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With a third of its mortgage portfolio having variable rates, CIBC saw its amortizations soar as of the fourth quarter.

Over a quarter (26%) of CIBC’s residential mortgage portfolio now has an effective amortization of 35 years or longer, the bank reported as part of its Q4 earnings release. That’s just slightly more than TD Bank, which similarly reported that 25.2% of its mortgage portfolio now has amortizations in excess of 35 years.

Remaining amortizations for CIBC residential mortgages

Q4 2022 Q4 2021
20-25 years 31% 45%
25-30 years 17% 27%
30-35 years 4% NA
35 years and more 26% NA

“As interest rates rise, most of our variable rate mortgages with fixed payments are impacted through an extension of amortization until renewal,” the bank noted in its report. “At renewal, the mortgage reverts to the original amortization schedule, which may require additional payments.”

CIBC has said it’s been proactively reaching out to borrowers, in addition to “a number of programs and initiatives” deployed throughout the year to “help our clients through a rising rate environment.”

The bank added that $28 billion worth of mortgages will be up for renewal in the next 12 months⁠—$20 billion of which are fixed-rate mortgages and $8 billion worth with a variable rate.

“At this time, we still only see a small, less than $20 million of mortgage balances with clients we see as being at higher risk from a credit perspective and whose LTVs are in excess of 70%,” said Chief Risk Officer Frank Guse. “These ratios are very stable quarter-over-quarter. We actively monitor our portfolios and proactively reach out to clients who are at high risk of financial stress.”

Less than 1% of CIBC’s uninsured mortgage portfolio has both a FICO score of 650 or less and a loan-to-value (LTV) over 75%.

“Overall, our mortgage portfolio is well positioned and we do not expect to see material losses,” Guse added.

CIBC earnings highlights

Q4 net income: $1.3 billion (-17% Y/Y)
2022 net income: $6.6 billion (-2%)
Earnings per share: $1.39

Q4 2022 Q3 2022 Q4 2021
Residential mortgage portfolio $262B $260B $243B
HELOC portfolio $19.4B $19.4B $18.8B
Percentage of mortgage portfolio uninsured 80% 80% 76%
Avg. loan-to-value (LTV) of uninsured book 48% 45% 49%
Mortgages renewing in the next 12 months $28B NA NA
Portfolio mix: percentage with variable rates ~33% NA NA
90+ days past due 0.13% 0.14% 0.17%
Retail portfolio gross impaired loans 0.13% 0.14% 0.17%
Canadian banking net interest margin (NIM) 2.47% 2.51% 2.35%
Provisions for credit losses $436M $243M $78M

Source: CIBC Bank Q4 Investor Presentation

Conference Call

  • “In Canadian Personal & Business Banking, we demonstrated positive momentum with our strongest client growth since 2017, where we added over 350,000 net new clients to our bank, 38% of which are from the affluent segment, almost 3x the index of our market share in that segment,” said President and CEO Victor Dodig.
  • The bank saw growth in loans and deposits of 12% and 9%, respectively.
  • “As expected, both net write-offs and delinquencies trended higher in Q4, with client activity continuing to revert towards pre-pandemic spending patterns,” said Frank Guse, CIBC’s new Chief Risk Officer.
  • “We’ve made really good strides in our franchising of our mortgage clients. So, as at October, 92% of our client base that have mortgages now have deeper relationships with us,” said Laura Dottori-Attanasio, group head of Canadian Personal and Business Banking. “So, while we will see volume come off of 2022 levels, we do expect to continue to do really well on the franchising side and to grow in other areas of the bank that I think are going to offset some of the decrease that we see in the mortgage side of the business.”
  • “We had a big drop in prepayment activity this quarter with the rapidly rising interest rate environment…[and] when we look at November, I would tell you that we expect our prepayment activity to remain low [and] we are seeing much higher spreads than we saw in our October lows,” Dottori-Attanasio said.
  • “When we look at our housing and economic outlook and looking at our application pipeline, that is down,” Dottori-Attanasio added. “Expect to see, I’d say, low single-digit growth for 2023.”

Source: CIBC Q4 conference call

Note: Transcripts are provided as-is from the companies and/or third-party sources, and their accuracy cannot be 100% assured.


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