Geoffrey Weiss - Vice-President of Investor Relations Gerald T. McCaughey - Chief Executive Officer, President and Non Independent Director Kevin A. Glass - Chief Financial Officer and Senior Executive Vice President Thomas D. Woods - Chief Risk Officer and Senior Executive Vice President Victor G. Dodig - Group Head of Wealth Management and Senior Executive Vice President J. David Williamson - Senior Executive Vice President and Group Head of Retail & Business Banking Brian O’Donnell - Executive Vice-President of Risk Services

John Aiken - Barclays Capital, Research Division Gabriel Dechaine - Crédit Suisse AG, Research Division Robert Sedran - CIBC World Markets Inc., Research Division John Reucassel - BMO Capital Markets Canada Peter D. Routledge - National Bank Financial, Inc., Research Division Michael Goldberg - Desjardins Securities Inc., Research Division Darko Mihelic - Cormark Securities Inc., Research Division Andre-Philippe Hardy - RBC Capital Markets, LLC, Research Division Mario Mendonca - Canaccord Genuity, Research Division Steve Theriault - BofA Merrill Lynch, Research Division Cheryl M. Pate - Morgan Stanley, Research Division

Good morning, ladies and gentlemen. Welcome to the CIBC Quarterly Results Conference Call. Please be advised that this call is being recorded. [Operator Instructions] I would now like to turn the meeting over to Mr. Geoff Weiss. Please go ahead, Mr. Weiss.

Thank you. Good morning, and thank you for joining us. This morning, CIBC Senior Executives will review CIBC's Q2 2013 results that were released earlier today. The documents referenced on this call, including CIBC's Q2 news release, investor presentation and financial supplement, as well as CIBC's Q2 report to shareholders, can all be found on our website at www.cibc.com. In addition, an archive of this audio webcast will be available on our website later today. This morning's agenda will include opening remarks from Gerry McCaughey, CIBC's President and Chief Executive Officer. Kevin Glass, our Chief Financial Officer, will follow with the financial review. And Tom Woods, our Chief Risk Officer, will close the formal remarks with a risk management update. After the presentations, there will be a question-and-answer period that will conclude before 8:30 a.m. Also with us for the question-and-answer period are CIBC's business leaders, including Victor Dodig, Richard Nesbitt and David Williamson, as well as other senior officers. Before we begin, let me remind you that any individual speaking on behalf of CIBC on today's call may make forward-looking statements that are subject to a variety of risks and uncertainties. These statements may include material factors or assumptions that could cause CIBC's actual results in future periods to differ materially. For more information, please refer to the note about forward-looking statements in today's press release. With that, let me now turn the meeting over to Gerry.

Thank you, Geoff, and good morning, everyone. Before I begin, let me also remind you that my comments may contain forward-looking statements. Today, CIBC announced adjusted net income for the second quarter of $876 million, up 4% from a year ago, and adjusted diluted earnings per share of $2.12, up 6% from a year ago. Return on equity for the quarter was 22.3%. We finished the second quarter with a Basel III common equity ratio of 9.1 -- 9.7%. Today, we declared a $0.02 increase in our quarterly common dividend. This increase leaves us within our payout range of 40% to 50%. During the quarter, we purchased and canceled approximately 2.5 million common shares. With this, we have completed the Normal Course Issuer Bid, announced in August of 2012, for repurchase of up to 2% of CIBC's common shares. Also during the quarter, we announced our intention to acquire Atlantic Trust, a leading U.S. private wealth management firm from its parent company, Invesco. This transaction further enhances our strategy to build our North American Private Wealth Management offering to high net-worth clients. I will now review the financial results and strategic developments for each of our businesses. Retail and Business Banking delivered net income of $604 million for the second quarter of 2013, up 9% from the same quarter last year. Credit quality in our retail portfolios is strong. In Q2, provision for credit losses decreased from the prior year, largely due to lower losses in our credit card portfolio. Loss rates in this portfolio are at the lowest levels since the fourth quarter of 2008. During the second quarter of 2013, Retail and Business Banking continued to make progress against our objectives of accelerating profitable revenue growth and enhancing the client experience. We continue to invest in our distribution…

Thanks, Gerry. My presentation will refer to the slides that are posted on our website, starting with Slide 5, which is a summary of results for the quarter. And we're actually very pleased with our second quarter results. We posted adjusted net income of $876 million, which resulted in adjusted earnings per share of $2.12. And overall, we produced strong results this quarter. Our Retail and Business Banking franchise generated another quarter of strong earnings, with solid year-over-year volume growth, particularly in our CIBC-branded products. Retail and Business Banking is successfully executing on a strategy focused on accelerating profitable revenue growth and enhancing the client experience. Our Wealth Management business experienced record net sales of long-term mutual funds, and we continue to execute our client-focused strategy in Wholesale Banking. Our capital markets and corporate and investment banking businesses both performed well. That improving credit quality, particularly in our retail portfolios, and we also increased our quarterly dividend by $0.02 to $0.96 per share this quarter. During the quarter, we had 3 items of note: Income from the structured credit run-off business of $0.05 per share, a loss in our exited European leveraged finance portfolio of $0.04 per share, and the amortization of intangible assets, which was a loss of $0.01 per share. In aggregate, the impact of these items on earnings netted to 0. The balance of my presentation will be focused on adjusted results, which exclude these items of note. We have included slides with reported results in the appendix to this presentation. Moving to the details for each of our strategic business units, I'll start with results for Retail and Business Banking on Slide 6. Revenue in the quarter was $2 billion, up $32 million or 2% from the same quarter last year, with gains in our core…

Thanks, Kevin. Good morning, everybody. Slide 21, loan losses in Q2 were $265 million or $244 million on an adjusted basis compared with $265 million in Q1. Reported loan losses included a $21 million provision in our exited European leveraged finance portfolio. On an adjusted basis, we had very good performance in both retail and wholesale lending, mainly due to lower losses in cards and the U.S. Real Estate Finance portfolio. Slide 22, our cards portfolio continues to perform very well. The net credit loss rate in Q2 was 3.9%, down from 4.1% in Q1, and the lowest since Q4' of 2008. Our cards delinquency rate continued to improve in Q2. With respect to Canadian residential mortgages on Slide 23, 74% of this portfolio is insured, with over 90% of this insurance being provided by CMHC. The average loan to value of our uninsured mortgage portfolio, based on March house price estimates, is 54%. Slide 24 shows our Canadian residential mortgage portfolio by region. The size of this portfolio was $143 billion, with approximately 46% in Ontario, followed by BC at 20% and Alberta at 16%. The credit quality of this portfolio continues to be high, with a net credit loss rate of approximately 1 basis point per annum. Slide 25 shows our Canadian residential condo mortgage exposure. Condos account for approximately 12% of our total mortgage portfolio, with about 72% in Ontario and BC. 75% of the condo sub-portfolio is insured. And the uninsured portfolio has an average loan to value of 54%. This slide also shows our condo developer exposure. At April 30, our drawn loans to construction projects were $888 million or approximately 2% of our business and government portfolio. The exposure is diversified across 75 projects. Slide 26 shows our exposure to the European peripheral countries…

Thank you. That concludes our prepared remarks. We'll now move to questions. [Operator Instructions] Operator, we're ready for the first question on the phone.

[Operator Instructions] Our first question is from John Aiken from Barclays.

Question for Victor. Victor, does the news of the unfortunate passing of Mark Powell have any impact whatsoever on the potential acquisition of Atlantic Trust?

John, not appropriate for us to comment on what is clearly a personal matter reflecting the private actions of an individual who is now deceased. But what I can tell you from a business standpoint is our transition planning is well underway. We're working towards a Q4 calendar closing. Client feedback has been very positive. And to date, all indicators are that we have strong client retention, and importantly, employees have expressed satisfaction with the announcement and CIBC as an owner of Atlantic Trust.

Our next question is from Gabriel Dechaine from Credit Suisse. Gabriel Dechaine - Crédit Suisse AG, Research Division: Just 1 on Aeroplan. Can you just tell me who "owns" the customer, owns the data and the information? On the buyback, I'm surprised that Gerry didn't give any more color on your future plans for buyback. You've exhausted the current NCIB and you're not upsizing it, so no buybacks until the next one comes up for renewal -- or the current one, sorry?

Yes, I'll go first, and then David can take the Aimia question. We originally announced this buyback last September, and it had a 1-year window for us to complete it. Circumstances have permitted us to proceed more rapidly than that schedule, so we're finished now. In the interim, we've also bought Atlantic Trust. And we've decided that what we would like to do is, as we get closer to year end and the closing of the Atlantic Trust transaction, we'll review with our board the possibility of a further buyback. But we're proceeding strategically at roughly the pace that we outlined a little -- around a year ago.

It's David Williamson. Regarding your question regarding the customers, so nature of the relationship is we buy points from Aimia for the Aeroplan program, so the customer information and relationship's with us, hence, the desire to ensure that, that card is a market-leading card because the customers look to us for the nature of that, the offerings in that card. But of course, there's scope to active partners on that product with the information that's available to us. But that's the information regarding the customer, and the relationship really resides with us in that program.

Our next question is from Robert Sedran from CIBC.

Just wanted to follow-up on the travel card issue. I'm curious if the expenses that were disclosed earlier, was there any impact on the Q2 results? Is the $50 million committed spending now regardless of what happens with Aimia? And sort of related question, are these new expenses or just being reallocated from savings that you found elsewhere?

It's Gerry, I'll start off and then I'll turn it over to David for further color on this. First of all, although there is some slicing and dicing that one can do about -- more so other value that you might derive from the expenditures rather than a reallocation. I do think that you should think of this as new spending. And you should think of it as spending over and above what we would otherwise have spent. You should also not think of it as spending where they will necessarily be a reallocation from other areas. That's always possible. We've been -- we've done very well with that in the past, but that's not our message here. Our message here is this is incremental expenditure, and that it's an investment in the possibility that we will be working with a CIBC travel card. Having said that, there have been some expenditures so far, but they'd be reasonably minor, and they'd be pretty much soft cost. And I would also say that the $50 million that we outlined, as I mentioned in my remarks, is not the costs of marketing and retention that would mainly come in 2014. I'll turn it over to David for a little more color on that, and we'll see if that satisfies what you're asking. David?

Thanks, Gerry. So that was a pretty comprehensive answer. Let me just build upon that. So what we indicated in Gerry's comments today is a $50 million spend. So there's been a small amount of spend in Q2, but it's really not that significant an amount. So it's really starting to build up from here. So we expect to spend in $30 million in the remainder of 2013, but roughly 2/3 of that amount in Q4 and expect the expenditures of approximately the remaining $20 million in the first half of the next year. And as Gerry also mentioned in his remarks, if we choose not to renew with Aimia, and proceed to launch a new offering, there will be a significant and materially higher marketing and retention incentive costs that would be expended in that circumstance. And frankly, we expect several market players will also spend significantly. I guess the point I'd make is, the advantage we have is along with our end of contract rights, we've got unique insight into the Aeroplan customer, so we can target to retain the most, let's say, important customer relationships. So that's kind of some insight onto the economics. Regarding -- and Gerry's right, these will be incremental costs. To date, what we have been doing is managing our expenses by a lot of what we referred to in an earlier conference call as back to front. We've eliminated several hundred positions in sales service roles and not taking those savings, but we've used that as a source to invest in our frontline staff and several hundred people added to the frontline sales effort. So that program's going to continue, as the way we're managing getting incremental sales with not incremental expenses. So that will continue. But this build for an alternative travel card offering would be on top of that.

And just to clarify, this is an entirely new offering, its not like your retrofitting the Aventura program or something like that?

I think we'll build upon the platforms and rails that we have, but the intent here is to build something that is truly a market-leading travel card. So it would be a new offering, but obviously sensibly build upon the existing rails to the extent of -- that are available to us. But it'll be a new and enhanced travel card offering.

Our next question from John Reucassel, BMO Capital Markets.

David, just back to Aeroplan again -- or Gerry. You did mention sizable retention of existing Aeroplan customers. Are you able to size that for us, under 50% over 50%? And what -- I guess you mentioned a short-term cost, which you talked about here the cost. There's cost of retention and new technology, but there is the cost of kind of lost earnings or whatnot. Is there any color you can give us around that?

Yes, I'll start off again here. The -- we're not in a position to define the percentage of retention, and I also want to make sure that the distinction that David has made about what qualifies as our targeted retention is something that's well understood. When we talk about percentages of retention, there are a number of unknowns. Gross retention is an unknown because of the competitive forces that will come to bear at the time. Our defense on this card will not just be geared to the new contract holder. As a matter of fact, we do not believe that the new contract holder would necessarily be the unique area of competition, because we think that if this is opened up, that there are several industry players in the travel card business that would market very hard into the opportunity. And so that's quite a crowd that one could have competitively. And our intent, in response to that, in order to fulfill our strategy and to arrive at the best economic outcome, will be to be very, very targeted, because we do have the advantage of having all of the data and all the client specifics. And so the one thing I will tell you is, while we're not in a position to tell you the percentage of retention, we will tell you the shape of retention. We will be targeting a subset of the portfolio because the retention dollars that we spend can be best leveraged in that fashion and can have the highest success rate. There are other parts of the portfolio that this would present an opportunity for us to align with our strategy. And that may, in some cases, mean that competitors would be taking that away from us. I'll turn it over to David for further color, but I will tell you that the retention dollars that we will spend, once we get the targeting going, will be significant.

Okay, thanks, Gerry. John, I'll just offer a couple of additional comments, see if this continues to add to your understanding. So first off, I'd say our primary objective, and consistent with our client-centric focus that we've been talking about for a while, is to ensure that one way or another, we offer our clients a market-leading travel card. It could be Aeroplan. If the offering is revitalized, the extent required for our clients, and is available on appropriate economic terms. It may be the case that we choose not to renew the Aimia agreement, and therefore, we've been taking steps to build a new market-leading travel card offer. So this is effectively taking the fly any airline at Aventura and building upon it. In the event that the Aeroplan contracts -- we choose not to renew it, then we're going to ensure that we're ready to very effectively meet our client needs. And as Gerry said, if the contract's not renewed, we'd expect some pretty intense competition from premium card product offers, and we expect there to be attrition from our existing cardholder base. The interesting point being the attrition would likely be split in the marketplace by, at least, 5 market participants who'll seek to take advantage of this market disruption. We do, however, expect to retain a sizable portion of our existing client base. In addition to our end-of-contract rights, we are uniquely positioned, as the incumbent, to tailor an offer to target the retention of the most desirable segments of the portfolio. And as Gerry said, we will spend the funds required to support those retention efforts. I guess one thing I'd turn to is, we've had a bit of practice in this area recently with FirstLine. And as we said with FirstLine, we wanted to retain 25% of that book. Our retention to date, as we've mentioned, has been stronger than that. In fact, in the second quarter, we've retained over 40% of the book that came off. And in fact, each month in the second quarter, we were over 40%. So that was achieved through having a detailed retention plan, having a dedicated retention team, and frankly, fairly solid and effective execution of that retention plan. So the -- that learning and that kind of focus would be what we need to apply to this particular effort. So hopefully that helps, John.

Just a follow-up, Gerry. Just presumably, you wouldn't raise the divi if you're worried that there was a significant earnings hit coming. Would that be a fair conclusion?

The -- do you mean -- are you talking about future increases or this increase?

This increase.

Well, you got to remember that the -- you've got the short term and the longer term. And over the longer term, one of the elements that will happen here is if this contract is no longer with us and then we go through the retargeting and retaining a smaller portion of the portfolio, but one that totally fits our strategy, what will happen is that we would have less mono-line-oriented business, and we would also have less credit susceptibility in terms of the economic cycle. So while you're going to have a total earnings picture that would be different in the short term, if we migrate away from this card, in the longer term -- remember our strategy is lower risk, consistent sustainable earnings and reduction of volatility. Because we would actually, under certain scenarios, be reducing the volatility of our earnings base in the event that we had a smaller travel card component, that would mean that it would be supportive of dividend increases. So that's what I think you should take out of this, is that strategically, as long as we stay aligned, we believe that you should continue to think of our future interest rate increases in the same way you have in the past.

Our next question is from Peter Routledge from National Bank Financial.

Just a quick follow-up on the Aimia. Net card fees, I think in 2012 were $619 million. What's that number going to be if you shift off, shift away from Aeroplan? How much of a decline would there be?

Yes, Peter, David speaking. I think it's a bit early to speculate on the impact. I think some of the comments we've had here as far as giving a sense of the dynamics, it would be about the right level to be at this point in time.

Okay. And then just for Kevin, I notice in corporate and other, you've got a clearer trend of declining net interest income in just that segment. Is there something we should draw from that? Why do we see that sort of persistent downward trend in net interest income in corporate and other?

I think, I mean, there are couple of factors. Some of that's just driven by treasury activities, which can be somewhat volatile. And also that would be the area where we have our tab [ph] offset. And that part of our business is actually being pretty successful on an ongoing basis. So that's what would drive that delta.

So it's not higher funding cost?

No, it wouldn't be a higher finding cost issue.

Our next question is from Michael Goldberg from Desjardins Securities.

I'll change it from credit card. Can you please talk about the increase in your Canadian net interest margin, broken into: one, the impact of product margins on a matched basis; two, mix; and three, treasury? And in particular, what would the NIM trend be in the absence of the treasury contribution? And if you could give us a NIM trend in percentage terms, excluding treasury, that would be great.

Michael, David Williamson. I'll have a crack at -- from a business perspective because you're -- really it sounds like looking at it x treasury, which is kind of the way I look at it. So why don't I speak to it, and if there's any follow-up questions, we can come from there. So you talked about products, you talked about mix. So from a product perspective, part of how we've had an 8-basis-point uplift in NIMs year-over-year and 5 quarters of marginal increases in NIMs is really those 2 points you raised, products and mix. So on the product space, business banking, we're holding our margins. It's a competitive marketplace, but we're holding our margins in commercial mortgages, which has become quite a thin margin business. You've heard us say we've kind of downplayed that sector. Again, could have had the revenue growth if we pursued it, but we're looking to pursue business that's suitably profitable for use of the balance sheet, so we've deemphasized that business. In the other parts of our commercial lending we're meeting the needs of our clients, but doing so on appropriate prices. And the other, in mortgages, we're growing at rates above our peer group. But again, we're doing that and our -- the way we conduct ourselves in the market isn't by competing on price. We're trying to do it on a quality kind of and suitable volume level. So if you see us acting in each of the products, you see us acting with profitability and margin in mind. And then when it comes to mix, that's also very much a factor for us. So we've got, with the runoff of the FirstLine book and a move to our branded products, happening in mortgages and happening in other parts of our book, broker deposits, those kind of places, the mix is moving more to profitable areas. And that's where we get this kind of tailwind we've got, which is the impact of moving out of FirstLine and having a desire to get 25% of that into the higher-margin branded products. As I mentioned, we're running quite a bit higher retention than the 25% and that's having quite a positive impact. That's one of the things that's helping our NIMs, and frankly, offsetting the headwind, which everyone has, which is this low interest rate environment. So as a result of those dynamics, we've been saying we kind of anticipate a relatively stable NIM, again, excluding treasury, stable NIM. And it's just that over the last little while, we've been outperforming that marginally because of that focus on product profitability and the benefit of moving to a mix that's higher margin. So hopefully that covers it. And I look at the world, excluding treasury, if you want to get into treasury, that's probably worthy of a follow-up offline discussion, I would think.

Okay. Just one other thing on the product side. The impact of low rates on deposits?

Yes, it's significant, right. So in, say, business banking, for example, where we have quite a collection of deposits, especially in our small-business sector, which we're really trying to focus on and enhance our team in business banking, revitalized kind of the higher end of our lending, the larger client, that's what we mean by higher end. That's really worked well. And now we're trying to revitalize our small business banking part. A lot of deposits in there, and it really grinds us. The impact of lower interest rates as the tractors roll over, over time and impacts deposits. So that's being offset by the growth in the book. So what you're seeing is the results in business banking are that those 2 dynamics: the impact of lower interest rates on a very substantial deposit base, which will play well in the future, being offset by us focusing on margins and achieving quite good volume growth.

Without getting too much into the detail of the treasury, could -- are there numbers that you could give us as to what that NIM would be excluding the treasury?

Michael, it's Gerry here. Unfortunately, we requested at the beginning that follow-on, that we limit the follow-on questions. And we still have a queue, and we're into very good follow-on questions by you. We're going to have ask you to re-queue to come back at this stage, so we can get everybody else, to answer their questions. Is that okay?

Do I have a choice?

So thank you, Michael.

Our next question is from Darko Mihelic from Cormark.

I appreciate there's a lot of sensitivity around the Aimia, especially now at this stage, so just a couple of things real quickly on Aimia. One, if you're not prepared to talk about the earnings impact today, in terms of ultimate risk, when do you think you would be prepared to talk about the ultimate risk of, perhaps, losing the Aeroplan? And then secondly, with respect to the, your verbiage around this whole discussion is quite clear, should you choose not to renew. So I think that's very clear that we understand that it's your choice at the end of this period whether or not to renew. But what I'm very unclear on is, what you mean by your rights at the end of it all. Could you perhaps provide more color? So obviously, what I'm looking for is, the size of the risk; and then secondly, I want to understand, how you're going to mitigate it, and what are the mitigating factors? And these rights, I'm not exactly sure I understand what that means.

Darko, so the reason why, it's early days, right? We're right in the middle of a negotiation, and hence, providing some of the information you're talking about would be, a, early; and b, inappropriate, when you're in the middle of a negotiation. So what we're trying to do here is just be clear about some of the dynamics. And I've been clear about the dynamics from our perspective. I can also be clear of the dynamics from the perspective of a potential bidder. But it'd all be with respect of trying to provide you with the appropriate information at this point in time. The second point you raised, which is just trying to understand what our end-of-contract rights are, and there's a reason why you're in the dark. We're just not legally capable of outlining what our end-of-contract rights are in our agreement with Aimia. So that lack of clarity's intentional and sort of has to be there. So hopefully, that gives you a sense of what we're trying to do. We're trying to be helpful here to the appropriate extent at this juncture.

Our next question is from Andre-Philippe Hardy from RBC Capital Markets.

Another question on Aimia. Obviously, you're not going to make a decision December 30 on whether you renew or not, so what's a realistic date as to when you might make a decision to renew or not? And let's say the decision is to renew, does that $50 million spend stop at that point?

Andre, let's just talk about the status of negotiation. So as we mentioned before, long-standing partnership with Aeroplan, it goes back 20 years. It does expire at the end of this calendar year. And we've been engaged in periodic extension discussions with Aimia. And we do anticipate being involved in future conversations with them. Regarding timing, a key thing is, our key objective here is to revitalize the Aimia program and make sure it can be a market-leading offer going forward, but do it on appropriate economic terms. It may be the case that we choose not to renew the agreement with Aimia, and therefore, we're building this alternative market-leading travel card, which speaks to just the actions. It speaks to our clients' interest. We want a market-leading travel card. And we'll get there one way or the other. And timing will be dictated by the flow of the discussions around those points of topic. Regarding the -- I'll cover the other question you had, which is cost. So of the $50 million, part of it is building this enhanced fly any airline or a travel card offering and making sure that we've got offers that are appropriate for this client base we're going to be targeting. So we will spend a large part of that money, irrespective, because it enhances our client offering, and so that will be spent. But part of the $50 million is in relation to an actual launch. For example, cutting plastic is in the $50 million. That number would migrate quite a bit depending on how much plastic you were cutting. So some of it will be spent irrespective, because it's good money to be spending, and part of it is money that would be spent attached to a launch.

Okay. And just to wrap up, a lot of questions on how much you expect to lose in revenues or customers. I appreciate you simply can't answer that question, but can you at least help us understand the starting point, which is, how much net income does CIBC generate from the Aeroplan relationship?

The, I think -- so I'll make a couple of comments. First, obviously, that none of the -- consistent with our peer group, we don't disclose the profitability of the cards business or -- that's consistent across the market. And then within that, you've gone inside cards and want information regarding a subsegment. Again, not planning to disclose it at this point. As things evolve, there might be a point in time to do that, but I'm sure you would understand, Andre, in the middle of negotiations at this point in time, not the right way to go forward. Regarding retention, I think we've given a lot of information and tried to allow for a studied view on it. One thing I'd comment on to, a certain extent, the retention level we achieve will be related to the amount of money we commit to retention. We've got some work underway to determine the optimal level to spend. And optimal isn't just a magnitude, it's also targeting and thinking about the nature of the offer for the various customer characteristics that we are in a position to observe. So it's early days, yes, we're moving on a couple of fronts. Primary objective is to make sure our clients are taken care of.

Andre, it's Gerry here. I'd also like to just mention that, strategically, the characteristic of the income is very important to us here, in terms of what we choose to retain and not retain. There is a -- while there's certain fee revenue that comes into this, there's also payments that go out. And what you're left with in the end is that a substantial portion of the economics of any cards portfolio is around the revolve. And I would just link back to my earlier remarks, revolve means you have outstandings, outstandings mean you have exposure. And when we do our stress tests through the cycle, because of that exposure, you have to allocate capital to the portfolio. All of this you know, but I did want to say that from viewpoint of strategy, it's important to understand that, we do not just look at net income as a raw piece of information. We look at net income, including all of the elements that are associated with earning that in income, and we're trying to come out of this with the best alignment with our strategy around low risk and consistent sustainable earnings. The key elements that we target on this portfolio, when we think about that, are the cyclical elements. And so I just wanted to emphasize that strategy is closely linked to this decision. And there are elements of this portfolio in terms of risk, as well as client characteristics in that it's a large mono-line portfolio for us that are influencing our attitude around the overall economics that are associated with this.

Our next question is from Mario Mendonca from Canaccord Genuity.

Going to Page 41 of your supplement -- I'll move away from Aimia for a moment. There, you make -- you indicate, and this is probably best for Tom, exposure at default for your residential secured personal lending or your real estate secured lending of about $183 billion, and a risk weighting of about 4%. Now, I'm not sure how much you study your peers, but it'd be helpful to understand, why that number, that risk weighting, that 4%, would be so much lower for CIBC than most of the other banks in Canada? Is there a mix issue here? Is there something that you can point me to?

Yes, Mario, it's Tom. Two things: mainly, it is mix. The fact that we have a higher percentage of insured versus the other banks. And secondly, and I think Brian O'Donnell will correct me if I'm wrong here. It's largely -- well, it's virtually entirely a Canadian portfolio.

Sorry, just one quick thing. The exposure of default, I thought, took into account just the uninsured?

[indiscernible] Exposure at default. Do you have a comment, Brian, on that? Brian O’Donnell: I think -- actually, I think I'll have to follow-up, Tom, and just get some clarity in terms of the exposure. I'm pretty sure the exposure here on Page 41 you're referring to includes the insured portfolio. And probably the best way to look at that then is the exceptionally low components of the FirstLine on Page 41, where there's exposure of $155 billion. And that would include the insured component. And the loss history on that portfolio, therefore, is obviously very low, so you can see that bringing down our weighted average pretty significantly.

Okay. Then that's a disclosure difference then because that's not how it appears for some of the others, the disclosure's different I think [ph]. That might be the explanation. But I may want to... Brian O’Donnell: I'll check into that and clarify for you as well.

Okay. One final thing then just on Aimia, if I could. The expenses, the $50 million or so you're referring to. Could any of that be capitalized? And secondarily, how do you expect to treat this, as a core number or would you adjust for it?

Mario, David speaking. So no, it may be some element of it being -- with scope of to be capitalized. But the nature of the spend is primarily expense in nature. At least you should look at it that way. And I think we'll look at the size of the spend and in the periods, but we'd have a orientation towards adjust to be able to pull that out so you could see what the underlying business is doing.

So, an orientation to adjust for it, to show it as an item of note?

Exactly, yes.

Our next question is from Steve Theriault from Bank of America.

I wanted to come back to the buyback for a moment for Gerry, and I apologize Gerry, if I missed this earlier. I did see the headline that you're going to review the buyback in Q4. But what's the rationale for not upsizing the buyback sooner with a Tier 1 common over 9, likely heading to 10? I know you do have Atlantic Trust coming down the pipe. That's a pretty nominal 20 basis points relative to your sort of normal internal capital generation, so if you could give us some color around there? In particular, is there any sense from the regulator that they would like you to hold off on the buyback at this point?

We don't comment on any discussions that we have with the regulator. That would be the first thing that I would say. The second thing is that we'll review it in the fourth quarter in line with our overall capital planning for the next year. We laid originally out that this would take place over the course of the year. We proceeded more rapidly than we originally laid out. And we don't see any drawbacks of having a high capital ratio. We're ahead of our peers, but there are some that in our vicinity. And therefore, we don't particularly think that we're an outlier, and so we are going to address this in the fullness of time.

If I could ask a follow-up on Aimia. At this time, is there any restriction to sending out marketing to ERGO [ph] customers, like in their monthly statements pitching Aventura or another card before the deal were to expire?

We're not going to comment any further on things that have to do with whether -- with the guts of the contract and our existing relationship. And so I think that the cross-marketing that we might do to Aventura, you should look at it that whatever we might have done up until today, we will continue to do. But there are certain elements of balance that have been discussed and are contained within the contract. And I think we just should, for the moment, presume that it's business as usual.

Our next question's from Cheryl Pate from Morgan Stanley.

I have a question on the net interest margin in the Retail and Business Banking segment. I'm just wondering if you can help me understand the difference between -- just trying to figure out if something changed in the way you're doing the treasury allocation for the quarter? When I sort of run the basic calc, it looks like NIM would actually be down x the treasury allocation. So I'm just wondering if you can help reconcile the 2 and help me understand the difference there?

Well, Cheryl, let me speak first to that and then maybe if anyone has comments on the treasury side, I'll hand over to them. So no, pulling aside treasury, the Retail and Business Banking NIMs -- or the comments I made before to Michael Goldberg, let me put it that way, apply. Like we -- without putting treasury to the side, we've got enhanced NIMs. And the dynamic is pressure from low interest rates being offset by maintaining margin in products and enhancing where we can by choosing what products we move on, like commercial mortgages and so forth. And then mix. And we've got a real tailwind from product moving from FirstLine to our branded mortgages. So maybe that's the thing, Cheryl, that's -- because if not for FirstLine, we would be seeing flat, I guess, NIMs. And that's what's pushing us into the positive zone. So maybe that's from a business perspective. Let me hand over to Kevin.

Cheryl, nothing has changed in terms of our methodology. The NIMs that David discloses, as he said, exclude treasury, but we've done that on a consistent basis. So happy to take this offline because we just should just make sure we know what we're reconciling to, so we'll follow-up with you after the call I think.

At this time, I would like to turn the meeting back over to you, Mr. Weiss.

Thank you, operator. That concludes our call. Please contact Investor Relations with any follow-up questions. Have a good day.

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