CIBC Annual Accountability Report 2004 CIBC 1016 E 2004AR CVR 12/9/04 10:47 AM Page 2 (1,1)
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CIBC 1016_e_2004AR_CVR 12/9/04 10:46 AM Page 1 (2,1) Annual Accountability Report 2004 CIBC Annual Accountability Report 2004 CIBC 1016_e_2004AR_CVR 12/9/04 10:47 AM Page 2 (1,1) Who We Are Where We’re Going At CIBC, we are in business to help Our Vision is to be recognized as the our clients achieve what matters leader in client relationships. to them. We are focused on creating Building To get there, we have made commitments a winning culture for our clients, for to each of our stakeholders – our employees and for our a roadmap for communities. A consistent drive to To Clients – help our clients achieve what create more value for these matters to them stakeholders will in turn contribute to To Employees – create a work environment long-term achieving our objective to generate where people can excel best total returns to shareholders over Growth the long term. To Communities – make a real difference Winning will mean living by our values – To Shareholders – generate the highest total Trust, Teamwork, Accountability – and return to shareholders creating value for all who have a stake in CIBC. Creating Value Client satisfaction Employee commitment Risk management 2004 Highlights > In CIBC Retail Markets, realized > Ranked 2nd in the first-ever list > Met objectives for reducing improved client satisfaction of the top workplaces for visible exposure to large corporate scores in the areas of minorities, published by loans and merchant banking professionalism, quality of advice Canadian Business magazine portfolio ahead of schedule and personalized service > Invested almost $70 million > Market risk is 42.5% below levels > Launched the CIBC Unlimited™ globally in training and of two years ago Chequing Account, which development of employees provides transactions at a flat monthly fee Share Price Appreciation % 150 CIBC’s share price appreciation of 133% over the past five years well 120 exceeded the appreciation of 101% and 22% for the Bank Index and 90 the broad market, respectively. When combined with dividend yield, CIBC’s total return for the past five years was 172.9%, best among 60 the major Canadian banks. 30 0 -30 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 CIBC S&P/TSX bank index S&P/TSX DESIGN: BRYAN MILLS TORONTO GROUP, WWW.BRYANMILLS.COMM CIBC 1016_e_2004AR_FRT&BCK 12/10/04 6:39 PM Page 1 Creating Value Business Strategies Performance Deliberate and stable growth over the Our strategies for the past two years Measurement long term is a key priority. Sustained have been consistent with our Disciplined measurement of our success requires a continuing evolution objectives to reduce risk and generate performance on all fronts is critical to in our strategies and culture. It requires stable earnings growth. We set four long-term success. CIBC has several a balanced focus on key value drivers. specific business strategies: specific medium-term financial targets We believe the most important building > Reduce risk which are reviewed on page 4. In blocks for long-term success are: > Shift business mix addition, CIBC monitors a range of > Improve productivity internal non-financial targets. This > Client satisfaction > Grow core businesses year’s report includes a more fulsome > Employee commitment review of non-financial measures. > Excellent risk management We have made progress in all areas. We plan to expand this reporting in > Environmental responsibility the years ahead. > Meaningful contributions to our communities > Good governance > Stable growth in economic profit Environment Contribution to Governance Financial performance communities > Adopted the Equator Principles, > Contributed more than > Ranked third most respected > Realized earnings growth of a voluntary environmental and $44 million worldwide, of corporation in Canada based 6.6% over last year social risk screening process for which $28 million was invested on corporate governance > Increased total dividends paid applicable project financing in Canada practices, in a survey per common share by 34.1% transactions conducted by KPMG LLP > CIBC Run for the Cure™ had over last year > Developed key environmental its most successful year yet; > Implemented mandatory performance metrics and Canadians in 40 communities online training for all expanded our environmental across the country raised employees for reputation and procurement program through $19 million for the Canadian legal risks and anti-money vendor assessment reviews Breast Cancer Foundation laundering Net income $2.2 billion Return on equity (ROE) 18.7% Assets $278.8 billion Tier 1 capital ratio 10.5% CIBC 1016_e_2004AR_FRT&BCK 12/10/04 6:39 PM Page 2 CIBC Annual Accountability Report 2004 For what matters Financial Highlights 2 Financial Highlights 2004 As at or for the years ended October 31 2004 2003 2002 2001 2000 Common share information Per share – basic earnings $ 5.60 $ 5.21 $ 1.37 $ 4.19 $ 4.95 – diluted earnings 5.53 5.18 1.35 4.13 4.90 – dividends 2.20 1.64 1.60 1.44 1.29 Share price – closing 73.90 59.21 38.75 48.82 48.40 Shares outstanding (thousands) – end of period 347,488 362,043 359,064 363,188 377,140 Market capitalization ($ millions) $ 25,679 $ 21,437 $ 13,914 $ 17,731 $ 18,254 Value measures Price to earnings multiple (12-month trailing) 13.2 11.4 28.9 11.7 9.8 Dividend yield (based on closing share price) 3.0% 2.8% 4.1% 2.9% 2.7% Dividend payout ratio(1) 39.2 31.5 > 100 34.2 26.2 Financial results ($ millions) Total revenue $ 11,883 $ 11,576 $ 11,041 $ 11,162 $ 12,079 Provision for credit losses 628 1,143 1,500 1,100 1,220 Non-interest expenses 8,251 8,128 9,129 8,226 8,096 Net income 2,199 2,063 653 1,686 2,060 Financial measures Efficiency ratio 69.4% 70.2% 82.7% 73.7% 67.0% Efficiency ratio (TEB)(2) 68.6 69.4 81.9 72.8 66.3 Return on equity(1) 18.7 19.2 5.1 16.1 20.3 Net interest margin(3) 1.91 1.98 1.88 1.63 1.63 Total shareholder return 28.9 57.8 (17.9) 3.8 57.5 Balance sheet information ($ millions) Loans and acceptances $ 142,282 $ 139,073 $ 143,917 $ 139,661 $ 154,740 Total assets 278,764 277,147 273,293 287,474 267,702 Deposits 190,577 188,130 196,630 194,352 179,632 Common shareholders’ equity 10,397 10,421 9,245 9,601 9,493 Balance sheet quality measures Common equity to risk-weighted assets 9.0% 9.0% 7.3% 7.4% 7.1% Risk-weighted assets ($ billions) $ 115.9 $ 116.3 $ 126.5 $ 129.9 $ 132.9 Tier 1 capital ratio 10.5% 10.8% 8.7% 9.0% 8.7% Total capital ratio 12.8 13.0 11.3 12.0 12.1 Other information Retail/wholesale ratio(4) 72%/28% 64%/36% 48%/52% 49%/51% 55%/45% Regular workforce headcount 37,281 36,630 42,552 42,315 44,215 (1) Dividend payout ratio and return on equity have been revised to incorporate the effect of premiums on preferred share redemptions. Prior-year information has been restated. (2) Taxable equivalent basis (TEB). For additional information, see the Non-GAAP measures section. (3) During the year, we reclassified equity-accounted investments from investment securities to other assets. This realignment has also resulted in the reclassification of related income statement items. Accordingly, net interest margin for 2003 and 2002 has been restated, as applicable; net interest margin prior to 2002 has not been restated as the amounts are not reasonably determinable. (4) Retail includes CIBC Retail Markets, CIBC Wealth Management and commercial banking (reported as part of CIBC World Markets). Wholesale reflects CIBC World Markets, excluding commercial banking. The ratio is determined by the amount of capital attributed to the business lines as at the end of the year. Prior to 2003, the ratio was based on the average capital attributed to the business lines in the year. For further details, see the Non-GAAP measures section. Earnings per share (EPS) and Return on equity (ROE) Risk-weighted assets and total assets dividends per share ROE was 18.7% in 2004 compared with 19.2% Risk-weighted assets were $115.9 billion in 2004, compared EPS diluted were $5.53 in 2004, compared with $5.18 in in 2003. ROE is a key measure of profitability. It is with $116.3 billion in 2003. Risk-weighted assets are 2003. EPS is a measure of net income less dividends and calculated as net income less preferred dividends and calculated by applying weighting factors as specified by the premiums on preferred shares, divided by weighted-average premiums expressed as a percentage of average industry regulator to all balance sheet assets and off-balance diluted common shares for the year. CIBC’s dividends per common shareholders’ equity. sheet exposures. CIBC’s total assets were $278.8 billion in common share for 2004 were $2.20 compared with $1.64 2004, compared with $277.1 billion in 2003. in 2003. (%) ($ billions) ($) 6 25 300 5 20 225 4 15 3 150 10 2 75 5 1 0 0 0 00 01 02 03 04 00 01 02 03 04 00 01 02 03 04 EPS Dividends Risk-weighted assets Total assets CIBC 1016_e_2004AR_FRT&BCK 12/10/04 6:39 PM Page ifx2 This year’s report combines the 2004 Annual Report with the 2004 Public Accountability Statement. The Public Accountability Statement documents CIBC’s commitment to: providing more affordable, accessible banking to Canadians; advancing the goals of small businesses; creating a supportive workplace for our employees; contributing to communities and, protecting the environment.