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

Thank you and good morning. We will begin this morning's presentation with opening remarks from Victor Dodig, our President and Chief Executive Officer. Following Victor, Hratch Panossian, our Chief Financial Officer, will review our operating results. Followed by a risk management update from Shawn Beber, our Chief Risk Officer. Victor will close out the prepared remarks with a brief update on 2021. We're joined in the room by CIBC's business leaders including Harry Culham, Laura Dottori-Attanasio, and Jon Hountalas; as well as Mike Capatides, who has joined us remotely from U.S. They will be available to take questions following the prepared remarks. As noted on Slide 2 of our investor presentation, our comments may contain forward-looking statements which involve assumptions and have inherent risks and uncertainties. Actual results may differ materially. With that, I will now turn the meeting over to Victor.

Thank you, Geoff, and good morning. Thanks for joining us and we hope you’re all doing well. 2020 was a year where we experienced a once in a century health crisis that affected all aspects of our society. At the same time, it was a year of continued transformation for our bank as we focus on helping make our clients ambitions a reality. Our CIBC team acted with urgency and with purpose to support our clients, one another and our communities are building a relationship oriented bank for a modern world. For the full-year, adjusted revenue of CAD$18.7 billion and pre-provision earnings of CAD$8.2 billion were up over 2019, while expense growth was limited to just 2%. Net of a higher provision of -- for credit losses that was primarily pandemic related, adjusted earnings were CAD$4.4 billion or CAD$9.69 per share. Our capital remains strong with a CET1 ratio of 12.1%. Our investments in technology over the past several years to digitize and simplify our bank are allowing us to provide real time remote support to our clients at a time when physical distancing has become the norm. These efforts are being recognized by our clients. With our highest client experience scores on record and recognition as the top performing banking brand during the pandemic, will continue to convert this momentum into deeper client relationships going forward. Now let me turn to our business performance. During the fourth quarter we saw some improvement in the macroeconomic environment. The resulting increase in consumer activity was reflected in our Canadian personal and business banking franchise with monthly improvement in card purchase volumes throughout the quarter.

Thank you, Victor and good morning, everyone. Starting on Slide 8. This morning we reported earnings of CAD$1 billion and diluted earnings per share of CAD$2.20 for the fourth quarter of 2020. Excluding items of note, we delivered earnings of CAD$1.3 billion or CAD$2.79 per share. Adjusted ROE improved to 13.5% for the quarter, as our profitability continues to recover from the Q2 drop. Pre-provision earnings of CAD$2 billion were down 3% from the prior year, reflecting the relative resilience of our diversified franchise in a challenging environment. Revenues of CAD$4.6 billion were down 2% year-over-year as balanced growth across our businesses and solid trading revenues partially offset the impact of lower client activity and interest rates due to the COVID-19 pandemic. Strong expense management help offset the pressure on revenue, with adjusted expenses declining 2% from the prior year as efficiency improvements outpaced targeted investments aligned with our strategy. Provision for credit losses of CAD$291 million were meaningfully lower from the prior year and prior quarter. Shawn will speak to provisions in more detail in his remarks. Turning to Slide 9. We maintain the strength of our balance sheet over this quarter. Average LCR of 145% was relatively stable from the prior quarter and well above the 100% regulatory minimum. Our capital position continued to strengthen ending the quarter with CET1 ratio of 12.1% or 11.9%, excluding the ECL transitional benefit. Internal capital generation and a decrease in RWAs were the primary drivers of capital build in the quarter. Consistent with our previous guidance, RWA migration was a modest headwind to CET1 in the quarter, driven by negative migration of our wholesale portfolios net of improvements in retail. We remain very comfortable with our current capital outlook, a strong internal generation provides capacity to absorb further credit migration and organic deployment in support of our clients. The balance of my presentation will refer to adjusted results which exclude items of note. Slide 10 reflects our personal and business banking results, where we continue to see positive trends as we revitalize the business. Net income for the quarter was CAD$635 million, up 5% from last year helped by sequential improvement in revenue and pre-provision earnings as well as lower provisions on credit losses.

Thank you, Hratch, and good morning. While the start of the fourth quarter saw the continued reopening of economies following the restrictive measures implemented at the onset of the pandemic, by the end of the quarter, we were starting to see a resurgence in case counts. Since then, we’ve had a mix of both challenging and positive developments with renewed restrictions occurring in many of the markets we serve, while at the same time promising news regarding vaccine development has been announced. We’ve continued to evolve our analysis from prior quarters and exercise judgment where appropriate in determining our provision for credit losses for performing loans. Our overall provisions this quarter were lower than the third quarter. At this time, we are not seeing broad based credit weakness in the portfolio, and to date, performance has been better than had been anticipated at the start of the pandemic, as our clients both business and personal have continued to exhibit prudent financial behavior and given the benefit of ongoing government support. Where we have seen issues, they have arisen in various unrelated sectors and in many cases, we are experiencing issues before the pandemic. As forecasted, we did see some additional migration from Stage 2 to Stage 3 allowances, which we expect will be a continuing trend over the coming quarters as net credit losses are expected to peak in the middle of 2021. Turning to Slide 17. Provision for credit losses was CAD$291 million in Q4, down from CAD$525 million in the prior quarter, with lower provisions in both impaired and performing loans. Provision on impaired loans of CAD$178 million was down CAD$122 million from last quarter, largely due to lower insolvencies and write-offs experienced in our Canadian retail portfolios. Similar to the prior quarter, the decrease in retail insolvencies…

Thanks, Shawn. Before we take questions, I’d like to share our thoughts on CIBC strategic focus for 2021 and beyond. Our first priority is to reinvigorate our Canadian consumer franchise and this includes gaining share in our core personal and small business product, accelerating growth in our newly created direct financial services business, and improving asset management net flows while delivering good investment performance for our clients. We’ve made good progress in each of these areas throughout 2020, but there is more upside to capture in the year and years ahead. Serving the Canadian consumer is an important part of what we do, and our efforts will deliver enhanced value to our clients and growth to our Bank as we go forward. Our second priority is to continue -- is continuing our transformation journey with a determined focus on bending our cost base and reinvesting a substantial portion of savings into high return projects, particularly as it relates to process simplification and technology enhancements. And our third priority is to build on the advantages where we are performing well, including Commercial Banking and Private Wealth, on both sides of the border and in our Capital Markets business. Each of these businesses have plans to continue to grow and are also implementing new initiatives to enhance capabilities in fast growing market segments, like the innovation economy and sustainable finance. With that, let me now provide some color on our performance expectations for 2021 in each of our strategic business units. For our Canadian Personal Banking franchise, we will continue to build off our recent improvements and work to get our business back to market levels of growth and doing so consistently. Assuming pandemic-related constraints begin to ease in the latter half of calendar '21, we expect to see a pickup in…

And the first question is from Ebrahim Poonawala from Bank of America Securities. Please go ahead.

Good morning. I guess a couple of follow-up questions regarding your strategic priorities, Victor, in terms of reinvigorating the Canadian franchise. One, talk to us in terms of your outlook for mortgage growth. If we do have a decent mortgage market next year, do you think the businesses at a point where we should see peer like growth? And secondly, what does it mean, in terms of when you talk about tight expense management, investing, enhancing the technology platform? What should we expect in terms of the efficiency outlook, or just absolute expense growth as we think about next year?

Good morning, Ebrahim. Thanks for the question. So let me just -- I'll provide a couple of comments, and I'm going to hand off to Laura on the mortgage growth more specifically and to Hratch on the expense growth management going forward. So you'll recall that we said to you a year ago that our goal is to get our mortgage growth in particular, but our Canadian consumer franchise performing consistently, and at the very least in line with market. If you look at our numbers quarter-over-quarter sequentially over the course of the year, we are achieving that target. Last year, we're negative This year, we're quite positive in terms of spot balances. We expect this to continue. We expect to keep pace with the housing market as the housing market evolves and we certainly expect to keep pace with our competitors in terms of our investments and our mobile mortgage advisors and our product offering. With respect to expenses, we're trying to keep them into low single digits to reflect the economic reality. If things recover, we'll grow with that economy and maintain our capture of the upside. So why don't I do this? Laura could provide more detail on the progress that she's making leading the Canadian personal bank, and then Hratch can provide you a little more color commentary on expense management.

All right. Well, I think you answered that very well, Victor. So I don't know if I have anything to add other than, again, a lot of work has been done to ensure that we can deliver more consistent and sustainable performance. And I think that's what we're starting to see in mortgages, in particular. And as you mentioned, good news, we reverse the trend that we were on. And we're now starting to close the gap with the competition. So feeling very good about sort of the trajectory that we're on. And maybe over to Hratch on expenses.

Sure. Thanks, Laura. And I think Victor covered the punch line, Ebrahim, and good morning. So we continue to be focused on expense management. We think it's an important part of the transformation of our bank. We've proven that we can deliver efficiency. If you look at this quarter, down almost 2% on a year-over-year basis. For the full year, we contain expenses to 2%, in a year where we had tough environment on revenues, we contained operating leverage to modestly negative. And so we're focused on pre-provision earnings, and we're focused on operating leverage. That's the way we sort of guide our expense targets, if you will. And so going into next year, we're trying to get that pre-provision earnings to a growth trajectory, we're trying to get to positive operating leverage as soon as possible in what is a tough environment, right? So to do all of that, we're going to have to pull the levers and we think of expenses in a few buckets. The first bucket is revenue linked expenses, and number of those will be improving as performance improves. But that from an operating leverage perspective and a pre-provision earnings perspective, it doesn't work against our objective. What we're really focused on is the other two buckets, which is our investments to against the strategy and to transform the business and discretionary expenses. And so between those two, we are pulling the lever so that discretionary is eliminated, where it's not value creating. And we're investing in the right places, and net-net of those two, will actually manage the outcome to get the pre-provision earnings and operating leverage where we want to and as Victor said, in the current environment, we think that means that low single-digit recent restructuring we did this year, that's largely completed, it'll give us that full year benefit of $250 million we’ve talked about. And we telegraphed that at the time that's going to allow us to stay at that low single-digit level. We think we have opportunities to be at that level, while even accelerating investment by doing even more on efficiency initiatives as we go forward in '21.

Thank you very much.

Thank you. The next question is from John Aiken from Barclays. Please go ahead.

Hratch, just a quick follow on in terms of the efficiency discussion. I noted that you still got about CAD$200 million left from the restructuring charge taken this year. How much do you think that can benefit your expense plans in 2021?

Sure. Thank you, John, and that's a bit of accounting. So as we had mentioned on the last call, we anticipated to largely complete that in this fiscal year, and we have done that. So it is mostly complete from a taking action perspective. And so the benefits will start accruing. From an accounting perspective, what happens is, when folks elect deferred payments over time, then the accounting reserve will come down over time as those payments are made to individuals. And so you're going to see that climb down slowly over time, but the benefit in the earnings will already be realized for fiscal year 2021.

Thanks. If I can add one quick one on, I noted that FirstCaribbean moved from available for sale in terms of the accounting treatment. Can you update us in terms of where the deal with the transaction sits at this point?

Yes, let me just provide some perspective on that John, and then Hratch will get into some of the technicalities. Just to remind everyone, we have an engaged buyer with a genuine interest in the Caribbean banking sector and a proven track record in banking. Our business there like any other well run banking platform is adjusting sensibly to the economic reality of the pandemic. And it is good business, it's going to recover as the economy recovers. Our focus now is to continue to pursue the regulatory approval process, and that's been complicated by the COVID pandemic as well. When we have an important development on that front, we will advise our investors accordingly. This quarter was an accounting quarter, and I just want to pass it on to Hratch for some of the technicalities around that.

Sure. Thanks, Victor. And we -- you're going to have time as you do, John to go through the MD&A and the notes to our statements in the annual report and you'll see all of this reported there. So not much to add to what's in the disclosures, but for the benefit of folks on the call, really the accounting classification of held for sale and the assessment of recoverable value on goodwill both of those are governed by the relevant accounting guidance under IFRS. And this was really triggered by us following the guidance. So really delineating the accounting here from the deal, as Victor said. So the change is particularly with the accounting in the quarter were triggered by the increased uncertainty surrounding the deal, as we've described in the disclosures and we spoke about before complexity of the regulatory environment, COVID related complexities and so forth. And so that increased uncertainty, given the technical requirements here, when we consider the circumstances and the guidance, we determined it was appropriate to discontinue the held for sale accounting this quarter. And to revert to using an estimated value based on current market circumstances, for the purposes of assessing the goodwill versus using the terms of the actual proposed deal with GMV. And so that's what really drove that, but as Victor said, we continue to pursue the transaction.

Thanks, Hratch. Hopefully the rest of your questions won't be leading into the weeds on accounting. I will requeue.

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

Yes. Are there any other implications of that accounting change other than like the evaluation of the goodwill, which I assumed was on a regular quarter or something like that?

No, there wouldn't be, Gabe . So we had, as you recall, we had added disclosure specific to held for sale classification, there was a summary balance sheet and so forth, put in. And so that's really the only changes in the disclosures. In terms of how we were accounting for the business, we had continued to consolidate the business and the earnings coming in through the corporate and other segments. So that will continue.

Okay, my real question is on the mortgage growth strategy, and I guess the overall growth strategy for the Canadian retail business. And Victor, you mentioned the word -- market level growth and consistent growth and, Laura, you reiterated that. What are you doing differently this time, because a few years ago, we had a bit of a roller coaster move around in the mortgage growth rate, so it's really high at one point and really low. Like, what do you -- what are you doing differently to make sure it's more consistent and I guess, building better relationships overall.

Good morning, Gabriel. So I'm happy to take that one. I guess I would, you know, I think it's worth mentioning that you have a new management team in -- across the board, but overseeing mortgages in particular, and we've given full end-to-end accountability for client journeys to this management team, which I believe will make a difference and I guess two things. So on acquisition, I'd tell you that we're very focused on the quality of our growth and the anchoring of our new clients. And so that will certainly help us on a go-forward basis. And then secondly, you might recall in the last quarter, I spoke about retention. And while I tell you that we haven't been as successful as I would have liked in terms of retaining some of our past vintage clients when they came up for renewal, I believe we've laid the groundwork to ensure that we get not just better retention on a go-forward basis, but better acquisition. We've worked to increase our level and point of contact via the different channels we've had. We've eliminated friction points, et cetera. So all of that to say that, I expect we're going to see improvements on a go-forward basis in mortgages. And as Victor pointed out, this is all about laying the groundwork so that we can deliver you more consistent and sustainable performance.

Sounds like Investor Day material.

If I can just add to Laura's comments, because business is heading in the right direction. And it's all consistent with the long-term strategy that we've laid out. When we say building a relationship oriented bank for the modern world. You got to decouple not just the numbers that you're seeing in the business, but also some of the numbers that we don't accentuate as much like our client experience scores. Our client experience scores at CIBC are the highest that they've been in two decades, that has been a steady climb up. It is a reflection of all the things that we're doing to improve process to improve our product offerings, which are way more competitive than they were before. And super competitive relative to our peer group. And that's why we're starting to win business. On our checking account front, you have $6,000 in the bank with CIBC, you pay no fees. We have alternatives to our direct financial services is simply, if you have less, you can pay no fees to our direct nick. When it comes to our mutual fund offer, we launched our smart portfolios, which are more sharply priced than any other multi asset portfolio offered by our peer group. Again, you see a growth in the managed money portfolio. We've launched CIBC Goal Planner to build deeper relationships with our clients. All of this stitched together with Laura's leadership and the team's leadership around continuing that trajectory will deliver that against that performance gap that we have. And it'll close. And over time, the market will continue to see us as the bank that we are, a new bank, a relationship oriented bank and one that's ready to take on the future.

Thank you.

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

Hi, good morning. I just wanted to ask about the potential for reserve releases through this cycle. And specifically, what would be reasonable timing? And then also, where would it be more concentrated, consumer versus the commercial loan book?

Good morning, Meny. It's Shawn. So thanks for the question. We expect, as I mentioned in my prepared remarks that our impaired losses will increase going forward and peak sometime mid next year. So obviously an uncertain environment. But based on our current outlook, we expect to average somewhere in the low to mid 40 basis points for impaired losses. As those impairments come through, we would expect to see the performing allowance get pulled through as a function of that. And what's contributing to that impaired loss ratio, you would have seen this quarter we had a particularly low level of impairments this quarter that was driven by a combination of strong credit performance, but also some of the deferral activity that we’ve had, and we expect to see that deferral activity, particularly in the consumer side roll through. So as a result, we will see that those performing allowances sort of come through and offset some of those impaired losses in fiscal '21. In terms of sort of how that -- the rest of the performing allowance behaves relative to those loans that won't ever go impaired or statistically aren't expected to go impaired, that's going to be a function of a bunch of different moving pieces, credit performance, outlook. And so that will be over a six to eight quarter period, we expect to see most of that build that we saw over the course of fiscal '21. We were up about 79% with our allowances. You'd see that sort of pull-through, but that's going to be -- there may be timing mismatches between those releases and what you see on the impaired side.

If -- well, maybe switching gears a little bit, just on a pre-tax pre-provision basis, would you say -- do you have confidence that you can get to positive PTPP growth fiscal 2021?

Yes, Meny, that's our goal. That's our goal. That's -- winning market share and bending the cost curve done right with some economic tailwinds, we expect to start heading into positive territory.

And can you give us any more in terms of detail? Like how positive and more specifically, what are the key drivers there? Is it really about revenue more than expenses?

Yes, so Meny maybe I'll jump in and give a little bit more color. And obviously, I'll caveat that with -- it's a tough environment to predict as we all know that, but we'll base this on our current expectations. So I think as we look at the revenues this year, for the full year given the tough environment, we had just over 1% growth on the revenue side and that modestly negative operating leverage I spoke about, which drove the decrease in pre-provision earnings. So that's what we're trying to revert here. And we're going to look at both sides of that revenue and the expense. And we alluded a bit to expenses earlier, but I think the revenue side will be part of the story. So we are seeing some good momentum as we talked about in the retail business as well as other businesses. And so from an NII perspective, we're going to continue have pressure from lower interest rates, but the balanced growth with client business that we're doing in all of our businesses, there's good momentum. And we think as we get into that latter part of the year, last year, the latter -- next year in the latter half, once the recovery takes hold, we think those will accelerate. And so we think NII trajectory will start shifting. From the fee perspective, we are also seeing some good momentum there. We are seeing the recoveries on the card side, some of the foreign exchange on that is still lagging. But all of those things as well later next year will come in. Wealth Management side and investment fees, we've seen good momentum as we've talked about and we expect if markets stay cooperative, that continues as well. And then the Capital Markets side, we've seen some good strength on trading, obviously a tough year as a comp. But the team's going to be working very hard to produce growth on top of the year this year from a revenue perspective. So we think that bodes well for revenue relative to where we were this year, hoping to bring revenues in at a higher pace than this year. And then as I said, we're trying to contain the expenses to that low single digits and as much contained as possible. So between those two as we get later into the next year, we think we can turn this around on the PP and eventually operating leverage as well.

Thank you.

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

Good morning, Victor. In your opening remarks, you talked about robust net flows on both sides of the border. And there's a lot of cash on the sidelines at low rates being reinvested industry-wide. But is there anything you can elaborate on that kind of specific to CIBC? And is it directed towards any certain client segment like retail private wealth or institutional?

Yes. Good morning, Scott. Thank you for that question. I'd say there's a couple of things that are driving our net flows on both sides of the border. One is investment performance. Our investment performance in our Canadian asset management business and in our U.S management -- asset management platform is in the top half and top quartile of performance, consistently good across important asset classes to our clients. I'd say the second thing is we've been really working hard, particularly in the Canadian market, where our footprint is larger, to ensure that our product offering is competitive relative to our peer group and is relevant to our clients. And that's what's driving our growth. We launched something called our Smart Portfolios last year, with smart beta embedded in them and that is really, really getting good traction in our Canadian personal banking franchise. Then I'd say the third piece is on the higher net worth segment. The strategy of putting together Commercial Banking and Wealth Management where we're seeing the monetization of assets from our clients in our Commercial Banking business, from the sale businesses to private equity or to strategic buyers, we're capturing those assets into our private wealth business in the U.S and our private wealth business in Canada. Notably, in the U.S., we've gone from 0 to over 70 billion in AUA over the last 6 years. And in the fall of this year, Barron's ranked as the number two registered investment advisor in the United States. It's CIBC Private Wealth Management something that we don't focus on enough. So again, three things. Investment performance, products that are relevant to our clients and the referral activity within our bank is quite robust. And we expect that to continue.

And Victor you talked about the Commercial and Wealth Management connection. Maybe Laura, maybe you can kind of talk about the strategy on the retail side and in the Wealth Management, and how that two may coincide?

Sure, Scott. I'll cover sort of some of the retail and maybe on the Wealth side if Jon wanted to add in his views. I think as you heard from Victor, a lot of the work that we've done, I'd say in retail was really to start with laying that groundwork to deliver again the consistent sustainable earnings. And so a lot of what we've done, we've reprioritized our investments into better digital capabilities. So really on the starting with the sales and servicing capabilities, and then we're really focused on increasing our sales force productivity. Victor referenced earlier on before the Q&A, he talked about that financial planning tool that we have. So we think that's going to allow us to elevate our advice offering, because we have our clients who can come in either to banking centers, or they can do sessions with us virtually. We think that's actually going to help move the dial. So we're really focused on, I would say, those segments, where we see that we can grow, and I'm going to save and regain our natural market share. So we've done all the prioritization and I'd say 2021 is really about execution. So what we've invested in has to deliver results. We are being granular, we are being targeted, and I think you're going to see and we're starting to see some of the better client experience, and ultimately better results as we go forward for our shareholders. And maybe I'll stop there and see if Jon wants to add in on the Wealth side.

So most of -- what most of what needs to be said has been said. The one thing I would add is our confidence level is high. And we are adding people in every channel in the Wealth side to keep up with the flows. Everything we talk about is working, we need more people to handle the volume.

Thank you very much.

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

Hi, good morning. Just thinking about the all bank NIM, and you did mention the impact from higher liquidity in your comments as well. Wondering how we should think about this going into fiscal '21. So maybe we can think about like what was the impact in fiscal '21 from the additional liquidity on your balance sheet and how do you think that unfolds that through fiscal '21 and how does that roll through your all bank NIM? Just hoping to get a little bit more color on that.

Very happy to elaborate on that. So, yes, if you look at the all bank NIM, I think it's been a story of degradation we saw through the year and then now stabilizing, right? So this quarter all bank NIM was down only 1 basis points and really the drivers behind that are some of the benefits that we saw in the retail NIM with the recovery there offset by a small pressure from changes in mix towards lower yielding parts of the balance sheet. So that part is abating and that's related to your comments with respect to the excess liquidity. So if I look at that piece particularly, it has been something that's built up since the middle of the year, and we've spoken about it quite a bit. It's really because of the growth in deposits versus loans. We are pleased to have been growing deposits very robustly with our clients. And when you look at our data, rise over $80 billion over the year of growth in deposits versus just less than $20 billion on loans. So that delta has added up to the liquidity on the balance sheet. But that has stabilized. In terms of the cost of that, it's been sort of and it varies quarter-over-quarter, but it's been in the teens territory in terms of basis points impact to NIM. But I should point out it's not a big negative to NII. It's really the balance so that if you do the math just on the numbers I gave you, it would say 60, but it's more like a $50 billion balance increase to the denominator that's driving it. So when that goes away, that can recover pretty quickly. So when we get into next year, we do think that liquidity is going to get deployed, we do think that loan growth is going to accelerate and we feel confident about that. You heard from Victor and the businesses, just moment -- a moment ago. So as that happens, we think that will start coming back down and that'll help offset some of the pressure that we are still going to have from rates. And so net-net I think those will help moderate the decrease in NIM from here.

And is that built into -- you did a great job kind of outlining how you think revenue and expenses flow next year. Is that built into your expectations? Or is it not?

No, absolutely it is. So what we would have built in expectations is stable NIMs in the U.S. as we've talked about, we feel pretty good about that. A small gradual decline in retail as we absorb the impact of lower rates and a normalization of the excess liquidity. All of those are in our forecast.

Perfect. And then just second, there was a charge related to the consolidation of the real estate portfolio. Just hoping you can unpack what that is.

Yes, sure. Happy to do that. And maybe Victor can start with the overall Square project, because it is related to our consolidation in Square and then I'll give you a bit more on the accounting.

Yes. Thanks again for that question. Again, I take us back to what are we trying to achieve over the long-term, we're playing the long game here. Well before the pandemic, we had a vision to consolidate our head office footprint and the 23 locations that we have scattered across the Greater Toronto Area where a significant amount of our head office team is located into a modern purpose built headquarters, and it's called CIBC Square. It exemplifies the future of work. And what I mean by that is, it's flexible agile space, collaborative space, modern space, it reinforces employee wellness and convenience and we'll happy to highlight more of that into the future as we start moving in there, and it's equipped with the most advanced ventilation systems and technology. So now with the pandemic, it's allowed us to accelerate our consolidation plan, which is the result of some of the accounting that we undertook this quarter. As we move into a more normal environment, I got three points to highlight here. One is our team is going to return to the office including CIBC Square into our other locations across Canada and the U.S. We're going to do this with safety in mind, health in mind, and we're going to do in a very staged fashion because keeping our team healthy and well and engaged, is the most important thing to us. Some of our team members are going to work remotely, work permanently. We've had great success with our contact center team working from home. They're engaged, they're productive, they're speaking to our clients and making their experience much better. And the other thing I'll say is this. I think it's important to recognize that many of our CIBC team members have continued to serve our clients in the workplace throughout the pandemic. That includes in our banking centers, in our currency operations, our technology operations and it's really been a team effort. I mean, many of us have worked remotely, some of us have had to go to the workplace each and every day. I admire them for their courage and what we've done is tried to keep them healthy, and safe and well productive, while engaged with our clients. Now, the accounting of what happens with the real estate, Hratch, let me hand it off to you. Not -- to just want you to talk about accounting, but it's part of the question that was asked.

Sure. Thank you. Thank you, Victor. Yes, so as Victor said, it was important context, right. This isn't something we've done in isolation, it was always part of the plan. We are not taking on more real estate, we are moving into Square taking on square footage and we were always going to give up square footage. But we've always got our eye on optimizing shareholder value and creating value for shareholders. So in the current circumstance, we sort of looked at how we could optimize the exits that we were already going to do. Some of the spaces, it's sitting vacant at this point in time with teams working from home, there's cleaning expenses, utilities and so forth. So there really was a positive payback for our shareholders when we looked at it to exiting some of the space earlier. And then this is where it gets into the accounting, the technicals of the accounting since we adopted IFRS 16 and put the right of use assets on the balance sheet is that when you vacate space, at that point in time, you've got to take the charge. And so this was a quarter where we vacated a number of those spaces, as people work-from-home until we get into Square as Victor mentioned. And so that was the CAD$114 million charge related to the right of use assets plus a number of other things related to it with respect to the fixed assets on those properties and so forth. But as I said, there's a positive payback for our shareholders on that and that's why we took the decision when we did.

And just sorry, what is the positive payback? And so this is just determination of leases essentially? Is that essentially it?

So it is exit of the existing leases. There is positive payback from a few things. One, there is a sublease recovery assumption we've been very modest with that sublease recovery assumption that's netted off that CAD$114 million. We understand it's a tough environment, but there are some leases here with value. The second one is related to some of those other expenses related to the properties I spoke about. And then the third one is really the savings on the expenses on the future rent. But that to be fair, that offsets to some extent with the additional new cost of moving into Square and those expenses.

Great. Thank you very much.

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

Thanks. My question is for Shawn. Shawn, I just want to take your answer on the PCL outlook a step further, just because it's important to my estimates. I think you said that the impaired loss ratio would be in the low to mid 40 basis point range, but that's going to be offset by some performing releases. So my question is, how should we think about the total PCL ratio for 2021?

Yes, thanks for the question. Look, the behavior of the performing provision is it's going to be variable through the year. I mean, as I said in the earlier remarks, we built a significant amount of allowance coming into the pandemic over the course of Q2 and Q3, in particular, a little bit this quarter as well. And we anticipate that that would kind of run through that incremental amount holding all else constant, we would run through the P&L over call it a 6 to 8 quarter period. But how that's going to play out quarter-to-quarter is going to vary based on a whole bunch of factors. So I'm reluctant to put a particular number around it, I'd say there is a -- there is an amount of that performing provision that is going to move across as those impaired loans move, because there's a certain amount of that performing allowance that would be booked against those particular loans. But for the balance of the portfolio, that's going to be as we've talked about the macroeconomic factors, credit behavior over the course of time. And so I think that's kind of the guidance that we could provide at this point. And the other thing I would say is over that 6 to 8 quarter period, it's likely a little bit more front end loaded and back end.

You mean the release of the performance is more front end loaded?

Just on the basis of the way the allowances build, and then as the economic -- if things play out the way there's -- the way they're forecasted to at least at this point, you'd see those macroeconomic variables improve. And so you'd see some level of that performing allowance come through over the course of time. Generally, it will be probably more leading indicator, but there's still, as I say, quite a bit of uncertainty. It will be more front end loaded, we would expect.

Got you. And then at the end of that 6 to 8 quarter period, should we expect the ACL to revert back to historical levels? Or would it remain elevated from where you're at right now?

We'll take into account, frankly, all of the new information that we get having gone through this pandemic. There will be presumably portfolio growth at the same time. So hard to say where it'll land at the end. But if you think about sort of the arc of the whole exercise, when the pandemic hit, we took -- went through the portfolios, generated or recognized allowances. When you get to the other side of all of this, where will those provisions be, you'd expect to see back to some level of normalcy, but we'll be taking into account all of the information that we gained through this whole experience to inform our allowances at the end of it.

Okay, thanks. And if I could squeak another one in there. So last quarter you provided some disclosure on what delinquency rates would be in the Canadian consumer portfolio, excluding the impact of deferrals. It looks like residential mortgages and personal lending is trending better than expected, but cards a bit worse. Can you talk about the trends moving forward?

Lemar, it's Geoff here. Can I ask you to requeue? We got a number of people in line and we were going to run over.

Yes, sure.

everybody. We will catch up after or requeue. Thanks.

No problem. Thanks.

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

Good morning. Shawn, if you could go back to your -- back to you referred to getting impaireds or impaireds approaching 40 or 45 points in 2021. Now impaired loan losses were around 17 basis points this quarter, if I’m doing it correctly. That would imply 2x to 2.5x increase in the impaireds in 2021. Is really what you're guiding us to about a 2x to 2.5x increase from this quarter. And second, if so, what line items or what loans in particular? Is it credit cards here you would be sensitive to, or commercial? If you could help me think through that.

Yes. So as I mentioned the -- this quarter, the impaired losses were particularly low and impacted pretty significantly in the credit cards side from the deferrals. So we would expect -- so in answer your question, yes, we're talking about low to mid 40s for impaired. Some of that is going to be catching up for the credit card, in particular deferrals that we'll be running through. So I think on the consumer side, you'll see it less so on the business and government side, that's as you know, historically pretty lumpy. We do expect it to come through over the course of '21. But in terms of the particular outperformance this quarter relative to what we anticipate and what our allowances that we have built would be reflective of, it'll be in part to the consumer side, and then the business and government which will be lumpy and episodic over the course of the year is still our expectation.

Thank you.

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

Hi, thank you. Question for Laura Dottori. Laura, as we do a post mortem on 2020, I've done some preliminary math, but I'm hoping you've done this math too and you can provide some guidance on it. I'm interested in understanding the revenue impact in credit cards. So -- and I don't really need it line by line, I'm just thinking about the drop in net interest income, the relief you provided, the drop in balances, the drop in revolve rates, you name it, fees. So if we look at 2020 versus 2019, how much did that drop? And how much do you think you can recoup in a recovery? And maybe you can speak to the results so far in November? What is credit card usage look like in November? Are we bouncing back? Are balances back up? Are people using the cards again? Are they spending on Christmas? So any kind of thought process there on just helping me pencil in a bit of revenue pickup from people going back into credit cards?

Okay. Thanks, Darko. That sounded more like a statement than a question. But let me see if I can provide a little bit of color. I guess I'd start just by saying a lot of sort of the performance we're going to see on a go-forward basis will matter like in terms of economic activity, consumer activity. I would tell you that in the month of November, we have seen increased activity. We're expecting from an NII perspective, and maybe this is a bit broader than cards, but as you know, cards have higher margin, so tends to drive more of the business. We do expect to see NII growth in the latter half of 2021, so somewhere around the second quarter. So I do think that's going to help offset some of that NIM compression that Hratch was talking about earlier. I think we're going to see some good usage from the cash back card that Victor talked about with our Dividend Enhancement Card and the great ratings that we have. When I looked at our applications for those cards, they're up significantly, assuming those get utilized and we have revolving balances, I would expect to see a better trajectory, if you will, in 2021 than we've seen in 2020. As you saw, and I think we provided some of that in our disclosure, you can see where purchase volumes have come back somewhat and then remains to be seen if it continues, but for the time being, I would tell you that we're feeling pretty good including our Aventura card. We did a really good job in my view in terms of modifying some of the rewards that we provide, so that they're not just travel. And in fact from an outstandings perspective, we've seen an increase in our outstanding and I would say almost flat from a purchase volume perspective. So I think we've managed to do well in that regard. But as far as everyday rewards cash back cards go, that's I would say we're seeing more activity there from a purchase volume perspective, and I would expect to see more from an outstandings. But it really depends on the way forward from a consumer activity perspective. Does that help answer the questions you had?

I prefer to hear the revenue impact in 2020 versus 2019. If you're not willing to provide that, that's fine. So I'd love to know though in your assessment of 2020, how much credit card revenues were down versus 2019 in totality if that didn't have that number handy. I mean …

Maybe Darko I will jump in. It's Hratch. I think, Laura, can maybe answer the -- anything more on the business side, if you want, right? But we do not disclose P&L at the product level. So let me start with that. But I will give you some pieces just to help you think through what you're thinking through. And I think you're trying to get to what this means for '21 more importantly. So when I look at this year, you're right, you mentioned a number of the pieces, you can do the math on the credit card interest rate really from the basis points you see, most of the 5 basis points increase this quarter, as I said, was related to that. But I'll save you the math on that one. That was probably around sort of between the two quarters, it really impacted It was kind of 40 -- just over CAD$40 million for the year. So that's one impact. The other one is what you would see coming in, in the card fees line, in our SFI, which I'm sure you've looked at. And then there's also a piece in the FX other than trading piece that's related to cards, FX transactions. So on those, the cards line there is a broader line. So when you really just look at the personal and business banking element of that, fees on cards this quarter were recovered. They were down a bit more than this in the last couple of quarters, but this quarter they were still down about just over CAD$10 million. And that number may have been double that over the last couple of quarters. And then on the FX side as well, there is about another similar number just over CAD$10 million this quarter. So when you look at about '20 or so this quarter from that line item, and as I said that line was larger in Q3 and Q2. And then you put that together with the CAD$40 million from the interest rate relief and then the NII balance, I'm sure you can do based on the balance drop and the average outstanding you saw, that'll get you a pretty good estimate for the year. Is that helpful?

Thanks. Yes, that’s very helpful. That’s what I was looking for. Thanks very much.

Thanks, Darko.

Thank you. The next question is from Nigel D’Souza from Veritas Investment. Please go ahead. Nigel D’Souza: Thank you. Good morning. I had a follow-up for you on the payment deferrals for your credit card book. And when I look at your reactive versus proactive portfolios, it looks like there's a divergence there in credit performance. And I was wondering if you could touch on what characteristics specific to the proactive portfolio that's driving less favorable experience? Because when I look at FICO scores, they seem to be relatively similar.

Yes. Good morning. Thanks for the question. So the population that we show is the proactive. We had identified a group of clients at the outset of the pandemic, who were already experiencing some level of difficulty going into the pandemic. And so we provided the -- that group with the proactive deferrals. At the time, if you -- and I think we had this disclosure in our -- in last quarter's investor presentation, that group would have been -- 68% of that group would have been current coming into the pandemic. So with the deferrals running off, that group is now 75% current, so actually an uptick. So they've had more time to sort of address their financial situations, we provided that relief. And so relative to coming into the pandemic, they're actually doing better at this point. Now it's still early stages, and we will continue to watch that portfolio very carefully. But that's what gives rise to the differential between the two population. Nigel D’Souza: Okay. That's really helpful. And just a quick question on performing loan loss provisions. When I look at your forward looking indicators, it looks like they've improved across each of your scenarios. So the offset to that, the mall parameter updates is that more so management overlay and scenario weighting driven? Could you just provide some color there?

So we also had a scenario weight change, so we put more weighting towards the downside from the upside. So that would have also contributed to it. But beyond that, it's been sort of regular way, risk rating activity et cetera, that's contributed to the performing balance this quarter. Nigel D’Souza: Okay. Thank you. I appreciate the color.

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

Okay. Thank you. Okay. Maybe, Victor, two quick questions for you. You've obviously done very well by the clients. A lot of the actions you've taken, maybe waiving fees and what have you, net beneficial both to clients and I guess to customer retention. Do you think brokerage commissions will go to 0 in Canada?

I don't know. I think the most important thing in our model and I would say that we're not the low cost producer. Our model is relationship based. Actually, if you lift the hood on our Investors Edge business, which sits within direct financial services as does simply financial. The biggest, most substantive part there is our Premium Edge service, which is very competitively priced. Clients are trading from CAD$4.95, they actually have a relationship manager. And it's very connected to our most affluent clients. So the business model works very, very well. For other clients, within our personal banks that are in sort of mass affluent and core segments, were priced at CAD$6.95, which is market leading for the peer group banks. The offering is very, very good, satisfies their needs. So we will stay competitive, that's the most important thing I can tell you. And we will stay relationship oriented in terms of our focus.

Okay. And so when you look ahead, and assuming credit is enhanced, so to speak, and you think about the recovery and your complex of businesses here, do you feel like it's going to be more of a consumer or commercial led recovery?

Well, let me just take a step back and talk about sort of my perspective on the -- on our perspective on the economy today. I think it's important to recognize that there are parts of our economy, particularly in the discretionary consumer sector and in the small business sector, that have really been feeling the economic fallout of the pandemic. It's going to take some time for them to recover. And they're an important part of our economy. So that is something that we need to be very mindful of. We don't talk about it enough. Having said that, I believe in Canadian and American entrepreneurial spirit, and I see businesses starting to retool in terms of their business models. And I think that they'll come back, perhaps to some targeted government support, they'll come back more quickly and we'll be there to support them. From a broader macro …

Thank you.

So from a broader …

No, I think you can give me the point. I mean I think you've got the U.S. franchise as well, which I suspect is actually very well-positioned with improved sentiment as well, no?

It is. Mike Capatides is on the call. So maybe, Mike, if you want to chime in on that?

Sure. Thanks for the question. We think we are incredibly well-positioned for that. We had a very good outing earlier this year with the PPP program. We got applications and funding in for literally every one of our clients who requested it. A lot of goodwill. Our relationship based approach to commercial banking, we're in contact with our customers around the clock. And I will say looking forward, we're positioned for growth with those customers. And lastly our Wealth platform, you heard earlier that we've had a positive net flows, literally every quarter on the back of performance in the strength of CIBC. But something has gone unnoticed as we literally built out our private banking platform. And the loan balances there are year-over-year are up almost 100%. So we're feeling good about how we're positioned for the coming year with our -- with customer sentiment.

Okay. I appreciate that. Thank you. I know it's been a long call. So I'll leave it at there. Thank you.

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

Hi, good morning. I wanted to go back to Laura on your mortgage growth and clearly you've had a pretty decent pickup. But when I look at your market share among the big six, you actually lost a bit more market share this quarter sequentially than last. So I'm wondering if you're comfortable in maybe giving us a timeline on when you think CIBC could see that market share steady or potentially grow?

Hey, Mike. I did -- I have the chart that you prepared that is locked in my mind. So again, I do want to highlight that and you're right, like we're still in that sixth place from a year-over-year growth perspective, lost some ground in the last month. But again, I just want to point out and Victor said that, we have a lot tighter performance distribution. I do feel we're headed in the right direction and the consistent sustainable performance is really what matters the most in this one. So I don't know that I'm prepared to tell you, it's one or two quarters in. What I would expect and again, there's movement from quarter-to-quarter, but that you will see a gradual improvement over the course of 2021. That would be the expectation.

Okay, fair enough. And then really quickly, what are your thoughts on mortgages being an anchor product for your business? It's something that I tend to think about with respect to what the broader implications might have been on the share that you've lost over, say, like the past year, like when you do lose a client on a renewal that doesn't stay with CIBC, does that typically mean that they take over a lot of their other services with them to the competitor?

That really depends on the client and there are differing views out there. There's a lot of research that tells you that as we go more digital, clients are more inclined to want to have that one product from that one institution. The way we operate and the competition were all the same. Once we sell a product, whether it's a mortgage, a credit card, you name it, we all work to anchor the client because it's just better we know our client better, it's better from a risk management perspective, usually better for the clients as well. But remains to be seen, look, a lot of the mortgage growth we had in the past those were mortgages from clients that dealt elsewhere. So it depends on the client. I guess, all I can leave you with is that, like everyone, we work really hard from when we do provide a mortgage to try to anchor that client because, A, we think it's better for the client and better for the organization.

Okay. Thank you for the insight.

Thank you. Ladies and gentlemen, this will conclude today's question-and-answer session. I'd like to turn the meeting back over to Victor.

Thank you, operator, and thank you all for your very good questions and your patience as we've kind of managed through an extended webcast. Let me just close as follows. I want to tell you that our Bank has performed well in a very challenging 2022, supported by a sound strategy focused on deep client relationships, diversified earnings mix and a conservative approach to risk and expense management. Our investments in talent and technology positioned us well to provide remote client support throughout the pandemic and it's going to provide us with that support going forward. In the year ahead, whatever the economic trajectory, we will capture the upside as economic tailwinds prevail, and we have a strong balance sheet to weather any prolonged economic downturns. Today, we also announced that the honorable John Manley will be retiring as the Chair of our Board. And Kate Stevenson, who has served as a Director of CIBC for 9 years will take on the role of Chair upon a reelection at our annual meeting in 2021. John's strong leadership and his commitment to inclusion have helped us -- help guide our Bank through a period of change in the industry, and strengthened our CIBC culture. I want to thank John for his guidance and counsel, and I look forward to working with Kate, who bring a wealth of leadership experience to her new role. And before we end today's call, I want to thank our 44,000 CIBC colleagues globally for honoring our history of being there for our clients in challenging times. I couldn't be more proud of how our CIBC team has rallied to support our clients, to support our communities and one another as we lived our purpose. And to our shareholders, thank you for your continued support. Have a Safe and happy holiday season. And we'll speak to you in the new calendar year. Take care.

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