You might have, as you sort of look to step away, a lot to be proud of in terms of how the stock has performed lately, and what are your sort of reflections on what CIBC looks like today versus what it might have been prior to your tenure in 2014 when you took over?
Thanks, Mike. So good morning, everyone. This has been 11 years of this conference, and I wanted to tell you how grateful I am for the support and the feedback that you've given us as a CIBC team. I want you to remember this: the most important thing is that the team has helped transform CIBC. It hasn't been one person. It's been a team, and the individual sitting next to me, Harry Culham, has played an important part in that. And when I reflect on what we were able to achieve over just over a decade, from a financial standpoint, our total shareholder returns, while they kind of went through a journey, I would say on a one, three, five, and 10-year basis, they're near the top of the tables.
The last five quarters have exhibited improving ROE, and I know that's something that Harry's very focused on as we go forward, that ROE gets to a more and more premium level. Operating leverage has been positive for eight consecutive quarters, and that financial outcome is really a function of the strategy that we put in place, a strategy that is working on so many fronts, and we'll talk about that in the context of today's discussion. I think the other thing I'd say that's a fundamental change at our bank is culture, and those are the soft factors, whether it's culture internally and how we collaborate and how our team is feeling about our bank, to employee share ownership at the bank improving, to rewarding them for great outcomes, to how our clients feel, and our client experience scores are the highest they've been.
We took our Net Promoter Score from a negative score to bottom of the basement to a good solid number two with ambitions to be number one. We've taken our technology platform at the foundational level, and we revamped it, whether it's CRM, whether it's digital goal planning, whether it's cloud-based computing, whether it's Workday, whether it's a new financial GL. The front end, the mobile apps, I think are top of the league as well. There's a lot to do in the middle, and I know Harry's going to talk about that a little bit. It's a big focus of his, of how do you continue to focus on the thick middle. That's changed as well. So in a nutshell, it's a fundamentally changed bank, and we feel very good about where it is today, and we feel equally good about where it's heading tomorrow.
So with that, perfect time to ask Harry to maybe chime in and maybe.
Is there a white water?
Yes. Oh, sorry. This one's an opening. Maybe just talk about your top priorities as you have been big congrats, obviously, on the appointment. Your top priorities at the outset, and if you are planning an Investor Day in 2026, I don't want to front-run that. That's obviously a second question: will investors look forward to an Investor Day where you could sort of provide a bit of a strategic refresh and your priorities as CEO?
Excellent. Well, first of all, I'd say I reiterate what Victor said. Thank you. Thank you for your partnership, for your support as shareholders. I am privileged to be sitting here in front of all of you and obviously humbled to take on this role. What I would say is that in terms of near-term priorities, Victor and I have been very, very focused on a seamless transition, really around our clients, around our teammates, as Victor mentioned, and of course, all of our stakeholders, including our shareholders. And it's going well so far. We've got some work to do still, but we're very focused on that in the near- term.
As we look forward, capitalizing on the momentum that Victor mentioned a moment ago is really, really important as we think about that execution with excellence of our strategy that we believe in as an organization, that our team believes in, doubling down on our client focus, our connectivity that we've been talking about for a decade, that really delivering all of our bank to our clients in a risk-controlled manner, really, really important. Victor talked about that middle, that modernization, that drive for efficiencies, the use of new technology is so important as we think about the balance between efficiencies and investment, and of course, our human capital. There's nothing more important than our teammates and getting that productivity up. Those are the priorities as we think forward to enable that strategic execution.
In terms of an Investor Day, I think it would be very important for us to lay out our vision, a continuation of our vision, of our strategy, which has worked so well, and with our executive team over the next while, we'll be coming back to you with a proper date in 2026 to lay out our priorities and our vision as we move forward to the next chapter.
Okay, awesome. And then I have to ask about the ROE in terms of how you think about it. Obviously, it's been a big focus for Victor. It's a hairy question, though.
I know. I know. I'm in a PowerPoint chart.
Got it. But it sounds like it's going to remain an important driver for you as well and sort of your North Star kind of as well.
It is.
How do you see ROE, and is it really just a continuation of what the progress you've been making lately driving it higher?
We use the word continuity a lot.
Continuity.
It's really, really important. We've made great progress, obviously, with more capital over the last while, hitting 14.6%, Jeff. We'll keep me honest, year to date in ROE. We've targeted north of 15%, as you know, and you mentioned the word North Star. It's a bit overused, but we talk about it a lot. Our executive committee is very focused on it with our finance colleagues driving the bus on this. And so it's very, very important to us that we drive north of 15%, but we're really focused on that execution of the strategy, which enables that ROE to grow. And so that deep client focus, that connectivity we talked about, finding that balance between efficiencies and investment, so important to driving the ROE. And of course, we have the balance sheet management, which can come into play as well over time.
Okay. Maybe jumping over to a credit question for Victor, and this is, I guess, your opportunity to sort of do the victory lap.
I don't want to do a victory lap.
Well, I mean, you should. So I guess the genesis of the question is, if you sort of look at CIBC in historical times, it had been sort of perceived as the bank that might hit a few road bumps in a credit cycle, the bad part of a credit cycle. We're in the midst of a credit cycle, not a horrible one, certainly, but the outperformance has been pretty notable for CIBC on the impaired loan PCLs. And I have to ask, what's different? What is it that's changed that has made CIBC now the credit outperformer when things get a little bit sort of volatile in the economy?
Mike, it's a good question. It's just worthwhile reinforcing that it's all a function of our strategy. It's a function of knowing who our clients are, knowing who we want to bank, and knowing how we want to bank them, and living well within our risk appetite. And when we actually do underwrite that credit, having line of sight to making sure that that actually contributes to an improving ROE. A lot of it has to do with knowing who our clients are and being selective. And that holds true in our retail business. It holds true in our Commercial and Wealth business, our Capital Markets business, and in our U.S. business. And when we did hit a bump in the road, as we did in institutional real estate in the U.S., we quickly course-corrected.
And we've actually been shifting the portfolio away from some of those assets into a more diversified portfolio, but it's all rooted in our strategy and how we do business. And I think, Harry, you can double-click on that. I mean, you've been pretty focused on doing that in Capital Markets and echoing that across the bank in your tenure.
Yeah, no, I think I do believe that deep relationships are at the foundational level when it comes to risk management. You know who to call. You know exactly what your clients are up to. And so it's the best way to manage risk is to know your clients really, really well. And that connected nature across our bank, delivering all of CIBC to our clients matters. Coupled with the technology to actually understand the analysis, the analytics around our clients is really, really important. So we measure every single dollar of capital that goes out the door, where it goes, and we look back on a regular basis to understand the returns, but also the risk. And every discussion that we have around our clients is also around the risk. And as we look forward, growing our bank in a risk-controlled manner is really, really important.
And you've seen the results of that over the last many, many quarters and years, in fact.
Awesome. Maybe on capital deployment for Harry, obviously, I think, Victor, I can almost say verbatim what your capital priorities are because you've been so consistent in that message. But obviously, organic growth is number one for Harry. How do you sort of think about buybacks maybe being amped up a little bit, maybe even M&A, whether it's tucked in? And maybe we can get a bit more of a detailed discussion on the M&A potential. But if you do get an environment here where maybe the loan world just is not recovering as quickly across your business lines in Canada for the foreseeable future, does that sort of make you more likely to do perhaps more M&A or buybacks?
So the first thing I'd say is I've had the privilege of sitting with Victor for 11 years next to him. So the strategy that we have is developed by our executive team, and the strategy encompasses where we deploy our capital, how we deploy our capital. And that has evolved over time, obviously, as the world changes. But we're in a position now where we have obviously excess capital. We feel very good about our capital levels. We also feel very good about where we're headed over time. Priority number one is organic growth. We're really focused on devoting capital to our core clients, the millions of core clients that we have across all of our lines of businesses. And we've got great momentum, as you saw over the last many quarters, in deploying our capital to our clients. And so that would be priority number one.
Of course, again, we want to continue to invest in our bank, into the infrastructure of our bank. That's very, very important. The drive towards efficiency, the drive towards modernization, very, very important. So it's clients, it's modernization of our bank with a really good balance. And then, of course, we've got dividends, we've got return of capital to shareholders and buybacks that you mentioned. And I see Rob Sedran over in the corner frowning at me, making sure I'm going to say the right things. But as CFO, we're all over this. We talk about it all the time. We're clearly focused on utilizing our buyback capability. We renewed our NCIB, as you know, and we have flexibility. So we have flexibility around where and how we deploy our capital and the timing of how we deploy our capital.
In terms of M&A, another lever, of course, we've been very focused on tuck-in acquisitions. We've had some very good success South of the border with respect to our Wealth Management franchise. I think we've been quite vocal on the growth of our Wealth Management business, higher ROE businesses in general, and we could talk more about that across various different businesses. That's where we're going to continue to deploy capital. But I would look at it more as tuck-in opportunities that are accretive to ROE over the medium term. So no surprises, more of the same. We speak the same voice having sat next to each other for 11 years.
Okay, thanks for that. Victor, maybe going to you on the Canadian business, just in terms of what CIBC does differently without revealing too much of that secret sauce, but obviously it's been working and you're not chasing volume. Maybe just talk about what it is that you specifically do for clients that gets them to develop those deeper relationships with the bank. I know it's a loaded question.
No, it's not loaded. It's a good question, Mike. Our retail bank is a crown jewel for our bank. It is a big driver of returns. It's a big enhancer of our multiples, and we've worked together with the entire team to get it to a whole new level, so it all starts with our people and a real focus on serving our clients. That culture of how we serve our clients, how we respond to client issues, how we respond and embrace client opportunities is something that kind of beats at the center of CIBC's heart. I really mean that, so what have we done around that?
We've built good technology around that, whether that's harnessing our data assets, using CRM in a client-friendly way, putting out a digital financial planning platform that is proven to improve Net Promoter Scores, that is proven to improve client share of wallet. So when a client goes through CIBC GoalPlanner and they actually do a retirement plan as well, their Net Promoter Score goes as high as 85. That's a big deal. Then within that business, there is a big focus on the mass affluent and the rejuvenation of the Imperial Service, which is a capital-light business, which is primed to grow significantly going forward because of the investments that we've made, both in our people and our technology. Alongside that, you have a digital acquisition platform through Simplii, through Costco, and quite frankly, through the mainline bank.
Those clients come in the front door and we seek to franchise them to build relationships over the long- term. That, in a nutshell, is who CIBC is at retail. It's not led by price, it's not led by product, but there's a real thoughtful client or relationship-oriented approach to running our bank, and that, I think, permeates through the entire bank.
Maybe switching over to Harry just on Commercial Banking and Wealth, like that connectivity in Canada, as you step into the CEO role, do you have any thoughts to offer on that? I know it's an important aspect of every bank's strategy, getting that continuity, the connection between the client base. How do you see that sort of evolving for CIBC?
It's just how we operate every single day. It's how we talk about business. It's how we just work with our clients. We expect our entire organization to be delivered to our clients. It's just part of the DNA of the organization of our bank. We've been doing it for a long time. It's interesting, Victor. You go back and Victor and I both read Volume 5 of our history, 1973- 1999. We were innovative. We're client-focused. We're team-focused. We had an excellent culture. We've got that back now. And now we're focused on that momentum and going to the next level around that connectivity. So Commercial and Wealt h is a perfect example where these groups work together hand in hand. The referrals between the two are exceptional. It's growing. It's growing regularly, both North and South of the border. It also is growing with Capital Markets.
So it isn't a relationship manager's job just to deliver Capital Markets products. It's also to deliver everything our bank can offer to the C-suite, to the average client out there, important client of ours that they see the entire bank. So that connectivity really does work for us. It's how we operate day in and day out. It's been part of our history.
And you know when we took that, what was seen as an unorthodox step of putting together Commercial Banking and Wealth Management , there was a little bit of trepidation from investors, partially because you can't compare us to the other banks as directly. But why are you doing this? Nobody else does it this way. I mean, our view, and some of this comes from our discussions day after day around the market, going more and more private.
As the market goes more private, you have entrepreneurs, you have private sponsors that are involved in creating value. When that value gets unlocked, we want to be there to help them with their Wealth Management . And we have countless examples of clients who've come to us, who've sold their businesses, either all of their businesses or part of their businesses, and their Wealth Management comes to us and we manage that for them.
I might add, Victor, just on that, because Mike did ask. We've seen hundreds of clients together as we transition. And many are Commercial and Wealth clients. And we have an office set up to ensure that this is really functional. And time and time again we hear that they require service in the wealth space, as an example, if you're a commercial client. In fact, I think about a third of our commercial clients have a wealth relationship with us.
Okay, thanks for that color. Harry, just on the RESL exposure, and I guess this is also one of those legacy things which is quickly dissipating. I don't think people look at CIBC the same way in terms of the fact that it has a bit more RESL exposure in Canada as being necessarily a negative. Obviously, the spreads in that business don't tend to be too high.
I think Hratch has been clear on recent calls that it's a lot smaller of a contributor to the retail business. What would you sort of say to some maybe detractors that still look at CIBC and say, well, too much RESL exposure, Canadian housing is not looking so great right now? Any thoughts on that?
I go back to the comments that Victor made earlier about our ability to manage risk and adjudicate. We're really good at it, and we've proven that through cycles, and so we're really pleased with that, first instance. The second thing I'd say is that it goes back to our strategy, building deep relationships with those 13 million clients we have, franchising those clients. That's really, really important. Understanding your client base. We use a lot of data. We use a lot of analytics to understand our client base, to also understand how we can franchise them if they're not. We're also focused on, from a RESL perspective, the renewal space. Everybody's read about the size of the renewals coming about, and we're very focused on retaining the most valuable clients. So that trade-off between revenue and returns is really important to us.
And our core client base will fight day in, day out to ensure that we maintain those relationships at the highest level. Very, very important. I think we'll grow at and around industry average. We'll keep up with the industry. But it's more about generating the returns and building for the growth of the future around franchising. It's really got us to a good place at the moment. And you see the results. And I think having Hratch, our former CFO, very focused on strategy, very focused on the numbers, leading that business has been exceptional.
Okay, maybe switching over to the U.S. business, probably for Victor. Obviously, a lot of changes over the years, a couple of acquisitions just to beef up your capabilities there. I know you've talked a lot about the cross-border dynamic. Maybe talk about the U.S. strategy at a high level. Where is it sort of heading? I know you're kind of stepping away as CEO, but what have you set this business up in terms of the direction it's going in, and what is it going to look like in three to five years?
Sure. So if you just go back 11 years, less than 2% of our profits came from the United States. Today, it's one in every $5, give or take a quarter, depending on how it performs. Our goal was to, A, diversify our bank, not simply for the purposes of diversification, but to be able to follow our clients in a North American economy. A lot of money continues to move North-South, and I fundamentally believe that will continue to be the case once the tariff discussions kind of get to a different phase. So we're well- positioned to serve our clients. We also took the step of building a business that doesn't reflect what we do in Canada in terms of our footprint. We consciously have avoided retail in the U.S. We think retail is a highly competitive world.
We think retail is going through this massive transformation as we see on our home market and decided to focus on what we would largely call the private economy: entrepreneurs, Commercial Banking, and Wealth Management. We did that through the acquisition of The PrivateBank , which I think has gone very well. We did that through several acquisitions in the Wealth Management space, which is now in the $100 billion zone. There's more to do. I think it's still subscale relative to where it could be. And I know Harry and the team will be focused on that going forward, and we did that with our Capital Markets business.
And Harry can speak to that as well, which is, again, focused on our clients, focused largely on the private economy, private sponsors, private business owners, and working our way to an ROE that, on a blended basis, is currently well over 10%. In the Commercial business, it's lower than 10% because of the goodwill. Now we'll work our way toward a better place. So that would be, I think, the story going forward. In the most recent past, we've invested significantly in the backbone of the bank, which should send you signals that our plans are to grow organically. In the next several months, we're launching our mobile platform that we have in Canada, the U.S.
version of it, which will help our private banking franchise grow and attract more capital-like business-like deposits, as well as asset management and other Wealth Management-oriented products, and continue to focus on those clients that do treasury with us and lending with us and ancillary business with us and Capital Markets to get that ROE to a better place. And I think, Harry, you're going to continue on that path. And I know you're very focused on getting that ROE on a full basis, not just tangible, to well over 10%.
Absolutely.
Maybe switching over to cap markets. Obviously, you're your neck of the woods, Harry. What's the strategy in cap markets, just high level, and why has it been working? I know there's been a much more strategic approach to the U.S. part of the business. Maybe talk about just overall where you see the business going and then speak specifically, if you can, on the U.S. side as well. Obviously, the bank has had different levels of exposure and breadth in the U.S. cap markets business over the very long- term. And it seems like it's a lot more concentrated now to the betterment of the bank, so.
We had the opportunity to rebuild the Capital Markets business 15 years ago. And for the last 10 or 12 years, I think we've outperformed our peers in terms of revenue, NIAT, pre-provision, pre-tax earnings basis, all based on delivering the entire Capital Markets platform and our bank to our clients. And that's worked really well. Highly connected back-to-front infrastructure, et cetera, risk management. So you've seen returns that are outsized, and I believe that they will be consistent. You've seen a focus on discipline around where resources go. I mentioned that earlier. And I think underlying all of that is culture. Victor mentioned culture a moment ago. If you look at the Capital Markets business, it's a client-driven business. It's all about culture. It's about how you do business day in and day out as part of CIBC, our bank.
And so that's really, really important and highly connected with our commercial bank, both North and South of the border, and highly connected with our wealth franchise. And by the way, from a technology perspective, often street leading. And so we feel really comfortable about the infrastructure, the culture, the breadth of the business, the continuity of that business. I might add also that my Deputy for the last year is Christian Exshaw, who has now taken, has been announced to take over Capital Markets. And the same leadership team is in place.
And so you should continue to see consistency of sustainable growth over time and a risk-controlled manner in the Capital Markets space. In terms of the U.S., about half of the business in the U.S. is Capital Markets related. About half is Commercial and Wealt h. We've seen outsized growth in the U.S. on the back of opportunity.
We've been expanding in the U.S. for a number of years with our clients. Our clients are active in the U.S., in the industries we know well. We are not trying to be all things to all people. That's not what we're trying to do. We're trying to drive really strong returns with deep relationships in areas we know well in a risk-controlled manner. And that will continue. So we're pretty excited about it.
I'd love to ask a follow-up just on that connectivity. And obviously, there have been a lot of changes since Victor became CEO in 2014. Any examples you can give on what you've sort of seen operationally that's really changed things?
Since Victor came in?
Yeah.
Listen, we put the pin on. This is a CIBC pin. It's not a Capital Markets pin. By the way, if you ask anybody, they'll say the same thing. We work for our bank with a great history and a great history of working with our clients, with our team, our culture, et cetera. We've got the Run for the Cure coming up in a few weeks' time. Hopefully, some of you will be there. Just things like that matter. They've always mattered to CIBC. Victor emphasized that importance of our cultural connectivity. I would say what we learned over the last decade under Victor's leadership was everybody matters. When you got up in the morning in April of 2020 and the world was falling apart, we knew that the infrastructure teams were all there.
They're all there helping deliver for our clients, for our shareholders, for all of our stakeholders to ensure that our bank was going to be there when it was required to be there. And so we've proven, I think, over cycles now that that culture of connectivity under Victor's leadership, leading with our clients first, matters. And that now you're seeing it come through in the results.
Okay, thanks for that thoughtful answer. On AI, maybe starting with Victor, I'd like to get some color from both of you gentlemen. But on AI, Victor, maybe in terms of the journey on AI, I know it's still a developing part of the bank's story, both on the cost side and on the revenue side. Where do you see sort of CIBC sitting in that dynamic? Do you see yourself as being a little bit ahead of industry, kind of in line with the industry? Or are you doing some sort of secretive things in the background that we're about to get excited about when we see the Investor Day in 2026?
There's no secretive things that are going on. We have a history of embracing technology and ensuring that our technology strategy reinforces our business strategy, and it's no different with artificial intelligence. The first thing we stood up was governance around AI, governance around data, governance around the use cases, so not everyone's running here, there, and everywhere, so we put some order in our house, and that's what we do, and that's how we operate the business. We have created our own CIBC AI, which we call CAI, which is our own internal large language model that we draw on the resources that are outside, but we can do things with our own data, with our clients in a private fashion. We've actually organized everything, I'd say, the use cases into three main buckets. First bucket would be efficiency.
And that efficiency you'll see in the contact centers over time, internal and external contact centers. You already see that in the coding activity of our programmers in the early days. There are other buckets in KYC, charting notes for our advisors, and how that'll help them become more efficient. And we don't talk about this is going to eliminate jobs. It's going to change the nature of work and actually make working at CIBC even more interesting because it'll take the sand out of the gears. The second bucket would be defense. And that would be on the fraud front and on the AML front. And the third piece would be on growth and how do we use it for growth. And I think we're focusing on things in that specific order.
Get the efficiencies, get the sand out of the gears so that work becomes more interesting and more meaningful for our people. And we're focusing on defense as well. Then we'll start focusing more on growth. And I know Harry's very focused on how can we do this in a way where the entire team rallies around what we're doing without their arms folded and saying, "I don't want to be part of this." And all of our team, I can say unequivocally, is engaged.
I think we've had 48,000 team members trained in AI over the last year, so it's top-down, bottom-up. Everybody's engaged, and it's going to change the way we work over time, no doubt. And it's already having an influence, so we're really, really trying to be in the forefront.
Got it. Got it. Well, thank you, gentlemen. As we sort of wind down our time slot here, some final words, maybe starting with Harry. And then we have to give the last word to Victor, who's going into his retirement soon after a very amazing run at CIBC, especially in the last few years, given the stock price's outperformance. So maybe starting with Harry, is there any key messages for investors?
I think the message is continuity, continuity in the momentum and the trajectory we're on. And hopefully, we can take that a little higher with some of the things we've talked about today. I think the team is highly engaged, highly engaged with our clients, highly engaged with all of our stakeholders back-to-front, infrastructure, front office, et cetera. So we've got an engaged team. The culture is excellent. We're in a good spot. And I'd just like to thank all of our shareholders for your engagement over the years. I look forward to partnering with you as we move forward. And we're always accessible. So maybe I'll pass over to Victor for the last word.
All I'll say is thank you. Thank you for being there. Thank you for the hard questions. I didn't get too many softballs from many of you. I want to tell you that it's a privilege to be in this role. Canadian banks play an incredibly important role in our economy and our society and to be able to work with my team, our team, to take CIBC to a whole new level has been a real positive life experience because in the end, we're there to serve our 13 million clients. We're there to make sure that our 50,000 employees have a stable and growing paycheck and a way to look forward to their work each and every day. We've created, I think, a return profile that our investors are proud of. We give money back to the community.
And this is the perfect time for Harry and the team to take it to a whole new level. And I will be screaming from the rooftops, a proud alumnus and a proud ambassador, and always bleed scarlet. Thank you.
Thank you very much, gentlemen.
Thank you. Thanks, Mike.
That Slivovica.
Follow me.
One a day?
I got to learn about it. One a week.
One a week. Thank you very much, gentlemen.
Thanks.
With that, we'll go to the lunch break now. We'll come back with Peter Rutledge, Superintendent of OSFI, at noon for a Q&A.