CIBC Chief Looks to Affluent Canadians for Next Leg of Growth

(Bloomberg) -- Canadian Imperial Bank of Commerce, after benefiting from a strong turnaround in its mortgage business in recent years, is focusing on affluent Canadians for further growth.

The CIBC Imperial Service wealth-advisory business will be one of the top areas the Toronto-based bank invests in for future growth, Chief Executive Officer Victor Dodig said in an interview ahead of the company’s annual meeting. That business may also be one of the top beneficiaries of the bank’s acquisition of Capital One Financial Corp.’s C$3 billion ($2.4 billion) Costco-branded Mastercard business.  

CIBC Imperial Service “has real room to grow, both within our existing franchise, by deepening relationships, and through the 2 million Costco clients that are coming our way, because many of them don’t bank with us,” Dodig said in the interview.

Two other major avenues for investment and growth include business banking, where CIBC recently partnered with financial-technology firm Pollinate to bring its Tyl payments and point-of-sale technology to Canada, and by “digitizing and simplifying banking” for existing clients, Dodig said.

Those priorities come after stretch in which CIBC worked to reinvigorate its Canadian mortgage business, which had lagged behind those of competitors. The bank’s balance of loans secured by real estate rose about 13% in its most recent fiscal year, compared with 2.9% the prior 12 months.

The bank’s investments in technology and front-line workers to boost revenue was a major theme of Dodig’s remarks at Thursday’s annual meeting, according to his planned talk. Dodig also was set to highlight the opening of the bank’s new main office, dubbed CIBC Square, as a “modern, purpose-built headquarters.”

Those investments are coming as Canada faces accelerating wage growth and the fastest inflation in a generation. Dodig said he expects the Bank of Canada to raise rates enough to tame inflation and that he still expects “decent” economic growth ahead, but CIBC is prepared to dial back its spending if needed.

“We’ve got a very structured portfolio of investments,” Dodig said. “If we see things are deteriorating, we can always pull back to make sure that we’re driving the kind of earnings profile that our shareholders expect.”

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