# CIBC Annual Report 2020

## Who we are

CIBC is a leading North American financial institution and ended 2020 with a market capitalization of \$44 billion and a Basel III Common Equity Tier 1 capital ratio of 12.1%.

Across Personal and Business Banking, Commercial Banking and Wealth Management, and Capital Markets businesses, our 44,000 employees provide a full range of financial products and services to 10 million personal banking, business, public sector and institutional clients in Canada, the U.S. and around the world.

**\$3.8B** Reported net income
**\$4.4B** Adjusted net income
**\$44B** Market capitalization
**12.1%** Basel III CET1 ratio
**10M** Clients

## Our purpose

CIBC’s purpose is to help make your ambition a reality.

## Our strategy

At CIBC, our goal is to deliver superior client experience and top-tier shareholder returns while maintaining our financial strength. To achieve our ambition, we are executing on three strategic priorities:

1. Focusing on key client segments to accelerate our earnings growth
2. Simplifying and transforming to deliver a modern relationship banking proposition
3. Advancing our purpose-driven culture

## Creating value for our shareholders

At CIBC, we are committed to delivering sustainable earnings growth to our shareholders. We are guided by our purpose – to help make our clients’ ambition a reality – as we reinvest in our business to accelerate revenue growth and reduce our structural cost base while keeping a keen focus on industry-leading fundamentals in capital, expenses and risk management.

## Table of contents

| Item | Page |
|---|---|
| 2020 Performance at a glance | |
| Environmental, social and governance (ESG) scorecard | i |
| Our response to COVID-19 | ii |
| Message from the President and Chief Executive Officer | iv |
| Message from the Chair of the Board | ix |
| Enhanced Disclosure Task Force | x |
| Management’s discussion and analysis | 1 |
| Consolidated financial statements | 99 |
| Notes to the consolidated financial statements | 114 |
| Quarterly review | 191 |
| Ten-year statistical review | 193 |
| Glossary | 196 |
| Shareholder information | 203 |

# 2020 performance at a glance

## Business mix
% adjusted net income$^{(1)}$

```mermaid
pie
    title % adjusted net income(1)
    "Canadian Personal and Business Banking" : 44
    "Canadian Commercial Banking and Wealth Management" : 27
    "Capital Markets" : 25
    "U.S. Commercial Banking and Wealth Management" : 10
    "Corporate and Other" : -6
```

**62.8** Client experience 2020 CIBC Enterprise Net Promoter Score

## Reported revenue
(\$ billions)

```mermaid
bar chart
    title Reported revenue ($ billions)
    section Revenue
        18: 17.8
        19: 18.6
        20: 18.7
```

## Reported earnings per share
(\$)

```mermaid
bar chart
    title Reported earnings per share ($)
    section Earnings
        18: 11.65
        19: 11.19
        20: 8.22
```

## Adjusted earnings per share$^{(1)}$
(\$)

```mermaid
bar chart
    title Adjusted earnings per share(1) ($)
    section Earnings
        18: 12.21
        19: 11.92
        20: 9.69
```

## Dividend
(\$/share)

```mermaid
bar chart
    title Dividend ($/share)
    section Dividend
        18: 5.32
        19: 5.60
        20: 5.82
```

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.

## Financial highlights

For the year ended October 31
(Canadian \$ in billions, except as noted)

| Metric | 2020 | 2019 |
|---|---|---|
| **Financial results** | | |
| Revenue | 18.7 | 18.6 |
| Provision for credit losses | 2.5 | 1.3 |
| Expenses | 11.4 | 10.9 |
| Reported/Adjusted net income$^{(1)}$ | 3.8/4.4 | 5.1/5.4 |
| **Financial measures (%)** | | |
| Reported/Adjusted efficiency ratio$^{(1)}$ | 60.6/55.8 | 58.3/55.5 |
| Reported/Adjusted return on common shareholders’ equity (ROE)$^{(1)}$ | 10.0/11.7 | 14.5/15.4 |
| Net interest margin | 1.50 | 1.65 |
| Total shareholder return | (5.9) | 4.2 |
| **Common share information** | | |
| Reported/Adjusted earnings per share$^{(1)}$ | 8.22/9.69 | 11.19/11.92 |
| Market capitalization | 44.4 | 50.0 |
| **Dividends (%)** | | |
| Dividend yield | 5.9 | 5.0 |
| Reported/Adjusted dividend payout ratio$^{(1)}$ | 70.7/60.0 | 49.9/46.9 |

**Net income by strategic business unit**

| SBU | 2020 | 2019 |
|---|---|---|
| Canadian Personal and Business Banking | 2.0 | 2.3 |
| Canadian Commercial Banking and Wealth Management | 1.2 | 1.3 |
| U.S. Commercial Banking and Wealth Management | 0.4 | 0.7 |
| Capital Markets | 1.1 | 1.0 |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.

## Financial scorecard

| Metric | Target | 2020 reported results | 2020 adjusted results$^{(1)}$ |
|---|---|---|---|
| Earnings per share (EPS) growth$^{(2)}$ | 5%–10% annually | \$8.22, down 27% from 2019 | \$9.69, down 19% from 2019 |
| Return on equity (ROE)$^{(2)}$ | 15%+ | 10.0% | 11.7% |
| Efficiency ratio | 52% run rate in 2022 | 60.6%, increased 230 basis points from 2019 | 55.8%, increased 30 basis points from 2019 |
| Basel III CET1 ratio | Strong buffer to regulatory minimum | 12.1% | |
| Dividend payout ratio$^{(2)}$ | 40%–50% | 70.7% | 60.0% |
| Total shareholder return | Outperform the S&P/TSX Composite Banks Index over a rolling five-year period | CIBC – 27.7% Banks Index – 35.3% | |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.
$^{(2)}$ Through the cycle.

## Environmental, social and governance (ESG) scorecard

| Material topics | Target | 2020 performance | Status |
|---|---|---|---|
| **Client experience** | • Continuous improvement | • CIBC Enterprise Net Promoter Score was 62.8, a two point increase from 2019 | $\checkmark$ |
| **Privacy and information security** | • No privacy findings against CIBC by regulators | • 3 privacy findings against CIBC by regulators$^{(1)}$ | $\text{X}^{(1)}$ |
| **Sustainable finance** | • \$150 billion in support for environmental and sustainable financing over 10 years (2018–2027) | • \$15.7 billion in environmental and sustainable financing $28\%^{(2)}$ achieved to date (\$42 billion) | $\checkmark$ |
| **Inclusive banking** | • Engage 200,000 clients in financial education seminars and events over three years (2019–2021) | • 2020 performance will be updated in CIBC’s 2020 Sustainability Report | $\text{N/A}$ |
| | • Provide \$9 billion in new loans to SMEs over four years (2020–2023) | • \$6.9 billion in new loans to small and medium-sized enterprises (SMEs) $77\%$ achieved to date | $\checkmark$ |
| | • Grow our commercial banking Indigenous business by 10% in 2020 | • 23% growth in commercial banking Indigenous business | $\checkmark$ |
| **Belonging at work** | • At least 30% women and at least 30% men on the CIBC Board of Directors | • 40% women on the CIBC Board of Directors | $\checkmark$ |
| | • At a minimum, between 35% and 40% women in board-approved executive roles by 2022 (Global) | • 33% women in board-approved executive roles (Global) | $\checkmark$ |
| | • At least 22% visible minorities in board-approved executive roles by 2022 (Canada) | • 20% visible minorities in board-approved executive roles (Canada) | $\checkmark$ |
| | • 4% Black leaders in board-approved executive roles by 2023 (Canada) | • 3% leaders from the Black community in board-approved executive roles (Canada) | $\checkmark$ |
| | • 8%–9% of external hires in 2020 are persons with disabilities (Canada) | • 5% of external hires are persons with disabilities (Canada)$^{(3)}$ | $\text{X}^{(3)}$ |
| | • 2% of external hires in 2020 are Indigenous peoples (Canada) | • 3% of external hires are Indigenous peoples (Canada) | $\checkmark$ |
| | • At least 5% of student recruitment from the Black community | • Student recruitment from the Black community | Starting in 2021 |
| **Employee engagement** | • CIBC’s employee engagement score >109% of the Willis Towers Watson global financial services norm | • CIBC’s engagement score of 90% was 111% of the Willis Towers Watson global financial services norm | $\checkmark$ |
| | • Voluntary turnover <12.5% in 2020 (Canada) | • 7.3% voluntary turnover (Canada) | $\checkmark$ |
| | • 100% of employees will have performance reviews in 2020 | • 100% of employees had performance reviews | $\checkmark$ |
| **Community relationships** | • \$350 million in total corporate and employee giving over five years (2019–2023) | • Invested \$75 million in community organizations across Canada and the U.S. $44\%$ achieved to date (\$154 million) | $\checkmark$ |
| **Business ethics** | • 100% employee completion rate for ethical training on our Code of Conduct | • 100% of employees completed CIBC ethical training on our Code of Conduct | $\checkmark$ |

$^{(1)}$ Cases against CIBC by the Office of the Privacy Commissioner of Canada.
$^{(2)}$ Represents the cumulative results of 2018 through 2020.
$^{(3)}$ The full picture of our hiring for persons with disabilities is likely not reflected due to low self-disclosure in the survey utilized for data collection.

# Our response to COVID-19

The COVID-19 pandemic triggered significant economic disruption and public health concerns around the world. From the largest corporations to families planning for their future, many clients faced a crisis that affected their immediate well-being and put their long-term ambitions at risk.

Drawing on our 153-year history of being there for our clients in challenging times, everyone across our bank immediately understood the role we needed to play – for our clients, for our communities, and for each other.

And we did.

From our teams in Asia and Europe who were first to initiate business continuity plans to support our clients through the pandemic, to our teams across North America who were proactive in preparing for this disruption and stepped forward when called on, our global team delivered for all of our stakeholders and honoured our history.

## Our team

Our global team of 44,000 was the driving force behind our strong, client-focused response to the pandemic. Protecting their health and well-being, along with that of our clients and our communities, has been our top priority.

As public health measures were being enacted, an unprecedented 70% of our team members switched to working remotely. We stayed connected and focused on our clients thanks to our investments in technology and collaboration tools that facilitated a smooth transition.

For team members in vital roles who needed to be on-site, we implemented enhanced safety protocols and provided additional financial compensation, as well as activating back-up work locations and adjusting hours in our banking centres to ensure we continued to serve our clients.

In addition, we provided employees with wellness resources and up to 10 additional paid days off to ensure they were taking care of themselves as they focused all of their efforts on supporting our clients through a challenging period.

In our 2020 employee survey, 88% of our team members said CIBC helped them manage their well-being during the pandemic. This was an important source of pride for our team members. We also saw our employee engagement score increase to 90, an all-time high for CIBC.

## Our clients

As the disruption caused by COVID-19 created pressure on the finances of individuals, families and businesses alike, our entire bank leaned in with purpose as we leveraged the strength and commitment of our team to implement a range of support measures to help our clients during a challenging time.

During the year, we assisted more than 500,000 clients facing financial hardship through payment deferral programs on mortgages, loans and credit cards, and reduced interest rates on credit cards, in many cases providing financial relief proactively.

Throughout this period we worked to ensure our clients had access to much-needed funds being made available through government programs, including the Canada Emergency Business Account and the Paycheck Protection Program in the U.S.

Recognizing the urgent need to provide financial support and relief quickly and in a radically simple way, in many cases our team launched fully digital solutions for clients.

In addition, we provided “front-of-the-line” access to seniors and persons with disabilities and proactively offered assistance to clients identified to have the greatest need. We’ve also supported our large corporate clients and entrepreneurs across our global footprint to ensure they, in turn, can take care of their teams and continue to play a role in moving our economy forward.

As a result of our focus and commitment to our clients, CIBC was recognized as the top performing brand during the first wave of the pandemic.

## Our communities

As the impacts of COVID-19 continue to be felt across our communities, our promise is to help revive the sector by harnessing our investments and genuinely caring culture. This includes helping through our people and financial support.

To date Team CIBC has delivered nearly 1,000 hours of COVID-19 related volunteer time. In addition, we increased donations for those most at risk and reassured our community partners that our support would remain in place. Incremental donations included emergency funding for Community Food Centres Canada, United Way, Kids Help Phone, Canadian Blood Services and the American Red Cross. We also supported frontline health-care workers with Aventura points to enable them to take a well-deserved break through our Holidays for Heroes program, as well as supporting the next generation of health care workers achieve their ambitions for a career in health care through the CIBC Future Heroes Fund Bursary Program.

And we continued our long-standing support for those fighting cancer, as we rallied behind a virtual CIBC Run for the Cure, attracting the participation of thousands of Canadians across the country.

# Message from the President and Chief Executive Officer

## Resilient and focused on the future

Drawing on our 153-year history of being there for our clients, we responded to the COVID-19 pandemic by living our purpose – to help make our clients’ ambitions a reality – while delivering a resilient financial performance and advancing our long-term growth strategy in 2020.

> Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.
>
> Victor G. Dodig, President and Chief Executive Officer

Thanks to the tremendous efforts of our team of 44,000 employees globally, we are well positioned to succeed amidst a changing environment in the years ahead and contribute to a more inclusive, sustainable future.

## Financials and 2020 review

Our bank reported earnings in 2020 of \$3.8 billion or \$4.4 billion on an adjusted basis, down 26% and 18% from last year, respectively, primarily as a result of the economic impact of the COVID-19 pandemic. Our capital position remained very strong, with a CET1 ratio of 12.1%, underscoring the strength of our balance sheet as we focus on growing our business in an uncertain economic environment.

Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.

As public health measures such as stay at home directives and physical distancing were introduced to slow the spread of COVID-19, we leveraged our investments in technology in recent years to support our clients. We moved quickly to enable digital-first solutions – including being the first bank to announce our readiness to accept Canada Emergency Business Account (CEBA) applications from business owners in Canada using a fully digital application.

We also acted in line with our purpose by being the first bank to announce reduced credit card interest rates for clients experiencing hardship. We established payment relief programs, as well as priority service for seniors in our banking centres and on the phone. In addition, we made calls to our senior clients to check on their well-being and to help them use mobile and online banking, which saw a surge in demand from clients 65 years of age and over as the pandemic set in. Our bank was recognized as the top performing brand during the peak of COVID-19, a reflection of the measures we took to help our clients.

Our decisive, early action made a challenging time more manageable. In 2020, our bank helped over 500,000 clients with payment relief, and advice when they needed us most.

Our team was the foundation of our client-focused response to the pandemic. At a time of significant disruption and uncertainty, many of our team members seamlessly transitioned to working remotely, while those who needed to be on site to perform essential work were able to do so safely. Our team was steadfast in the face of a challenge, and made a difference in the lives of our clients. I want to thank them for their professionalism and dedication.

Through the pandemic we remained focused on creating a relationship-oriented bank for a modern world. In 2020 we continued to reinvest for long-term growth.

## Revenue by business segment

**\$8.5B** Canadian Personal and Business Banking
**\$4.1B** Canadian Commercial Banking and Wealth Management
**\$2.1B** U.S. Commercial Banking and Wealth Management
**\$3.5B** Capital Markets

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture.

We continued to attract new clients and deliver growth in our Commercial Banking and Wealth Management businesses in the U.S. and Canada. In just one example of our relationship-focused approach to doing business, as the U.S. government rolled out relief programs for business owners to support payrolls, our team of relationship managers called every one of our commercial banking clients to evaluate their needs and work with them to determine if a loan through the relief program would be of help to their business.

Our focus on supporting growth in the private economy and the deep expertise of our relationship managers have helped us to build a robust, high-quality commercial banking portfolio in recent years, and have fueled growth in our wealth management business through new and deeper client relationships that cross business and personal needs. Despite the context of a challenging overall environment, our bank is well positioned to move these businesses forward, both in Canada and the U.S.

In Canadian Personal and Business Banking, we achieved our highest client experience scores on record as we continued to make investments in advice and in our digital capabilities – two areas that remain the foundation of client relationships and growth. In addition, we earned the highest overall satisfaction rating among the Big 5 banks from J.D. Power for our mobile banking app.

We continued to modernize our bank to make it easier for clients to get advice through virtual meetings, and implemented options such as eSignatures to allow clients to sign documentation without needing to leave their home. While we have a continued opportunity to accelerate growth in this area, there are encouraging signs that our efforts are producing results.

Amidst a highly volatile market, we were there with the advice and counsel to help our largest corporate clients navigate market conditions. Our diversified Capital Markets business delivered strong, high-quality growth in 2020, including robust results in our trading businesses, growth in the U.S. by working as a connected team, and continued revenue growth through connectivity by furthering the innovative remittance and foreign exchange services offered to personal banking and wealth management clients across our bank.

## Strengthening our leadership team

As part of our long-term growth strategy, a number of members of our Executive Committee took on new or expanded accountabilities this year, as we continue to invest in the depth of our leadership team and position leaders to draw on their skills in new areas of our bank. This further strengthens our client-focused culture and connectivity across our bank in support of our clients.

## Building an inclusive, sustainable future

As the economy moves towards recovery, we all have an opportunity to reshape our future economy as one that is more inclusive and more sustainable, reflective of the full capabilities of our collective intellectual capital.

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture. But there is more we can do.

As social unrest grew in 2020, I had the opportunity to speak with many of our team members from the Black community and I heard first-hand their stories of the effects of racism in their personal and professional lives.

As a team, we are taking decisive action to eliminate racism in all its forms. I was proud to take on the role of co-Chair for the BlackNorth Initiative to help drive action on this important issue. Our bank also announced specific measures to attract and develop talented team members from the Black community, create new learning opportunities to help disrupt anti-Black racism and direct over \$1,000,000 of our corporate donations to organizations supporting Black communities in North America. These measures are in addition to our existing commitments in hiring and developing people of colour, persons with disabilities and Indigenous peoples. A more inclusive bank is a stronger bank, better positioned to meet the needs of our clients.

Further, we have an opportunity to build a more sustainable economy through the coming economic recovery. Within our Capital Markets business we expanded our team of experts in sustainable finance and renewable energy again this year, and we held our first-ever Sustainability Conference bringing together industry leaders from a variety of sectors to map out a path to a more sustainable future. Across our bank, we continue to make progress on our own targets in areas such as a reduction in greenhouse gas emissions from our operations. As well, we have achieved \$42 billion of our \$150 billion sustainable finance target by 2027 as we support our clients in transitioning to the low-carbon economy of the future.

## Executive Team

| Name | Title |
|---|---|
| **Victor G. Dodig** | President and Chief Executive Officer |
| **Shawn Beber** | Senior Executive Vice-President and Chief Risk Officer |
| **Michael G. Capatides** | Senior Executive Vice-President and Group Head, U.S. Region; President and CEO, CIBC Bank USA |
| **Harry Culham** | Senior Executive Vice-President and Group Head, Capital Markets |
| **Laura Dottori-Attanasio** | Senior Executive Vice-President and Group Head, Personal and Business Banking, Canada |
| **Jon Hountalas** | Senior Executive Vice-President and Group Head, Commercial Banking and Wealth Management, Canada |
| **Christina Kramer** | Senior Executive Vice-President and Group Head, Technology, Infrastructure and Innovation |
| **Kikelomo Lawal** | Executive Vice-President and Chief Legal Officer |
| **Hratch Panossian** | Senior Executive Vice-President and Chief Financial Officer and Enterprise Strategy |
| **Sandy Sharman** | Senior Executive Vice-President and Group Head, People, Culture and Brand |

Our bank has a proud tradition of supporting our communities, and our commitment continued in 2020. As charities and community organizations faced a shortfall in donations as a result of the pandemic, we contributed \$750,000 to organizations that would face increased demand including food banks and mental health services. Later in the year, working together with the Canadian Cancer Society, we reimagined the CIBC Run for the Cure into a virtual event and helped to raise \$2 million as a team for this vitally important cause.

## Looking ahead to 2021 and beyond

The need for advice and the value of relationships amidst changing market conditions have never been higher. To attract new clients and drive growth, banks will need to invest in their infrastructure and advice capabilities to enable the right conversations with clients at this pivotal moment for so many families and businesses. We believe our strategy positions us well to succeed in this evolving market.

Our view is that clients will continue to embrace digital. It will form an important touchpoint as part of client relationships, for both everyday transactions and increasingly, for advice and virtual engagement. We will build on our leadership in this area.

The economic recovery will be led by the private economy, with mid-market businesses playing a major role. Our investments in this market pre-pandemic and our focus on our clients during the crisis will pay long-term dividends as growth returns. We will continue to enhance our capabilities in the U.S. and continue to invest in our team of relationship managers in Canada to help businesses navigate this challenging period. Relationships in this market are often multi-generational, and the foundation we are laying today as the relationship leader will have long-term benefits for our bank.

As well, we will continue to build on our differentiated Capital Markets business model, meeting the needs of our core clients while growing our recurring, fee-based earnings within this business as well as across our Wealth Management businesses.

Our bank is well positioned for the changes occurring in the market for financial services and in the broader economy. We’ve transformed our culture around our clients and we’ve lived our purpose at a time when relationships are becoming entrenched as the primary value proposition for financial institutions, which positions us well for continued growth.

We’re investing in our team – the foundation of our relationship-focused growth strategy. In 2021, we’ll begin moving in to CIBC Square, our new global headquarters, as part of a broader workforce modernization effort that will further the connectivity across our bank that enables our relationship-focused approach to meeting the needs of our clients. We were again recognized this year as one of Canada’s Top 100 employers and best diversity employers, a reflection of our focus on building an inclusive culture where every team member can achieve their ambitions.

I am incredibly proud of our CIBC team for their efforts during a crisis. I am equally proud of the work we’ve done together to be a leader in the economy of the future. Our bank is well positioned to help clients achieve their ambitions and drive growth in the years ahead.

Victor G. Dodig, President and Chief Executive Officer

# Message from the Chair of the Board

## Building a sustainable, inclusive bank

2020 has been a challenging year for all of us! During this year of unprecedented difficulties, your Board has sought to maintain a long-term focus on the trends shaping our industry while offering our full support to management as CIBC moved decisively to meet the needs of clients amidst the global pandemic.

2020 was a year of renewal for your Board. We welcomed Charles Brindamour, Chief Executive Officer of Intact Financial Corporation as a Director, as Linda Hasenfratz retired from our Board after 15 years of outstanding service as a Director.

We also oversaw succession planning across our senior management team, further developing leaders across the bank and bringing some new faces to the senior executive team. As we move into 2021, I am pleased that following her retirement, Mary Lou Maher, KPMG Canadian Managing Partner, Quality & Risk and Global Head of Inclusion and Diversity, will be put forward for election at our next annual meeting.

In 2020 we also took steps to accelerate our inclusion and diversity strategy, including a new goal to have 4% of board-approved executive roles based in Canada held by leaders from the Black community by 2023, as part of the bank’s broader target to have 22% representation of visible minorities in board-approved executive roles by 2022. While we seek to achieve gender parity on the Board, we are proud that 40% of your Board members are women, ahead of our target to have at least 30% women and men. In addition, the diversity policy of your Board was updated to emphasize the Board’s commitment to having its membership better reflect the background of CIBC employees and the clients and communities we serve.

After 16 years as a Director including the last six as your Chair of the Board, I will be retiring at the annual meeting in April. As I look back over my time as Chair, I believe we achieved much together. I am confident that CIBC has the right strategy, culture, and a deep leadership team to build a relationship-oriented bank for a modern world. I am pleased that Katharine B. Stevenson, who has served on the CIBC Board since 2011, has been appointed Chair of the Board, effective April 8, 2021, upon her election as a director at our annual meeting.

In closing, I would like to thank your CEO, Victor Dodig and your management team for their leadership throughout this year full of surprises. On behalf of your Board, I also would like to thank every member of CIBC’s team for their passion in living our purpose. We are grateful for everything you do.

The Honourable John P. Manley, Chair of the Board

# Enhanced Disclosure Task Force

The Enhanced Disclosure Task Force (EDTF), established by the Financial Stability Board, released its report “Enhancing the Risk Disclosures of Banks” in 2012, which included thirty-two disclosure recommendations. The index below provides the listing of these disclosures, along with their locations. EDTF disclosures are located in our management’s discussion and analysis, consolidated financial statements, and supplementary packages, which may be found on our website (www.cibc.com). No information on CIBC’s website, including the supplementary packages, should be considered incorporated herein by reference.

| Topics | Recommendations | Disclosures | Management’s discussion and analysis Page references | Consolidated financial statements Page references | Supplementary regulatory capital disclosure Pillar 3 Report and |
|---|---|---|---|---|---|
| General | 1 | Index of risk information – current page | | | |
| | 2 | Risk terminology and measures $^{(1)}$ | 71–72 | | |
| | 3 | Top and emerging risks | 50 | | |
| | 4 | Key future regulatory ratio requirements | 36, 39, 76, 78 | 166 | 9, 16 |
| **Risk governance, risk management and business model** | 5 | Risk management structure | 44, 45 | | |
| | 6 | Risk culture and appetite | 43, 46, 47 | | |
| | 7 | Risks arising from business activities | 48, 53 | | |
| | 8 | Bank-wide stress testing | 31, 49, 57, 71, 74 | | |
| **Capital adequacy and risk weighted assets** | 9 | Minimum capital requirements | 31 | 166 | |
| | 10 | Components of capital and reconciliation to the consolidated regulatory balance sheet | 36 | 8–11 | |
| | 11 | Regulatory capital flow statement | 37 | 12 | |
| | 12 | Capital management and planning | 39 | 166 | |
| | 13 | Business activities and risk-weighted assets | 38, 53 | 4 | |
| | 14 | Risk-weighted assets and capital requirements | 33, 38 | 4 | |
| | 15 | Credit risk by major portfolios | 56–61 | 27–36 | |
| | 16 | Risk-weighted assets flow statement | 38 | 4, 5 | |
| | 17 | Back-testing of models | 48, 57, 70 | 69, 70 | |
| **Liquidity** | 18 | Liquid assets | 75 | | |
| **Funding** | 19 | Encumbered assets | 75 | | |
| | 20 | Contractual maturity of assets, liabilities and off-balance sheet instruments | 79 | | |
| | 21 | Funding strategy and sources | 77 | | |
| **Market risk** | 22 | Reconciliation of trading and non-trading portfolios to the consolidated balance sheet | 69 | | |
| | 23 | Significant trading and non-trading market risk factors | 69–73 | | |
| | 24 | Model assumptions, limitations and validation procedures | 69–73 | | |
| | 25 | Stress testing and scenario analysis | 31, 71 | | |
| **Credit risk** | 26 | Analysis of credit risk exposures | 58–67 | 138–145, 186 | 6–7, 65–68 |
| | 27 | Impaired loan and forbearance policies | 55, 65, 85 | 116 | |
| | 28 | Reconciliation of impaired loans and the allowance for credit losses | 65 | 139 | |
| | 29 | Counterparty credit risk arising from derivatives | 55, 59 | 156–157 | 68, 35 $^{(2)}$ |
| | 30 | Credit risk mitigation | 55, 61 | 156–157 | 20, 53, 68 |
| **Other risks** | 31 | Other risks | 80–82 | | |
| | 32 | Discussion of publicly known risk events | 80 | 179 | |

$^{(1)}$ A detailed glossary of our risk and capital terminology is included on page 198.
$^{(2)}$ Included in supplementary financial information package.

# Management’s discussion and analysis

## Management’s discussion and analysis

Management’s discussion and analysis (MD&A) is provided to enable readers to assess CIBC’s financial condition and results of operations as at and for the year ended October 31, 2020, compared with prior years. The MD&A should be read in conjunction with the audited consolidated financial statements. Unless otherwise indicated, all financial information in this MD&A has been prepared in accordance with International Financial Reporting Standards (IFRS or GAAP) and all amounts are expressed in Canadian dollars. Certain disclosures in the MD&A have been shaded as they form an integral part of the consolidated financial statements. The MD&A is current as of December 2, 2020. Additional information relating to CIBC, including the Annual Information Form, is available on SEDAR at www.sedar.com and on the United States (U.S.) Securities and Exchange Commission’s (SEC) website at www.sec.gov. No information on CIBC’s website (www.cibc.com) should be considered incorporated herein by reference. A glossary of terms used in the MD&A and the audited consolidated financial statements is provided on pages 196 to 202 of this Annual Report.

### 2 External reporting changes

* **2 Overview** (p. 8)
* **2 CIBC’s strategy** (p. 8)
* **2 Performance against objectives** (p. 8)
* **5 Financial highlights** (p. 9)
* **6 Economic and market environment** (p. 10)
    * **6 Year in review – 2020** (p. 10)
    * **6 Outlook for calendar year 2021** (p. 11)
* **7 Significant events** (p. 12)
* **8 Financial performance overview** (p. 14)
    * **8 2020 Financial results review** (p. 14)
    * **9 Net interest income and margin** (p. 15)
    * **9 Non-interest income** (p. 15)
    * **10 Trading activities (TEB)** (p. 16)
    * **10 Provision for credit losses** (p. 16)
    * **10 Non-interest expenses** (p. 17)
    * **11 Taxes** (p. 18)
    * **11 Foreign exchange** (p. 18)
    * **12 Fourth quarter review** (p. 19)
    * **13 Quarterly trend analysis** (p. 20)
    * **14 Review of 2019 financial performance** (p. 21)
* **16 Non-GAAP measures** (p. 22)
* **19 Strategic business units overview** (p. 23)
    * **20 Canadian Personal and Business Banking** (p. 24)
    * **22 Canadian Commercial Banking and Wealth Management** (p. 26)
    * **24 U.S. Commercial Banking and Wealth Management** (p. 28)
    * **26 Capital Markets** (p. 30)
    * **29 Corporate and Other** (p. 32)
* **30 Financial condition** (p. 33)
    * **30 Review of condensed consolidated balance sheet** (p. 33)
    * **31 Capital management** (p. 35)
    * **41 Off-balance sheet arrangements** (p. 37)
* **43 Management of risk** (p. 39)
* **83 Accounting and control matters** (p. 50)
    * **83 Critical accounting policies and estimates** (p. 50)
    * **88 Accounting developments** (p. 53)
    * **89 Other regulatory developments** (p. 54)
    * **90 Related-party transactions** (p. 55)
    * **90 Policy on the Scope of Services of the Shareholders’ Auditor** (p. 55)
    * **90 Controls and procedures** (p. 55)
* **91 Supplementary annual financial information** (p. 56)

## A NOTE ABOUT FORWARD-LOOKING STATEMENTS

From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this Annual Report, in other filings with Canadian securities regulators or the SEC and in other communications. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-looking statements under applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements made in the “Message from the President and Chief Executive Officer”, “Overview – Performance against objectives”, “Economic and market environment – Outlook for calendar year 2021”, “Significant events”, “Financial performance overview – Taxes”, “Strategic business units overview – Canadian Personal and Business Banking”, “Strategic business units overview – Canadian Commercial Banking and Wealth Management”, “Strategic business units overview – U.S. Commercial Banking and Wealth Management”, “Strategic business units overview – Capital Markets”, “Financial condition – Capital management”, “Financial condition – Off-balance sheet arrangements”, “Management of risk – Risk overview”, “Management of risk – Top and emerging risks”, “Management of risk – Credit risk”, “Management of risk – Market risk”, “Management of risk – Liquidity risk”, “Accounting and control matters – Critical accounting policies and estimates”, “Accounting and control matters – Accounting developments”, “Accounting and control matters – Other regulatory developments” and “Accounting and control matters – Controls and procedures” sections of this report and other statements about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies, the regulatory environment in which we operate and outlook for calendar year 2021 and subsequent periods. Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “forecast”, “target”, “objective” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could”. By their nature, these statements require us to make assumptions, including the economic assumptions set out in the “Economic and market environment – Outlook for calendar year 2021” section of this report, and are subject to inherent risks and uncertainties that may be general or specific. Given the continuing impact of the coronavirus (COVID-19) pandemic on the global economy, financial markets, and our business, results of operations, reputation and financial condition and the expectation that oil prices will remain well below year-ago levels, there is inherently more uncertainty associated with our assumptions as compared to prior periods. A variety of factors, many of which are beyond our control, affect our operations, performance and results, and could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements. These factors include: the occurrence, continuance or intensification of public health emergencies, such as the COVID-19 pandemic, and any related government policies and actions; credit, market, liquidity, strategic, insurance, operational, reputation, legal, conduct, regulatory and environmental and related social risk; currency value and interest rate fluctuations, including as a result of market and oil price volatility; the effectiveness and adequacy of our risk management and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate, including the Organisation for Economic Co-operation and Development Common Reporting Standard, and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking Supervision’s global standards for capital and liquidity reform, and those relating to bank recapitalization legislation and the payments system in Canada; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions, and interest rate and liquidity regulatory guidance; the resolution of legal and regulatory proceedings and related matters; the effect of changes to accounting standards, rules and interpretations; changes in our estimates of reserves and allowances; changes in tax laws; changes to our credit ratings; political conditions and developments, including changes relating to economic or trade matters; the possible effect on our business of international conflicts and terrorism; natural disasters, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; potential disruptions to our information technology systems and services; increasing cyber security risks which may include theft or disclosure of assets, unauthorized access to sensitive information, or operational disruption; social media risk; losses incurred as a result of internal or external fraud; anti-money laundering; the accuracy and completeness of information provided to us concerning clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates or associates; intensifying competition from established competitors and new entrants in the financial services industry including through internet and mobile banking; technological change; global capital market activity; changes in monetary and economic policy; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations, including increasing Canadian household debt levels and global credit risks; our success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels; changes in client spending and saving habits; our ability to attract and retain key employees and executives; our ability to successfully execute our strategies and complete and integrate acquisitions and joint ventures; the risk that expected benefits of an acquisition, merger or divestiture will not be realized within the expected time frame or at all; and our ability to anticipate and manage the risks associated with these factors. This list is not exhaustive of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Any forward-looking statements contained in this report represent the views of management only as of the date hereof and are presented for the purpose of assisting our shareholders and financial analysts in understanding our financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statement that is contained in this report or in other communications except as required by law.

## 2 External reporting changes

* **Changes made to our business segments**
    * We changed the way that we allocate capital to our strategic business units (SBUs). Previously, we utilized an economic capital model to attribute capital to our SBUs and calculate segmented return on equity. Effective November 1, 2019, capital is allocated to the SBUs based on the estimated amount of regulatory capital required to support their businesses. Segmented return on equity is a non-GAAP measure (see the “Non-GAAP measures” section for additional details).
    * The transfer pricing methodology used by Treasury was enhanced to align with the changes that we made to our capital allocation methodology as discussed above. Concurrently with this change, we also made other updates and enhancements to our funds transfer pricing methodology as well as minor updates to certain allocation methodologies.
    
    Prior period amounts have been revised accordingly. The changes impacted the results of our SBUs and how we measure the performance of our SBUs. There was no impact on our consolidated financial results from these changes.

* **Adoption of IFRS 16 “Leases”**
    Effective November 1, 2019, we adopted IFRS 16 “Leases” (IFRS 16) using the modified retrospective approach, without restatement of comparative periods.

## Overview

CIBC is a leading North American financial institution with a market capitalization of \$44 billion and a Basel III Common Equity Tier 1 (CET1) ratio of 12.1% as at October 31, 2020. Through our four SBUs – Canadian Personal and Business Banking, Canadian Commercial Banking and Wealth Management, U.S. Commercial Banking and Wealth Management, and Capital Markets – CIBC provides a full range of financial products and services to 10 million personal banking, business, public sector and institutional clients in Canada, the U.S. and around the world. We have approximately 44,000 employees dedicated to providing our clients with banking solutions for a modern world, delivering consistent and sustainable earnings growth for our shareholders, and giving back to our communities.

## CIBC’s strategy

At CIBC, our goal is to deliver superior client experience and top-tier shareholder returns while maintaining our financial strength. To achieve this, we are executing on three strategic priorities:

* Focusing on key client segments to accelerate our earnings growth;
* Simplifying and transforming to deliver a modern relationship-banking proposition; and
* Advancing our purpose-driven culture.

## Performance against objectives

For many years, CIBC has reported a scorecard of financial measures that we use to evaluate and report on our progress to external stakeholders. These measures can be categorized into four key areas – earnings growth, operational efficiency, profitability, and balance sheet strength. We have set targets for each of these measures over the medium term, which we define as three to five years.

On March 11, 2020, the outbreak of COVID-19 was officially declared a pandemic by the World Health Organization (WHO). The COVID-19 pandemic has had a significant adverse impact on the global economy, and has negatively impacted our results in fiscal 2020. Until there is greater certainty concerning the dissemination of an effective mass-produced vaccine, the COVID-19 pandemic is expected to continue to impact our ability to achieve our performance objectives.

### Earnings growth$^{(1)}$

To assess our earnings growth, we monitor our earnings per share (EPS). Our through-the-cycle target is an average annual EPS growth of 5% to 10%. In 2020, against a backdrop of a challenging economic environment, reported and adjusted$^{(1)}$ diluted EPS declined by 27% and 19%, respectively.

Going forward, we are maintaining our target to deliver average annual EPS growth of 5% to 10% through the cycle.

**Reported diluted EPS**
(\$)

```mermaid
bar chart
    title Reported diluted EPS ($)
    section EPS
        16: 10.70
        17: 11.24
        18: 11.65
        19: 11.19
        20: 8.22
```

**Adjusted diluted EPS$^{(1)}$**
(\$)

```mermaid
bar chart
    title Adjusted diluted EPS(1) ($)
    section EPS
        16: 10.22
        17: 11.11
        18: 12.21
        19: 11.92
        20: 9.69
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## Operational efficiency

We have two metrics to measure operational efficiency:

### 1. Efficiency ratio$^{(1)}$

To assess how well we use our resources to generate net income, we measure and monitor our efficiency ratio, defined as the ratio of non-interest expenses to total revenue. In 2020, our reported and adjusted$^{(1)}$ efficiency ratios were 60.6% and 55.8%, respectively, compared with 58.3% and 55.5% in 2019.

**Reported efficiency ratio**
$(\%)$

```mermaid
bar chart
    title Reported efficiency ratio (%)
    section Ratio
        16: 59.7
        17: 58.8
        18: 57.5
        19: 58.3
        20: 60.6
```

**Adjusted efficiency ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted efficiency ratio(1) (%)
    section Ratio
        16: 58.0
        17: 57.2
        18: 55.6
        19: 55.5
        20: 55.8
```

### 2. Operating leverage$^{(1)}$

Operating leverage, defined as the difference between the year-over-year percentage change in revenue (on a taxable equivalent basis (TEB)) and year-over-year percentage change in non-interest expenses, is a measure of the relative growth rates of a bank’s revenue and expenses. In 2020, our reported and adjusted$^{(1)}$ operating leverage was (4.0)% and (0.6)%, respectively.

Going forward, our target is to deliver positive operating leverage through the cycle, which will improve our efficiency ratio over time.

**Reported operating leverage**
$(\%)$

```mermaid
bar chart
    title Reported operating leverage (%)
    section Leverage
        16: 7.3
        17: 1.6
        18: 2.4
        19: (1.5)
        20: (4.0)
```

**Adjusted operating leverage$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted operating leverage(1) (%)
    section Leverage
        16: 2.8
        17: 1.5
        18: 3.2
        19: 0.2
        20: (0.6)
```

## Profitability

We have three metrics to measure profitability, including two shareholder value targets:

### 1. Return on common shareholders’ equity (ROE)$^{(1)}$

ROE is a key measure of profitability. In 2020, our reported and adjusted$^{(1)}$ ROE were at 10.0% and 11.7%, respectively.

Going forward, we will continue to target a strong ROE of at least 15% through the cycle.

**Reported return on common shareholders’ equity**
$(\%)$

```mermaid
bar chart
    title Reported return on common shareholders’ equity (%)
    section ROE
        16: 19.9
        17: 18.3
        18: 16.6
        19: 14.5
        20: 10.0
```

**Adjusted return on common shareholders’ equity$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted return on common shareholders’ equity(1) (%)
    section ROE
        16: 19.0
        17: 18.1
        18: 17.4
        19: 15.4
        20: 11.7
```

### 2. Dividend payout ratio$^{(1)}$

We have consistently delivered adjusted$^{(1)}$ dividend payout ratios in the range of 40% to 50% of earnings to common shareholders. Our key criteria for considering dividend increases are our current level of payout relative to our target and our view on the sustainability of our current earnings level through the cycle. In 2020, our reported and adjusted$^{(1)}$ dividend payout ratios were 70.7% and 60.0%, respectively.

Going forward, we will continue to target a dividend payout ratio of 40% to 50% through the cycle.

**Reported dividend payout ratio**
$(\%)$

```mermaid
bar chart
    title Reported dividend payout ratio (%)
    section Payout
        16: 44.3
        17: 45.5
        18: 45.6
        19: 49.9
        20: 70.7
```

**Adjusted dividend payout ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted dividend payout ratio(1) (%)
    section Payout
        16: 46.4
        17: 46.2
        18: 43.4
        19: 46.9
        20: 60.0
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## 3. Total shareholder return (TSR)

TSR is the ultimate measure of shareholder value, and the output of delivering against the financial targets within our control. We have an objective to deliver a TSR that exceeds the industry average, which we have defined as the Standard & Poor’s (S&P)/Toronto Stock Exchange (TSX) Composite Banks Index, over a rolling five-year period. For the five years ended October 31, 2020, our TSR was 27.7%, which was below the Banks Index return over the same period of 35.3%.

**Rolling five-year TSR**
$(\%)$

```mermaid
xychart-beta
    title Rolling five-year TSR (%)
    x-axis [Oct-19, Jan-20, Apr-20, Jul-20, Oct-20]
    y-axis "Percentage" 0 --> 125
    line "CIBC 27.7%" [34.2, 34.2, 28.3, 27.5, 27.7]
    line "S&P/TSX Composite Index 34.2%" [34.2, 34.2, 32.5, 33.3, 34.2]
    line "S&P/TSX Composite Banks Index 35.3%" [35.3, 35.3, 33.8, 34.4, 35.3]
```

## Balance sheet strength

Maintaining a strong balance sheet is foundational to our long-term success. Our goal is to maintain strong capital and liquidity positions. We look to constantly balance our objectives of holding a prudent amount of excess capital for unexpected events and environmental uncertainties, investing in our core businesses, growing through acquisitions and returning capital to our shareholders.

### 1. Basel III Common Equity Tier 1 (CET1) ratio

At the end of 2020, our Basel III CET1 ratio was 12.1%, well above the current regulatory target set by the Office of the Superintendent of Financial Institutions (OSFI) of 9.0%. In response to the COVID-19 pandemic, OSFI directed that all federally regulated financial institutions halt share buybacks and dividend increases until further notice.

**CET1 ratio**
$(\%)$

```mermaid
bar chart
    title CET1 ratio (%)
    section Ratio
        16: 11.3
        17: 11.4
        18: 11.6
        19: 11.6
        20: 12.1
```

### 2. Liquidity Coverage Ratio (LCR)

Our ability to meet our financial obligations is measured through the LCR ratio. It measures unencumbered high quality liquid assets (HQLA) that can be converted into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario. The LCR standard requires that, absent a situation of financial stress, the value of the ratio be no lower than 100%.

For the quarter ended October 31, 2020, our three-month daily average LCR was 145% compared to 125% for the same period last year.

**Liquidity coverage ratio**
$(\%)$

```mermaid
bar chart
    title Liquidity coverage ratio (%)
    section Ratio
        16: 124
        17: 128
        18: 120
        19: 125
        20: 145
```

## Client experience

Our ambition is to be the leader in client experience as measured by external client surveys and our internal CIBC Enterprise Net Promoter Score (CIBC CXNPS). Our client-focused culture is resonating with the clients we serve as evidenced by our strongest scores to date from both the IPSOS Customer Service Index and the J.D. Power Client Satisfaction (SAT) study. Our internal CIBC CXNPS is a balanced weighting of internal net promoter scores across our businesses. As of October 31, 2020, the CIBC CXNPS score was 62.8, a 2-point increase over 2019.

CIBC was ranked the top performing brand during the pandemic as a result of our focus and commitment to clients. Over 90% of CIBC clients surveyed feel the same or more positive about CIBC as a result of our response to COVID-19. CIBC also received IPSOS Financial Service Excellence awards for our mobile banking, live agent telephone banking and ATMs.

Going forward, we will continue to build on this momentum to further enhance the quality and consistency of our service delivery to our clients in support of our purpose-driven culture and strategy to be a modern, innovative relationship-oriented bank.

# Financial highlights

| For the year ended October 31 | 2020 | 2019 |
|---|---|---|
| **Financial results (\$ millions)** | | |
| Revenue | 18,741 | 18,611 |
| Provision for credit losses | 2,489 | 1,286 |
| Expenses | 11,362 | 10,856 |
| Reported/Adjusted net income$^{(1)}$ | 3.8/4.4 | 5.1/5.4 |
| **Financial measures (%)** | | |
| Reported/Adjusted efficiency ratio$^{(1)}$ | 60.6/55.8 | 58.3/55.5 |
| Reported/Adjusted return on common shareholders’ equity (ROE)$^{(1)}$ | 10.0/11.7 | 14.5/15.4 |
| Net interest margin | 1.50 | 1.65 |
| Total shareholder return | (5.9) | 4.2 |
| **Common share information** | | |
| Reported/Adjusted earnings per share$^{(1)}$ | 8.22/9.69 | 11.19/11.92 |
| Market capitalization | 44.4 | 50.0 |
| **Dividends (%)** | | |
| Dividend yield | 5.9 | 5.0 |
| Reported/Adjusted dividend payout ratio$^{(1)}$ | 70.7/60.0 | 49.9/46.9 |

**Net income by strategic business unit**

| SBU | 2020 | 2019 |
|---|---|---|
| Canadian Personal and Business Banking | 2.0 | 2.3 |
| Canadian Commercial Banking and Wealth Management | 1.2 | 1.3 |
| U.S. Commercial Banking and Wealth Management | 0.4 | 0.7 |
| Capital Markets | 1.1 | 1.0 |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.

## Financial scorecard

| Metric | Target | 2020 reported results | 2020 adjusted results$^{(1)}$ |
|---|---|---|---|
| Earnings per share (EPS) growth$^{(2)}$ | 5%–10% annually | \$8.22, down 27% from 2019 | \$9.69, down 19% from 2019 |
| Return on equity (ROE)$^{(2)}$ | 15%+ | 10.0% | 11.7% |
| Efficiency ratio | 52% run rate in 2022 | 60.6%, increased 230 basis points from 2019 | 55.8%, increased 30 basis points from 2019 |
| Basel III CET1 ratio | Strong buffer to regulatory minimum | 12.1% | |
| Dividend payout ratio$^{(2)}$ | 40%–50% | 70.7% | 60.0% |
| Total shareholder return | Outperform the S&P/TSX Composite Banks Index over a rolling five-year period | CIBC – 27.7% Banks Index – 35.3% | |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.
$^{(2)}$ Through the cycle.

## Environmental, social and governance (ESG) scorecard

| Material topics | Target | 2020 performance | Status |
|---|---|---|---|
| **Client experience** | • Continuous improvement | • CIBC Enterprise Net Promoter Score was 62.8, a two point increase from 2019 | $\checkmark$ |
| **Privacy and information security** | • No privacy findings against CIBC by regulators | • 3 privacy findings against CIBC by regulators$^{(1)}$ | $\text{X}^{(1)}$ |
| **Sustainable finance** | • \$150 billion in support for environmental and sustainable financing over 10 years (2018–2027) | • \$15.7 billion in environmental and sustainable financing $28\%^{(2)}$ achieved to date (\$42 billion) | $\checkmark$ |
| **Inclusive banking** | • Engage 200,000 clients in financial education seminars and events over three years (2019–2021) | • 2020 performance will be updated in CIBC’s 2020 Sustainability Report | $\text{N/A}$ |
| | • Provide \$9 billion in new loans to SMEs over four years (2020–2023) | • \$6.9 billion in new loans to small and medium-sized enterprises (SMEs) $77\%$ achieved to date | $\checkmark$ |
| | • Grow our commercial banking Indigenous business by 10% in 2020 | • 23% growth in commercial banking Indigenous business | $\checkmark$ |
| **Belonging at work** | • At least 30% women and at least 30% men on the CIBC Board of Directors | • 40% women on the CIBC Board of Directors | $\checkmark$ |
| | • At a minimum, between 35% and 40% women in board-approved executive roles by 2022 (Global) | • 33% women in board-approved executive roles (Global) | $\checkmark$ |
| | • At least 22% visible minorities in board-approved executive roles by 2022 (Canada) | • 20% visible minorities in board-approved executive roles (Canada) | $\checkmark$ |
| | • 4% Black leaders in board-approved executive roles by 2023 (Canada) | • 3% leaders from the Black community in board-approved executive roles (Canada) | $\checkmark$ |
| | • 8%–9% of external hires in 2020 are persons with disabilities (Canada) | • 5% of external hires are persons with disabilities (Canada)$^{(3)}$ | $\text{X}^{(3)}$ |
| | • 2% of external hires in 2020 are Indigenous peoples (Canada) | • 3% of external hires are Indigenous peoples (Canada) | $\checkmark$ |
| | • At least 5% of student recruitment from the Black community | • Student recruitment from the Black community | Starting in 2021 |
| **Employee engagement** | • CIBC’s employee engagement score >109% of the Willis Towers Watson global financial services norm | • CIBC’s engagement score of 90% was 111% of the Willis Towers Watson global financial services norm | $\checkmark$ |
| | • Voluntary turnover <12.5% in 2020 (Canada) | • 7.3% voluntary turnover (Canada) | $\checkmark$ |
| | • 100% of employees will have performance reviews in 2020 | • 100% of employees had performance reviews | $\checkmark$ |
| **Community relationships** | • \$350 million in total corporate and employee giving over five years (2019–2023) | • Invested \$75 million in community organizations across Canada and the U.S. $44\%$ achieved to date (\$154 million) | $\checkmark$ |
| **Business ethics** | • 100% employee completion rate for ethical training on our Code of Conduct | • 100% of employees completed CIBC ethical training on our Code of Conduct | $\checkmark$ |

$^{(1)}$ Cases against CIBC by the Office of the Privacy Commissioner of Canada.
$^{(2)}$ Represents the cumulative results of 2018 through 2020.
$^{(3)}$ The full picture of our hiring for persons with disabilities is likely not reflected due to low self-disclosure in the survey utilized for data collection.

## Our response to COVID-19

The COVID-19 pandemic triggered significant economic disruption and public health concerns around the world. From the largest corporations to families planning for their future, many clients faced a crisis that affected their immediate well-being and put their long-term ambitions at risk.

Drawing on our 153-year history of being there for our clients in challenging times, everyone across our bank immediately understood the role we needed to play – for our clients, for our communities, and for each other.

And we did.

From our teams in Asia and Europe who were first to initiate business continuity plans to support our clients through the pandemic, to our teams across North America who were proactive in preparing for this disruption and stepped forward when called on, our global team delivered for all of our stakeholders and honoured our history.

### Our team

Our global team of 44,000 was the driving force behind our strong, client-focused response to the pandemic. Protecting their health and well-being, along with that of our clients and our communities, has been our top priority.

As public health measures were being enacted, an unprecedented 70% of our team members switched to working remotely. We stayed connected and focused on our clients thanks to our investments in technology and collaboration tools that facilitated a smooth transition.

For team members in vital roles who needed to be on-site, we implemented enhanced safety protocols and provided additional financial compensation, as well as activating back-up work locations and adjusting hours in our banking centres to ensure we continued to serve our clients.

In addition, we provided employees with wellness resources and up to 10 additional paid days off to ensure they were taking care of themselves as they focused all of their efforts on supporting our clients through a challenging period.

In our 2020 employee survey, 88% of our team members said CIBC helped them manage their well-being during the pandemic. This was an important source of pride for our team members. We also saw our employee engagement score increase to 90, an all-time high for CIBC.

### Our clients

As the disruption caused by COVID-19 created pressure on the finances of individuals, families and businesses alike, our entire bank leaned in with purpose as we leveraged the strength and commitment of our team to implement a range of support measures to help our clients during a challenging time.

During the year, we assisted more than 500,000 clients facing financial hardship through payment deferral programs on mortgages, loans and credit cards, and reduced interest rates on credit cards, in many cases providing financial relief proactively.

Throughout this period we worked to ensure our clients had access to much-needed funds being made available through government programs, including the Canada Emergency Business Account and the Paycheck Protection Program in the U.S.

Recognizing the urgent need to provide financial support and relief quickly and in a radically simple way, in many cases our team launched fully digital solutions for clients.

In addition, we provided “front-of-the-line” access to seniors and persons with disabilities and proactively offered assistance to clients identified to have the greatest need. We’ve also supported our large corporate clients and entrepreneurs across our global footprint to ensure they, in turn, can take care of their teams and continue to play a role in moving our economy forward.

As a result of our focus and commitment to our clients, CIBC was recognized as the top performing brand during the first wave of the pandemic.

### Our communities

As the impacts of COVID-19 continue to be felt across our communities, our promise is to help revive the sector by harnessing our investments and genuinely caring culture. This includes helping through our people and financial support.

To date Team CIBC has delivered nearly 1,000 hours of COVID-19 related volunteer time. In addition, we increased donations for those most at risk and reassured our community partners that our support would remain in place. Incremental donations included emergency funding for Community Food Centres Canada, United Way, Kids Help Phone, Canadian Blood Services and the American Red Cross. We also supported frontline health-care workers with Aventura points to enable them to take a well-deserved break through our Holidays for Heroes program, as well as supporting the next generation of health care workers achieve their ambitions for a career in health care through the CIBC Future Heroes Fund Bursary Program.

And we continued our long-standing support for those fighting cancer, as we rallied behind a virtual CIBC Run for the Cure, attracting the participation of thousands of Canadians across the country.

# Message from the President and Chief Executive Officer

## Resilient and focused on the future

Drawing on our 153-year history of being there for our clients, we responded to the COVID-19 pandemic by living our purpose – to help make our clients’ ambitions a reality – while delivering a resilient financial performance and advancing our long-term growth strategy in 2020.

> Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.
>
> Victor G. Dodig, President and Chief Executive Officer

Thanks to the tremendous efforts of our team of 44,000 employees globally, we are well positioned to succeed amidst a changing environment in the years ahead and contribute to a more inclusive, sustainable future.

## Financials and 2020 review

Our bank reported earnings in 2020 of \$3.8 billion or \$4.4 billion on an adjusted basis, down 26% and 18% from last year, respectively, primarily as a result of the economic impact of the COVID-19 pandemic. Our capital position remained very strong, with a CET1 ratio of 12.1%, underscoring the strength of our balance sheet as we focus on growing our business in an uncertain economic environment.

Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.

As public health measures such as stay at home directives and physical distancing were introduced to slow the spread of COVID-19, we leveraged our investments in technology in recent years to support our clients. We moved quickly to enable digital-first solutions – including being the first bank to announce our readiness to accept Canada Emergency Business Account (CEBA) applications from business owners in Canada using a fully digital application.

We also acted in line with our purpose by being the first bank to announce reduced credit card interest rates for clients experiencing hardship. We established payment relief programs, as well as priority service for seniors in our banking centres and on the phone. In addition, we made calls to our senior clients to check on their well-being and to help them use mobile and online banking, which saw a surge in demand from clients 65 years of age and over as the pandemic set in. Our bank was recognized as the top performing brand during the peak of COVID-19, a reflection of the measures we took to help our clients.

Our decisive, early action made a challenging time more manageable. In 2020, our bank helped over 500,000 clients with payment relief, and advice when they needed us most.

Our team was the foundation of our client-focused response to the pandemic. At a time of significant disruption and uncertainty, many of our team members seamlessly transitioned to working remotely, while those who needed to be on site to perform essential work were able to do so safely. Our team was steadfast in the face of a challenge, and made a difference in the lives of our clients. I want to thank them for their professionalism and dedication.

Through the pandemic we remained focused on creating a relationship-oriented bank for a modern world. In 2020 we continued to reinvest for long-term growth.

## Revenue by business segment

**\$8.5B** Canadian Personal and Business Banking
**\$4.1B** Canadian Commercial Banking and Wealth Management
**\$2.1B** U.S. Commercial Banking and Wealth Management
**\$3.5B** Capital Markets

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture.

We continued to attract new clients and deliver growth in our Commercial Banking and Wealth Management businesses in the U.S. and Canada. In just one example of our relationship-focused approach to doing business, as the U.S. government rolled out relief programs for business owners to support payrolls, our team of relationship managers called every one of our commercial banking clients to evaluate their needs and work with them to determine if a loan through the relief program would be of help to their business.

Our focus on supporting growth in the private economy and the deep expertise of our relationship managers have helped us to build a robust, high-quality commercial banking portfolio in recent years, and have fueled growth in our wealth management business through new and deeper client relationships that cross business and personal needs. Despite the context of a challenging overall environment, our bank is well positioned to move these businesses forward, both in Canada and the U.S.

In Canadian Personal and Business Banking, we achieved our highest client experience scores on record as we continued to make investments in advice and in our digital capabilities – two areas that remain the foundation of client relationships and growth. In addition, we earned the highest overall satisfaction rating among the Big 5 banks from J.D. Power for our mobile banking app.

We continued to modernize our bank to make it easier for clients to get advice through virtual meetings, and implemented options such as eSignatures to allow clients to sign documentation without needing to leave their home. While we have a continued opportunity to accelerate growth in this area, there are encouraging signs that our efforts are producing results.

Amidst a highly volatile market, we were there with the advice and counsel to help our largest corporate clients navigate market conditions. Our diversified Capital Markets business delivered strong, high-quality growth in 2020, including robust results in our trading businesses, growth in the U.S. by working as a connected team, and continued revenue growth through connectivity by furthering the innovative remittance and foreign exchange services offered to personal banking and wealth management clients across our bank.

## Strengthening our leadership team

As part of our long-term growth strategy, a number of members of our Executive Committee took on new or expanded accountabilities this year, as we continue to invest in the depth of our leadership team and position leaders to draw on their skills in new areas of our bank. This further strengthens our client-focused culture and connectivity across our bank in support of our clients.

## Building an inclusive, sustainable future

As the economy moves towards recovery, we all have an opportunity to reshape our future economy as one that is more inclusive and more sustainable, reflective of the full capabilities of our collective intellectual capital.

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture. But there is more we can do.

As social unrest grew in 2020, I had the opportunity to speak with many of our team members from the Black community and I heard first-hand their stories of the effects of racism in their personal and professional lives.

As a team, we are taking decisive action to eliminate racism in all its forms. I was proud to take on the role of co-Chair for the BlackNorth Initiative to help drive action on this important issue. Our bank also announced specific measures to attract and develop talented team members from the Black community, create new learning opportunities to help disrupt anti-Black racism and direct over \$1,000,000 of our corporate donations to organizations supporting Black communities in North America. These measures are in addition to our existing commitments in hiring and developing people of colour, persons with disabilities and Indigenous peoples. A more inclusive bank is a stronger bank, better positioned to meet the needs of our clients.

Further, we have an opportunity to build a more sustainable economy through the coming economic recovery. Within our Capital Markets business we expanded our team of experts in sustainable finance and renewable energy again this year, and we held our first-ever Sustainability Conference bringing together industry leaders from a variety of sectors to map out a path to a more sustainable future. Across our bank, we continue to make progress on our own targets in areas such as a reduction in greenhouse gas emissions from our operations. As well, we have achieved \$42 billion of our \$150 billion sustainable finance target by 2027 as we support our clients in transitioning to the low-carbon economy of the future.

## Executive Team

| Name | Title |
|---|---|
| **Victor G. Dodig** | President and Chief Executive Officer |
| **Shawn Beber** | Senior Executive Vice-President and Chief Risk Officer |
| **Michael G. Capatides** | Senior Executive Vice-President and Group Head, U.S. Region; President and CEO, CIBC Bank USA |
| **Harry Culham** | Senior Executive Vice-President and Group Head, Capital Markets |
| **Laura Dottori-Attanasio** | Senior Executive Vice-President and Group Head, Personal and Business Banking, Canada |
| **Jon Hountalas** | Senior Executive Vice-President and Group Head, Commercial Banking and Wealth Management, Canada |
| **Christina Kramer** | Senior Executive Vice-President and Group Head, Technology, Infrastructure and Innovation |
| **Kikelomo Lawal** | Executive Vice-President and Chief Legal Officer |
| **Hratch Panossian** | Senior Executive Vice-President and Chief Financial Officer and Enterprise Strategy |
| **Sandy Sharman** | Senior Executive Vice-President and Group Head, People, Culture and Brand |

Our bank has a proud tradition of supporting our communities, and our commitment continued in 2020. As charities and community organizations faced a shortfall in donations as a result of the pandemic, we contributed \$750,000 to organizations that would face increased demand including food banks and mental health services. Later in the year, working together with the Canadian Cancer Society, we reimagined the CIBC Run for the Cure into a virtual event and helped to raise \$2 million as a team for this vitally important cause.

## Looking ahead to 2021 and beyond

The need for advice and the value of relationships amidst changing market conditions have never been higher. To attract new clients and drive growth, banks will need to invest in their infrastructure and advice capabilities to enable the right conversations with clients at this pivotal moment for so many families and businesses. We believe our strategy positions us well to succeed in this evolving market.

Our view is that clients will continue to embrace digital. It will form an important touchpoint as part of client relationships, for both everyday transactions and increasingly, for advice and virtual engagement. We will build on our leadership in this area.

The economic recovery will be led by the private economy, with mid-market businesses playing a major role. Our investments in this market pre-pandemic and our focus on our clients during the crisis will pay long-term dividends as growth returns. We will continue to enhance our capabilities in the U.S. and continue to invest in our team of relationship managers in Canada to help businesses navigate this challenging period. Relationships in this market are often multi-generational, and the foundation we are laying today as the relationship leader will have long-term benefits for our bank.

As well, we will continue to build on our differentiated Capital Markets business model, meeting the needs of our core clients while growing our recurring, fee-based earnings within this business as well as across our Wealth Management businesses.

Our bank is well positioned for the changes occurring in the market for financial services and in the broader economy. We’ve transformed our culture around our clients and we’ve lived our purpose at a time when relationships are becoming entrenched as the primary value proposition for financial institutions, which positions us well for continued growth.

We’re investing in our team – the foundation of our relationship-focused growth strategy. In 2021, we’ll begin moving in to CIBC Square, our new global headquarters, as part of a broader workforce modernization effort that will further the connectivity across our bank that enables our relationship-focused approach to meeting the needs of our clients. We were again recognized this year as one of Canada’s Top 100 employers and best diversity employers, a reflection of our focus on building an inclusive culture where every team member can achieve their ambitions.

I am incredibly proud of our CIBC team for their efforts during a crisis. I am equally proud of the work we’ve done together to be a leader in the economy of the future. Our bank is well positioned to help clients achieve their ambitions and drive growth in the years ahead.

Victor G. Dodig, President and Chief Executive Officer

# Message from the Chair of the Board

## Building a sustainable, inclusive bank

2020 has been a challenging year for all of us! During this year of unprecedented difficulties, your Board has sought to maintain a long-term focus on the trends shaping our industry while offering our full support to management as CIBC moved decisively to meet the needs of clients amidst the global pandemic.

2020 was a year of renewal for your Board. We welcomed Charles Brindamour, Chief Executive Officer of Intact Financial Corporation as a Director, as Linda Hasenfratz retired from our Board after 15 years of outstanding service as a Director.

We also oversaw succession planning across our senior management team, further developing leaders across the bank and bringing some new faces to the senior executive team. As we move into 2021, I am pleased that following her retirement, Mary Lou Maher, KPMG Canadian Managing Partner, Quality & Risk and Global Head of Inclusion and Diversity, will be put forward for election at our next annual meeting.

In 2020 we also took steps to accelerate our inclusion and diversity strategy, including a new goal to have 4% of board-approved executive roles based in Canada held by leaders from the Black community by 2023, as part of the bank’s broader target to have 22% representation of visible minorities in board-approved executive roles by 2022. While we seek to achieve gender parity on the Board, we are proud that 40% of your Board members are women, ahead of our target to have at least 30% women and men. In addition, the diversity policy of your Board was updated to emphasize the Board’s commitment to having its membership better reflect the background of CIBC employees and the clients and communities we serve.

After 16 years as a Director including the last six as your Chair of the Board, I will be retiring at the annual meeting in April. As I look back over my time as Chair, I believe we achieved much together. I am confident that CIBC has the right strategy, culture, and a deep leadership team to build a relationship-oriented bank for a modern world. I am pleased that Katharine B. Stevenson, who has served on the CIBC Board since 2011, has been appointed Chair of the Board, effective April 8, 2021, upon her election as a director at our annual meeting.

In closing, I would like to thank your CEO, Victor Dodig and your management team for their leadership throughout this year full of surprises. On behalf of your Board, I also would like to thank every member of CIBC’s team for their passion in living our purpose. We are grateful for everything you do.

The Honourable John P. Manley, Chair of the Board

# Enhanced Disclosure Task Force

The Enhanced Disclosure Task Force (EDTF), established by the Financial Stability Board, released its report “Enhancing the Risk Disclosures of Banks” in 2012, which included thirty-two disclosure recommendations. The index below provides the listing of these disclosures, along with their locations. EDTF disclosures are located in our management’s discussion and analysis, consolidated financial statements, and supplementary packages, which may be found on our website (www.cibc.com). No information on CIBC’s website, including the supplementary packages, should be considered incorporated herein by reference.

| Topics | Recommendations | Disclosures | Management’s discussion and analysis Page references | Consolidated financial statements Page references | Supplementary regulatory capital disclosure Pillar 3 Report and |
|---|---|---|---|---|---|
| General | 1 | Index of risk information – current page | | | |
| | 2 | Risk terminology and measures $^{(1)}$ | 71–72 | | |
| | 3 | Top and emerging risks | 50 | | |
| | 4 | Key future regulatory ratio requirements | 36, 39, 76, 78 | 166 | 9, 16 |
| **Risk governance, risk management and business model** | 5 | Risk management structure | 44, 45 | | |
| | 6 | Risk culture and appetite | 43, 46, 47 | | |
| | 7 | Risks arising from business activities | 48, 53 | | |
| | 8 | Bank-wide stress testing | 31, 49, 57, 71, 74 | | |
| **Capital adequacy and risk weighted assets** | 9 | Minimum capital requirements | 31 | 166 | |
| | 10 | Components of capital and reconciliation to the consolidated regulatory balance sheet | 36 | 8–11 | |
| | 11 | Regulatory capital flow statement | 37 | 12 | |
| | 12 | Capital management and planning | 39 | 166 | |
| | 13 | Business activities and risk-weighted assets | 38, 53 | 4 | |
| | 14 | Risk-weighted assets and capital requirements | 33, 38 | 4 | |
| | 15 | Credit risk by major portfolios | 56–61 | 27–36 | |
| | 16 | Risk-weighted assets flow statement | 38 | 4, 5 | |
| | 17 | Back-testing of models | 48, 57, 70 | 69, 70 | |
| **Liquidity** | 18 | Liquid assets | 75 | | |
| **Funding** | 19 | Encumbered assets | 75 | | |
| | 20 | Contractual maturity of assets, liabilities and off-balance sheet instruments | 79 | | |
| | 21 | Funding strategy and sources | 77 | | |
| **Market risk** | 22 | Reconciliation of trading and non-trading portfolios to the consolidated balance sheet | 69 | | |
| | 23 | Significant trading and non-trading market risk factors | 69–73 | | |
| | 24 | Model assumptions, limitations and validation procedures | 69–73 | | |
| | 25 | Stress testing and scenario analysis | 31, 71 | | |
| **Credit risk** | 26 | Analysis of credit risk exposures | 58–67 | 138–145, 186 | 6–7, 65–68 |
| | 27 | Impaired loan and forbearance policies | 55, 65, 85 | 116 | |
| | 28 | Reconciliation of impaired loans and the allowance for credit losses | 65 | 139 | |
| | 29 | Counterparty credit risk arising from derivatives | 55, 59 | 156–157 | 68, 35 $^{(2)}$ |
| | 30 | Credit risk mitigation | 55, 61 | 156–157 | 20, 53, 68 |
| **Other risks** | 31 | Other risks | 80–82 | | |
| | 32 | Discussion of publicly known risk events | 80 | 179 | |

$^{(1)}$ A detailed glossary of our risk and capital terminology is included on page 198.
$^{(2)}$ Included in supplementary financial information package.

# Management’s discussion and analysis

## Management’s discussion and analysis

Management’s discussion and analysis (MD&A) is provided to enable readers to assess CIBC’s financial condition and results of operations as at and for the year ended October 31, 2020, compared with prior years. The MD&A should be read in conjunction with the audited consolidated financial statements. Unless otherwise indicated, all financial information in this MD&A has been prepared in accordance with International Financial Reporting Standards (IFRS or GAAP) and all amounts are expressed in Canadian dollars. Certain disclosures in the MD&A have been shaded as they form an integral part of the consolidated financial statements. The MD&A is current as of December 2, 2020. Additional information relating to CIBC, including the Annual Information Form, is available on SEDAR at www.sedar.com and on the United States (U.S.) Securities and Exchange Commission’s (SEC) website at www.sec.gov. No information on CIBC’s website (www.cibc.com) should be considered incorporated herein by reference. A glossary of terms used in the MD&A and the audited consolidated financial statements is provided on pages 196 to 202 of this Annual Report.

### 2 External reporting changes

* **2 Overview** (p. 8)
* **2 CIBC’s strategy** (p. 8)
* **2 Performance against objectives** (p. 8)
* **5 Financial highlights** (p. 9)
* **6 Economic and market environment** (p. 10)
    * **6 Year in review – 2020** (p. 10)
    * **6 Outlook for calendar year 2021** (p. 11)
* **7 Significant events** (p. 12)
* **8 Financial performance overview** (p. 14)
    * **8 2020 Financial results review** (p. 14)
    * **9 Net interest income and margin** (p. 15)
    * **9 Non-interest income** (p. 15)
    * **10 Trading activities (TEB)** (p. 16)
    * **10 Provision for credit losses** (p. 16)
    * **10 Non-interest expenses** (p. 17)
    * **11 Taxes** (p. 18)
    * **11 Foreign exchange** (p. 18)
    * **12 Fourth quarter review** (p. 19)
    * **13 Quarterly trend analysis** (p. 20)
    * **14 Review of 2019 financial performance** (p. 21)
* **16 Non-GAAP measures** (p. 22)
* **19 Strategic business units overview** (p. 23)
    * **20 Canadian Personal and Business Banking** (p. 24)
    * **22 Canadian Commercial Banking and Wealth Management** (p. 26)
    * **24 U.S. Commercial Banking and Wealth Management** (p. 28)
    * **26 Capital Markets** (p. 30)
    * **29 Corporate and Other** (p. 32)
* **30 Financial condition** (p. 33)
    * **30 Review of condensed consolidated balance sheet** (p. 33)
    * **31 Capital management** (p. 35)
    * **41 Off-balance sheet arrangements** (p. 37)
* **43 Management of risk** (p. 39)
* **83 Accounting and control matters** (p. 50)
    * **83 Critical accounting policies and estimates** (p. 50)
    * **88 Accounting developments** (p. 53)
    * **89 Other regulatory developments** (p. 54)
    * **90 Related-party transactions** (p. 55)
    * **90 Policy on the Scope of Services of the Shareholders’ Auditor** (p. 55)
    * **90 Controls and procedures** (p. 55)
* **91 Supplementary annual financial information** (p. 56)

## A NOTE ABOUT FORWARD-LOOKING STATEMENTS

From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this Annual Report, in other filings with Canadian securities regulators or the SEC and in other communications. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-looking statements under applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements made in the “Message from the President and Chief Executive Officer”, “Overview – Performance against objectives”, “Economic and market environment – Outlook for calendar year 2021”, “Significant events”, “Financial performance overview – Taxes”, “Strategic business units overview – Canadian Personal and Business Banking”, “Strategic business units overview – Canadian Commercial Banking and Wealth Management”, “Strategic business units overview – U.S. Commercial Banking and Wealth Management”, “Strategic business units overview – Capital Markets”, “Financial condition – Capital management”, “Financial condition – Off-balance sheet arrangements”, “Management of risk – Risk overview”, “Management of risk – Top and emerging risks”, “Management of risk – Credit risk”, “Management of risk – Market risk”, “Management of risk – Liquidity risk”, “Accounting and control matters – Critical accounting policies and estimates”, “Accounting and control matters – Accounting developments”, “Accounting and control matters – Other regulatory developments” and “Accounting and control matters – Controls and procedures” sections of this report and other statements about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies, the regulatory environment in which we operate and outlook for calendar year 2021 and subsequent periods. Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “forecast”, “target”, “objective” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could”. By their nature, these statements require us to make assumptions, including the economic assumptions set out in the “Economic and market environment – Outlook for calendar year 2021” section of this report, and are subject to inherent risks and uncertainties that may be general or specific. Given the continuing impact of the coronavirus (COVID-19) pandemic on the global economy, financial markets, and our business, results of operations, reputation and financial condition and the expectation that oil prices will remain well below year-ago levels, there is inherently more uncertainty associated with our assumptions as compared to prior periods. A variety of factors, many of which are beyond our control, affect our operations, performance and results, and could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements. These factors include: the occurrence, continuance or intensification of public health emergencies, such as the COVID-19 pandemic, and any related government policies and actions; credit, market, liquidity, strategic, insurance, operational, reputation, legal, conduct, regulatory and environmental and related social risk; currency value and interest rate fluctuations, including as a result of market and oil price volatility; the effectiveness and adequacy of our risk management and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate, including the Organisation for Economic Co-operation and Development Common Reporting Standard, and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking Supervision’s global standards for capital and liquidity reform, and those relating to bank recapitalization legislation and the payments system in Canada; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions, and interest rate and liquidity regulatory guidance; the resolution of legal and regulatory proceedings and related matters; the effect of changes to accounting standards, rules and interpretations; changes in our estimates of reserves and allowances; changes in tax laws; changes to our credit ratings; political conditions and developments, including changes relating to economic or trade matters; the possible effect on our business of international conflicts and terrorism; natural disasters, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; potential disruptions to our information technology systems and services; increasing cyber security risks which may include theft or disclosure of assets, unauthorized access to sensitive information, or operational disruption; social media risk; losses incurred as a result of internal or external fraud; anti-money laundering; the accuracy and completeness of information provided to us concerning clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates or associates; intensifying competition from established competitors and new entrants in the financial services industry including through internet and mobile banking; technological change; global capital market activity; changes in monetary and economic policy; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations, including increasing Canadian household debt levels and global credit risks; our success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels; changes in client spending and saving habits; our ability to attract and retain key employees and executives; our ability to successfully execute our strategies and complete and integrate acquisitions and joint ventures; the risk that expected benefits of an acquisition, merger or divestiture will not be realized within the expected time frame or at all; and our ability to anticipate and manage the risks associated with these factors. This list is not exhaustive of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Any forward-looking statements contained in this report represent the views of management only as of the date hereof and are presented for the purpose of assisting our shareholders and financial analysts in understanding our financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statement that is contained in this report or in other communications except as required by law.

## 2 External reporting changes

* **Changes made to our business segments**
    * We changed the way that we allocate capital to our strategic business units (SBUs). Previously, we utilized an economic capital model to attribute capital to our SBUs and calculate segmented return on equity. Effective November 1, 2019, capital is allocated to the SBUs based on the estimated amount of regulatory capital required to support their businesses. Segmented return on equity is a non-GAAP measure (see the “Non-GAAP measures” section for additional details).
    * The transfer pricing methodology used by Treasury was enhanced to align with the changes that we made to our capital allocation methodology as discussed above. Concurrently with this change, we also made other updates and enhancements to our funds transfer pricing methodology as well as minor updates to certain allocation methodologies.
    
    Prior period amounts have been revised accordingly. The changes impacted the results of our SBUs and how we measure the performance of our SBUs. There was no impact on our consolidated financial results from these changes.

* **Adoption of IFRS 16 “Leases”**
    Effective November 1, 2019, we adopted IFRS 16 “Leases” (IFRS 16) using the modified retrospective approach, without restatement of comparative periods.

## Overview

CIBC is a leading North American financial institution with a market capitalization of \$44 billion and a Basel III Common Equity Tier 1 (CET1) ratio of 12.1% as at October 31, 2020. Through our four SBUs – Canadian Personal and Business Banking, Canadian Commercial Banking and Wealth Management, U.S. Commercial Banking and Wealth Management, and Capital Markets – CIBC provides a full range of financial products and services to 10 million personal banking, business, public sector and institutional clients in Canada, the U.S. and around the world. We have approximately 44,000 employees dedicated to providing our clients with banking solutions for a modern world, delivering consistent and sustainable earnings growth for our shareholders, and giving back to our communities.

## CIBC’s strategy

At CIBC, our goal is to deliver superior client experience and top-tier shareholder returns while maintaining our financial strength. To achieve this, we are executing on three strategic priorities:

* Focusing on key client segments to accelerate our earnings growth;
* Simplifying and transforming to deliver a modern relationship-banking proposition; and
* Advancing our purpose-driven culture.

## Performance against objectives

For many years, CIBC has reported a scorecard of financial measures that we use to evaluate and report on our progress to external stakeholders. These measures can be categorized into four key areas – earnings growth, operational efficiency, profitability, and balance sheet strength. We have set targets for each of these measures over the medium term, which we define as three to five years.

On March 11, 2020, the outbreak of COVID-19 was officially declared a pandemic by the World Health Organization (WHO). The COVID-19 pandemic has had a significant adverse impact on the global economy, and has negatively impacted our results in fiscal 2020. Until there is greater certainty concerning the dissemination of an effective mass-produced vaccine, the COVID-19 pandemic is expected to continue to impact our ability to achieve our performance objectives.

### Earnings growth$^{(1)}$

To assess our earnings growth, we monitor our earnings per share (EPS). Our through-the-cycle target is an average annual EPS growth of 5% to 10%. In 2020, against a backdrop of a challenging economic environment, reported and adjusted$^{(1)}$ diluted EPS declined by 27% and 19%, respectively.

Going forward, we are maintaining our target to deliver average annual EPS growth of 5% to 10% through the cycle.

**Reported diluted EPS**
(\$)

```mermaid
bar chart
    title Reported diluted EPS ($)
    section EPS
        16: 10.70
        17: 11.24
        18: 11.65
        19: 11.19
        20: 8.22
```

**Adjusted diluted EPS$^{(1)}$**
(\$)

```mermaid
bar chart
    title Adjusted diluted EPS(1) ($)
    section EPS
        16: 10.22
        17: 11.11
        18: 12.21
        19: 11.92
        20: 9.69
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## Operational efficiency

We have two metrics to measure operational efficiency:

### 1. Efficiency ratio$^{(1)}$

To assess how well we use our resources to generate net income, we measure and monitor our efficiency ratio, defined as the ratio of non-interest expenses to total revenue. In 2020, our reported and adjusted$^{(1)}$ efficiency ratios were 60.6% and 55.8%, respectively, compared with 58.3% and 55.5% in 2019.

**Reported efficiency ratio**
$(\%)$

```mermaid
bar chart
    title Reported efficiency ratio (%)
    section Ratio
        16: 59.7
        17: 58.8
        18: 57.5
        19: 58.3
        20: 60.6
```

**Adjusted efficiency ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted efficiency ratio(1) (%)
    section Ratio
        16: 58.0
        17: 57.2
        18: 55.6
        19: 55.5
        20: 55.8
```

### 2. Operating leverage$^{(1)}$

Operating leverage, defined as the difference between the year-over-year percentage change in revenue (on a taxable equivalent basis (TEB)) and year-over-year percentage change in non-interest expenses, is a measure of the relative growth rates of a bank’s revenue and expenses. In 2020, our reported and adjusted$^{(1)}$ operating leverage was (4.0)% and (0.6)%, respectively.

Going forward, our target is to deliver positive operating leverage through the cycle, which will improve our efficiency ratio over time.

**Reported operating leverage**
$(\%)$

```mermaid
bar chart
    title Reported operating leverage (%)
    section Leverage
        16: 7.3
        17: 1.6
        18: 2.4
        19: (1.5)
        20: (4.0)
```

**Adjusted operating leverage$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted operating leverage(1) (%)
    section Leverage
        16: 2.8
        17: 1.5
        18: 3.2
        19: 0.2
        20: (0.6)
```

## Profitability

We have three metrics to measure profitability, including two shareholder value targets:

### 1. Return on common shareholders’ equity (ROE)$^{(1)}$

ROE is a key measure of profitability. In 2020, our reported and adjusted$^{(1)}$ ROE were at 10.0% and 11.7%, respectively.

Going forward, we will continue to target a strong ROE of at least 15% through the cycle.

**Reported return on common shareholders’ equity**
$(\%)$

```mermaid
bar chart
    title Reported return on common shareholders’ equity (%)
    section ROE
        16: 19.9
        17: 18.3
        18: 16.6
        19: 14.5
        20: 10.0
```

**Adjusted return on common shareholders’ equity$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted return on common shareholders’ equity(1) (%)
    section ROE
        16: 19.0
        17: 18.1
        18: 17.4
        19: 15.4
        20: 11.7
```

### 2. Dividend payout ratio$^{(1)}$

We have consistently delivered adjusted$^{(1)}$ dividend payout ratios in the range of 40% to 50% of earnings to common shareholders. Our key criteria for considering dividend increases are our current level of payout relative to our target and our view on the sustainability of our current earnings level through the cycle. In 2020, our reported and adjusted$^{(1)}$ dividend payout ratios were 70.7% and 60.0%, respectively.

Going forward, we will continue to target a dividend payout ratio of 40% to 50% through the cycle.

**Reported dividend payout ratio**
$(\%)$

```mermaid
bar chart
    title Reported dividend payout ratio (%)
    section Payout
        16: 44.3
        17: 45.5
        18: 45.6
        19: 49.9
        20: 70.7
```

**Adjusted dividend payout ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted dividend payout ratio(1) (%)
    section Payout
        16: 46.4
        17: 46.2
        18: 43.4
        19: 46.9
        20: 60.0
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## 3. Total shareholder return (TSR)

TSR is the ultimate measure of shareholder value, and the output of delivering against the financial targets within our control. We have an objective to deliver a TSR that exceeds the industry average, which we have defined as the Standard & Poor’s (S&P)/Toronto Stock Exchange (TSX) Composite Banks Index, over a rolling five-year period. For the five years ended October 31, 2020, our TSR was 27.7%, which was below the Banks Index return over the same period of 35.3%.

**Rolling five-year TSR**
$(\%)$

```mermaid
xychart-beta
    title Rolling five-year TSR (%)
    x-axis [Oct-19, Jan-20, Apr-20, Jul-20, Oct-20]
    y-axis "Percentage" 0 --> 125
    line "CIBC 27.7%" [34.2, 34.2, 28.3, 27.5, 27.7]
    line "S&P/TSX Composite Index 34.2%" [34.2, 34.2, 32.5, 33.3, 34.2]
    line "S&P/TSX Composite Banks Index 35.3%" [35.3, 35.3, 33.8, 34.4, 35.3]
```

## Balance sheet strength

Maintaining a strong balance sheet is foundational to our long-term success. Our goal is to maintain strong capital and liquidity positions. We look to constantly balance our objectives of holding a prudent amount of excess capital for unexpected events and environmental uncertainties, investing in our core businesses, growing through acquisitions and returning capital to our shareholders.

### 1. Basel III Common Equity Tier 1 (CET1) ratio

At the end of 2020, our Basel III CET1 ratio was 12.1%, well above the current regulatory target set by the Office of the Superintendent of Financial Institutions (OSFI) of 9.0%. In response to the COVID-19 pandemic, OSFI directed that all federally regulated financial institutions halt share buybacks and dividend increases until further notice.

**CET1 ratio**
$(\%)$

```mermaid
bar chart
    title CET1 ratio (%)
    section Ratio
        16: 11.3
        17: 11.4
        18: 11.6
        19: 11.6
        20: 12.1
```

### 2. Liquidity Coverage Ratio (LCR)

Our ability to meet our financial obligations is measured through the LCR ratio. It measures unencumbered high quality liquid assets (HQLA) that can be converted into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario. The LCR standard requires that, absent a situation of financial stress, the value of the ratio be no lower than 100%.

For the quarter ended October 31, 2020, our three-month daily average LCR was 145% compared to 125% for the same period last year.

**Liquidity coverage ratio**
$(\%)$

```mermaid
bar chart
    title Liquidity coverage ratio (%)
    section Ratio
        16: 124
        17: 128
        18: 120
        19: 125
        20: 145
```

## Client experience

Our ambition is to be the leader in client experience as measured by external client surveys and our internal CIBC Enterprise Net Promoter Score (CIBC CXNPS). Our client-focused culture is resonating with the clients we serve as evidenced by our strongest scores to date from both the IPSOS Customer Service Index and the J.D. Power Client Satisfaction (SAT) study. Our internal CIBC CXNPS is a balanced weighting of internal net promoter scores across our businesses. As of October 31, 2020, the CIBC CXNPS score was 62.8, a 2-point increase over 2019.

CIBC was ranked the top performing brand during the pandemic as a result of our focus and commitment to clients. Over 90% of CIBC clients surveyed feel the same or more positive about CIBC as a result of our response to COVID-19. CIBC also received IPSOS Financial Service Excellence awards for our mobile banking, live agent telephone banking and ATMs.

Going forward, we will continue to build on this momentum to further enhance the quality and consistency of our service delivery to our clients in support of our purpose-driven culture and strategy to be a modern, innovative relationship-oriented bank.

# Financial highlights

| For the year ended October 31 | 2020 | 2019 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|
| **Financial results (\$ millions)** | | | | | |
| Net interest income | 11,044 | 10,551 | 10,065 | 8,977 | 8,366 |
| Non-interest income | 7,697 | 8,060 | 7,769 | 7,303 | 6,669 |
| Total revenue | 18,741 | 18,611 | 17,834 | 16,280 | 15,035 |
| Provision for credit losses | 2,489 | 1,286 | 870 | 829 | 1,051 |
| Non-interest expenses | 11,362 | 10,856 | 10,258 | 9,571 | 8,971 |
| Income before income taxes | 4,890 | 6,469 | 6,706 | 5,880 | 5,013 |
| Income taxes | 1,098 | 1,348 | 1,422 | 1,162 | 718 |
| Net income | 3,792 | 5,121 | 5,284 | 4,718 | 4,295 |
| Net income attributable to non-controlling interests | 2 | 25 | 17 | 19 | 20 |
| Preferred shareholders and other equity instrument holders | 122 | 111 | 89 | 52 | 38 |
| Common shareholders | 3,668 | 4,985 | 5,178 | 4,647 | 4,237 |
| Net income attributable to equity shareholders | 3,790 | 5,096 | 5,267 | 4,699 | 4,275 |
| **Financial measures** | | | | | |
| Reported efficiency ratio | 60.6 % | 58.3 % | 57.5 % | 58.8 % | 59.7 % |
| Reported return on common shareholders’ equity | 10.0 % | 14.5 % | 16.6 % | 18.3 % | 19.9 % |
| Net interest margin | 1.50 % | 1.65 % | 1.68 % | 1.66 % | 1.64 % |
| **Common share information** | | | | | |
| Per share (\$) – basic earnings | 8.23 | 11.22 | 11.69 | 11.26 | 10.72 |
| – reported diluted earnings | 8.22 | 11.19 | 11.65 | 11.24 | 10.70 |
| – dividends | 5.82 | 5.60 | 5.32 | 5.08 | 4.75 |
| – book value | 84.05 | 79.87 | 73.83 | 66.55 | 56.59 |
| Closing share price (\$) | 99.38 | 112.31 | 113.68 | 113.56 | 100.50 |
| Shares outstanding (thousands) – weighted-average basic | 445,435 | 444,324 | 443,082 | 412,636 | 395,389 |
| – weighted-average diluted | 446,021 | 445,457 | 444,627 | 413,563 | 395,919 |
| – end of period | 447,085 | 445,342 | 442,826 | 439,313 | 397,070 |
| Market capitalization (\$ millions) | 44,431 | 50,016 | 50,341 | 49,888 | 39,906 |
| **Value measures** | | | | | |
| Total shareholder return | (5.90)% | 4.19 % | 4.70 % | 18.30 % | 5.19 % |
| Dividend yield (based on closing share price) | 5.9 % | 5.0 % | 4.7 % | 4.5 % | 4.7 % |
| Reported dividend payout ratio | 70.7 % | 49.9 % | 45.5 % | 45.6 % | 44.3 % |
| Market value to book value ratio | 1.18 | 1.41 | 1.54 | 1.71 | 1.78 |

**Selected financial measures – adjusted $^{(4)}$**

| Metric | 2020 | 2019 |
|---|---|---|
| Adjusted efficiency ratio$^{(5)}$ | 55.8 % | 55.5 % |
| Adjusted return on common shareholders’ equity | 11.7 % | 15.4 % |
| Adjusted effective tax rate | 21.8 % | 20.6 % |
| Adjusted diluted earnings per share (\$) | 9.69 | 11.92 |
| Adjusted dividend payout ratio | 60.0 % | 46.9 % |

**On- and off-balance sheet information (\$ millions)**

| Metric | 2020 | 2019 |
|---|---|---|
| Cash, deposits with banks and securities | 211,564 | 138,669 |
| Loans and acceptances, net of allowance | 416,388 | 398,108 |
| Total assets | 769,551 | 651,604 |
| Deposits | 570,740 | 485,712 |
| Common shareholders’ equity | 37,579 | 35,569 |
| Average assets (\$ billions) | 735,492 | 639,716 |
| Average interest-earning assets $^{(2)}$ | 654,142 | 572,677 |
| Average common shareholders’ equity | 36,792 | 34,467 |
| Assets under administration (AUA) $^{(6)(7)}$ | 2,368,904 | 2,425,651 |
| Assets under management (AUM) $^{(7)}$ | 265,936 | 252,007 |

**Balance sheet quality (All-in basis) and liquidity measures**

| Metric | 2020 | 2019 |
|---|---|---|
| Risk-weighted assets (RWA) (\$ millions) | | |
| Total RWA | 254,871 | 239,863 |
| CET1 capital RWA | n/a | n/a |
| Tier 1 capital RWA | n/a | n/a |
| Total capital RWA | n/a | n/a |
| **Capital ratios** | | |
| CET1 ratio$^{(8)}$ | 12.1 % | 11.6 % |
| Tier 1 capital ratio$^{(8)}$ | 13.6 % | 12.9 % |
| Total capital ratio$^{(8)}$ | 16.1 % | 15.0 % |
| Leverage ratio | 4.7 % | 4.3 % |
| LCR$^{(9)}$ | 145 % | 125 % |

**Other information**

| Metric | 2020 | 2019 |
|---|---|---|
| Full-time equivalent employees | 43,853 | 45,157 |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.
$^{(2)}$ Includes the full contract amount of AUA or custody under a 50/50 joint venture between CIBC and The Bank of New York Mellon of \$1,861.5 billion as at October 31, 2020 (2019: \$1,923.2 billion).
$^{(3)}$ AUM amounts are included in the amounts reported under AUA.
$^{(4)}$ Adjusted measures are non-GAAP measures. Adjusted measures are calculated in the same manner as reported measures, except that financial information included in the calculation of adjusted measures is adjusted to exclude the impact of items of note. For additional information and a reconciliation of reported results to adjusted results, see the “Non-GAAP measures” section.
$^{(5)}$ Calculated on a TEB.
$^{(6)}$ Includes the full contract amount of AUA or custody under a 50/50 joint venture between CIBC and The Bank of New York Mellon of \$1,861.5 billion as at October 31, 2020 (2019: \$1,923.2 billion).
$^{(7)}$ AUM amounts are included in the amounts reported under AUA.
$^{(8)}$ Effective beginning in the second quarter of 2020, ratios reflect the expected credit loss (ECL) transitional arrangement announced by OSFI on March 27, 2020.
$^{(9)}$ Average for the three months ended October 31 for each respective year.
n/a Not applicable.

## Financial results

| For the year ended October 31 (Canadian \$ in billions, except as noted) | 2020 | 2019 |
|---|---|---|
| **Financial results** | | |
| Revenue | 18.7 | 18.6 |
| Provision for credit losses | 2.5 | 1.3 |
| Expenses | 11.4 | 10.9 |
| Reported/Adjusted net income$^{(1)}$ | 3.8/4.4 | 5.1/5.4 |
| **Financial measures (%)** | | |
| Reported/Adjusted efficiency ratio$^{(1)}$ | 60.6/55.8 | 58.3/55.5 |
| Reported/Adjusted return on common shareholders’ equity (ROE)$^{(1)}$ | 10.0/11.7 | 14.5/15.4 |
| Net interest margin | 1.50 | 1.65 |
| Total shareholder return | (5.9) | 4.2 |
| **Common share information** | | |
| Reported/Adjusted earnings per share$^{(1)}$ | 8.22/9.69 | 11.19/11.92 |
| Market capitalization | 44.4 | 50.0 |
| **Dividends (%)** | | |
| Dividend yield | 5.9 | 5.0 |
| Reported/Adjusted dividend payout ratio$^{(1)}$ | 70.7/60.0 | 49.9/46.9 |

**Net income by strategic business unit**

| SBU | 2020 | 2019 |
|---|---|---|
| Canadian Personal and Business Banking | 2.0 | 2.3 |
| Canadian Commercial Banking and Wealth Management | 1.2 | 1.3 |
| U.S. Commercial Banking and Wealth Management | 0.4 | 0.7 |
| Capital Markets | 1.1 | 1.0 |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.

## Financial scorecard

| Metric | Target | 2020 reported results | 2020 adjusted results$^{(1)}$ |
|---|---|---|---|
| Earnings per share (EPS) growth$^{(2)}$ | 5%–10% annually | \$8.22, down 27% from 2019 | \$9.69, down 19% from 2019 |
| Return on equity (ROE)$^{(2)}$ | 15%+ | 10.0% | 11.7% |
| Efficiency ratio | 52% run rate in 2022 | 60.6%, increased 230 basis points from 2019 | 55.8%, increased 30 basis points from 2019 |
| Basel III CET1 ratio | Strong buffer to regulatory minimum | 12.1% | |
| Dividend payout ratio$^{(2)}$ | 40%–50% | 70.7% | 60.0% |
| Total shareholder return | Outperform the S&P/TSX Composite Banks Index over a rolling five-year period | CIBC – 27.7% Banks Index – 35.3% | |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.
$^{(2)}$ Through the cycle.

## Environmental, social and governance (ESG) scorecard

| Material topics | Target | 2020 performance | Status |
|---|---|---|---|
| **Client experience** | • Continuous improvement | • CIBC Enterprise Net Promoter Score was 62.8, a two point increase from 2019 | $\checkmark$ |
| **Privacy and information security** | • No privacy findings against CIBC by regulators | • 3 privacy findings against CIBC by regulators$^{(1)}$ | $\text{X}^{(1)}$ |
| **Sustainable finance** | • \$150 billion in support for environmental and sustainable financing over 10 years (2018–2027) | • \$15.7 billion in environmental and sustainable financing $28\%^{(2)}$ achieved to date (\$42 billion) | $\checkmark$ |
| **Inclusive banking** | • Engage 200,000 clients in financial education seminars and events over three years (2019–2021) | • 2020 performance will be updated in CIBC’s 2020 Sustainability Report | $\text{N/A}$ |
| | • Provide \$9 billion in new loans to SMEs over four years (2020–2023) | • \$6.9 billion in new loans to small and medium-sized enterprises (SMEs) $77\%$ achieved to date | $\checkmark$ |
| | • Grow our commercial banking Indigenous business by 10% in 2020 | • 23% growth in commercial banking Indigenous business | $\checkmark$ |
| **Belonging at work** | • At least 30% women and at least 30% men on the CIBC Board of Directors | • 40% women on the CIBC Board of Directors | $\checkmark$ |
| | • At a minimum, between 35% and 40% women in board-approved executive roles by 2022 (Global) | • 33% women in board-approved executive roles (Global) | $\checkmark$ |
| | • At least 22% visible minorities in board-approved executive roles by 2022 (Canada) | • 20% visible minorities in board-approved executive roles (Canada) | $\checkmark$ |
| | • 4% Black leaders in board-approved executive roles by 2023 (Canada) | • 3% leaders from the Black community in board-approved executive roles (Canada) | $\checkmark$ |
| | • 8%–9% of external hires in 2020 are persons with disabilities (Canada) | • 5% of external hires are persons with disabilities (Canada)$^{(3)}$ | $\text{X}^{(3)}$ |
| | • 2% of external hires in 2020 are Indigenous peoples (Canada) | • 3% of external hires are Indigenous peoples (Canada) | $\checkmark$ |
| | • At least 5% of student recruitment from the Black community | • Student recruitment from the Black community | Starting in 2021 |
| **Employee engagement** | • CIBC’s employee engagement score >109% of the Willis Towers Watson global financial services norm | • CIBC’s engagement score of 90% was 111% of the Willis Towers Watson global financial services norm | $\checkmark$ |
| | • Voluntary turnover <12.5% in 2020 (Canada) | • 7.3% voluntary turnover (Canada) | $\checkmark$ |
| | • 100% of employees will have performance reviews in 2020 | • 100% of employees had performance reviews | $\checkmark$ |
| **Community relationships** | • \$350 million in total corporate and employee giving over five years (2019–2023) | • Invested \$75 million in community organizations across Canada and the U.S. $44\%$ achieved to date (\$154 million) | $\checkmark$ |
| **Business ethics** | • 100% employee completion rate for ethical training on our Code of Conduct | • 100% of employees completed CIBC ethical training on our Code of Conduct | $\checkmark$ |

$^{(1)}$ Cases against CIBC by the Office of the Privacy Commissioner of Canada.
$^{(2)}$ Represents the cumulative results of 2018 through 2020.
$^{(3)}$ The full picture of our hiring for persons with disabilities is likely not reflected due to low self-disclosure in the survey utilized for data collection.

## Our response to COVID-19

The COVID-19 pandemic triggered significant economic disruption and public health concerns around the world. From the largest corporations to families planning for their future, many clients faced a crisis that affected their immediate well-being and put their long-term ambitions at risk.

Drawing on our 153-year history of being there for our clients in challenging times, everyone across our bank immediately understood the role we needed to play – for our clients, for our communities, and for each other.

And we did.

From our teams in Asia and Europe who were first to initiate business continuity plans to support our clients through the pandemic, to our teams across North America who were proactive in preparing for this disruption and stepped forward when called on, our global team delivered for all of our stakeholders and honoured our history.

### Our team

Our global team of 44,000 was the driving force behind our strong, client-focused response to the pandemic. Protecting their health and well-being, along with that of our clients and our communities, has been our top priority.

As public health measures were being enacted, an unprecedented 70% of our team members switched to working remotely. We stayed connected and focused on our clients thanks to our investments in technology and collaboration tools that facilitated a smooth transition.

For team members in vital roles who needed to be on-site, we implemented enhanced safety protocols and provided additional financial compensation, as well as activating back-up work locations and adjusting hours in our banking centres to ensure we continued to serve our clients.

In addition, we provided employees with wellness resources and up to 10 additional paid days off to ensure they were taking care of themselves as they focused all of their efforts on supporting our clients through a challenging period.

In our 2020 employee survey, 88% of our team members said CIBC helped them manage their well-being during the pandemic. This was an important source of pride for our team members. We also saw our employee engagement score increase to 90, an all-time high for CIBC.

### Our clients

As the disruption caused by COVID-19 created pressure on the finances of individuals, families and businesses alike, our entire bank leaned in with purpose as we leveraged the strength and commitment of our team to implement a range of support measures to help our clients during a challenging time.

During the year, we assisted more than 500,000 clients facing financial hardship through payment deferral programs on mortgages, loans and credit cards, and reduced interest rates on credit cards, in many cases providing financial relief proactively.

Throughout this period we worked to ensure our clients had access to much-needed funds being made available through government programs, including the Canada Emergency Business Account and the Paycheck Protection Program in the U.S.

Recognizing the urgent need to provide financial support and relief quickly and in a radically simple way, in many cases our team launched fully digital solutions for clients.

In addition, we provided “front-of-the-line” access to seniors and persons with disabilities and proactively offered assistance to clients identified to have the greatest need. We’ve also supported our large corporate clients and entrepreneurs across our global footprint to ensure they, in turn, can take care of their teams and continue to play a role in moving our economy forward.

As a result of our focus and commitment to our clients, CIBC was recognized as the top performing brand during the first wave of the pandemic.

### Our communities

As the impacts of COVID-19 continue to be felt across our communities, our promise is to help revive the sector by harnessing our investments and genuinely caring culture. This includes helping through our people and financial support.

To date Team CIBC has delivered nearly 1,000 hours of COVID-19 related volunteer time. In addition, we increased donations for those most at risk and reassured our community partners that our support would remain in place. Incremental donations included emergency funding for Community Food Centres Canada, United Way, Kids Help Phone, Canadian Blood Services and the American Red Cross. We also supported frontline health-care workers with Aventura points to enable them to take a well-deserved break through our Holidays for Heroes program, as well as supporting the next generation of health care workers achieve their ambitions for a career in health care through the CIBC Future Heroes Fund Bursary Program.

And we continued our long-standing support for those fighting cancer, as we rallied behind a virtual CIBC Run for the Cure, attracting the participation of thousands of Canadians across the country.

# Message from the President and Chief Executive Officer

## Resilient and focused on the future

Drawing on our 153-year history of being there for our clients, we responded to the COVID-19 pandemic by living our purpose – to help make our clients’ ambitions a reality – while delivering a resilient financial performance and advancing our long-term growth strategy in 2020.

> Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.
>
> Victor G. Dodig, President and Chief Executive Officer

Thanks to the tremendous efforts of our team of 44,000 employees globally, we are well positioned to succeed amidst a changing environment in the years ahead and contribute to a more inclusive, sustainable future.

## Financials and 2020 review

Our bank reported earnings in 2020 of \$3.8 billion or \$4.4 billion on an adjusted basis, down 26% and 18% from last year, respectively, primarily as a result of the economic impact of the COVID-19 pandemic. Our capital position remained very strong, with a CET1 ratio of 12.1%, underscoring the strength of our balance sheet as we focus on growing our business in an uncertain economic environment.

Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.

As public health measures such as stay at home directives and physical distancing were introduced to slow the spread of COVID-19, we leveraged our investments in technology in recent years to support our clients. We moved quickly to enable digital-first solutions – including being the first bank to announce our readiness to accept Canada Emergency Business Account (CEBA) applications from business owners in Canada using a fully digital application.

We also acted in line with our purpose by being the first bank to announce reduced credit card interest rates for clients experiencing hardship. We established payment relief programs, as well as priority service for seniors in our banking centres and on the phone. In addition, we made calls to our senior clients to check on their well-being and to help them use mobile and online banking, which saw a surge in demand from clients 65 years of age and over as the pandemic set in. Our bank was recognized as the top performing brand during the peak of COVID-19, a reflection of the measures we took to help our clients.

Our decisive, early action made a challenging time more manageable. In 2020, our bank helped over 500,000 clients with payment relief, and advice when they needed us most.

Our team was the foundation of our client-focused response to the pandemic. At a time of significant disruption and uncertainty, many of our team members seamlessly transitioned to working remotely, while those who needed to be on site to perform essential work were able to do so safely. Our team was steadfast in the face of a challenge, and made a difference in the lives of our clients. I want to thank them for their professionalism and dedication.

Through the pandemic we remained focused on creating a relationship-oriented bank for a modern world. In 2020 we continued to reinvest for long-term growth.

## Revenue by business segment

**\$8.5B** Canadian Personal and Business Banking
**\$4.1B** Canadian Commercial Banking and Wealth Management
**\$2.1B** U.S. Commercial Banking and Wealth Management
**\$3.5B** Capital Markets

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture.

We continued to attract new clients and deliver growth in our Commercial Banking and Wealth Management businesses in the U.S. and Canada. In just one example of our relationship-focused approach to doing business, as the U.S. government rolled out relief programs for business owners to support payrolls, our team of relationship managers called every one of our commercial banking clients to evaluate their needs and work with them to determine if a loan through the relief program would be of help to their business.

Our focus on supporting growth in the private economy and the deep expertise of our relationship managers have helped us to build a robust, high-quality commercial banking portfolio in recent years, and have fueled growth in our wealth management business through new and deeper client relationships that cross business and personal needs. Despite the context of a challenging overall environment, our bank is well positioned to move these businesses forward, both in Canada and the U.S.

In Canadian Personal and Business Banking, we achieved our highest client experience scores on record as we continued to make investments in advice and in our digital capabilities – two areas that remain the foundation of client relationships and growth. In addition, we earned the highest overall satisfaction rating among the Big 5 banks from J.D. Power for our mobile banking app.

We continued to modernize our bank to make it easier for clients to get advice through virtual meetings, and implemented options such as eSignatures to allow clients to sign documentation without needing to leave their home. While we have a continued opportunity to accelerate growth in this area, there are encouraging signs that our efforts are producing results.

Amidst a highly volatile market, we were there with the advice and counsel to help our largest corporate clients navigate market conditions. Our diversified Capital Markets business delivered strong, high-quality growth in 2020, including robust results in our trading businesses, growth in the U.S. by working as a connected team, and continued revenue growth through connectivity by furthering the innovative remittance and foreign exchange services offered to personal banking and wealth management clients across our bank.

## Strengthening our leadership team

As part of our long-term growth strategy, a number of members of our Executive Committee took on new or expanded accountabilities this year, as we continue to invest in the depth of our leadership team and position leaders to draw on their skills in new areas of our bank. This further strengthens our client-focused culture and connectivity across our bank in support of our clients.

## Building an inclusive, sustainable future

As the economy moves towards recovery, we all have an opportunity to reshape our future economy as one that is more inclusive and more sustainable, reflective of the full capabilities of our collective intellectual capital.

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture. But there is more we can do.

As social unrest grew in 2020, I had the opportunity to speak with many of our team members from the Black community and I heard first-hand their stories of the effects of racism in their personal and professional lives.

As a team, we are taking decisive action to eliminate racism in all its forms. I was proud to take on the role of co-Chair for the BlackNorth Initiative to help drive action on this important issue. Our bank also announced specific measures to attract and develop talented team members from the Black community, create new learning opportunities to help disrupt anti-Black racism and direct over \$1,000,000 of our corporate donations to organizations supporting Black communities in North America. These measures are in addition to our existing commitments in hiring and developing people of colour, persons with disabilities and Indigenous peoples. A more inclusive bank is a stronger bank, better positioned to meet the needs of our clients.

Further, we have an opportunity to build a more sustainable economy through the coming economic recovery. Within our Capital Markets business we expanded our team of experts in sustainable finance and renewable energy again this year, and we held our first-ever Sustainability Conference bringing together industry leaders from a variety of sectors to map out a path to a more sustainable future. Across our bank, we continue to make progress on our own targets in areas such as a reduction in greenhouse gas emissions from our operations. As well, we have achieved \$42 billion of our \$150 billion sustainable finance target by 2027 as we support our clients in transitioning to the low-carbon economy of the future.

## Executive Team

| Name | Title |
|---|---|
| **Victor G. Dodig** | President and Chief Executive Officer |
| **Shawn Beber** | Senior Executive Vice-President and Chief Risk Officer |
| **Michael G. Capatides** | Senior Executive Vice-President and Group Head, U.S. Region; President and CEO, CIBC Bank USA |
| **Harry Culham** | Senior Executive Vice-President and Group Head, Capital Markets |
| **Laura Dottori-Attanasio** | Senior Executive Vice-President and Group Head, Personal and Business Banking, Canada |
| **Jon Hountalas** | Senior Executive Vice-President and Group Head, Commercial Banking and Wealth Management, Canada |
| **Christina Kramer** | Senior Executive Vice-President and Group Head, Technology, Infrastructure and Innovation |
| **Kikelomo Lawal** | Executive Vice-President and Chief Legal Officer |
| **Hratch Panossian** | Senior Executive Vice-President and Chief Financial Officer and Enterprise Strategy |
| **Sandy Sharman** | Senior Executive Vice-President and Group Head, People, Culture and Brand |

Our bank has a proud tradition of supporting our communities, and our commitment continued in 2020. As charities and community organizations faced a shortfall in donations as a result of the pandemic, we contributed \$750,000 to organizations that would face increased demand including food banks and mental health services. Later in the year, working together with the Canadian Cancer Society, we reimagined the CIBC Run for the Cure into a virtual event and helped to raise \$2 million as a team for this vitally important cause.

## Looking ahead to 2021 and beyond

The need for advice and the value of relationships amidst changing market conditions have never been higher. To attract new clients and drive growth, banks will need to invest in their infrastructure and advice capabilities to enable the right conversations with clients at this pivotal moment for so many families and businesses. We believe our strategy positions us well to succeed in this evolving market.

Our view is that clients will continue to embrace digital. It will form an important touchpoint as part of client relationships, for both everyday transactions and increasingly, for advice and virtual engagement. We will build on our leadership in this area.

The economic recovery will be led by the private economy, with mid-market businesses playing a major role. Our investments in this market pre-pandemic and our focus on our clients during the crisis will pay long-term dividends as growth returns. We will continue to enhance our capabilities in the U.S. and continue to invest in our team of relationship managers in Canada to help businesses navigate this challenging period. Relationships in this market are often multi-generational, and the foundation we are laying today as the relationship leader will have long-term benefits for our bank.

As well, we will continue to build on our differentiated Capital Markets business model, meeting the needs of our core clients while growing our recurring, fee-based earnings within this business as well as across our Wealth Management businesses.

Our bank is well positioned for the changes occurring in the market for financial services and in the broader economy. We’ve transformed our culture around our clients and we’ve lived our purpose at a time when relationships are becoming entrenched as the primary value proposition for financial institutions, which positions us well for continued growth.

We’re investing in our team – the foundation of our relationship-focused growth strategy. In 2021, we’ll begin moving in to CIBC Square, our new global headquarters, as part of a broader workforce modernization effort that will further the connectivity across our bank that enables our relationship-focused approach to meeting the needs of our clients. We were again recognized this year as one of Canada’s Top 100 employers and best diversity employers, a reflection of our focus on building an inclusive culture where every team member can achieve their ambitions.

I am incredibly proud of our CIBC team for their efforts during a crisis. I am equally proud of the work we’ve done together to be a leader in the economy of the future. Our bank is well positioned to help clients achieve their ambitions and drive growth in the years ahead.

Victor G. Dodig, President and Chief Executive Officer

# Message from the Chair of the Board

## Building a sustainable, inclusive bank

2020 has been a challenging year for all of us! During this year of unprecedented difficulties, your Board has sought to maintain a long-term focus on the trends shaping our industry while offering our full support to management as CIBC moved decisively to meet the needs of clients amidst the global pandemic.

2020 was a year of renewal for your Board. We welcomed Charles Brindamour, Chief Executive Officer of Intact Financial Corporation as a Director, as Linda Hasenfratz retired from our Board after 15 years of outstanding service as a Director.

We also oversaw succession planning across our senior management team, further developing leaders across the bank and bringing some new faces to the senior executive team. As we move into 2021, I am pleased that following her retirement, Mary Lou Maher, KPMG Canadian Managing Partner, Quality & Risk and Global Head of Inclusion and Diversity, will be put forward for election at our next annual meeting.

In 2020 we also took steps to accelerate our inclusion and diversity strategy, including a new goal to have 4% of board-approved executive roles based in Canada held by leaders from the Black community by 2023, as part of the bank’s broader target to have 22% representation of visible minorities in board-approved executive roles by 2022. While we seek to achieve gender parity on the Board, we are proud that 40% of your Board members are women, ahead of our target to have at least 30% women and men. In addition, the diversity policy of your Board was updated to emphasize the Board’s commitment to having its membership better reflect the background of CIBC employees and the clients and communities we serve.

After 16 years as a Director including the last six as your Chair of the Board, I will be retiring at the annual meeting in April. As I look back over my time as Chair, I believe we achieved much together. I am confident that CIBC has the right strategy, culture, and a deep leadership team to build a relationship-oriented bank for a modern world. I am pleased that Katharine B. Stevenson, who has served on the CIBC Board since 2011, has been appointed Chair of the Board, effective April 8, 2021, upon her election as a director at our annual meeting.

In closing, I would like to thank your CEO, Victor Dodig and your management team for their leadership throughout this year full of surprises. On behalf of your Board, I also would like to thank every member of CIBC’s team for their passion in living our purpose. We are grateful for everything you do.

The Honourable John P. Manley, Chair of the Board

# Enhanced Disclosure Task Force

The Enhanced Disclosure Task Force (EDTF), established by the Financial Stability Board, released its report “Enhancing the Risk Disclosures of Banks” in 2012, which included thirty-two disclosure recommendations. The index below provides the listing of these disclosures, along with their locations. EDTF disclosures are located in our management’s discussion and analysis, consolidated financial statements, and supplementary packages, which may be found on our website (www.cibc.com). No information on CIBC’s website, including the supplementary packages, should be considered incorporated herein by reference.

| Topics | Recommendations | Disclosures | Management’s discussion and analysis Page references | Consolidated financial statements Page references | Supplementary regulatory capital disclosure Pillar 3 Report and |
|---|---|---|---|---|---|
| General | 1 | Index of risk information – current page | | | |
| | 2 | Risk terminology and measures $^{(1)}$ | 71–72 | | |
| | 3 | Top and emerging risks | 50 | | |
| | 4 | Key future regulatory ratio requirements | 36, 39, 76, 78 | 166 | 9, 16 |
| **Risk governance, risk management and business model** | 5 | Risk management structure | 44, 45 | | |
| | 6 | Risk culture and appetite | 43, 46, 47 | | |
| | 7 | Risks arising from business activities | 48, 53 | | |
| | 8 | Bank-wide stress testing | 31, 49, 57, 71, 74 | | |
| **Capital adequacy and risk weighted assets** | 9 | Minimum capital requirements | 31 | 166 | |
| | 10 | Components of capital and reconciliation to the consolidated regulatory balance sheet | 36 | 8–11 | |
| | 11 | Regulatory capital flow statement | 37 | 12 | |
| | 12 | Capital management and planning | 39 | 166 | |
| | 13 | Business activities and risk-weighted assets | 38, 53 | 4 | |
| | 14 | Risk-weighted assets and capital requirements | 33, 38 | 4 | |
| | 15 | Credit risk by major portfolios | 56–61 | 27–36 | |
| | 16 | Risk-weighted assets flow statement | 38 | 4, 5 | |
| | 17 | Back-testing of models | 48, 57, 70 | 69, 70 | |
| **Liquidity** | 18 | Liquid assets | 75 | | |
| **Funding** | 19 | Encumbered assets | 75 | | |
| | 20 | Contractual maturity of assets, liabilities and off-balance sheet instruments | 79 | | |
| | 21 | Funding strategy and sources | 77 | | |
| **Market risk** | 22 | Reconciliation of trading and non-trading portfolios to the consolidated balance sheet | 69 | | |
| | 23 | Significant trading and non-trading market risk factors | 69–73 | | |
| | 24 | Model assumptions, limitations and validation procedures | 69–73 | | |
| | 25 | Stress testing and scenario analysis | 31, 71 | | |
| **Credit risk** | 26 | Analysis of credit risk exposures | 58–67 | 138–145, 186 | 6–7, 65–68 |
| | 27 | Impaired loan and forbearance policies | 55, 65, 85 | 116 | |
| | 28 | Reconciliation of impaired loans and the allowance for credit losses | 65 | 139 | |
| | 29 | Counterparty credit risk arising from derivatives | 55, 59 | 156–157 | 68, 35 $^{(2)}$ |
| | 30 | Credit risk mitigation | 55, 61 | 156–157 | 20, 53, 68 |
| **Other risks** | 31 | Other risks | 80–82 | | |
| | 32 | Discussion of publicly known risk events | 80 | 179 | |

$^{(1)}$ A detailed glossary of our risk and capital terminology is included on page 198.
$^{(2)}$ Included in supplementary financial information package.

# Management’s discussion and analysis

## Management’s discussion and analysis

Management’s discussion and analysis (MD&A) is provided to enable readers to assess CIBC’s financial condition and results of operations as at and for the year ended October 31, 2020, compared with prior years. The MD&A should be read in conjunction with the audited consolidated financial statements. Unless otherwise indicated, all financial information in this MD&A has been prepared in accordance with International Financial Reporting Standards (IFRS or GAAP) and all amounts are expressed in Canadian dollars. Certain disclosures in the MD&A have been shaded as they form an integral part of the consolidated financial statements. The MD&A is current as of December 2, 2020. Additional information relating to CIBC, including the Annual Information Form, is available on SEDAR at www.sedar.com and on the United States (U.S.) Securities and Exchange Commission’s (SEC) website at www.sec.gov. No information on CIBC’s website (www.cibc.com) should be considered incorporated herein by reference. A glossary of terms used in the MD&A and the audited consolidated financial statements is provided on pages 196 to 202 of this Annual Report.

### 2 External reporting changes

* **2 Overview** (p. 8)
* **2 CIBC’s strategy** (p. 8)
* **2 Performance against objectives** (p. 8)
* **5 Financial highlights** (p. 9)
* **6 Economic and market environment** (p. 10)
    * **6 Year in review – 2020** (p. 10)
    * **6 Outlook for calendar year 2021** (p. 11)
* **7 Significant events** (p. 12)
* **8 Financial performance overview** (p. 14)
    * **8 2020 Financial results review** (p. 14)
    * **9 Net interest income and margin** (p. 15)
    * **9 Non-interest income** (p. 15)
    * **10 Trading activities (TEB)** (p. 16)
    * **10 Provision for credit losses** (p. 16)
    * **10 Non-interest expenses** (p. 17)
    * **11 Taxes** (p. 18)
    * **11 Foreign exchange** (p. 18)
    * **12 Fourth quarter review** (p. 19)
    * **13 Quarterly trend analysis** (p. 20)
    * **14 Review of 2019 financial performance** (p. 21)
* **16 Non-GAAP measures** (p. 22)
* **19 Strategic business units overview** (p. 23)
    * **20 Canadian Personal and Business Banking** (p. 24)
    * **22 Canadian Commercial Banking and Wealth Management** (p. 26)
    * **24 U.S. Commercial Banking and Wealth Management** (p. 28)
    * **26 Capital Markets** (p. 30)
    * **29 Corporate and Other** (p. 32)
* **30 Financial condition** (p. 33)
    * **30 Review of condensed consolidated balance sheet** (p. 33)
    * **31 Capital management** (p. 35)
    * **41 Off-balance sheet arrangements** (p. 37)
* **43 Management of risk** (p. 39)
* **83 Accounting and control matters** (p. 50)
    * **83 Critical accounting policies and estimates** (p. 50)
    * **88 Accounting developments** (p. 53)
    * **89 Other regulatory developments** (p. 54)
    * **90 Related-party transactions** (p. 55)
    * **90 Policy on the Scope of Services of the Shareholders’ Auditor** (p. 55)
    * **90 Controls and procedures** (p. 55)
* **91 Supplementary annual financial information** (p. 56)

## A NOTE ABOUT FORWARD-LOOKING STATEMENTS

From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this Annual Report, in other filings with Canadian securities regulators or the SEC and in other communications. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-looking statements under applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements made in the “Message from the President and Chief Executive Officer”, “Overview – Performance against objectives”, “Economic and market environment – Outlook for calendar year 2021”, “Significant events”, “Financial performance overview – Taxes”, “Strategic business units overview – Canadian Personal and Business Banking”, “Strategic business units overview – Canadian Commercial Banking and Wealth Management”, “Strategic business units overview – U.S. Commercial Banking and Wealth Management”, “Strategic business units overview – Capital Markets”, “Financial condition – Capital management”, “Financial condition – Off-balance sheet arrangements”, “Management of risk – Risk overview”, “Management of risk – Top and emerging risks”, “Management of risk – Credit risk”, “Management of risk – Market risk”, “Management of risk – Liquidity risk”, “Accounting and control matters – Critical accounting policies and estimates”, “Accounting and control matters – Accounting developments”, “Accounting and control matters – Other regulatory developments” and “Accounting and control matters – Controls and procedures” sections of this report and other statements about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies, the regulatory environment in which we operate and outlook for calendar year 2021 and subsequent periods. Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “forecast”, “target”, “objective” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could”. By their nature, these statements require us to make assumptions, including the economic assumptions set out in the “Economic and market environment – Outlook for calendar year 2021” section of this report, and are subject to inherent risks and uncertainties that may be general or specific. Given the continuing impact of the coronavirus (COVID-19) pandemic on the global economy, financial markets, and our business, results of operations, reputation and financial condition and the expectation that oil prices will remain well below year-ago levels, there is inherently more uncertainty associated with our assumptions as compared to prior periods. A variety of factors, many of which are beyond our control, affect our operations, performance and results, and could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements. These factors include: the occurrence, continuance or intensification of public health emergencies, such as the COVID-19 pandemic, and any related government policies and actions; credit, market, liquidity, strategic, insurance, operational, reputation, legal, conduct, regulatory and environmental and related social risk; currency value and interest rate fluctuations, including as a result of market and oil price volatility; the effectiveness and adequacy of our risk management and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate, including the Organisation for Economic Co-operation and Development Common Reporting Standard, and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking Supervision’s global standards for capital and liquidity reform, and those relating to bank recapitalization legislation and the payments system in Canada; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions, and interest rate and liquidity regulatory guidance; the resolution of legal and regulatory proceedings and related matters; the effect of changes to accounting standards, rules and interpretations; changes in our estimates of reserves and allowances; changes in tax laws; changes to our credit ratings; political conditions and developments, including changes relating to economic or trade matters; the possible effect on our business of international conflicts and terrorism; natural disasters, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; potential disruptions to our information technology systems and services; increasing cyber security risks which may include theft or disclosure of assets, unauthorized access to sensitive information, or operational disruption; social media risk; losses incurred as a result of internal or external fraud; anti-money laundering; the accuracy and completeness of information provided to us concerning clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates or associates; intensifying competition from established competitors and new entrants in the financial services industry including through internet and mobile banking; technological change; global capital market activity; changes in monetary and economic policy; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations, including increasing Canadian household debt levels and global credit risks; our success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels; changes in client spending and saving habits; our ability to attract and retain key employees and executives; our ability to successfully execute our strategies and complete and integrate acquisitions and joint ventures; the risk that expected benefits of an acquisition, merger or divestiture will not be realized within the expected time frame or at all; and our ability to anticipate and manage the risks associated with these factors. This list is not exhaustive of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Any forward-looking statements contained in this report represent the views of management only as of the date hereof and are presented for the purpose of assisting our shareholders and financial analysts in understanding our financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statement that is contained in this report or in other communications except as required by law.

## 2 External reporting changes

* **Changes made to our business segments**
    * We changed the way that we allocate capital to our strategic business units (SBUs). Previously, we utilized an economic capital model to attribute capital to our SBUs and calculate segmented return on equity. Effective November 1, 2019, capital is allocated to the SBUs based on the estimated amount of regulatory capital required to support their businesses. Segmented return on equity is a non-GAAP measure (see the “Non-GAAP measures” section for additional details).
    * The transfer pricing methodology used by Treasury was enhanced to align with the changes that we made to our capital allocation methodology as discussed above. Concurrently with this change, we also made other updates and enhancements to our funds transfer pricing methodology as well as minor updates to certain allocation methodologies.
    
    Prior period amounts have been revised accordingly. The changes impacted the results of our SBUs and how we measure the performance of our SBUs. There was no impact on our consolidated financial results from these changes.

* **Adoption of IFRS 16 “Leases”**
    Effective November 1, 2019, we adopted IFRS 16 “Leases” (IFRS 16) using the modified retrospective approach, without restatement of comparative periods.

## Overview

CIBC is a leading North American financial institution with a market capitalization of \$44 billion and a Basel III Common Equity Tier 1 (CET1) ratio of 12.1% as at October 31, 2020. Through our four SBUs – Canadian Personal and Business Banking, Canadian Commercial Banking and Wealth Management, U.S. Commercial Banking and Wealth Management, and Capital Markets – CIBC provides a full range of financial products and services to 10 million personal banking, business, public sector and institutional clients in Canada, the U.S. and around the world. We have approximately 44,000 employees dedicated to providing our clients with banking solutions for a modern world, delivering consistent and sustainable earnings growth for our shareholders, and giving back to our communities.

## CIBC’s strategy

At CIBC, our goal is to deliver superior client experience and top-tier shareholder returns while maintaining our financial strength. To achieve this, we are executing on three strategic priorities:

* Focusing on key client segments to accelerate our earnings growth;
* Simplifying and transforming to deliver a modern relationship-banking proposition; and
* Advancing our purpose-driven culture.

## Performance against objectives

For many years, CIBC has reported a scorecard of financial measures that we use to evaluate and report on our progress to external stakeholders. These measures can be categorized into four key areas – earnings growth, operational efficiency, profitability, and balance sheet strength. We have set targets for each of these measures over the medium term, which we define as three to five years.

On March 11, 2020, the outbreak of COVID-19 was officially declared a pandemic by the World Health Organization (WHO). The COVID-19 pandemic has had a significant adverse impact on the global economy, and has negatively impacted our results in fiscal 2020. Until there is greater certainty concerning the dissemination of an effective mass-produced vaccine, the COVID-19 pandemic is expected to continue to impact our ability to achieve our performance objectives.

### Earnings growth$^{(1)}$

To assess our earnings growth, we monitor our earnings per share (EPS). Our through-the-cycle target is an average annual EPS growth of 5% to 10%. In 2020, against a backdrop of a challenging economic environment, reported and adjusted$^{(1)}$ diluted EPS declined by 27% and 19%, respectively.

Going forward, we are maintaining our target to deliver average annual EPS growth of 5% to 10% through the cycle.

**Reported diluted EPS**
(\$)

```mermaid
bar chart
    title Reported diluted EPS ($)
    section EPS
        16: 10.70
        17: 11.24
        18: 11.65
        19: 11.19
        20: 8.22
```

**Adjusted diluted EPS$^{(1)}$**
(\$)

```mermaid
bar chart
    title Adjusted diluted EPS(1) ($)
    section EPS
        16: 10.22
        17: 11.11
        18: 12.21
        19: 11.92
        20: 9.69
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## Operational efficiency

We have two metrics to measure operational efficiency:

### 1. Efficiency ratio$^{(1)}$

To assess how well we use our resources to generate net income, we measure and monitor our efficiency ratio, defined as the ratio of non-interest expenses to total revenue. In 2020, our reported and adjusted$^{(1)}$ efficiency ratios were 60.6% and 55.8%, respectively, compared with 58.3% and 55.5% in 2019.

**Reported efficiency ratio**
$(\%)$

```mermaid
bar chart
    title Reported efficiency ratio (%)
    section Ratio
        16: 59.7
        17: 58.8
        18: 57.5
        19: 58.3
        20: 60.6
```

**Adjusted efficiency ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted efficiency ratio(1) (%)
    section Ratio
        16: 58.0
        17: 57.2
        18: 55.6
        19: 55.5
        20: 55.8
```

### 2. Operating leverage$^{(1)}$

Operating leverage, defined as the difference between the year-over-year percentage change in revenue (on a taxable equivalent basis (TEB)) and year-over-year percentage change in non-interest expenses, is a measure of the relative growth rates of a bank’s revenue and expenses. In 2020, our reported and adjusted$^{(1)}$ operating leverage was (4.0)% and (0.6)%, respectively.

Going forward, our target is to deliver positive operating leverage through the cycle, which will improve our efficiency ratio over time.

**Reported operating leverage**
$(\%)$

```mermaid
bar chart
    title Reported operating leverage (%)
    section Leverage
        16: 7.3
        17: 1.6
        18: 2.4
        19: (1.5)
        20: (4.0)
```

**Adjusted operating leverage$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted operating leverage(1) (%)
    section Leverage
        16: 2.8
        17: 1.5
        18: 3.2
        19: 0.2
        20: (0.6)
```

## Profitability

We have three metrics to measure profitability, including two shareholder value targets:

### 1. Return on common shareholders’ equity (ROE)$^{(1)}$

ROE is a key measure of profitability. In 2020, our reported and adjusted$^{(1)}$ ROE were at 10.0% and 11.7%, respectively.

Going forward, we will continue to target a strong ROE of at least 15% through the cycle.

**Reported return on common shareholders’ equity**
$(\%)$

```mermaid
bar chart
    title Reported return on common shareholders’ equity (%)
    section ROE
        16: 19.9
        17: 18.3
        18: 16.6
        19: 14.5
        20: 10.0
```

**Adjusted return on common shareholders’ equity$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted return on common shareholders’ equity(1) (%)
    section ROE
        16: 19.0
        17: 18.1
        18: 17.4
        19: 15.4
        20: 11.7
```

### 2. Dividend payout ratio$^{(1)}$

We have consistently delivered adjusted$^{(1)}$ dividend payout ratios in the range of 40% to 50% of earnings to common shareholders. Our key criteria for considering dividend increases are our current level of payout relative to our target and our view on the sustainability of our current earnings level through the cycle. In 2020, our reported and adjusted$^{(1)}$ dividend payout ratios were 70.7% and 60.0%, respectively.

Going forward, we will continue to target a dividend payout ratio of 40% to 50% through the cycle.

**Reported dividend payout ratio**
$(\%)$

```mermaid
bar chart
    title Reported dividend payout ratio (%)
    section Payout
        16: 44.3
        17: 45.5
        18: 45.6
        19: 49.9
        20: 70.7
```

**Adjusted dividend payout ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted dividend payout ratio(1) (%)
    section Payout
        16: 46.4
        17: 46.2
        18: 43.4
        19: 46.9
        20: 60.0
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## 3. Total shareholder return (TSR)

TSR is the ultimate measure of shareholder value, and the output of delivering against the financial targets within our control. We have an objective to deliver a TSR that exceeds the industry average, which we have defined as the Standard & Poor’s (S&P)/Toronto Stock Exchange (TSX) Composite Banks Index, over a rolling five-year period. For the five years ended October 31, 2020, our TSR was 27.7%, which was below the Banks Index return over the same period of 35.3%.

**Rolling five-year TSR**
$(\%)$

```mermaid
xychart-beta
    title Rolling five-year TSR (%)
    x-axis [Oct-19, Jan-20, Apr-20, Jul-20, Oct-20]
    y-axis "Percentage" 0 --> 125
    line "CIBC 27.7%" [34.2, 34.2, 28.3, 27.5, 27.7]
    line "S&P/TSX Composite Index 34.2%" [34.2, 34.2, 32.5, 33.3, 34.2]
    line "S&P/TSX Composite Banks Index 35.3%" [35.3, 35.3, 33.8, 34.4, 35.3]
```

## Balance sheet strength

Maintaining a strong balance sheet is foundational to our long-term success. Our goal is to maintain strong capital and liquidity positions. We look to constantly balance our objectives of holding a prudent amount of excess capital for unexpected events and environmental uncertainties, investing in our core businesses, growing through acquisitions and returning capital to our shareholders.

### 1. Basel III Common Equity Tier 1 (CET1) ratio

At the end of 2020, our Basel III CET1 ratio was 12.1%, well above the current regulatory target set by the Office of the Superintendent of Financial Institutions (OSFI) of 9.0%. In response to the COVID-19 pandemic, OSFI directed that all federally regulated financial institutions halt share buybacks and dividend increases until further notice.

**CET1 ratio**
$(\%)$

```mermaid
bar chart
    title CET1 ratio (%)
    section Ratio
        16: 11.3
        17: 11.4
        18: 11.6
        19: 11.6
        20: 12.1
```

### 2. Liquidity Coverage Ratio (LCR)

Our ability to meet our financial obligations is measured through the LCR ratio. It measures unencumbered high quality liquid assets (HQLA) that can be converted into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario. The LCR standard requires that, absent a situation of financial stress, the value of the ratio be no lower than 100%.

For the quarter ended October 31, 2020, our three-month daily average LCR was 145% compared to 125% for the same period last year.

**Liquidity coverage ratio**
$(\%)$

```mermaid
bar chart
    title Liquidity coverage ratio (%)
    section Ratio
        16: 124
        17: 128
        18: 120
        19: 125
        20: 145
```

## Client experience

Our ambition is to be the leader in client experience as measured by external client surveys and our internal CIBC Enterprise Net Promoter Score (CIBC CXNPS). Our client-focused culture is resonating with the clients we serve as evidenced by our strongest scores to date from both the IPSOS Customer Service Index and the J.D. Power Client Satisfaction (SAT) study. Our internal CIBC CXNPS is a balanced weighting of internal net promoter scores across our businesses. As of October 31, 2020, the CIBC CXNPS score was 62.8, a 2-point increase over 2019.

CIBC was ranked the top performing brand during the pandemic as a result of our focus and commitment to clients. Over 90% of CIBC clients surveyed feel the same or more positive about CIBC as a result of our response to COVID-19. CIBC also received IPSOS Financial Service Excellence awards for our mobile banking, live agent telephone banking and ATMs.

Going forward, we will continue to build on this momentum to further enhance the quality and consistency of our service delivery to our clients in support of our purpose-driven culture and strategy to be a modern, innovative relationship-oriented bank.

# Financial highlights

| For the year ended October 31 | 2020 | 2019 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|
| **Financial results (\$ millions)** | | | | | |
| Revenue | 18,741 | 18,611 | 17,834 | 16,280 | 15,035 |
| Provision for credit losses | 2,489 | 1,286 | 870 | 829 | 1,051 |
| Expenses | 11,362 | 10,856 | 10,258 | 9,571 | 8,971 |
| Reported/Adjusted net income$^{(1)}$ | 3.8/4.4 | 5.1/5.4 | | | |
| **Financial measures (%)** | | | | | |
| Reported/Adjusted efficiency ratio$^{(1)}$ | 60.6/55.8 | 58.3/55.5 | | | |
| Reported/Adjusted return on common shareholders’ equity (ROE)$^{(1)}$ | 10.0/11.7 | 14.5/15.4 | | | |
| Net interest margin | 1.50 | 1.65 | | | |
| Total shareholder return | (5.9) | 4.2 | | | |
| **Common share information** | | | | | |
| Reported/Adjusted earnings per share$^{(1)}$ | 8.22/9.69 | 11.19/11.92 | | | |
| Market capitalization | 44.4 | 50.0 | | | |
| **Dividends (%)** | | | | | |
| Dividend yield | 5.9 | 5.0 | | | |
| Reported/Adjusted dividend payout ratio$^{(1)}$ | 70.7/60.0 | 49.9/46.9 | | | |

**Net income by strategic business unit**

| SBU | 2020 | 2019 |
|---|---|---|
| Canadian Personal and Business Banking | 2.0 | 2.3 |
| Canadian Commercial Banking and Wealth Management | 1.2 | 1.3 |
| U.S. Commercial Banking and Wealth Management | 0.4 | 0.7 |
| Capital Markets | 1.1 | 1.0 |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.

## Financial scorecard

| Metric | Target | 2020 reported results | 2020 adjusted results$^{(1)}$ |
|---|---|---|---|
| Earnings per share (EPS) growth$^{(2)}$ | 5%–10% annually | \$8.22, down 27% from 2019 | \$9.69, down 19% from 2019 |
| Return on equity (ROE)$^{(2)}$ | 15%+ | 10.0% | 11.7% |
| Efficiency ratio | 52% run rate in 2022 | 60.6%, increased 230 basis points from 2019 | 55.8%, increased 30 basis points from 2019 |
| Basel III CET1 ratio | Strong buffer to regulatory minimum | 12.1% | |
| Dividend payout ratio$^{(2)}$ | 40%–50% | 70.7% | 60.0% |
| Total shareholder return | Outperform the S&P/TSX Composite Banks Index over a rolling five-year period | CIBC – 27.7% Banks Index – 35.3% | |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.
$^{(2)}$ Through the cycle.

## Environmental, social and governance (ESG) scorecard

| Material topics | Target | 2020 performance | Status |
|---|---|---|---|
| **Client experience** | • Continuous improvement | • CIBC Enterprise Net Promoter Score was 62.8, a two point increase from 2019 | $\checkmark$ |
| **Privacy and information security** | • No privacy findings against CIBC by regulators | • 3 privacy findings against CIBC by regulators$^{(1)}$ | $\text{X}^{(1)}$ |
| **Sustainable finance** | • \$150 billion in support for environmental and sustainable financing over 10 years (2018–2027) | • \$15.7 billion in environmental and sustainable financing $28\%^{(2)}$ achieved to date (\$42 billion) | $\checkmark$ |
| **Inclusive banking** | • Engage 200,000 clients in financial education seminars and events over three years (2019–2021) | • 2020 performance will be updated in CIBC’s 2020 Sustainability Report | $\text{N/A}$ |
| | • Provide \$9 billion in new loans to SMEs over four years (2020–2023) | • \$6.9 billion in new loans to small and medium-sized enterprises (SMEs) $77\%$ achieved to date | $\checkmark$ |
| | • Grow our commercial banking Indigenous business by 10% in 2020 | • 23% growth in commercial banking Indigenous business | $\checkmark$ |
| **Belonging at work** | • At least 30% women and at least 30% men on the CIBC Board of Directors | • 40% women on the CIBC Board of Directors | $\checkmark$ |
| | • At a minimum, between 35% and 40% women in board-approved executive roles by 2022 (Global) | • 33% women in board-approved executive roles (Global) | $\checkmark$ |
| | • At least 22% visible minorities in board-approved executive roles by 2022 (Canada) | • 20% visible minorities in board-approved executive roles (Canada) | $\checkmark$ |
| | • 4% Black leaders in board-approved executive roles by 2023 (Canada) | • 3% leaders from the Black community in board-approved executive roles (Canada) | $\checkmark$ |
| | • 8%–9% of external hires in 2020 are persons with disabilities (Canada) | • 5% of external hires are persons with disabilities (Canada)$^{(3)}$ | $\text{X}^{(3)}$ |
| | • 2% of external hires in 2020 are Indigenous peoples (Canada) | • 3% of external hires are Indigenous peoples (Canada) | $\checkmark$ |
| | • At least 5% of student recruitment from the Black community | • Student recruitment from the Black community | Starting in 2021 |
| **Employee engagement** | • CIBC’s employee engagement score >109% of the Willis Towers Watson global financial services norm | • CIBC’s engagement score of 90% was 111% of the Willis Towers Watson global financial services norm | $\checkmark$ |
| | • Voluntary turnover <12.5% in 2020 (Canada) | • 7.3% voluntary turnover (Canada) | $\checkmark$ |
| | • 100% of employees will have performance reviews in 2020 | • 100% of employees had performance reviews | $\checkmark$ |
| **Community relationships** | • \$350 million in total corporate and employee giving over five years (2019–2023) | • Invested \$75 million in community organizations across Canada and the U.S. $44\%$ achieved to date (\$154 million) | $\checkmark$ |
| **Business ethics** | • 100% employee completion rate for ethical training on our Code of Conduct | • 100% of employees completed CIBC ethical training on our Code of Conduct | $\checkmark$ |

$^{(1)}$ Cases against CIBC by the Office of the Privacy Commissioner of Canada.
$^{(2)}$ Represents the cumulative results of 2018 through 2020.
$^{(3)}$ The full picture of our hiring for persons with disabilities is likely not reflected due to low self-disclosure in the survey utilized for data collection.

## Our response to COVID-19

The COVID-19 pandemic triggered significant economic disruption and public health concerns around the world. From the largest corporations to families planning for their future, many clients faced a crisis that affected their immediate well-being and put their long-term ambitions at risk.

Drawing on our 153-year history of being there for our clients in challenging times, everyone across our bank immediately understood the role we needed to play – for our clients, for our communities, and for each other.

And we did.

From our teams in Asia and Europe who were first to initiate business continuity plans to support our clients through the pandemic, to our teams across North America who were proactive in preparing for this disruption and stepped forward when called on, our global team delivered for all of our stakeholders and honoured our history.

### Our team

Our global team of 44,000 was the driving force behind our strong, client-focused response to the pandemic. Protecting their health and well-being, along with that of our clients and our communities, has been our top priority.

As public health measures were being enacted, an unprecedented 70% of our team members switched to working remotely. We stayed connected and focused on our clients thanks to our investments in technology and collaboration tools that facilitated a smooth transition.

For team members in vital roles who needed to be on-site, we implemented enhanced safety protocols and provided additional financial compensation, as well as activating back-up work locations and adjusting hours in our banking centres to ensure we continued to serve our clients.

In addition, we provided employees with wellness resources and up to 10 additional paid days off to ensure they were taking care of themselves as they focused all of their efforts on supporting our clients through a challenging period.

In our 2020 employee survey, 88% of our team members said CIBC helped them manage their well-being during the pandemic. This was an important source of pride for our team members. We also saw our employee engagement score increase to 90, an all-time high for CIBC.

### Our clients

As the disruption caused by COVID-19 created pressure on the finances of individuals, families and businesses alike, our entire bank leaned in with purpose as we leveraged the strength and commitment of our team to implement a range of support measures to help our clients during a challenging time.

During the year, we assisted more than 500,000 clients facing financial hardship through payment deferral programs on mortgages, loans and credit cards, and reduced interest rates on credit cards, in many cases providing financial relief proactively.

Throughout this period we worked to ensure our clients had access to much-needed funds being made available through government programs, including the Canada Emergency Business Account and the Paycheck Protection Program in the U.S.

Recognizing the urgent need to provide financial support and relief quickly and in a radically simple way, in many cases our team launched fully digital solutions for clients.

In addition, we provided “front-of-the-line” access to seniors and persons with disabilities and proactively offered assistance to clients identified to have the greatest need. We’ve also supported our large corporate clients and entrepreneurs across our global footprint to ensure they, in turn, can take care of their teams and continue to play a role in moving our economy forward.

As a result of our focus and commitment to our clients, CIBC was recognized as the top performing brand during the first wave of the pandemic.

### Our communities

As the impacts of COVID-19 continue to be felt across our communities, our promise is to help revive the sector by harnessing our investments and genuinely caring culture. This includes helping through our people and financial support.

To date Team CIBC has delivered nearly 1,000 hours of COVID-19 related volunteer time. In addition, we increased donations for those most at risk and reassured our community partners that our support would remain in place. Incremental donations included emergency funding for Community Food Centres Canada, United Way, Kids Help Phone, Canadian Blood Services and the American Red Cross. We also supported frontline health-care workers with Aventura points to enable them to take a well-deserved break through our Holidays for Heroes program, as well as supporting the next generation of health care workers achieve their ambitions for a career in health care through the CIBC Future Heroes Fund Bursary Program.

And we continued our long-standing support for those fighting cancer, as we rallied behind a virtual CIBC Run for the Cure, attracting the participation of thousands of Canadians across the country.

# Message from the President and Chief Executive Officer

## Resilient and focused on the future

Drawing on our 153-year history of being there for our clients, we responded to the COVID-19 pandemic by living our purpose – to help make our clients’ ambitions a reality – while delivering a resilient financial performance and advancing our long-term growth strategy in 2020.

> Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.
>
> Victor G. Dodig, President and Chief Executive Officer

Thanks to the tremendous efforts of our team of 44,000 employees globally, we are well positioned to succeed amidst a changing environment in the years ahead and contribute to a more inclusive, sustainable future.

## Financials and 2020 review

Our bank reported earnings in 2020 of \$3.8 billion or \$4.4 billion on an adjusted basis, down 26% and 18% from last year, respectively, primarily as a result of the economic impact of the COVID-19 pandemic. Our capital position remained very strong, with a CET1 ratio of 12.1%, underscoring the strength of our balance sheet as we focus on growing our business in an uncertain economic environment.

Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.

As public health measures such as stay at home directives and physical distancing were introduced to slow the spread of COVID-19, we leveraged our investments in technology in recent years to support our clients. We moved quickly to enable digital-first solutions – including being the first bank to announce our readiness to accept Canada Emergency Business Account (CEBA) applications from business owners in Canada using a fully digital application.

We also acted in line with our purpose by being the first bank to announce reduced credit card interest rates for clients experiencing hardship. We established payment relief programs, as well as priority service for seniors in our banking centres and on the phone. In addition, we made calls to our senior clients to check on their well-being and to help them use mobile and online banking, which saw a surge in demand from clients 65 years of age and over as the pandemic set in. Our bank was recognized as the top performing brand during the peak of COVID-19, a reflection of the measures we took to help our clients.

Our decisive, early action made a challenging time more manageable. In 2020, our bank helped over 500,000 clients with payment relief, and advice when they needed us most.

Our team was the foundation of our client-focused response to the pandemic. At a time of significant disruption and uncertainty, many of our team members seamlessly transitioned to working remotely, while those who needed to be on site to perform essential work were able to do so safely. Our team was steadfast in the face of a challenge, and made a difference in the lives of our clients. I want to thank them for their professionalism and dedication.

Through the pandemic we remained focused on creating a relationship-oriented bank for a modern world. In 2020 we continued to reinvest for long-term growth.

## Revenue by business segment

**\$8.5B** Canadian Personal and Business Banking
**\$4.1B** Canadian Commercial Banking and Wealth Management
**\$2.1B** U.S. Commercial Banking and Wealth Management
**\$3.5B** Capital Markets

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture.

We continued to attract new clients and deliver growth in our Commercial Banking and Wealth Management businesses in the U.S. and Canada. In just one example of our relationship-focused approach to doing business, as the U.S. government rolled out relief programs for business owners to support payrolls, our team of relationship managers called every one of our commercial banking clients to evaluate their needs and work with them to determine if a loan through the relief program would be of help to their business.

Our focus on supporting growth in the private economy and the deep expertise of our relationship managers have helped us to build a robust, high-quality commercial banking portfolio in recent years, and have fueled growth in our wealth management business through new and deeper client relationships that cross business and personal needs. Despite the context of a challenging overall environment, our bank is well positioned to move these businesses forward, both in Canada and the U.S.

In Canadian Personal and Business Banking, we achieved our highest client experience scores on record as we continued to make investments in advice and in our digital capabilities – two areas that remain the foundation of client relationships and growth. In addition, we earned the highest overall satisfaction rating among the Big 5 banks from J.D. Power for our mobile banking app.

We continued to modernize our bank to make it easier for clients to get advice through virtual meetings, and implemented options such as eSignatures to allow clients to sign documentation without needing to leave their home. While we have a continued opportunity to accelerate growth in this area, there are encouraging signs that our efforts are producing results.

Amidst a highly volatile market, we were there with the advice and counsel to help our largest corporate clients navigate market conditions. Our diversified Capital Markets business delivered strong, high-quality growth in 2020, including robust results in our trading businesses, growth in the U.S. by working as a connected team, and continued revenue growth through connectivity by furthering the innovative remittance and foreign exchange services offered to personal banking and wealth management clients across our bank.

## Strengthening our leadership team

As part of our long-term growth strategy, a number of members of our Executive Committee took on new or expanded accountabilities this year, as we continue to invest in the depth of our leadership team and position leaders to draw on their skills in new areas of our bank. This further strengthens our client-focused culture and connectivity across our bank in support of our clients.

## Building an inclusive, sustainable future

As the economy moves towards recovery, we all have an opportunity to reshape our future economy as one that is more inclusive and more sustainable, reflective of the full capabilities of our collective intellectual capital.

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture. But there is more we can do.

As social unrest grew in 2020, I had the opportunity to speak with many of our team members from the Black community and I heard first-hand their stories of the effects of racism in their personal and professional lives.

As a team, we are taking decisive action to eliminate racism in all its forms. I was proud to take on the role of co-Chair for the BlackNorth Initiative to help drive action on this important issue. Our bank also announced specific measures to attract and develop talented team members from the Black community, create new learning opportunities to help disrupt anti-Black racism and direct over \$1,000,000 of our corporate donations to organizations supporting Black communities in North America. These measures are in addition to our existing commitments in hiring and developing people of colour, persons with disabilities and Indigenous peoples. A more inclusive bank is a stronger bank, better positioned to meet the needs of our clients.

Further, we have an opportunity to build a more sustainable economy through the coming economic recovery. Within our Capital Markets business we expanded our team of experts in sustainable finance and renewable energy again this year, and we held our first-ever Sustainability Conference bringing together industry leaders from a variety of sectors to map out a path to a more sustainable future. Across our bank, we continue to make progress on our own targets in areas such as a reduction in greenhouse gas emissions from our operations. As well, we have achieved \$42 billion of our \$150 billion sustainable finance target by 2027 as we support our clients in transitioning to the low-carbon economy of the future.

## Executive Team

| Name | Title |
|---|---|
| **Victor G. Dodig** | President and Chief Executive Officer |
| **Shawn Beber** | Senior Executive Vice-President and Chief Risk Officer |
| **Michael G. Capatides** | Senior Executive Vice-President and Group Head, U.S. Region; President and CEO, CIBC Bank USA |
| **Harry Culham** | Senior Executive Vice-President and Group Head, Capital Markets |
| **Laura Dottori-Attanasio** | Senior Executive Vice-President and Group Head, Personal and Business Banking, Canada |
| **Jon Hountalas** | Senior Executive Vice-President and Group Head, Commercial Banking and Wealth Management, Canada |
| **Christina Kramer** | Senior Executive Vice-President and Group Head, Technology, Infrastructure and Innovation |
| **Kikelomo Lawal** | Executive Vice-President and Chief Legal Officer |
| **Hratch Panossian** | Senior Executive Vice-President and Chief Financial Officer and Enterprise Strategy |
| **Sandy Sharman** | Senior Executive Vice-President and Group Head, People, Culture and Brand |

Our bank has a proud tradition of supporting our communities, and our commitment continued in 2020. As charities and community organizations faced a shortfall in donations as a result of the pandemic, we contributed \$750,000 to organizations that would face increased demand including food banks and mental health services. Later in the year, working together with the Canadian Cancer Society, we reimagined the CIBC Run for the Cure into a virtual event and helped to raise \$2 million as a team for this vitally important cause.

## Looking ahead to 2021 and beyond

The need for advice and the value of relationships amidst changing market conditions have never been higher. To attract new clients and drive growth, banks will need to invest in their infrastructure and advice capabilities to enable the right conversations with clients at this pivotal moment for so many families and businesses. We believe our strategy positions us well to succeed in this evolving market.

Our view is that clients will continue to embrace digital. It will form an important touchpoint as part of client relationships, for both everyday transactions and increasingly, for advice and virtual engagement. We will build on our leadership in this area.

The economic recovery will be led by the private economy, with mid-market businesses playing a major role. Our investments in this market pre-pandemic and our focus on our clients during the crisis will pay long-term dividends as growth returns. We will continue to enhance our capabilities in the U.S. and continue to invest in our team of relationship managers in Canada to help businesses navigate this challenging period. Relationships in this market are often multi-generational, and the foundation we are laying today as the relationship leader will have long-term benefits for our bank.

As well, we will continue to build on our differentiated Capital Markets business model, meeting the needs of our core clients while growing our recurring, fee-based earnings within this business as well as across our Wealth Management businesses.

Our bank is well positioned for the changes occurring in the market for financial services and in the broader economy. We’ve transformed our culture around our clients and we’ve lived our purpose at a time when relationships are becoming entrenched as the primary value proposition for financial institutions, which positions us well for continued growth.

We’re investing in our team – the foundation of our relationship-focused growth strategy. In 2021, we’ll begin moving in to CIBC Square, our new global headquarters, as part of a broader workforce modernization effort that will further the connectivity across our bank that enables our relationship-focused approach to meeting the needs of our clients. We were again recognized this year as one of Canada’s Top 100 employers and best diversity employers, a reflection of our focus on building an inclusive culture where every team member can achieve their ambitions.

I am incredibly proud of our CIBC team for their efforts during a crisis. I am equally proud of the work we’ve done together to be a leader in the economy of the future. Our bank is well positioned to help clients achieve their ambitions and drive growth in the years ahead.

Victor G. Dodig, President and Chief Executive Officer

# Message from the Chair of the Board

## Building a sustainable, inclusive bank

2020 has been a challenging year for all of us! During this year of unprecedented difficulties, your Board has sought to maintain a long-term focus on the trends shaping our industry while offering our full support to management as CIBC moved decisively to meet the needs of clients amidst the global pandemic.

2020 was a year of renewal for your Board. We welcomed Charles Brindamour, Chief Executive Officer of Intact Financial Corporation as a Director, as Linda Hasenfratz retired from our Board after 15 years of outstanding service as a Director.

We also oversaw succession planning across our senior management team, further developing leaders across the bank and bringing some new faces to the senior executive team. As we move into 2021, I am pleased that following her retirement, Mary Lou Maher, KPMG Canadian Managing Partner, Quality & Risk and Global Head of Inclusion and Diversity, will be put forward for election at our next annual meeting.

In 2020 we also took steps to accelerate our inclusion and diversity strategy, including a new goal to have 4% of board-approved executive roles based in Canada held by leaders from the Black community by 2023, as part of the bank’s broader target to have 22% representation of visible minorities in board-approved executive roles by 2022. While we seek to achieve gender parity on the Board, we are proud that 40% of your Board members are women, ahead of our target to have at least 30% women and men. In addition, the diversity policy of your Board was updated to emphasize the Board’s commitment to having its membership better reflect the background of CIBC employees and the clients and communities we serve.

After 16 years as a Director including the last six as your Chair of the Board, I will be retiring at the annual meeting in April. As I look back over my time as Chair, I believe we achieved much together. I am confident that CIBC has the right strategy, culture, and a deep leadership team to build a relationship-oriented bank for a modern world. I am pleased that Katharine B. Stevenson, who has served on the CIBC Board since 2011, has been appointed Chair of the Board, effective April 8, 2021, upon her election as a director at our annual meeting.

In closing, I would like to thank your CEO, Victor Dodig and your management team for their leadership throughout this year full of surprises. On behalf of your Board, I also would like to thank every member of CIBC’s team for their passion in living our purpose. We are grateful for everything you do.

The Honourable John P. Manley, Chair of the Board

# Enhanced Disclosure Task Force

The Enhanced Disclosure Task Force (EDTF), established by the Financial Stability Board, released its report “Enhancing the Risk Disclosures of Banks” in 2012, which included thirty-two disclosure recommendations. The index below provides the listing of these disclosures, along with their locations. EDTF disclosures are located in our management’s discussion and analysis, consolidated financial statements, and supplementary packages, which may be found on our website (www.cibc.com). No information on CIBC’s website, including the supplementary packages, should be considered incorporated herein by reference.

| Topics | Recommendations | Disclosures | Management’s discussion and analysis Page references | Consolidated financial statements Page references | Supplementary regulatory capital disclosure Pillar 3 Report and |
|---|---|---|---|---|---|
| General | 1 | Index of risk information – current page | | | |
| | 2 | Risk terminology and measures $^{(1)}$ | 71–72 | | |
| | 3 | Top and emerging risks | 50 | | |
| | 4 | Key future regulatory ratio requirements | 36, 39, 76, 78 | 166 | 9, 16 |
| **Risk governance, risk management and business model** | 5 | Risk management structure | 44, 45 | | |
| | 6 | Risk culture and appetite | 43, 46, 47 | | |
| | 7 | Risks arising from business activities | 48, 53 | | |
| | 8 | Bank-wide stress testing | 31, 49, 57, 71, 74 | | |
| **Capital adequacy and risk weighted assets** | 9 | Minimum capital requirements | 31 | 166 | |
| | 10 | Components of capital and reconciliation to the consolidated regulatory balance sheet | 36 | 8–11 | |
| | 11 | Regulatory capital flow statement | 37 | 12 | |
| | 12 | Capital management and planning | 39 | 166 | |
| | 13 | Business activities and risk-weighted assets | 38, 53 | 4 | |
| | 14 | Risk-weighted assets and capital requirements | 33, 38 | 4 | |
| | 15 | Credit risk by major portfolios | 56–61 | 27–36 | |
| | 16 | Risk-weighted assets flow statement | 38 | 4, 5 | |
| | 17 | Back-testing of models | 48, 57, 70 | 69, 70 | |
| **Liquidity** | 18 | Liquid assets | 75 | | |
| **Funding** | 19 | Encumbered assets | 75 | | |
| | 20 | Contractual maturity of assets, liabilities and off-balance sheet instruments | 79 | | |
| | 21 | Funding strategy and sources | 77 | | |
| **Market risk** | 22 | Reconciliation of trading and non-trading portfolios to the consolidated balance sheet | 69 | | |
| | 23 | Significant trading and non-trading market risk factors | 69–73 | | |
| | 24 | Model assumptions, limitations and validation procedures | 69–73 | | |
| | 25 | Stress testing and scenario analysis | 31, 71 | | |
| **Credit risk** | 26 | Analysis of credit risk exposures | 58–67 | 138–145, 186 | 6–7, 65–68 |
| | 27 | Impaired loan and forbearance policies | 55, 65, 85 | 116 | |
| | 28 | Reconciliation of impaired loans and the allowance for credit losses | 65 | 139 | |
| | 29 | Counterparty credit risk arising from derivatives | 55, 59 | 156–157 | 68, 35 $^{(2)}$ |
| | 30 | Credit risk mitigation | 55, 61 | 156–157 | 20, 53, 68 |
| **Other risks** | 31 | Other risks | 80–82 | | |
| | 32 | Discussion of publicly known risk events | 80 | 179 | |

$^{(1)}$ A detailed glossary of our risk and capital terminology is included on page 198.
$^{(2)}$ Included in supplementary financial information package.

# Management’s discussion and analysis

## Management’s discussion and analysis

Management’s discussion and analysis (MD&A) is provided to enable readers to assess CIBC’s financial condition and results of operations as at and for the year ended October 31, 2020, compared with prior years. The MD&A should be read in conjunction with the audited consolidated financial statements. Unless otherwise indicated, all financial information in this MD&A has been prepared in accordance with International Financial Reporting Standards (IFRS or GAAP) and all amounts are expressed in Canadian dollars. Certain disclosures in the MD&A have been shaded as they form an integral part of the consolidated financial statements. The MD&A is current as of December 2, 2020. Additional information relating to CIBC, including the Annual Information Form, is available on SEDAR at www.sedar.com and on the United States (U.S.) Securities and Exchange Commission’s (SEC) website at www.sec.gov. No information on CIBC’s website (www.cibc.com) should be considered incorporated herein by reference. A glossary of terms used in the MD&A and the audited consolidated financial statements is provided on pages 196 to 202 of this Annual Report.

### 2 External reporting changes

* **2 Overview** (p. 8)
* **2 CIBC’s strategy** (p. 8)
* **2 Performance against objectives** (p. 8)
* **5 Financial highlights** (p. 9)
* **6 Economic and market environment** (p. 10)
    * **6 Year in review – 2020** (p. 10)
    * **6 Outlook for calendar year 2021** (p. 11)
* **7 Significant events** (p. 12)
* **8 Financial performance overview** (p. 14)
    * **8 2020 Financial results review** (p. 14)
    * **9 Net interest income and margin** (p. 15)
    * **9 Non-interest income** (p. 15)
    * **10 Trading activities (TEB)** (p. 16)
    * **10 Provision for credit losses** (p. 16)
    * **10 Non-interest expenses** (p. 17)
    * **11 Taxes** (p. 18)
    * **11 Foreign exchange** (p. 18)
    * **12 Fourth quarter review** (p. 19)
    * **13 Quarterly trend analysis** (p. 20)
    * **14 Review of 2019 financial performance** (p. 21)
* **16 Non-GAAP measures** (p. 22)
* **19 Strategic business units overview** (p. 23)
    * **20 Canadian Personal and Business Banking** (p. 24)
    * **22 Canadian Commercial Banking and Wealth Management** (p. 26)
    * **24 U.S. Commercial Banking and Wealth Management** (p. 28)
    * **26 Capital Markets** (p. 30)
    * **29 Corporate and Other** (p. 32)
* **30 Financial condition** (p. 33)
    * **30 Review of condensed consolidated balance sheet** (p. 33)
    * **31 Capital management** (p. 35)
    * **41 Off-balance sheet arrangements** (p. 37)
* **43 Management of risk** (p. 39)
* **83 Accounting and control matters** (p. 50)
    * **83 Critical accounting policies and estimates** (p. 50)
    * **88 Accounting developments** (p. 53)
    * **89 Other regulatory developments** (p. 54)
    * **90 Related-party transactions** (p. 55)
    * **90 Policy on the Scope of Services of the Shareholders’ Auditor** (p. 55)
    * **90 Controls and procedures** (p. 55)
* **91 Supplementary annual financial information** (p. 56)

## A NOTE ABOUT FORWARD-LOOKING STATEMENTS

From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this Annual Report, in other filings with Canadian securities regulators or the SEC and in other communications. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-looking statements under applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements made in the “Message from the President and Chief Executive Officer”, “Overview – Performance against objectives”, “Economic and market environment – Outlook for calendar year 2021”, “Significant events”, “Financial performance overview – Taxes”, “Strategic business units overview – Canadian Personal and Business Banking”, “Strategic business units overview – Canadian Commercial Banking and Wealth Management”, “Strategic business units overview – U.S. Commercial Banking and Wealth Management”, “Strategic business units overview – Capital Markets”, “Financial condition – Capital management”, “Financial condition – Off-balance sheet arrangements”, “Management of risk – Risk overview”, “Management of risk – Top and emerging risks”, “Management of risk – Credit risk”, “Management of risk – Market risk”, “Management of risk – Liquidity risk”, “Accounting and control matters – Critical accounting policies and estimates”, “Accounting and control matters – Accounting developments”, “Accounting and control matters – Other regulatory developments” and “Accounting and control matters – Controls and procedures” sections of this report and other statements about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies, the regulatory environment in which we operate and outlook for calendar year 2021 and subsequent periods. Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “forecast”, “target”, “objective” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could”. By their nature, these statements require us to make assumptions, including the economic assumptions set out in the “Economic and market environment – Outlook for calendar year 2021” section of this report, and are subject to inherent risks and uncertainties that may be general or specific. Given the continuing impact of the coronavirus (COVID-19) pandemic on the global economy, financial markets, and our business, results of operations, reputation and financial condition and the expectation that oil prices will remain well below year-ago levels, there is inherently more uncertainty associated with our assumptions as compared to prior periods. A variety of factors, many of which are beyond our control, affect our operations, performance and results, and could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements. These factors include: the occurrence, continuance or intensification of public health emergencies, such as the COVID-19 pandemic, and any related government policies and actions; credit, market, liquidity, strategic, insurance, operational, reputation, legal, conduct, regulatory and environmental and related social risk; currency value and interest rate fluctuations, including as a result of market and oil price volatility; the effectiveness and adequacy of our risk management and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate, including the Organisation for Economic Co-operation and Development Common Reporting Standard, and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking Supervision’s global standards for capital and liquidity reform, and those relating to bank recapitalization legislation and the payments system in Canada; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions, and interest rate and liquidity regulatory guidance; the resolution of legal and regulatory proceedings and related matters; the effect of changes to accounting standards, rules and interpretations; changes in our estimates of reserves and allowances; changes in tax laws; changes to our credit ratings; political conditions and developments, including changes relating to economic or trade matters; the possible effect on our business of international conflicts and terrorism; natural disasters, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; potential disruptions to our information technology systems and services; increasing cyber security risks which may include theft or disclosure of assets, unauthorized access to sensitive information, or operational disruption; social media risk; losses incurred as a result of internal or external fraud; anti-money laundering; the accuracy and completeness of information provided to us concerning clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates or associates; intensifying competition from established competitors and new entrants in the financial services industry including through internet and mobile banking; technological change; global capital market activity; changes in monetary and economic policy; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations, including increasing Canadian household debt levels and global credit risks; our success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels; changes in client spending and saving habits; our ability to attract and retain key employees and executives; our ability to successfully execute our strategies and complete and integrate acquisitions and joint ventures; the risk that expected benefits of an acquisition, merger or divestiture will not be realized within the expected time frame or at all; and our ability to anticipate and manage the risks associated with these factors. This list is not exhaustive of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Any forward-looking statements contained in this report represent the views of management only as of the date hereof and are presented for the purpose of assisting our shareholders and financial analysts in understanding our financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statement that is contained in this report or in other communications except as required by law.

## 2 External reporting changes

* **Changes made to our business segments**
    * We changed the way that we allocate capital to our strategic business units (SBUs). Previously, we utilized an economic capital model to attribute capital to our SBUs and calculate segmented return on equity. Effective November 1, 2019, capital is allocated to the SBUs based on the estimated amount of regulatory capital required to support their businesses. Segmented return on equity is a non-GAAP measure (see the “Non-GAAP measures” section for additional details).
    * The transfer pricing methodology used by Treasury was enhanced to align with the changes that we made to our capital allocation methodology as discussed above. Concurrently with this change, we also made other updates and enhancements to our funds transfer pricing methodology as well as minor updates to certain allocation methodologies.
    
    Prior period amounts have been revised accordingly. The changes impacted the results of our SBUs and how we measure the performance of our SBUs. There was no impact on our consolidated financial results from these changes.

* **Adoption of IFRS 16 “Leases”**
    Effective November 1, 2019, we adopted IFRS 16 “Leases” (IFRS 16) using the modified retrospective approach, without restatement of comparative periods.

## Overview

CIBC is a leading North American financial institution with a market capitalization of \$44 billion and a Basel III Common Equity Tier 1 (CET1) ratio of 12.1% as at October 31, 2020. Through our four SBUs – Canadian Personal and Business Banking, Canadian Commercial Banking and Wealth Management, U.S. Commercial Banking and Wealth Management, and Capital Markets – CIBC provides a full range of financial products and services to 10 million personal banking, business, public sector and institutional clients in Canada, the U.S. and around the world. We have approximately 44,000 employees dedicated to providing our clients with banking solutions for a modern world, delivering consistent and sustainable earnings growth for our shareholders, and giving back to our communities.

## CIBC’s strategy

At CIBC, our goal is to deliver superior client experience and top-tier shareholder returns while maintaining our financial strength. To achieve this, we are executing on three strategic priorities:

* Focusing on key client segments to accelerate our earnings growth;
* Simplifying and transforming to deliver a modern relationship-banking proposition; and
* Advancing our purpose-driven culture.

## Performance against objectives

For many years, CIBC has reported a scorecard of financial measures that we use to evaluate and report on our progress to external stakeholders. These measures can be categorized into four key areas – earnings growth, operational efficiency, profitability, and balance sheet strength. We have set targets for each of these measures over the medium term, which we define as three to five years.

On March 11, 2020, the outbreak of COVID-19 was officially declared a pandemic by the World Health Organization (WHO). The COVID-19 pandemic has had a significant adverse impact on the global economy, and has negatively impacted our results in fiscal 2020. Until there is greater certainty concerning the dissemination of an effective mass-produced vaccine, the COVID-19 pandemic is expected to continue to impact our ability to achieve our performance objectives.

### Earnings growth$^{(1)}$

To assess our earnings growth, we monitor our earnings per share (EPS). Our through-the-cycle target is an average annual EPS growth of 5% to 10%. In 2020, against a backdrop of a challenging economic environment, reported and adjusted$^{(1)}$ diluted EPS declined by 27% and 19%, respectively.

Going forward, we are maintaining our target to deliver average annual EPS growth of 5% to 10% through the cycle.

**Reported diluted EPS**
(\$)

```mermaid
bar chart
    title Reported diluted EPS ($)
    section EPS
        16: 10.70
        17: 11.24
        18: 11.65
        19: 11.19
        20: 8.22
```

**Adjusted diluted EPS$^{(1)}$**
(\$)

```mermaid
bar chart
    title Adjusted diluted EPS(1) ($)
    section EPS
        16: 10.22
        17: 11.11
        18: 12.21
        19: 11.92
        20: 9.69
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## Operational efficiency

We have two metrics to measure operational efficiency:

### 1. Efficiency ratio$^{(1)}$

To assess how well we use our resources to generate net income, we measure and monitor our efficiency ratio, defined as the ratio of non-interest expenses to total revenue. In 2020, our reported and adjusted$^{(1)}$ efficiency ratios were 60.6% and 55.8%, respectively, compared with 58.3% and 55.5% in 2019.

**Reported efficiency ratio**
$(\%)$

```mermaid
bar chart
    title Reported efficiency ratio (%)
    section Ratio
        16: 59.7
        17: 58.8
        18: 57.5
        19: 58.3
        20: 60.6
```

**Adjusted efficiency ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted efficiency ratio(1) (%)
    section Ratio
        16: 58.0
        17: 57.2
        18: 55.6
        19: 55.5
        20: 55.8
```

### 2. Operating leverage$^{(1)}$

Operating leverage, defined as the difference between the year-over-year percentage change in revenue (on a taxable equivalent basis (TEB)) and year-over-year percentage change in non-interest expenses, is a measure of the relative growth rates of a bank’s revenue and expenses. In 2020, our reported and adjusted$^{(1)}$ operating leverage was (4.0)% and (0.6)%, respectively.

Going forward, our target is to deliver positive operating leverage through the cycle, which will improve our efficiency ratio over time.

**Reported operating leverage**
$(\%)$

```mermaid
bar chart
    title Reported operating leverage (%)
    section Leverage
        16: 7.3
        17: 1.6
        18: 2.4
        19: (1.5)
        20: (4.0)
```

**Adjusted operating leverage$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted operating leverage(1) (%)
    section Leverage
        16: 2.8
        17: 1.5
        18: 3.2
        19: 0.2
        20: (0.6)
```

## Profitability

We have three metrics to measure profitability, including two shareholder value targets:

### 1. Return on common shareholders’ equity (ROE)$^{(1)}$

ROE is a key measure of profitability. In 2020, our reported and adjusted$^{(1)}$ ROE were at 10.0% and 11.7%, respectively.

Going forward, we will continue to target a strong ROE of at least 15% through the cycle.

**Reported return on common shareholders’ equity**
$(\%)$

```mermaid
bar chart
    title Reported return on common shareholders’ equity (%)
    section ROE
        16: 19.9
        17: 18.3
        18: 16.6
        19: 14.5
        20: 10.0
```

**Adjusted return on common shareholders’ equity$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted return on common shareholders’ equity(1) (%)
    section ROE
        16: 19.0
        17: 18.1
        18: 17.4
        19: 15.4
        20: 11.7
```

### 2. Dividend payout ratio$^{(1)}$

We have consistently delivered adjusted$^{(1)}$ dividend payout ratios in the range of 40% to 50% of earnings to common shareholders. Our key criteria for considering dividend increases are our current level of payout relative to our target and our view on the sustainability of our current earnings level through the cycle. In 2020, our reported and adjusted$^{(1)}$ dividend payout ratios were 70.7% and 60.0%, respectively.

Going forward, we will continue to target a dividend payout ratio of 40% to 50% through the cycle.

**Reported dividend payout ratio**
$(\%)$

```mermaid
bar chart
    title Reported dividend payout ratio (%)
    section Payout
        16: 44.3
        17: 45.5
        18: 45.6
        19: 49.9
        20: 70.7
```

**Adjusted dividend payout ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted dividend payout ratio(1) (%)
    section Payout
        16: 46.4
        17: 46.2
        18: 43.4
        19: 46.9
        20: 60.0
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## 3. Total shareholder return (TSR)

TSR is the ultimate measure of shareholder value, and the output of delivering against the financial targets within our control. We have an objective to deliver a TSR that exceeds the industry average, which we have defined as the Standard & Poor’s (S&P)/Toronto Stock Exchange (TSX) Composite Banks Index, over a rolling five-year period. For the five years ended October 31, 2020, our TSR was 27.7%, which was below the Banks Index return over the same period of 35.3%.

**Rolling five-year TSR**
$(\%)$

```mermaid
xychart-beta
    title Rolling five-year TSR (%)
    x-axis [Oct-19, Jan-20, Apr-20, Jul-20, Oct-20]
    y-axis "Percentage" 0 --> 125
    line "CIBC 27.7%" [34.2, 34.2, 28.3, 27.5, 27.7]
    line "S&P/TSX Composite Index 34.2%" [34.2, 34.2, 32.5, 33.3, 34.2]
    line "S&P/TSX Composite Banks Index 35.3%" [35.3, 35.3, 33.8, 34.4, 35.3]
```

## Balance sheet strength

Maintaining a strong balance sheet is foundational to our long-term success. Our goal is to maintain strong capital and liquidity positions. We look to constantly balance our objectives of holding a prudent amount of excess capital for unexpected events and environmental uncertainties, investing in our core businesses, growing through acquisitions and returning capital to our shareholders.

### 1. Basel III Common Equity Tier 1 (CET1) ratio

At the end of 2020, our Basel III CET1 ratio was 12.1%, well above the current regulatory target set by the Office of the Superintendent of Financial Institutions (OSFI) of 9.0%. In response to the COVID-19 pandemic, OSFI directed that all federally regulated financial institutions halt share buybacks and dividend increases until further notice.

**CET1 ratio**
$(\%)$

```mermaid
bar chart
    title CET1 ratio (%)
    section Ratio
        16: 11.3
        17: 11.4
        18: 11.6
        19: 11.6
        20: 12.1
```

### 2. Liquidity Coverage Ratio (LCR)

Our ability to meet our financial obligations is measured through the LCR ratio. It measures unencumbered high quality liquid assets (HQLA) that can be converted into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario. The LCR standard requires that, absent a situation of financial stress, the value of the ratio be no lower than 100%.

For the quarter ended October 31, 2020, our three-month daily average LCR was 145% compared to 125% for the same period last year.

**Liquidity coverage ratio**
$(\%)$

```mermaid
bar chart
    title Liquidity coverage ratio (%)
    section Ratio
        16: 124
        17: 128
        18: 120
        19: 125
        20: 145
```

## Client experience

Our ambition is to be the leader in client experience as measured by external client surveys and our internal CIBC Enterprise Net Promoter Score (CIBC CXNPS). Our client-focused culture is resonating with the clients we serve as evidenced by our strongest scores to date from both the IPSOS Customer Service Index and the J.D. Power Client Satisfaction (SAT) study. Our internal CIBC CXNPS is a balanced weighting of internal net promoter scores across our businesses. As of October 31, 2020, the CIBC CXNPS score was 62.8, a 2-point increase over 2019.

CIBC was ranked the top performing brand during the pandemic as a result of our focus and commitment to clients. Over 90% of CIBC clients surveyed feel the same or more positive about CIBC as a result of our response to COVID-19. CIBC also received IPSOS Financial Service Excellence awards for our mobile banking, live agent telephone banking and ATMs.

Going forward, we will continue to build on this momentum to further enhance the quality and consistency of our service delivery to our clients in support of our purpose-driven culture and strategy to be a modern, innovative relationship-oriented bank.

# Financial highlights

| For the year ended October 31 | 2020 | 2019 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|
| **Financial results (\$ millions)** | | | | | |
| Revenue | 18,741 | 18,611 | 17,834 | 16,280 | 15,035 |
| Provision for credit losses | 2,489 | 1,286 | 870 | 829 | 1,051 |
| Expenses | 11,362 | 10,856 | 10,258 | 9,571 | 8,971 |
| Reported/Adjusted net income$^{(1)}$ | 3.8/4.4 | 5.1/5.4 | | | |
| **Financial measures (%)** | | | | | |
| Reported/Adjusted efficiency ratio$^{(1)}$ | 60.6/55.8 | 58.3/55.5 | | | |
| Reported/Adjusted return on common shareholders’ equity (ROE)$^{(1)}$ | 10.0/11.7 | 14.5/15.4 | | | |
| Net interest margin | 1.50 | 1.65 | | | |
| Total shareholder return | (5.9) | 4.2 | | | |
| **Common share information** | | | | | |
| Reported/Adjusted earnings per share$^{(1)}$ | 8.22/9.69 | 11.19/11.92 | | | |
| Market capitalization | 44.4 | 50.0 | | | |
| **Dividends (%)** | | | | | |
| Dividend yield | 5.9 | 5.0 | | | |
| Reported/Adjusted dividend payout ratio$^{(1)}$ | 70.7/60.0 | 49.9/46.9 | | | |

**Net income by strategic business unit**

| SBU | 2020 | 2019 |
|---|---|---|
| Canadian Personal and Business Banking | 2.0 | 2.3 |
| Canadian Commercial Banking and Wealth Management | 1.2 | 1.3 |
| U.S. Commercial Banking and Wealth Management | 0.4 | 0.7 |
| Capital Markets | 1.1 | 1.0 |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.

## Financial scorecard

| Metric | Target | 2020 reported results | 2020 adjusted results$^{(1)}$ |
|---|---|---|---|
| Earnings per share (EPS) growth$^{(2)}$ | 5%–10% annually | \$8.22, down 27% from 2019 | \$9.69, down 19% from 2019 |
| Return on equity (ROE)$^{(2)}$ | 15%+ | 10.0% | 11.7% |
| Efficiency ratio | 52% run rate in 2022 | 60.6%, increased 230 basis points from 2019 | 55.8%, increased 30 basis points from 2019 |
| Basel III CET1 ratio | Strong buffer to regulatory minimum | 12.1% | |
| Dividend payout ratio$^{(2)}$ | 40%–50% | 70.7% | 60.0% |
| Total shareholder return | Outperform the S&P/TSX Composite Banks Index over a rolling five-year period | CIBC – 27.7% Banks Index – 35.3% | |

$^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A.
$^{(2)}$ Through the cycle.

## Environmental, social and governance (ESG) scorecard

| Material topics | Target | 2020 performance | Status |
|---|---|---|---|
| **Client experience** | • Continuous improvement | • CIBC Enterprise Net Promoter Score was 62.8, a two point increase from 2019 | $\checkmark$ |
| **Privacy and information security** | • No privacy findings against CIBC by regulators | • 3 privacy findings against CIBC by regulators$^{(1)}$ | $\text{X}^{(1)}$ |
| **Sustainable finance** | • \$150 billion in support for environmental and sustainable financing over 10 years (2018–2027) | • \$15.7 billion in environmental and sustainable financing $28\%^{(2)}$ achieved to date (\$42 billion) | $\checkmark$ |
| **Inclusive banking** | • Engage 200,000 clients in financial education seminars and events over three years (2019–2021) | • 2020 performance will be updated in CIBC’s 2020 Sustainability Report | $\text{N/A}$ |
| | • Provide \$9 billion in new loans to SMEs over four years (2020–2023) | • \$6.9 billion in new loans to small and medium-sized enterprises (SMEs) $77\%$ achieved to date | $\checkmark$ |
| | • Grow our commercial banking Indigenous business by 10% in 2020 | • 23% growth in commercial banking Indigenous business | $\checkmark$ |
| **Belonging at work** | • At least 30% women and at least 30% men on the CIBC Board of Directors | • 40% women on the CIBC Board of Directors | $\checkmark$ |
| | • At a minimum, between 35% and 40% women in board-approved executive roles by 2022 (Global) | • 33% women in board-approved executive roles (Global) | $\checkmark$ |
| | • At least 22% visible minorities in board-approved executive roles by 2022 (Canada) | • 20% visible minorities in board-approved executive roles (Canada) | $\checkmark$ |
| | • 4% Black leaders in board-approved executive roles by 2023 (Canada) | • 3% leaders from the Black community in board-approved executive roles (Canada) | $\checkmark$ |
| | • 8%–9% of external hires in 2020 are persons with disabilities (Canada) | • 5% of external hires are persons with disabilities (Canada)$^{(3)}$ | $\text{X}^{(3)}$ |
| | • 2% of external hires in 2020 are Indigenous peoples (Canada) | • 3% of external hires are Indigenous peoples (Canada) | $\checkmark$ |
| | • At least 5% of student recruitment from the Black community | • Student recruitment from the Black community | Starting in 2021 |
| **Employee engagement** | • CIBC’s employee engagement score >109% of the Willis Towers Watson global financial services norm | • CIBC’s engagement score of 90% was 111% of the Willis Towers Watson global financial services norm | $\checkmark$ |
| | • Voluntary turnover <12.5% in 2020 (Canada) | • 7.3% voluntary turnover (Canada) | $\checkmark$ |
| | • 100% of employees will have performance reviews in 2020 | • 100% of employees had performance reviews | $\checkmark$ |
| **Community relationships** | • \$350 million in total corporate and employee giving over five years (2019–2023) | • Invested \$75 million in community organizations across Canada and the U.S. $44\%$ achieved to date (\$154 million) | $\checkmark$ |
| **Business ethics** | • 100% employee completion rate for ethical training on our Code of Conduct | • 100% of employees completed CIBC ethical training on our Code of Conduct | $\checkmark$ |

$^{(1)}$ Cases against CIBC by the Office of the Privacy Commissioner of Canada.
$^{(2)}$ Represents the cumulative results of 2018 through 2020.
$^{(3)}$ The full picture of our hiring for persons with disabilities is likely not reflected due to low self-disclosure in the survey utilized for data collection.

## Our response to COVID-19

The COVID-19 pandemic triggered significant economic disruption and public health concerns around the world. From the largest corporations to families planning for their future, many clients faced a crisis that affected their immediate well-being and put their long-term ambitions at risk.

Drawing on our 153-year history of being there for our clients in challenging times, everyone across our bank immediately understood the role we needed to play – for our clients, for our communities, and for each other.

And we did.

From our teams in Asia and Europe who were first to initiate business continuity plans to support our clients through the pandemic, to our teams across North America who were proactive in preparing for this disruption and stepped forward when called on, our global team delivered for all of our stakeholders and honoured our history.

### Our team

Our global team of 44,000 was the driving force behind our strong, client-focused response to the pandemic. Protecting their health and well-being, along with that of our clients and our communities, has been our top priority.

As public health measures were being enacted, an unprecedented 70% of our team members switched to working remotely. We stayed connected and focused on our clients thanks to our investments in technology and collaboration tools that facilitated a smooth transition.

For team members in vital roles who needed to be on-site, we implemented enhanced safety protocols and provided additional financial compensation, as well as activating back-up work locations and adjusting hours in our banking centres to ensure we continued to serve our clients.

In addition, we provided employees with wellness resources and up to 10 additional paid days off to ensure they were taking care of themselves as they focused all of their efforts on supporting our clients through a challenging period.

In our 2020 employee survey, 88% of our team members said CIBC helped them manage their well-being during the pandemic. This was an important source of pride for our team members. We also saw our employee engagement score increase to 90, an all-time high for CIBC.

### Our clients

As the disruption caused by COVID-19 created pressure on the finances of individuals, families and businesses alike, our entire bank leaned in with purpose as we leveraged the strength and commitment of our team to implement a range of support measures to help our clients during a challenging time.

During the year, we assisted more than 500,000 clients facing financial hardship through payment deferral programs on mortgages, loans and credit cards, and reduced interest rates on credit cards, in many cases providing financial relief proactively.

Throughout this period we worked to ensure our clients had access to much-needed funds being made available through government programs, including the Canada Emergency Business Account and the Paycheck Protection Program in the U.S.

Recognizing the urgent need to provide financial support and relief quickly and in a radically simple way, in many cases our team launched fully digital solutions for clients.

In addition, we provided “front-of-the-line” access to seniors and persons with disabilities and proactively offered assistance to clients identified to have the greatest need. We’ve also supported our large corporate clients and entrepreneurs across our global footprint to ensure they, in turn, can take care of their teams and continue to play a role in moving our economy forward.

As a result of our focus and commitment to our clients, CIBC was recognized as the top performing brand during the first wave of the pandemic.

### Our communities

As the impacts of COVID-19 continue to be felt across our communities, our promise is to help revive the sector by harnessing our investments and genuinely caring culture. This includes helping through our people and financial support.

To date Team CIBC has delivered nearly 1,000 hours of COVID-19 related volunteer time. In addition, we increased donations for those most at risk and reassured our community partners that our support would remain in place. Incremental donations included emergency funding for Community Food Centres Canada, United Way, Kids Help Phone, Canadian Blood Services and the American Red Cross. We also supported frontline health-care workers with Aventura points to enable them to take a well-deserved break through our Holidays for Heroes program, as well as supporting the next generation of health care workers achieve their ambitions for a career in health care through the CIBC Future Heroes Fund Bursary Program.

And we continued our long-standing support for those fighting cancer, as we rallied behind a virtual CIBC Run for the Cure, attracting the participation of thousands of Canadians across the country.

# Message from the President and Chief Executive Officer

## Resilient and focused on the future

Drawing on our 153-year history of being there for our clients, we responded to the COVID-19 pandemic by living our purpose – to help make our clients’ ambitions a reality – while delivering a resilient financial performance and advancing our long-term growth strategy in 2020.

> Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.
>
> Victor G. Dodig, President and Chief Executive Officer

Thanks to the tremendous efforts of our team of 44,000 employees globally, we are well positioned to succeed amidst a changing environment in the years ahead and contribute to a more inclusive, sustainable future.

## Financials and 2020 review

Our bank reported earnings in 2020 of \$3.8 billion or \$4.4 billion on an adjusted basis, down 26% and 18% from last year, respectively, primarily as a result of the economic impact of the COVID-19 pandemic. Our capital position remained very strong, with a CET1 ratio of 12.1%, underscoring the strength of our balance sheet as we focus on growing our business in an uncertain economic environment.

Our clients are at the centre of everything we do. This year, more than any other in my time as CEO, our clients needed us – and I am very proud of how our team delivered.

As public health measures such as stay at home directives and physical distancing were introduced to slow the spread of COVID-19, we leveraged our investments in technology in recent years to support our clients. We moved quickly to enable digital-first solutions – including being the first bank to announce our readiness to accept Canada Emergency Business Account (CEBA) applications from business owners in Canada using a fully digital application.

We also acted in line with our purpose by being the first bank to announce reduced credit card interest rates for clients experiencing hardship. We established payment relief programs, as well as priority service for seniors in our banking centres and on the phone. In addition, we made calls to our senior clients to check on their well-being and to help them use mobile and online banking, which saw a surge in demand from clients 65 years of age and over as the pandemic set in. Our bank was recognized as the top performing brand during the peak of COVID-19, a reflection of the measures we took to help our clients.

Our decisive, early action made a challenging time more manageable. In 2020, our bank helped over 500,000 clients with payment relief, and advice when they needed us most.

Our team was the foundation of our client-focused response to the pandemic. At a time of significant disruption and uncertainty, many of our team members seamlessly transitioned to working remotely, while those who needed to be on site to perform essential work were able to do so safely. Our team was steadfast in the face of a challenge, and made a difference in the lives of our clients. I want to thank them for their professionalism and dedication.

Through the pandemic we remained focused on creating a relationship-oriented bank for a modern world. In 2020 we continued to reinvest for long-term growth.

## Revenue by business segment

**\$8.5B** Canadian Personal and Business Banking
**\$4.1B** Canadian Commercial Banking and Wealth Management
**\$2.1B** U.S. Commercial Banking and Wealth Management
**\$3.5B** Capital Markets

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture.

We continued to attract new clients and deliver growth in our Commercial Banking and Wealth Management businesses in the U.S. and Canada. In just one example of our relationship-focused approach to doing business, as the U.S. government rolled out relief programs for business owners to support payrolls, our team of relationship managers called every one of our commercial banking clients to evaluate their needs and work with them to determine if a loan through the relief program would be of help to their business.

Our focus on supporting growth in the private economy and the deep expertise of our relationship managers have helped us to build a robust, high-quality commercial banking portfolio in recent years, and have fueled growth in our wealth management business through new and deeper client relationships that cross business and personal needs. Despite the context of a challenging overall environment, our bank is well positioned to move these businesses forward, both in Canada and the U.S.

In Canadian Personal and Business Banking, we achieved our highest client experience scores on record as we continued to make investments in advice and in our digital capabilities – two areas that remain the foundation of client relationships and growth. In addition, we earned the highest overall satisfaction rating among the Big 5 banks from J.D. Power for our mobile banking app.

We continued to modernize our bank to make it easier for clients to get advice through virtual meetings, and implemented options such as eSignatures to allow clients to sign documentation without needing to leave their home. While we have a continued opportunity to accelerate growth in this area, there are encouraging signs that our efforts are producing results.

Amidst a highly volatile market, we were there with the advice and counsel to help our largest corporate clients navigate market conditions. Our diversified Capital Markets business delivered strong, high-quality growth in 2020, including robust results in our trading businesses, growth in the U.S. by working as a connected team, and continued revenue growth through connectivity by furthering the innovative remittance and foreign exchange services offered to personal banking and wealth management clients across our bank.

## Strengthening our leadership team

As part of our long-term growth strategy, a number of members of our Executive Committee took on new or expanded accountabilities this year, as we continue to invest in the depth of our leadership team and position leaders to draw on their skills in new areas of our bank. This further strengthens our client-focused culture and connectivity across our bank in support of our clients.

## Building an inclusive, sustainable future

As the economy moves towards recovery, we all have an opportunity to reshape our future economy as one that is more inclusive and more sustainable, reflective of the full capabilities of our collective intellectual capital.

Inclusion is the cornerstone of our culture at CIBC. It is both an enabler of growth and a foundational element in our connected culture. But there is more we can do.

As social unrest grew in 2020, I had the opportunity to speak with many of our team members from the Black community and I heard first-hand their stories of the effects of racism in their personal and professional lives.

As a team, we are taking decisive action to eliminate racism in all its forms. I was proud to take on the role of co-Chair for the BlackNorth Initiative to help drive action on this important issue. Our bank also announced specific measures to attract and develop talented team members from the Black community, create new learning opportunities to help disrupt anti-Black racism and direct over \$1,000,000 of our corporate donations to organizations supporting Black communities in North America. These measures are in addition to our existing commitments in hiring and developing people of colour, persons with disabilities and Indigenous peoples. A more inclusive bank is a stronger bank, better positioned to meet the needs of our clients.

Further, we have an opportunity to build a more sustainable economy through the coming economic recovery. Within our Capital Markets business we expanded our team of experts in sustainable finance and renewable energy again this year, and we held our first-ever Sustainability Conference bringing together industry leaders from a variety of sectors to map out a path to a more sustainable future. Across our bank, we continue to make progress on our own targets in areas such as a reduction in greenhouse gas emissions from our operations. As well, we have achieved \$42 billion of our \$150 billion sustainable finance target by 2027 as we support our clients in transitioning to the low-carbon economy of the future.

## Executive Team

| Name | Title |
|---|---|
| **Victor G. Dodig** | President and Chief Executive Officer |
| **Shawn Beber** | Senior Executive Vice-President and Chief Risk Officer |
| **Michael G. Capatides** | Senior Executive Vice-President and Group Head, U.S. Region; President and CEO, CIBC Bank USA |
| **Harry Culham** | Senior Executive Vice-President and Group Head, Capital Markets |
| **Laura Dottori-Attanasio** | Senior Executive Vice-President and Group Head, Personal and Business Banking, Canada |
| **Jon Hountalas** | Senior Executive Vice-President and Group Head, Commercial Banking and Wealth Management, Canada |
| **Christina Kramer** | Senior Executive Vice-President and Group Head, Technology, Infrastructure and Innovation |
| **Kikelomo Lawal** | Executive Vice-President and Chief Legal Officer |
| **Hratch Panossian** | Senior Executive Vice-President and Chief Financial Officer and Enterprise Strategy |
| **Sandy Sharman** | Senior Executive Vice-President and Group Head, People, Culture and Brand |

Our bank has a proud tradition of supporting our communities, and our commitment continued in 2020. As charities and community organizations faced a shortfall in donations as a result of the pandemic, we contributed \$750,000 to organizations that would face increased demand including food banks and mental health services. Later in the year, working together with the Canadian Cancer Society, we reimagined the CIBC Run for the Cure into a virtual event and helped to raise \$2 million as a team for this vitally important cause.

## Looking ahead to 2021 and beyond

The need for advice and the value of relationships amidst changing market conditions have never been higher. To attract new clients and drive growth, banks will need to invest in their infrastructure and advice capabilities to enable the right conversations with clients at this pivotal moment for so many families and businesses. We believe our strategy positions us well to succeed in this evolving market.

Our view is that clients will continue to embrace digital. It will form an important touchpoint as part of client relationships, for both everyday transactions and increasingly, for advice and virtual engagement. We will build on our leadership in this area.

The economic recovery will be led by the private economy, with mid-market businesses playing a major role. Our investments in this market pre-pandemic and our focus on our clients during the crisis will pay long-term dividends as growth returns. We will continue to enhance our capabilities in the U.S. and continue to invest in our team of relationship managers in Canada to help businesses navigate this challenging period. Relationships in this market are often multi-generational, and the foundation we are laying today as the relationship leader will have long-term benefits for our bank.

As well, we will continue to build on our differentiated Capital Markets business model, meeting the needs of our core clients while growing our recurring, fee-based earnings within this business as well as across our Wealth Management businesses.

Our bank is well positioned for the changes occurring in the market for financial services and in the broader economy. We’ve transformed our culture around our clients and we’ve lived our purpose at a time when relationships are becoming entrenched as the primary value proposition for financial institutions, which positions us well for continued growth.

We’re investing in our team – the foundation of our relationship-focused growth strategy. In 2021, we’ll begin moving in to CIBC Square, our new global headquarters, as part of a broader workforce modernization effort that will further the connectivity across our bank that enables our relationship-focused approach to meeting the needs of our clients. We were again recognized this year as one of Canada’s Top 100 employers and best diversity employers, a reflection of our focus on building an inclusive culture where every team member can achieve their ambitions.

I am incredibly proud of our CIBC team for their efforts during a crisis. I am equally proud of the work we’ve done together to be a leader in the economy of the future. Our bank is well positioned to help clients achieve their ambitions and drive growth in the years ahead.

Victor G. Dodig, President and Chief Executive Officer

# Message from the Chair of the Board

## Building a sustainable, inclusive bank

2020 has been a challenging year for all of us! During this year of unprecedented difficulties, your Board has sought to maintain a long-term focus on the trends shaping our industry while offering our full support to management as CIBC moved decisively to meet the needs of clients amidst the global pandemic.

2020 was a year of renewal for your Board. We welcomed Charles Brindamour, Chief Executive Officer of Intact Financial Corporation as a Director, as Linda Hasenfratz retired from our Board after 15 years of outstanding service as a Director.

We also oversaw succession planning across our senior management team, further developing leaders across the bank and bringing some new faces to the senior executive team. As we move into 2021, I am pleased that following her retirement, Mary Lou Maher, KPMG Canadian Managing Partner, Quality & Risk and Global Head of Inclusion and Diversity, will be put forward for election at our next annual meeting.

In 2020 we also took steps to accelerate our inclusion and diversity strategy, including a new goal to have 4% of board-approved executive roles based in Canada held by leaders from the Black community by 2023, as part of the bank’s broader target to have 22% representation of visible minorities in board-approved executive roles by 2022. While we seek to achieve gender parity on the Board, we are proud that 40% of your Board members are women, ahead of our target to have at least 30% women and men. In addition, the diversity policy of your Board was updated to emphasize the Board’s commitment to having its membership better reflect the background of CIBC employees and the clients and communities we serve.

After 16 years as a Director including the last six as your Chair of the Board, I will be retiring at the annual meeting in April. As I look back over my time as Chair, I believe we achieved much together. I am confident that CIBC has the right strategy, culture, and a deep leadership team to build a relationship-oriented bank for a modern world. I am pleased that Katharine B. Stevenson, who has served on the CIBC Board since 2011, has been appointed Chair of the Board, effective April 8, 2021, upon her election as a director at our annual meeting.

In closing, I would like to thank your CEO, Victor Dodig and your management team for their leadership throughout this year full of surprises. On behalf of your Board, I also would like to thank every member of CIBC’s team for their passion in living our purpose. We are grateful for everything you do.

The Honourable John P. Manley, Chair of the Board

# Enhanced Disclosure Task Force

The Enhanced Disclosure Task Force (EDTF), established by the Financial Stability Board, released its report “Enhancing the Risk Disclosures of Banks” in 2012, which included thirty-two disclosure recommendations. The index below provides the listing of these disclosures, along with their locations. EDTF disclosures are located in our management’s discussion and analysis, consolidated financial statements, and supplementary packages, which may be found on our website (www.cibc.com). No information on CIBC’s website, including the supplementary packages, should be considered incorporated herein by reference.

| Topics | Recommendations | Disclosures | Management’s discussion and analysis Page references | Consolidated financial statements Page references | Supplementary regulatory capital disclosure Pillar 3 Report and |
|---|---|---|---|---|---|
| General | 1 | Index of risk information – current page | | | |
| | 2 | Risk terminology and measures $^{(1)}$ | 71–72 | | |
| | 3 | Top and emerging risks | 50 | | |
| | 4 | Key future regulatory ratio requirements | 36, 39, 76, 78 | 166 | 9, 16 |
| **Risk governance, risk management and business model** | 5 | Risk management structure | 44, 45 | | |
| | 6 | Risk culture and appetite | 43, 46, 47 | | |
| | 7 | Risks arising from business activities | 48, 53 | | |
| | 8 | Bank-wide stress testing | 31, 49, 57, 71, 74 | | |
| **Capital adequacy and risk weighted assets** | 9 | Minimum capital requirements | 31 | 166 | |
| | 10 | Components of capital and reconciliation to the consolidated regulatory balance sheet | 36 | 8–11 | |
| | 11 | Regulatory capital flow statement | 37 | 12 | |
| | 12 | Capital management and planning | 39 | 166 | |
| | 13 | Business activities and risk-weighted assets | 38, 53 | 4 | |
| | 14 | Risk-weighted assets and capital requirements | 33, 38 | 4 | |
| | 15 | Credit risk by major portfolios | 56–61 | 27–36 | |
| | 16 | Risk-weighted assets flow statement | 38 | 4, 5 | |
| | 17 | Back-testing of models | 48, 57, 70 | 69, 70 | |
| **Liquidity** | 18 | Liquid assets | 75 | | |
| **Funding** | 19 | Encumbered assets | 75 | | |
| | 20 | Contractual maturity of assets, liabilities and off-balance sheet instruments | 79 | | |
| | 21 | Funding strategy and sources | 77 | | |
| **Market risk** | 22 | Reconciliation of trading and non-trading portfolios to the consolidated balance sheet | 69 | | |
| | 23 | Significant trading and non-trading market risk factors | 69–73 | | |
| | 24 | Model assumptions, limitations and validation procedures | 69–73 | | |
| | 25 | Stress testing and scenario analysis | 31, 71 | | |
| **Credit risk** | 26 | Analysis of credit risk exposures | 58–67 | 138–145, 186 | 6–7, 65–68 |
| | 27 | Impaired loan and forbearance policies | 55, 65, 85 | 116 | |
| | 28 | Reconciliation of impaired loans and the allowance for credit losses | 65 | 139 | |
| | 29 | Counterparty credit risk arising from derivatives | 55, 59 | 156–157 | 68, 35 $^{(2)}$ |
| | 30 | Credit risk mitigation | 55, 61 | 156–157 | 20, 53, 68 |
| **Other risks** | 31 | Other risks | 80–82 | | |
| | 32 | Discussion of publicly known risk events | 80 | 179 | |

$^{(1)}$ A detailed glossary of our risk and capital terminology is included on page 198.
$^{(2)}$ Included in supplementary financial information package.

# Management’s discussion and analysis

## Management’s discussion and analysis

Management’s discussion and analysis (MD&A) is provided to enable readers to assess CIBC’s financial condition and results of operations as at and for the year ended October 31, 2020, compared with prior years. The MD&A should be read in conjunction with the audited consolidated financial statements. Unless otherwise indicated, all financial information in this MD&A has been prepared in accordance with International Financial Reporting Standards (IFRS or GAAP) and all amounts are expressed in Canadian dollars. Certain disclosures in the MD&A have been shaded as they form an integral part of the consolidated financial statements. The MD&A is current as of December 2, 2020. Additional information relating to CIBC, including the Annual Information Form, is available on SEDAR at www.sedar.com and on the United States (U.S.) Securities and Exchange Commission’s (SEC) website at www.sec.gov. No information on CIBC’s website (www.cibc.com) should be considered incorporated herein by reference. A glossary of terms used in the MD&A and the audited consolidated financial statements is provided on pages 196 to 202 of this Annual Report.

### 2 External reporting changes

* **2 Overview** (p. 8)
* **2 CIBC’s strategy** (p. 8)
* **2 Performance against objectives** (p. 8)
* **5 Financial highlights** (p. 9)
* **6 Economic and market environment** (p. 10)
    * **6 Year in review – 2020** (p. 10)
    * **6 Outlook for calendar year 2021** (p. 11)
* **7 Significant events** (p. 12)
* **8 Financial performance overview** (p. 14)
    * **8 2020 Financial results review** (p. 14)
    * **9 Net interest income and margin** (p. 15)
    * **9 Non-interest income** (p. 15)
    * **10 Trading activities (TEB)** (p. 16)
    * **10 Provision for credit losses** (p. 16)
    * **10 Non-interest expenses** (p. 17)
    * **11 Taxes** (p. 18)
    * **11 Foreign exchange** (p. 18)
    * **12 Fourth quarter review** (p. 19)
    * **13 Quarterly trend analysis** (p. 20)
    * **14 Review of 2019 financial performance** (p. 21)
* **16 Non-GAAP measures** (p. 22)
* **19 Strategic business units overview** (p. 23)
    * **20 Canadian Personal and Business Banking** (p. 24)
    * **22 Canadian Commercial Banking and Wealth Management** (p. 26)
    * **24 U.S. Commercial Banking and Wealth Management** (p. 28)
    * **26 Capital Markets** (p. 30)
    * **29 Corporate and Other** (p. 32)
* **30 Financial condition** (p. 33)
    * **30 Review of condensed consolidated balance sheet** (p. 33)
    * **31 Capital management** (p. 35)
    * **41 Off-balance sheet arrangements** (p. 37)
* **43 Management of risk** (p. 39)
* **83 Accounting and control matters** (p. 50)
    * **83 Critical accounting policies and estimates** (p. 50)
    * **88 Accounting developments** (p. 53)
    * **89 Other regulatory developments** (p. 54)
    * **90 Related-party transactions** (p. 55)
    * **90 Policy on the Scope of Services of the Shareholders’ Auditor** (p. 55)
    * **90 Controls and procedures** (p. 55)
* **91 Supplementary annual financial information** (p. 56)

## A NOTE ABOUT FORWARD-LOOKING STATEMENTS

From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this Annual Report, in other filings with Canadian securities regulators or the SEC and in other communications. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-looking statements under applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements made in the “Message from the President and Chief Executive Officer”, “Overview – Performance against objectives”, “Economic and market environment – Outlook for calendar year 2021”, “Significant events”, “Financial performance overview – Taxes”, “Strategic business units overview – Canadian Personal and Business Banking”, “Strategic business units overview – Canadian Commercial Banking and Wealth Management”, “Strategic business units overview – U.S. Commercial Banking and Wealth Management”, “Strategic business units overview – Capital Markets”, “Financial condition – Capital management”, “Financial condition – Off-balance sheet arrangements”, “Management of risk – Risk overview”, “Management of risk – Top and emerging risks”, “Management of risk – Credit risk”, “Management of risk – Market risk”, “Management of risk – Liquidity risk”, “Accounting and control matters – Critical accounting policies and estimates”, “Accounting and control matters – Accounting developments”, “Accounting and control matters – Other regulatory developments” and “Accounting and control matters – Controls and procedures” sections of this report and other statements about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies, the regulatory environment in which we operate and outlook for calendar year 2021 and subsequent periods. Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “forecast”, “target”, “objective” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could”. By their nature, these statements require us to make assumptions, including the economic assumptions set out in the “Economic and market environment – Outlook for calendar year 2021” section of this report, and are subject to inherent risks and uncertainties that may be general or specific. Given the continuing impact of the coronavirus (COVID-19) pandemic on the global economy, financial markets, and our business, results of operations, reputation and financial condition and the expectation that oil prices will remain well below year-ago levels, there is inherently more uncertainty associated with our assumptions as compared to prior periods. A variety of factors, many of which are beyond our control, affect our operations, performance and results, and could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements. These factors include: the occurrence, continuance or intensification of public health emergencies, such as the COVID-19 pandemic, and any related government policies and actions; credit, market, liquidity, strategic, insurance, operational, reputation, legal, conduct, regulatory and environmental and related social risk; currency value and interest rate fluctuations, including as a result of market and oil price volatility; the effectiveness and adequacy of our risk management and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate, including the Organisation for Economic Co-operation and Development Common Reporting Standard, and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking Supervision’s global standards for capital and liquidity reform, and those relating to bank recapitalization legislation and the payments system in Canada; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions, and interest rate and liquidity regulatory guidance; the resolution of legal and regulatory proceedings and related matters; the effect of changes to accounting standards, rules and interpretations; changes in our estimates of reserves and allowances; changes in tax laws; changes to our credit ratings; political conditions and developments, including changes relating to economic or trade matters; the possible effect on our business of international conflicts and terrorism; natural disasters, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; potential disruptions to our information technology systems and services; increasing cyber security risks which may include theft or disclosure of assets, unauthorized access to sensitive information, or operational disruption; social media risk; losses incurred as a result of internal or external fraud; anti-money laundering; the accuracy and completeness of information provided to us concerning clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates or associates; intensifying competition from established competitors and new entrants in the financial services industry including through internet and mobile banking; technological change; global capital market activity; changes in monetary and economic policy; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations, including increasing Canadian household debt levels and global credit risks; our success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels; changes in client spending and saving habits; our ability to attract and retain key employees and executives; our ability to successfully execute our strategies and complete and integrate acquisitions and joint ventures; the risk that expected benefits of an acquisition, merger or divestiture will not be realized within the expected time frame or at all; and our ability to anticipate and manage the risks associated with these factors. This list is not exhaustive of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Any forward-looking statements contained in this report represent the views of management only as of the date hereof and are presented for the purpose of assisting our shareholders and financial analysts in understanding our financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statement that is contained in this report or in other communications except as required by law.

## 2 External reporting changes

* **Changes made to our business segments**
    * We changed the way that we allocate capital to our strategic business units (SBUs). Previously, we utilized an economic capital model to attribute capital to our SBUs and calculate segmented return on equity. Effective November 1, 2019, capital is allocated to the SBUs based on the estimated amount of regulatory capital required to support their businesses. Segmented return on equity is a non-GAAP measure (see the “Non-GAAP measures” section for additional details).
    * The transfer pricing methodology used by Treasury was enhanced to align with the changes that we made to our capital allocation methodology as discussed above. Concurrently with this change, we also made other updates and enhancements to our funds transfer pricing methodology as well as minor updates to certain allocation methodologies.
    
    Prior period amounts have been revised accordingly. The changes impacted the results of our SBUs and how we measure the performance of our SBUs. There was no impact on our consolidated financial results from these changes.

* **Adoption of IFRS 16 “Leases”**
    Effective November 1, 2019, we adopted IFRS 16 “Leases” (IFRS 16) using the modified retrospective approach, without restatement of comparative periods.

## Overview

CIBC is a leading North American financial institution with a market capitalization of \$44 billion and a Basel III Common Equity Tier 1 (CET1) ratio of 12.1% as at October 31, 2020. Through our four SBUs – Canadian Personal and Business Banking, Canadian Commercial Banking and Wealth Management, U.S. Commercial Banking and Wealth Management, and Capital Markets – CIBC provides a full range of financial products and services to 10 million personal banking, business, public sector and institutional clients in Canada, the U.S. and around the world. We have approximately 44,000 employees dedicated to providing our clients with banking solutions for a modern world, delivering consistent and sustainable earnings growth for our shareholders, and giving back to our communities.

## CIBC’s strategy

At CIBC, our goal is to deliver superior client experience and top-tier shareholder returns while maintaining our financial strength. To achieve this, we are executing on three strategic priorities:

* Focusing on key client segments to accelerate our earnings growth;
* Simplifying and transforming to deliver a modern relationship-banking proposition; and
* Advancing our purpose-driven culture.

## Performance against objectives

For many years, CIBC has reported a scorecard of financial measures that we use to evaluate and report on our progress to external stakeholders. These measures can be categorized into four key areas – earnings growth, operational efficiency, profitability, and balance sheet strength. We have set targets for each of these measures over the medium term, which we define as three to five years.

On March 11, 2020, the outbreak of COVID-19 was officially declared a pandemic by the World Health Organization (WHO). The COVID-19 pandemic has had a significant adverse impact on the global economy, and has negatively impacted our results in fiscal 2020. Until there is greater certainty concerning the dissemination of an effective mass-produced vaccine, the COVID-19 pandemic is expected to continue to impact our ability to achieve our performance objectives.

### Earnings growth$^{(1)}$

To assess our earnings growth, we monitor our earnings per share (EPS). Our through-the-cycle target is an average annual EPS growth of 5% to 10%. In 2020, against a backdrop of a challenging economic environment, reported and adjusted$^{(1)}$ diluted EPS declined by 27% and 19%, respectively.

Going forward, we are maintaining our target to deliver average annual EPS growth of 5% to 10% through the cycle.

**Reported diluted EPS**
(\$)

```mermaid
bar chart
    title Reported diluted EPS ($)
    section EPS
        16: 10.70
        17: 11.24
        18: 11.65
        19: 11.19
        20: 8.22
```

**Adjusted diluted EPS$^{(1)}$**
(\$)

```mermaid
bar chart
    title Adjusted diluted EPS(1) ($)
    section EPS
        16: 10.22
        17: 11.11
        18: 12.21
        19: 11.92
        20: 9.69
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## Operational efficiency

We have two metrics to measure operational efficiency:

### 1. Efficiency ratio$^{(1)}$

To assess how well we use our resources to generate net income, we measure and monitor our efficiency ratio, defined as the ratio of non-interest expenses to total revenue. In 2020, our reported and adjusted$^{(1)}$ efficiency ratios were 60.6% and 55.8%, respectively, compared with 58.3% and 55.5% in 2019.

**Reported efficiency ratio**
$(\%)$

```mermaid
bar chart
    title Reported efficiency ratio (%)
    section Ratio
        16: 59.7
        17: 58.8
        18: 57.5
        19: 58.3
        20: 60.6
```

**Adjusted efficiency ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted efficiency ratio(1) (%)
    section Ratio
        16: 58.0
        17: 57.2
        18: 55.6
        19: 55.5
        20: 55.8
```

### 2. Operating leverage$^{(1)}$

Operating leverage, defined as the difference between the year-over-year percentage change in revenue (on a taxable equivalent basis (TEB)) and year-over-year percentage change in non-interest expenses, is a measure of the relative growth rates of a bank’s revenue and expenses. In 2020, our reported and adjusted$^{(1)}$ operating leverage was (4.0)% and (0.6)%, respectively.

Going forward, our target is to deliver positive operating leverage through the cycle, which will improve our efficiency ratio over time.

**Reported operating leverage**
$(\%)$

```mermaid
bar chart
    title Reported operating leverage (%)
    section Leverage
        16: 7.3
        17: 1.6
        18: 2.4
        19: (1.5)
        20: (4.0)
```

**Adjusted operating leverage$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted operating leverage(1) (%)
    section Leverage
        16: 2.8
        17: 1.5
        18: 3.2
        19: 0.2
        20: (0.6)
```

## Profitability

We have three metrics to measure profitability, including two shareholder value targets:

### 1. Return on common shareholders’ equity (ROE)$^{(1)}$

ROE is a key measure of profitability. In 2020, our reported and adjusted$^{(1)}$ ROE were at 10.0% and 11.7%, respectively.

Going forward, we will continue to target a strong ROE of at least 15% through the cycle.

**Reported return on common shareholders’ equity**
$(\%)$

```mermaid
bar chart
    title Reported return on common shareholders’ equity (%)
    section ROE
        16: 19.9
        17: 18.3
        18: 16.6
        19: 14.5
        20: 10.0
```

**Adjusted return on common shareholders’ equity$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted return on common shareholders’ equity(1) (%)
    section ROE
        16: 19.0
        17: 18.1
        18: 17.4
        19: 15.4
        20: 11.7
```

### 2. Dividend payout ratio$^{(1)}$

We have consistently delivered adjusted$^{(1)}$ dividend payout ratios in the range of 40% to 50% of earnings to common shareholders. Our key criteria for considering dividend increases are our current level of payout relative to our target and our view on the sustainability of our current earnings level through the cycle. In 2020, our reported and adjusted$^{(1)}$ dividend payout ratios were 70.7% and 60.0%, respectively.

Going forward, we will continue to target a dividend payout ratio of 40% to 50% through the cycle.

**Reported dividend payout ratio**
$(\%)$

```mermaid
bar chart
    title Reported dividend payout ratio (%)
    section Payout
        16: 44.3
        17: 45.5
        18: 45.6
        19: 49.9
        20: 70.7
```

**Adjusted dividend payout ratio$^{(1)}$**
$(\%)$

```mermaid
bar chart
    title Adjusted dividend payout ratio(1) (%)
    section Payout
        16: 46.4
        17: 46.2
        18: 43.4
        19: 46.9
        20: 60.0
```

$^{(1)}$ Adjusted measures are non-GAAP measures. For additional information, see the “Non-GAAP measures” section.

## 3. Total shareholder return (TSR)

TSR is the ultimate measure of shareholder value, and the output of delivering against the financial targets within our control. We have an objective to deliver a TSR that exceeds the industry average, which we have defined as the Standard & Poor’s (S&P)/Toronto Stock Exchange (TSX) Composite Banks Index, over a rolling five-year period. For the five years ended October 31, 2020, our TSR was 27.7%, which was below the Banks Index return over the same period of 35.3%.

**Rolling five-year TSR**
$(\%)$

```mermaid
xychart-beta
    title Rolling five-year TSR (%)
    x-axis