|
-
|
|
280
|
|
|
-
|
|
-
|
|
|
280
|
Comprehensive income
|
$
|
3,445
|
$
|
230
|
|
$
|
-
|
$
|
-
|
|
$
|
3,675
|
(1)
|
Represents a decrease in Non-interest income - Income from
equity-accounted associates and joint ventures of $1 million and an
increase in Non-interest expenses - Employee compensation and benefits
of $71 million.
|
(2)
|
Certain amounts associated with our self-managed credit card portfolio
have been reclassified from Non-interest expenses - Other to
Non-interest income - Card fees.
|
For the year ended October 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
Previously
|
Post-employment
|
|
|
|
|
$ millions
|
as reported
|
benefits(1)
|
|
Reclassification(2)
|
|
Restated
|
Interest income
|
$
|
11,907
|
$
|
-
|
|
$
|
-
|
|
$
|
11,907
|
Interest expense
|
|
4,581
|
|
-
|
|
|
-
|
|
|
4,581
|
Net interest income
|
|
7,326
|
|
-
|
|
|
-
|
|
|
7,326
|
Non-interest income
|
|
5,223
|
|
(5)
|
|
|
(59)
|
|
|
5,159
|
Provision for credit losses
|
|
1,291
|
|
-
|
|
|
-
|
|
|
1,291
|
Non-interest expenses
|
|
7,215
|
|
46
|
|
|
(59)
|
|
|
7,202
|
Income before taxes
|
|
4,043
|
|
(51)
|
|
|
-
|
|
|
3,992
|
Income taxes
|
|
704
|
|
(15)
|
|
|
-
|
|
|
689
|
Net income
|
|
3,339
|
|
(36)
|
|
|
-
|
|
|
3,303
|
Net income attributable to non-controlling interests
|
|
8
|
|
1
|
|
|
-
|
|
|
9
|
Net income attributable to equity shareholders
|
|
3,331
|
|
(37)
|
|
|
-
|
|
|
3,294
|
Net income
|
|
3,339
|
|
(36)
|
|
|
-
|
|
|
3,303
|
OCI, net of tax, that is subject to subsequent reclassification to net
income
|
|
19
|
|
-
|
|
|
-
|
|
|
19
|
OCI, net of tax, that is not subject to subsequent reclassification to
net income
|
|
-
|
|
(454)
|
|
|
-
|
|
|
(454)
|
Comprehensive income
|
$
|
3,358
|
$
|
(490)
|
|
$
|
-
|
|
$
|
2,868
|
(1)
|
Represents a decrease in Non-interest income - Income from
equity-accounted associates and joint ventures of $5 million and an
increase in Non-interest expenses - Employee compensation and benefits
of $46 million.
|
(2)
|
Certain amounts associated with our self-managed credit card portfolio
have been reclassified from Non-interest expenses - Other to
Non-interest income - Card fees.
|
(b) Other changes in accounting standards
The following standards and amendments to standards were also adopted
effective November 1, 2013.
IFRS 11 "Joint Arrangements", issued in May 2011, requires entities
which had previously accounted for joint ventures using proportionate
consolidation to collapse the proportionately consolidated net asset
value (including any allocation of goodwill) into a single investment
balance at the beginning of the earliest period presented using the
equity method. As we presently apply the equity method for our joint
arrangements under IFRS, the adoption of IFRS 11 did not impact our
consolidated financial statements.
IFRS 12 "Disclosure of Interests in Other Entities", issued in May 2011,
requires enhanced disclosures about both consolidated entities and
unconsolidated entities in which an entity has involvement. The
objective of IFRS 12 is to provide information to enable users to
evaluate the nature of, and risks associated with, its interest in
other entities, including subsidiaries, joint arrangements, associates
and unconsolidated structured entities, and the effects of those
interests on our consolidated financial statements. IFRS 12 did not
impact our consolidated financial statements; however, additional
disclosures will be provided in our annual consolidated financial
statements.
As a result of the issuance of IFRS 10, IFRS 11 and IFRS 12, the IASB
issued amended and renamed IAS 27 "Separate Financial Statements" and
IAS 28 "Investments in Associates and Joint Ventures". The amended IAS
27 removes its existing consolidation model and requirements related to
consolidated financial statements as they are now addressed in IFRS 10.
The amended IAS 27 prescribes the accounting for investments in
subsidiaries, jointly controlled entities and associates in separate
financial statements. Amended IAS 28 outlines how to apply the equity
method to investments in associates and joint ventures. The adoption of
amended IAS 27 and IAS 28 did not impact our consolidated financial
statements.
IFRS 13 "Fair Value Measurement", issued in May 2011, replaces the fair
value measurement guidance contained in individual IFRSs with a single
standard for measuring fair value. IFRS 13 provides expanded disclosure
about fair value measurements for both financial and non-financial
assets and liabilities measured at fair value on a recurring or
non-recurring basis and for items not measured at fair value but for
which fair value is disclosed. Adoption of this standard did not result
in changes to how we measure fair value. However, additional
disclosures related to the type and range of inputs used in the
estimation of the fair value of financial instruments measured at fair
value on the balance sheet that are considered to be in Level 3 of the
fair value hierarchy have been included in Note 2 of our interim
consolidated financial statements. In addition, we will be required to
provide additional disclosures related to the fair value of financial
instruments measured at amortized cost on our balance sheet, such as
loans and deposits, including how the disclosed fair values fit into
the fair value hierarchy in our annual consolidated financial
statements.
IFRS 7 "Disclosures - Offsetting Financial Assets and Financial
Liabilities", issued in December 2011, contains amendments to IFRS 7
and requires new disclosure for financial assets and liabilities that
are offset in the balance sheet or are subject to master netting
arrangements or similar arrangements. The amendments did not impact our
consolidated financial statements; however, additional disclosures will
be provided in our annual consolidated financial statements.
2. Fair value measurement
Fair value is defined as the price that would be received to sell an
asset, or paid to transfer a liability, between market participants in
an orderly transaction in the principal market at the measurement date
under current market conditions (i.e. the exit price). The
determination of fair value requires judgment and is based on market
information, where available and appropriate. Fair value measurements
are categorized into three levels within a fair value hierarchy (Level
1, 2 or 3) based on the valuation inputs used in measuring the fair
value, as outlined below.
-
Level 1 - Unadjusted quoted market prices in active markets for
identical assets or liabilities we can access at the measurement date.
Bid prices, ask prices or prices within the bid and ask, which are the
most representative of the fair value, are used as appropriate to
measure fair value. Fair value is best evidenced by an independent
quoted market price for the same instrument in an active market. An
active market is one where transactions are occurring with sufficient
frequency and volume to provide quoted prices on an ongoing basis.
-
Level 2 - Quoted prices for identical assets or liabilities in markets
that are inactive or observable market quotes for similar instruments,
or use of valuation technique where all significant inputs are
observable. Inactive markets may be characterized by a significant
decline in the volume and level of observed trading activity or through
large or erratic bid/offer spreads. In instances where traded markets
do not exist or are not considered sufficiently active, we measure fair
value using valuation models.
-
Level 3 - Non-observable or indicative prices or use of valuation
technique where one or more significant inputs are non-observable.
For a significant portion of our financial instruments, quoted market
prices are not available because of the lack of traded markets, and
even where such markets do exist, they may not be considered
sufficiently active to be used as a final determinant of fair value.
When quoted market prices in active markets are not available, we would
consider using valuation models. The valuation model and technique we
select maximizes the use of observable market inputs to the extent
possible and appropriate in order to estimate the price at which an
orderly transaction would take place at the measurement date. In an
inactive market, we consider all reasonably available information
including any available pricing for similar instruments, recent arm's
length market transactions, any relevant observable market inputs,
indicative dealer or broker quotations, and our own internal
model-based estimates.
Valuation adjustments are an integral component of our fair valuation
process. We apply judgment in establishing valuation adjustments that
take into account various factors that may have an impact on the
valuation. Such factors include, but are not limited to, the bid-offer
spread, illiquidity due to lack of market depth, parameter uncertainty
and other market risk, model risk and credit risk. For derivatives, we
have credit valuation adjustments (CVA) that factor in counterparty, as
well as our own credit risk, and a valuation adjustment for
administration costs.
Generally, the unit of account for a financial instrument is the
individual instrument, and valuation adjustments are applied at an
individual instrument level, consistent with that unit of account. In
cases where we manage a group of financial assets and liabilities that
consist of substantially similar and offsetting risk exposures, the
valuation adjustments for financial assets and liabilities are measured
on the basis of the net open risks.
We apply judgment in determining the most appropriate inputs and the
weighting we ascribe to each such input as well as in our selection of
valuation methodologies. Regardless of the valuation technique we use,
we incorporate assumptions that we believe market participants would
make for credit, funding, and liquidity considerations. When the fair
value of a financial instrument at inception is determined using a
valuation technique that incorporates significant non-observable market
inputs, no inception profit or loss (the difference between the
determined fair value and the transaction price) is recognized at the
time the asset or liability is first recorded. Any gains or losses at
inception are deferred and recognized only in future periods over the
term of the instruments or when market quotes or data become
observable.
We have an ongoing process for evaluating and enhancing our valuation
techniques and models. Where enhancements are made, they are applied
prospectively, so that fair values reported in prior periods are not
recalculated on the new basis. Valuation models used, including
analytics for the construction of yield curves and volatility surfaces,
are vetted and approved, consistent with our model risk policy.
To ensure that valuations are appropriate, we have established internal
guidance on fair value measurement, which is reviewed periodically in
recognition of the dynamic nature of markets and the constantly
evolving pricing practices in the market. A number of policies and
controls are put in place to ensure the internal guidance on fair value
measurement is being applied consistently and appropriately. Fair value
of publicly issued securities and derivatives is independently
validated at least once a month. Valuations are verified to external
sources such as exchange quotes, broker quotes or other
management-approved independent pricing sources. Key model inputs, such
as yield curves and volatilities, are independently verified. The
results from the independent price validation and any valuation
adjustments are reviewed by the Independent Price Verification
Committee on a monthly basis. This includes, but is not limited to,
reviewing fair value adjustments and methodologies, independent price
verification results, limits and valuation uncertainty. Fair value of
privately issued securities is reviewed on a quarterly basis.
Due to the judgment used in applying a wide variety of acceptable
valuation techniques and models, as well as the use of estimates
inherent in this process, estimates of fair value for the same or
similar assets may differ among financial institutions. The calculation
of fair value is based on market conditions as at each balance sheet
date, and may not be reflective of ultimate realizable value.
Details on fair value methods and assumptions used for determining fair
value of our financial instruments are disclosed in pages 105 to 107 of
the 2013 Annual Report.
The table below presents the level in the fair value hierarchy into
which the fair values of financial instruments, that are carried at
fair value on the interim consolidated balance sheet, are categorized:
|
|
|
|
|
Level 1
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
Valuation technique -
|
|
Valuation technique -
|
|
|
|
|
|
|
|
Quoted market price
|
observable market inputs
|
|
non-observable market inputs
|
Total
|
Total
|
|
|
|
2014
|
2013
|
2014
|
2013
|
|
2014
|
2013
|
2014
|
2013
|
|
$ millions, as at
|
Apr. 30
|
Oct. 31
|
Apr. 30
|
Oct. 31
|
|
Apr. 30
|
Oct. 31
|
Apr. 30
|
Oct. 31
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits with banks
|
$
|
-
|
$
|
-
|
$
|
5
|
$
|
111
|
|
$
|
-
|
$
|
-
|
$
|
5
|
$
|
111
|
|
Trading securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed
|
$
|
1,590
|
$
|
2,053
|
$
|
6,448
|
$
|
7,378
|
|
$
|
-
|
$
|
-
|
$
|
8,038
|
$
|
9,431
|
|
|
Corporate equity
|
|
29,546
|
|
27,169
|
|
3,278
|
|
3,707
|
|
|
-
|
|
-
|
|
32,824
|
|
30,876
|
|
|
Corporate debt
|
|
-
|
|
-
|
|
2,526
|
|
2,362
|
|
|
-
|
|
-
|
|
2,526
|
|
2,362
|
|
|
Mortgage- and asset-backed
|
|
-
|
|
-
|
|
933
|
|
564
|
|
|
827
|
|
837
|
|
1,760
|
|
1,401
|
|
|
|
$
|
31,136
|
$
|
29,222
|
$
|
13,185
|
$
|
14,011
|
|
$
|
827
|
$
|
837
|
$
|
45,148
|
$
|
44,070
|
|
Trading loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business and government
|
$
|
-
|
$
|
-
|
$
|
4,028
|
$
|
2,211
|
|
$
|
-
|
$
|
-
|
$
|
4,028
|
$
|
2,211
|
|
AFS securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed
|
$
|
4,427
|
$
|
1,162
|
$
|
9,091
|
$
|
14,625
|
|
$
|
-
|
$
|
-
|
$
|
13,518
|
$
|
15,787
|
|
|
Corporate equity
|
|
41
|
|
29
|
|
-
|
|
9
|
|
|
625
|
|
618
|
|
666
|
|
656
|
|
|
Corporate debt
|
|
-
|
|
-
|
|
5,393
|
|
7,967
|
|
|
16
|
|
9
|
|
5,409
|
|
7,976
|
|
|
Mortgage- and asset-backed
|
|
-
|
|
-
|
|
1,991
|
|
2,922
|
|
|
185
|
|
286
|
|
2,176
|
|
3,208
|
|
|
|
$
|
4,468
|
$
|
1,191
|
$
|
16,475
|
$
|
25,523
|
|
$
|
826
|
$
|
913
|
$
|
21,769
|
$
|
27,627
|
|
FVO securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government issued or guaranteed
|
$
|
-
|
$
|
-
|
$
|
47
|
$
|
44
|
|
$
|
-
|
$
|
-
|
$
|
47
|
$
|
44
|
|
|
Corporate debt
|
|
-
|
|
-
|
|
104
|
|
96
|
|
|
-
|
|
-
|
|
104
|
|
96
|
|
|
Asset-backed
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
136
|
|
147
|
|
136
|
|
147
|
|
|
$
|
-
|
$
|
-
|
$
|
151
|
$
|
140
|
|
$
|
136
|
$
|
147
|
$
|
287
|
$
|
287
|
|
Derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
$
|
1
|
$
|
-
|
$
|
11,175
|
$
|
13,718
|
|
$
|
43
|
$
|
46
|
$
|
11,219
|
$
|
13,764
|
|
|
Foreign exchange
|
|
-
|
|
-
|
|
6,010
|
|
4,812
|
|
|
-
|
|
-
|
|
6,010
|
|
4,812
|
|
|
Credit
|
|
-
|
|
-
|
|
52
|
|
-
|
|
|
242
|
|
294
|
|
294
|
|
294
|
|
|
Equity
|
|
166
|
|
129
|
|
457
|
|
342
|
|
|
6
|
|
1
|
|
629
|
|
472
|
|
|
Precious metal
|
|
18
|
|
-
|
|
166
|
|
28
|
|
|
-
|
|
-
|
|
184
|
|
28
|
|
|
Other commodity
|
|
99
|
|
117
|
|
911
|
|
460
|
|
|
-
|
|
-
|
|
1,010
|
|
577
|
|
|
|
$
|
284
|
$
|
246
|
$
|
18,771
|
$
|
19,360
|
|
$
|
291
|
$
|
341
|
$
|
19,346
|
$
|
19,947
|
|
Total financial assets
|
$
|
35,888
|
$
|
30,659
|
$
|
52,615
|
$
|
61,356
|
|
$
|
2,080
|
$
|
2,238
|
$
|
90,583
|
$
|
94,253
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits and other liabilities (1)
|
$
|
-
|
$
|
-
|
$
|
(1,842)
|
$
|
(1,729)
|
|
$
|
(834)
|
$
|
(737)
|
$
|
(2,676)
|
$
|
(2,466)
|
|
Obligations related to securities sold short
|
|
(5,862)
|
|
(9,099)
|
|
(6,401)
|
|
(4,228)
|
|
|
-
|
|
-
|
|
(12,263)
|
|
(13,327)
|
|
|
|
$
|
(5,862)
|
$
|
(9,099)
|
$
|
(8,243)
|
$
|
(5,957)
|
|
$
|
(834)
|
$
|
(737)
|
$
|
(14,939)
|
$
|
(15,793)
|
|
Derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
$
|
-
|
$
|
-
|
$
|
(10,756)
|
$
|
(12,820)
|
|
$
|
(47)
|
$
|
(48)
|
$
|
(10,803)
|
$
|
(12,868)
|
|
|
Foreign exchange
|
|
-
|
|
-
|
|
(5,534)
|
|
(4,166)
|
|
|
-
|
|
-
|
|
(5,534)
|
|
(4,166)
|
|
|
Credit
|
|
-
|
|
-
|
|
(75)
|
|
-
|
|
|
(350)
|
|
(413)
|
|
(425)
|
|
(413)
|
|
|
Equity
|
|
(143)
|
|
(120)
|
|
(1,156)
|
|
(1,650)
|
|
|
(22)
|
|
(13)
|
|
(1,321)
|
|
(1,783)
|
|
|
Precious metal
|
|
(19)
|
|
(8)
|
|
(211)
|
|
(22)
|
|
|
-
|
|
-
|
|
(230)
|
|
(30)
|
|
|
Other commodity
|
|
(173)
|
|
(126)
|
|
(260)
|
|
(338)
|
|
|
-
|
|
-
|
|
(433)
|
|
(464)
|
|
|
|
$
|
(335)
|
$
|
(254)
|
$
|
(17,992)
|
$
|
(18,996)
|
|
$
|
(419)
|
$
|
(474)
|
$
|
(18,746)
|
$
|
(19,724)
|
|
Total financial liabilities
|
$
|
(6,197)
|
$
|
(9,353)
|
$
|
(26,235)
|
$
|
(24,953)
|
|
$
|
(1,253)
|
$
|
(1,211)
|
$
|
(33,685)
|
$
|
(35,517)
|
|
(1)
|
Comprises FVO deposits of $2,072 million (October 31, 2013: $1,764
million), FVO secured borrowings of nil (October 31, 2013: $352
million), bifurcated embedded derivatives of $598 million (October 31,
2013: $348 million), and FVO other liabilities of $6 million (October
31, 2013: $2 million). Changes in our own credit risk had an
insignificant impact on the determination of the fair value of our FVO
deposits.
|
Transfers between levels in the fair value hierarchy are deemed to have
occurred at the beginning of the reporting period. Transfers between
levels can occur as a result of additional or new information regarding
valuation inputs and changes in their observability. During the
quarter, we transferred $182 million of trading securities and $1,797
million of securities sold short from Level 1 to Level 2 due to reduced
observability used to value these securities, and $6 million of
embedded derivatives and $5 million of derivative liabilities were
transferred from Level 3 to Level 2 due to increased observability of
one or more significant non-observable inputs used to value these
instruments (October 31, 2013: $6 million of certain bifurcated
embedded derivatives and $1 million of derivative liabilities from
Level 2 to Level 3).
For the quarter and six months ended April 30, 2014, a net loss of $11
million and a net gain of $42 million were recognized, respectively, in
the interim consolidated statement of income on the financial
instruments, for which fair value was estimated using valuation
techniques requiring non-observable inputs (a net gain of $83 million
and $130 million for the quarter and six months ended April 30, 2013,
respectively).
The following table presents the changes in fair value of financial
assets and liabilities in Level 3. These instruments are measured at
fair value utilizing non-observable market inputs. We often hedge
positions with offsetting positions that may be classified in a
different level. As a result, the gains and losses for assets and
liabilities in the Level 3 category presented in the table below do not
reflect the effect of offsetting gains and losses on the related
hedging instruments that are classified in Level 1 and Level 2.
|
|
|
|
|
Net gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
included in income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized
|
Transfer
|
Transfer
|
|
|
|
|
|
|
|
|
|
|
|
Opening
|
|
|
|
|
|
|
gains (losses)
|
in to
|
out of
|
|
|
|
|
|
|
|
|
Closing
|
$ millions, for the three months ended
|
balance
|
Realized(1)
|
|
Unrealized(1)(2)
|
|
included in OCI
|
Level 3
|
Level 3
|
Purchases
|
Issuances
|
Sales
|
Settlements
|
balance
|
Apr. 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage- and asset-backed
|
$
|
861
|
$
|
128
|
|
$
|
40
|
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(202)
|
$
|
827
|
Trading loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business and government
|
|
28
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(28)
|
|
-
|
|
-
|
AFS securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate equity
|
|
643
|
|
21
|
|
|
(2)
|
|
|
(5)
|
|
-
|
|
-
|
|
1
|
|
-
|
|
(33)
|
|
-
|
|
625
|
|
Corporate debt
|
|
14
|
|
-
|
|
|
-
|
|
|
2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
16
|
|
Mortgage- and asset-backed
|
|
232
|
|
-
|
|
|
-
|
|
|
(1)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(46)
|
|
185
|
FVO securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-backed
|
|
144
|
|
-
|
|
|
(4)
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(4)
|
|
136
|
Derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
45
|
|
2
|
|
|
(2)
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(2)
|
|
43
|
|
Credit
|
|
286
|
|
(16)
|
|
|
(16)
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(12)
|
|
242
|
|
Equity
|
|
1
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
5
|
|
-
|
|
-
|
|
-
|
|
6
|
Total assets
|
$
|
2,254
|
$
|
135
|
|
$
|
16
|
|
$
|
(4)
|
$
|
-
|
$
|
-
|
$
|
6
|
$
|
-
|
$
|
(61)
|
$
|
(266)
|
$
|
2,080
|
Deposits and other liabilities (3)
|
$
|
(788)
|
$
|
(9)
|
|
$
|
(180)
|
|
$
|
-
|
$
|
-
|
$
|
6
|
$
|
-
|
$
|
(27)
|
$
|
2
|
$
|
162
|
$
|
(834)
|
Derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
(49)
|
|
(2)
|
|
|
2
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2
|
|
(47)
|
|
Credit
|
|
(397)
|
|
6
|
|
|
24
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
17
|
|
(350)
|
|
Equity
|
|
(14)
|
|
-
|
|
|
(3)
|
|
|
-
|
|
-
|
|
5
|
|
(2)
|
|
(8)
|
|
-
|
|
-
|
|
(22)
|
Total liabilities
|
$
|
(1,248)
|
$
|
(5)
|
|
$
|
(157)
|
|
$
|
-
|
$
|
-
|
$
|
11
|
$
|
(2)
|
$
|
(35)
|
$
|
2
|
$
|
181
|
$
|
(1,253)
|
Oct. 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage- and asset-backed
|
$
|
839
|
$
|
46
|
|
$
|
21
|
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(69)
|
$
|
837
|
Trading loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business and government
|
|
8
|
|
8
|
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(16)
|
|
-
|
|
-
|
AFS securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate equity
|
|
639
|
|
27
|
|
|
(36)
|
|
|
21
|
|
-
|
|
-
|
|
8
|
|
-
|
|
(41)
|
|
-
|
|
618
|
|
Corporate debt
|
|
23
|
|
15
|
|
|
1
|
|
|
(7)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(23)
|
|
-
|
|
9
|
|
Mortgage- and asset-backed
|
|
347
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(61)
|
|
286
|
FVO securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-backed
|
|
150
|
|
4
|
|
|
(2)
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(5)
|
|
147
|
Derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
43
|
|
2
|
|
|
2
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1)
|
|
46
|
|
Credit
|
|
342
|
|
(16)
|
|
|
(23)
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(9)
|
|
294
|
|
Equity
|
|
1
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1
|
Total assets
|
$
|
2,392
|
$
|
86
|
|
$
|
(37)
|
|
$
|
14
|
$
|
-
|
$
|
-
|
$
|
8
|
$
|
-
|
$
|
(80)
|
$
|
(145)
|
$
|
2,238
|
Deposits and other liabilities (3)
|
$
|
(692)
|
$
|
(20)
|
|
$
|
(40)
|
|
$
|
-
|
$
|
(6)
|
$
|
-
|
$
|
3
|
$
|
5
|
$
|
(5)
|
$
|
18
|
$
|
(737)
|
Derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
(49)
|
|
(4)
|
|
|
2
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3
|
|
(48)
|
|
Credit
|
|
(473)
|
|
15
|
|
|
21
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
24
|
|
(413)
|
|
Equity
|
|
(4)
|
|
-
|
|
|
-
|
|
|
-
|
|
(1)
|
|
-
|
|
-
|
|
(8)
|
|
-
|
|
-
|
|
(13)
|
Total liabilities
|
$
|
(1,218)
|
$
|
(9)
|
|
$
|
(17)
|
|
$
|
-
|
$
|
(7)
|
$
|
-
|
$
|
3
|
$
|
(3)
|
$
|
(5)
|
$
|
45
|
$
|
(1,211)
|
(1)
|
Includes foreign currency gains and losses.
|
(2)
|
Comprises unrealized gains and losses relating to these assets and
liabilities held at the end of the reporting period.
|
(3)
|
Includes FVO deposits of $585 million (October 31, 2013: $557 million)
and bifurcated embedded derivatives of $249 million (October 31, 2013:
$180 million).
|
Quantitative information about significant non-observable inputs
Valuation techniques using one or more non-observable inputs are used
for a number of financial instruments. The following table discloses
the valuation techniques and quantitative information about the
significant non-observable inputs used in Level 3 financial
instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
Range of inputs
|
$ millions, as at
|
Apr. 30
|
|
Valuation techniques
|
|
Key non-observable inputs
|
|
Low
|
|
High
|
|
Trading securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage- and asset-backed
|
$
|
827
|
|
Market proxy or direct broker quote
|
|
Market proxy or direct broker quote
|
|
0
|
%
|
99.0
|
%
|
AFS securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited partnerships
|
|
406
|
|
Adjusted net asset value(1)
|
|
Net asset value
|
|
n/a
|
|
n/a
|
|
|
|
Private companies
|
|
219
|
|
Valuation multiple
|
|
Earnings multiple
|
|
6.3
|
|
15.4
|
|
|
|
|
|
|
|
|
|
Revenue multiple
|
|
3.2
|
|
3.9
|
|
|
|
|
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
8.3
|
%
|
20.0
|
%
|
|
Corporate debt
|
|
16
|
|
Discounted cash flow
|
|
Discount rate
|
|
16.0
|
%
|
30.0
|
%
|
|
Mortgage- and asset-backed
|
|
185
|
|
Discounted cash flow
|
|
Credit spread
|
|
0.8
|
%
|
0.8
|
%
|
|
|
|
|
|
|
|
Prepayment rate
|
|
12.2
|
%
|
31.5
|
%
|
FVO securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-backed
|
|
136
|
|
Market proxy or direct broker quote
|
|
Market proxy or direct broker quote
|
|
78.0
|
%
|
92.0
|
%
|
Derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
43
|
|
Proprietary model(2)
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
Credit
|
|
242 (3)
|
|
Market proxy or direct broker quote
|
|
Market proxy or direct broker quote
|
|
29.7
|
%
|
99.7
|
%
|
|
|
|
|
|
|
Discounted cash flow
|
|
Default rate
|
|
4.0
|
%
|
4.0
|
%
|
|
|
|
|
|
|
|
|
Recovery rate
|
|
50.0
|
%
|
70.0
|
%
|
|
|
|
|
|
|
|
|
Prepayment rate
|
|
20.0
|
%
|
20.0
|
%
|
|
|
|
|
|
|
|
|
Credit spread(4)
|
|
0.1
|
%
|
1.1
|
%
|
|
Equity
|
|
6
|
|
Option model
|
|
Market volatility
|
|
13.4
|
%
|
35.7
|
%
|
Total assets
|
$
|
2,080
|
|
|
|
|
|
|
|
|
|
Deposits and other liabilities
|
$
|
(834)
|
|
Market proxy or direct broker quote
|
|
Market proxy or direct broker quote
|
|
0
|
%
|
97.3
|
%
|
|
|
|
|
|
|
Option model
|
|
Market volatility
|
|
7.6
|
%
|
22.0
|
%
|
|
|
|
|
|
|
|
|
Market correlation
|
|
(54.7)
|
%
|
100.0
|
%
|
Derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
(47)
|
|
Proprietary model(2)
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
Credit
|
|
(350)
|
|
Market proxy or direct broker quote
|
|
Market proxy or direct broker quote
|
|
0
|
%
|
99.7
|
%
|
|
|
|
|
|
|
Discounted cash flow
|
|
Default rate
|
|
4.0
|
%
|
4.0
|
%
|
|
|
|
|
|
|
|
|
Recovery rate
|
|
50.0
|
%
|
70.0
|
%
|
|
|
|
|
|
|
|
|
Prepayment rate
|
|
20.0
|
%
|
20.0
|
%
|
|
|
|
|
|
|
|
|
Credit spread
|
|
0.1
|
%
|
1.1
|
%
|
|
Equity
|
|
(22)
|
|
Option model
|
|
Market volatility
|
|
29.6
|
%
|
35.7
|
%
|
Total liabilities
|
$
|
(1,253)
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted net asset value is determined using reported net asset values
obtained from the fund manager or general partner of the limited
partnership and may be adjusted for current market levels where
appropriate.
|
(2)
|
Using valuation techniques which we consider to be non-observable.
|
(3)
|
Net of CVA reserves related to financial guarantors calculated based on
reserve rates (as a percentage of fair value) ranging from 16% to 69%.
|
(4)
|
Excludes financial guarantors.
|
n/a
|
Not applicable.
|
Sensitivity of Level 3 financial assets and liabilities
The following section describes the significant non-observable inputs
identified in the table above, the inter-relationships between those
inputs and the sensitivity of fair value to changes in those inputs. We
performed our Level 3 sensitivity analysis on an individual instrument
basis, except for instruments managed within our structured credit
run-off business for which we performed the sensitivity analysis on a
portfolio basis to reflect the manner in which those financial
instruments are managed.
Within our structured credit run-off business our primary sources of
exposure, which are derived either through direct holdings or
derivatives, are U.S. residential mortgage market contracts,
collateralized loan obligations (CLOs), corporate debt and other
securities and loans. Structured credit positions classified as loans
and receivables are carried at amortized cost and are excluded from
this sensitivity analysis. The structured credit positions carried on
the consolidated balance sheet at fair value are within trading
securities, FVO securities, FVO structured note liability within
deposits and derivatives. These fair values are generally derived from
and are sensitive to non-observable inputs, including indicative broker
quotes and internal models that utilize default rates, recovery rates,
prepayment rates and credit spreads. Indicative broker quotes are
derived from proxy pricing in an inactive market or from the brokers'
internal valuation models. These quotes are used to value our trading
and FVO securities, FVO structured note liability and derivative
positions. A significant increase in the indicative broker prices or
quotes would result in an increase in the fair value of our Level 3
securities and note liability but a decrease in the fair value of our
credit derivatives. The fair value of our credit derivatives
referencing CLO assets are also impacted by other key non-observable
inputs, including:
-
Prepayment rates - which are a measure of the future expected repayment
of a loan by a borrower in advance of the scheduled due date.
Prepayment rates are driven by consumer behaviour, economic conditions
and other factors. A significant increase in prepayment rates of the
underlying loan collateral of the referenced CLO assets would result in
an increase in the fair value of the referenced CLO assets and a
decrease in our Level 3 credit derivatives.
-
Recovery rates - which are an estimate of the amount that will be
recovered following a default by a borrower. Recovery rates are
expressed as one minus a loss given default rate. Hence, a significant
increase in the recovery rate of the underlying defaulted loan
collateral of the referenced CLO assets would result in an increase in
the fair value of the referenced CLO assets and a decrease in the fair
value of our Level 3 credit derivatives.
-
Credit spreads - which are the premium over a benchmark interest rate in
the market to reflect a lower credit quality of a financial instrument
and forms part of the discount rate used in a discounted cash flow
model. A significant increase in the credit spread, which raises the
discount rate applied to future cash flows of the referenced CLO
assets, would result in a decrease in the fair value of referenced CLO
assets and an increase in the fair value of our Level 3 credit
derivatives.
-
Default rates or probabilities of default - which are the likelihood of
a borrower's inability to repay its obligations as they become
contractually due. A significant increase in the default rate of the
underlying loan collateral of the referenced CLO assets up to a certain
reasonably possible level would result in an increase in the fair value
of the referenced CLO assets and a decrease in the fair value of our
Level 3 credit derivatives. This impact is due to accelerated principal
repayments from the defaulted underlying loan collateral and the
subordination structure of the referenced CLO assets. In general,
higher default rates have a positive correlation with credit spreads,
but a negative correlation with recovery rates and prepayment rates,
with the respective impact on fair value as described above.
The fair value of the credit derivatives is also sensitive to CVA for
counterparty risk on both the credit derivative counterparty and on
CIBC.
The impact of adjusting the indicative broker quotes, default rates,
recovery rates, prepayment rates and credit spreads noted above to
reasonably possible alternatives would increase the net fair value by
up to $53 million or decrease the net fair value by up to $52 million
in respect of financial instruments carried at fair value in our
structured credit run-off business. Changes in fair value of a Level 3
FVO structured note liability and the Level 3 positions that the note
hedges have no impact on this sensitivity analysis because reasonably
possible changes in fair value are expected to be largely offsetting.
The fair value of our investments in private companies is derived from
applying applicable valuation multiples to financial indicators such as
revenue or earnings. Earnings multiples or revenue multiples represent
the ratios of earnings or revenue to enterprise value and are often
used as non-observable inputs in the fair value measurement of our
investments in private companies. We apply professional judgment in our
selection of the multiple from comparable listed companies, which is
then further adjusted for company-specific factors. The fair value of
private companies is sensitive to changes in the multiple we apply. A
significant increase in earnings multiples or revenue multiples
generally results in an increase in the fair value of our investments
in private companies and by adjusting the multiple within a reasonably
possible range, the aggregate fair value for our investment in private
companies would increase by $57 million or decrease by $23 million.
The fair value of our limited partnerships (LPs) is determined based on
the net asset value (NAV) provided by the fund managers, adjusted as
appropriate. The fair value of LPs is sensitive to changes in the NAV
and by adjusting the NAV within a reasonably possible range, the
aggregate fair value of our LPs would increase or decrease by $32
million.
The fair value of our asset-backed securities (ABS) is determined based
on non-observable credit spreads and assumptions concerning the
repayment of receivables underlying these ABS. The fair value of our
ABS is sensitive to changes in the credit spreads and prepayment
assumptions. A significant increase in credit spreads generally results
in a decrease in the fair value of our Level 3 ABS and a significant
increase in prepayment rates would result in a decrease in the fair
value of our Level 3 ABS. By adjusting these non-observable inputs by
reasonably alternative amounts, the fair value would increase or
decrease by $5 million.
Our bifurcated embedded derivatives are recorded within deposits and
other liabilities. The determination of the fair value of certain
bifurcated embedded derivatives requires significant assumptions and
judgment to be applied to both the inputs and the valuation techniques
employed. These embedded derivatives are sensitive to long-dated market
volatility and correlation inputs, which we consider to be
non-observable. Market volatility is a measure of the anticipated
future variability of a market price and is an important input for
pricing options which are inherent in many of our embedded derivatives.
A higher market volatility generally results in a higher option price,
with all else held constant, due to the higher probability of obtaining
a greater return from the option, and results in an increase in the
fair value of our Level 3 embedded derivative liabilities. Correlation
inputs are used to value those embedded derivatives where the payout is
dependent upon more than one market price. For example, the payout of
an equity basket option is based upon the performance of a basket of
stocks, and the inter-relationships between the price movements of
those stocks. A positive correlation implies that two inputs tend to
change the fair value in the same direction, while a negative
correlation implies that two inputs tend to change the fair value in
the opposite direction. Changes in market correlation could result in
an increase or a decrease in the fair value of our Level 3 embedded
derivative liabilities. By adjusting the non-observable inputs by
reasonably alternative amounts, the fair value of our embedded
derivative liabilities would increase or decrease by $7 million.
3. Significant acquisition and dispositions
Aeroplan Agreements
On December 27, 2013, CIBC completed the transactions contemplated by
the tri-party agreements with Aimia Canada Inc. (Aimia) and The
Toronto-Dominion Bank (TD) that were announced on September 16, 2013.
CIBC sold to TD approximately 50% of its existing Aerogold VISA credit
card portfolio, consisting primarily of credit card only customers,
while CIBC retained the Aerogold VISA credit card accounts held by
clients with broader banking relationships at CIBC.
The portfolio divested by CIBC consisted of $3.3 billion of credit card
receivables. Upon closing, CIBC received a cash payment from TD equal
to the credit card receivables outstanding acquired by TD.
CIBC also received upon closing, in aggregate, $200 million in upfront
payments from TD and Aimia.
Under the terms of the agreements:
-
CIBC continues to have rights to market the Aeroplan program and
originate new Aerogold cardholders through its CIBC branded channels.
-
The parties have agreed to certain provisions to compensate for the risk
of cardholder migration from one party to another. There is potential
for payments of up to $400 million by TD/Aimia or CIBC for net
cardholder migration over a period of 5 years.
-
CIBC expects to receive annual commercial subsidy payments from TD of
approximately $38 million per year in each of the three years after
closing.
-
The CIBC and Aimia agreement includes an option for either party to
terminate the agreement after the third year and provides for penalty
payments due from CIBC to Aimia if holders of Aeroplan credit cards
from CIBC's retained portfolio switch to other CIBC credit cards above
certain thresholds.
-
CIBC is working with TD under an interim servicing agreement to effect a
smooth transition of the cardholders moving to TD.
In conjunction with the completion of the Aeroplan transaction, CIBC has
fully released Aimia and TD from any potential claims in connection
with TD becoming Aeroplan's primary financial credit card partner.
Acquisition of Atlantic Trust Private Wealth Management
On December 31, 2013, CIBC completed the acquisition of Atlantic Trust
Private Wealth Management (Atlantic Trust) from its parent company,
Invesco Ltd., for $224 million (US$210 million) plus working capital
and other adjustments. Atlantic Trust provides integrated wealth
management solutions for high-net-worth individuals, families,
foundations and endowments in the United States.
The following summarizes the consideration transferred and the amounts
of assets acquired and liabilities assumed at the acquisition date.
Consideration transferred
|
The consideration transferred was as follows:
|
|
|
|
$ millions, as at December 31, 2013
|
|
|
Upfront cash payment
|
$
|
179
|
Contingent consideration, at fair value (deferred payment)
|
|
45
|
Working capital and other adjustments
|
|
12
|
Total consideration transferred
|
$
|
236
|
The deferred payment is based on acquired assets under management (AUM)
at the measurement date of April 30, 2014. The estimated fair value of
the deferred payment of $45 million (US$42 million) as at the
acquisition date was included in the consideration transferred. The
deferred payment was settled in May 2014 for $46 million (US $42
million).
Assets acquired and liabilities assumed
|
The fair values of identifiable assets acquired and liabilities assumed
were as follows:
|
|
|
|
$ millions, as at December 31, 2013
|
|
|
Cash
|
$
|
47
|
AFS securities
|
|
4
|
Land, buildings and equipment
|
|
10
|
Other assets
|
|
30
|
Software and other intangible assets
|
|
91
|
Other liabilities
|
|
(30)
|
Net identifiable assets acquired
|
|
152
|
Goodwill arising on acquisition
|
|
84
|
Total consideration transferred
|
$
|
236
|
Intangible assets and goodwill
The acquired intangible assets include a customer relationship
intangible asset of $89 million that arises from the acquired
investment management contracts. The fair value of the customer
relationship intangible asset was estimated using a discounted cash
flow method based on estimated future cash flows arising from fees
earned from the acquired AUM, which took into account expected net
redemptions and market appreciation from existing clients, net of
operating expenses and other cash outflows. The goodwill arising on
acquisition of $84 million mainly comprised the value of expected
synergies and the value of new business growth arising from the
acquisition.
Acquisition-related costs
Acquisition-related costs of $5 million were included in Non-interest
expenses.
Sale of equity investment
On November 29, 2013, CIBC sold an equity investment that was previously
acquired through a loan restructuring in CIBC's exited European
leveraged finance business. The transaction resulted in an after-tax
gain, net of associated expenses, of $57 million in the three months
ended January 31, 2014.
4. Securities
Fair value of AFS securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
2013
|
$ millions, as at
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
|
|
|
|
|
Oct. 31
|
|
|
|
|
Gross
|
Gross
|
|
|
|
|
|
Gross
|
Gross
|
|
|
|
|
Amortized
|
unrealized
|
unrealized
|
Fair
|
Amortized
|
unrealized
|
unrealized
|
Fair
|
|
|
cost
|
gains
|
losses
|
value
|
cost
|
gains
|
losses
|
value
|
Securities issued or guaranteed by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian federal government
|
$
|
2,673
|
$
|
23
|
$
|
-
|
$
|
2,696
|
$
|
6,770
|
$
|
34
|
$
|
(1)
|
$
|
6,803
|
|
Other Canadian governments
|
|
2,607
|
|
17
|
|
-
|
|
2,624
|
|
3,925
|
|
34
|
|
(1)
|
|
3,958
|
|
U.S. Treasury and agencies
|
|
5,858
|
|
4
|
|
(31)
|
|
5,831
|
|
2,856
|
|
5
|
|
(27)
|
|
2,834
|
|
Other foreign governments
|
|
2,367
|
|
12
|
|
(12)
|
|
2,367
|
|
2,193
|
|
17
|
|
(18)
|
|
2,192
|
Mortgage-backed securities
|
|
1,722
|
|
9
|
|
-
|
|
1,731
|
|
2,894
|
|
12
|
|
(2)
|
|
2,904
|
Asset-backed securities
|
|
442
|
|
3
|
|
-
|
|
445
|
|
299
|
|
5
|
|
-
|
|
304
|
Corporate public debt
|
|
5,365
|
|
48
|
|
(10)
|
|
5,403
|
|
7,927
|
|
57
|
|
(17)
|
|
7,967
|
Corporate private debt
|
|
5
|
|
1
|
|
-
|
|
6
|
|
5
|
|
4
|
|
-
|
|
9
|
Corporate public equity
|
|
12
|
|
30
|
|
-
|
|
42
|
|
12
|
|
18
|
|
-
|
|
30
|
Corporate private equity
|
|
365
|
|
259
|
|
-
|
|
624
|
|
363
|
|
263
|
|
-
|
|
626
|
|
|
$
|
21,416
|
$
|
406
|
$
|
(53)
|
$
|
21,769
|
$
|
27,244
|
$
|
449
|
$
|
(66)
|
$
|
27,627
|
As at April 30, 2014, the amortized cost of 123 AFS securities that are
in a gross unrealized loss position (October 31, 2013: 148 securities)
exceeded their fair value by $53 million (October 31, 2013: $66
million). The securities that have been in a gross unrealized loss
position for more than a year include 16 AFS securities (October 31,
2013: 24 securities), with a gross unrealized loss of $13 million
(October 31, 2013: $40 million). We have determined that these AFS
securities were not impaired.
Reclassification of financial instruments
In October 2008, amendments made to IAS 39 "Financial Instruments -
Recognition and Measurement" and IFRS 7 "Financial Instruments -
Disclosures" permitted certain trading financial assets to be
reclassified to loans and receivables and AFS in rare circumstances. As
a result of these amendments, we reclassified certain securities to
loans and receivables and AFS with effect from July 1, 2008. During the
quarter and six months ended April 30, 2014, we have not reclassified
any securities.
The following tables show the carrying values, fair values, and income
or loss impact of the assets reclassified:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
$ millions, as at
|
|
|
|
Apr. 30
|
|
|
|
Oct. 31
|
|
|
|
Fair
|
Carrying
|
Fair
|
Carrying
|
|
|
|
value
|
|
value
|
value
|
value
|
Trading assets previously reclassified to loans and receivables
|
$
|
2,267
|
$
|
2,285
|
$
|
2,746
|
$
|
2,781
|
Trading assets previously reclassified to AFS
|
|
6
|
|
6
|
|
7
|
|
7
|
Total financial assets reclassified
|
$
|
2,273
|
$
|
2,291
|
$
|
2,753
|
$
|
2,788
|
|
|
|
|
|
For the three
|
|
|
|
For the six
|
|
|
|
|
|
|
months ended
|
|
|
|
months ended
|
|
|
|
2014
|
2014
|
2013
|
|
|
2014
|
2013
|
|
$ millions
|
Apr. 30
|
Jan. 31
|
Apr. 30
|
|
|
Apr. 30
|
Apr. 30
|
|
Net income (before taxes) recognized on assets reclassified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
$
|
16
|
$
|
18
|
$
|
20
|
|
|
$
|
34
|
$
|
36
|
|
|
Impairment write-downs
|
|
-
|
|
-
|
|
(14)
|
|
|
|
-
|
|
(14)
|
|
|
|
$
|
16
|
$
|
18
|
$
|
6
|
|
|
$
|
34
|
$
|
22
|
|
Change in fair value recognized in net income (before taxes) on assets
if
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
reclassification had not been made
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On trading assets previously reclassified to loans and receivables
|
$
|
(6)
|
$
|
21
|
$
|
(11)
|
|
|
$
|
15
|
$
|
13
|
|
|
On trading assets previously reclassified to AFS
|
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
-
|
|
|
|
$
|
(6)
|
$
|
21
|
$
|
(11)
|
|
|
$
|
15
|
$
|
13
|
|
The effective interest rates on trading securities previously
reclassified to AFS ranged from 3% to 13% with expected recoverable
cash flows of $1.2 billion as of their reclassification date. The
effective interest rates on trading assets previously reclassified to
loans and receivables ranged from 4% to 10% with expected recoverable
cash flows of $7.9 billion as of their reclassification date.
5. Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at or for the three
|
|
|
|
As at or for the six
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
|
months ended
|
|
|
|
|
|
|
|
2014
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
2013
|
$ millions
|
|
|
|
|
|
Apr. 30
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
Individual
|
Collective
|
Total
|
Total
|
|
Total
|
|
|
Total
|
|
Total
|
|
|
allowance
|
allowance
|
allowance
|
allowance
|
|
allowance
|
|
|
allowance
|
|
allowance
|
Balance at beginning of period
|
$
|
347
|
$
|
1,338
|
$
|
1,685
|
$
|
1,758
|
|
$
|
1,881
|
|
|
$
|
1,758
|
|
$
|
1,916
|
|
Provision for credit losses
|
|
55
|
|
275
|
|
330
|
|
218
|
|
|
265
|
|
|
|
548
|
|
|
530
|
|
Write-offs
|
|
(24)
|
|
(224)
|
|
(248)
|
|
(277)
|
|
|
(368)
|
|
|
|
(525)
|
|
|
(704)
|
|
Recoveries
|
|
1
|
|
49
|
|
50
|
|
50
|
|
|
46
|
|
|
|
100
|
|
|
90
|
|
Interest income on impaired loans
|
|
(2)
|
|
(6)
|
|
(8)
|
|
(9)
|
|
|
(9)
|
|
|
|
(17)
|
|
|
(18)
|
|
Other
|
|
(7)
|
|
(13)
|
|
(20)
|
|
(55)
|
(1)
|
|
2
|
|
|
|
(75)
|
(1)
|
|
3
|
Balance at end of period
|
$
|
370
|
$
|
1,419
|
$
|
1,789
|
$
|
1,685
|
|
$
|
1,817
|
|
|
$
|
1,789
|
|
$
|
1,817
|
Comprises:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
370
|
$
|
1,356
|
$
|
1,726
|
$
|
1,620
|
|
$
|
1,756
|
|
|
$
|
1,726
|
|
$
|
1,756
|
|
Undrawn credit facilities (2)
|
|
-
|
|
63
|
|
63
|
|
65
|
|
|
61
|
|
|
|
63
|
|
|
61
|
(1)
|
Includes a release of $81 million of collective allowance for credit
losses resulting from the sale of approximately 50% of our Aerogold
VISA portfolio to TD which was recognized as part of the net gain on
sale.
|
(2)
|
Included in Other liabilities on the interim consolidated balance sheet.
|
Impaired loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
2013
|
$ millions, as at
|
|
|
|
|
|
|
|
Apr. 30
|
Oct. 31
|
|
|
|
Gross
impaired
|
Individual
allowance
|
Collective
allowance(1)
|
|
Net
impaired
|
Net
impaired
|
Residential mortgages
|
$
|
517
|
$
|
1
|
$
|
162
|
|
$
|
354
|
$
|
394
|
Personal
|
|
214
|
|
9
|
|
133
|
|
|
72
|
|
86
|
Business and government
|
|
790
|
|
360
|
|
8
|
|
|
422
|
|
520
|
Total impaired loans (2)
|
$
|
1,521
|
$
|
370
|
$
|
303
|
|
$
|
848
|
$
|
1,000
|
(1)
|
Includes collective allowance relating to personal, scored small
business and mortgage impaired loans that are greater than 90 days
delinquent. In addition, we have collective allowance of $1,116 million
(October 31, 2013: $1,211 million) on balances and commitments which
are not impaired.
|
(2)
|
Average balance of gross impaired loans for the quarter ended April 30,
2014 totalled $1,549 million (for the quarter ended October 31, 2013:
$1,655 million).
|
Contractually past due loans but not impaired
This is comprised of loans where repayment of principal or payment of
interest is contractually in arrears. The following table provides an
aging analysis of the contractually past due loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
$ millions, as at
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
Oct. 31
|
|
|
Less than
|
|
31 to
|
|
Over
|
|
|
|
|
|
|
31 days
|
|
90 days
|
|
90 days
|
|
Total
|
|
Total
|
Residential mortgages
|
$
|
1,679
|
|
$
|
626
|
|
$
|
245
|
|
$
|
2,550
|
|
$
|
2,509
|
Personal
|
|
494
|
|
|
109
|
|
|
32
|
|
|
635
|
|
|
567
|
Credit card
|
|
534
|
|
|
143
|
|
|
91
|
|
|
768
|
|
|
955
|
Business and government
|
|
171
|
|
|
117
|
|
|
16
|
|
|
304
|
|
|
258
|
|
$
|
2,878
|
|
$
|
995
|
|
$
|
384
|
|
$
|
4,257
|
|
$
|
4,289
|
6. Goodwill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash-generating units (CGU)
|
|
|
|
|
|
|
|
CIBC
|
|
Wealth
|
Capital
|
|
|
|
|
|
|
$ millions, for the three months ended
|
FirstCaribbean
|
|
Management
|
markets
|
|
Other
|
|
Total
|
2014
|
Balance at beginning of period
|
$
|
776
|
|
$
|
970
|
$
|
40
|
|
$
|
84
|
|
$
|
1,870
|
Apr. 30
|
|
Acquisitions
|
|
-
|
|
|
1
|
|
-
|
|
|
-
|
|
|
1
|
|
|
|
Impairment
|
|
(420)
|
|
|
-
|
|
-
|
|
|
-
|
|
|
(420)
|
|
|
|
Adjustments (1)
|
|
(12)
|
|
|
(1)
|
|
-
|
|
|
-
|
|
|
(13)
|
|
|
Balance at end of period
|
$
|
344
|
|
$
|
970
|
$
|
40
|
|
$
|
84
|
|
$
|
1,438
|
2014
|
Balance at beginning of period
|
$
|
727
|
|
$
|
884
|
$
|
40
|
|
$
|
82
|
|
$
|
1,733
|
Jan. 31
|
|
Acquisitions
|
|
-
|
|
|
83
|
|
-
|
|
|
-
|
|
|
83
|
|
|
|
Adjustments (1)
|
|
49
|
|
|
3
|
|
-
|
|
|
2
|
|
|
54
|
|
|
Balance at end of period
|
$
|
776
|
|
$
|
970
|
$
|
40
|
|
$
|
84
|
|
$
|
1,870
|
2013
|
Balance at beginning of period
|
$
|
695
|
|
$
|
884
|
$
|
40
|
|
$
|
81
|
|
$
|
1,700
|
Apr. 30
|
|
|
Adjustments (1)
|
|
7
|
|
|
-
|
|
-
|
|
|
1
|
|
|
8
|
|
|
Balance at end of period
|
$
|
702
|
|
$
|
884
|
$
|
40
|
|
$
|
82
|
|
$
|
1,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ millions, for the six months ended
|
|
|
|
|
|
|
|
|
2014
|
Balance at beginning of period
|
$
|
727
|
|
$
|
884
|
$
|
40
|
|
$
|
82
|
|
$
|
1,733
|
Apr. 30
|
|
Acquisitions
|
|
-
|
|
|
84
|
|
-
|
|
|
-
|
|
|
84
|
|
|
|
Impairment
|
|
(420)
|
|
|
-
|
|
-
|
|
|
-
|
|
|
(420)
|
|
|
|
Adjustments (1)
|
|
37
|
|
|
2
|
|
-
|
|
|
2
|
|
|
41
|
|
|
Balance at end of period
|
$
|
344
|
|
$
|
970
|
$
|
40
|
|
$
|
84
|
|
$
|
1,438
|
2013
|
Balance at beginning of period
|
$
|
696
|
|
$
|
884
|
$
|
40
|
|
$
|
81
|
|
$
|
1,701
|
Apr. 30
|
|
|
Adjustments (1)
|
|
6
|
|
|
-
|
|
-
|
|
|
1
|
|
|
7
|
|
|
Balance at end of period
|
$
|
702
|
|
$
|
884
|
$
|
40
|
|
$
|
82
|
|
$
|
1,708
|
(1)
|
Includes foreign currency translation adjustments.
|
Impairment testing of goodwill and key assumptions
CIBC FirstCaribbean
For the impairment test performed as at August 1, 2013, we determined
that the recoverable amount of the FirstCaribbean International Bank
Limited (CIBC FirstCaribbean) CGU approximated its carrying value. As a
result, no impairment was recognized. During the three months ended
April 30, 2014, we revised our expectations concerning the extent and
timing of the recovery of economic conditions in the Caribbean region.
We identified this change in expectation as an indicator of impairment
and therefore estimated the recoverable amount of CIBC FirstCaribbean
as at April 30, 2014 to determine whether an impairment loss existed.
The recoverable amount of the CIBC FirstCaribbean CGU is based on a
value in use calculation that was estimated using a five year cash flow
projection and an estimate of the capital required to be maintained in
the region to support ongoing operations. The five year cash flow
projection is consistent with CIBC FirstCaribbean's three year internal
plan that was previously reviewed by its Board of Directors adjusted in
the current quarter to reflect management's belief that the economic
recovery expected in the Caribbean region will occur over a longer
period of time than originally forecasted and that estimated realizable
values of underlying collateral for non-performing loans will be lower
than previously expected. A terminal growth rate of 2.5% (2.5% as at
August 1, 2013) was applied to the years after the five year forecast.
All of the forecast cash flows were discounted at an after-tax rate of
13% (13.62% pre-tax) which we believe to be a risk-adjusted interest
rate appropriate to CIBC FirstCaribbean (we used an identical after-tax
rate of 13% as at August 1, 2013). The determination of a discount rate
and a terminal growth rate require the exercise of judgment. The
discount rate was determined based on the following primary factors: i)
the risk-free rate, ii) an equity risk premium, iii) beta adjustment to
the equity risk premium based on a review of betas of comparable
publicly traded financial institutions in the region, and iv) a country
risk premium. The terminal growth rate was based on the forecast
inflation rates and management's expectations of real growth.
We determined that the carrying amount of the CIBC FirstCaribbean CGU
exceeded our estimate of its recoverable amount as at April 30, 2014.
As a result, we recorded an impairment charge of $420 million during
the quarter in respect of goodwill held by Corporate and Other for CIBC
FirstCaribbean.
Estimation of the recoverable amount is an area of significant judgment.
Reductions in the estimated recoverable amount could arise from various
factors, such as, reductions in forecasted cash flows, an increase in
the assumed level of required capital, and any adverse changes to the
discount rate or the terminal growth rate either in isolation or in any
combination thereof. We have estimated that a 10% decrease in each of
the terminal year's and subsequent years' forecasted cash flows would
result in a reduction in the estimated recoverable amount of the CIBC
FirstCaribbean CGU by approximately $115 million. We have also
estimated that a 50 basis point increase in the after-tax discount rate
would result in a reduction in the estimated recoverable amount of the
CIBC FirstCaribbean CGU by approximately $65 million. These
sensitivities are indicative only and should be considered with
caution, as the effect of the variation in each assumption on the
estimated recoverable amount is calculated in isolation without
changing any other assumptions. In practice, changes in one factor may
result in changes in another, which may magnify or counteract the
disclosed sensitivities.
7. Structured entities and derecognition of financial assets
Structured entities
Structured entities are entities that have been designed so that voting
or similar rights are not the dominant factor in deciding who controls
the entity, such as when any voting rights relate to administrative
tasks only and the relevant activities are directed by means of
contractual arrangements. Structured entities include special purpose
entities, which are entities that are created to accomplish a narrow
and well-defined objective.
We consolidate a structured entity when the substance of the
relationship indicates that we control the structured entity.
Details of our consolidated and non-consolidated structured entities are
provided on pages 118 and 119 of the 2013 Annual Report, except for
CIBC Capital Trust, which is no longer consolidated effective November
1, 2013. See Note 1 to the interim consolidated financial statements
for additional details.
We have two covered bond programs, structured and legislative. Covered
bonds are full recourse on-balance sheet obligations that are also
fully collateralized by assets over which bondholders enjoy a priority
claim in the event of CIBC's insolvency. Under the structured program
we transfer a pool of insured mortgages to the CIBC Covered Bond
Guarantor Limited Partnership that warehouses these mortgages and
serves as a guarantor to bondholders for payment of interest and
principal. Under the legislative program, we transfer a pool of
conventional uninsured mortgages to the CIBC Covered Bond (Legislative)
Guarantor Limited Partnership that warehouses these mortgages and
serves as a guarantor to bondholders for payment of interest and
principal. For both covered bond programs, the assets are owned by the
guarantor and not CIBC. As at April 30, 2014, our structured program
had issued covered bond liabilities of $11.5 billion with a fair value
of $11.6 billion (October 31, 2013: $11.7 billion with a fair value of
$11.8 billion) and our legislative program had issued covered bond
liabilities of $2.0 billion with a fair value of $2.0 billion (October
31, 2013: $2.0 billion with a fair value of $2.0 billion). The covered
bond liabilities are supported by a contractually-determined portion of
the assets transferred to the guarantor and certain contractual
arrangements designed to protect the bondholders from adverse events,
including foreign currency fluctuations.
With respect to Cards II Trust and Broadway Trust entities as at April
30, 2014, $4.3 billion of credit card receivable assets with a fair
value of $4.4 billion (October 31, 2013: $4.6 billion with a fair
value of $4.7 billion) supported associated funding liabilities of $4.3
billion with a fair value of $4.4 billion (October 31, 2013: $4.6
billion with a fair value of $4.7 billion).
As at April 30, 2014, there were $2.1 billion (October 31, 2013: $2.1
billion) of total assets in our non-consolidated multi-seller conduits.
Our on-balance sheet amounts and maximum exposure to loss related to
structured entities that are not consolidated are set out in the table
below. The maximum exposure comprises the carrying value of unhedged
investments, the notional amounts for liquidity and credit facilities,
and the notional amounts less accumulated fair value losses for
unhedged written credit derivatives on structured entity reference
assets. The impact of CVA is not considered in the table below.
|
|
|
|
|
|
|
CIBC structured
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
CIBC
|
collateralized
|
|
Third-party
|
|
Pass-through
|
mortgage
|
|
|
|
|
|
sponsored
|
debt obligation
|
|
structured vehicles
|
|
investment
|
securitization
|
$ millions, as at April 30, 2014
|
conduits
|
vehicles
|
|
Run-off
|
Continuing
|
|
structures
|
trust
|
On-balance sheet assets at carrying value (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading securities
|
$
|
6
|
$
|
7
|
|
$
|
820
|
$
|
309
|
|
$
|
2,639
|
$
|
12
|
|
AFS securities
|
|
-
|
|
2
|
|
|
-
|
|
445
|
|
|
-
|
|
-
|
|
FVO securities
|
|
-
|
|
-
|
|
|
136
|
|
-
|
|
|
-
|
|
-
|
|
Loans
|
|
95
|
|
94
|
|
|
2,144
|
|
352
|
|
|
-
|
|
-
|
|
Derivatives (2)
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
|
153
|
|
-
|
|
|
|
|
|
$
|
101
|
$
|
103
|
|
$
|
3,100
|
$
|
1,106
|
|
$
|
2,792
|
$
|
12
|
October 31, 2013
|
$
|
90
|
$
|
135
|
|
$
|
3,456
|
$
|
756
|
(3)
|
$
|
3,135
|
$
|
5
|
On-balance sheet liabilities at carrying value (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives (2)
|
$
|
-
|
$
|
7
|
|
$
|
308
|
$
|
-
|
|
$
|
160
|
$
|
-
|
October 31, 2013
|
$
|
-
|
$
|
13
|
|
$
|
355
|
$
|
-
|
|
$
|
209
|
$
|
-
|
Maximum exposure to loss, net of hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and loans
|
$
|
101
|
$
|
103
|
|
$
|
3,100
|
$
|
1,106
|
|
$
|
2,639
|
$
|
12
|
|
Notional of written derivatives, less fair value losses
|
|
-
|
|
138
|
|
|
2,127
|
|
-
|
|
|
-
|
|
-
|
|
Liquidity and credit facilities
|
|
2,083
|
|
46
|
|
|
119
|
|
840
|
|
|
-
|
|
-
|
|
Less: hedges of investments, loans and written
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivatives exposure
|
|
-
|
|
(150)
|
|
|
(4,401)
|
|
-
|
|
|
(2,639)
|
|
-
|
|
|
|
|
|
$
|
2,184
|
$
|
137
|
|
$
|
945
|
$
|
1,946
|
|
$
|
-
|
$
|
12
|
October 31, 2013
|
$
|
2,241
|
$
|
97
|
|
$
|
970
|
$
|
1,290
|
(3)
|
$
|
-
|
$
|
5
|
(1)
|
Excludes structured entities established by Canada Mortgage and Housing
Corporation (CMHC), Federal National Mortgage Association (Fannie Mae),
Federal Home Loan Mortgage Corporation (Freddie Mac), Government
National Mortgage Association (Ginnie Mae), Federal Home Loan Banks,
Federal Farm Credit Bank, and Student Loan Marketing Association
(Sallie Mae).
|
(2)
|
Comprises written credit default swaps and total return swaps under
which we assume exposures and excludes all other derivatives.
|
(3)
|
Restated to include certain revolving loans and associated unutilized
credit commitments.
|
Derecognition of financial assets
Details of the financial assets that did not qualify for derecognition
are provided on page 119 of the 2013 Annual Report.
The following table provides the carrying amount and fair value of
transferred financial assets that did not qualify for derecognition and
the associated financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
$ millions, as at
|
|
|
Apr. 30
|
|
Oct. 31
|
|
|
Carrying
|
Fair
|
Carrying
|
Fair
|
|
|
amount
|
value
|
amount
|
value
|
Residential mortgages securitizations (1)
|
$
|
23,545
|
$
|
23,578
|
$
|
30,508
|
$
|
30,538
|
Securities held by counterparties as collateral under repurchase
agreements (2)(3)
|
|
1,928
|
|
1,928
|
|
1,159
|
|
1,159
|
Securities lent for securities collateral (2)(3)
|
|
14,245
|
|
14,245
|
|
11,793
|
|
11,793
|
|
$
|
39,718
|
$
|
39,751
|
$
|
43,460
|
$
|
43,490
|
Carrying amount of associated liabilities (4)
|
$
|
41,038
|
$
|
41,319
|
$
|
44,586
|
$
|
44,538
|
(1)
|
Includes $1.9 billion (October 31, 2013: $7.2 billion) of mortgages
underlying mortgage-backed securities held by CMHC counterparties as
collateral under repurchase agreements. Government of Canada bonds have
also been pledged as collateral to CMHC counterparties. Certain cash in
transit balances related to the securitization process amounting to
$1,460 million (October 31, 2013: $1,126 million) have been applied to
reduce these balances.
|
(2)
|
Does not include over-collateralization of assets pledged.
|
(3)
|
Excludes third-party pledged assets.
|
(4)
|
Includes the obligation to return off-balance sheet securities
collateral on securities lent.
|
Additionally, we securitized $30.8 billion with a fair value of $30.8
billion (October 31, 2013: $25.2 billion with a fair value of $25.2
billion) of mortgages that were not transferred to external parties.
8. Deposits(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
$ millions, as at
|
|
|
|
|
|
|
|
|
|
|
Apr. 30
|
|
|
Oct. 31
|
|
|
|
Payable on
|
|
Payable
|
|
Payable on a
|
|
|
|
|
|
|
|
demand(3)
|
|
after notice(4)
|
|
fixed date(5)
|
|
Total
|
|
Total
|
Personal
|
$
|
9,176
|
|
$
|
75,150
|
|
$
|
43,802
|
|
$
|
128,128
|
|
$
|
125,034
|
Business and government
|
|
33,577
|
|
|
22,385
|
|
|
80,111
|
|
|
136,073
|
(6)
|
|
134,736
|
Bank
|
|
1,438
|
|
|
20
|
|
|
5,724
|
|
|
7,182
|
|
|
5,592
|
Secured borrowings (7)
|
|
-
|
|
|
-
|
|
|
42,640
|
|
|
42,640
|
|
|
49,802
|
|
$
|
44,191
|
|
$
|
97,555
|
|
$
|
172,277
|
|
$
|
314,023
|
|
$
|
315,164
|
Comprised of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held at amortized cost
|
|
|
|
|
|
|
|
|
|
$
|
311,951
|
|
$
|
313,048
|
|
Designated at fair value
|
|
|
|
|
|
|
|
|
|
|
2,072
|
|
|
2,116
|
|
|
|
|
|
|
|
|
|
|
|
$
|
314,023
|
|
$
|
315,164
|
Total deposits include:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In domestic offices
|
|
|
|
|
|
|
|
|
|
$
|
37,020
|
|
$
|
35,670
|
|
|
In foreign offices
|
|
|
|
|
|
|
|
|
|
|
2,802
|
|
|
2,421
|
|
Interest-bearing deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In domestic offices
|
|
|
|
|
|
|
|
|
|
|
232,236
|
|
|
237,400
|
|
|
In foreign offices
|
|
|
|
|
|
|
|
|
|
|
40,759
|
|
|
39,673
|
|
U.S. federal funds purchased
|
|
|
|
|
|
|
|
|
|
|
1,206
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
$
|
314,023
|
|
$
|
315,164
|
(1)
|
Includes deposits of $73.2 billion (October 31, 2013: $68.2 billion)
denominated in U.S. dollars and deposits of $8.6 billion (October 31,
2013: $9.0 billion) denominated in other foreign currencies.
|
(2)
|
Net of purchased notes of $1,729 million (October 31, 2013: $1,131
million).
|
(3)
|
Includes all deposits for which we do not have the right to require
notice of withdrawal. These deposits are generally chequing accounts.
|
(4)
|
Includes all deposits for which we can legally require notice of
withdrawal. These deposits are generally savings accounts.
|
(5)
|
Includes all deposits that mature on a specified date. These deposits
are generally term deposits, guaranteed investment certificates, and
similar instruments.
|
(6)
|
Includes $1.6 billion (October 31, 2013: $1.6 billion) of Notes
purchased by CIBC Capital Trust.
|
(7)
|
Comprises liabilities issued by or as a result of activities associated
with the securitization of residential mortgages, Covered Bond
Programme, and consolidated securitization vehicles.
|
9. Share capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
|
|
|
|
|
For the six
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
|
|
|
|
months ended
|
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
|
|
2014
|
|
|
2013
|
$ millions, except number of shares
|
Apr. 30
|
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
|
|
Apr. 30
|
|
|
Number
|
|
|
|
Number
|
|
|
|
Number
|
|
|
|
|
Number
|
|
|
|
Number
|
|
|
|
|
of shares
|
Amount
|
|
of shares
|
Amount
|
|
of shares
|
Amount
|
|
|
of shares
|
Amount
|
|
of shares
|
Amount
|
Balance at beginning of period
|
398,136,283
|
$
|
7,750
|
|
399,249,736
|
$
|
7,753
|
|
401,959,802
|
$
|
7,765
|
|
|
399,249,736
|
$
|
7,753
|
|
404,484,938
|
$
|
7,769
|
Issuance pursuant to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option plans
|
146,941
|
|
12
|
|
301,839
|
|
24
|
|
53,807
|
|
4
|
|
|
448,780
|
|
36
|
|
589,193
|
|
42
|
|
Shareholder investment plan (1)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
7,672
|
|
1
|
|
Employee share purchase plan (2)
|
-
|
|
-
|
|
-
|
|
-
|
|
267,760
|
|
22
|
|
|
-
|
|
-
|
|
521,724
|
|
42
|
|
|
398,283,224
|
$
|
7,762
|
|
399,551,575
|
$
|
7,777
|
|
402,281,369
|
$
|
7,791
|
|
|
399,698,516
|
$
|
7,789
|
|
405,603,527
|
$
|
7,854
|
Purchase of common shares for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cancellation
|
(914,600)
|
|
(18)
|
|
(1,415,100)
|
|
(27)
|
|
(2,471,031)
|
|
(48)
|
|
|
(2,329,700)
|
|
(45)
|
|
(5,808,331)
|
|
(112)
|
Treasury shares
|
6,692
|
|
1
|
|
(192)
|
|
-
|
(3)
|
1,000
|
|
-
|
(3)
|
|
6,500
|
|
1
|
|
16,142
|
|
1
|
Balance at end of period
|
397,375,316
|
$
|
7,745
|
|
398,136,283
|
$
|
7,750
|
|
399,811,338
|
$
|
7,743
|
|
|
397,375,316
|
$
|
7,745
|
|
399,811,338
|
$
|
7,743
|
(1)
|
Commencing with the January 28, 2013 dividend payment, shares
distributed under the Shareholder Investment Plan were acquired in the
open market. Previously these shares were issued from treasury.
|
(2)
|
Commencing June 14, 2013, employee contributions to our Canadian
employee share purchase plan were acquired in the open market.
Previously these shares were issued from treasury.
|
(3)
|
Due to rounding.
|
Normal course issuer bid
On September 5, 2013, we announced that the Toronto Stock Exchange had
accepted the notice of CIBC's intention to commence a normal course
issuer bid. Purchases under this bid commenced on September 18, 2013
and will terminate upon the earlier of (i) CIBC purchasing up to a
maximum of 8 million common shares, (ii) CIBC providing a notice of
termination, or (iii) September 8, 2014.
During the quarter ended April 30, 2014, we purchased and cancelled an
additional 914,600 common shares under this bid at an average price of
$92.89 for a total amount of $85 million. For the six months ended
April 30, 2014, we purchased and cancelled 2,329,700 common shares
under this bid at an average price of $91.05 for a total amount of $212
million. Since the inception of this bid, we have purchased and
cancelled 3,253,600 common shares at an average price of $88.87 for a
total amount of $289 million.
Preferred shares
On April 30, 2014, we redeemed all of our 13 million Non-cumulative Rate
Reset Class A Series 35 Preferred Shares with a par value and
redemption price of $25.00 per share for cash.
Regulatory capital
|
|
|
|
|
|
|
|
Our capital ratios and ACM are presented in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
$ millions, as at
|
Apr. 30
|
Oct. 31
|
|
Transitional basis
|
|
|
|
|
|
|
|
CET1 capital
|
|
$
|
16,532
|
|
$
|
16,698
|
|
Tier 1 capital
|
|
|
18,076
|
|
|
17,830
|
|
Total capital
|
|
|
21,581
|
|
|
21,601
|
|
RWA
|
|
|
152,044
|
|
|
151,338
|
|
CET1 ratio
|
|
|
10.9
|
%
|
|
11.0
|
%
|
Tier 1 capital ratio
|
|
|
11.9
|
%
|
|
11.8
|
%
|
Total capital ratio
|
|
|
14.2
|
%
|
|
14.3
|
%
|
ACM
|
|
|
18.1
|
x
|
|
18.0
|
x
|
All-in basis
|
|
|
|
|
|
|
|
CET1 capital
|
|
$
|
13,641
|
|
$
|
12,793
|
|
Tier 1 capital
|
|
|
16,488
|
|
|
15,888
|
|
Total capital
|
|
|
20,206
|
|
|
19,961
|
|
RWA
|
|
|
135,883
|
|
|
136,747
|
|
CET1 ratio
|
|
|
10.0
|
%
|
|
9.4
|
%
|
Tier 1 capital ratio
|
|
|
12.1
|
%
|
|
11.6
|
%
|
Total capital ratio
|
|
|
14.9
|
%
|
|
14.6
|
%
|
|
|
|
|
|
|
|
|
During the quarter and six months ended April 30, 2014, we have complied
with all of our regulatory capital requirements.
10. Post-employment benefit expense
The following table provides details on the post-employment benefit
expenses recognized in the interim consolidated statement of income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
|
|
|
For the six
|
|
|
|
|
|
|
months ended
|
|
|
|
|
months ended
|
|
|
2014
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
2013
|
$ millions
|
|
Apr. 30
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
|
Apr. 30
|
Defined benefit plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension plans
|
$
|
45
|
$
|
46
|
|
$
|
50
|
|
|
$
|
91
|
$
|
102
|
Other post-employment plans
|
|
11
|
|
10
|
|
|
10
|
|
|
|
21
|
|
20
|
Total net defined benefit expense
|
$
|
56
|
$
|
56
|
|
$
|
60
|
|
|
$
|
112
|
$
|
122
|
Defined contribution plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIBC's pension plans
|
$
|
7
|
$
|
3
|
|
$
|
3
|
|
|
$
|
10
|
$
|
6
|
Government pension plans (1)
|
|
23
|
|
22
|
|
|
21
|
|
|
|
45
|
|
42
|
Total defined contribution expense
|
$
|
30
|
$
|
25
|
|
$
|
24
|
|
|
$
|
55
|
$
|
48
|
(1)
|
Includes Canada Pension Plan, Quebec Pension Plan, and U.S. Federal
Insurance Contributions Act.
|
11. Income taxes
Enron
In prior years, the Canada Revenue Agency issued reassessments
disallowing the deduction of approximately $3 billion of the 2005 Enron
settlement payments and related legal expenses. The matter is currently
in litigation. The Tax Court of Canada trial on the deductibility of
the Enron payments is scheduled to commence in October 2015.
Should we successfully defend our tax filing position in its entirety,
we would recognize an additional accounting tax benefit of $214 million
and taxable refund interest of approximately $202 million. Should we
fail to defend our position in its entirety, we would incur an
additional tax expense of approximately $866 million and non-deductible
interest of approximately $124 million.
12. Earnings per share
|
|
|
|
|
|
|
For the three
|
|
|
|
For the six
|
|
|
|
|
|
|
|
months ended
|
|
|
|
months ended
|
|
|
2014
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
2013
|
$ millions, except number of shares and per share amounts
|
|
Apr. 30
|
|
Jan. 31
|
|
|
Apr. 30
|
|
|
|
Apr. 30
|
|
Apr. 30
|
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to equity shareholders
|
$
|
317
|
$
|
1,174
|
|
$
|
860
|
|
|
$
|
1,491
|
$
|
1,643
|
Less: Preferred share dividends and premiums
|
|
25
|
|
25
|
|
|
25
|
|
|
|
50
|
|
50
|
Net income attributable to common shareholders
|
$
|
292
|
$
|
1,149
|
|
$
|
835
|
|
|
$
|
1,441
|
$
|
1,593
|
Weighted-average common shares outstanding (thousands)
|
|
397,758
|
|
398,539
|
|
|
400,400
|
|
|
|
398,155
|
|
401,890
|
Basic earnings per share
|
$
|
0.73
|
$
|
2.88
|
|
$
|
2.09
|
|
|
$
|
3.62
|
$
|
3.97
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to diluted common shareholders
|
$
|
292
|
$
|
1,149
|
|
$
|
835
|
|
|
$
|
1,441
|
$
|
1,593
|
Weighted-average common shares outstanding (thousands)
|
|
397,758
|
|
398,539
|
|
|
400,400
|
|
|
|
398,155
|
|
401,890
|
Add: Stock options potentially exercisable (1) (thousands)
|
|
761
|
|
678
|
|
|
412
|
|
|
|
706
|
|
425
|
Weighted-average diluted common shares outstanding (thousands)
|
|
398,519
|
|
399,217
|
|
|
400,812
|
|
|
|
398,861
|
|
402,315
|
Diluted earnings per share
|
$
|
0.73
|
$
|
2.88
|
|
$
|
2.09
|
|
|
$
|
3.61
|
$
|
3.96
|
(1)
|
Excludes average options outstanding of 311,840 (January 31, 2014:
839,472; April 30, 2013: 346,842) with a weighted-average exercise
price of $96.34 (January 31, 2014: $92.68; April 30, 2013: $95.41) for
the quarter ended April 30, 2014 and average options of 312,072 with a
weighted-average price of $96.34 for the six months ended April 30,
2014 (average options of 345,201 with a weighted-average price of
$95.58 for the six months ended April 30, 2013), as the options'
exercise prices were greater than the average market price of CIBC's
common shares.
|
13. Contingent liabilities and provision
In the ordinary course of its business, CIBC is a party to a number of
legal proceedings, including regulatory investigations, in which claims
for substantial monetary damages are asserted against CIBC and its
subsidiaries. Legal provisions are established if, in the opinion of
management, it is both probable that an outflow of economic benefits
will be required to resolve the matter, and a reliable estimate can be
made of the amount of the obligation. If the reliable estimate of
probable loss involves a range of potential outcomes within which a
specific amount within the range appears to be a better estimate, that
amount is accrued. If no specific amount within the range of potential
outcomes appears to be a better estimate than any other amount, the
mid-point in the range is accrued. In some instances, however, it is
not possible either to determine whether an obligation is probable or
to reliably estimate the amount of loss, in which case no accrual can
be made.
While there is inherent difficulty in predicting the outcome of legal
proceedings, based on current knowledge and in consultation with legal
counsel, we do not expect the outcome of these matters, individually or
in aggregate, to have a material adverse effect on our consolidated
financial statements. However, the outcome of these matters,
individually or in aggregate, may be material to our operating results
for a particular reporting period. We regularly assess the adequacy of
CIBC's litigation accruals and make the necessary adjustments to
incorporate new information as it becomes available.
The provisions disclosed in Note 23 to the 2013 annual consolidated
financial statements included all of CIBC's accruals for legal matters
as at that date, including amounts related to the significant legal
proceedings described in that note and to other legal matters.
CIBC considers losses to be reasonably possible when they are neither
probable nor remote. It is reasonably possible that CIBC may incur
losses in addition to the amounts recorded when the loss accrued is the
mid-point of a range of reasonably possible losses, or the potential
loss pertains to a matter in which an unfavourable outcome is
reasonably possible but not probable.
CIBC believes the estimate of the aggregate range of reasonably possible
losses, in excess of the amounts accrued, for its significant legal
proceedings, where it is possible to make such an estimate, is from nil
to approximately $240 million as at April 30, 2014. This estimated
aggregate range of reasonably possible losses is based upon currently
available information for those significant proceedings in which CIBC
is involved, taking into account CIBC's best estimate of such losses
for those cases for which an estimate can be made. CIBC's estimate
involves significant judgment, given the varying stages of the
proceedings and the existence of multiple defendants in many of such
proceedings whose share of the liability has yet to be determined. The
range does not include potential punitive damages and interest. The
matters underlying the estimated range as at April 30, 2014 consist of
the significant legal matters disclosed in Note 23 to the 2013 annual
consolidated financial statements as updated below. The matters
underlying the estimated range will change from time to time, and
actual losses may vary significantly from the current estimate. For
certain matters, CIBC does not believe that an estimate can currently
be made as many of them are in preliminary stages and certain matters
have no specific amount claimed. Consequently, these matters are not
included in the range.
The following developments related to our significant legal matters
occurred since the issuance of our 2013 annual consolidated financial
statements:
-
Marcotte Visa Class Action: The appeal was heard by the Supreme Court of
Canada in February 2014. The court reserved its decision.
-
Green Secondary Market Class Action: In February 2014 the Ontario Court
of Appeal released its decision overturning the lower court and
allowing the matter to proceed as a certified class action. CIBC and
the individual defendants have sought leave to appeal to the Supreme
Court of Canada.
-
Brown Overtime Class Action: The plaintiffs' appeal to the Ontario Court
of Appeal was heard in May 2014. The court reserved its decision.
-
Watson Credit Card Class Action: On March 27, 2014 the court released
its decision granting class certification. The plaintiffs and
defendants have filed Notices of Appeal.
Other than the items described above, there are no significant
developments in the matters identified in Note 23 to our 2013 annual
consolidated financial statements, and no significant new matters have
arisen since the issuance of our 2013 annual consolidated financial
statements.
14. Segmented information
CIBC has three strategic business units (SBUs): Retail and Business
Banking, Wealth Management and Wholesale Banking. These SBUs are
supported by Corporate and Other.
Retail and Business Banking provides clients across Canada with
financial advice, banking, investment, and authorized insurance
products and services through a strong team of advisors and more than
1,100 branches, as well as our ABMs, mobile sales force, telephone
banking, online and mobile banking.
Wealth Management provides relationship-based advisory services and an
extensive suite of leading investment solutions to meet the needs of
institutional, retail and high net worth clients. Our asset management,
retail brokerage and private wealth management businesses combine to
create an integrated offer, delivered through more than 1,500 advisors
across Canada and the U.S.
Wholesale Banking provides a wide range of credit, capital markets,
investment banking and research products and services to government,
institutional, corporate and retail clients in Canada and in key
markets around the world.
Corporate and Other includes the six functional groups - Technology and
Operations, Corporate Development, Finance, Treasury, Administration,
and Risk Management - that support CIBC's SBUs. The expenses of these
functional groups are generally allocated to the business lines within
the SBUs. Corporate and Other also includes our International banking
operations comprising mainly CIBC FirstCaribbean, strategic investments
in the CIBC Mellon joint ventures and The Bank of N.T. Butterfield &
Son Limited, and other income statement and balance sheet items not
directly attributable to the business lines.
Segment reporting changes
The following segment reporting changes were made in the first quarter
of 2014. Prior period amounts were restated accordingly.
Sale of Aeroplan portfolio
On December 27, 2013, we sold approximately 50 percent of our Aerogold
VISA portfolio, consisting primarily of credit card only customers, to
TD. Accordingly, the revenue related to the sold credit card portfolio
was moved from Personal Banking to the Other line of business within
Retail and Business Banking.
Allocation of Treasury activities
Treasury-related transfer pricing continues to be charged or credited to
each line of business within our SBUs. We changed our approach to
allocating the residual financial impact of Treasury activities.
Certain fees are charged directly to the lines of business, and the
residual net revenue is retained in Corporate and Other.
Business unit allocations
Treasury activities impact the reported financial results of the SBUs.
Each line of business within our SBUs is charged or credited with a
market-based cost of funds on assets and liabilities, respectively,
which impacts the revenue performance of the SBUs. Once the interest
and liquidity risk inherent in our client-driven assets and liabilities
is transfer priced into Treasury, it is managed within CIBC's risk
framework and limits. The residual financial results associated with
Treasury activities are reported in Corporate and Other. Capital is
attributed to the SBUs in a manner that is intended to consistently
measure and align economic costs with the underlying benefits and risks
associated with SBU activities. Earnings on unattributed capital remain
in Corporate and Other. We review our transfer pricing methodologies on
an ongoing basis to ensure they reflect changing market environments
and industry practices.
To measure and report the results of operations of the lines of business
within our Retail and Business Banking and Wealth Management SBUs, we
use a Manufacturer/Customer Segment/Distributor Management Model. The
model uses certain estimates and allocation methodologies in the
preparation of segmented financial information. Under this model,
internal payments for sales and trailer commissions and distribution
service fees are made among the lines of business and SBUs.
Periodically, the sales and trailer commission rates paid to customer
segments for certain products are revised and applied prospectively.
Non-interest expenses are attributed to the SBUs to which they relate
based on appropriate criteria. Revenue, expenses, and other balance
sheet resources related to certain activities are fully allocated to
the lines of business within the SBUs.
The individual allowances and related provisions are reported in the
respective SBUs. The collective allowances and related provisions are
reported in Corporate and Other except for: (i) residential mortgages
greater than 90 days delinquent; (ii) personal loans and scored small
business loans greater than 30 days delinquent; and (iii) net
write-offs for the card portfolio, which are all reported in the
respective SBUs. All allowances and related provisions for CIBC
FirstCaribbean are reported in Corporate and Other.
|
|
|
|
Retail and
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
|
Wealth
|
Wholesale
|
Corporate
|
CIBC
|
$ millions, for the three months ended
|
Banking
|
Management
|
Banking
|
and Other
|
Total
|
2014
|
Net interest income (1)
|
$
|
1,357
|
$
|
48
|
$
|
398
|
$
|
(5)
|
$
|
1,798
|
Apr. 30
|
Non-interest income
|
|
486
|
|
598
|
|
206
|
|
79
|
|
1,369
|
|
|
Intersegment revenue (2)
|
|
96
|
|
(98)
|
|
2
|
|
-
|
|
-
|
|
|
Total revenue (1)
|
|
1,939
|
|
548
|
|
606
|
|
74
|
|
3,167
|
|
|
Provision for credit losses
|
|
173
|
|
1
|
|
21
|
|
135
|
|
330
|
|
|
Amortization and impairment (3)
|
|
25
|
|
6
|
|
1
|
|
489
|
|
521
|
|
|
Other non-interest expenses
|
|
1,015
|
|
389
|
|
317
|
|
170
|
|
1,891
|
|
|
Income (loss) before income taxes
|
|
726
|
|
152
|
|
267
|
|
(720)
|
|
425
|
|
|
Income taxes (1)
|
|
180
|
|
35
|
|
54
|
|
(150)
|
|
119
|
|
|
Net income (loss)
|
$
|
546
|
$
|
117
|
$
|
213
|
$
|
(570)
|
$
|
306
|
|
|
Net income (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
$
|
-
|
$
|
1
|
$
|
-
|
$
|
(12)
|
$
|
(11)
|
|
|
|
Equity shareholders
|
|
546
|
|
116
|
|
213
|
|
(558)
|
|
317
|
|
|
Average assets (4)
|
$
|
227,362
|
$
|
4,372
|
$
|
121,105
|
$
|
53,446
|
$
|
406,285
|
2014
|
Net interest income (1)
|
$
|
1,437
|
$
|
50
|
$
|
389
|
$
|
29
|
$
|
1,905
|
Jan. 31
|
Non-interest income
|
|
725
|
|
546
|
|
290
|
|
168
|
|
1,729
|
|
|
Intersegment revenue (2)
|
|
93
|
|
(94)
|
|
1
|
|
-
|
|
-
|
|
|
Total revenue (1)
|
|
2,255
|
|
502
|
|
680
|
|
197
|
|
3,634
|
|
|
Provision for (reversal of) credit losses
|
|
210
|
|
(1)
|
|
2
|
|
7
|
|
218
|
|
|
Amortization and impairment (3)
|
|
24
|
|
4
|
|
1
|
|
66
|
|
95
|
|
|
Other non-interest expenses
|
|
1,031
|
|
347
|
|
328
|
|
178
|
|
1,884
|
|
|
Income (loss) before income taxes
|
|
990
|
|
152
|
|
349
|
|
(54)
|
|
1,437
|
|
|
Income taxes (1)
|
|
244
|
|
38
|
|
85
|
|
(107)
|
|
260
|
|
|
Net income
|
$
|
746
|
$
|
114
|
$
|
264
|
$
|
53
|
$
|
1,177
|
|
|
Net income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
$
|
-
|
$
|
1
|
$
|
-
|
$
|
2
|
$
|
3
|
|
|
|
Equity shareholders
|
|
746
|
|
113
|
|
264
|
|
51
|
|
1,174
|
|
|
Average assets (4)
|
$
|
227,837
|
$
|
4,152
|
$
|
121,951
|
$
|
56,079
|
$
|
410,019
|
2013
|
Net interest income (1)
|
$
|
1,380
|
$
|
46
|
$
|
362
|
$
|
34
|
$
|
1,822
|
Apr. 30
|
Non-interest income
|
|
522
|
|
481
|
|
211
|
|
88
|
|
1,302
|
|
|
Intersegment revenue (2)
|
|
83
|
|
(84)
|
|
1
|
|
-
|
|
-
|
|
|
Total revenue (1)
|
|
1,985
|
|
443
|
|
574
|
|
122
|
|
3,124
|
|
|
Provision for credit losses
|
|
233
|
|
-
|
|
21
|
|
11
|
|
265
|
|
|
Amortization and impairment (3)
|
|
22
|
|
3
|
|
1
|
|
60
|
|
86
|
|
|
Other non-interest expenses
|
|
966
|
|
321
|
|
297
|
|
155
|
|
1,739
|
|
|
Income (loss) before income taxes
|
|
764
|
|
119
|
|
255
|
|
(104)
|
|
1,034
|
|
|
Income taxes (1)
|
|
192
|
|
28
|
|
63
|
|
(111)
|
|
172
|
|
|
Net income
|
$
|
572
|
$
|
91
|
$
|
192
|
$
|
7
|
$
|
862
|
|
|
Net income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
2
|
$
|
2
|
|
|
|
Equity shareholders
|
|
572
|
|
91
|
|
192
|
|
5
|
|
860
|
|
|
Average assets (4)
|
$
|
226,012
|
$
|
3,920
|
$
|
122,962
|
$
|
51,409
|
$
|
404,303
|
(1)
|
Wholesale Banking net interest income and income tax expense includes a
taxable equivalent basis (TEB) adjustment of $124 million for the three
months ended April 30, 2014 ($110 million and $97 million for the three
months ended January 31, 2014 and April 30, 2013, respectively) with an
equivalent offset in Corporate and Other.
|
(2)
|
Intersegment revenue represents internal sales commissions and revenue
allocations under the Manufacturer / Customer Segment / Distributor
Management Model.
|
(3)
|
Comprises amortization and impairment of buildings, furniture,
equipment, leasehold improvements, and software and other intangible
assets. In addition, the current period includes the goodwill
impairment charge for CIBC FirstCaribbean.
|
(4)
|
Assets are disclosed on an average basis as this measure is most
relevant to a financial institution and is the measure reviewed by
management.
|
|
|
|
|
Retail and
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
|
|
Wealth
|
Wholesale
|
Corporate
|
CIBC
|
$ millions, for the six months ended
|
Banking
|
Management
|
Banking
|
and Other
|
Total
|
2014
|
Net interest income (1)
|
$
|
2,794
|
$
|
98
|
$
|
787
|
$
|
24
|
$
|
3,703
|
Apr. 30
|
Non-interest income
|
|
1,211
|
|
1,144
|
|
496
|
|
247
|
|
3,098
|
|
|
Intersegment revenue (2)
|
|
189
|
|
(192)
|
|
3
|
|
-
|
|
-
|
|
|
Total revenue (1)
|
|
4,194
|
|
1,050
|
|
1,286
|
|
271
|
|
6,801
|
|
|
Provision for credit losses
|
|
383
|
|
-
|
|
23
|
|
142
|
|
548
|
|
|
Amortization and impairment (3)
|
|
49
|
|
10
|
|
2
|
|
555
|
|
616
|
|
|
Other non-interest expenses
|
|
2,046
|
|
736
|
|
645
|
|
348
|
|
3,775
|
|
|
Income (loss) before income taxes
|
|
1,716
|
|
304
|
|
616
|
|
(774)
|
|
1,862
|
|
|
Income taxes (1)
|
|
424
|
|
73
|
|
139
|
|
(257)
|
|
379
|
|
|
Net income (loss)
|
$
|
1,292
|
$
|
231
|
$
|
477
|
$
|
(517)
|
$
|
1,483
|
|
|
Net income (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
$
|
-
|
$
|
2
|
$
|
-
|
$
|
(10)
|
$
|
(8)
|
|
|
|
Equity shareholders
|
|
1,292
|
|
229
|
|
477
|
|
(507)
|
|
1,491
|
|
|
Average assets (4)
|
$
|
227,603
|
$
|
4,260
|
$
|
121,535
|
$
|
54,785
|
$
|
408,183
|
2013
|
Net interest income (1)
|
$
|
2,790
|
$
|
93
|
$
|
697
|
$
|
97
|
$
|
3,677
|
Apr. 30
|
Non-interest income
|
|
1,043
|
|
946
|
|
432
|
|
191
|
|
2,612
|
|
|
Intersegment revenue (2)
|
|
162
|
|
(164)
|
|
2
|
|
-
|
|
-
|
|
|
Total revenue (1)
|
|
3,995
|
|
875
|
|
1,131
|
|
288
|
|
6,289
|
|
|
Provision for credit losses
|
|
474
|
|
-
|
|
31
|
|
25
|
|
530
|
|
|
Amortization and impairment (3)
|
|
44
|
|
6
|
|
2
|
|
116
|
|
168
|
|
|
Other non-interest expenses
|
|
1,941
|
|
634
|
|
741
|
|
329
|
|
3,645
|
|
|
Income (loss) before income taxes
|
|
1,536
|
|
235
|
|
357
|
|
(182)
|
|
1,946
|
|
|
Income taxes (1)
|
|
384
|
|
55
|
|
79
|
|
(219)
|
|
299
|
|
|
Net income
|
$
|
1,152
|
$
|
180
|
$
|
278
|
$
|
37
|
$
|
1,647
|
|
|
Net income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
4
|
$
|
4
|
|
|
|
Equity shareholders
|
|
1,152
|
|
180
|
|
278
|
|
33
|
|
1,643
|
|
|
Average assets (4)
|
$
|
226,248
|
$
|
3,967
|
$
|
122,936
|
$
|
50,011
|
$
|
403,162
|
(1)
|
Wholesale Banking net interest income and income tax expense includes a
TEB adjustment of $234 million for the six months ended April 30, 2014
($189 million for the six months ended April 30, 2013) with an
equivalent offset in Corporate and Other.
|
(2)
|
Intersegment revenue represents internal sales commissions and revenue
allocations under the Manufacturer / Customer Segment / Distributor
Management Model.
|
(3)
|
Comprises amortization and impairment of buildings, furniture,
equipment, leasehold improvements, and software and other intangible
assets. In addition, the current period includes the goodwill
impairment charge for CIBC FirstCaribbean.
|
(4)
|
Assets are disclosed on an average basis as this measure is most
relevant to a financial institution and is the measure reviewed by
management.
|
15. Financial instruments - disclosures
We have provided quantitative disclosures related to credit risk
consistent with Basel guidelines in the "Credit risk" section of
management's discussion and analysis in our 2013 Annual Report and
interim report to shareholders, which require entities to disclose
their exposures based on how they manage their business and risks. The
table below sets out the categories of the on-balance sheet exposure to
credit risk under different Basel approaches, displayed in both
accounting categories and Basel portfolios.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting categories
|
|
Basel portfolios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIRB and standardized approaches
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
|
|
|
|
Not
|
Total
|
|
|
|
|
|
|
|
|
secured
|
Qualifying
|
|
|
Total
|
subject
|
consolidated
|
|
|
|
|
|
|
|
|
personal
|
revolving
|
Other
|
Asset
|
subject to
|
to credit
|
balance
|
$ millions, as at
|
|
Corporate
|
Sovereign
|
Bank
|
lending
|
retail
|
retail
|
securitization
|
credit risk
|
risk
|
sheet
|
2014
|
Cash and deposits with banks
|
|
$
|
-
|
$
|
6,864
|
$
|
2,567
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
9,431
|
$
|
1,257
|
$
|
10,688
|
Apr. 30
|
Securities
|
|
|
1,834
|
|
14,249
|
|
4,875
|
|
-
|
|
-
|
|
-
|
|
1,539
|
|
22,497
|
|
44,707
|
|
67,204
|
|
|
Cash collateral on securities borrowed
|
|
978
|
|
-
|
|
1,913
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,891
|
|
-
|
|
2,891
|
|
|
Securities purchased under resale agreements
|
|
|
7,308
|
|
4,878
|
|
12,248
|
|
-
|
|
-
|
|
-
|
|
-
|
|
24,434
|
|
-
|
|
24,434
|
|
|
Loans
|
|
|
45,808
|
|
3,502
|
|
1,066
|
|
168,812
|
|
19,132
|
|
9,236
|
|
2,697
|
|
250,253
|
|
853
|
|
251,106
|
|
|
Allowance for credit losses
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,726)
|
|
(1,726)
|
|
|
Derivative instruments
|
|
|
1,470
|
|
2,805
|
|
15,071
|
|
-
|
|
-
|
|
-
|
|
-
|
|
19,346
|
|
-
|
|
19,346
|
|
|
Customers' liability under acceptances
|
|
7,400
|
|
1,745
|
|
155
|
|
-
|
|
-
|
|
-
|
|
-
|
|
9,300
|
|
-
|
|
9,300
|
|
|
Other assets
|
|
|
124
|
|
1,899
|
|
2,016
|
|
225
|
|
6
|
|
14
|
|
2
|
|
4,286
|
|
9,573
|
|
13,859
|
|
|
Total credit exposure
|
$
|
64,922
|
$
|
35,942
|
$
|
39,911
|
$
|
169,037
|
$
|
19,138
|
$
|
9,250
|
$
|
4,238
|
$
|
342,438
|
$
|
54,664
|
$
|
397,102
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 31
|
Total credit exposure
|
|
$
|
65,215
|
$
|
29,707
|
$
|
44,909
|
$
|
167,488
|
$
|
22,749
|
$
|
8,457
|
$
|
5,148
|
$
|
343,673
|
$
|
54,333
|
$
|
398,006
|
SOURCE CIBC