Canadian Imperial Bank of Commerce (CM) Earnings Call Transcript & Summary

[Audio Gap] Executive Committee will be presenting: Victor Dodig, our President and CEO; Laura Dottori-Attanasio, who leads our Personal and Business -- Banking Business in Canada; Harry Culham, who leads Capital Markets; Jon Hountalas, who leads Commercial and Wealth Management in Canada; Mike Capatides, Head of our U.S. business; and Hratch Panossian, our CFO and Head of Enterprise Strategy. In addition to our speakers, we're excited to have the rest of our leadership in attendance today: Sandy Sharman, who leads People, Culture and Brand; Shawn Beber, our Chief Risk Officer; Christina Kramer, who leads Technology, Infrastructure and Innovation; and Kikelomo Lawal, our Chief Legal Officer and Head of our ESG practice, will be available for Q&A and networking during the breaks. We also want to take the opportunity today to highlight some of the engines driving growth at our bank, which we will spotlight throughout the day. Chris Sweetland leads our Payment Strategy and Transformation; Christian Exshaw is the Head of Global Markets and leads Direct Financial Services; and Mark McQueen, Head of CIBC Innovation Banking, they'll all be joining us for the spotlights today. With that, let's turn to the agenda. Over the course of the morning, we're very excited to share our journey on where we've come as a bank, where we're at today and, most importantly, where we go from here. We have been on a journey transforming our bank over the last few years, and we're excited to share our path forward. We're a bank built for growth, and Victor will kick things off by sharing more with you on our strategy and plans to deliver value to our shareholders. If there's one message to leave you with today, it's that our client-focused strategy builds on the momentum we have achieved, and we will continue to deliver consistent and sustainable performance for all of our stakeholders. Following Victor's opening remarks, you're going to hear from Laura. Laura is going to explain what we believe, CIBC is a leading retail bank in Canada as well as Chris, who will come up on stage and highlight some of our -- highlights on our leading payments platform. Next, Harry will explain how we're growing our unique capital markets platform. Christian is going to join Harry and share insights on what we've built at direct financial services and how we will scale it across the bank. We're going to host the first of 2 Q&A sessions following Harry. As I mentioned, our full executive team is available to join him and answer your questions today. For those in person, we're going to have microphone runners across the floor. Please raise your hand and they'll come to you and you can ask your question. For those on the webcast, there's a live chat feature where we can enter questions. Following the Q&A session, we're going to have our first break for 30 minutes and give everyone a chance to network. After the break, we'll come back, and Victor is going to introduce the next section of the day and highlight our unique structure to serve the private economy. You'll then hear from Jon and Mike, who are going to provide more insight into our Commercial Banking and Wealth businesses in Canada and the United States. Mark is going to join Jon briefly on stage to explain how CIBC is uniquely positioned serve the innovation economy. Hratch is going to close out the presentations by providing color on our financial outlook and provide you with some targets and shed some light on how we go about executing our strategy and allocate capital to deliver enhanced value and returns. We'll then have our second Q&A session, where Victor will come up with Jon, Mike and Hratch. And again, the rest of the executive team will be available to join in. So with that, let's begin. I'm pleased to introduce our President and CEO, Victor Dodig.

Good morning, everyone. It's great to see you here. Whether you're here in person or whether you're here virtually, our goal is to create and help you engage with our bank, help you advocate for our bank and invest in our bank. And that, through this Investor Day presentation, is our objective. And I hope you walk away with that at the end of today. I'm joined today by members of our CIBC Executive Committee, our team and our broader leadership team who had a very visible hand in shaping the strategy of the bank that we are today. You're going to get an opportunity to hear from some of them. You can ask them all questions here on stage and certainly when we break for lunch and during the intermission because we want you to get to know us better and better. We are the people who have shaped our bank in terms of where we are today. We are people. I want every one of us are going to give you a little bit of a story about the connection to our bank. My connection goes back to 1976 when I opened up my first account, 6606563. I was a paper boy. But really, in 1985, I was hired to be a customer service representative or a teller at CIBC. I worked at Thursday nights, Friday nights and Saturdays during my university years at a time where technology was reshaping banking. At that time, we were implementing Dot Matrix printers in the banking center, and the primary provider of our computers was [indiscernible]. So it's just another sign of how things can change but how things also stay the same. Technology is always fundamentally reshaped banking, but at the same time, relationships have been a constant, whether you're a CSR or whether you're here as an executive or managing relationships day to day. I came back to our bank in 2005 and have had the fortunate opportunity to work within our Wealth business, our Retail business, and I became the captain of our team in 2014. But I'm only the captain because we work as a team. And I'm very proud and privileged to work with the team we have because we have world-class executives. And you're going to hear a story today of a bank that's on the rise, a bank that's invested to transform for the future. If you get any message, as Geoff said, there's one message, there's always several messages in these presentations, there's 3 things I'd like to reinforce with you. One is that we're a fundamentally transformed bank. We've worked hard to transform our bank, maintaining those relationships and strengthening them but investing in technology and looking to the future. And we will continue to do that. The second thing I want you to know is that we are a client-focused bank. It's part of our culture. We have reawakened that part of CIBC many years ago and we strengthen it each and every day. You're going to hear from our executives how deep those client relationships are and how meaningful they have become. And the third thing I want to convey is that we are ready for the future, and we will continue to deliver those results going forward. At the same time, I recognize the economic environment that we're in. Inflation is high, interest rates are rising, equity markets are delivering nothing but volatility and there's a great deal of concern out there. But you have to also look at the other side. There's a lot of liquidity in the system. Our clients, particularly those in commercial and corporate banking, recognize the environment but also are confident in the medium-term, long-term future. And I think we have to look at that in a very, very balanced way. I will tell you that our strategy, our focus on clients is not cyclical. It will be constant. We will adjust to the market. If the market is more difficult, we will adjust our pace of investment. When it turns around, we will accelerate that pace of investment. But we will constantly focus on the future and delivering the results that you're going to hear about a little later on. Today, our bank -- just to give you a quick snapshot of what we are and who we are. We were founded in 1867, as you saw in the video. We're domiciled in Toronto, but we're a North American bank with global reach. We've got a market cap of $64 billion, that changes day by day. But importantly, we're a diversified business. You can see that in the bottom left-hand corner of your slide. Much more diversified than many, many individuals give us credit for, focused on delivering strong financial results, whether that's our return on equity or that's our capital levels or that's our net income after tax growth that you see up in the upper right-hand corner. A strong credit rating and a bank that's on the rise. We're on the rise not just because of our financials, but it's how we do business and how we carry ourselves. And our purpose is at the cornerstone of who we are. It is foundational to us. It has always been there, and we reclaimed it in the past number of years, our purpose of making your ambition a reality, that purpose that will speak to all our stakeholders. If you're a client, it could be about helping you buy a home, saving for your child's education. Or investing and scaling in your business so that you can grow your business, you can create employment. That's what we do as a bank. For members of our team, it's about collaborating and working to advance their careers, giving them challenges so they see the meaning of being part of the CIBC team and to see their future in our strategy as well. For our communities, it's about how we invest in them. We operate in thousands of communities, thousands. And it's important that they see us as a primary stakeholder in their daily livelihood. And if we do that really, really well, we deliver for our shareholders, which is ultimately what you measure us on. But behind that output is a lot of input and a lot of focus on our purpose of making your ambitions a reality. This purpose has been something that we focused on for years. This focus on ESG that you talk -- that many investors talk about today is something that's been part of our DNA. You look at our investments in the community, you look at CIBC Miracle Day. For those in financial services, you know that the first Wednesday of every December, our Capital Markets business and our Wealth Management businesses, direct all our revenues to kids' charities. Since 1984, we've been doing that. And since 1984, we've raised over 250 -- $270 million to help children that are less fortunate. Over the past quarter century, we've been the sponsor of the Run for the Cure, with a singular goal of ending breast cancer. We've raised over $480 million. Those 2 events are defining events for us. It's who we are, $0.75 billion given back to the community. And last year, we announced the CIBC Foundation to make sure that we're there with an endowed investment of money to invest in the community on an ongoing basis. And we're going to continue to contribute that - to that year after year. When it comes to the environment, we are all about managing a just, commonsensical transition. Our nonrenewable energy clients are focused on reducing their carbon footprint, and we're working with them to help them in that regard. Our renewable clients are looking to fill the gap on energy needs with renewable energy that goes from hydro right through to solar, including uranium. And we're helping them. We're a signatory to the Net Zero Banking Alliance, and we're committed to reducing our own carbon footprint through our own activities by 2024 to neutral and to go net zero by 2050 in our financing activities. We've got a target of $300 billion in sustainable financing by 2030. And we are one of the top renewable lenders today in North America. We ranked Top 5 or Top 10, depending on when you're measured. And finally, in this space, very innovative platform called Carbonplace is launching over the course of this year. And it's backed by us and 8 other banks based in the U.K., and it's all about creating a tokenized market mechanism to sell carbon offsets to buyers that need it and legitimizing them and tracking them. That is the future. That is who we are. When it comes to governance, we're world class. We have a Board that's world-class, chaired by Kate Stevenson, a diverse Board, a Board that has skills that cover the landscape of banking, financial services and business that helps the leadership team guide us in our strategy. We are focused also on safeguarding our clients' data, and we're also focused on always, always putting the client first and providing fair advice. That is who we are. That's what our ESG DNA is, but it's always been part of who we are. I want to talk about how we've transformed our bank. It's been a journey for us, but it's been a very focused journey in very specific areas to change the way we bank. One is to focus on client experience and driving a better client experience result where relationships matter but technology is reshaping them as well. The second is to make sure that our team, in a world where there's a war for talent each and every day, is engaged and believes in our purpose and believes in our mission. The third is to make sure our business is diversified. And the fourth is to continue to modernize our bank. I'm going to talk to you about each one of these briefly. So what's happened on the client experience front at our bank? Well, we've invested in advice capabilities. We've invested in our digital platforms. We've invested in empowering our frontline so they can make better decisions for our clients. I get a client complaint. It goes to our client team immediately within 2 hours. It's escalated and it's resolved as quickly as possible. That's who we are. We all think that way as a team. And we're dedicated to operational excellence because that matters in banking. So what is the net result of all of that? At the top of this slide, you see our relationship-intensive businesses, Commercial Banking, Wealth Management, Capital Markets. These scores are world-class Net Promoter Scores, where our clients, and you can talk to anybody out there that banks with us in these segments, and they will tell you unequivocally that we work as a team, we're collaborative and we solve their solutions from soup to nuts. And that's what's delivering these scores. Our goal now is to improve upon them and, at the very least, keep them where they are. In our consumer franchise, we have made significant strides in client experience, ranked #1 today in online banking, #2 today in client satisfaction. We haven't seen that kind of ranking in over a quarter century. In our direct bank, simply, we're #1 in this country. And then on the Ipsos-rated scores, which rates a qualitative assessment of a client's experience, we've doubled the improvement in our Net Promoter Score versus our peer group. We are focused on our clients and we are focused on creating advocacy with them each and every day. When it comes to our team, we're focused in 3 key areas: making sure we have an inclusive company where everyone feels that they can bring their entire self to work each day, that they're engaged and enabled and that we're future-ready. When you look at these 3 areas of the slide, on the left-hand side, it talks about an inclusive and purpose-driven company. 90% of our team are aligned with our purpose. They're inspired by it. They feel really good. They understand it. They wake up on their bed saying, "I know what I need to do." We're also investing in our team. Inflation is out there. We just announced something last week that I think is unique in terms of where we want to get our minimum wage to the frontline team members that deal with our clients each and every day and also adjusting pay for those across the board at more junior levels. We need to grow to continue to invest, and we will. That's a sign to them. They're engaged and enabled. These scores are -- that GHPN means global high-performer norm. We're above the global high performer norm. We're at the top decile when it comes to an engaged workforce. If you talk to our Imperial Service advisers or would go to the investment advisers, we're at the top end there in terms of how they feel about our bank and what we're doing for them. And then getting everybody ready for the future. We are reinvesting our dollars in terms of making sure that we have great frontline relationship managers building relationships with clients while also putting technology and mobility in the hands of our team. Diversification, the third quadrant. We've worked hard to diversify our bank. This shows you 2016 earnings to 2021. We've grown them by 50%. Not only have we grown them by 50% across the board, but we've also diversified, notably in the United States. In 2016, we earned 2% of our earnings in the U.S. It equated to USD 70 million after tax. Last year, our CIBC team delivered over USD 1 billion after tax, 21% of our earnings, through a combination of smart inorganic investments, but importantly, an organic growth profile that is second to none in the market. And we've done this by focusing on credit quality, as you can see at the bottom of the slide, where our impaired provisions have dropped over time relative to our peer group. So we're focused on relationships. We're focused on high-quality relationships and delivering a very good result for our shareholders. It's worthwhile just stepping back and looking at how we achieve this U.S. growth because it's been a bit of an 8-year story. One foundational acquisition was the private bank, but everything else around it was tuck-ins as we call them, and organic growth. And now we all operate under one banner, CIBC, CIBC Bank USA. And we operate in 9 out of the 10 -- top 10 MSAs. And as I said to you, we're delivering meaningful growth for clients who are not just doing one thing with us. But much like the Canadian market, they're building deep relationships with our CIBC team. And finally, modernizing our bank. This is really, really important. How we work and where we work is critical to our team. So we've modernized our physical spaces. CIBC Square is not just a headquarters building. It's a physical manifestation of what we believe the future looks like. This vision we worked on as a team well before the pandemic. But sometimes you're better lucky than smart because the pandemic is resulting in workplaces that should look like ours. I encourage you to take a look at CIBC Square today before you leave. It is about collaboration, it's about agility, it's about moving quickly in a fast-adapting marketplace. In our banking centers, banking centers are going to continue to play a very important role in what we do in the Canadian market, in particular. But they're transforming themselves as well. We are investing in our banking centers to make them advice centers. Transactions are being conducted by our clients on their own so they can build relationships with us. Banking centers are becoming smaller and smarter where relationships are at the core of what we do. And embracing new ways of working and being flexible. You don't hear us making pronouncements of, "Thou shall do this and thou shall do that." We just adjust to the reality. We adjust to the hybrid work model. We adjust the mobility, and we do it smartly. It's all about working with our team, understanding their needs and understanding our clients' needs. And we do it well. Technology. We've increased our investment in technology by over 50% in the last number of years. And it's focused on 3 specific areas. Can we run our bank more efficiently? Yes, we can. Our cloud investment is second to none in this market. It's pure leading, it's deliberate and it's all meant to deliver better efficiencies into the future. Protecting our bank and doubling our investment in cyber as the world becomes more digital, educating our clients on some of the nontechnical aspects of how to protect your data is important to us. And thirdly, to grow our bank, to deepen those relationships. And we've done that by rolling out a sales force more robustly than anyone in our peer group and rolling out CIBC GoalPlanner, which you're going to hear from Laura about a little later on how digital financial planning delivers a much better outcome for our clients in terms of Net Promoter Scores and funds under management growth. And we've just begun. The third piece is our brand. So just take a moment here to see how it's evolved since 1867. [Presentation]

Our brand is our emotional energy. It's a representation of who we are, the soul of our bank. And people always ask, why do you invest in your brand? You invest in your brand because you believe in it. You invest in your brand because it's an emotional manifestation of who we are and where we're going. And people say, "Well, how did you come up with this brand?" Well, we built on our heritage. If you actually looked at some of the heritage of where the logo came from, that's the 2 Chevrons from the '60s when the bank was its strongest coming together to talk about the future. It's a symbol of our purpose. You look through that and it transforms lives. That's what we do. We make those ambitions real. Our brand is worth over $10 billion. We've invested a small amount to recreate it and to reenvision it and to help everybody think about what lies ahead. In the early days, we've launched it in Canada. We're rolling it out in the U.S. Canadians are telling us, relative to our peer group, they're seeing us as more modern and more innovative. And brand consideration, while 3 doesn't seem like a lot, let me tell you, in the marketing world, it's a lot. People are embracing our brand. They feel its future, the future. So as I said to you at the outset, we're a bank on the rise. You see that in our numbers, whether it's our earnings numbers, our top line revenue growth. our ROE, which is a world-class top quartile -- top of the top quartile ROE and also in our capital strength. And you're going to hear a lot more from Hratch at the end of the presentation of how this all lies together, where the numbers will be going, how we plan on strengthening them going forward through our business strategies. They're going to hear about from our business leaders. I'm just going to pivot really quickly to a high-level overview of our strategy. It's rooted in what we believe is going on in the market. And there are a couple of key mega trends that we focus on. The first 2 are about clients and how clients are seeing the world specifically and which segments are growing most quickly and why we're well-positioned there. The affluent and high potential segment is an area where CIBC is very well-positioned. And the world has also shifted from public markets to private markets over the last number of decades, again, a part of the market where we're very well-positioned. Technology is pillars 3 and 4. Technology, as I said to you. When the Olivetti computers came in 1985, it was reshaping in the landscape, it continues to reshape the landscape. Whether it's improving client experience day by day or dealing with the onslaught of open banking, which I could assure you, we are ready for or big tech, which we're ready for. If they want to come into financial services, CIBC is ready to compete with them. And finally, looking to areas of growth that are unique to what's going on in the market and are unique because we're actually capitalizing them, whether it's fintech capabilities, you're going to hear that about that in our Direct Financial Services business; the energy transition, where we've demonstrated leadership; or innovation banking where the opportunity for us is unparalleled. So what is our strategy in a nutshell? It's to focus on these client segments that are high-growth and high-touch and deliver real potential for meaningful relationships. It's to continue to focus on how we improve that client experience so that we can compete with the fintechs, we can compete with the incumbents and we can compete with anybody, including Big Tech that decides to come into financial services and decides to compete on our turf. And the third is to capitalize on these future differentiators. So how well are we positioned? Well, on the Canadian affluent and high net worth space, we're very well-positioned. You can see here that our growth rate in this segment is growing at 2.5x the overall bank. Our clients here in the middle of the bar represent a substantial amount of our revenue and we're outgrowing our peer group. And we're doing it because we have a market-leading platform in our Imperial Service with over 2,000 advisers that are dedicated to building relationships with our clients on both sides of the balance sheet and a value proposition that still stands alone in the Canadian market. A private Wealth business in Wood Gundy, in a private banking franchise, that's focused on the high end of our clients in a unique model where we combine it with our commercial bank. And we have lots of advisory support that we've invested in. Almost 4,000 professionals dedicated to building our business with the affluent and high net worth Canadians. And you're going to hear about this -- more about this from Jon and Laura as they speak about their specific businesses. In the United States, we started with 0 in Wealth Management in 2014. Today, we have $100 billion. Now that's not where we want to be. We want to continue to grow. We've grown that through a series of acquisitions and through organic growth. Our high net worth clients in the United States are growing at 2.5x our overall client base. The average account size is $20 million. It is at the upper end of the U.S. wealth management landscape, and we plan to stay focused on that upper end and make sure that the model we have in a large market like the U.S. can scale and can be profitable. And you can see the growth in it and is way -- well above market, both in terms of assets under administration, loans and deposits. Because now we're investing in private banking. And we rolled out private banking, our wealth management is often co-located with our commercial bank and it is distinctive value proposition in the U.S. marketplace, where Barron's ranked us #4 out of 13,000 RIA firms. And we're very pleased with that result, but we don't take it for granted. In our commercial bank, that high-touch focus remains true as well in both Canada and the United States, where you see our clients increasingly are doing wealth management with us. They bring their treasury business to us. We are growing our loans and deposits at or above market in most key segments. And we're doing it with a focus on doing -- of high credit quality. That's who we are. We have 1,400 relationship managers in our North American commercial franchise in Canada and the United States. And in Capital Markets, we have a unique value proposition where Capital Markets, like the rest of our bank, as part of our bank is focused on delivering for our clients, our strategic clients who generate almost 2/3 of our revenue. Our growth rate is in the double-digit range. We kind of are top tier in the Canadian market, you're going to hear from Harry on that point, And we have a Direct Financial Services embedded in it, and we have a connectivity to the rest of the bank that's second to none in capital markets. Elevating our client experience, the second part of this wheel. So how are we going to elevate it? Well, CIBC GoalPlanner has only touched 25% of our affluent clients so far. We're going to get to over 90%. We're going to roll it out across the Imperial Service, across our private wealth franchise. We're also going to launch Smart Planner, and you're going to hear about that in a moment. I said to you earlier, our banking centers remain vital to who we are and what we do, but our clients are taking upon themselves to do basic transactions. 92% of transactions are now conducted by clients on their own. It will be 95%. The last mile or the last 5% is hard to close off, but we're going to focus on that as well. Our connectivity revenues through Capital Markets were $1 in almost every $3 will be coming from a connection to the rest of the bank or our retail relationship partners outside of Canada. And of course, cloud-enabled, focusing on efficiencies, making sure that we can be agile and innovative and move quickly as financial services continues to get reshaped. And finally, our future differentiators. Here, you're going to hear from Harry and from Christian, our Direct Financial Services business, which again stands unique, stands tall and is our answer to the fintechs where we deliver real revenues and real profitability and real capability to our clients. You're going to hear from Jon and from Mark McQueen about Innovation Banking and how we've made a difference here in the Innovation Banking system where, again, our opportunity is unparalleled. You're going to hear about our renewables and energy transition, we show leadership. And you're going to hear from Chris Sweetland about payments and why we believe we can become a leader in this space through the investments that we're making. So in the end, I'm almost going to wrap up here before I hand it off to Laura. We're a modern relationship-oriented bank and we've worked hard to get here. We have a winning client-centric culture that we're going to continue to focus on regardless of what the economic environment looks like. We'll adjust, but that's part of our strategy, is to stay consistent and not volatile. The third is to create positive change. For those that work with us and those that work around us and the communities that we operate in. And finally, for all of you as our investors, is to deliver sustainable outperformance over the short medium and long term relative to our peer group. Thank you. Laura, let me pass it on to you in a moment, okay? Thank you.

All right. Thank you, Victor. Good morning. It's very nice to be able to see so many of you in person. It seems like it's been a very long time. So I've been in the industry, I'm going to age myself here, but for about 30 years. And I've been with CIBC for the past 13. I led our corporate bank and I oversaw trading room credit in our Capital Markets. I then moved to risk management as our Chief Risk Officer. And for the past 2-plus years, I've had the privilege of leading our Personal and Business Bank. Now as you heard from Geoff, our goal is to be Canada's leading retail bank, and that's by putting our clients first and providing our clients with exceptional client journeys and experiences. So today, well, it might not seem like it because it is somewhat stressful to be up on this big stage, I'm actually very excited. So I'm going to get to share with you some of the momentum that we have in our Personal and Business bank, more about our strategy, including highlighting some of our key enablers for growth. But first, there's 4 things that I'd like to highlight as I take you through our plans. So the first is that we have repositioned our business for growth, and that's through the various changes that we've made over the years; the second, we have and we continue to invest in our people and our technology to win; and the third, we continue to execute on our strategy. It's working. We're gaining market share. And fourth, that really is our client-focused approach that's helping drive market-leading performance that you're seeing in our top line strong results over the past few quarters. So let's start with a quick overview of our business. The Personal and Business Bank represents about 40% of CIBC's overall revenues. We generate strong return on equity at 38%. We have 11 million clients and over 12,000 team members to serve them. And we think of our business in 3 broad categories: we have Imperial Service for our affluent clients; we have business banking for our small- and medium-sized companies; and then we have core retail, and that's to serve our broader client base. And it is an exciting time to be in the Personal and Business bank. We're really pleased with the positive momentum that we're seeing in our client growth and in our satisfaction scores. So you can see up on the screen, we're very excited about this, because we've actually achieved our strongest net client growth since 2017. We've welcomed 260,000 new clients over the last 12 months. And that's 2x as many as we have just 2 years ago. And we're actually seeing our client growth 3.5x higher than our peers. Our account openings have grown faster in both our digital and physical channels than our peers. And Victor mentioned this, but it's worth highlighting. On client experience, for the very first time in over 2 decades, we actually ranked second, and we believe we can do better. We're leading market share growth in most of our product categories, as you've seen. We have year-over-year balance growth that ranked #2 in deposits and #1 in lending. We have good revenue diversification, and we are making solid progress. When we look at our deposits, we have had unprecedented growth in our everyday bank account opens. We're actually up 30% from 3 years ago. And in cards, when we look at the last Nielsen report, we are #1 in active accounts and in transaction volume growth. And then on mortgages, with our team's relentless focus on end-to-end client experience, we actually achieved 12 straight months of share gains and end of term retention that is at record levels at 92%. So very proud. And it's worth pointing out that these market-leading results that you're seeing, we have done them while we have maintained a very strong risk profile. We take a lot of time to make a point of ensuring that our business strategies are focused on generating and retaining high-value growth in our top-performing segments. Our disciplined risk approach has not changed. And our portfolio has an average beacon score of just under 770. That's a very high-quality credit score. Our growth is very much focused on relationships that all have to fit within our risk appetite. And this is important given the shifting landscape that we're living in. It's really important to have high-quality risk control growth, which is what we've been focused on. I think we all know the financial services industry is undergoing unprecedented change, and that's with our traditional business models that are being challenged continually. So in order to effectively compete, we really do need to be proactive. Our view really is that a successful future is really about getting client preference and convenience right. Very important. It's important that we be in the right ecosystems and that we create the right personalized digital experiences that our clients want. And we're really well-positioned to successfully navigate this changing landscape. We have great client offers. We have wonderful value propositions, like our Youth Smart Start account, if you've taken the time to see that. And we continue to make really good investments to win. And we're going to cover some of those initiatives soon. But first, I would like to talk about the Costco portfolio opportunity that we have. So winning is not only about having the right people and about having the right strategic investments, it really is about the possibility for accelerated growth. And with the Costco portfolio, we have a very meaningful opportunity to expedite our goal to become Canada's leading retail bank. Not only are we partnering with one of Canada's biggest and strongest retailers. This partnership provides us with access to millions of mainly affluent cardholders that are new to our bank. So it is a wonderful franchising and growth opportunity that can really accelerate our path relative to just growing organically. So with that background on our business and on our momentum, I would like to take you through our strategy. We started this 2 years ago, and we continue to deploy it as it relates to growing and, even more importantly, ensuring that we deliver sustainable results. So we have 3 strategic priorities: they're enhancing our digital client experiences, increasing productivity with our effective frontline team and differentiating with personalized advice. So allow me to double-click on each of them. I said this before, but getting client preference and convenience right is really vital for our future. We know that our digitally active clients have higher client experience scores, better retention, and that leads to deeper, more profitable relationships. We've been working to offer better, more seamless digital journeys, including more self-serve capabilities. A good example, and there's a few up on the screen, is our digital application process. So we took a process that used to take 5 minutes. We simplified, we brought it down to 1 minute. And what we saw is just on credit cards alone, our conversion rate went up 25%. So a lot of the changes we're making are working. And we have solid plans for a lot more digital self-serve capability. And that includes our upcoming, and I would say, very cool and interactive digital advice tool that we plan on offering to our core client base. So in a few months, we are going to be launching actionable, personalized advice in our digital channel. We know our clients are going to love it. Hopefully, you will too. And so we thought we would give you a short preview. Over to the video. [Presentation]

All right. How exciting is that? Ease and convenience and all with your own digital coach that you can carry around in your pocket. So that's just a sign of some of the stuff that we're working on. So we're going to continue to increase for our digital world. But the reality is, and Victor mentioned this, a large part of our revenues continue to be generated in our banking centers. And so our team is, in fact, a very important differentiator in making our clients' ambitions a reality. To be best-in-class, we need to ensure that our teams have the right tools, they have the right training so they can focus entirely on our clients and provide them with the right level of value-added advice they need. So to do this, we simplified our org design. We removed admin tasks from our financial advisers and we modified our training so that our team could focus on advice and on deepening relationships. And it's working, and you'll see on the screen. Productivity increased with our net sales per adviser, growing 17% and 7% annually over the last 4 years in our core and Imperial Service offers. We invested in our frontline tools like eCRM. So that's a client relationship management tool, that allows our advisers to have ready access to their clients' information, it's all digital, so they can efficiently serve our client base. We started rolling this out to our advisers this year, and our plan is to continue to roll it out to all of our frontline team members over the next few years. And we do expect to see continued improvements in our frontline effectiveness as we continue to simplify and digitize. So I can't emphasize this enough. Getting consumer preference and convenience right is vital for our future. The deeper our understanding of our clients, the better we will do in ensuring that we have our clients in the right offer, that we're delivering the right experience in a way that we feel is convenient for them. And we continue to invest in scalable assets. We have advanced digital capabilities that we're investing in, more digital tools, including auto fulfillment in the cloud. So from a data perspective, we're leveraging Microsoft Azure and Databricks. And that's as we migrate all of our data into the cloud, and that's to enable better and faster understanding of our clients' needs. We also have a dedicated analytics team, and that's to provide for deeper, more predictive understanding of our clients. And we continue in terms of investing in sales force for even more fulfillment capabilities. So we have momentum, and we have a sound strategy. Now what I'd like to do is talk about the 3 growth enablers that we have as it relates to our strategy. So these are the areas where we feel we continue to have untapped opportunity to further grow and to further gain market share. And so that's an Imperial Service for our affluent clients; in Business Banking for our small- and medium-sized companies; and in Franchising for our broader client base. On Imperial Service. This really is a unique and differentiated offer from our competitors. Our advisers, as Victor pointed out, take care of both sides of the balance sheet. That means they look after both our clients' debt needs and our clients' investment needs. We believe this allows for much better client experience as our clients get more personalized service, more personalized advice that evolves with their life journey. Imperial Service is a significant offer with scale. We have 2,200 financial advisers that are licensed, and they provide very dedicated advisory services to our affluent clients. And we've been successful in growing this. In the past 2 years, we migrated over 200,000 clients or households that move from core to Imperial Service. And we moved another 3,000 clients or $3 billion to $4 billion of funds managed from Imperial Service to Wealth Management. And that really speaks to the strong connectivity between our businesses that Victor often references. And what's important here is we believe we have the potential to do so much more. We have another 200,000 households that we can move from core to Imperial Service. We have the 2 million-plus Costco cardholders that I mentioned that are new to CIBC. We have research that shows that affluent households in Canada are growing 4x faster than the average Canadian household. And Victor mentioned it, we also have the CIBC GoalPlanner. So this is where we really take the power of our financial advisers, and we combine it with an advanced digital financial planning tool. It actually does drive superior, I'm going to say, a financial planning experience. It's all cash flow-based, and it really does allow our affluent clients to plan for the future they aspire to. Since we've launched it, and I know on Victor's screen, we saw -- I think it was 25% in 2021. And Victor said, we were going to 90%. We've given ourselves an internal target of 100%. But today, we're at 33% of our Imperial Service households who actually have a plan. For these households, funds managed grew by 7% or $7 billion. That is substantially more than our clients who actually do not have a plan with us. And as Victor pointed out, they have much better client experience scores. So we believe we have the opportunity to deliver a 10% funds managed CAGR over the next few years in this particular space. Business Banking. That's another important growth enabler. So small business contributes about 42% of our country's GDP. It's important for our country and our communities. We have 13% of this market on the deposit side and 9% on the lending side. We also feel we have a really good opportunity here to grow our market share and deliver a 5% loan and deposit CAGR over the next few years. So to do this, we started by moving our Business Banking team into our banking center ecosystem. We did that so we could increase referrals and we could better streamline and standardize our market approach. And now we're updating our digital capabilities. So we're working with Encino, a pioneer in cloud-based banking, by leveraging their digital workflow tool. And what we're doing is we're streamlining processes by digitizing and by automating client journeys. So that will allow for faster, better client experiences. And we know there's still more to do for us to grow market share and to protect our existing client base from ongoing disruption. So I think this is a good segue to invite Chris Sweetland up on the stage. Chris can talk market disruption, how to compete in this changing landscape. And he'll actually share a few more cool things that we're working on in our Business Bank. So Chris recently joined us. He's a payments and technology expert. He has worked for some fascinating brands. He's been with Square, so -- well, Square, I guess, now Block. Before that, he was with Visa and he spent a few years at Google. So I would tell you when he was at Square and that was almost a year ago, Chris. He spent a lot of time trying to figure out how to disrupt our industry. And the good news is we convinced him to join Team CIBC. And now he's spending a lot of his time helping CIBC challenge all of that disruption. And so Chris, if you could come up on stage to share with us.

Well, thank you, Laura. And suffice to say, I'm very grateful to now be here at CIBC. Laura highlighted a moment ago about some of the exciting strategic investments that we're making in the future of our retail bank in our business banking platform and in our digital transformation. And nowhere is that more evident and perhaps more important than in the space surrounding modern money movement, the future of payments. This is hugely important to how we support and serve our Business Banking clients. Businesses, especially retailers and merchants, they have very different needs today than they did even a few years ago: optimizing cash flow, understanding their options with respect to accounts receivable and payments, how to acquire new customers in an omnichannel world. Frankly for most small businesses, just understanding how to keep pace with all the change in technology. This space in our industry is changing and very, very rapidly. The rate of change and innovation, especially as it relates to new and exciting technology, new and emerging competition in this constantly evolving space around policy and regulation. That rate of change is outpaced only by the shifting attitudes, behaviors and preferences of Canadian consumers and retailers. That's especially true as it relates to digital channels. the adoption of which we've seen increased dramatically and frankly long before the pandemic. And as the digital divide continues to close, that rate of adoption is frankly here to stay. So as we make investments in this space, we try to align them to the 3 pillars of our enterprise payment strategy: firstly, to diversify and grow our business and our revenue as it relates to payments and commerce solutions; two, to protect and entrench our existing business, key client segments, key relationships, and that's especially true for small businesses, sole proprietors and the affluent; and then three, we strive to influence and shape not only our industry but our economy through the decisions and the investments we make in modernizing our payments infrastructure. So with that, I'd like to highlight an investment that we're making now. Back in February, we announced a partnership, an exclusive partnership in Canada and equity investment in a U.K.-based software firm called, Pollinate. Pollinate is a digital and mobile payment platform service provider. Their capabilities span digital activation and onboarding, merchant payments, merchant payment acceptance, data analytics and insights and even consumer and merchant loyalty. And with Pollinate and their support, later this year, we'll be launching Tyl by CIBC in Canada. Tyl by CIBC is our reentry into merchant acquiring. More importantly, it's our opportunity to modernize merchant acquiring. Tyl is our commitment to deliver new value propositions to Canada's small businesses and entrepreneurs. And Tyl is our platform, CIBC's own platform, to integrate financial services and payments, to bring and drive data-driven insights and value-added services and to promote and put forward new commerce solutions and business tools so that we can deepen and strengthen our key client relationships in business banking. Now Pollinate is an established software provider. They've helped other financial institutions, before CIBC, build their own digital ecosystems. In fact, the solution that we're bringing together to Canada is already live with 2 other financial institutions in Australia and in the U.K. This is a phenomenal model for CIBC. Through new technology, modern technology, digital technology, but also partnerships, we can iterate and experiment very quickly. We can get to market much faster, and we can learn from the expertise and the capabilities of those that have been on this journey a little bit longer than we have. But most importantly, we can do so without relinquishing our role at the center of the value proposition as both bank and solution provider. We at CIBC understand and appreciate the role of small businesses and entrepreneurs, not only in our communities and our economy, but for the future of our bank. With Tyl, we can reclaim market share in the space and, importantly, we can reimagine client experience in a new era in which digital engagement is most important. But most importantly, for me, it's an opportunity to serve and support the 98% -- the more than 98% of businesses in Canada that identify as small or medium-sized enterprises. I really appreciate the opportunity to share with you a little bit about Tyl. We're excited about it. And with that, I'm going to invite Laura back on the stage. Thank you.

Thank you, Chris. Now given he did come from Square, now Block, and he's in banking, we asked him to tone it down a bit when he was on stage. So he's normally a lot more excited than he appeared to be. So thank you for that, Chris. You can see we're working hard to continue to be in the right ecosystems. It's all about getting, as I said earlier, our clients' preference and convenience done right. So I have one more growth enabler I'd like to highlight. And that's deepening our core relationships through franchising. Now our internal data suggests that a fully franchised client will, on average, deliver 10x more revenue and have better client's experience scores. We define fully franchised. you can see it on the screen, as clients that have products and services in 4 areas that are transactions, investments, borrowings and credit cards. And we're working hard to do even more to deepen client relationships. As an example, we actually reduced the number of our mortgage-only clients by 10% from 2 years ago. So we've been making a lot of progress, but we feel that we have a lot more upside. As you can see, only 11% of our client base is fully franchised. So we recently created a franchising team, and that's to ensure that we have focus and a disciplined holistic approach in how we look at our clients. Going forward, we plan to deepen our share of wallet by about 200,000 clients a year. And so as we continually franchise, we believe we have the opportunity to grow our $557 billion of funds managed by approximately 2% per year. So a lot of opportunity to grow. And you can see the summary on this slide. I do want to say I'm extremely proud of our team and of our positive momentum. We are gaining market share and, very importantly, we're doing it with much more satisfied clients. And you need to know that we are very prepared for a changing involving -- or sorry, evolving environment. We have the right strategy. We really do have the right team, and as Victor said, we have really strong collaboration across the bank. And we are very laser-focused on disciplined execution, and it's all about better client experience. And so we are well on our way towards our goal of becoming Canada's leading retail bank. And so thank you for listening. And now I'd like to invite my friend and colleague up, Harry Culham, to talk about our Capital Markets.

Good morning, everyone. It is indeed great to be with you all today. I'm looking around, seeing so many familiar faces. It's been way too long, as Laura pointed out. Just a little background on me. I did join our bank over 3 decades ago, in 1990, in fact, coming out of university. I ended up moving abroad several years later with [ gold-bracket ] firms in Asia and London. Came back to Toronto and CIBC in 2008. And it really is -- was good to be home, and it's good to be home now. So I'm really excited to talk about our Capital Markets and DFS business today. It's a unique and fast-growing platform with lots of momentum. We've had a consistent and client-focused strategy over many years that we believe is working well. When you think about our Capital Markets franchise, I'd like you to focus on 3 -- or 4 key messages, actually, as you see in front of you. This is a differentiated and highly connected platform. We're differentiated by our financial performance, by our culture and by our business mix. About 30% of our revenue is a result of dealing with our institutional clients and our trading businesses. 40% is our corporate origination businesses, and about 30% is a result of working with our commercial, wealth and personal clients. We have a strong track record of growth and execution. We have market-leading growth, profitability and returns, and we have a best-in-class pre-provision, pretax earnings stability over the last several years. The business is very well aligned to long-term macro trends. We have a top-ranked renewable, sustainable finance and energy transition business in Canada and North America. We have a strong and rapidly growing private capital, technology and innovation business. And we ranked #1 in many of our trading businesses in Canada. And finally, we have strong levers for further growth. We are on track to deliver double-digit revenue growth in the U.S. after doubling the size of our platform over the past 5 years since 2017, and we're on track to double the size of our DFS business, our Direct Financial Services businesses, over the next 5 years. Here's a very good snapshot of our Capital Markets and DFS business overall. You can see our platform today with the stats on the left. We're well-diversified by business, by client segment and by geography. The business is highly focused on resource and risk discipline. Each of the component businesses, Global Markets, Corporate Banking and Investment Banking, are all delivering record results over the past few years. And if you go back 5 years to 2017, the U.S. represented just 17% of our business. And now it's about 25% today. And since that time, revenue and pretax pre-provision earnings have essentially doubled. In the DFS business, we're very excited to tell you more about today. This is a unique set of digital-first solutions for our personal clients to spend money, make money, move money and store money. And since DFS was formed in 2020, we've incubated the business within Capital Markets to provide some operating autonomy and really leverage some of the Capital Markets' technology and talent. We believe the business is well-positioned for the future. My colleague, Christian Exshaw, will be up shortly to talk more about our business. Capital Markets at a glance, in front of you. This is a little more detail. The platform we've built is very well-diversified. It is a client-driven business built for profitable long-term growth. We have a best-in-class [indiscernible] at 46%, our return on equity, at 21%. Growth of the platform has been strong and consistently above our peers. And the reasons for that growth are the 3 highlights you see on the right. We've built a franchise around our strategic clients. We have more than 600 strategic clients globally today, and that number is growing. These are deep relationships where we deliver all of our bank to our clients. Talent is core to our growth, which is evidenced by our productivity metrics. These are -- we're very focused on adding diverse and leading talent across our businesses. And our technology is market-leading. We've built best-in-class real-time risk management capabilities. We're focused on agility and scalability of our platforms. In fact, the majority of our applications are now on the cloud within Capital Markets. With that backdrop, here's our growth strategy in more detail and what we're doing to maintain our momentum. We've had 3 long-term strategic priorities that have been consistent over many years. We're focused on being the leading capital markets platform for our strategic clients in Canada. Secondly, we're expanding our franchise to the U.S. to continue to deliver double-digit growth. And lastly, we're building our platform we call Connectivity, servicing commercial, wealth and personal clients and accelerating Direct Financial Services. I would also like to add that 5 years ago -- about 5 years ago, we evolved our business to address the growth and intersection of private capital, innovation, sustainable finance, and this is now more important than ever as we've built a competitive advantage that we plan to maintain. So our strategy is working. Our first strategic priority. Canada is our largest market. About 2/3 of our revenue today is derived from Canadian client activity and approximately 360 of our 600-plus strategic clients are based in Canada. Our businesses in Canada are very well-positioned and scaled versus our peers. We ranked #2 by revenue versus peers in Canada and by aggregate, league tables as well. Our strategy is to maintain and grow our position in the market by focusing on the insight and advice and execution that matters to our clients. And that includes delivering our leading technology, including our electronic trading platforms and real-time risk management and our deep industry knowledge. This includes our important energy clients as we help them navigate evolving markets and the transition to a net zero world. The second leg of our strategy is the U.S. From a growth perspective, expanding in the U.S. is a key part of many of our growth plans. Our clients are global, the reach is important. In 2017, we stated we would double the size of our U.S. platform by 2022. And we've achieved that this year. We've grown a number of corporate client relationships over the past 5 years, more than doubled the Debt Capital Markets franchise, doubled the size of our corporate investment banking team to support our U.S. clients. And approximately 50% the growth of our revenue has come from our Global Markets franchise as we export our leading technology and our culture across the border. I'd also note the very important partnership we have with our Commercial and Wealth colleagues in the U.S. which has never been stronger. Just for context, in 2018, we had 4 Investment Banking engagements with our clients at Commercial Banking in the U.S. In 2021, we had 58. Good momentum. So over the next 5 years, we plan to have elevated growth. We're going to continue to expand the number of clients. We're going to continue to deepen relationships. We're leveraging partnerships with our U.S. Commercial Wealth colleagues and with Loop Capital. From an industry perspective, our main focus is to further expand in the areas we know well and our high-growth, including financials and private capital, infrastructure, renewables and technology-related industries. We have invested significantly in these areas over the past 5 years and have built leadership positions versus peers, as you can see from the stats on the right. Our strategic partnership with Sera Global is one example of where we're investing and will enhance our private capital and strategic advisory services. And another example is our recently announced partnerships with several universities in sustainable finance area. Our third strategic priority is delivering Capital Markets products to our commercial, wealth and personal clients. And I've highlighted how you can think about that a moment ago: 4.0% is our corporate client franchise, 30% is our institutional and trading franchise and about 30% is our connectivity business, if you think about our Commercial Wealth and personal clients. Our connectivity clients -- our connectivity businesses include Simplii, The Alternate Solutions Group and Investor's Edge. If you think about Wealth Solutions, so that would be our structured notes and market-linked GICs to high net worth clients and personal clients. And our mid-market solution, really, that's about servicing our commercial clients, north and south of the border with global market solutions, advisory and capital raising. These connectivities are important -- these connectivity businesses, as we call them, are very important for several reasons from a funding perspective, from a growth and revenue perspective -- from a funding perspective, Simplii has over $20 billion of deposits. Our structured notes and market-linked GIC businesses has more than $20 billion in balances, and these are growing at double digits. From a recurring revenue perspective, the businesses are highly stable and diversify our revenue sources and growth. Our revenue from DFS and other connectivity businesses are growing at double digits, and we're on track to continue that momentum. In fact, we're targeting 15-plus percent revenue growth over the next 5 years at DFS -- within DFS. And with that, I'm now going to pass it over to Christian Exshaw, our Head of Global Markets and DFS, to talk to you about our DFS business. Christian?

Well done. Always difficult, I would say, to be between, I would say, a presentation and the break, right? But I'll try to make it as interesting as possible to keep the energy level up. So [Foreign Language]. Welcome. Harry mentioned the diversity and the quality of our earnings. This morning, I'm going to give you some context on our Direct Financial Services that contributes to that objective. In 2020 -- at the end of 2020, we actually did a lot of work, worked with my colleagues in corporate development, technology, finance. And we decided, having done all this work, to unify 3 digital-like businesses: Simplii, where our clients store and spend money; Investor's Edge, where our clients make money, that's where they can invest and trade the money; and The Alternate Solutions Group, which enables our clients to move money. These businesses have a number of unique characteristics, and that's why we put them together. They're fast-growing. It's also a future-focused business and reaches a unique client base. They deliver fee-like revenues, which I really love about this business compared to the Global Markets, is that those fee-like revenues are operating 24/7, 365. And they're also very independent from market volatility. And last but not least, they support our growth objectives and enhance the quality of our capital markets earnings. Those businesses have strong tailwinds. I know that the market is right now difficult. You would have seen it this morning, but they have a lot of strong tailwinds. Now this said, we do have strong competition from established players and also emerging fintech players. So for instance, Simplii competes against Tangerine, EQ Bank, Koho. Investor's Edge, on the other hand, competes against the likes of Robinhood, Wealthsimple, Questrade and, obviously, the offering of the big 5 banks. And as for The Alternate Solutions Group, it really, I would say, competes against the fintechs. I'm not so -- I'm not sure how much you know about those, but let's say, it could be Chip, Pioneer, Remitly, Flywire, Revolut, N26, and on the DCC side, [ dynamic currency consumer ] side with the Euronet. Now while competition is strong, we have strong advantages to win. Several players have 1 or 2 of those client solutions, but none, none have all 3. And in the environment as we have today, it is very important to have diversified earnings, diversified business models with our clients. It's a unique opportunity for us to deliver digital fintech-like solutions while benefiting -- and I cannot stress this enough, benefiting from the security and safety of a large regulated bank. This is very, very important for our clients. And we have a proven operating model to win, developed through the growth of our alternate solutions group. I'm really excited about that business, by the way, and you'll see it. It's a business that we created back in 2012. We gave the team full autonomy, full agility to fail and really focus on client returns. And that's really what they did. And our mission, as Harry mentioned, is to tap in our core capabilities that we established back in '08 in Capital Markets, which is technology on one hand and our FX businesses. So when you look at why the Alternate Solutions Group is, I would say, so profitable, so successful. It is really because of its 4-step operating model. And I cannot stress enough how important those are. Number one, fostering an intrapreneurial culture, not entrepreneurial, so entrepreneurs within CIBC. That means that you have to allow those guys, those guys to actually fail. I think that's very, very important, fail quickly. And using, I would say, colocation as a mean of being able to get the best of our technology partners. So you see the business and technology, I would say, working together in a very agile work environment. Then leveraging open-source software and the cloud. That also was very important for us at the beginning because it enables you to create an extensive and cost-effective, modern core technology stack. We're very, very focused, I would say, on technology. Designing and building components in a modular way. So imagine modules in the ecosystem in the cloud, which provides you a lot of flexibility, a lot of agility to, I would say, react to client demand faster as opposed to having integrated models that we used to have before. Designing and building components in a modular way is very important because they enable you to reuse those components both inside and outside CIBC. And what I mean by outside CIBC is now that you invested all this money building technology, why not white label some of that technology, and we're doing this. The fourth and the last point, which is probably the most important is the relentless focus on execution. That is very, very important for us. Now that operating model has allowed the team to quickly integrate new partners depending on the partners and depending on what it is we're doing for them 6 to 12 months is what we typically do with our colleagues in technology. And to leverage CIBC existing capabilities that allow for faster and cost-effective scaling. Now the Alternate Solutions Group, as I said, was created in 2012, and it's grown since then from 0 to $270 million. It has an operating leverage of 20%. It has a cost-income ratio of around 40%. It's a big growth business. Our remittance business, which we call the Global Money Transfer is an example of those innovative solutions that we have for our clients. Now if you recall, back in 2017, Victor actually played a video, and we spoke to you about our remittance business what we transfer. Back then, that business recorded 325,000 transactions in 48 countries. In 2021, the number of transactions had nearly quintupled to 1.45 million transactions in over 130 countries. And obviously, this business continues to grow. And more on that later. Now these are not just the, I would say, only solutions that we have, other solutions that we've built, again, for our clients would be dynamic currency conversion, which is a point of transaction and FX conversion in over 200,000 ATMs globally. Here in Canada, South America, Asia, Europe, operating 24/7, 365. International student pay, where we partner with colleges and universities in Canada and internationally to enable students to convert their tuitions in their domestic currency. Multicurrency pricing, again, partnering with e-commerce networks where we offer FX optionality for their users. And we have many, many other, I would say, type of technologies that we've built in the prepaid card, et cetera, I won't bore you with them. But just to show you a bit of what we -- tell you the story of what it is we've built in that ecosystem. So these businesses are high growth. They're very profitable. They're scalable, they're stable. They operate 24/7, 365. So this is the way we built, I would say, ASG. Now imagine if you were to actually use that playbook and you apply it now, I would say, to both Simplii and Investor's Edge. And you would come to the conclusion, oh my god, the opportunity is immense. It's enormous, I would say, for those businesses. And I would tell you, yes, you're pretty right. You are right. If you were to look at what we've done since then, it's been pretty, I would say, pretty compelling, and I'll give you some numbers. We've been monetizing and scaling these businesses. Simplii at the end of 2020 was nowhere on the cloud. My colleagues in technology have done a phenomenal job. By the end of this year, we'll be -- we're 50% cloud. Investor's Edge, it's going to take a bit more time. We'll be 25% cloud-based by the end of the year and 40% by March. But again, very strong progress in those businesses. The number of clients between Simplii and Investor's Edge, roughly 2 million clients, Victor mentioned the Net Promoter Score. Again, it's not a platitude. 5 years ago, Net Promoter Score of Simplii was around 11 to 13. Today, it's leading in Canada, #1 at 28. And when we compare ourselves to some of the U.K. banks like Starling, et cetera, you realize that actually there's no -- more potential. Those guys actually go in the 40s and 50s. We're very, very focused on our clients. We're not building the product, we're a reverse engineer from the client to the product. So we have significant untapped potential in terms of deepening those relationships, new clients that we onboard through mortgages, 85% of those new clients, we are able to cross-sell at least 1 product at minimum. So very focused on the quality of what it is we do with our clients to live our purpose. Now I'd like to talk to you about the wallet size. I mean all this is great, but how much money are those guys are going to make out of it, right? Well, the wallet size, the way we look at it is pretty compelling, given Canada's idiosyncrasies. Think about the new-comer population, 400,000 to 500,000 newcomers arriving in Canada every year, most of whom are digital native. Consider the international students that come and study in Canada every year, 400,000 to 450,000, they're for sure all digital native. And then you've got the largest, I would say, growing population of Canadians looking for -- who are value-conscious looking for digital banking services. So again, very, very excited about the potential. Look at the progress over the last 18 months. 18 months ago, roughly 60% of our Simplii clients were 34 and younger, and that number has grown, I would say, to 71%. So things are going exactly the way we wanted them to go. So in summary, we are targeting high-growth client segments such as the newcomers, students, digital savvy and value-conscious clients by delivering scalable technology and executing the Alternate Solutions Group operating model. Hope you found this interesting. Harry, back to you.

Thank you, Christian. I've had the privilege of working with and knowing Christian for almost 2 decades now. We worked around the world together. And when I see Christian, that excited, I think he mentioned that word 3 or 4x times about a business, I have full confidence. I also have full confidence in the team, back to front, delivering with Christian's leadership in the DFS growth plans that we have in front of us. So just to recap if I may, with respect to capital markets and DFS, this is a foundation built for growth. Our platform is differentiated versus our peers by strategic focus, by business mix and by financial performance. We have a highly connected franchise, our across business lines and geographies for our corporate and institutional clients and really across our banks to support our commercial, wealth and personal clients. We have a proven track record of success, delivering market-leading growth and performance versus our peers and delivering on our growth objectives, including for our U.S. region and for our connectivity growth targets. We've invested significantly in building businesses that align to new economy macro trends. We have leadership positions in those areas. Today, and we're well positioned really for leadership in the future. We're going to maintain that momentum, and we have real levers for growth, continuing to drive Capital Markets leadership in Canada, double-digit growth in the U.S. and DFS over the next 5 years. And when you bring all of that together, we're very well positioned to deliver superior long-term earnings growth. Thank you very much.

So this next hour is yours. It's a half an hour for questions in here and a half an hour of engagement over coffee out there. I know everyone has gotten used to kind of going from their living room to their kitchen, doing this and that, maybe being at the cottage. This is a new unique to us. We haven't done this in a long time. So let's engage. I said to you at the very outset, I want 3 things from you. I want advocacy, I want engagement, and I want you to think about investing in our bank. And if you're already invested, invest more. Harry and Laura are going to join me on stage. Come on up. And all of our executive committee members and any of the speakers are open game for questions. So we're going to have paddles out there. You put your hand out, the paddle will go there. There is a paddle for the virtual community. Whoever wants to ask a question on the phone, we'll go to you as well. The first question is from Meny. Let's have a seat here.

Meny Grauman from Scotiabank. When I hear about the DFS, definitely, the growth sounds exciting, but I keep thinking one of these things doesn't sound like the other. And so the question is just the logic of building a successful consumer-focused business brand in the context of a wholesale bank. And I'm still struggling with that. And maybe the way to ask the question is why doesn't it make sense to put it in the personal bank. I think if you ask 10 out of 10 people, they'd say, just off the top of your head, it makes sense to put something like this in a personal bank. So why is it in wholesale?

So Meny, it's a good question, but I'm not concerned at all. It was a very deliberate decision to structure our business that way. Laura runs a business, that is our largest business in the bank and has great growth potential for those clients who value relationships and they value technology. And marrying those 2 together is a big opportunity for us, and it's a singular focus for her and her team. And the growth opportunity that lies behind the strategy that Laura outlined is significant. At the same time, we have an opportunity to build on some of the very real capabilities we have within capital markets. We have the trading capabilities that come with our Investor's Edge business, the FX technology investments that have made us the #1 player in FX in Canada and extending those through our payments platform like GMT and dual currency conversion and other things that Christian just spoke at. And setting aside simply to say, let's go after the value-conscious digital-only consumer. We have 12% to 15% of the market. We are going to grow that 12% to 15% through our personal bank. And we are going to compete head on with those who want a digital first solution where the human touch is really not a big part of the value proposition. And let's set that up and go after the other 85% of the market together. Laura's going to get some of it. The DFS business is going to get some of it under Harry's leadership and Christian's leadership, and we're going to win. It works. It's working today. Client acquisition numbers have doubled in Simplii over the past years. Client acquisition numbers, as Laura has outlined, have increased way above our peers and way above what we've ever seen in our personal bank and make sure that those 2 engines work very well for our shareholders.

So just a follow-up there. Is part of the thinking that there's -- you're setting up a competitive element here between those 2 businesses? .

No. I would say that we don't have 85% of the market. So we're not obsessed about competing with ourselves. We're obsessed about winning with the other 85% with 2 unique value propositions that will win. We're also focused on making sure that clients that generate wealth through our DFS business, start getting referred to our Personal and Business Bank and our Wealth Management franchise. Clients who are sensitive and want -- are very value conscious, and don't value the human relationship are migrated over to Simplii. So it works well together.

I'm looking for a little more detail from Harry and perhaps even you, Victor. So bear with me, I think my question is 3 questions, how, where and why. So the first question is, how do you intend to grow in the U.S? Is that balance sheet? Are you hiring managing directors? Are you acquiring businesses. Can you give us a little more color on how you intend to grow in the U.S.? Second question is where is that by geography, Chicago, New York, is it by corporate investment banking. Is it, again, balance sheet, is it trading? And then the question is why for Victor. Why grow the U.S.? The U.S., I don't think is as high as ROE as Canada. In the past, you are much larger in the U.S. and you exited. So a question for Victor is why grow the U.S. business aggressively by 10% if it's not as profitable as Canada.

Well, let me start with the why. We've started with the why several years back where everyone was saying, well, why are you investing in the U.S.? And we said, look, it's all a client-driven strategy. We have Canadian clients, the bank North South. And we also see our ability to take some of our core capabilities and not replicating the full bank that we have in Canada and distinctly competing in some areas of the U.S. where we believe we can add value, and we believe we can deliver a return on equity that's commensurate with our overall returns, which Raj will talk about. I think we've been able to do that, Darko. We've been able to invest in our Wealth Management franchise through 3 acquisitions. We made an acquisition of the private bank, where I think there was question marks. Are you going to be able to generate your returns? We have. It was accretive way before our targets. And the growth that we're seeing now organically gives us great confidence that the model of focusing on the private economy in the U.S., private economy being the wealthier end of the Wealth Management spectrum and privately owned businesses, that really work hand in hand is working and then bringing the capital markets business closer and closer to that. There's absolutely no comparison to our operating model and our strategy today in the United States and what we had decades ago. It is a black and white, completely different bank and a completely different strategy that candidly is working. We will continue to focus on organic growth. You're going to hear from Mike Capatides in the second part of the presentation, who will lay that out for you. We are going to be unrelenting in our focus on organic growth. If we do the tuck-in acquisitions, they'll focus on our wealth management business where we can actually generate more fee-based than recurring revenue and at the same time, work with Harry and his team on the capital market side, which is highly connected to the U.S. franchise. It is not Wall Street. It is bringing smart, well-grounded capital markets to the Main Street owners of American businesses and those who want their wealth managed by us.

And just to the how and where, Darko, great questions. We started many years ago, as you recall, it's going well. But if you go back to our strategy to be the leading capital markets platform in Canada for our core clients, 80% of our clients have activities or operations in the U.S. We need to be relevant in the U.S. That's #1. Number two, the opportunity for growth is significant. Doing what we do. We're not trying to be all things to all people as Victor just pointed out. We're trying to be extremely relevant, build deep relationships across the corporate and institutional land space. So it's not a balance sheet-led strategy. It's a client-led strategy, where we deepen relationships. And we believe the best way to manage risk is to know our clients really, really well, and that's what we're doing. We're building relationships in the most important high-growth areas that we understand really well, very strategic, very targeted. And the third leg of our strategy, really servicing our commercial and wealth colleagues and clients in the U.S. is so important. We're really good at it in Canada. We work very closely with John and the team, and we think we can do a lot more in the U.S. We're fully integrated. In fact, the Head of Investment Banking, as an example, lives and works in Chicago and runs U.S. investment banking from there. We are connected by technology. We're connected by clients. It's working well.

So in a nutshell, you're following your clients south of the border, you're not actually building out -- and the RWA growth that we saw recently in your business was not U.S. It was not predominantly U.S.-based...

It's a combination -- it's a combination of Canada and the U.S. The RWA growth is a result of the markets. It's a result of doing more client business. It's a result of utilization, it's about diversifying our client franchise. So really very well diversified, I would say, in the areas we know very well, and we feel very good about the loan books.

It's Gabriel Dechaine, right? You got to tell everybody who you were.

Gabriel Dechaine. [Foreign Language] So I appreciate all the growth strategies outlined, that's very important, of course. But the questions I'm getting from investors these days and -- and mortgage -- the housing market and mortgage growth has been a big thing, obviously, in the industry for the past couple of years. What can you tell us about some of the underwriting risk management strategies you implemented or enforced or whatever over the past couple of years when interest rates were low, housing prices were going up. And then what kind of granularity could you give us on the growth, whether it's exposure to investor-owned mortgages, any special underwriting standards you applied to variable rate mortgages and I'm pulling a Darko here, a third question.

You do that on the webcast.

It's one question. Have you stress test the mortgage book for potential payment spikes or for borrowers that are facing renewals or have floating rate mortgages, anything of that nature would help. And I'd ask these questions of any banks just...

They're all -- everything is fair game, Gabriel. You know that. So I want to draw on Shawn Beber, our Chief Risk Officer, to start, and Laura can also backfill from the business side because I think you did a great job describing it. But Shawn can give you a perspective from the risk management perspective.

Right. So good morning, and great to see everybody. And Gabriel, thanks very much for the question. So we have not compromised our risk appetite in achieving the growth. You heard Laura speak about the investments that we've been making from a front office perspective in terms of effectiveness and client experience. We've also been making investments on the risk management side to support the growth. So when we look at the portfolio, we're very comfortable with the growth that we've achieved both in terms of when you look at the statistics as they are today, we had quarter-over-quarter improvement in delinquency rates. They're already low since the onset of the pandemic. They went lower in our most recent quarter both on a year-over-year basis and a quarter-over-quarter basis. From a strategic perspective, Laura talked about deepening relationships. Our growth has been more weighted towards clients with whom we have deeper relationships. That is a credit positive. And as we look at the outlook and the stress testing that we do in the portfolio, we look at it across a number of different dimensions in terms of home price changes, in terms of the credit scores of our clients, both the bureau scores as well as our internal metrics. And we're very comfortable with where things are currently. And I -- look things could play out and to the extent things get more stressed, then you could see higher losses than we had certainly included in the materials, but that's not the base case that we are looking at. And as we look at the portfolio from a -- from the composition perspective, we're in cities. We're more heavily weighted towards some of the markets that had even lower loan-to-value statistics particularly the Greater Toronto Area and the Greater Vancouver Area, which has also -- contributes to the positive credit aspect. So we're comfortable with the portfolio as it is, and we watch constantly for signs of stress. We look at the rates that have been qualified. As you'll know, we stressed using higher rates when we're doing origination activity based on the minimum qualifying rate. That gives us a certain element of view into the ability of clients to manage with higher rates. And for the portion of the book that is variable rate, as we talked about, I think, on the last conference call, those variable rate mortgages, the payment doesn't change month to month. The composition between what goes into interest versus principal will change as rates change, but the monthly payment stays constant. And so at renewal, that could lead to a higher amount of outstanding balance at renewal. But in terms of the performance right now, it's not changing the monthly payment. So we're watching it very carefully.

Is it safe to say the -- well, not safe, but is it logical, I guess, to say that the payment shock type scenario that people get concerned about. That's not until 2025, 2026 time line as opposed to your variable rate borrowers aren't getting hit today with a higher payment, correct?

Yes. That would be the expectation. And so much as those -- the mortgages that would be rolling over the next few years would have qualified at rates that are actually sort of at or even a little bit higher than what the prevailing rates are today. But as we look into the future, that could be a stress and we watch for that carefully and watch what those renewal rates look like and the forecast -- the interest rate forecast that we're working with.

Laura, you want to...

Yes. Well, maybe just to add 2 things. So our underwriting continues to be solid. It hasn't changed much. Some of the tweaking we've done is actually to be tighter on our underwriting. And in fact, you mentioned investors, we actually have tighter qualifying requirements than what we see our competitors doing on the Street. So very comfortable with the credit quality of the portfolio and how we've been growing it. It really has been about deepening client relationships where we know that we have less risk in the event of a downturn. And then just on the growth because you started with that, we do know it's a softening market, and we have taken that account in what I shared in terms of what we think we can deliver. We've already taken into account a much softer growth market for mortgages in the low to single digits.

Mario Mendonca, TD Securities. First Victor for you. As I walk through the building and I noticed everything looked a little different. I've been away a while as much of us have. It seems like a pretty big investment. The investment in the brand also seems very real to me. What I'd like to understand is how does -- how do all these investments tie into CIBC's primary goal, which is to be a customer-focused bank, how does this building, the investment in the branch? How does that all tie in? That's the first question. And then secondly, how do you justify this kind of investment? Like can you actually make a calculation that says this is worth the effort and worth the money because it means this to CIBC.

That's a good question, Mario. These are significant, important and deliberate investments in terms of the reshaping of our bank going forward. Before the pandemic, we had over 15,000 people in Toronto working in 23 different buildings. And we said to ourselves, that doesn't make sense. We need to be working in a more agile environment, a more open environment, a more collaborative environment and we had the opportunity to reshape that, and it happens, once a century, for a financial institution of our size, we jumped on it as a leadership team. We created CIBC Square. We took a vision of what could be the most modern, forward-looking urban campus and bring it to life. And we've done that in this South building, and we're going to do it when we build the next building and bring our trading floor over there and some of the other businesses. When you look at our occupancy costs overall, you look at any financial institution, they vary between 4% and 5%. And that's going to be of revenues. That's going to be kind of the trend line that you see. We save some money here to repurpose it for the future. And I can tell you that our team that's returned, and we've returned more people than any other Canadian bank -- probably most -- more than most other banks on this continent, are overwhelmingly positive. It's democratized the workplace, it's put all the desks to the windows. People feel the light. People feel the collaboration and that kind of energy and that kind of retention factor is good for business. On the brand, yes, we've invested in the brand. The brand is worth a goodwill value of $10 billion. Part of what we do is bring our ambitions to life, our purpose to life, and part of that has to be the manifestation of what we've changed on the inside to the outside world. The brand that we had was a reflection of the past. The brand that we have recreated is building on our heritage and one for the future. And we feel very, very good about the investments that we made and the returns that we're going to get on them. For a brand that's worth $10 billion, I can tell you that the investments that we've made in that brand is less than 2% over time. Very manageable within the context of our overall financials.

So not really -- it's not a reasonable question to try to quantify something that's that sort of squishy but...

If you get a better retention of your talent. If you get better retention and more business from clients, you need to have very small improvements to pay off the investments that we've made.

Question for Harry then. One of the things I've been tracking post-pandemic is where every bank's capital markets revenue sits today compared to what it was in the couple of years before the pandemic, and 2 banks sit very, very high in that metric. Your bank and the bank I work for, the revenue from capital markets is much higher now than it was before the pandemic. What I'm trying to gauge here is it all simply because those 2 banks or your bank, in particular, has made a big push into the U.S.? Is it really the U.S. strategy that's causing CIBC and the other bank to really differentiate themselves. And then secondarily, is there any reason why we should be worried about this?

Okay. So great question. We're really focused on that 7% to 10% growth in PPE and we've been delivering above peer average as you point out. So we're excited about that. This is down to a number of factors, and it all comes back to our clients and our talent and our technology. We invested, as Christian pointed out, many years ago in the underlying systems and technology to ensure that we had the best platform, we think, on Bay Street from a technology perspective. We think we have the best most diverse, most capable talent on Bay Street, and we're expediting those capabilities to the U.S. We would rank right up there, 1 or 2, in terms of revenue in Canada for the capital markets business, the traditional capital markets business, and you saw the league table stat. So we definitely punch above our weight in terms of our size and we're very pleased with that. It's all client-driven. We continue to develop our client relationships, deepen our client relationships in Canada. We pivoted now, as we pointed a moment ago to the U.S., really over the last 5 years with the purchase of the private bank. That partnership is excellent, as we mentioned earlier. The ability to build our corporate an institutional franchise has also been excellent. We've attracted the right talent. We're exporting our technology and our culture very importantly. We talk about risk appetite is how we operate. Clients are the center of everything we do. We stick to what we know really well, and we think we can continue to do that. We think the market is big enough to allow us to really specialize in the areas that are important to our clients as we grow our franchise in the U.S. and really service our commercial clients in the U.S. as well.

So you'd say that in the risk posture of the bank despite how much bigger capital markets is now relative to pre-pandemic, hasn't changed?

I don't think it's changed very much at all. If you look at our -- the metrics. If you look at the productivity per unit of VaR or per unit of balance sheet or per FTE, it's Street leading for sure. Our plan is to maintain that discipline around resources and risk and try to maintain the very strong mix ratios that matter to people like you, Mario. So we're very excited. It matters to us and our clients and our shareholders as well. So we think we can maintain that discipline.

Lemar Persaud from Cormark Securities. My question is for Laura. I want to -- I'm coming back to one of your earlier slides where you show average funds managed. So 5% cards and other lending, you have 30% of revenues. And given the addition of the Costco cards portfolio, I'm just wondering how does that evolve over the next kind of 4 years, both from a mix and a revenue perspective?

You mean the revenue mix that we're showing in the asset mix?

That's right.

Well, over -- when we look at 2025, and we run that through with our plan, it changes a bit. It doesn't change a lot. We will see more cards revenue. We expect to see just a little bit less in mortgages, but we're really moving like 1 percentage point around the different revenue growth factors. And what we need to see, like in cards, in particular, like a lot of the revenue comes from revolving balances. And as you know, with the pandemic, Canadians have been very prudent. So they've brought down their outstanding balances or revolving balances. And so that will take time before that comes back up. And so I think we will be probably well into and beyond a bit of 2025 before we see some of that real change. So all that to say, you'll see 1 or 2 percentage point changes, but we don't expect it to be that significant.

Okay. Great. And then my next question is for Harry. I noticed the U.S. revenue growth target of 10% is a little bit below kind of what you've delivered from 2017 to 2021. Just wondering if you could just do a little bit of a double-click there. Is the slowdown because you're kind of starting at a higher base? Are you incorporating some of the more challenging macroeconomic backdrop in there? Or is there just a level of conservatism?

Well, we're always conservative in Capital Markets. We don't want to overpromise, of course. But we don't think the environment is going to impact us dramatically. Our clients are, as Victor pointed out, very healthy, very active and the pipeline looks strong for the foreseeable future. The U.S. growth, we think we can grow at double digits over the next number of years. We think we can do the same thing with DFS. Canada may be a little slower. So that's why we're targeting 7% to 10% for the business overall in Capital Markets.

And Harry and I have talked about that. That 10% is really -- the base is bigger, right, and the posture is client-focused. It's not like let's just generate more revenue. How can we generate a higher quality stream of earnings that you're going to see at the end of the presentation today from Hratch, how does that tie into a much better profile and an even deeper quality profile of earnings across our bank, what capital markets makes an important contribution.

John Aiken with Barclays. Laura, I wanted to dig into the business banking growth targets you've given us the 5%. I noticed that you combined loan and deposit in terms of the growth. I was hoping you could give us some of your thoughts in terms of where that's going to break down between loan growth and deposit growth and then continuing the trend of multipoint questions. Can you give us some visibility in terms of what you're seeing in the business environment right now, particularly with the changes that we've seen in the economic outlook?

Well, maybe I'll start with the latter and with first. I'd say our business banking clients continue to be very optimistic, notwithstanding what we all are talking about and see coming on the horizon. We see our clients, I would obviously being very conservative. And it's part of -- if you look at our business mix, we have a lot more clients that have deposits and a lot less that have a lending relationship with us. And for those that do, we actually see much lower utilization rates. And so what I think we're seeing and when we have conversations, people are just being very prudent because they're not entirely sure sort of what's coming and what's out there. And so when you take that back to my 5% CAGR, and I mentioned both, we would expect to see more of it in lending. Again, when you look a bit where we're at, we would expect that, again, our clients are going to start to draw more on their facilities. So we should see that grow a bit more than we would see deposits. Although we do expect both to grow just given we feel we're underweight our natural market share. Like we think we should be sitting at 15%. And so we've got, call it, another 2% on the deposit side and then more at 9% on the lending side. But what we want to be careful of as well, we do want to grow our deposit base. And so we're going to pace ourselves. So we merge them together, and we're going to work them both as we go. And I think with the investment we've made with nCino, that should help a lot. So we're really taking, I'm going to say, an old school traditional process, and we're starting by digitizing it. So it will be a lot easier for our advisers and our clients to deal with us. And then on the lending side, it will be easier for inputs, but we've still got some work to do sort of Wave 2 as it relates to more automated credit decisioning. I hope that...

It's Very good, Laura. And the other thing we want to emphasize here is just the mutually reinforcing factor of business banking in the affluent client base because many of our business banking clients as they grow, will also drive growth in our funds managed in our affluent business and the Wealth Management side of our business, whether that's within the Imperial Service or our Private Wealth side. I won't say who, but I looked at a sliver of our -- one of our leading franchisee clients. And I looked at the franchises that they have, how many they have, what percentage have their money with our Imperial Service, what percentage have their money with Wealth Management. The numbers are impressive. They can be even more impressive. But that's how the business model hangs together. And that's why growing business banking is so important to the affluent growth as well. We have a panel -- we have a question on the phone. Ebrahim just wait, we have a question -- pedal #4 is virtual.

Question from a participant on the webcast, I'll read the question out. It's about mortgage lending. On mortgage lending, we saw the large banks get into the very low single-digit range, about 1% year-over-year growth in the last rate hiking cycle. When the Bank of Canada raised from 50 basis points to 175. This time around, the number of rate hikes is expected to be significantly higher. So if current expectations on rate hikes play out, should investors expect to see declining mortgage balances in your portfolio.

Well, I don't think we'll see declining mortgage balances. What we will see, as we talked about, is the slowing from a growth perspective. And so we've already talked about on a go-forward basis, we expect to see our growth slow to single to low digits. On balances, as rates rise, and I do want to take this moment to point out that we have led most of the rate increases you've seen in the market because we do have to work to protect our margins. But I would expect the actual balances to grow a bit. So if you think of variable rates to what Shawn said for our clients and all the banks are a little bit different, but if rates are going -- are going up, clients are moving some of the amount they owe to a later date. And so balances you would expect will actually go up.

We have one more question before we break. Ebrahim?

Ebrahim Poonawala, Bank of America. I guess -- just one question around client acquisition. I think you talked about net client growth, 3.5x spares. And then you also talked about like full de-franchising some of the clients. Talk to us in terms of how much of that growth has come from promotions, incentives to attract clients to CIBC. And then when you think about fully franchising these customers, when you look through your product set and you're trying to cross-sell where do you think is the biggest gap to have a #1 or #2 product so that those clients actually buy into the CIBC product versus going to a competitor? Like where's the biggest gap? And how do you feel about the product set across the board.

You want to start?

I'll be happy to start. The good news is we're seeing it across the board. So it's not just because we're out doing a whole lot of advertising. We are doing some of that, and that's important, right? You need to be in the right places where people see CIBC as an opportunity and are interested in looking at it further. We've done a great job on retention. And so we are doing better than the industry when we look at some of the data that's available with organizations that go and compare bank to bank and they come and tell you, your bank A, we can't tell you who others are. So we have our best retention scores ever and that's because we've been working really hard on being much closer to our clients, being more relevant and engaging with them. So that's part of it. On the acquisition front, it's really about making those client experiences and journeys easier. I use the example of the digital application process. We were actually the laggard in the industry. If you went online and you wanted to digitally apply for a credit card or a bank account and you clicked, we had the highest drop off rates. We're actually -- we still have opportunity. We're not market leading in that regard, but we've picked up a lot of space, and that's what we're going to continue to do is really focus on getting those client experiences right, so that it's easy. We did really well this year, like what led growth for us is really on the everyday banking account. So we've done that really well. When you talk on franchising, we know we can and we need to do a lot better. And when we talk about putting the client first, that's where the change comes from. Historically, we are very product-led, everyone is out selling their product. We want to take a very thoughtful approach. So we created a team where we have this holistic view and it's all about what does the client want. Not what do we want to sell from you, right? I can put a process in place and cross-sell, and we try not to use that language. It's about what does the client want? Because if you want to offer them the best service and advice, it's what is in their best interest, what do they need. So I would tell you the -- and it's not a gap, it's what we need to work on the most is our systems historically have been very vertically built, and so they're not as integrated as we'd like. So we need to have a client view when we look at things. So that's a lot of our investments. It's how we get to see everything and then working through with all the data we have and as we analyze it, what's the best thing for a client next, when is the best time to reach out. And so that's what we need to work on. And I would tell you, as far as the products go, I can stay here all day and talk about this. Mortgages is like, by far, the most complex I would say, product that we offer. It is the one that could use the most digitization automation and probably the one that will take the longest to do that. In part, because it's complex, and in part, because our clients, notwithstanding where they are digitizing, they still want to talk to someone. They still want to come in and have a conversation.

So I just -- if I can just build on that. So I've seen the data we've talked about it. 34% of our affluent client base today started as students at the bank. So it's really important that you do the $300 offer. It's really important that we grow the Simplii offer. The acquisition numbers are increasing. And I see much of that activity driving future growth for our bank. In our affluent offer today, Ebrahim, we have over 600,000 households that we bank. We shared some of the data with you. We've -- one of the things we didn't talk about today is while we have 2,200 Imperial Service financial advisers that are focused on the affluent, we have set up 1,400 associate financial advisers within our retail bank to focus on the emerging affluent. That's the 190,000 clients that Laura said still sit in the court. How can we franchise them? Then we have the 2 million Costco clients, of which probably 2/3 are Affluent and/or business owners and/or both. And we don't have any more market share than we have naturally with them. That is a huge growth opportunity. So if we can do goal planner for everybody that's on our portfolio today. If we can franchise through our associate financial advisers, the 190,000. And if we can take more than our fair share of the Costco clients that are affluent or business banking, that's how you get those 10% CAGR numbers going forward. That's how you get the business banking numbers. And today, more than ever, our strategy is highly connected. The systems we're investing in are much more horizontal there's always a way to go, but that's the direction we're heading in. And that's where we're very confident in the strategy that we've laid out. And with that, it's time for coffee, tea, juice, a little of engagement out there, and we'll see you back here at 11:00. We're trying to stick to the schedule it's 10:31. Thank you. [Break]

Welcome to the back half of our presentation. I hope you enjoyed your break. I hope you got a chance to engage with one another. Now we're going to pivot. We use that a lot during COVID. We're going to pivot to -- our focus on the private economy. And then Hratch will have an opportunity to talk about financials. We'll have another Q&A, and there'll be lunch after that. Again, I appreciate having you all here. So just seeing you and having the informal collisions in the hallway always is something that you can't do on Zoom or Microsoft Teams. So I'm here just to introduce the next section because of our unique structure and putting commercial banking and wealth management together. I know you all like to see numbers presented in a certain way. But I think I have to emphasize for you the reason why we did this. It was a deliberate, well-thought through strategy to focus on what we call the private economy. And that is bringing together commercial banking that is owned by -- largely by private owners sometimes backed by pension plans and sometimes backed by private equity and venture capital and is experiencing through generational change, through restructuring of industry, monetization events. And our ability to be there for our clients to advise them, to finance them and to manage their wealth is unparalleled, which gives our structure a competitive advantage. So that competitive advantage is represented by our commercial bank. We have a very strong commercial bank with a deep presence in Canada and an important presence that's growing in the United States. We serve over 20,000 clients. Our funds managed, loans and deposits are $225 billion, about equal. So it's kind of a self-funded business. More than 140 locations, many of those in Canada, but we operate in 9 of the 10 top MSAs in the United States and over 1,000 dedicated relationship managers. And within that, we have an innovation bank. We're going to have a spotlight on innovation banking where Mark McQueen is going to talk about the investment that we made and the notable and balanced growth that we've seen in that ecosystem, in the technology ecosystem, where we have an unparalleled growth opportunity. The second thing I wanted to do is just highlight for you our Wealth Management business because it is organized differently. It is in various parts of our bank deliberately. We have, in aggregate, over 4,000 professionals dedicated to Wealth Management. We have a business that has $541 billion in assets under administration. And you can see how it's broken down by channel, by country. And notably, we've had very, very strong net flows and continue to have strong net flows, especially in our private wealth franchise. We've been ranked recently as having the top cadre of advisers in Canada in our private wealth business. And as I mentioned to you earlier, we were ranked #4 by Barron's and through many, many different independent research houses, they rank our performance in the high end of the U.S. wealth business, at a very strong level. You're going to now hear from 2 of my executive friends and colleagues that have our very seasoned executives, that have deep experience and that have driven the growth in our architecting the strategy for our business going forward. The first is Jon Hountalas, who runs our Canadian and commercial wealth business, and after Jon, there's Mike Capatides, we affectionately refer to him as a Cap. You can call him either, he response to both. Jon only responds to Jon, by the way. So before I get off stage, I wanted to introduce a brief video clip of Steve Scott, who's a client of our bank, a friend of our bank and epitomizes what Commercial Banking and Wealth Management does together for clients that own their own businesses. And Steve Scott is one of many thousands of examples within our bank that's driving an incredible amount of referral activity between the 2. And I know Jon and Cap will both highlight that referral activity between our businesses what it's, again, is a competitive advantage. So let's run the video and then after video, Jon will be up to share his story with you. Thank you. [Presentation]

Good morning. I'm Jon Hountalas, and I'm proud to be here with my CIBC colleagues, and I'm particularly excited to share the Commercial Banking and Wealth story. I joined CIBC in 2010 as Head of the Commercial Bank, and I took on the responsibilities of Wealth in 2017. So Victor spent a little bit of time throughout the day and just before the video talking about the origins of this business unit and let me try to summarize. Collectively, we had a view of how the economy was changing and which sectors would grow faster. We decided to build a culture, a connected culture across the bank, which isn't easy to do and a specific structure to capitalize on the growth. 5 years in, we love where we are, and it's played out exactly as we expected. Let me give you a quick summary of what we've built. One, a relationship-focused commercial bank that's growing faster than market. We built this model 10 years ago. We're running it for a long time. We'll walk you through it. We have a strong Wealth Management platform with significant upside potential and we'll talk about that. We're uniquely positioned to be the best relationship in advice bank in Canada. When I think about that, I think about 3 things: Do the clients like you. Do they value what you do? And do they give you more business? And we'll touch on all those subjects. And finally, we're future focused. We think business services sector is going to continue to grow. We're investing, innovation bank is at the forefront of that, you'll hear more about innovation banking. Let's go quickly -- quick overview. Revenues, $4.7 billion, after-tax profit of $1.7 billion, 25% ROE. Clients are 95% Wealth, 5% Commercial, $357 billion in funds managed between Private Wealth and Asset Management, pretty even, and loans and deposits within the Commercial Bank pretty even. The summary here is good financial metrics, a highly connected business, diversified across business lines and balanced within business lines. Let's take a look at the Commercial Bank. Revenue growth, 8%; loan growth, 10%; deposit growth, 16%; and profit growth, 10%. Those are all good numbers. The numbers we're equally as proud of is our NPS score, 84, our clients love us and our loan loss provision, 12 basis points over 5 years. We break the business down into 3 segments. The biggest is diversified. It's across the country, every province, many communities, a broad definition of a diversified business, private company $1 million to $75 million in credit. This is our deposit engine for the bank. Historically, we've grown loans and deposits high single, low double-digit range. The pandemic, everything turned upside down. Loans didn't grow very much, deposit growth was material. Our real estate business, broad -- diversified and broad-based by asset class, more focused in terms of geography. We focus on the major urban centers. We focus on the best players in every geography and every asset class. Historically, we've grown real estate and non-real estate at the same range. And again, the pandemic, things were different. The diversified space was quiet. Real estate was buoyant, real estate grew faster. It's going to go back to normal. Real estate and non-real estate will grow at the same rate. Our final business is our specialized business. This is our innovation bank, our private equity coverage, our asset-based lending and our mid-market investment bank. It's our smallest business, depends how you measure it. It's 10% to 20% of the total business. It's the fastest growing. It will remain the fastest growing. Private capital is for real, M&A is going to happen. There's lots of money on the sideline. We're very good at these industries, they're going to continue to grow. So I just spoke about 12 basis points of loan losses over 4 years, which during the pandemic is pretty good. Our loan loss story is not a 4-year story, and it's not a 12 basis point story. It's here on the charts over 10 years, we've been sub-10 basis points. And we try to break it up between real estate and non-real estate. The non-real estate piece, you see it, as we talk about on calls, lumpy from time to time, but 15 basis points roughly overall. The real estate loan losses are hard to see because they're so low. Over 10 years, we've lost $1 million in real estate. The book today is $37 billion or so, we've lost $1 million. And again, even this isn't a 10-year story. I went back 10 years prior before my time. The results aren't quite this good, but close. And I know people are thinking, well, real estate has been great in Canada. This is more than just a macro real estate story. These level of losses speak to the quality of our team, it speaks to our focused strategy and most importantly, it speaks to the strength of the clients we pick. Let's talk about Wealth. 6% revenue growth, 7% AUA growth, 8% profit growth. We break up wealth into 2 big parts, Private Wealth, so that's Wood Gundy and Private Banking, and then we have our asset management business. Our Private Wealth business has real momentum. Profit grows about 15% per annum, but let's put profit aside. Three data points that make me very confident about our future. First is our NPS score, 81. Think about that. These are high net worth clients with unique and complex needs. They know what they want. They have high expectations. We're meeting or exceeding them. Two, and Victor mentioned it, The Globe & Mail recently put up the 150 top advisers in Canada. We have 35 of them. That speaks to the talent in our organization. And finally, investment executive, there's a survey every year of all the advisers across the industry. And if you know advisers, they're an independent bunch, they speak their mind. We scored #2 on that survey, 8.9 out of 10. And if you dig a bit on the things like leadership, on the things like do we communicate with advisers, do we listen to advisers, we score #1. So you look at those 3 things. Our clients love us. We have unbelievable talent and our advisers think we're on the right track. For me, that's real momentum. We look at our asset management business. It's part of the whole wealth spectrum. Victor spoke about it a little bit. Our Wealth business is across SBUs. Asset Management is important to everything. It's important to core. It's important to Imperial Service. It's important to Private Banking, and it's also important to Wood Gundy. Over the last 4 years, and it will always continue, we look to elevate our investment management capabilities. At the same time, we look to be efficient. This is an industry that is still under price compression. And our cost income ratio continues to go down. We're running an efficient shop, and we're close to the rest of our channels. So that's the past. What are we going to do in the future? We're going to invest in our platforms to maintain our commercial banking momentum and to capitalize on our Wealth Management opportunities. Let me put a finer point on that. We will grow Wealth Management faster. We're going to continue with connectivity. The hard work of creating the engine that makes these referrals, we've done that. No big investments to make anymore. Our teams know each other. The reporting that we need has been done. Now we start to scale. And finally, we're focused on future differentiators. We'll talk about those a bit. And of course, Innovation Banking will come up and say a few words. So let's talk about the Commercial Bank. Talked about our model, step 1 in our strategy is to scale our model. So what is this model? It's got 4 pieces that I think are important. One is we grow our own talent. In a world where talent is tough, we hire at a university. We teach them the CIBC way and we guide them as they become leaders through the organizations and as importantly, as they become leaders in their own business communities. Two, credit discipline is a big deal. You see it in our loan losses, you see it in our culture. We train at the start and it's continuous learning. We work closely with our risk colleagues. We're proud of that relationship. It's a competitive advantage. It lets us react quickly. Three, client experience. We have tested about it. Our clients don't know one person. They know a team. Sometimes we call it team sports, sometimes we call it a 3 touch model. It doesn't matter what we call it. What happens in that times of need or times of opportunity, we know our clients, we deliver and we deliver fast. And finally, we have disciplined sales management. We always value referrals from clients. We always value referrals from professional contacts. We don't sit by our phone and wait for those referrals to come. We're out there in the traffic, action, calling people, calling prospects, we make it happen for ourselves. As we grow our business, when you look at our numbers in a typical year or quarter, 40% to 60% of our growth comes from new clients. This is a model that's easy to explain, hard to execute. We've been at it a long time. We really like where we are. 86% of our loan relationships are either sole relationships or lead relationships. So it shows we're not just doing business for the sake of doing business. We know the people we deal with. So what to expect from us? Balance and consistency in the Commercial Bank. It doesn't mean we can't get better. We certainly can. And we're going to be using technology to improve our processes. And we put this into 2 buckets of work, 1 is sales enablement and 2 is the client experience. So what do we mean by sales enablement? eCRM, data, loan pricing tools. More information to our relationship managers to make them smarter about our clients to have better discussions. It's ultimately a revenue play. Then we've got the client experience work stream. This is about digitizing onboarding. This is about digitizing our major workflow processes. This is employee experience, this is client experience. And along the way, we think we'll get more efficient and take costs out. And finally, we target high-growth segments. Innovation Banking and what we call the national industry programs. So Innovation Banking, we acquired Wellington in 2018. Wellington was a North American debt fund. We knew them a long time, we have done business with them. What we liked about them was the focus on the clients, and we loved the credit history. It was totally in line with our culture. We figured out quickly that if you take those attributes, combine them with the CIBC brand, combine them with our capital and combine them with our support, good things will happen, and they have. Mark McQueen and I spent a lot of time dreaming about what was possible. It counts a number of scenarios we came up with. We surpassed every scenario we came up with. And now we're rebaselining and growing faster. Mark will be up in a few moments to talk about that. We've also got the national industry programs, things like health care, pharmacy, franchises. We think those areas are going to go faster. We're putting some investment there. Between Innovation Banking and our National Industry Program, we're going to double our funds managed. Private Wealth. We've invested a fair bit over the last couple of years, and we've seen success. Let me start with Private Banking. You'll see big investments in the paragraph, but it starts with -- we changed our leader. We put a dedicated leader in place 2 years ago. Once it was put in place, we changed structure, we started to add private bankers. We started to have support people. We created offers for company executives, for entrepreneurs, for their children. We created a family office. We co-located more private banks with the commercial bank. This business is a gem. It is growing 25% a year in profit. It's going to accelerate. We will certainly double it in 3 or 4 years. Wood Gundy, we're always looking for new advisers, either developing our own or the right competitive recruits. But the core of the strategy isn't new advisers. The core of the strategy is financial planning and fee-based revenue. So what are we doing on the financial planning side? We've hired planners. We've rolled out our digital plan. We've got more disciplined. We've gone from 15% penetration a year ago. We're roughly at 25%, and we can get to 40%. Every time we do a plan, $625,000 of increased investable assets. It's the same story anywhere across the bank. You heard it with Laura, you're going to hear it from me, any segment, any people, if you sit down, if you make their ambitions real, good things happen. Financial planning, make good things happen. The other place is fee-based revenue. We're investing in the unified account. It's a complex project, but at the end of the day, it's going to simplify how we onboard fee-based clients. Onboarding will get simpler, reporting will get simpler, portfolio management for advisers will get simpler. It's been a long road to get here. Again, it's a complicated project. We're 18 months away. Our fee-based revenues are growing slowly without the tool. Once the new platform comes in, we're going to accelerate. Asset Management, we're also changing the major investment tool. Today, it's based on 3 platforms in the back, multiple onboarding in the front. We're creating one platform, soup to nuts, back to front. In the front, you'll see better client experience, better employee experience. You'll see the penetration rates from 12 go up. And in the back, we're going to get more efficient. We're very excited about what we call let's just call it asset management simplification. And finally, we're going to accelerate our investment in customized wealth solutions. We're going to embed alternatives, private market and ESG and more of our strategies. We talked -- when we came out here on Investor Day 4 years ago, it was just when we had launched this business unit. We knew deep down, the client experience would be good. We didn't know what we would do on the connectivity front. We put up some bold targets. We said $8 billion to $11 billion. We've done $11.3 billion. You see there where the referrals have gone. Investment, 65%, deposits 8%, loan 17%. So this is a fee light -- sorry, capital-light, fee-intensive, sticky business. The recipient so far, private banking and Wood Gundy. We haven't had as much as I'd like coming back in Commercial Banking, work in process, will get better. When people hear about this connectivity and these numbers, their mind always goes to the big monetization events. We love them. They're big numbers. They're fun to be involved with. That's not the magic. The magic is getting in front of the executives and the owners way before the -- way before the monetization event. Banking them, banking their families, helping them kind of reach their ambitions. When that works, it's unbelievable. Our average referral going in is $2 million. It's not $300 million, $400 million, $500 million, which is what we see on monetization events. And what I'm left with, perhaps what I'm most excited about is that we're just getting started. 28% of our commercial clients, somebody at the company has a wealth relationship, lots of upside and 22% of our Wood Gundy clients to qualify for private banking are there. So again, big upside on this front. I can't tell you how excited I am. We're putting out a target of $12 billion to $15 billion, I hope to crush it. I spoke earlier about our success with innovation banking. I could talk about it for a long time, but there's somebody that knows it way better than I do. I'd love to bring up Mark McQueen, Mark come on up. Mark McQueen heads the innovation banking team. He has spearheaded the strategy and [indiscernible].

Tough act to follow, so bear with me. Mark McQueen, I spent 35 years in business and government. The last 4.5 had been here at CIBC, following acquisition in 2018. When we first started talking in 2017, Jon, Victor and I all saw both the need and the opportunity for a domestic champion in Canada in our sector. Given, I think, the results we've had to date, it turned out to be pretty prescient. Given the increasing important role that technology plays in all walks of life, you can appreciate this is a great horizon we have ahead of us. Our specialized team does 3 things. We look at technology, life science, health care and clean tech. So think software, medical devices and water technology. We cared about intellectual property, enterprise value and critical mass. Since the vast majority of VC-backed high-growth companies are in cash burn mode. This is a top sector for your average lender, which is a sustainable competitive advantage for those with experience on their side. On our first day at CIBC at Jon's simple instructions were, keep doing what you're doing. And for entrepreneurs, you can imagine that was music to our ears, and he meant it. This is a deposit-rich vertical, as you probably suspect, provides a steady stream of low-cost funding. Fifty of our portfolio companies have raised over $4 billion since January 2020, and that's allowed us to be self-funding as a group since 2019. Our role in the ecosystem with our VC and growth equity relationships gives CIBC an opportunity to have early engagement with technology companies. I think the Pollinate deal that Laura and Chris talked about earlier this morning is an example of what can be done that when you have those tight relationships, when we have people like Victor involved directly with the leading VC fund, GPs, how that could be good for the entire organization. Well, the last year might look like a funding peak, please take comfort that the last 8 years, there's been more than USD 70 billion invested in our sector each and every year, and that gives us thousands of prospects to go after. Our core team has been in place for 20 years. Don't worry that we all as old as me. Well, our expanded footprint in 13 different key markets has brought additional talent and depth and new client relationships as well. We honed our credit appetite in starting the Dotcom Burst at 2000. We saw the 2001 recession, the 2008 financial crisis. Of course, the most recent COVID-19 pandemic. And that sets us up very well as valuations come off in the first half year of 2022 to be able to take care of our clients and our opportunity for whatever is to come. Our -- I think our loan losses have -- well not to surprise people, as low as they've been since 2018, and they've been about 10 basis points a year. And when you think about the warrant gains that we've realized to date, they exceed those realized loan losses. And that's something that's interesting about our sector and CIBC has been able to capture that. Our cross-border capabilities are unique, I think, for a Canadian bank in our sector, and that provides real value add to our VC relationships. Our footprint in the different markets matches up perfectly with CIBC USA and on the Canadian side of the border, which provides a higher, probably, referral rate than folks might have imagined for the wealth management and private banking businesses. Our clients need someone to take care of their business, their families, themselves. They're busy growing a company. They don't have time to think about these things, and our colleagues are there to help them in that moment. CIBC's $450 million LP strategy, I think, shows the commitment we have long term for the sector and allows institutions to create relationships across the board that will stand the test of time. As you can see, we've had great growth in terms of team members, loans, deposits and of course, earnings. As was highlighted in the second quarter earnings report, our loans and deposits grew 100% as at the most recent Q2 results our $59 million in NIBT that we had for fiscal '21 is now $109 million on an LTM basis, which gives us a lot of comfort that, that target of 3 years that Jon set for us, we can achieve by fiscal 2025. These 3 case studies are examples of our role in the ecosystem. 7shifts is a Saskatoon-based software company. Series A type that we did $1.7 million financing in 2018. We then provide them additional growth capital in 2020. And feature them on our podcast and video series here at CIBC. And recently, they raised $100 million Series C financing by Softbank, which is one of the highest profile VC funds in the world, right there in Saskatoon. Q4 is an example of a $30 million credit sale we did here for this Toronto-based capital markets platform. When the time came last year to choose the IPO lead mandate, the Board of Canadian and U.S. VCs award, to Harry Culham's team in capital markets. And finally, there's the story of our Vancouver-based loan client Canalyst. In this situation, it's -- the company's management did not think that they were ready to take on around from a California-based $19 billion VC fund. We had done business with Dragoneer. We knew they were a good fit, and we prevailed on management to take the meeting. And as the Vancouver Tech Journal called this the $30 million financing that happened -- wouldn't have happened but for CIBC's role. This is an example of the benefit to our clients and prospects when you have a large network like we do of relationships. Each of these 3 stories gives you a flavor of our role in the ecosystem, what can be done. It frankly gives us a great deal of satisfaction and pride to help these entrepreneurs achieve their envisions, it's infectious. I know Victor gets it every single time. He covers on the road with us. We've had a lot of fun. We built a diverse, I think, energetic team. And frankly, without a doubt, this is an unparalleled opportunity for CIBC. Thanks very much.

Thank you, Mark. So I'll just close in only a minute. I'll leave you with a few takeaways. One, we have a relationship-focused commercial bank. We're successful. We're going to scale. We're going to keep going. We have a strong wealth management platform. We see significant upside. We're going to grow faster. We're uniquely positioned to be connected. We put out some connection numbers. We hope to beat them. And finally, we're future-focused, Innovation Banking is an example. We're going to be looking for others. We've got 5 targets up here. I'm very comfortable with all of them. And with those targets, I'll invite my friend and colleague, Mike Capatides to come up and tell us the CIBC USA story. Mike, it's a good one. Come on.

Thanks, Jon, and good morning, everybody. So I'm Mike Capatides. As I said, I mostly answered to Cap when it's yield out, but will answer to both. I've been at the bank for 27 years, initially came as General Counsel, spent most of the time as CAO, Chief Administration Officer. And for the last 4 years, I've had the honor to lead the Commercial Wealth franchise in the U.S. And it's been an exciting story, and I'm happy to share with you. So the 4 themes that I want to cover and I want to leave you folks with at the end of today is that this franchise, Victor mentioned it, is purpose-built. When CIBC was looking to reenter the U.S. and expand upon its capital markets presence there, we looked at those businesses that people -- clients still valued expertise and advice. And 2 businesses that we do very well in Canada, and that's Commercial Banking and that's Wealth. And so we had a few acquisitions, to lay the foundation. PrivateBank on the Commercial Banking side, Atlantic Trust in Geneva on the Wealth side, brought those together and we've grown over the last couple of years robustly with organic growth. And much of that growth has been on the basis of cross-business referrals, which was always the plan. And as what Jon said, it worked. In this entire time, we've been investing to support what we built and where we're going. So a quick look at what we built over the last 5 years, this is a business that's based on high touch and a relationship-driven model. This is how we compete with competitors small, medium and large. And it's working. We've had consistent year-after-year robust growth in loans, deposits, AUM and pre-provision pretax earnings. You've heard a couple of eye opening metrics about the growth of this business and our growth in the U.S. already from Victor and Harry, let me give you one more. So the day before the PrivateBank acquisition in the Commercial Banking and Wealth space, we were making $0 in the U.S. Last year, at the end of 2021, we came up on $1 billion pre-provision pretax. And together with our Capital Markets colleagues and it is very, very much a partnership in the U.S., and I'll talk a bit more about, we exceeded 20% in CIBC's earnings. And this franchise has strong future earnings power. So I'd like to point out 3 things about the map you're looking at. We have a strong geographic footprint. And the bottom line is in Commercial and Wealth and Capital Markets, we are largely everywhere we want to be and needed to be. So the platform is built. Our clients are coast to coast and a good portion of our growth is coming from outside of the Midwest in the faster-growing MSAs in the United States. And 2/3 of offices have Commercial and Wealth co-located. And we've been adding private bankers, which drives deeper client relationships. I always like to talk to our talented and growing Private Banking Group and say very much in these offices, they're the glue that brings everything together, all of our groups. And you will hear that we have plenty of opportunity to grow on this existing footprint. So let's look at Commercial Banking, let's look what we've built. We have extensive national coverage in middle market commercial, specialized industries and commercial real estate. We've had consistent and robust growth, and importantly, it's been profitable. That's growth in revenue, loans and deposits. And our differentiator in this business, again, is our expertise and customized advice. That is why people come to us. That is how we succeed. So just to give you an example, one of our specialized groups is Healthcare. We are very good at it. We have a team that's worked together -- a senior team for more than 20 years, and they selectively work with clients who are leaders in the industry and value our expertise. Again, that is why they come for us, expertise and advice. And we've had disciplined growth. That expertise enables our team to identify the best operators in the business, which is how we succeed. So let's take a look at our credit risk profile. When CIBC and the PrivateBank were first talking about coming together and before the acquisition, one of the first topics we covered and how to get satisfied with that we had a consistent credit culture, and we did. You can see from up here that we have a well-diversified portfolio by industry in C&I space and by class of real estate in our real estate group and both are widely diversified by geography. Again, we span the United States. Our commitment to a strong credit culture and our expertise can be seen as an example in our real estate group prior to the pandemic. Our group decided to deemphasize retail, hospitality and office ahead of the curve and to emphasize multifamily and industrial. Again, it turned out to be right, and it was based on the deep knowledge of the industry. And we've had consistently strong credit performance, including through the pandemic. During the pandemic, from a credit point of view, our relationship-driven approach had to stay in contact with all our clients so that we could identify any issues that were popping up early and then work the problem. As we came out of the pandemic, that same approach, we encouraged our bankers to get a plane, train, car or walk and visit every single one of our clients. And in many of these cases, in Commercial and frankly, in Wealth, we were told we were the first ones there and that they wouldn't forget it. But before I leave this slide, I want to point out one aspect of the chart up there, and that's in the commercial real estate impaired PCL rate. And there's just a little bit of more detail on that. As we were coming together with the PrivateBank and we were focused on our relationship-driven model, we had a business in CIBC that was legacy real estate. And when we looked at it, we determined that the two businesses there were not relationship-based. We exited one completely, CMBS business. And the other business was not a relationship-driven business at all, and we brought in new management. We pivoted completely. And now we do in the Institutional Real Estate space, we have a relationship-driven model where we bank the best institutional real estate lenders in the country. And you'll see that when you back out losses from that portfolio, which we've exited, you'll see the average rate comes down more favorably. So turning to our Wealth franchise, we have a focus on our high net worth and ultra-high net worth segments. Our clients are attracted to our award-winning investment platform and our high-touch approach. And all that has driven a 7% Compound Annual Growth Rate and positive net flows since 2018. We have Relationship Managers in 17 offices, and we've added Private Banking to 13 of those. And that, of course, has led to the referrals that we're all talking about. The best way that I could describe to you what we have achieved in the U.S. and we hope to expand upon is by an example. And it's a recent example. We had a commercial banking team that was pitching a family-owned beer distributor in the United States for years. They got the opportunity to try to win the banking business. So they were brought to Chicago, and they came with 3 generations of the family. The banking -- the commercial bankers were successful. We got the mandate -- sold bank mandate. But at the very first meeting, we had a private banker there who set up a banking relationship with all 3 levels of the family. We had a Wealth Manager there. And as Jon referenced before, started the process of learning about the family, about their needs and about the possible down-the-road of generational transfers of funds. And then lastly, we had our Capital Markets colleagues there. We had our very good commercial M&A bankers there, and we also had -- professionals there, all of whom establish great relationships. And that's the way it works. We're doing that across the country. We're doing it every day. And our ability to literally on a day's notice get a commercial banker together, a private banker, a wealth professional and the right capital markets people together on a single day to visit a client, I believe, is basically our secret sauce. And I think we do it better than just about anybody in the United States. And I'm not -- I don't want to forget our cross-border capabilities because, again, we talk every day, and those professionals are also available for us. So that's where we've been. Now let's look at where we're going. As with our other businesses, we have a great momentum. And we believe it's going to continue in the coming years, and we believe that we're going to generate above-market growth in all our businesses. We plan to grow organically. We show we can do it, clearly in our Commercial Banking business and in private Wealth. But as Victor mentioned, we're always open for tuck-in acquisitions in the Wealth space, and we plan to invest in the future with our people, technology and infrastructure. So in Commercial Banking, we're going to continue to grow. We're going to continue to build in the fast-growing geographies in the U.S. by attracting new clients. Well over half of our growth in deposits and loans has been from new clients, and we certainly plan to do more with existing clients. We're going to maintain our focus on being our clients' primary bank, and we -- an example of that, we are the sole or lead arranger for nearly 80% of our loans. And we plan to continue to expand and nurture our specialty groups, where that's a prime example of our relationship-driven approach where people come to us for expertise and advice. And we will selectively add new specialties. This past year, we added equipment finance, and we're excited about the build-out of that business. In Wealth, we plan to add Relationship Managers and Business Development Officers to continue attracting new clients and continue our track record of positive net flows every quarter. And again, new clients in this business has made up 84% of our AUM growth. And we plan to expand our family office capabilities, which targets the ultra-high net worth, which is a very -- it's a growing and very profitable sector for us. And that includes introducing market-leading technologies such as a new customer-facing systems, but also includes simply sitting down with families -- multi-generational families to educate and to plan. And to give a feel to that momentum, we're going to continue to invest much like Jon spoke about before, north of the border. In our client-facing technologies, such as our integrated wealth platform and digital capabilities, our foundational technologies such as continued rollout of Salesforce and our integrated data platform and importantly talent. Our people, frontline and support are the key to our success. All 3 of these are going to help drive increased referral activity. We've made great progress in the past number of years, as you can see. But you can also see that we have plenty more to do, and we're excited about that. So let me leave you with this as I started. We're a purpose-built franchise that's positioned to deliver strategic and disciplined growth across Commercial and Wealth with an emphasis on organic growth. We're everywhere we need to be to execute on that growth. And we will consider tuck-in Wealth acquisitions, but our growth will be primarily organic. In terms of our 2025 targets, again, we plan to drive above-market commercial and loan deposit growth. We plan to achieve a 15% Compound Annual Growth Rate in AUM, and we plan to our existing clients. We're going to roll forward the goal we've had each of the last number of years of each year increasing our referral activity by 10%. All this will add up to a 10% to 13% Compound Annual Growth Rate in revenue. It's an exciting story. We're excited about the future. And with that, let me welcome our CFO, Hratch.

Thank you, Cap, and good morning, everyone. Almost good afternoon. It's been great to see you all and actually shake hands. Hopefully, none of you invested in fist bumps or elbows because that was not as long-lived as people anticipated. So thank you for being here, and thank you for listening to us. I trust you found the day valuable so far. You've heard from Victor and our business leaders about how we've built our bank for growth and also about our plans on how we will continue that momentum going forward. So I'm excited to be here today to bring it all together in terms of what does that all mean to you as our shareholders and as those that cover the market. . So some quick background on myself as others have done. I've taken a maybe less traditional path to someone in my role than others, began life as an engineer and actually course corrected into financial services back in the early 2000s through a payment startup in Silicon Valley. And actually, Chris and I were comparing notes, we share some ex colleagues. After that, I was in consulting space and I split time between Canada and the U.S. advising banks specifically on issues across risk management, finance, capital markets strategy, and that was actually my first interaction with CIBC. CIBC was a client of mine after the financial crisis, where I helped work on things around risk management, treasury and some of the repositioning of the capital markets business. And over the last 11 years, I've had the opportunity to be part of the team, helping the journey of transformation that we've all gone through in roles in treasury, in strategy, corporate development and core finance. And for now almost the last 3 years, I've had the privilege to lead our highly dedicated, highly talented finance and strategy teams and that team had a lot to do with putting today together. So I want to take the opportunity to thank them all as well as others. Now bringing together our strategic planning, our financial planning, our treasury team that manages our balance sheet, our transformation office that oversees our strategic growth investments with core finance, I believe that we've built a best-in-class strategic finance organization that not only delivers operational excellence in our core finance and governance mandate but also supports the bank to deliver the superior performance that we have been delivering and that we'll talk about in the future today. As a management team, we see ourselves first and foremost as stewards of our shareholders' capital. And our finance team supports that by helping develop our strategy and our strategic and financial targets, and I'll talk a little bit about what those are today in tangible terms. Driving our strategic planning process, which fundamentally includes our resource allocation process to include we allocate resources against our strategic priorities, we drive focused investment and we drive strong returns. And then lastly, creating accountability and ensuring execution discipline through transparent performance measurement to ensure that we're actually generating the value that we set out to deliver. Okay. So with that context, there's 3 points I will touch on, which relates to everything I just spoke about today. Number one, as an organization, we've adopted a robust accountability framework. It's focused explicitly on relative outperformance, relative to the market, and it is explicitly focused on value creation for all of our stakeholders. It defines our goals for value creation. It drives our strategy development, and it is ingrained in our day-to-day decision-making and performance measurement. And I'll talk about all of that. Second, we have also adopted a disciplined and comprehensive resource allocation approach that enables us to focus our investments and optimize returns. And I'll cover how we've applied that in the past and how that's delivered results. But more importantly, I'm sure for everybody how we will apply that going forward to continue delivering results. And lastly, I'll talk a bit about our plans and our targets. And what you'll hear is that our strategic plan and our execution discipline approach is built to sustain our growth momentum. And it gives us the confidence to increase our earnings and profitability targets today, supported by the top line growth and market share gains that we've been talking about all day as well as strong discipline on expenses, operating leverage and profitability. Okay. So what you see on the slide here in front of you is what we call our enterprise value framework. And we introduced this a few years ago. It links our purpose, which is signified by the logo in the center of the graphic to our goals as an organization for our various stakeholders. Let me talk about the goals first, and I'll cover some of the other elements next. Our goal as an organization is simple. It's to outperform on enterprise value creation and tangible terms over the long term, and we believe the only way to do this sustainably is to create tangible value for all of our stakeholders. For our shareholders, that goal ends up being delivering top-tier returns through tangible value growth. And to enable this, we need to deliver value for the other stakeholder groups for our clients, delivering value so that we can grow our clients, particularly in target segments. We can deepen those relationships, and you heard a lot about that today. We drive loyalty, improve satisfaction, improve value for clients, which equates to more value for shareholders. We're an employer of choice. And we think in this market, particularly, it is important to remain an employer of choice so that we can attract, develop, retain and engage the best team in the industry in order to deliver on our purpose for our clients and deliver value for shareholders. And lastly, it is also important for us to do our part for our communities, including our team and our planet in order to advance sustainability and equity, and we've made specific commitments on this. We've made commitments around our own impact on the environment, commitments to support our clients to transition, commitments to our foundation, CIBC Foundation and what commitments the foundation makes to the community as well as diversity in equity across our team and in our communities. Now as I mentioned, this framework is ingrained in our governance processes as well as management day to day. So it is the fundamental basis of our board enterprise KPIs that are used to evaluate management performance. There are metrics across all of those stakeholder groups and specific targets that we get evaluated on. It is also ingrained in our compensation framework, and we've touched on that before. You've seen our proxy material, but these elements do make it into the compensation framework explicitly. It drives our day-to-day decision-making. It drives the development of our strategy, the allocation of our resources and it drives performance measurement decisions against all of these outcomes. And we had some conversations about the building, the brand, our U.S. investment, all of those things get evaluated around delivering value for those stakeholder groups and specific metrics put against them. Now you heard extensively today about our strategy, so I won't spend too much time on it, but just to say it is engineered to deliver on these objectives, value for shareholders by focusing on where we can deliver value for other stakeholders like clients. We're focused on the high-value segments that we've talked about growing faster than markets where we have capabilities to outperform and create value for those groups where it's focused on improving the client experience to drive franchising and again, deliver value to the bottom line. And it's focused on building future differentiators that they themselves can help catalyze change for our clients and for overall, the community and the planet and sustain our growth at the same time. And we've built key capabilities that are covered in this framework as well to enable us to compete in that strategy effectively. You've heard a lot about how we use relationships, how we use the connectivity across our banks to surface value for clients and shareholders at the same time. You've heard about innovation, about a number of the things we're doing in order, again, to drive value to our clients and shareholders. And the last one, which is our capital deployment is what I'll cover now. We believe that our resource allocation framework is how we ensure that we deploy our available resources, which are all always scarce against the best use to deliver on these outcomes. Our framework that's up on the slide is comprehensive and disciplined. On comprehensive, we view resource allocation broadly, maybe more broadly as some people -- than some people think when they think capital allocation as both our balance sheet resources as well as our investments that flow through the income statement expenses. At the end of the day, it's all shareholder capital if it makes it to the bottom line. On discipline, we have a rigorous process where all material discretionary investments of any of these resources have a robust business case, they're assessed against strategic fit, they're assessed beyond financial performance. We have metrics against them and then they are monitored on an ongoing basis. So let me speak a little bit about each of these considerations. On capital, we look at both regulatory capital as well as economic capital. On regulatory capital, we have a fully allocated model, common, press, [ sub debt ], all of that is allocated as cost against any business that we do. And we look for returns against our cost of capital. We look at that on a risk-adjusted basis, on risk-adjusted hurdles. We look at that against alternatives of deployment opportunities. We look at that against cost of capital. We also manage overall the allocation of our balance sheet robustly. We are looking for strong returns on assets after fully loaded in cost of funds and cost of capital, diversification and balance, diversification in our assets, diversification in our deposits and balance on the 2 sides of the balance sheet. And as you've heard from our various businesses, we have very strong asset and deposit generation capabilities in all of our SBUs and that has allowed us to maintain the balance as we grow, and it will allow us to continue to do the same. In terms of investments through our expenses, we look at both. We look at things which are capitalized that CapEx investments, but also all of our operating expenses. And what we're trying to do there is balance the investments, manage the positive operating leverage, balance where we invest in terms of revenue and efficiency and look for ROIs and contributions to earnings. Now we've always had good practices around this area, and you can see the results. It's allowed us to deliver our ROE of 15%, our return on tangible of 18%. We've grown tangible book value per share at 9%. And in addition to that, we've delivered tangible value through a dividend, which is not in that over this period, high 4% range in terms of dividend yield. However, before taking the increased investment path that we've taken in the last few years, we've made this framework more robust to ensure that we maintain the discipline and we believe this will serve us and our stakeholders as well. Okay. So let me talk a little bit about capital deployment. This slide covers past capital deployment priorities as well as returns on them. As I mentioned, this approach isn't new. So we've applied this, and we've shown a period since 2016 here, which includes the period of our acquisition, a large acquisition in the U.S. Our strong profitability over this period of time generated approximately $30 billion of capital. We also issued capital predominantly to support that acquisition. Through the disciplined allocation of that capital, we maintain our strong returns and continue to generate capital for the future. Consistent with our priority to maximize value for shareholders, we've prioritized organic growth. And as you see over this period of time, that has generated a return of 19%. . We've also prioritized the dividend. And so we've increased our dividends over this period of time with earnings within our range and returned $14 billion of capital to shareholders through our dividend, which is $2 billion more than had we not made increases since the start of that period. Then concurrently, we've done M&A. We've been disciplined. But we have done high-quality successful acquisitions over this period of time, most significantly the PrivateBank, deploying approximately $6 billion and generating both strategic and financial value. These investments in aggregate, when we look at the portfolio, have generated strong results. So in 2021, we had double-digit 10% returns off the portfolio. But more importantly, they've opened up new avenues of capital deployment for us where we can deploy organic capital at much higher returns going forward, and that's evidenced by the return on tangible of 16% that you see on the slide. All of the businesses we've acquired, and you've heard about many of them today, the innovation banking platform in the U.S., they continue to have strong growth momentum and strong profitability. So we will continue contributing to both the bank's growth and profitability. And lastly, we've also returned capital over this period of time through buybacks opportunistically. And we say opportunistic because given the implied returns of the buybacks versus the hurdle rates we apply for our organic growth. We believe that organic growth opportunities continue to be better for our shareholders than buybacks. Moving forward, we'll continue to prioritize organic growth because of that reason as well as our dividends. Now let me talk a little bit about investing. As we focused on organic growth, we deliberately increased our investment in the business to drive that. Over that period of time, $3.5 billion of expense increases would have been invested in the business. You've heard today about where we've invested. We've invested in the client experience. We've invested in our team, in new businesses and generated growth as well as the core infrastructure of the bank. However, we've partially funded that, and we've talked about this in the past. Since 2016, we've generated a cumulative of around $1 billion of savings in our expenses to help offset part of the investment. Examples of where our workforce, how we work, the processes, digitization, a lot of the things you've heard again today, and we think we can continue generating savings at that rate going forward, but I'll cover that in a second. So all of this, our efforts, we believe, have delivered results. Looking at the period since our last Investor Day, in addition to delivering on our strategic objectives, which we have, and you've heard about that, revitalizing our consumer franchise, continuing to grow share in the other businesses, making the bank more efficient and growing, we've maintained a strong balance sheet. Now these numbers -- as of the end of the year, things have changed, but we continue to maintain strong capital and liquidity, and we've had good balance in growing the balance sheet and diversification. But importantly, we've met all of our medium-term financial targets. Earnings growth, 6% reported, 7% adjusted. Our ROE above 15% positive operating leverage, strong dividend payout and outperformed the index of our peers in terms of total return over this period. We're proud of these results. We made commitments to our shareholders, and we delivered on it. And we intend to continue doing so. Okay. So let's shift to the future. How are we going to do that? We'll continue to apply the same approach, same disciplined approach, focused on organic growth through what we call our portfolio of strategic growth initiatives. Connecting back to our enterprise value framework, we're investing aligned with our priorities in order to deliver stakeholder value, investing in better products and services, key client segments, investing in future differentiators, including areas tied to sustainability and strategic enablers that will drive better client experience, better employee experience and engagement and better efficiency for shareholders. To give you a sense of the scale of this portfolio, approximately $8 billion of capital through 2025, will get invested against the specific initiatives that we've underwritten in this portfolio and it's a little more than half of our balance sheet growth, a little less than half of our expense growth that we have very granular visibility into in these initiatives and the rest being more business as usual growth in our businesses. And it represents a very material amount of contribution to our growth going forward. Over $3 billion in pretax pre-provision earnings by 2025 out of the portfolio, which is roughly half of our revenue growth and strong profitability, 25% over that period ROE for the portfolio. Starting with profitable contribution as of this year, as we've talked about on our quarterly calls, material, profitable bottom line contribution from this portfolio already. Okay. So what does this mean for revenues? We recognize that the macro environment is uncertain, probably more today than it was a couple of weeks ago when we were working on this day. But we're confident that our strategy supported by these investments is going to allow us to outperform market on revenue going forward through 2025. Overall, we made a number of assumptions around the market. You see them in the appendix. There's a number of macro factors going into the assumptions. We believe, overall, that represents a mid-single-digit revenue growth environment for the market. Why further support from rising interest rates more today than a week ago, we've got continued balance sheet growth. We've talked a little bit, Laura touched on mortgages. Things will slow in certain areas, but still reasonable balance sheet growth and reasonable demand for fees from services and advice capabilities. While we can't control that environment number, we can't control our own outperformance and we believe our strategy will allow us to outperform that by a few percent. How? One, better mix. You've heard from us around the key client segments we're focusing on that are high value and grow faster than market. Two, outperformance. We will gain share, particularly in those key segments by applying our capabilities, deepening those relationships, productivity improvements in the front line, driving those improvements and share gains and revenues. And then finally, expansion, whether that's market expansion, and you've heard about some of that in the U.S., particularly or new products and new revenue streams that we didn't participate in before. You heard from Laura and Chris, Tyl is our reentry into merchant acquiring. So there are a number of examples of those types of things. Assuming the macro environment is what it is. We think this culminates in a high single-digit revenue. Now let me move to the expenses in terms of what funds this growth from an investment perspective. We will continue to manage expenses the same way, balanced, disciplined, aiming overall for positive operating leverage through the period 2025, continued investment in our strategic growth initiatives. Now we've accelerated investments in the past. So I do expect it to slow down from here after 2022 in terms of growth rate, but continued investment and partially funded by continued efficiency improvements about at the same annual pace as we did in the past when we look at the current portfolio of initiatives. And as we've discussed before, we continue to believe that we can keep our structural expenses when we take those efficiency gains even with the higher inflationary environment that we face, we can keep our structural expenses to run the bank in low single digits. In addition to that, our investments through 2025 plus performance measurement will add a few percent to it, which ends up in a mid-single-digit expectation for expense growth. But most importantly, our rigorous planning process gives us visibility and gives us the ability to manage that up or down by pacing ourselves as the environment changes, giving us the confidence to commit to positive operating leverage. Okay. So bringing all that together, our strategy positions us to deliver strong earnings growth through 2025. Revenue outperformance, we spoke about base case expectation high single digits. Positive operating leverage, in fact, today, I would say we have some room on that without materially affecting our investment portfolio to generate positive operating leverage, but we also have flexibility to pace ourselves. And against that, we expect some headwinds from PCLs. And usually low PCLs will normalize. We're providing guidance on mid- to high-20s basis points, and Jon can cover that in a lot more detail, potentially some tax proposals out there. You put all of that together, we're confident in high single-digit earnings growth through 2025 and outperformance relative to market. Okay. Now we've talked a lot about the goal of sustainable outperformance. We believe this requires strong profitability to drive ongoing capital generation to help fund the organic growth, to help fund dividend increases and to help fund a strong balance sheet. So let me cover our capital objectives first, and I'll pivot to what that means for profitability and then we'll wrap up. Our capitalization levels currently are around where we plan to operate, and we expect to be over 11% CET1 through 2025. To deploy capital, I covered this before, priority remains organic growth and our dividend and we are reaffirming our dividend payout ratio of 40% to 50%. We'll also assess M&A. And you heard from Mike, we'll assess it opportunistically in certain areas like Wealth in the U.S. However, they have to represent best avenue for value for our stakeholders for us to proceed. Now in terms of ROE trajectory, based on all of these assumptions, we believe that our strategic plan will yield a positive trajectory of ROE over this period of time. I referenced some headwinds in terms of PCL tax changes, there's also some positives you have to normalize for like the capital impact of Basel IV changes coming in '23, '24. You take all of that into account, our normalized ROE in 2021 would have been lower than what it was, but still above our 15% target. But from there, we believe our core business growth with a strong momentum and strong marginal organic returns in all of the businesses will create a positive trajectory for ROE even before the help from interest rates. Interest rates will provide further tailwind. And at this point, it would allow us to go significantly above 16% and gives us some capacity to reinvest more in the latter part of that period if we chose to do so, but we will target 16% plus in terms of our ROE targets through this period. Okay. Now let me wrap up. reinforcing key messages. We're focused on sustainable outperformance and value creation for all stakeholders. We have a comprehensive disciplined approach to allocate resources against this. It allows us to focus our investments and optimize returns. And our plan, our track record of strong execution and our discipline gives us the confidence to raise our earnings target even in an uncertain environment. And this is independent of our 2025 targets, which may be impacted by the environment. We believe we've built our bank for sustainable growth. And structurally, our bank through time can now deliver higher growth and higher profitability, which is why we're raising our earnings target to 7% to 10% from the current 5% to 10%. We're raising our ROE target from the current 15% to 16% plus. We're maintaining our commitment 40% to 50% dividend payout ratio and plan to keep capital CET1 over 11%. With that, thank you for listening to us this morning, and we'll open up to welcome your questions for another session.

Thank you very much for your patience.

I ask Hratch, Kat, and Jon to join me on stage. And again, any member of our leadership team is available for any questions you may have. [indiscernible]

A couple of questions for Hratch. Your expense trajectory there were structural low single digits with the investments, it brings you to the mid-single digits. In the current climate -- and then you also suggested that you could toggle that investment if need be. In the current climate, how much are you thinking about toggling the investments to drive expense growth lower than the next year or so because we have a few quarters behind us where expense growth was relatively high?

Yes, certainly. Thank you for the question, Gabriel. And it is top of mind. We're talking about that. We're thinking about that at all times. But I'll say in the current climate, as we've been constructing this plan and we are in our planning season, we've been going through our portfolio of initiatives and our expense forecasts in real time as the environment is shifting around us. And a number of things look different in the last couple of weeks than they did before, and we talked about this with some of our investors at the break. But there are puts and takes. Interest rates are in a better place. Based on what we have in here on interest rates, Canada is 50-odd, better today on the forward, U.S. 75 -- sorry, other way around Canada 75, the U.S. 50, and that benefits us, right? Our sensitivity to interest rates is $400-odd million, $430 million or 100 basis points in the next 12 months. So that helps. But that also could come with some balance sheet moderation, right? So we've taken all of those things into account. And net-net, as I said on the slide on 2025, at this point, if I look at the full period through '25 and our assumptions updated for what's going on now, we feel confident that we still have a path to high- single digit revenue growth and, therefore, that expense of mid-single digit is the right place. We are being prudent. We're not spending a dollar where we don't need to, but we're investing and we believe in returns at the strategic value than at this point, we're staying the course.

Okay. A similar question, but on the capital, you're in and around your management target, 11.5%. You got the rising rates, which could actually work against capital generation. Loan growth in low RWA density categories like mortgage is slowing, but you're still getting good growth in commercial and higher RWA density stuff. Do you expect to be accreting capital over the next year? Or do you move -- expect the bank to move closer to that minimum level of 11%?

Yes, certainly. So as I said in my remarks, Gabriel, our plan is to stay right around where we are. So I would expect a relatively stable CET1 from here. Now a number of things can move things, right? There could be credit migrations. There could be macro factors that hit the AFS books and OCI. But generally, and we've done a number of different scenarios, there is puts and takes again. But I think we can stay relatively stable while maximizing deployment against the best return opportunities.

We have a question here. Sohrab.

Sohrab Movahedi, BMO Capital Markets. Victor, maybe first question for you. Lots of good information here, lots of good targets. You talked about ESG, I think, in Hratch's, I'll call it spiral communities and planet are highlighted. I think it's top of mind for everyone. What would be 3 metrics you would want us to track around CIBC's focus on this over the next 2 or 3 years?

ESG is clearly topical for investors. I'm going to ask Kikelomo Lawal, who is our executive response -- she's our Chief Legal Officer and also responsible for our ESG strategy, leading the team horizontally. We're very committed on many fronts. I'm going to get her an opportunity here to talk about our strategy, and we could talk about the metrics as well. Thank you.

Thanks very much for the question, and hello, everyone. Let me just take a couple of minutes -- a couple of seconds to talk about myself. I am a new recruit to CIBC, but I'm not a rookie. I've got 27 years of practice in the law and in infrastructure groups and strategy groups. So to answer your question, I think of things in terms of our priorities. And we have 3. I would say they are: number one, making sure that we are focused on aligning the ESG strategy with our purpose; number two, ensuring that we are staying true and delivering on our commitments; and number three, making sure that our governance structure is robust and it allows us amongst ourselves to ensure that we are responsive, to ensure that we are accountable and that we are accountable as well to those who are observing and evaluating our actions. So if I take a second to drill down all of those, the first way that we ensure that it remains top of mind for CIBC, and you heard Victor talk about ESG being in our DNA is because we tie it to compensation. So CIBC is the first Canadian bank to ensure that ESG has a specific weighting in terms of incentive compensation. CIBC is also the only bank that does that for purposes of not just executives, but a large majority. In terms of commitments, you've heard Victor talk about our commitments on an S front. You heard also commentary on the G front. You also heard commentary on the S front, but just let me highlight for a second, what we're doing with respect to climate. You heard today about our commitment to 2050 Net Zero, you heard today as well about our commitments on an interim target basis for our oil and gas portfolio. You also heard today about our $300 billion commitment in terms of sustainable finance. All of these things go to the work that has gone into coming up with these commitments and ensuring that we're going to deliver on them. And then lastly, in terms of our governance, I'll just say that it starts with oversight at the Board, and it continues on down to accountability right to the folks who are having day-to-day accountability and responsibility for ESG matters. So -- and you spoke of metrics. The metrics for sure, you will see us reporting all those in our sustainability report. But I'd also invite you to take a look at what CIBC is doing in terms of engaging, engagement with our stakeholders, engagement with all of you folks from an investor perspective as well look for thought leadership. These are changing times, as you rightly pointed out. These are momentous time and look for CIBC to weigh in when it comes to things like public policy as it's being developed, when it comes to things like standards that are being established.

Thanks Kikelomo, that's great. Thanks, Sohrab, for your question. When I look at the numbers at the end of the year, at the end of 5 years, at the end of 10 years, I look to see how well are we doing from an incentive comp standpoint? And how is that tied to the targets that we're delivering along all of those fronts? The weighting that we have and are we meeting that in its fullest sense? You double-click on that, we've made commitments on Scope 1 and 2 reductions as a bank by 2030. We're going to be publishing that on an annual basis. we've made commitments on how we're going to invest in the community. We publish that on an annual basis. We sign up for the 1% [ imagine ] commitment of contribution of our profits. So these are the metrics that we look at. And the other metric that we look at that people don't necessarily associate with ESG as how diverse, how low is our voluntary turnover, how talented is our team and that's an important factor in terms of how we perform because ESG, as Kikelomo said, is not kind of something we do here. It's part of what we've always done, and it's core to our strategy, delivered right. It will deliver the top-tier returns that Hratch talked about.

If I can sneak in a second one.

Sure, you can.

Victor, maybe just for Hratch or maybe for the broader team. Obviously, this Investor Day has been many months, maybe years in the making. The world has changed around this. You've got some targets up there. What are the risks to these targets, maybe the largest risks to these targets you see over the next 12 to 18 months?

Hratch, do you want to start?

Sure. Happy to start. Sohrab, it's the factors we covered. We feel very confident in how we're managing the bank in visibility in terms of the actions we're taking and the results we'll get investments, returns against those investments and our ability to perform well relative to the market. The risks, I would say, are related to the market. And that's the thing that we can't control other than to react to it. And so what happens to economic growth, what happens to interest rates, what happens to the markets and how that affects the Wealth platform in terms of assets, what happens to Capital Markets volumes and FX Harry's business, all of those factors will affect the market. But we're focused on 2 things. Regardless of that environment, we think our plans because they are engineered, right, to deliver share gains, to deliver deepening franchising of relationships, to uncover value across the business segments, to innovate in new areas, we believe we will outperform market. But in terms of the absolute numbers that ends up being, certainly, there is volatility from all of the factors that can affect revenue and all of the factors that can affect the PCL line and Jon can speak to that more. That said, we're focusing on being able to adjust. And so not only do we believe in our plans and the individual initiatives, again, we have visibility at a very granular level to approximately half of our expense growth. And there is another few percent of our expense growth that is inherently variable and performance linked. And so there's almost a piece of it that takes care of itself if the macro environment is less robust and there's a very large piece of it where we will stay the course. We think these are all good things to do, but we have the ability because we have the granularity of the road maps and the plans and the numbers to really pace ourselves and mix and match to commit to positive operating leverage even as some of those risks materialize and to commit to strong earnings growth and outperformance.

Thank you, Sohrab. Yes, we have a question panel #1, and we have another question here from Ebrahim.

It's Samuel from Scotiabank. Mike, you referenced potential tuck-in Wealth acquisition in the U.S. I'm just wondering what's the focus for that? Would it be geographic expansion, new capabilities? Any detail in terms of what you would be looking for in a tuck-in?

Well, there's a couple of factors to that, right? First is a price that makes sense in today's market. So as Hratch and Victor talked about, we're very careful with our stakeholders' capital. But after that, focusing on the growth markets in the United States, I think, is key across all of our businesses. There are some obvious examples like Florida and Texas and California. But having said all that, we are across the United States in our Wealth franchise and adding additional capabilities or additional tuck-in capabilities to our existing offices, frankly, is also high on our list. So a price that makes sense, a culture that meshes with our culture and we're a bit different than many other franchises. Again, we have that focus on the high net worth and the ultra-high net worth. And so we believe over the coming months and years, there will be plenty of opportunities for us to look at. And then if the culture fits, execute on those.

Just to follow up, just in terms of the size of the U.S. business, if you include the Commercial, Wealth and then the portion from Capital Markets, you have a slide showing that it's about 20%, 21% now. In 2025, do you expect it to be materially different? I don't know if there's a specific chart in the deck, I didn't see it. But how big can the U.S. be by 2025? And then more aspirationally, where is that line that you're comfortable with in terms of how big can the U.S. be before you think it's too big?

Well, we're not too big. We've kind of -- it's a good question. We've kind of stated that we'd like to get to 25% as a kind of [ a way ] station, and we think we can do that growing organically. And remember, 25% of our overall earnings as the rest of the bank grows. So that's a bold kind of target, but it's, I think, achievable based on our current growth profile and our strategic investment plan. It's achievable by 2025, somewhere around there. We had a question here from Ebrahim.

I guess just a question around: One, Hratch, you talked about like focus on relative outperformance as you think about your targets. Over the last few years, expense growth was elevated, maybe catch up is the wrong word, but you're investing across the franchise. One, are you saying that you're done with that and from year on you're going to be peer-like or better than peer as we think about expense growth and what that means for operating leverage? And then second, and I'm stealing Richard's question, so I'm giving you credit for it. But just talk to us, one, you have a macroeconomic assumption when inflation comes down. How bad is speculation for your business when you think about the bank credit quality-wise, margin-wise, growth-wise? And what -- how big of a risk is that if we remain in a period -- stagflationary period for a couple of years and what that does to the ROE?

Okay. Happy to start with that. And then maybe in terms of credit on the taxation, maybe Jon can comment as well. On the expenses, look, Ebrahim, or I should say -- thank you, Richard, for the question. It's -- we don't have visibility into what others will do. We have visibility to what they've been doing. I won't comment on it. We know what we're doing is the right thing for our bank to generate value. But let me say a few things. I mentioned expense investment slowing down or contribution to expense growth from investment slowing down. We accelerated the level of investment and you saw in our expense slide, we had 6% of our expense stack being investments. we're now -- if you look at it this year, we're going to be closer to 10% because we've increased the pace of that. But -- so you can maintain that higher level of investment on an ongoing basis with less pressure on expense growth now that you're at that level. And so we do anticipate that to slow down a little bit. It doesn't mean we're slowing down the level of investments. And we believe, again, we manage to the operating leverage. We have the ability to pace that. We believe we can deliver the positive operating leverage. We don't manage having our expense level at a certain level relative to the peers. We understand that when the revenue environment changes, if you don't manage the expense then operating leverage and earnings suffer. And so that's why we manage to those things, but not necessarily relative to the others. Where our outperformance will come is we believe with the revenue side, top line outperformance from the share gains, expansion, et cetera, we talked about plus positive operating leverage, those will be enough to create outperformance on the bottom line. Now in terms of the stagflationary environment, look, I think again, there is puts and takes. Clearly, that's not a positive scenario. But if you have the environment around inflation, you've got interest rates at a certain level, those could help, you could help potentially impact -- inflation for us is on the expense side, it's a negative. But if that comes with higher interest rates and trying to temper that, that's a positive. And so the net of inflation and interest rates together, that's generally for us not a negative because we have more sensitivity on the upside. The credit is an issue that we do look at and then the balance sheet growth or growth in the economy and what that does to balance sheet growth is another that we look at it. And so certainly, you could see the revenue be pressured from slower growth. We would manage expenses in that environment. And I think on the credit side, we would anticipate that would have an impact, but maybe Shawn can jump in.

So really quickly, as Hratch said, it's going to be path dependent. So a shorter bout of stagflation isn't a good thing, but it's going to be path-dependent in terms of how does that bleed into a more sustained high interest rate environment. How does that impact that service coverage ratios, the interest rate environment will also impact some of our FLI. And certainly, for a longer period of stagflation, if it starts bleeding into GDP expectations, that can have an effect. So you could see some credit deterioration in that, if it's something more than a short-lived phenomenon, but it's going to be dependent on a number of different variables and how they play out.

And in that world, if I can just follow up, would you be more worried about the consumer, given where the consumer is from a leverage standpoint? Or some of Jon's customers in terms of commercial clients, small business clients might feel greater pressure in managing through that kind of a backdrop?

Again, it's going to depend on how it materializes. You often see that play through first in the consumer portfolio before you see it play through in the commercial sense. But remember, relative to where our clients were pre-pandemic, sitting here today and with the uncertainty coming, our clients are generally in better financial condition than they were pre-pandemic, particularly on the consumer side, where between the government programs, the level of lower spending that's occurred and prudent behavior, paying down higher cost debt, et cetera. Clients are in a good spot sitting here today to address what's coming. And then we'll have to see how that ultimately plays out, how long it may last.

And Ebrahim, stagflation is bad for everyone. Every industry, every government, there's 2 or 3 businesses I could think of that sit on the periphery of society that might benefit from something like that. So let's hope it doesn't happen. My own belief is that central banks are weighing in. They're trying to course correct. After a series of onetime events that none of us have lived through, we're going to go into an environment where inflation may not be 2% and may be at a slightly elevated level. And the price of money will be repriced going forward, which I think is a good thing because it's been too low for too long and it's created some unintended consequences in the global economy, but it's not a good outcome for anybody. The most important thing is we can manage through these cycles as a bank. We're confident in our strategy. We're confident in our balance sheet. We're confident in our client relationships, our ability to work together as a team and work together through whatever storm may come. And the sun will ultimately shine, that we all know. Well, you got to take 1 more -- 2 more questions, and then we're going to wrap 3 more questions, okay? 3 more questions. I feel like I'm an auctioneer. We have a -- where there was a paddle here. Darko, there's a paddle there with Mario, and there's a paddle with Paul, and then we're going to end off right there, the 3 of you. Thank you. Darko, yes, we'll go over to you first.

I wanted to go back to Laura, if she's here and willing to answer the following question, that would be great. One of the things I was hoping to learn today was how your business -- I mean, I can see your revenue target. But one of the things that we've witnessed over, at CIBC for the past 5, 6 years has sort of been an up and down approach to the mortgage market. It was weak at one point, very strong. And so where I sit today is I wanted to learn if mortgages does slow and it shows here that it's 24% of your revenue -- of your revenues, how do you make it up? How do you get that 10% revenue growth if mortgages slow to the single digit? What's the big leader? What's the -- is it cards and other, which seems to be very big? Is it deposits? Can you just maybe unpack how your revenue growth looks going forward if your mortgage growth slows significantly?

I was hoping I was done, not going to lie. So we are working really hard on delivering sustainable results. So all the spend, all of the focus on client experience, everything is such that we can deliver not just market-leading performance, but we want to do it in a sustainable way so that you don't see some of what you've seen in the past. So we're working very hard on that. You're right that we do expect our mortgage growth to slow, and it will be less of a growth driver for us. Where we expect to see the largest part of our revenue growth over the next year or 2 is the same place we saw this year is in banking accounts, our everyday banking accounts. I mentioned that we were up, I said 30%, but it's actually 40% higher over the last 3 years. It usually takes, call it, 18 months to 2 years that you see from the time you get a unit, you open an account to start to see some of that revenue gain. So with all of the growth we're seeing in our cards and in our deposit accounts or everyday banking, that's where we expect to see more of the growth. We also expect to see a lot more coming in business banking and in funds managed with some of the work we have. So we expect less of the growth to actually come from the mortgage book.

So if you kind of went through -- just going through Laura's presentation again, right, the affluent strategy is focused on 3 specific things in the short to medium term. Going deeper with our clients on financial planning, which generates funds, managed growth on both sides of the balance sheet. That we know. We've been through it. We've got 600,000 households. We've been through 1/3. There's another 2/3 to go. There's 190,000 core clients that are being served by new cadre of associate financial advisers, many of whom had a mortgage and one other product. Those advisers are looking to deepen and franchise those relationships. And the third would be the Costco franchise, where we have a vast majority of affluent clients that we plan on building the business banking franchise and the affluent franchise through. That gives us great confidence that there's so much more we can do with our clients as we deepen those relationships going forward, even if the other categories slow down. Mario?

Yes, I'll get it started now.

You're going to get us started now or you...

Over the call afterwards then. Hratch, I appreciate everything you said about being able to manage expenses if the revenue environment doesn't work. What I'm thinking a lot about is how capital will behave and I appreciate that we just went through the pandemic and probably socialized a lot of losses and there was a lot of government support. If we don't have that kind of environment where the government steps in and saves the day, does the capital ratio behave a little more -- is it more volatile Is there potential to sink below 11%?

Yes. Thank you for the question, Mario. Look, I think we manage the capital as we do everything else prudently, and we're keeping different scenarios in mind and how we would react to them. So given from the scenario we're in now, there's a number of things that impact capital. Obviously, number one is generation. We continue to have strong generation. We've talked about a 16% target. That allows you to grow your RWAs at a pace of sort of 13%, 14% after paying, let's assume a 45% dividend. And so if there's organic growth and we deploy that, that's the best lever. We had better results and better returns. If you are in the environment that credit is more challenged, you're right. You have credit migration. Credit migration impacts RWAs. But in that environment, you have less RWA growth. And so we've had strong pace of organic growth. We're continuing to anticipate robust RWA growth through organic deployment, but there's -- those are the 2 things that go against each other. If we see some credit migration in the scenarios that we run, we would have less consumption of capital. Now obviously, for earnings, that means short-term less revenue related to those things. But in terms of ROE of the business as well, outside of the losses, the core profitability of the business continues to stay robust if we don't deploy that capital. In terms of, I think, other scenarios and could you get below 11% in the scenario as we're running, Mario, we've got ample room. And we think we can manage downturns. We run a number of stress tests. We also run stagflation. That's one of the scenarios Shawn's team runs. We feel good about our ability to manage through and stay above any regulatory requirements as [indiscernible] stresses evolve. But it's really going to depend on the stress and we'll manage through that period and reallocate that capital deployment as required.

Yes. Let me drill down just a little there. We often hear the phrase RWA inflation and increases in risk density. Do you believe that the models are sufficiently gradual in nature and through the cycle that a spike in credit losses would not have a meaningful impact on risk density are these truly through the model -- sorry, through the cycle calculations?

Yes. So I think there's 2 things there when you get to the models, Mario, right? And we saw that playing out through, frankly, the pandemic. I think there is actually somewhat -- they're connected, but can be somewhat disconnected timing wise in terms of the losses and the models. Because remember, your RWA models, depending on if you're talking about the retail ones or the wholesale ones, will largely depend on the ratings and the credit quality and the PDs of losses and so forth on the portfolio. So if the expectation of the credit quality changes, which, again, we saw this in the pandemic, on the wholesale side, it will happen as you look at credits and you re-rate them, and we try to do that very quickly as we're going through the pandemic. And as ratings of clients change, regardless of the losses, you will see the RWAs on that front, right? And if ratings don't change and those 2 things do end up being correlated, but it's more of the ratings rather than the actual losses. And on the retail side, again, it depends on all the scoring and so forth and the RWA can move. So it's through the cycle averages that are used for the models, but it's depending on the ratings at that point in time. And so as the ratings, that's where the migration comes in, right, as the ratings move, you would see that coming through.

Mario, can I just comment on that? Because I think 2 things are going to serve us very well if the environment gets to be rocky, the economic environment. One is how we've engineered and built our bank over the last half decade and more. One is deeper client relationships, so we know the clients from the personal banking perspective, where the relationships are deep to our credit card portfolio that I would say is we haven't given enough kind of focus, but it's an affluent portfolio, Aventura, Aeroplan, Costco, dividend. That's the core of our portfolio. You got a very affluent client base. The business banking clients we've chosen the bank in commercial banking and the way we've engineered our capital markets business put us in a very, very different position than we would have been a decade ago. So CIBC is much better positioned because of how we've built our bank. The second thing I'd say is just more of a comment on the Canadian banking system. Whether or not the government comes in, in terms of support, there's a lot of buffer on capital and they're supposed to be countercyclical. And our regulator knows that, and they've always act prudentially in a common sensical way. So we feel good about that, but everything out there will affect everybody. And I'm confident that the bank that we've built today, that we have today is a much better, more durable, more client-focused bank that bodes well from a credit quality perspective as well. Paul?

Thanks for making the time. Question for Jon and Mike. Earlier this morning, we talked about the importance of cross-border relationships for the capital markets and the corporate build-out -- lending build out there. You also know one of your key competitors in the commercial space talks a lot about cross-border opportunity, probably not your competitor I'm talking about. So I'd like to hear from both of you in terms of how closely you're working together and thinking about these cross-border client relationships on the commercial side for both your businesses?

So I'll go first and I'll flip it to Mike. So it's important. Doing the original deal with PrivateBank was a must for us. We were fighting a battle with one arm tied behind our back. Most Canadian mid-market companies today have some sort of presence in the U.S. Mike and I have done a great job of -- the relationships in Canada, we opened the bank accounts in the U.S. We have a cross-border desk. We talk about it all the time. It's a small relationship in the U.S. It gets the coverage of a big relation -- like a big relationship because of how important it is to Canada. So we talk often. We've got goals. It's important. It's probably more important north-south than it is south-north. It's particularly important to our innovation bank like we could not do that business without Mike's infrastructure, right? A lot of those clients are in the U.S. The deposits are taken in the U.S., so we're tied at the hip on this stuff.

And I'll just reemphasize that for better or for worse, I talk to him every day. And our cross-border desk is very active and something that I think, again, distinguishes us from some of our competitors is the connectivity of all our teams. They -- it's not just Jon and I. It's our group heads in C&I and real estate and Wealth and issues if they pop up or opportunities as they pop up are literally focused on same day. And I think our ability to act quickly and act cohesively is a real advantage for us. It's been mostly north-south, had a bit south-north. But we just react quickly. We react in a coordinated fashion, and it's important to us and it's important to our bank.

Okay. You've been very generous at your time. So I'm just going to wrap up in 2 minutes here. We're going to have lunch right after this. At the very beginning of today, I wanted to convey -- I wanted to make sure that you came out of here as advocates, as more engaged and as even high -- having even a higher degree of conviction as investors in our bank. And I hope that today, through these presentations, the connectivity between them, the transparency, the good confidence that we've demonstrated, humble, well-grounded confidence gives you that conviction. The conviction that we're a bank on the rise. We've transformed CIBC, and we will continue to transform CIBC with a deep focus on how technology reshapes banking, but also how relationships remain core to what we do. The second thing I hope you take away is that we have a distinct focus on attractive client segments across our businesses that are higher touch and higher growth that well execute -- with a well-executed plan will deliver that growth through our P&L, and we'll deliver even more important relationships to our bank. And the third thing is that we have some growth differentiators, whether that's direct financial services, whether that's the energy transition, whether that's innovation banking, whether that's our investments in business banking are all going to make a difference to the growth profile of our bank. I recognize like all of you that we're in a volatile economic environment. What you should recognize is that you have a responsible leadership team here with a portfolio of investments that we can fine tune based on how that economic environment evolves. If it gets difficult, we will pace it. If it turns around and there's lots of reasons to believe that, over time, it will turn around, we will accelerate our investments. But we will always be mindful around our returns, our top-tier returns that we're trying to deliver for our shareholders day in and day out. And finally, I'd like to thank our team, those here, some of those around the table who helped bring today together. Like the rest of the world, we're all restarting. And with it comes lots of friction and sand in the gears, but our team worked day and night through the pandemic and getting this building up and going and over the last several months to pull together this Investor Day, and I wanted to give them a big round of applause for everything they do. And please don't run. Enjoy some lunch out there, engage with us, and I know that the engagement will continue far beyond this Investor Day. Thank you.