Canadian Imperial Bank of Commerce (CM) 2017 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the CIBC Quarterly Financial Results Conference Call. Please be advised that this call is being recorded.

I would like to turn the meeting over to John Ferren, Senior Vice President, Corporate CFO and Investor Relations, CIBC. Please go ahead, Mr. Ferren.

Thank you. Good morning, and thank you, everyone, for joining us this morning. CIBC's senior executives will review CIBC's results for the third quarter of 2017 that were released to the market earlier this morning. The documents referenced on this call, including CIBC's news release, investor presentation and financial supplements, can all be found on our website at cibc.com. An archive of this audio webcast will also be available on our website later today.

This morning's agenda will include opening remarks from Victor Dodig, CIBC's President and Chief Executive Officer; Kevin Glass, our Chief Financial Officer, will follow with a financial review; and Laura Dottori-Attanasio, our Chief Risk Officer, will provide a risk management update.

With us for the question-and-answer period are CIBC's business leaders, including Harry Culham, Jon Hountalas, Christina Kramer and Larry Richman as well as other senior officers of the bank.

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 Victor.

Thanks, John. Good morning, everyone, and thank you for joining us. CIBC reported solid third quarter results this morning with adjusted earnings of $1.2 billion, which is up 9% from last year. Our strong performance was driven by continued volume growth across our businesses, good credit performance, positive operating leverage and the contribution of PrivateBank earnings since June 23.

On a per share basis, this quarter's adjusted earnings of $2.77 were up 4% from last year, marking our 12th consecutive quarter of year-over-year EPS growth. And we ended the quarter in a strong capital position, with a CET1 ratio of 10.4% that was well above our stated target of remaining above 10%. With consideration to our strong capital position and reflecting our positive outlook, we announced a $0.03 dividend increase today, taking our quarterly dividend to our common equity shareholders to $1.30 per share.

While delivering strong financial results, we continued to make progress against our goal of becoming the leader in client experience. In our most recent Ipsos Net Promoter Score, our gap to #1 narrowed to its smallest ever, and we are trending towards our highest fiscal year-end score. Our entire CIBC team is being empowered to help us accomplish our client experience goals. And because of this, we're building very good momentum. We're focused on building enduring relationships with our clients and helping them through good and through difficult times.

I want to point out the example of what our CIBC team has done to come together to support our clients during the British Columbia forest fires. We put special measures in place to help our clients manage their finances through this difficult time. We helped them make special payments arrangements on mortgages, loans and credit cards. We reversed service fees and non-CIBC ATM withdrawal fees on personal accounts, and we've provided access to funds in their guaranteed investment certificates. From setting up mobile banking trailers at evacuation centers to storing humanitarian supplies for evacuees, our focus has been on listening to our clients and offering to help them. And on that point, I want to thank our team members for dedicating their energy and commitment to make CIBC a great bank for our clients. In addition to our client focus, we continue to advance our priorities of simplifying our business and innovating for our clients.

I'm going to highlight some of our achievements in these areas as I review the performance of our business segments. But before I do that, I want to introduce you to some new members of our senior leadership team. This past June, we announced the promotions of Christina Kramer and Jon Hountalas. Christina is leading our personal and small business banking team, and Jon is the Head of Canadian Commercial Banking and Wealth Management. We also announced the appointments of Larry Richman to head up our U.S. operations; Deepak Khandelwal, who's going to lead a new functional group dedicated to client connectivity and innovation; and Sandy Sharman as our Chief Human Resources and Communications Officer. These changes are part of a natural evolution that is further embedding a client-first culture at CIBC, enabling the execution of our strategy and developing the next generation of our leaders. It's notable that as part of these changes, we've moved more than 40 leaders across our bank with the notion of cross-pollinating ideas and further strengthening our talent pool. I'm also pleased with our progress in advancing women at our bank. With the broader leadership changes we've recently announced, nearly half of the individuals we promoted were our talented female executives.

So now let me return to our business unit results. Canadian Retail and Business Banking delivered adjusted earnings of $720 million, and that's up 8% from a year ago. Volume growth across all our products and higher fee revenue contributed to strong revenue growth of 5%. Margins improved 1 basis point, and we delivered positive operating leverage this quarter in our retail business. We're proud of the investments we continue to make to advance our digital and mobile technology to meet the evolving needs of our clients. And on this front, we announced last week the launch of CIBC's new direct banking brand, Simplii Financial. Simplii is about growth and it's about client focus. It will meet the needs of Canadians who value no-fee daily banking and great rates through online, mobile and telephone channels. By bringing our direct banking offer in-house, we're giving ourselves greater control and flexibility, and we'll be better positioned for incremental growth opportunities going forward.

Also of note this quarter was the #1 ranking our bank received for the third consecutive year in an industry survey of financial advisers conducted by Investment Executive. Being the #1 choice for our clients starts with having a committed and confident team, and these results underscore what we see every day: Our advisers are proud of our bank, our advisers are focused on our clients and they feel very well supported in helping our clients meet their long-term goals. My colleague, Christina Kramer, is here this morning to answer any questions you may have about Retail and Business Banking.

Let me turn to our Canadian Wealth Management business, where adjusted earnings were $136 million, up 10% from last year, driven by higher fee-based revenue and asset growth. These results reflect the benefits of ongoing investments, including the addition of client-facing roles that will help us drive growth in the Canadian high net worth market. We're also focused on offering our Wealth Management clients choice across our investment products and are doing that through a very competitive range of offers that meet their needs. This quarter, to improve value and accessibility for Canadian investors, we introduced a suite of lower-cost CIBC passive portfolios. We also enhanced our investment lineup with management fee reductions, lower investment minimums and a simplified product offering. And for our institutional investors, we launched the CIBC active global currency pool, leveraging our 20-year track record of managing active currency strategies. My colleague, Jon Hountalas, is here this morning to answer questions on our Canadian Wealth Management business.

Turning to Capital Markets. We reported adjusted earnings of $252 million compared to $290 million last year and $267 million in the second quarter. This was another strong quarter for Capital Markets, with balanced performance across our business. In global markets, results were supported by higher foreign exchange trading and higher global finance revenues. In corporate and investment banking, revenue was up $34 million or 12% from the second quarter on the strength of higher equity and debt underwriting and higher corporate banking revenue. For the quarter, CIBC ranked #1 in both equity new issues, with a market share of 14% as well as advisory services with $8.4 billion in deal value. Our broad-based and client-driven results across the core of our Capital Markets business help to offset the impact we would have otherwise seen from the runoff of TRS revenue.

During the quarter, CIBC was named Best Derivatives House in Canada for the fourth year in a row by GlobalCapital. The award recognizes firms for their innovation, their market impact, performance, client feedback and uniqueness of approach based on interviews of key market participants. And in Capital Markets, we continue to make important strategic investments in both talent and technology. These investments are all geared to meeting our clients' needs across our business and are focused on continuing to deliver innovative solutions for our clients. And my colleague, Harry Culham, is here this morning to answer any questions you may have on our Capital Markets business.

Our U.S. Commercial and Wealth Management business includes results from the PrivateBank, CIBC Atlantic Trust and our U.S. real estate finance business. It's in keeping with what we told you in our last call and we want to provide transparency on our U.S. performance. Our adjusted earnings from this segment of $44 million were $19 million higher than last year, primarily due to the inclusion of 39 days of PrivateBank results. Excluding the PrivateBank contributions, combined revenue from our U.S. real estate finance and CIBC Atlantic Trust units was up 15% year-over-year. Although we've just closed the acquisition of PrivateBank, we're already benefiting from the combination of our 2 banks. Integration efforts are proceeding very well, and there's lots of excitement on both our clients and our team members on the opportunities that lie ahead. We've already begun to expand our commercial and corporate banking offer to our North American clients as we look to leverage our more comprehensive U.S. cash management and deposit-taking capability. In the Wealth Management space, the combination of the PrivateBank and CIBC Atlantic Trust creates a platform of $40 billion of assets under administration. We've seen lots of early referral activity across our expanded team of private bankers, as they look to leverage this platform to serve the full lending and deposit-taking needs of our U.S. Wealth Management clients.

And to further our U.S. growth strategy, we also announced during the quarter the acquisition of Chicago-based Geneva Advisors. The addition of Geneva Advisors will bring new client relationships and another $8 billion of assets under management, adding further scale to our U.S. Wealth Management platform. I might add that 3.5 years ago, we had 0 in U.S. Wealth Management assets and today, we have close to $50 billion. We look forward to closing our acquisition with Geneva and welcoming the team to the CIBC team.

As we bring all of our U.S. teams together, one of our integration milestones will be the rebranding of our U.S. region to a unified CIBC brand. We'll be formally announcing the details on that next month. Having our entire team operating under the CIBC brand is exciting, and it's an important way of building our presence in the U.S. market as we go forward. My colleague Larry Richman, sitting right here beside me, is here this morning to answer any questions you have on U.S. Commercial Banking and Wealth Management.

In summary, we're very pleased with our results and we're very pleased with the consistency of our performance this quarter and on a year-to-date basis. It's been a period of significant transformation for CIBC, as we continue to focus on our clients and position our bank to deliver growth for our shareholders.

Before I pass it on to Kevin, I just want to finish my remarks with some perspective on the current operating environment and what it means for CIBC. While interest rates in Canada increased in July, they remain low by historic standards, and we're not expecting a step-wise decline in consumer lending activity. With GDP growth to 3% in the first 6 months of 2017, the consensus outlook at the current time is for another 25 basis point increase before year-end and potentially another 50 basis points in 2018, assuming U.S. trade policy does not prove to be a major barrier to Canadian economic growth. The expected impact for CIBC's Canadian business is a moderation in consumer and mortgage lending activity to reflect the higher interest rate environment and regulatory measures that have been implemented to slow the housing market. However, business credit demand should remain healthy in an improving economy.

In the U.S., the interest rate outlook is similar to that in Canada, with a 25 basis point interest rate increase expected in the second half of 2017 and a further 50 basis points in 2018 as the economy is expected to improve. If the U.S. carries out its proposed tax reform, our Wealth Management business south of the border should also benefit from a greater high net worth savings pool.

So that's all been a mouthful. I want to now turn it over to our CFO, Kevin Glass, to review our third quarter financial performance in more detail. Kevin, over to you.

Thanks, Victor. My presentation will refer to the slides that are posted on our website, starting with Slide 5. So as you can see, we had very solid results this quarter. We reported net income of $1.1 billion and earnings per share of $2.60. Items of note during the quarter reduced our reported earnings by $0.17 per share, and these included an increase in legal provisions of $0.08 per share and transaction integration-related costs associated with the acquisition of the PrivateBank of $0.07 per share. So adjusting for these items of note, our net income was $1.2 billion and EPS was $2.77. Our Basel III CET1 ratio was 10.4%. Our return on equity was over 17%, and we increased our quarterly dividend by $0.03 to $1.30.

The balance of my presentation will be focused on adjusted results, which exclude items of note. We have included slides with reported results in the Appendix of the presentation. Let me start with the performance of our business segments, beginning with the results for Canadian Retail and Business Banking on Slide 6. Canadian Retail and Business Banking recorded another quarter of solid revenue and earnings growth, positive operating leverage and good credit performance. Revenue for the quarter was $2.3 billion, up 5% from last year, driven by growth in both personal and business banking.

Personal banking revenue of $1.9 billion was up 5% from the same period last year, driven by strong and broad-based volume growth. Total assets were up 11%, saved by residential mortgage growth of 13%. Our personal lending portfolios, including cards, grew 6% as we continued to see improving results in this area. Personal deposits and GIC growth of 7% was driven by higher checking and savings account balances.

Business banking revenue was $467 million, up 7% from last year, driven by strong deposits and lending volume growth and higher credit-related fees, partially offset by narrower deposit spreads. Business deposits in GICs were up 13% and business lending balances were up 9% from the same period last year.

Other revenue of $8 million was down $3 million as a result of the continued runoff of our exited FirstLine mortgage broker business. Provision for credit losses of $187 million was down $9 million from the prior quarter and $10 million from the same period last year as lower loss rates more than offset the impact of portfolio growth in cards and personal lending. Noninterest expenses were $1.2 billion, up 5% from the prior year, driven by investments we continue to make in strategic growth initiatives to support our transformation into a modern, convenient and innovative bank. Net interest margin was up 1 basis point sequentially due primarily to higher deposit spreads and a higher prime-BA spread, partially offset by business mix.

Canadian Retail and Business Banking net income of $720 million was up 8% from the same period last year, driven by solid revenue growth, good credit performance and strong cost containment.

As announced last week, we are launching CIBC's new direct banking brand, Simplii Financial, which will replace the President's Choice Financial brand banking products and services issued by CIBC effective November 1. Related to this transaction, we expect to incur fees and charges of approximately $100 million pretax, which includes contractual payments, severance and project costs relating to the launch of Simplii Financial, which will be reported as an item of note when we release our fourth quarter results.

Slide 7 shows the results of our Canadian Wealth Management segment. Revenues for the quarter were $603 million, up $49 million or 9% from the prior year, driven by strong performance across all businesses. Retail brokerage revenue of $354 million was up $37 million or 12% from a year ago due to higher fee-based and commission revenue, driven by asset growth and equity and debt issuance activity. Asset management revenue of $204 million was up $8 million or 4%, largely due to higher assets under management, resulting from market depreciation and strong net sales of long-term mutual funds, partially offset by a decline in mark-to-market achieved gains on investments in our mutual funds and institutional accruals. Private Wealth Management revenue of $45 million was up $4 million or 10%, mainly due to balance growth in both lending and deposits within Canadian private banking.

Noninterest expenses of $417 million were up $33 million or 9%, primarily due to higher performance-based compensation. And net income for the quarter was $136 million, up $12 million or 10% from the same quarter last year.

Slide 8 shows the results of our new U.S. Commercial Banking and Wealth Management segment, which includes results for the PrivateBank, our U.S. real estate finance business and CIBC Atlantic Trust. PrivateBank has made a strong start as part of CIBC, adding $26 million to our earnings this quarter. Performance reflects solid operating results, with loan-to-deposit balances up 15% and 7%, respectively, from last year. We have included a slide in the Appendix to this presentation that details private bank's performance. Revenue for the quarter for the U.S. segment was $239 million, up $146 million or 157% from the prior year, driven by the inclusion of 39 days of PrivateBank results. Commercial banking revenue of $150 million was up $111 million from a year ago. Wealth management revenue of $80 million was up $27 million or 51%. In addition to Atlantic Trust, this segment now includes retail and wealth management revenue generated by PrivateBank. Of the $230 million in revenue in the commercial banking and wealth management business, our U.S. real estate finance business and CIBC Atlantic Trust contributed $106 million, which is up 15% from the prior year.

Other revenue of $9 million reflects net revenue related to PrivateBank's investment portfolios. Provision for credit losses was $34 million in the quarter with over half of this amount attributable to a company-specific loss in our preexisting real estate finance portfolio. In addition, we established a collective allowance and recorded provisions of $13 million relating to PrivateBank on new loan originations and renewals of acquired loans.

Noninterest expenses of $147 million were up $82 million from the prior year -- sorry, from the prior quarter due to the acquisition.

Net income for the quarter was $44 million, up $25 million in the same quarter last year.

Turning to Capital Markets on Slide 9. Revenue this quarter was $679 million, down $39 million or 8% from the same quarter last year. Global markets revenue of $360 million was down $55 million from the prior year, driven by lower revenue from equity and interest rate trading, largely due to the expected decline in equity derivatives revenue as a result of changes to the Canadian Income Tax Act related to synthetic equity arrangements. This was partially offset by higher foreign exchange trading and higher revenue from global markets financing activities. The resources previously employed by the TRS business are being redeployed into existing and new client-driven businesses.

Corporate and investment banking revenue of $321 million was down $4 million from a very strong prior year quarter, driven by lower equity underwriting revenue, partially offset by higher corporate lending revenue.

Provision for credit losses was $1 million in the quarter compared to a provision of $7 million in the prior year and the recovery of $5 million last quarter.

Noninterest expenses of $340 million were down $12 million from the prior year, primarily due to lower performance-driven compensation, partially offset by higher spending on strategic initiatives.

Net income of $252 million was down $38 million from the prior year. The solid earnings this quarter successfully demonstrate the strength of our client focus and diversified product, industry sector and geographic business mix and the sustainable earnings power of our core businesses.

Slide 10 reflects the results of the Corporate and Other segment, where net income for the quarter was $14 million compared to the net loss of $34 million in the prior year. The improvement was largely due to higher revenue in FirstCaribbean, improved treasury results and investment gains.

Turning to capital on Slide 11. Our CET1 ratio was 10.4% as at July 31, down 180 basis points from the prior quarter. The impact of closing the PrivateBank acquisition was partially offset by solid organic capital generation, the impact of share issuance to our dividend reinvestment and employee share-based plans and the reversal of the Basel I-IV adjustment. The all-in impact of the acquisition, including related foreign exchange hedges on our CET1 ratio, was approximately 230 basis points. Our leverage ratio was 3.9% at July 31, down 20 basis points from Q2.

To wrap up, we are very pleased with our strong results this quarter, reflecting consistent execution of our client-focused culture and strategy. With our strong ROE and EPS growth this quarter, we remain on track to achieve our medium-term performance objectives of at least 5% EPS growth, 15% ROE and strong capital ratios for fiscal 2017 as well as keeping us on track to achieve our next target of 55% run rate by the end of 2019.

That concludes my remarks. But before I turn the call over to Laura, I would like to mention that this is John Ferren's last call before he transitions to his new role as CFO of our Canadian Retail business. I'd like to thank John for his leadership and contribution over the past 2 years and wish him well with this new challenge. At the same time, I'd like to welcome Amy South, who will transition from a previous role as CFO of Capital Markets and Treasury and assume the Corporate CFO and Head of Investor Relations responsibilities.

With that, I'll turn the call over to Laura.

All right. Thanks, Kevin, and good morning, everyone. So Slide 13 begins with our loan loss performance, which now includes the PrivateBank portfolio and reflects the realignment of our existing U.S. real estate finance book out of Capital Markets to our new U.S. Banking and Wealth Management segment. I'm pleased with the overall performance of the credit portfolio so far this year, and in particular, as our retail banking segment continues its strong performance.

Loan losses were up $30 million quarter-over-quarter. This increase was driven by 2 items in our U.S. Commercial Banking and Wealth Management segment. First, we had a $21 million loss in our preexisting U.S. real estate finance book, which is now part of this new segment. Secondly, to account for our acquisition of the PrivateBank in our consolidated results, we booked a $13 million collective provision for non-impaired loans. This was established for the renewals of acquired loans and new loan originations and appears in the U.S. commercial banking and wealth management line. We would expect the collective provision for non-impaired related to new originations and renewals of acquired loans to continue into the fourth quarter under current accounting rules. I would like to highlight that the credit quality of the PrivateBank portfolio continues its strong performance, which is in line with our due diligence expectations.

Now turning to Slide 14. New formations were $473 million. That's up $84 million quarter-over-quarter, and it's mainly due to the one U.S. real estate finance loan that I referred to earlier, which we impaired this quarter. While the overall growth-impaired loans were essentially flat at $1.3 billion, there were a few moving parts that I'd like to highlight for you. The number increased given the inclusion of PrivateBank's results, including one new impairment and the impairment to the U.S. real estate finance loan. These increases were largely offset by the decline of the U.S. dollar and the decrease in the oil and gas sector. So as a percentage of gross loans and acceptances, gross impaired loans were 37 basis points, which is down 3 basis points from last quarter.

Slide 15 provides an overview of our residential mortgage and HELOC portfolios in Canada, along with a breakout of the Greater Vancouver and Toronto areas. I'd like to highlight a few items from this slide. While the HELOC balances grew by 7% over the prior year, the utilization rates have remained relatively constant over the past 2 years. As our mortgage balances grew by 13%, from $175 billion to $197 billion on a year-over-year basis, it is mainly attributable to an increase in volume while we have seen the number of applications decrease marginally over the same period. Our late-stage delinquency rates across all of these portfolios continued to remain low and stable, with Vancouver and Toronto performing significantly better than our Canadian average.

Slide 16 speaks to our Canadian uninsured residential mortgage originations. And here, you will see that we originated $16 billion of uninsured mortgages, which represents an 8% year-over-year increase. Of that amount, 14% were to clients in the GVA whereas 41% were to clients in the GTA. Average Beacon scores of our new clients continues to be strong, with mortgage portfolio quality stable and in line with our risk appetite.

Slide 17 shows our Beacon and loan-to-value distribution for our overall Canadian uninsured residential mortgage portfolio. The Greater Vancouver and Toronto markets continue to have better credit profile than the Canadian average. Beacon score distributions are towards the higher end, and average loan to values continue to remain at healthy levels.

On Slide 18, we've highlighted our Canadian credit card and unsecured personal lending portfolios. On a year-over-year basis, the late-stage delinquency rates of both Canadian cards and unsecured personal lending portfolios were down slightly. One other item to highlight as it relates to our card's performance is the mix shift between premium and non-premium cards that has occurred. Over the last few years, we've had good momentum in building our proprietary Aventura cards business. Clients choosing these cards tend to have stronger credit profiles than those in our non-premium card segment. And as such, we're seeing the effect of this, alongside improving employment conditions, which we believe is translating into continued strong performance within this segment.

Lastly, Slide 19 shows the distribution of revenue in our trading portfolios as compared with VaR. We had positive trading days throughout this quarter, which is the same as last quarter. Our average trading VaR was $8.1 million, up from $6.3 million in the second quarter, largely driven by increased underwriting activity in support of our clients.

I'll now turn things back to John.

Thank you, Laura. So we'll open the phone lines for questions at this point.

(Operator Instructions) And the first question is from Ebrahim Poonawala from Bank of America Merrill Lynch.

The first question, I just want to start with capital. With private now behind you, I think, for the longest time you had built excess capital to get the deal done. With the CET1 above your 10%-plus ratio, can you talk about in terms of how high you are willing to let this ratio go? Or just in terms -- update us on your capital deployment strategy, be it capital return or maybe additional U.S. M&A?

Sure, Ebrahim. Thanks for your question. We've always been consistent in terms of our view of having a very strong capital ratio. As we indicated in the second quarter, once we closed the PrivateBank, we wanted to be above 10%, and we're at 10.4%. We've very pleased with that level. Our goal is to be in the 10.5% range. And our focus over the medium term is really around maintaining that range, investing in organic growth, which is really going to be the primary driver, which would include integration with the PrivateBank, making the franchise stronger and stronger as we put resources into the business and putting resources into our Canadian business, really focusing on where we can get the highest returns for our shareholders. Inorganic activity is largely going to be on hold for the interim period as we galvanize around the assets that we've invested in. And when it comes to returning capital to our shareholders, our goal is to be in the upper end of our dividend payout range, and we are currently at that level. So we want to see consistent dividend increases over time as we grow our business. And as you know, we have a buyback in place, but we don't foresee using that unless there's extreme value that surfaced in our franchise. And finally, it's important for us to maintain that buffer for any regulatory changes that are on the horizon. So basic message is 10.5%, a good range to be in, focus on organic growth, focus on consistent dividend growth, making sure we have buffers for any regulatory changes, and that would be it.

Got it. And if I can just follow-up on that, Victor, very quickly. You mentioned regulatory changes, I'm just wondering if -- we wonder what happened with Basel IV during -- in October and when the committee meets again. But if you were to go ahead with the Basel IV structure, can you sort of give us a sense of what impact that would have on your CET1 ratio?

Kevin, I'll pass that on to you. But you tell me where they're going to land on Basel IV, and I'll tell you where this is going to land. So Kevin, you want to shed some light on that?

I think what I can do is stress that. I mean, based on what we've seen so far, all of the changes have been pushed out well into 2020 and beyond. So A, we'll have a lot of time to deal with it; B, we anticipate there'll be phase-ins; and C, as Victor said, I mean it's unclear right now exactly what's going to be delivered. But certainly, the changes we know about are factored into our forecast and we're comfortable with them.

The next question is from John Aiken from Barclays.

Kevin, I was hoping to dive into the corporate and other segment just for a little bit. I mean, we saw a large step-up in the revenue. Delta has been $160 million, $100 million of that came from TEB adjustment. We have $5 million from international. But in your commentary, you talked about higher revenues from FirstCaribbean and treasury and then I think you mentioned investment gains. So out of that $60 million, can you give us a little more color on what that came from? Because, I mean, obviously, we're trying to plug this into our models and figure out its sustainability.

Sure, John. So if you recall at the last quarterly call, I think I guided towards breakeven as we move forward, and I think that that's really been driven by stronger treasury results as we're moving forward. Now there's volatility, and you'll see continued volatility. So I'll continue to say breakeven, maybe a small loss is the way that we would see going forward. In this particular quarter, FCIB helped a little bit. We did have some small gains on disposition of investments, but the big change has been in treasury. So with rates moving the way they are, generally, our investment in capital, some of our LPs are recharging, too, so the business which flows through treasury are improving. But in this particular quarter, we also had some gains as we rebalance some of our portfolio, so that helped. And also, there's volatility on our hedges. They're not all perfectly hedged. There's some hedge ineffectiveness. This quarter, we had a number of items going for us. So everything worked for us. And I would say, moving forward, I would just plug in breakeven to a small loss.

Okay, Kevin, appreciate that. And one follow-on, if I may. A little bit surprised not to see any disclosure on margins within U.S. commercial, particularly given the asset sensitivity, the operations down there. Are we going to get that on a go-forward basis? Or is this a decision that you've taken not to provide information for competitive or other reasons?

No, we'll certainly give that information moving forward. And what I would say -- and happy to turn it over to Larry to talk a bit more about the business, but certainly, if we take the NIMs back in March when they last -- or sorry, June, when they last announced versus now, we continue to see NIM improvement.

It's Larry Richman, nice to be on the call and very, very pleased to be part of CIBC. Just a little perspective on the business, which I think can shed some light. One, margins are -- actually are up. And in the U.S. business, particularly as it relates to PrivateBank, the business is actually very solid and there is good momentum, and our outlook for the business is positive. Clients are really focusing in our view, my view, on their business and how they're going to grow it. And the client management teams feel good about the business. And so we're seeing a lot of good activity. There's good activity that we're seeing both from existing clients as well as new clients. And so we're maintaining strong, as we have over the years, selectivity and discipline. But at the same time, we're seeing good opportunities. And at the same time, with rates rising, we're seeing some improvement in margins. So we're holding -- we're expanding volume, and at the same time doing well on a margin standpoint.

The next question is from Nick Stogdill from Credit Suisse.

Larry, just a follow-up on your comments there. Does that mean we should expect the U.S. Bank to sustain higher-than-industry average loan growth in the U.S., higher than what we're seeing currently in C&I?

Yes. I can't speak to the industry in the future, but I guess I can tell you that we see very strong organic opportunities to be able to drive continued, consistent quality profitable growth. We're seeing more opportunities now, given the combination of deals and opportunities that we could -- that we're looking at than we even did before when we were a private, separate organization. So we're seeing some early signs of where the opportunities, based upon the integration, of being one, are coming about. So I can't speak to the future, but I can certainly tell you that we're seeing good opportunities, good solid pipelines. And our bankers are feeling good, and our clients are coming to us or we're seeking and seeing -- identifying opportunities going forward.

And then my second question for Laura. Just on the LTVs and the Canadian uninsured mortgage book, 55% last quarter, 52% this quarter, a little surprising I guess given the recent market trends. Maybe you can just give us an update on why they're declining? And then if LTVs were to reverse course and increase, are there any implications that can have, anything on growth? And maybe how much would it take of an increase in LTVs to see an impact on capital on the uninsured book? Or any color you can add there.

Yes, Nick, not sure I understand the second part of the question. But as it relates to loan-to-values, if you will, what we're seeing in terms of increase is really it's on the volume side that as house prices have increased, what we're seeing is that the average size of a mortgage has increased. So that is where that segment of growth is coming from. When you do look at our loan-to-values, I guess what I would say is we do have adequate buffer to sustain a drop in housing prices. And quite frankly, and more importantly, when we look at our portfolio, as I mentioned in my prepared remarks, we have really strong mortgage performance from a delinquency perspective. Victor spoke of earlier how well the economy is doing. Unemployment in this country is actually looking very good, and that's the main driver of losses, the main thing that we look at and that, if house prices do come off, we need our borrowers to continue to have their jobs to service their loans. But in the event we find ourselves taking on assets, we do have and continue to have a good buffer as it relates to that loan-to-value.

My second question was really, just if LTVs went from the 52% back to something higher, would that matter if it was just driven by housing price declines and there was no impact on employment? Would we see any implications on growth or capital if we went from 52% back to something north of that?

So again, so long as unemployment stays as is, we would not expect to see, if you will, any real change to delinquencies or to loan losses. And so no real impact as well to capital. We do have the LGD change from a regulatory perspective that we've put into place. So that has a bit of an impact in terms of how we would see risk-weighted assets move and consequently, CET1, but not expected to be material in any way.

The next question is from Stephen Theriault from Eight Capital.

Couple of questions, if I could. Maybe starting with the U.S. So when we piece together the new disclosure, I was a bit surprised to see Atlantic Trust looks like it's not far off of breakeven. So can you talk about any issues going on there? Will the addition of Geneva move that operation to being more meaningful profitable -- more meaningfully profitable? And how much upside is there for Atlantic Trust given the PrivateBank closing and increased offerings and so on?

Let me talk briefly about Atlantic Trust contribution. I think that part of the noise that we have in their numbers is just really accounting and it's some allocation of support costs and then amortization of acquisition-related costs. So the good news is, recently, they've been consistently delivering revenue in the $55 million, $60 million-odd range. And that's up from about $40 million 3 years ago. So as we have the runoff of acquisition-related costs and I think a tighter focus on expenses, we would expect those earnings to improve. Let me hand over to Larry to take the rest of the question.

Yes. Thank you. Let me speak strategically to the Atlantic Trust-Geneva-PrivateBank combination, the importance of private wealth to the combined organization and also to the U.S. market. I'm actually very, very excited. And we have seen, interestingly, some early really nice opportunities because of the views of great clients, interesting opportunities to cross-sell and provide more banking opportunities. Specifically, where we have a strong private wealth relationship in Atlantic Trust, Geneva and our private wealth business at PrivateBank, we're really able to drive private banking opportunities now that we couldn't do before. So we look at it as an opportunity to not only drive more business and relationship expansion with our clients, but it should yield greater deposit capabilities and also opportunities to seek other, fuller banking relationships. The addition of the Geneva, which is most recent, is a very exciting one. One, it's a great team -- well recognized, very, very nice high-quality client base that fits very well with the commercial client base that we have at PrivateBank today. And at the same time, we see really nice opportunities to be able to create more scale. And at the same time, they're local to the Chicago market, so it gives us the capability to have more scale and more importance and more opportunities in the Chicago market. So I think there will be greater client expansion as well as deeper relationships as a result of both of these. These will provide benefits over the long term.

Okay. Thanks for that color and thanks for those numbers, Kevin. And then turning to Canada for a second, for Christina, a lot of mortgage momentum, obviously continued quite strongly this quarter. I picture those as being completions from earlier this year, before the GTA slowdown. So I'd be interested, do you think given the Toronto slowdown, we'll see a more noticeable slowdown in momentum beginning in Q4? I guess I'm asking, what does the mortgage pipeline look like looking out over the next couple of quarters?

Thank you, Steve. Let me put it in the context of our overall business. We've seen good momentum and consistent earnings growth across our businesses over the past 2 years. And that growth, we've seen that in funds managed growth, both on money in, money out across product areas and across both personal and business. So let me then turn to the mortgage growth. The key driver of our relative growth over the past couple of years has been the steady buildup and the improving productivity of our Mobile Mortgage Advisor team, and it's been a deliberate client-focused strategy. We want to be there for key moments in our clients' lives. We want to make banking with CIBC easy to do. So we've built up the strong Mortgage Advisor team across Canada. Earlier this year, we reached our target level of mortgage advisers. And given that our relative mortgage growth has been largely fueled by our MA expansion, now that we're at target state, we expect that the relative mortgage growth rate will begin to converge to industry levels over a few quarters. You asked about the GTA market, so we have started to see some evidence of softening, as Laura mentioned, so new originations in July were down month-over-month, and that was largely driven by the GTA market. So -- and given the prospect of further regulatory changes, the most notable of which are the amendments to the B-20 guidelines, we do anticipate some softening in the market over the upcoming year.

Okay. And then if I could just -- a quick numbers question, before I ring off, for Kevin on the tax rate. It was higher this quarter. I suspect you'll tell us it's mix from higher U.S. and maybe the TRS. Is there a new normal or some sort of normal tax rate range you could share with us going forward? I guess, realizing that there's probably some additional impact from PrivateBancorp being in for a full quarter next fiscal?

Yes, Steve, I mean, you're absolutely right, the higher tax rate is because of the rolloff of the synthetic equity business, and there's some volatility depending on how earnings go. But I would look for a tax rate in the 22% to 24% range, if you're going to model that moving forward.

The next question is from Meny Grauman from Cormark Securities.

Just to follow up on the talk of the B-20 proposal. Victor, I'm wondering what your view on this proposal is given we're seeing a slowdown already in the GTA. Is it maybe prudent to hold off on another regulatory change?

I'm not going to go there, Meny. I think the regulators are going to decide what's best from a macro prudential perspective for the Canadian economy. Our job as a leadership team is to manage within that framework. I think Laura and Christina have both been clear in terms of our current risk posture in our mortgage portfolio as well as our growth prospects in our mortgage portfolio, and we will manage within those parameters. And our goal is to manage prudently for both our shareholders and also to deliver for our clients what they need. I think one thing I would say in terms of our overall growth in our consumer franchise, it is growing across the board. We are seeing growth in investment funds. We're seeing growth in deposits. And so there's a high quality level of growth that we're seeing. And we'll continue to endeavor to build those deeper client relationships in our franchise, and that's the only way for us to deliver value. As regards regulatory change, I will leave that to our regulators.

And then if I could just ask a follow-up, just a numbers question in terms of your residential mortgages. What percentage are adjudicated at 200 basis points above the contracted rate right now?

Manny, it's Laura. I can take that question and I guess I'd answer it twofold. The percentage that are currently adjudicated that way would be a little over 3/4. But if we were to look at which percentage of our new originations would qualify, that number would actually be in the 90% range.

Okay. Do you mind just explaining that difference a little bit more?

Yes, absolutely. Your question specifically was around what percentage do we currently adjudicate when we look at the requirement at 2% onto the Bank of Canada posted rate. So I am referring to if we were going to run our new originations through that rule, how many would qualify. So they don't all come in the way things work today. Having to qualify is the difference here. Because I think what you're trying to get to with the B-20 document that's out for consultation is what might be the impact to our future business if these rules were to come into play, because as you can appreciate, the change as it relates to the stress test requirement to qualify at 200 basis points over the contractual rate that, that actually would apply to our uninsured mortgages.

Your next question is from Scott Chan from Canaccord Genuity.

Larry, I'm just trying to extrapolate the PrivateBank acquisition 39 days. And I know it's not exact, but Laura touched on the collective provision in the quarter, but the NIX or the efficiency ratio seemed a little bit high versus prior to the transaction. What is the targeted efficiency ratio? Or how should we look at that ratio going forward? The only thing I saw was like higher compensation expense related to retaining employees, and I was wondering if that was onetime as well.

Let me just take that question. So I would say it's early days. The compensation adjustments certainly have a big impact. They aren't onetime, but they have a relatively short shelf life, so that'll run off over the next couple of years. But we would anticipate that, from a NIX perspective, PrivateBank would actually contribute positively to CIBC as a whole and help drive us to that 55% NIX ratio that we're going to get to in 2019.

So I guess put it another way, if I look at year-to-date with the tailwind on the volume growth and the NIM, the adjusted normalized earnings would be tracking higher than last year?

Yes, I think that's fair to say.

Is that a fair statement?

It's Larry. Let me add a couple of things to it. One, there remains, and has consistently been, a very focused strategy of not only driving profitable client growth but also managing expenses and creating increased operating leverage. And that's a very important part of driving long-term shareholder value, we believe. And that remains. We believe that the organic growth strategy and the opportunities between the leveraging, the capabilities and financial strength of CIBC will provide more revenue capabilities. And at the same time that we're integrating, we're also paying very close attention to how we manage expenses. And so there's a very fine eye and management focus on expenses overall and feel very good the we not only had an improvement -- and again, it's hard to be able to see, but an improvement this quarter in the NIX, or as we in the U.S. said, efficiency ratio this quarter. But that'll remain an ongoing focus for us.

Your next question is from Sumit Malhotra from Scotia Capital.

I want to start on Slide 23 of your presentation and the PrivateBancorp detail you provided us, for Kevin and probably Laura. Kevin, first off, on the NIM bullet you gave us here, NIM at 3.97%. That's decently higher than the last numbers we saw from Private when they reported, which I have here was back around 3.3%. Are you calculating this measure differently? Or is there something changed in the disclosure? Because I'm sure NIM has gone up, but that seems significant. And just for Laura, to get the other part in, the $11 million in provisions that's shown here, that would've been roughly a full quarter run rate for Private. I'm guessing that, that allowance that you mentioned is shown here and not in the corporate segment, whereas -- where I think you usually have done your allowance adjustments. So hoping you can clarify that, please.

Sure, let me take the first. But I mean, NIM has actually gone up significantly as a result of the base business, so that's the bulk of it. But also, what helps NIM a bit in this quarter is just because of purchase price accounting, we have a loan discount accretion that you'll have seen in the MD&A that flows through as well. So on a reported basis, that also helps the NIM. And that was about $11 million, $12 million this quarter, so that would also contribute to the NIM improvement. But base NIMs are going up because the business is improving and rates are improving -- yes, rates have increased.

It's Larry. Just a couple further thoughts to reinforce Kevin's message, which is the -- we are -- rates in the U.S -- and we're very asset-sensitive with a big proportion of our loans tied -- variable priced and tied to LIBOR and, in many cases, 30-day LIBOR. With the rates rising, that has had an impact, positive impact. What we're seeing, at the same time that rates are rising, is we're able to hold pricing at reasonable rates. And again, it is a mix of portfolio with some loans priced at different pricing than -- obviously than others in different industry segments and mix. But overall, I feel good that we're holding pricing in a continued competitive market, and the up of rates has had a nice contribution.

And Laura, on the PCL?

So to your question, the allowance you would find that I mentioned earlier, the $13 million, so that's in Corporate and Other.

So the $11 million that's shown on that Slide 23 for Private in provisions, that's the provision that -- the core business booked in the 1 month or so that it was in the numbers?

That's right.

That seems decently higher than the provision that Private had been running at. So maybe that's the case, but I just wanted to make sure that there wasn't anything onetime-ish in the establishment of that.

So there's nothing onetime -- well, sorry, there's purchase accounting in there, which I think is adding noise to the number. Nothing as it relates to the performance. We've seen solid, standard performance from the PrivateBank from a loan-loss perspective. So what you're seeing really is noise in the numbers, as I said, related to purchase accounting. And so I can hand that back to Kevin, who hopefully can take you through that detail.

Yes, and just, I'll say this from what I've seen, I understand the impact on NIM that Kevin was mentioning. I'm a little surprised to hear about purchase accounting boosting the provision. But Kevin, maybe you've got something there?

Sure. So on acquisition, when you do the acquisition accounting, there are 2 adjustments to go through. So the first is writing off all the existing allowances; and then secondly, doing a portfolio fair value discount, so -- and then building up the allowance over time. So in this quarter, you'll see 2 things going through that largely offset. The first is building up the allowance, which is about $10-odd million. And that's included in that number that you were referring to on the slide. The other side of that is accreting the discount back into income, and that was a comparable number going the other way that would be included in the top line. And what I would point out moving forward is the added complexity is IFRS 9. So at the end of the year, when we convert to IFRS 9, there'll be a onetime adjustment where we actually catch up the entire amount of the allowance for doubtful accounts. So that'll be caught up, and we won't have that drag moving toward, but we will continue to have the accretion. But we'll disclose that as we move forward.

And just to wrap this up, so I think you and I had this discussion last quarter about potential impacts of closing this transaction on capital. And I'll say the 230 basis point impact on capital was larger than I expected. Was there a larger impact as a result of these adjustments that you're referring to on capital than may have initially been contemplated?

No. The answer is no. That's entirely within the range. Actually, it was bang on from what we expected. But I mean, there are a couple of things because we saw that some of the estimates were a bit higher. So a couple of things that may have not been taken into account. And the first is, we had some dissenting shareholders, so that was about 10 basis points. So that's still out there. And then the other thing is the calculation of that CET1 is somewhat opaque. So if you look at expected loan-loss shortfalls, that would've been about another 15 basis points. So I think that may really have accounted for the difference. But in terms of the adjustments that I referred to relating to the allowance and the loan-loss accretion and the loan discount, no, that didn't have a negative impact. That was really a wash.

The next question is from Doug Young from Desjardins Capital Markets.

Just back to PrivateBancorp and the NIM discussion, and I get the discussion that you just had, but can you talk about what the NIM would've been, excluding the accounting noise, just so we can compare it to that 3.3%?

Why don't we get back to you with the exact calculation? Trying to do reconciliations on the call is probably not a smart move, and it's -- it would certainly have an impact, but not a big impact. The biggest driver would've been increasing interest rates on the core business, but we'll get back to you with a detailed reconciliation.

Okay. Fair enough. And then just on the regulatory capital, I saw the risk-weighted assets was reduced by I think about $2.5 billion due to model enhancements. Laura, can you flesh out what that related to?

Really just standard course model enhancements that follow the regular pace of model updates. So nothing major to point out.

What business line was it?

It's across our business lines. There would've been some, I believe, in our Capital Markets and then in the Retail portfolio. But again, small things, nothing major.

Okay. And then just in Canadian P&C banking sequential NIM increase, was there -- just surprised given the mix of business shift. Was there anything unusual that positively impacted the Canadian NIM sequentially? And can you talk a bit about what the outlook would be for Canadian NIMs given, obviously, one rate increase and as we stare into 2018 and given your outlook for rates?

It's Christina. I'll answer that question. In Q3, we saw 1 basis point improvement in NIM. And that was the net effect of better deposit spreads, a slightly more favorable prime-BA spread and a drag from business mix. So looking a few quarters ahead and building in some current expectations for the market for future rate increases, we expect our NIM to be steady to slightly improving.

The next question is from Gabriel Dechaine from National Bank Financial.

Just to clarify. The collective build, it looks like it did go through the new segment. That's what the write-up says in your MD&A here, the explanation for the increase -- partial explanation of the increase in PCL. Is that correct?

Yes, that's correct, Gabriel.

Okay. And then IFRS 9, you touched upon that. And there will be a transitional adjustment and, therefore, we won't see this general allowance or collective allowance build beyond Q4. Do you think that the overall adjustment from IFRS 9, the transitional adjustment will have a material impact on your core Tier 1, maybe a few basis points or something more than that?

So in our disclosure next quarter, we'll be giving way more detail and actually coming out with a number. We're continuing to model. But based on what we have seen so far, it's quite manageable.

Let me put it this way, OSFI put out some guidance on Monday, I believe, saying if banks expect there's a material impact, ask us for a phase-in or put in a request for a phase-in time frame, are you -- do you think the time frame of phase-in is going to be long or short?

No, I mean, I think the whole -- there's a lot of complexity to that. It really depends bank to bank. I think from our perspective, even if there isn't a phase-in, we can manage the transition.

The next question is from Mario Mendonca from TD Securities.

I'll try to be fairly quick here. The VaR did spike a fair bit in May, I suspect something happened there that I should know, but I can't remember. Is there anything you can highlight?

Mario, it's Harry Culham here. We had some pretty large transactions in the equity capital markets space with some remnants that were absorbed in the market over time. And that's the real reason for it.

So there was nothing. That's actually -- you would view that as a real -- as a positive then?

Yes, I mean, we're there to work with our clients. And in fact, we did a follow-on transaction in the coming months.

So the reason I ask is because I didn't see any improvement in the revenue emerging from that spike in VaR. Are you suggesting then that, that spike in revenue seen later in June is reflective of the increase in VaR in May?

Yes, what I'm saying is, there are times we need to stand with our clients to get transactions out in the market, and it was a very large transaction at that point in time with remnants which The Street faced. And there wasn't a significant amount of revenue, if any, attached to that one transaction. And as you know, we view these client transactions or client relationships on a long-term basis. And therefore, we believe that over the long run, it's the right thing to do to attach risk to client transactions of that nature.

All right. That's good enough. The all bank margin, Kevin, this is maybe tough for me to ask you. But I look at all your all bank margin, and I clean it up for trading and I do it on a [T] basis. The all bank margin sequentially was up 9 basis points, the way I look at it now. You may not calculate it that way, so it may be unfair to ask the question. But let me just ask it generally, the significant increase in the margin the way I've described it, was that essentially just the Treasury activity you were referring to?

The answer is yes, and I mean part of the challenge of all bank margin is actually, on the margin, just a slight move in assets can make quite a big difference on that. So a lot of that did have to do with a rebalancing of Treasury with -- on a pretty low-margin business which can move the all bank margin quite a lot. That's correct.

So is it conceivable that number can just sort of come right back down next quarter in all bank margin color?

Yes, I mean, I think you can expect some volatility on that. I mean, for us, the more important margin business or NIM to have a look at is Retail, which drives a lot of higher-margin revenue. So I think that's fair to say, yes.

Okay. And then finally, on cards. Anything -- any activity, changes in purchase activity you're seeing on Aeroplan specifically? Because the card revenue did look light but the volumes -- but the balances looked great. So anything you can highlight there?

Thanks, I'll take that question. It's Christina. As Amy had actually stated earlier this month, and as we've seen in our own experience both in spend and active, there's been very little change since the Air Canada announcement. So it's been business as usual from that perspective. Overall, our travel space, we're seeing some good growth in the portfolio. Aero is stable, contributing well. And Aventura is seeing robust growth.

Just -- I couldn't hear you right off the bat, when you got started. So you were just saying you didn't really see anything emerge on Aeroplan here in this quarter?

So yes, what I was saying was both -- Amy has stated this as well as in our own experience, there's been very little change since the Air Canada announcement.

The next question is from Sohrab Movahedi from BMO Capital Markets.

Two quickies, hopefully. If I can just go back to Christina, are there any metrics you could share with us, Christina, that over the last couple of years with the good mortgage growth, where you're seeing other products growing as well? In other words, give us some comfort that these are not single product relationships.

Yes. As to specific metrics, I don't have offhand. But what I could say for sure is that we have seen growth across the business acquired by our mortgage advisers as well as in our banking centers, which is primarily where we're seeing the mortgage growth. And that growth is coming with deposits and with other business to CIBC. So it is broad based, and it is across all the product categories, as I mentioned earlier.

Okay. I mean, on Page 21 of the presentation material, I mean, residential mortgage is, for example, this quarter up 13%; cards, up 2%; business, up 9%; personal loans, only up 7%. If I look at just the metrics you have over here and in a very blunt fashion look at your loan-to-deposit ratio, it's actually going up, would've been about 144% last quarter or last year up to 147%. So is this consistent with what you would expect the mortgage growth to be resulting in?

Mortgage growth is part of the story. We -- as I mentioned earlier, we are seeing growth across all of our segments, both on personal and business. We're seeing it across all the product categories, and we're seeing strong funds managed growth in money in and money out. So in terms of the mortgage contribution, it has brought in new business for us. It's brought in new clients, which also have brought in deposits and core banking and so on.

Okay. And then very quickly maybe either for Kevin or Victor. I mean, you're still continuing to issue shares through the DRIP discount, I think. I assume you're going to turn that off before you contemplate any buyback-type activity. I think you were talking about a little bit earlier, and I was a bit surprised, Victor, I think you said something along the lines of we will only do buybacks if we thought it was a good value proposition. But given where the stock is trading, you don't think you're there right now?

Sohrab, the trade-offs, when we look at capital management as a leadership team, we look at what's going to be the highest and best use to our shareholders over the medium to long term. When it comes to some of these short-term capital trade-offs, we'll do the right thing. You can just assume that we'll do the right thing to maximize share value. I'm not going to comment on the value of the shares today, that's for you to judge and for our investors to judge. I will tell you that I think we're running a very good, robust business with good expense control across all of our footprint. And I think the acquisition that we've made in the PrivateBank over time will prove to be a very, very good investment for our shareholders.

And our last question will be from Darko Mihelic from RBC Capital Markets.

I actually have 3, I think, simple questions so hopefully we can tear through this quickly. Laura, when I look at the presentation on Slide 15, when we look at the delinquency rates, really nothing to look at there. But the only thing that comes to mind is, just to set my mind at ease, when I look at the increase in delinquency rates in GVA, just want to make sure that there isn't a single vintage that's causing the increase. Is this a broad-based mild increase in delinquencies we shouldn't care about? Or are there, in fact, some things, some vintages that are posing more problems?

Darko, no, we actually do go in and do quite the exercise to normalize, if you will, for growth in the portfolio. So we do look at all of our vintage performance. And the delinquency rates remain pretty much the same. And so there's no degradation happening there. What you're seeing there, quite frankly, is just a little bit of noise relating interestingly to a handful of accounts that we have.

Okay. And then just quickly on Slide 16, I think, Christina, you were talking about your productivity of your mortgage advisers. Can you give us a sense of where -- I mean, if I took the $16 billion, divide it by your advisers, I suppose I'd have sort of a productivity number. But can you give us the delta in where you think you are relative to the industry in terms of how productive your advisers are relative to any other mobile rep from any other Canadian bank?

I know that our mortgage advisers have been seeing growing improvements in productivity. This has been year-after-year over the last several years. As it relates to our peer group, we don't have any comparisons to share.

Okay. And then I guess the last question, I just wanted to go back to the question -- the discussion you just had with Sohrab on the issuance of shares. I just wanted to understand a bit better just for modeling purposes, I mean, it's about 2 million shares a quarter when you have the DRIP and the employee plan put together. Maybe very succinctly, at what level of capital do you shut that off?

Very succinctly, Darko. Look, our goal is to be in the 10.5% range. If we were to go slightly higher than that, I'd be okay with that. I wouldn't want to go lower than the 10.4%, 10.3% kind of range. So we're going to work within the band of 10.4% to 10.7%. And once we have clear visibility on the regulatory environment, on the macroeconomic environment, we'll make decisions vis-à-vis the DRIP.

Thank you. There are no further questions. I'd like to turn the call back over to Mr. Dodig.

Thank you very much, operator, and thanks, everyone, for being on the call. 1 hour and 15 minutes, I think that's a record for us, at least a recent record. Before we wrap, I wanted to just do a couple of things. I wanted to announce that we're going to hold our next Investor Day on the 13th of December in Toronto. We look forward to this opportunity to introduce you to our new leadership team. And what we'd like to do is provide you with a perspective on what we told you almost 2.5 years ago in terms of what we were going to deliver and give you a perspective going forward on what we intend to deliver for you as our shareholders. And for those of you who are able to join us, we're gearing up for another successful run -- for another successful CIBC Run for the Cure on the 1st of October. It's a cause our team across our country and our clients very much are passionate about, and we hope to see you there. And in closing, I'd like to thank CIBC's team members for everything you do for our clients, our shareholders and our communities. And I also would like to thank you, our investors, for your continued support and confidence and good questions about our bank. Have a great day.

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