CIBC Leans on US Commercial Banking, Wealth to Drive Gains

(Bloomberg) -- Canadian Imperial Bank of Commerce expects its US commercial-banking and wealth-management business to provide the fastest sales growth over the next three years.

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The unit will increase revenue at a 10% to 13% compound annual growth rate through 2025, according to an investor-day presentation Thursday. That’s the highest growth rate of any of the four units for which Canada’s fifth-largest lender released projections.

Chief Executive Officer Victor Dodig has expanded CIBC’s US operations since taking the reins in 2014, most notably through the roughly $5 billion acquisition of commercial bank and wealth manager PrivateBancorp Inc., completed in 2017. CIBC is counting on a growing US presence to drive growth in other businesses as well, including in its capital-markets unit.

“It’s all a client-driven strategy,” Dodig said in response to analysts’ questions Thursday. “We have Canadian clients that bank north-south. We also see an ability to take some of our core capabilities -- not replicating the full bank that we have in Canada -- and distinctly competing in some areas of the US where we believe we can add value.”

Toronto-based CIBC is targeting compound annual revenue growth in its capital-markets division of 7% to 10%, with revenue in the US growing 10% or more. Canadian commercial banking and wealth management also is targeting 7% to 10% compound annual revenue growth.

CIBC’s Canadian personal and business banking division -- the lender’s largest unit by revenue -- is aiming for 7% to 10% compound annual revenue growth. To help achieve that, the bank is targeting 10% annual growth in the personal funds managed by its Imperial Service, a financial-planning and investing service.

The division also is aiming for 5% compound annual growth in business-banking loans and deposits. Despite the turbulent environment, Canadian businesses remain confident in their growth prospects, said Laura Dottori-Attanasio, head of Canadian personal and business banking.

“Our business-banking clients continue to be very optimistic, notwithstanding what we are all talking about and see coming on the horizon,” Dottori-Attanasio said in response to analysts’ questions.

CIBC executives reiterated the bank’s plans to invest in technology and revenue-generating employees to spur growth, but noted that they could dial back that spending based on what happens in the economy.

Dodig reiterated the bank’s expectations that revenue would increase at a faster pace than spending in the medium term, while saying that the current pace of spending is “more elevated than we would envision over the longer term.”

“Banking is changing,” Dodig said in an interview, “and you need to invest to be in a leadership position.”

(Updates with CEO’s comments in last two paragraphs.)

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