# CIBC 2011 ANNUAL REPORT ## 2011 Annual Report Strong fundamentals in a changing world CIBC is a leading Canadian-based global financial institution with a market capitalization of $30.1 billion and a Tier 1 capital ratio of 14.7%. Through our three major businesses – **Retail and Business Banking, Wealth Management and Wholesale Banking** – we provide a full range of financial products and services to 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. We invest in our businesses, our clients, our people and our communities to deliver consistent and sustainable earnings to our shareholders. ## Our First Principle and Strategic Imperative CIBC’s first principle is to be a lower risk bank. As a lower risk bank, CIBC targets value creation for stakeholders by delivering on its strategic imperative of consistent and sustainable earnings over the long term. ## Our Strategic Priorities * Cultivating deeper relationships with our clients across our businesses * Focusing on value for our clients through understanding their needs * Competing in businesses where we can leverage our expertise to add differentiated value * Pursuing risk-controlled growth in Canada and internationally where our expertise can be exported * Continuously investing in our client base, people, and infrastructure CIBC delivers consistent, sustainable earnings to shareholders ## 2011 Performance CIBC reported another year of progress and performance in 2011. Our actions over the past year have aligned with our strategic imperative to deliver consistent and sustainable earnings and have strengthened CIBC for the long term. We underpinned our progress with strong fundamentals in capital strength, competitive productivity and sound risk management. Our progress against our objectives is profiled on pages 8 and 9. Each of our core businesses saw significant achievement over the course of the year, which is outlined in the business unit summaries beginning on page 12. **25.6%** Earnings growth at CIBC was up $627 million year-over-year, a more than 25% increase ## Our clients * Named “Best in Mobile Banking – Consumer Internet Banks – Global” by *Global Finance* magazine * Launched new CIBC Mobile Brokerage App and CIBC Home Advisor App – both firsts in Canada * Became largest dual issuer of Visa and MasterCard credit cards in Canada * Introduced new CIBC MasterCard credit cards * Introduced a new competitive pricing offer in CIBC Investor’s Edge * \#1 on the TSX in trading (volume and value) * \#1 in customer satisfaction for President’s Choice Financial, our joint venture with Loblaw ## Our employees * Increased our Employee Commitment Index for the sixth consecutive year * Selected as one of Canada’s Best Employers for New Canadians for the fourth consecutive year * Recognized as one of Canada’s Best Diversity Employers * Named one of Canada’s 10 Most Admired Corporate Cultures * Invested approximately $58 million in the training and development of our people ## Our communities * Invested more than $35 million to support communities across Canada * Marked the 15th anniversary of the Canadian Breast Cancer Foundation CIBC Run for the Cure with more than $30 million raised * Raised $4.1 million on CIBC Miracle Day in December 2010 to support children’s charities throughout 2011 * Contributed more than $7.9 million to the 2010 United Way campaign * Named Canada’s top fundraising team for the 2010 Movember campaign | Metric | 2009 ($ billions) | 2010 ($ billions) | 2011 ($ billions) | |---|---|---|---| | **Revenue** | 9.9 | 12.1 | 12.2 | | **Net income** ($ billions) | 1.2 | 2.5 | 3.1 | | **Diluted earnings per share** ($) | 2.65 | 5.87 | 7.31 | | **Return on equity** (%) | 9.4 | 19.4 | 21.3 | *** # Creating value for our shareholders CIBC seeks to create value for our shareholders by generating consistent and sustainable earnings while achieving strategic growth. To do so, we are investing in our core businesses, maintaining a lower risk discipline aligned with our strategy, and underpinning our activities with industry-leading fundamentals. This focus has served our stakeholders well. We hold a position of strength; we are confident in our future and we continue to grow CIBC as part of our commitment to focus on what matters. We are investing in our clients, our employees, and our communities, and we will further strengthen our franchise to drive returns and create long-term value for our shareholders. ## Table of Contents * 2 Chief Executive Officer’s letter * 4 Chair of the Board’s letter * 6 Governance * 8 Performance against objectives * 10 Senior management * 12 Retail and Business Banking * 16 Wealth Management * 20 Wholesale Banking * 24 Corporate responsibility * 26 Management’s discussion and analysis * 109 Consolidated financial statements * 235 Shareholder and other information ## Message from the President and Chief Executive Officer Gerald T. McCaughey ### Strong fundamentals in a changing world CIBC reported another year of progress and performance in 2011, against a backdrop of market volatility, slowing global economic expansion and continued change within the financial services industry. CIBC’s strategic imperative is to deliver consistent, sustainable earnings over the long term. That imperative continues to guide our activities, whether enhancing our existing operations, considering future growth opportunities, or adhering to our risk profile. CIBC achieved solid results across our businesses in 2011; our capital position remains among the best of any bank globally and we introduced a broad range of initiatives focused on enhancing the value we provide our clients. CIBC reported net income of $3.1 billion or $7.39$^{(1)}$ per share on a cash basis, compared with $2.5 billion and $5.95^{(1)}$ a year ago. Revenues rose to $12.2 billion from $12.1 billion and return on equity was once again strong at 21.3%. CIBC’s earnings strength enabled us to increase our quarterly dividend to 90 cents effective October 2011, while further improving our capital ratios and making broad investments in our network and people. ### Strengthening our businesses Our three business units – Retail and Business Banking, Wealth Management and Wholesale Banking – all took significant steps during the year to strengthen our businesses and increase the value we provide to our 11 million clients. Retail and Business Banking reported net income of $2.1 billion in 2011, up from $1.8 billion in 2010. In Retail and Business Banking, we built and renovated more branches, extended our branch operating hours, launched new products like our family of MasterCard credit cards and reinforced our leadership position in mobile banking with our home advisor and stock trading Apps. Wealth Management, which is reporting as a separate business this year, had net income of $279 million in 2011, up from $225 million in 2010. The team delivered record long-term net sales in 2011 and market-leading performance. Despite volatility and uncertainty in global equity markets, Wholesale Banking continued to deliver consistent and risk-controlled performance during the year, reporting net income of $565 million, compared with $342 million in 2010. In Wholesale Banking, we maintained strong market positions in our long-established and successful investment banking, underwriting and mergers and acquisition businesses, while seeking further growth in corporate lending, foreign exchange and infrastructure finance. $^{(1)}$ For additional information, see the “Non-GAAP measures” section of the MD&A. ### Strategic investments in growth and brand While reinforcing our core businesses, we have also continued to identify strategic options for growth. In August, we concluded our fourth strategic investment in 18 months with the purchase of a 41% equity interest in American Century Investments of Kansas City. This is a leading U.S. asset management company that will enable CIBC to offer clients additional investment opportunities through its existing equity and fixed income capabilities. It will also provide an additional platform for growth internationally in a sector that has attractive demographic and risk characteristics. More broadly, we took further steps to build our brand in the marketplace through focused advertising and sponsorships. As the presenting sponsor of the 2011 International Indian Film Academy Awards, we engaged South Asian clients and brought “Bollywood” to life for Canadians across the country. CIBC was also recently selected as lead sponsor of the 2015 Pan Am and Parapan Am Games taking place in Canada, which will enhance our profile with clients, employees and the community. ### CIBC has strong fundamentals We accomplished all this while ensuring the bank has strong fundamentals in terms of capital, expenses and risk management. CIBC’s balance sheet and capital position are very strong. At the end of fiscal 2011, CIBC’s Tier 1 capital ratio rose to 14.7% and Tangible Common Equity to 11.4%. When measured using the Basel III regulatory standards, which will not be fully implemented until 2019, CIBC’s pro-forma common equity ratio of 8.1% already exceeds the required minimum level of 7%. In the areas of efficiency and risk, CIBC maintained our non-interest expense to revenue ratio at our objective of industry median. Loan losses declined to $841 million, supported by effective risk management across our businesses. While our world is changing, CIBC’s objective to provide value to those who rely on us – our clients, our employees, our communities and our shareholders – remains core to our future. That focus, combined with our strong capital base, growing businesses and clear view of the way forward, gives us confidence as we enter 2012. As always, our employees continue to be at the foundation of our success. Their dedication and commitment have brought us to the position we find ourselves in today and I would like to thank them for their contribution during 2011. Gerald T. McCaughey President and Chief Executive Officer **21.3%** Return on Equity was the highest among the Canadian banks and up 10% year-over-year. **14.7%** Our industry-leading Tier 1 capital ratio is among the highest of the global banks. CIBC continued its leadership in mobile banking innovation for clients by being the first bank in Canada to bring a mobile trading App to investors. CIBC has achieved important progress during a period of significant change within the worldwide financial services industry. ## Chair of the Board’s letter Charles Sirois ### Another dynamic year in global financial services CIBC achieved solid results for all of our shareholders, clients, employees and the communities we serve, in what was another dynamic year in global financial markets. In this changing environment, your Board has been steadfast in its commitment to maintaining strong governance principles. Over the last year, the Board continued its focus on enhancing CIBC’s governance systems, Board renewal, Board effectiveness and risk management oversight. We also focused on furthering our stakeholder engagement framework, talent management and executive compensation philosophy. Our best-in-class corporate governance standards were recognized in 2011 by GMI, the leading independent provider of global corporate governance risk ratings and research, which placed CIBC in the top 1% of companies rated. ### Stakeholder engagement – a key part of our investor relations program Maintaining an ongoing dialogue with our investors is a priority of your Board. Our stakeholder engagement framework ensures that the Board is current on the views of our stakeholders. Our formalized process and enhanced focus in this area have allowed us to be more proactive. Our emphasis on effective stakeholder engagement extends beyond the meetings we have with investors to our overall communication strategy. Over the course of 2011, I had the opportunity to meet one-on-one with a number of CIBC shareholders who collectively represent more than 22% of CIBC’s outstanding shares. ### Strategy and risk – a Board enriched process Corporate strategy, and its successful execution, is a key determinant of shareholder value. Although strategy is management’s responsibility, the Board has been very active over the last year with management in participating in CIBC’s ongoing strategic planning process. Together with management, we have focused on specific strategic themes, including domestic and international growth, as well as the strategic management of cost, risk and talent. Our experienced directors bring an independent, balanced and value-added perspective to this process. In addition, your Board has been actively engaged in educational sessions focused on understanding the impact of the changing environment on themes that are critical to CIBC’s strategy. As part of CIBC’s financial and strategic planning process, the Board’s Risk Management Committee continues to refine CIBC’s risk appetite to maintain a strong alignment between risk and business strategy. The refinements reflect CIBC’s goal to be a lower-risk Canadian bank with a view to strategically grow in select businesses where our competitive capabilities and market opportunities align. Our risk appetite statement is an important guiding principle in support of our risk culture at CIBC and is aligned with our strategic imperative of consistent and sustainable performance. Our strong foundation of corporate governance enables us to operate in a manner that prudently assesses and mitigates risk while supporting business innovation or growth. ### Executive compensation and talent management CIBC has further developed its talent management strategy with the support of the Management Resources and Compensation Committee. This strategy focuses on understanding the impact of our business strategy on talent demands, furthering leadership development and enhancing succession planning for critical roles, as well as employees at all levels. Executive compensation continues to be a key area of focus with the objective of aligning CIBC’s executive compensation program with CIBC’s strategy and emerging best practices in the marketplace. The redesign of our senior executive team compensation program in 2009 and 2010 impacted a broader executive population and expanded the use of performance vesting criteria and equity deferrals. These details are well described in CIBC’s 2012 Management Proxy Circular that will be available in March. Our advancements in the area of executive compensation have been widely recognized by our shareholders. ### Looking forward In summary, 2011 was a successful year for your Board and CIBC. Our confidence in CIBC’s strong position and positive future outlook was underscored by the decision to increase the quarterly dividend to shareholders last October. On behalf of the Board, I would like to recognize Gerry and his senior management team for their continued strong leadership and for the critical role they play in ensuring that the bank’s strong governance culture is reflected in our business strategies and priorities. The senior executive team, along with the dedication and efforts of our more than 42,000 employees, is critical to our progress. I would also like to extend my appreciation to Bob Steacy who will be retiring from the Board at our upcoming Annual Shareholder Meeting. In addition, I am grateful to all Board members for their leadership and active engagement in the achievements of CIBC over the last year. Charles Sirois Chair of the Board ## Governance We believe long-term success requires effective governance. CIBC’s Board and management have maintained a longstanding commitment to strong governance principles, fostering a philosophy of transparency and engagement and demonstrating leadership in governance best practices. ### Guided by an independent and experienced Board At the core of our commitment to governance is an independent, experienced Board of Directors that cultivates a culture of integrity and accountability. To ensure we preserve the appropriate complement of Board skills, qualifications and competencies to effectively address CIBC’s evolving needs, we assess directors’ skills and the Board’s performance every year. The responsibility of the Board is to oversee the management of the business and affairs of CIBC. As part of this supervisory duty, the Board utilizes a comprehensive, integrated governance framework which includes an effective committee structure. Four Board committees assist with the execution of the Board’s fiduciary obligations and help to enhance governance: * The **Audit Committee** assists the Board by reviewing CIBC’s financial statements, financial disclosure and internal controls; * The **Corporate Governance Committee** assists the Board in fulfilling its corporate governance oversight responsibilities; * The **Management Resources and Compensation Committee** assists the Board by overseeing CIBC’s human capital, organizational effectiveness, succession planning and compensation programs; and * The **Risk Management Committee** assists the Board by overseeing CIBC’s risk profile and principal business risks against CIBC’s defined risk appetite. Each Committee has a mandate outlining its functions and responsibilities. These mandates can be found on our corporate website at www.cibc.com. In addition, four management committees have been established to support the senior team on the governance and control activities of CIBC: * Capital and Risk Committee; * Disclosure Committee; * Reputation and Legal Risk Committee; and * Governance and Control Committee. ### Adhering to explicit codes of behaviour Accountability is one of CIBC’s core values. To nurture a strong governance culture of ethical integrity and personal accountability, CIBC has policies on personal conduct for directors, employees and contractors that are intended to protect our clients, our employees and CIBC. All members of CIBC’s Board of Directors are required to certify their compliance annually with the **CIBC Code of Ethics for Directors**. The principles in this Code require a consistent and high standard of ethical conduct for all directors. The principles are intended to protect the business ### CIBC’s integrated governance framework Our integrated governance framework guides the Board and management in fulfilling their obligations to CIBC and our stakeholders. The Board reviews the effectiveness of the governance structure annually and is committed to evolving its structure to ensure it serves as the keystone for sustaining excellence in governance in the future. This framework includes a capable and qualified Board with diverse backgrounds and skills; a collaborative and constructive relationship between the Board and senior management; and a robust set of governance and control policies and procedures. ```mermaid graph TD A[Chair of the Board] --> B(Board of Directors) B --> C(Chief Executive Officer) B --> D(Shareholders) B --> E(Auditors) B --> F(Regulators) B --> G(Management) C --> H(Audit Committee) C --> I(Risk Management Committee) C --> J(Capital and Risk Committee) C --> K(Governance and Control Committee) C --> L(Reputation and Legal Risks Committee) C --> M(Asset Liability Committee) B --> H B --> I B --> J B --> K B --> L B --> M H --> G I --> G J --> G K --> G L --> G M --> G H --> E I --> E J --> E K --> E L --> E M --> E H --> F I --> F J --> F K --> F L --> F M --> F H --> D I --> D J --> D K --> D L --> D M --> D H --> A I --> A J --> A K --> A L --> A M --> A C --> L C --> K C --> I C --> J C --> H C --> M ``` **Board of Directors** | Name | Year Appointed | Roles | Affiliation | Location | |---|---|---|---|---| | Brent S. Belzberg | (2005) | (CGC, MRCC – Chair) | Senior Managing Partner, TorQuest Partners | Toronto, Ontario, Canada | | Gary F. Colter | (2003) | (CGC – Chair, MRCC) | President, CRS Inc. | Mississauga, Ontario, Canada | | Dominic D’Alessandro | (2010) | (RMC) | Past President and Chief Executive Officer, Manulife Financial Corporation | Toronto, Ontario, Canada | | Patrick D. Daniel | (2009) | (RMC) | President and Chief Executive Officer, Enbridge Inc. | Calgary, Alberta, Canada | | Luc Desjardins | (2009) | (MRCC) | President and Chief Executive Officer, Superior Plus Corp. | Montreal, Quebec, Canada | | Hon. Gordon D. Giffin | (2001) | (MRCC) | Senior Partner, McKenna Long & Aldridge LLP | Atlanta, Georgia, U.S.A. | | Linda S. Hasenfratz | (2004) | (MRCC) | Chief Executive Officer, Linamar Corporation | Guelph, Ontario, Canada | | Nicholas D. Le Pan | (2008) | (CGC, RMC – Chair) | Consultant | Ottawa, Ontario, Canada | | Hon. John P. Manley P.C., O.C. | (2005) | (AC, CGC) | President and Chief Executive Officer, Canadian Council of Chief Executives | Ottawa, Ontario, Canada | | Gerald T. McCaughey | (2005) | President and Chief Executive Officer, CIBC | Toronto, Ontario, Canada | | Jane L. Peverett | (2009) | (AC) | Corporate Director | West Vancouver, British Columbia, Canada | | Leslie Rahl | (2007) | (RMC) | Founder and Managing Partner, Capital Market Risk Advisors, Inc. | New York, New York, U.S.A. | | Charles Sirois C.M., O.Q. | (1997) | Chair of the Board, CIBC | Chairman and Chief Executive Officer, Telesystem Ltd. | Montreal, Quebec, Canada | | Robert J. Steacy | (2008) | (AC) | Corporate Director | Toronto, Ontario, Canada | | Katharine B. Stevenson | (2011) | (RMC) | Corporate Director | Toronto, Ontario, Canada | | Ronald W. Tysoe | (2004) | (AC – Chair, CGC) | Corporate Director | Jupiter, Florida, U.S.A. | **Committee Abbreviations:** * AC – Audit Committee * CGC – Corporate Governance Committee * MRCC – Management Resources and Compensation Committee * RMC – Risk Management Committee CIBC’s governance practices and principles to confirm that we continue to meet regulatory requirements and that we remain at the forefront of governance best practices. These practices and principles include: * Our **Statement of Corporate Governance Practices** which describes our comprehensive governance framework, states CIBC’s vision and details the Board’s responsibilities. This document explains the Board’s approach to Board composition, director nomination and tenure, Board independence and education, as well as director and executive compensation and management succession. * Our **CIBC Disclosure Policy** which supports consistent and timely communication with CIBC’s stakeholders, outlines our philosophy and practices for disclosing material information to the market, and clarifies the roles and responsibilities of various individuals and groups at CIBC relating to the release of material information. * The **Disclosure Required by NYSE Listed Company Manual** which summarizes the significant differences between the governance practices of CIBC and those required of U.S. domestic companies under the New York Stock Exchange listing standards. As a Canadian public company with securities listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE), CIBC has in place a system of corporate governance practices that meets or exceeds these regulatory requirements. CIBC’s governance practices, policies and standards, including the Disclosure Required by NYSE Listed Company Manual, can all be found in the Governance section of our website at www.cibc.com. ## Performance against objectives Our progress against our strategic priorities in 2011 supported strong performance. Our strategy is creating value for our shareholders by delivering consistent and sustainable earnings over the long term. We are maintaining our medium-term objectives under the new International Financial Reporting Standards (IFRS). ### Financial | Medium-term objectives | 2011 results | |---|---| | **Earnings per share (EPS) growth** | Diluted EPS growth of 5%–10% per annum, on average, over the next 3–5 years | 2011 EPS of **$7.31** | | | | 2010 EPS of **$5.87** | | **Return on equity (ROE)** | Return on average common equity of 20% through the cycle (calculated as net income less preferred share dividends and premium on redemptions expressed as a percentage of average common shareholders‘ equity) | ROE: **21.3%** | | **Capital strength** | Tier 1 capital ratio target of 8.5% | Tier 1 capital ratio: **14.7%** | | | Total capital ratio target of 11.5% | Total capital ratio: **18.4%** | | **Business mix** | 75% retail$^{(1)}$/25% wholesale (as measured by economic capital$^{(2)}$) | **77%/23%** retail/wholesale (as measured by economic capital$^{(2)}$) | | **Risk** | Maintain provision for credit losses as a percentage of loans and bankers‘ acceptances (loan loss ratio) on a managed basis$^{(2)}$ between 50 and 65 basis points through the business cycle | Loan loss ratio on a managed basis$^{(2)}$: **48 basis points** | | **Productivity** | Achieve a median ranking within our industry group, in terms of our non-interest expense to total revenue (cash efficiency ratio, taxable equivalent basis (TEB)$^{(2)}$) | Cash efficiency ratio, TEB$^{(2)}$: **58.8%** | | **Dividend payout ratio** | 40%–50% (common share dividends paid as a percentage of net income after preferred share dividends and premium on redemptions) | Dividend payout ratio: **47.9%** | | **Total shareholder return** | Outperform the S\&P/TSX Composite Banks Index (dividends reinvested) on a rolling five-year basis | Five years ended October 31, 2011: **CIBC: 9.3%** Index: **24.3%** | $^{(1)}$ Retail includes Retail and Business Banking, Wealth Management and International Banking operations (reported as part of Corporate and Other). $^{(2)}$ For additional information, see the “Non-GAAP measures” section. A constituent of the Dow Jones Sustainability World Index for 10 consecutive years, and a member of the Dow Jones Sustainability North American Index since its inception in 2005. Listed on the FTSE4Good Index since its inception in 2001. A member of the Jantzi Social Index since its inception in 2000. Performance against objectives Our progress against our strategic priorities in 2011 supported strong performance. Our strategy is creating value for our shareholders by delivering consistent and sustainable earnings over the long term. We are maintaining our medium-term objectives under the new International Financial Reporting Standards (IFRS). ### Non-financial | Objectives | Accomplishments | |---|---| | **Clients** | Help our clients achieve what matters to them | * Named “Best in Mobile Banking” globally by *Global Finance* magazine * Launched new CIBC Mobile Brokerage App and CIBC Home Advisor App – both firsts in Canada * Became largest dual issuer of Visa and MasterCard credit cards in Canada * Introduced new CIBC MasterCard credit cards * Introduced a new competitive pricing offer in CIBC Investor’s Edge * \#1 on the TSX in trading (volume and value) * \#1 in customer satisfaction for President’s Choice Financial | | **Employees** | Create an environment where all employees can excel | * Increased our Employee Commitment Index for the sixth consecutive year * Selected as one of Canada’s Best Employers for New Canadians for the fourth consecutive year * Recognized as one of Canada’s Best Diversity Employers * Named one of Canada’s 10 Most Admired Corporate Cultures * Invested approximately $58 million in the training and development of our people | | **Community** | Make a real difference in our communities | * Invested more than $35 million to support communities across Canada * Marked the 15th anniversary of the Canadian Breast Cancer Foundation CIBC Run for the Cure with more than $30 million raised * Raised $4.1 million on CIBC Miracle Day in December 2010 to support children’s charities throughout 2011 * Contributed more than $7.9 million to the 2010 United Way campaign * Named Canada’s top fundraising team for the 2010 Movember campaign | | **Environment** | Demonstrate environmental responsibility in all activities | * Included on the Carbon Disclosure Leadership Index for our disclosure of GHG emissions and strategies to address climate change related risks and opportunities * Reduced energy consumption across Canadian operations by 7.8% since 2009 * Increased the use of Forest Stewardship Council (FSC) certified paper stock to 94% * Arranged over $1.5 billion in public and private equity financing and advised on the purchase or sale of more than $20 billion in assets for companies in the Renewable Energy & Clean Tech segment since 2009 * Recognized with the Gold Technology Accelerator Award by Renewed Computer Technology for our donations of surplus IT equipment | | **Governance** | Be a leader in governance practices | * Ranked in the top 1% of all companies rated by GMI for best-in-class corporate governance standards * Ranked \#1 in corporate governance disclosure among financial services sector peers in the 2010 CICA Corporate Reporting Awards * Ranked 4th on Bloomberg Markets’ Top 20 List of the World’s Strongest Banks after delivering the strongest return on equity of any major bank in the developed world and the highest total shareholder return among Canadian banks last year | Named a Best Employer for New Canadians for a fourth consecutive year. Recognized as one of Canada’s Best Diversity Employers. Named one of Canada’s 10 Most Admired Corporate Cultures. ## Senior management Our Senior Executives and Senior Leaders set the strategic direction for CIBC, our businesses and functional groups, and provide leadership to more than 42,000 employees as they help our 11 million clients achieve what matters to them. ### Senior Executive Team | Name | Title | |---|---| | Gerald T. McCaughey | President and Chief Executive Officer, CIBC | | Michael Capatides | Senior Executive Vice-President, Chief Administrative Officer and General Counsel, Administration | | Victor Dodig | Senior Executive Vice-President, CIBC, Group Head, Wealth Management | | Kevin Glass | Senior Executive Vice-President, CIBC, Chief Financial Officer, Finance | | Richard Nesbitt | Senior Executive Vice-President, CIBC, Group Head, Wholesale, International, and Technology and Operations | | Hon. Jim Prentice P.C., Q.C. | Senior Executive Vice-President and Vice-Chair, CIBC | | Richard Venn | Senior Executive Vice-President, Advisor to the CEO Office, CIBC | | David Williamson | Senior Executive Vice-President, CIBC, Group Head, Retail and Business Banking | | Tom Woods | Senior Executive Vice-President, Chief Risk Officer, Risk Management | ### Senior Leaders | Name | Title | |---|---| | David Arnold | Executive Vice-President, Finance Shared Services | | Geoff Belsher | Managing Director and Group Co-Head, Wholesale Banking | | Michael Boluch | Executive Vice-President, CIBC Technology | | Harry Colham | Managing Director and Group Co-Head, Wholesale Banking | | Laura Dottori-Attanasio | Managing Director and Global Head, Corporate Credit Products | | Stephen Forbes | Executive Vice-President, Marketing, Communications, President’s Choice Financial and Retail and Business Banking Strategy | | Steve Geist | Managing Director and President, CIBC Asset Management | | Charles Gerber | Executive Vice-President and Deputy General Counsel, Legal, Governance and Control | | Name | Title | |---|---| | Monique Gravel | Managing Director and Head, CIBC Wood Gundy | | Jon Hountalas | Executive Vice-President, Business Banking | | Marybeth Jordan | Managing Director and Head, CIBC Investor Services Inc. | | Christina Kramer | Executive Vice-President, Retail Distribution and Channel Strategy | | Cheryl Longo | Executive Vice-President, Card Products and National Collections | | Art Mannarn | Executive Vice-President, Business Support and Strategic Initiatives | | Brian McDonough | Executive Vice-President, Wholesale Credit and Investment Risk Management | | Jacqueline Moss | Executive Vice-President, Human Resources | | Brian O’Donnell | Executive Vice-President, Risk Services | | John Orr | Executive Vice-President, Strategy and Corporate Development | | Rik Parkhill | Chief Executive Officer, CIBC FirstCaribbean International Bank | | Kevin Patterson | Executive Vice-President, Technology and Operations | | Wayne Ralph | Executive Vice-President, Global Operations and INTRIA | | Duncan Webster | Managing Director, Chief Investment Officer and Head, CIBC Global Asset Management | | Gary Whitfield | Managing Director and Head, Private Wealth Management – Canada | ## Retail and Business Banking Retail and Business Banking provides clients across Canada with financial advice, products and services through a strong team of advisors and nearly 1,100 branches, as well as our ABMs, mobile sales force, telephone banking, online and mobile banking. David Williamson Senior Executive Vice-President, CIBC, and Group Head, Retail and Business Banking Q: How do you compete for the client’s share of wallet in an ongoing competitive and uncertain environment? A: From building their savings and managing their debt to investing in their future, we are focused on helping our clients achieve what matters to them. Canadians, now more than ever, are looking for a bank to build their financial security. We continue to invest in our strong distribution platform to provide our clients with the access and choice to simplify their banking. In 2011, we opened new branches, expanded Saturday and Sunday hours and enhanced our ABM network. We also grew our mobile sales force, developed our telephone and online banking platforms, and strengthened our award-winning and industry-leading mobile banking offer. CIBC employees at the Sahali banking centre in Kamloops, BC celebrate the branch’s grand opening with former professional hockey player Trevor Linden. **Front Row** Murray Redman Karen Joki-Hollanti Trevor Linden Krista Bifano Judy Marchese Dwight Liburd Yousuf Hameed **Middle Row** Lisa Wiebe Lauren Silver Donna Carusi **Back Row** Corey Darling Graham Lye Sherri Valana ### 2011 Highlights Our objective is to continually strengthen our focus as a client centric organization. Across Retail and Business Banking, we are focused on our priorities which are to: build deeper relationships with our clients; improve our sales and service capabilities; and acquire and retain clients who seek deeper and more rewarding relationships. #### Personal Banking * First bank in Canada to launch a mobile brokerage App allowing stock trading on smartphones * Named “Best in Mobile Banking” globally * Celebrated milestone with more than 100 new branches opened in the past four years, providing clients with greater access and choice * Launched new CIBC MasterCard credit cards, broadening the choice for consumers and offering strong client value * Became largest dual issuer of Visa and MasterCard credit cards in Canada with the completion of the Citigroup Canada MasterCard acquisition #### Business Banking * Strong growth in business lending and deposits * Integrated business sales forces to create a better client experience within Commercial Banking * Established a new integrated Global Transaction Banking team * Recruited strong new executive talent in Business Banking * Implemented a new cash management solution for business clients * Sponsored Canada’s 50 Best Managed Companies Program, recognizing excellence in Canadian-owned and managed companies ### Committed to our clients Retail and Business Banking continued to invest throughout 2011 in areas that provide greater access and choice to our clients in how and when they do their everyday banking: * We were the first bank in Canada to launch a mobile brokerage App allowing stock trading on smartphones, furthering our leadership in this emerging space on behalf of our clients. * We were recognized by *Global Finance* magazine as “Best in Mobile Banking – Consumer Internet Banks” among banks globally. * We celebrated a milestone with more than 100 new branches opened in the past four years and now have nearly 1,100 branches operating across the country. * We were the first bank to offer Sunday banking and we extended branch operating hours to include more branches opening on Saturday. * We became the largest dual issuer of Visa and MasterCard credit cards in Canada with the completion of the Citigroup Canada MasterCard acquisition. * We launched the CIBC Advantage Card, Canada’s first Visa Debit card that provides our clients more flexibility when shopping online or while out of the country. * We enhanced our focus on business banking, resulting in higher volumes and lending balances that grew above market rates. As we close fiscal 2011, our business is well positioned. We have built and renovated more branches, extended our branch operating hours, launched new products and reinforced our leadership position in mobile banking with our home advisor and stock trading Apps. | Metric | 2009 ($ billions) | 2010 ($ billions) | 2011 ($ billions) | |---|---|---|---| | **Revenue** | 7.1 | 7.6 | 8.0 | | **Net income** ($ billions) | 1.5 | 1.8 | 2.1 | | **Funds managed** ($ billions) | 346.1 | 363.7 | 378.3 | | **Efficiency ratio** (%) | 51.5 | 50.7 | 51.0 | ### Investing in areas that matter to our clients To further our business in 2012 and beyond, we are focused on our priorities which are to: build deeper relationships with our clients; improve our sales and service capabilities; and acquire and retain clients who seek deeper and more rewarding relationships. Our objective is to continually strengthen our focus as a client-centric organization. In support of this, we completed a reorganization mid-way through 2011 which included consolidating all sales and client channels under one leadership team structure. We also created a new senior cross-product leadership role to streamline processes across all of our sales, channel and product activities. We have also launched a series of initiatives in support of our three priorities which will provide added benefit to our clients in the years to come. #### Deepening client relationships Our focus is to build long-lasting and deep relationships with our clients. In support of this we have: * modified frontline incentives to better align how we incent our frontline staff to address and fulfill client needs; * making adjustments to branch staffing levels so that we have more staff available to serve clients in our high traffic branches; * continued to invest in our strong distribution platform, adding more than 100 new or renovated branches over the past four years and enhancing our capabilities in telephone, online, ABM and mobile banking; * expanded our branch operating hours with more than 500 branches now open on Saturdays and more than 50 branches now open on Sundays; and * reorganized and invested further in expanding our business banking sales team so we can better address the needs of our business banking clients across Canada. CIBC launched new CIBC MasterCard credit cards in 2011, offering greater choice for consumers within CIBC’s industry-leading credit card lineup. #### Improving our sales and service capabilities At the same time, our goal is to continually make it easier for our frontline staff to address the needs of our clients. We have launched a series of initiatives aimed at improving our sales and service capabilities, just some of which include: * launching a new problem resolution process that allows our frontline teams to resolve client issues more quickly and at first point of contact; * focusing on streamlining our adjudication processes for personal lending products including loans, lines of credit and mortgages; and * simplifying sales and frontline reporting, thereby freeing up more time for our frontline leaders to spend with clients. Continuous improvement of our sales and service capabilities will be a key focus in 2012. #### Acquiring and retaining clients In addition, we are investing in areas that will allow us to acquire and retain clients who seek deeper and more rewarding relationships. We know that our clients are looking for new ways to bank with us so we have made innovation a key priority. Examples are: * continued to lead the industry in Canada in mobile banking innovation by expanding our innovation in this area with the launch of the CIBC Mobile Brokerage App and the CIBC Home Advisor App – both firsts in Canada; * named “Best in Mobile Banking” among banks globally by *Global Finance* magazine; and * named the lead sponsor of the Pan Am and Parapan Am Games, which will be held in Canada in 2015. CIBC was the proud presenting sponsor of the 2011 International Indian Film Academy Awards celebrations in Toronto. We engaged Bollywood fans from coast-to-coast and brought the glamour and creativity of the Indian film industry to life for Canadians of all backgrounds. | Deepening client relationships | Improving sales and service capabilities | Acquiring and retaining clients | |---|---|---| | * Modified frontline incentives * Making adjustments to branch staffing * Continued to invest in our strong distribution platform * Expanded branch operating hours * Reorganized and invested further in expanding our business banking sales team | * Launched a new problem resolution process to resolve client issues more quickly and at first point of contact * Streamlined frontline client adjudication processes * Simplified sales and frontline reporting, thereby freeing up more time for our frontline leaders to spend with clients | * Continued mobile banking innovation with the launch of the CIBC Mobile Brokerage App and the CIBC Home Advisor App * Named “Best in Mobile Banking” among banks globally by *Global Finance* magazine * Became the largest dual issuer of Visa and MasterCard credit cards in Canada * Named the lead sponsor of the 2015 Pan Am and Parapan Am Games | ## Wealth Management Wealth Management comprises asset management, retail brokerage and private wealth management businesses. Combined, these businesses offer an extensive suite of leading investment and relationship-based advisory services to meet the needs of institutional, retail, and high net worth clients. Victor Dodig Senior Executive Vice-President, CIBC, and Group Head, Wealth Management Q: What are your plans for growth outside Canada? A: This year CIBC acquired a 41% equity stake in American Century Investments, a leading U.S. asset management firm that complements our existing investment capabilities while providing CIBC with additional growth opportunities and diversification. Steady fee-based earnings, capital efficiency and favourable consumer trends, such as an aging demographic and increased savings rates, make the global expansion for asset management very attractive. We will continue to invest in our Wealth Management platform, domestically and internationally, to enhance our client value and strengthen shareholder returns. The CIBC team responsible for the development of the CIBC Mobile Brokerage App demonstrates how investors can make trades on the go through their mobile device. **Front Row** Matt Skinner Steve Tyers Andrej Podgajski **Back Row** Richard Allen Nuno Carreira Dom Dallaire Randy Dulay ### 2011 Highlights Our objective is to be a leader in wealth management solutions in markets where we offer advice and to be a leading global asset manager by delivering exceptional value for our clients, our employees, our shareholders, and our communities. * Acquired a 41% equity stake in American Century Investments, a leading U.S. asset management firm * Launched a CIBC Mobile Brokerage App, making CIBC the first bank to bring mobile trading to Canadian investors * Delivered record growth of 44% in net sales of long-term mutual funds * Investment performance consistently ranked amongst industry leaders * CIBC Wood Gundy ranked \#2 in full-service brokerage and experienced a solid increase in client satisfaction * Expanded our CIBC Private Wealth Management footprint in four cities across Canada * Delivered 2% growth in assets under administration | Metric | 2009 ($ billions) | 2010 ($ billions) | 2011 ($ billions) | |---|---|---|---| | **Revenue** | 1.4 | 1.5 | 1.6 | | **Net income** ($ billions) | 189 | 225 | 279 | | **Assets under administration** ($ billions) | 180 | 199 | 203 | | **Mutual funds** ($ billions) | 43.8 | 48.6 | 51.4 | Wealth Management provides specialized advice to our retail and institutional clients. ### Strengthening specialized advisory capabilities Wealth Management plays an important role in CIBC’s client advisory offer by providing custom-tailored solutions to our retail and institutional clients. Through leading industry experts, we also deliver a range of specialized capabilities such as: * tax and estate planning for high net worth individuals; * business transition planning and support for small- and mid-sized business owners; and * innovative thinking and ideas to our institutional clients. As a business, we continue to grow and strengthen our advisory capabilities. Our dedicated team of specialists, such as Financial Planners, Wealth Advisors and Estate Planning Specialists, work in partnership with advisors across the organization. Together, these specialists provide comprehensive planning to clients with more complex needs to help them preserve and grow their wealth. ### Providing clients with solutions for every stage of life #### Enhancing value for our clients In 2011, Wealth Management launched a number of innovations to provide our clients with enhanced value and to further deepen our relationships. A new pricing offer within our self-directed brokerage business, CIBC Investor’s Edge, rewards our self-directed clients with one of the most competitive trading prices available in Canada. The launch of mobile trading in 2011 further leveraged technology to enhance our clients’ experience. CIBC was the first bank to bring a mobile trading App to Canadian investors. Technology continues to play a key role. These investments in our business have helped to enhance the value that we aim to provide our clients each and every day and to deliver on our promise of an excellent client experience. #### Driving superior investment performance Delivering strong investment performance and solid returns for our clients is a key focus for our Wealth Management business. In 2011, we further strengthened our capabilities and enhanced our team of investment professionals, particularly with key hires in Canadian Equities and Fixed Income. Our open-architecture approach also allows us to hire the very best sub advisors the world over. CIBC is one of the largest purchasers of outside money management services in Canada, which provides our clients with access to the industry’s leading investment professionals, globally. Our team-based approach, investment discipline and open architecture have been very successful in yielding results for our clients. Throughout the year, our investment performance has consistently ranked amongst the leaders in the industry. Our investment performance is consistently ranked amongst industry leaders. We help clients grow and preserve their wealth for future generations. #### Developing innovative investment solutions and products We continue to evolve our investment solutions through product innovation and enhancements to meet the needs of our clients. This year, we launched a number of new products, including the Renaissance Optimal Inflation Opportunities Portfolio, which is designed to mitigate inflation risk and provide growth opportunities by taking advantage of the changing economic environment around the world. In addition, we broadened our Premium Class series to offer our clients even greater value through lower costs, greater performance and increased pricing transparency. As more Canadians near retirement, the need for investment products which provide income while limiting exposure to inflation, taxation and risk increases. We are focused on meeting this need and providing our clients with solutions that will provide comfort and security throughout their retirement years. We continue to evolve our investment solutions to meet the changing needs of our clients. We provide advice and solutions to our clients to give them comfort and security in their retirement. ##### Advice and solution innovation * First to market with a mobile trading App for Canadian investors * Industry-leading client experience in full-service brokerage * Rewarding our clients and deepening relationships with self-directed brokerage loyalty pricing * Investing in our advisory offer with new advisor training program ##### Investment performance * Momentum in long-term retail mutual fund sales * Delivering solid investment performance for our clients * Leader in separately managed account programs ##### Strengthening our platform * Building international asset management profile * Advancing the Renaissance Investments brand, our third-party fund offering * Simplifying processes for our clients ## Wholesale Banking Wholesale Banking provides a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and key markets around the world. Richard Nesbitt Senior Executive Vice-President, CIBC, and Group Head, Wholesale, International and Technology and Operations Q: How will you ensure you continue to meet the evolving demands of wholesale clients? A: Clients are more sophisticated than ever and we have to support and grow with them. Our clients are increasingly looking beyond Canada to meet their business objectives and we are extending our service and product offerings globally to respond to these evolving needs. We are growing our corporate lending, investment banking, foreign exchange, distribution and capital markets capabilities in select global markets. Another key area for us is technology. Clients are demanding innovation – we have to be responsive. That’s why our leadership position in electronic trading, our focus on e-Commerce and foreign exchange and the launch of new products such as our CORE smart order routing engine for equity trading are so important to us and to the service we provide our clients. This year, CIBC supported Brookfield Asset Management Inc. and associated companies by participating in 22 financing transactions totaling $3.2 billion. **Back Row** Scott Smith, Wholesale Banking (CIBC) Jon Haick, Brookfield Asset Management Inc. (Brookfield) Peter Mastromarini, CIBC **Front Row** Paul Farrell, CIBC Sam Pollock, Brookfield Kelly Marshall, Brookfield Sean Gilbert, CIBC ### 2011 Highlights Our objective is to be the premier client-focused wholesale bank centred in Canada with a reputation for consistent and sustainable earnings, for risk-controlled growth and for being a well-managed firm known for excellence in everything we do. CIBC participated in a number of key transactions as: * financial advisor to Equinox Minerals Limited on its $7.3 billion sale to Barrick Gold; * lead manager of Intact Financial Corporation’s (Intact) $962 million common equity offering – the largest Canadian bought deal in 2011 – and lead arranger of $1.6 billion in credit facilities for Intact; * financial advisor to Ontario Power Generation’s award-winning $1.9 billion debt financing program to fund the redevelopment and expansion of four hydroelectric generating stations on the Lower Mattagami River; mandate included acting as joint bookrunner on the program’s inaugural $475 million bond transaction; * joint bookrunner on two unsecured debenture offerings for Bell Canada totalling $2.0 billion; * sole lead arranger for a $1.5 billion revolving credit facility for TransAlta; and * lead manager of the Whistler Blackcomb Holdings Inc., Parallel Energy Trust and Pretium Resources Inc., Initial Public Offerings (IPO), as well as senior co-manager of the General Motors IPO. ### Being the premier client-focused wholesale bank Our mission and goal for Wholesale Banking have remained unchanged since 2008. We continue to focus on being the premier client-focused wholesale bank, with a mission of bringing Canadian capital markets products to Canada and the rest of the world and bringing the world to Canada. Our client-focused strategy positions us well to achieve a strong market position in our key business categories, including equity trading and underwriting, mergers and acquisitions, corporate and government debt underwriting and loan syndication. Our corporate lending capability is a key priority and we are making significant progress in this area. | Metric | 2009 ($ millions) | 2010 ($ millions) | 2011 ($ millions) | |---|---|---|---| | **Revenue** | 554 | 1,767 | 2,064 | | **Net income** ($ millions) | -472 | 342 | 565 | | **Economic Capital** ($ billions) | 2.8 | 2.3 | 2.2 | | **Average Value at Risk (VaR)** ($ millions) | 6.3 | 4.2 | 6.5 | CIBC completed 35 IPOs, raising $2.2 billion, more than any other Canadian financial institution this fiscal year. ### Priorities * Client-focused strategy * Profitable leadership in core businesses * Grow with CIBC ### 2011 in review #### Capital markets * Participated in 250 deals, more than any other Canadian dealer * Ranked \#1 in market share (up from \#2 in 2010), maintaining our status as the \#1 or \#2 equity underwriter in Canada since 2003 * Led several large offerings, most notably Intact’s $962 million offering and Brookfield Asset Management’s $578 million offering * \#1 in market share in equity trading by both volume and value * Broadened client-focused product capabilities, including the delivery of the CORE platform * Improved foreign exchange market share | | 2009 (Revenue, $ millions) | 2010 (Revenue, $ millions) | 2011 (Revenue, $ millions) | |---|---|---|---| | **Capital markets** | 1,291 | 1,051 | 1,111 | | **Corporate and investment banking** | 694 | 718 | 952 | #### Corporate and investment banking * Maintained strong position in mergers and acquisitions, debt underwriting, and syndicated lending, and improved market position in equity underwriting * Improved Canadian lending market share; global authorized loan commitments up 21% * Expanded our U.S. Energy lending capabilities, to more effectively serve both existing and new clients * Increased focus on Infrastructure, with our Project Finance team leading, co-leading, or participating in debt financing for a number of power projects across a variety of industries including renewable power, conventional power, transmission, health-care, justice, and transportation ### Growing and developing our business while maintaining a risk discipline #### Identifying growth opportunities Within Wholesale Banking we continue to look for new ways to grow and develop our business. In addition to opportunities for risk controlled growth in our core Canadian based businesses, we are focusing on selective expansion in our regional markets and development of new products and services that meet the needs of our clients as well as the risk profile of CIBC. Within Wholesale Banking we have identified and assessed a number of opportunities that will support our growth including: * Expansion of our lending activities internationally, leveraging our existing industry expertise to drive ancillary growth in other Wholesale Banking products and services globally. * Global expansion of investment banking, building our international presence by advising corporations in industries where we have a longstanding tradition of expertise and service – for example, the resource and mining sectors. * Growth of foreign exchange by expanding our global distribution capability and our product options. * Expansion of our infrastructure finance activities by growing our market position in Canada. * Building a leading technology capability to further strengthen our track record of delivering innovation and access for our clients. Our vision is to be our clients’ preferred wholesale banking partner across multiple products, services and markets. ```mermaid graph TD A[Identifying growth opportunities] --> B(Expansion of our lending activities internationally) A --> C(Global expansion of investment banking) A --> D(Growth of foreign exchange) A --> E(Expansion of our infrastructure finance activities) A --> F(Building a leading technology capability) ``` ### Expanding beyond Canada while reaping awards on home ground In support of these opportunities, this year we opened a new Wholesale Banking office in London, England and a new Corporate Credit Products office in Houston, Texas. These openings highlight our commitment to building our capabilities to address the needs of our clients who are increasingly expanding their markets globally. In 2011, CIBC’s wholesale banking business was recognized as a leader in many areas: * CIBC was the leading M\&A advisor in Canada, based on dollar value of announced deals, according to *Thomson Financial*. * Our Foreign Exchange business ranked \#1 for market share gains in foreign exchange volume with clients who trade under $5 billion a year, by *Euromoney’s* 2011 annual survey. * CIBC was named a 2011 *Greenwich Associates* Quality Leader in Canadian Foreign Exchange Service. * Leader in Canadian Equity Trading – \#1 in volume, value and number of trades. * \#1 in Direct Market Access among Canadian bank-owned dealers by the *Forefactor Canadian Investment Technology Awards* 2011. * Brendan Woods International ranked CIBC’s research team \#3 in Canada, with nine all-star analysts. The largest electronic initiative in our cash equities business this year was the delivery of the CORE platform – a groundbreaking smart order routing engine that combines ultra-fast processing speed with powerful risk filters in a single equity trading platform. The service and value we deliver to our clients and the breadth of our product offerings are being recognized and are helping to build our reputation as a premier client-focused wholesale bank. ```mermaid graph LR subgraph Client-focused strategy C1(Premier client-focused capabilities in our investment banking and capital markets businesses) C2(Top-ranked research expertise) C3(Longstanding relationships with many of Canada’s leading private and public sector enterprises) end subgraph Profitable leadership in core businesses P1(Building and growing our corporate credit capabilities) P2(Leading the way in electronic trading) end subgraph Grow with CIBC G1(Expanding our credit, investment banking and capital markets activities in key global markets) G2(Building technology solutions to meet client demands for speed, security and convenience) G3(Supporting and financing Canadian infrastructure projects) end ``` ## Corporate Responsibility Our commitment to corporate responsibility extends from our vision, mission and values and is integrated into our operations and business practices. We recognize that the long-term success and viability of our business is closely linked to the confidence and trust our clients and stakeholders have in our organization. This year, CIBC has developed a framework to help guide our performance and enhance our overall reporting capabilities based on our economic, environmental, social and governance (EESG) commitments. We continue to focus on: * providing accessible and affordable banking to Canadians; * advancing the goals of small business; * creating an environment where all employees can excel; * making a real difference in our communities; and * protecting our environment. ### Economic contribution CIBC is a major contributor to the Canadian economy and to the communities in which we work and live. We generate economic growth and prosperity by creating employment opportunities, purchasing local goods and services, supporting small business, helping our clients achieve their financial goals and by addressing community development issues that matter to Canadians. ### What matters to our clients – we continually look for ways to make banking easier and more flexible for our clients by offering greater access and choice, broader community and business support, and ensuring transparency and accountability in our business dealings. CIBC has had a long-term commitment to supporting breast cancer initiatives and in 2011, marked its 15th anniversary as proud title sponsor of the Canadian Breast Cancer Foundation CIBC Run for the Cure. Over 13,000 CIBC employees, friends and family took part in this year’s event and helped raise $3 million. Since 1992, Team CIBC has raised almost $30 million towards the Foundation’s vision of creating a future without breast cancer. ### Environmental responsibility Our environmental policy commits CIBC to responsible and sustainable growth while protecting and conserving the environment, safeguarding the interests of all CIBC stakeholders from unacceptable levels of environmental risk, and supporting the principles of sustainable development. **94% of paper used is FSC-certified** ### Social investment CIBC’s success comes from fulfilling the commitments we have made to each of our stakeholders – creating an environment where all employees can excel, making a real difference in our communities, and helping our clients achieve what matters to them. **Our employees** – we focus on what matters to our employees such as access to career and development opportunities, safe and healthy workplaces, effective training, and positive work-life balance. These efforts help ensure that employees are able to perform at their best, contribute to their communities and advance CIBC’s vision of being the leader in client relationships. **Achieved our highest recorded Employee Commitment Index** CIBC helped 30 grade 10 students make their post-secondary dreams a reality through the CIBC Youthvision Scholarship Program. Over 390 scholarships have been awarded since 1999. **Our communities** – we are committed to causes that matter to our clients, employees and communities. Our goal is to make a difference through corporate donations, sponsorships and the volunteer spirit of our employees. **More than $35 million invested to support communities across Canada** | Community Investment Breakdown | Percentage | |---|---| | Cures | 35% | | Kids | 29% | | Community | 33% | | Other | 3% | Percentage of community investment by Kids, Cures and Community. CIBC is committed to investing in Kids, Cures and Community. We care about nurturing and educating Canada’s children and young adults so they can build a better future. We care about bringing hope and relief to people fighting cancer so together we can find a cure. We care about the communities we live in and work each day to make them stronger. On December 1, 2010, participating Wholesale Banking employees and CIBC Wood Gundy Investment Advisors together with clients donated their fees and commissions to support children’s charities across Canada. CIBC Miracle Day raised a record $4.1 million in 2010 and more than $60 million since its inception in 1984. ### Governance practices At CIBC, we conduct our business with honesty and integrity. We hold ourselves accountable for our actions and strive to fulfill the commitments we have made to each of our stakeholders. These values guide our behaviour and performance, and help to maintain the trust and confidence placed in our organization. **Among top 1% of companies rated for best-in-class corporate governance – GMI** CIBC is an *Imagine Canada Caring Company*. CIBC’s online Corporate Responsibility Report and Public Accountability Statement will be available in February 2012 at www.cibc.com. ## Management’s discussion and analysis Management’s discussion and analysis (MD\&A) is provided to enable readers to assess CIBC’s results of operations and financial condition for the year ended October 31, 2011, compared with prior years. The MD\&A should be read in conjunction with the audited consolidated financial statements, which have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). Unless otherwise indicated, all amounts in the MD\&A are expressed in Canadian dollars. Certain comparative amounts have been reclassified to conform with the presentation adopted in the current year. This MD\&A is current as of November 30, 2011. Additional information relating to CIBC is available on SEDAR at www.sedar.com and on the U.S. Securities and Exchange Commission’s (SEC) website at www.sec.gov. No information on our website (www.cibc.com) should be considered incorporated herein by reference. A glossary of terms used in the MD\&A and the consolidated financial statements is provided on pages 230 to 234 of this Annual Report. 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 U.S. Securities and Exchange Commission and in other communications. These statements include, but are not limited to, statements made in the “Creating value for our shareholders”, “Message from the President and Chief Executive Officer”, “Performance Against Objectives”, “Overview”, “Financial Performance Overview – Taxes”, “Financial Performance Overview – Outlook for calendar year 2012”, “Business Line Overview – Retail and Business Banking”, “Business Line Overview – Wealth Management”, “Business Line Overview – Wholesale Banking”, “Financial Condition – Capital Resources”, “Management of Risk – Liquidity Risk”, “Accounting and Control Matters – Risk Factors Related to Fair Value Adjustments” and “Accounting and Control Matters – Contingent Liabilities” sections, of this report and other statements about our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies and outlook for 2012 and subsequent periods. Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate” and other similar expressions of 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 “Financial Performance Overview – Outlook for calendar year 2012” section of this report, and are subject to inherent risks and uncertainties that may be general or specific. 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: credit, market, liquidity, strategic, operational, reputation and legal, regulatory and environmental risk discussed in the ”Management of Risk“ section of this report; legislative or regulatory developments in the jurisdictions where we operate, amendments to, and interpretations of, risk-based capital guidelines and reporting instructions; the resolution of legal 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; the possible effect on our business of international conflicts and the war on terror; natural disasters, public health emergencies, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; the accuracy and completeness of information provided to us by clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates; intensifying competition from established competitors and new entrants in the financial services industry; technological change; global capital market activity; changes in monetary and economic policy; currency value fluctuations; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations; changes in market rates and prices which may adversely affect the value of financial products; 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; 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. 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. | Section | Page | |---|---| | 27 Overview | 27 | | 27 Vision, mission and values | 27 | | 27 Our first principle and strategic imperative | 27 | | 27 Performance against objectives | 27 | | 29 Economic and market environment | 29 | | 30 Financial performance overview | 30 | | 30 Financial highlights 2011 | 30 | | 31 2011 financial performance | 31 | | 31 Net interest income and margin | 31 | | 31 Non-interest income | 31 | | 32 Trading activities | 32 | | 32 Provision for credit losses | 32 | | 33 Non-interest expenses | 33 | | 33 Taxes | 33 | | 34 Foreign exchange | 34 | | 34 Significant events | 34 | | 35 Outlook for calendar year 2012 | 35 | | 35 Fourth quarter review | 36 | | 36 Quarterly trend analysis | 36 | | 37 Review of 2010 financial performance | 37 | | 39 Non-GAAP measures | 39 | | 41 Business line overview | 41 | | 42 Retail and Business Banking | 42 | | 44 Wealth Management | 44 | | 46 Wholesale Banking | 46 | | 51 Corporate and Other | 51 | | 52 Financial condition | 52 | | 52 Review of condensed consolidated balance sheet | 52 | | 53 Capital resources | 53 | | 58 Management of risk | 58 | | 63 Risk overview | 63 | | 64 Board of Directors (the Board): The Board oversees the enterprise-wide risk management program through approval of our risk appetite and supporting risk management policies and limits. The Board accomplishes its mandate through its Risk Management and Audit committees, described below. | 64 | | 64 Risk Management Committee (RMC): This committee assists the Board in fulfilling its responsibilities for approving CIBC’s risk appetite and overseeing CIBC’s risk profile and performance against the defined risk appetite. This includes oversight of policies, procedures, and limits related to the identification, measurement, monitoring, and control of CIBC’s principal business risks. | 64 | | 64 Audit Committee: The Audit Committee reviews the overall adequacy and the effectiveness of internal controls and the control environment, including controls over the risk management process. | 64 | | 64 Senior Executive Team (SET): The SET, led by the CEO, and including the executives reporting directly to the CEO, is responsible for setting business strategy and for monitoring, evaluating, and managing risks across CIBC. The SET is supported by the following committees: | 64 | | 64 Capital and Risk Committee (CRC): This committee, which comprises the SET, senior leaders from the lines of business and Risk Management and other infrastructure groups, provides a forum for the strategic assessment of risks and risk-mitigation strategies. Key activities include reviewing, evaluating and recommending CIBC’s risk appetite statement and risk strategies; reviewing and evaluating business strategies in the context of our risk appetite; and identifying, reviewing, and advising on current and emerging risk issues and associated mitigation plans. | 64 | | 64 Governance and Control Committee (GCC): This committee, which comprises senior leaders from Risk Management, lines of business and other infrastructure groups, acts as the senior point of management review with respect to the design and effectiveness of CIBC’s governance and internal control structure, within the parameters and strategic objectives established by the CEO and direction provided by the Board. | 64 | | 64 Reputation and Legal Risks (RLR) Committee: This committee, which comprises senior leaders from Risk Management and other infrastructure groups, reviews transactions for potential material reputation and/or legal impacts and provides oversight of our policies and procedures relative to the management of reputation and legal risks. | 64 | | 65 Risk management | 65 | | 65 Risk identification and measurement | 65 | | 65 Risk controls | 65 | | 66 Credit risk | 66 | | 67 Credit risk mitigation | 67 | | 68 Exposure to credit risk | 68 | | 71 Business and government exposures by industry groups | 71 | | 73 Total loans and acceptances | 73 | | 73 Impaired loans | 73 | | 74 Allowance for credit losses | 74 | | 77 Exposure to certain countries and regions | 77 | | 78 Selected exposures in certain activities | 78 | | 79 European leveraged finance | 79 | | 79 Settlement risk | 79 | | 80 Market risk | 80 | | 81 Process and control | 81 | | 81 Risk measurement | 81 | | 82 Value-at-Risk | 82 | | 82 Stress testing and scenario analysis | 82 | | 82 Backtesting | 82 | | 83 VaR by risk type – trading portfolio(1) | 83 | | 83 Trading revenue | 83 | | 84 Backtesting of trading revenue (TEB)(1)(2) vs. VaR | 84 | | 84 Non-exchange traded commodity derivatives | 84 | | 84 Non-trading activities | 84 | | 85 Interest rate risk | 85 | | 85 Foreign exchange risk | 85 | | 86 Liquidity risk | 86 | | 87 Term funding sources and strategies | 87 | | 88 Credit ratings | 88 | | 88 Contractual obligations | 88 | | 89 Credit and liquidity commitments | 89 | | 90 Other contractual obligations | 90 | | 90 Strategic risk | 90 | | 90 Operational risk | 90 | | 91 Process and control | 91 | | 91 Risk measurement | 91 | | 92 Reputation and legal risk | 92 | | 93 Regulatory risk | 93 | | 93 Environmental risk | 93 | | 94 Accounting and control matters | 94 | | 94 Critical accounting policies and estimates | 94 | | 95 Valuation of financial instruments | 95 | | 96 Methods and assumptions | 96 | | 97 Transaction costs | 97 | | 97 Date of recognition of securities | 97 | | 97 Effective interest rate | 97 | | 97 Impairment of financial assets | 97 | | 98 Allowance for credit losses | 98 | | 98 Specific allowance | 98 | | 98 General allowance | 98 | | 99 Securitizations and VIEs | 99 | | 100 Asset impairment | 100 | | 100 Income taxes | 100 | | 102 Contingent liabilities | 102 | | 103 Employee future benefit assumptions | 103 | | 104 Financial instruments | 104 | | 105 U.S. regulatory developments | 105 | | 105 Accounting developments | 105 | | 106 Changes in accounting policies | 106 | | 107 Transition to International Financial Reporting Standards | 107 | | 108 Process, financial reporting controls and technology | 108 | | 108 Financial impacts | 108 | | 109 Future changes | 109 | | 109 Related-party transactions | 109 | | 110 Controls and procedures | 110 | | 111 Management’s annual report on internal control over financial reporting | 111 | | 112 Changes in internal control over financial reporting | 112 | | 101 Supplementary annual financial information | 101 | | 106 Volume/rate analysis of changes in net interest income | 106 | | 107 Analysis of net loans and acceptances | 107 | | 108 Summary of allowance for credit losses | 108 | | 109 Net loans and acceptances by geographic location(1) | 109 | | 110 Impaired loans before general allowance | 110 | | 112 Trouble debt restructuring | 112 | | 113 Note 6 Securitizations and variable interest entities | 113 | | 113 Securitization | 113 | | 114 Credit card | 114 | | 115 Variable interest entities | 115 | | 117 Note 4 Securities | 117 | | 118 Reclassification of financial instruments | 118 | | 119 Fair value of AFS securities | 119 | | 122 Note 2 Fair value of financial instruments | 122 | | 137 Fair value of derivative instruments | 137 | | 138 Exposure subject to AIRB approach | 138 | | 141 Note 3 Significant acquisitions and disposition | 141 | | 142 Note 4 Securities | 142 | | 145 Note 5 Loans(1)(2) | 145 | | 147 Note 6 Securitizations and variable interest entities | 147 | | 151 Note 9 Other assets | 151 | | 153 Note 12 Trading activities | 153 | | 155 Note 14 Derivative instruments | 155 | | 156 Note 15 Designated accounting hedges | 156 | | 157 Note 16 Subordinated indebtedness | 162 | | 163 Note 17 Common and preferred share capital and preferred share liabilities | 163 | | 168 Note 19 Interest rate sensitivity | 168 | | 169 Note 20 Stock-based compensation | 169 | | 172 Note 21 Employee future benefits | 172 | | 176 Note 22 Income taxes | 176 | | 179 Note 23 Earnings per share | 179 | | 179 Note 24 Commitments, guarantees, pledged assets and contingent liabilities | 179 | | 184 Lease commitments(1)(2)(3) | 184 | | 185 Guarantees | 185 | | 186 Pledged assets | 186 | | 187 Securities collateral | 187 | | 188 Note 25 Concentration of credit risk | 188 | | 189 Note 26 Related-party transactions | 189 | | 190 Note 27 Investments in joint ventures and equity-accounted associates | 190 | | 191 Note 28 Significant subsidiaries | 191 | | 192 Note 29 Segmented and geographic information | 192 | | 195 Note 30 Financial instruments – disclosures | 195 | | 197 Consolidated financial statements | 197 | | 198 Condensed consolidated statement of operations | 198 | | 199 Disclosures about the credit quality of financing receivables and the allowance for credit losses | 214 | | 200 Credit derivatives and standby and performance letters of credit | 200 | | 202 Derivatives related gains (losses) recognized in the consolidated statement of operations | 202 | | 203 Consolidated financial statements | 203 | | 204 Consolidation | 204 | | 206 Disclosure about post-retirement benefit plan assets | 206 | | 208 Contingent liabilities | 208 | | 209 Changes in significant accounting policies affecting Canadian and U.S. GAAP differences | 209 | | 212 Consolidated financial statements | 212 | | 213 Consolidated financial statements | 213 | | 214 Consolidated financial statements | 214 | | 215 Consolidated financial statements | 215 | | 217 Note 32 Transition to International Financial Reporting Standards | 217 | | 220 Opening IFRS consolidated balance sheet and reconciliation to previously reported Canadian GAAP amounts, as at November 1, 2010 (Transition Date to IFRS) | 220 | | 221 Section A. Exemptions and exceptions from retrospective application of IFRS | 221 | | 222 Section B. Differences in accounting policies | 222 | | 228 Section D. Reconciliation of equity from Canadian GAAP to IFRS as at the Transition Date | 228 | | 229 Quarterly review | 229 | | 231 Ten-year statistical review | 231 | | 235 Shareholder information | 235 | | 239 How to reach us: Where to find more information | 240 | ## Consolidated financial statements ### Financial reporting responsibility The management of Canadian Imperial Bank of Commerce (CIBC) is responsible for the preparation of the Annual Report, which includes the consolidated financial statements and management’s discussion and analysis (MD\&A), and for the timeliness and reliability of the information disclosed. The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles as well as the requirements of the Bank Act (Canada). The MD\&A has been prepared in accordance with the requirements of applicable securities laws. The consolidated financial statements and MD\&A, of necessity, contain items that reflect the best estimates and judgments of the expected effects of current events and transactions with appropriate consideration to materiality. All financial information appearing throughout the Annual Report is consistent with the consolidated financial statements. Management has developed and maintains effective systems, controls and procedures to ensure that information used internally and disclosed externally is reliable and timely. During the past year, we have continued to improve, document and test the design and operating effectiveness of internal control over external financial reporting. The results of our work have been subjected to audit by the shareholders’ auditors. As at year end, we have determined that internal control over financial reporting is effective and CIBC is in compliance with the requirements set by the U.S. Securities and Exchange Commission (SEC) under the U.S. Sarbanes-Oxley Act (SOX). CIBC’s Chief Executive Officer and Chief Financial Officer have certified CIBC’s annual filings with the SEC under SOX and with the Canadian Securities Administrators under Canadian securities laws. The Chief Auditor and his staff review and report on CIBC’s internal controls, including computerized information system controls and security, the overall control environment, and accounting and financial controls. The Chief Auditor has full and independent access to the Audit Committee. The Board of Directors oversees management’s responsibilities for financial reporting through the Audit Committee, which is composed of directors who are not officers or employees of CIBC. The Audit Committee reviews CIBC’s interim and annual consolidated financial statements and MD\&A and recommends them for approval by the Board of Directors. Other key responsibilities of the Audit Committee include monitoring CIBC’s system of internal control, monitoring its compliance with legal and regulatory requirements, and reviewing the qualifications, independence and performance of the shareholders’ auditors and internal auditors. Ernst \& Young LLP, the shareholders’ auditors, obtain an understanding of CIBC’s internal controls and procedures for financial reporting to plan and conduct such tests and other audit procedures as they consider necessary in the circumstances to express their opinions in the reports that follow. The shareholders’ auditors have full and independent access to the Audit Committee to discuss their audit and related matters. The Office of the Superintendent of Financial Institutions (OSFI) Canada is mandated to protect the rights and interest of depositors and creditors of CIBC. Accordingly, OSFI examines and enquires into the business and affairs of CIBC, as deemed necessary, to ensure that the provisions of the Bank Act (Canada) are being complied with and that CIBC is in sound financial condition. Gerald T. McCaughey President and Chief Executive Officer Kevin Glass Chief Financial Officer November 30, 2011 ### Independent auditors’ report of registered public accounting firm to shareholders #### Report on financial statements We have audited the accompanying consolidated financial statements of Canadian Imperial Bank of Commerce (CIBC), which comprise the consolidated balance sheet as at October 31, 2011 and 2010 and the consolidated statements of operations, comprehensive income, changes in shareholders’ equity and cash flows for each of the years in the three-year period ended October 31, 2011, and a summary of significant accounting policies and other explanatory information. #### Management’s responsibility for the consolidated financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. #### Auditors’ responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. #### Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of CIBC as at October 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the three-year period ended October 31, 2011, in accordance with Canadian generally accepted accounting principles. #### Other matter We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), CIBC’s internal control over financial reporting as of October 31, 2011, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 30, 2011 expressed an unqualified opinion on CIBC’s internal control over financial reporting. Ernst \& Young LLP Chartered Accountants Licensed Public Accountants Toronto, Canada November 30, 2011 ### Independent auditors’ report of registered public accounting firm to shareholders #### Report on internal controls under standards of the Public Company Accounting Oversight Board (United States) We have audited Canadian Imperial Bank of Commerce’s (CIBC) internal control over financial reporting as of October 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). CIBC’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying management’s annual report on internal control over financial reporting contained in the accompanying management’s discussion and analysis. Our responsibility is to express an opinion on CIBC’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, CIBC maintained, in all material respects, effective internal control over financial reporting as of October 31, 2011, based on the COSO criteria. We have also audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of CIBC as at October 31, 2011 and 2010 and the consolidated statements of operations, comprehensive income, changes in shareholders’ equity and cash flows for each of the years in the three-year period ended October 31, 2011 of CIBC and our report dated November 30, 2011 expressed an unqualified opinion thereon. Ernst \& Young LLP Chartered Accountants Licensed Public Accountants Toronto, Canada November 30, 2011 ### Consolidated balance sheet $ millions, as at October 31 | ASSETS | 2011 | 2010$^{(1)}$ | |---|---|---| | Cash and non-interest-bearing deposits with banks | $ 1,855 | $ 2,190 | | Interest-bearing deposits with banks | 4,442 | 9,862 | | Securities (Note 4) | | | | Trading (Note 12) | 32,797 | 28,557 | | Available-for-sale (AFS) | 29,212 | 26,621 | | Designated at fair value (FVO) (Note 13) | 20,064 | 22,430 | | | 82,073 | 77,608 | | Cash collateral on securities borrowed | 1,838 | 2,401 | | Securities purchased under resale agreements | 26,002 | 34,941 | | Loans (Note 5) | | | | Residential mortgages | 99,603 | 93,568 | | Personal | 34,842 | 34,335 | | Credit card | 10,408 | 12,127 | | Business and government | 41,812 | 38,582 | | Allowance for credit losses | (1,647) | (1,720) | | | 185,018 | 176,892 | | Other | | | | Derivative instruments (Note 14) | 28,259 | 24,682 | | Customers’ liability under acceptances | 9,361 | 7,684 | | Land, buildings and equipment (Note 7) | 1,676 | 1,660 | | Goodwill (Note 8) | 1,894 | 1,913 | | Software and other intangible assets (Note 8) | 654 | 609 | | Investments in equity-accounted associates | 1,128 | 298 | | Other assets (Note 9) | 9,499 | 11,300 | | | 52,471 | 48,146 | | **Total assets** | **$ 353,699** | **$ 352,040** | | **LIABILITIES AND SHAREHOLDERS’ EQUITY** | | | | Deposits (Note 10) | | | | Personal | $ 116,592 | $ 113,294 | | Business and government | 134,636 | 127,759 | | Bank | 4,181 | 5,618 | | | 255,409 | 246,671 | | Obligations related to securities sold short | 10,316 | 9,673 | | Cash collateral on securities lent | 2,850 | 4,306 | | Obligations related to securities sold under repurchase agreements | 11,456 | 23,914 | | Other | | | | Derivative instruments (Note 14) | 29,807 | 26,489 | | Acceptances | 9,396 | 7,684 | | Other liabilities (Note 11) | 11,823 | 12,572 | | | 51,026 | 46,745 | | Subordinated indebtedness (Note 16) | 5,138 | 4,773 | | Non-controlling interests | 164 | 168 | | Shareholders’ equity | | | | Preferred shares (Note 17) | 2,756 | 3,156 | | Common shares (Note 17) | 7,376 | 6,804 | | Contributed surplus | 90 | 96 | | Retained earnings | 7,605 | 6,095 | | Accumulated other comprehensive income (AOCI) | (487) | (361) | | | 17,340 | 15,790 | | **Total liabilities and shareholders’ equity** | **$ 353,699** | **$ 352,040** | $^{(1)}$ Certain prior year information has been reclassified to conform to the presentation adopted in the current year. The accompanying notes and shaded sections in “MD\&A – Management of risk” are an integral part of these consolidated financial statements. Gerald T. McCaughey President and Chief Executive Officer Ronald W. Tysoe Director ### Consolidated statement of operations $ millions, except as noted, for the year ended October 31 | | 2011 | 2010 | 2009 | |---|---|---|---| | **Interest income** | | | | | Loans | $ 7,708 | $ 7,288 | $ 7,183 | | Securities | 1,963 | 1,562 | 1,705 | | Securities borrowed or purchased under resale agreements | 365 | 193 | 324 | | Deposits with banks | 63 | 52 | 85 | | | 10,099 | 9,095 | 9,297 | | **Interest expense** | | | | | Deposits | 2,787 | 2,192 | 2,879 | | Other liabilities | 747 | 476 | 785 | | Subordinated indebtedness | 215 | 188 | 208 | | Preferred share liabilities (Note 17) | – | 35 | 31 | | | 3,749 | 2,891 | 3,903 | | **Net interest income** | **6,350** | **6,204** | **5,394** | | **Non-interest income** | | | | | Underwriting and advisory fees | 514 | 426 | 478 | | Deposit and payment fees | 756 | 756 | 773 | | Credit fees | 381 | 341 | 304 | | Card fees | 99 | 304 | 328 | | Investment management and custodial fees | 486 | 459 | 419 | | Mutual fund fees | 849 | 751 | 658 | | Insurance fees, net of claims | 320 | 277 | 258 | | Commissions on securities transactions | 496 | 474 | 472 | | Trading (loss) income (Note 12) | (74) | 603 | (531) | | AFS securities gains, net (Note 4) | 407 | 400 | 275 | | FVO losses, net (Note 13) | (134) | (623) | (33) | | Income from securitized assets | 1,063 | 631 | 518 | | Foreign exchange other than trading | 237 | 683 | 496 | | Other | 499 | 399 | 119 | | | 5,899 | 5,881 | 4,534 | | **Total revenue** | **12,249** | **12,085** | **9,928** | | **Provision for credit losses (Note 5)** | **841** | **1,046** | **1,649** | | **Non-interest expenses** | | | | | Employee compensation and benefits | 4,163 | 3,871 | 3,610 | | Occupancy costs | 664 | 648 | 597 | | Computer, software and office equipment | 994 | 1,003 | 1,010 | | Communications | 297 | 290 | 288 | | Advertising and business development | 214 | 197 | 173 | | Professional fees | 179 | 210 | 189 | | Business and capital taxes | 38 | 88 | 117 | | Other | 801 | 720 | 676 | | | 7,350 | 7,027 | 6,660 | | **Income before income taxes and non-controlling interests** | **4,058** | **4,012** | **1,619** | | **Income tax expense (Note 22)** | **969** | **1,533** | **424** | | | 3,089 | 2,479 | 1,195 | | **Non-controlling interests** | **10** | **27** | **21** | | **Net income** | **$ 3,079** | **$ 2,452** | **$ 1,174** | | Preferred share dividends and premiums (Note 17) | (177) | (169) | (162) | | **Net income applicable to common shares** | **$ 2,902** | **$ 2,283** | **$ 1,012** | | **Weighted-average common shares outstanding (thousands)** | | | | | – Basic | 396,233 | 387,802 | 381,677 | | – Diluted | 397,097 | 388,807 | 382,442 | | **Earnings per share (in dollars) (Note 23)** | | | | | – Basic | $ 7.32 | $ 5.89 | $ 2.65 | | – Diluted | $ 7.31 | $ 5.87 | $ 2.65 | | **Dividends per common share (in dollars) (Note 17)** | **$ 3.51** | **$ 3.48** | **$ 3.48** | The accompanying notes and shaded sections in “MD\&A – Management of risk” are an integral part of these consolidated financial statements. ### Consolidated statement of comprehensive income $ millions, for the year ended October 31 | | 2011 | 2010 | 2009 | |---|---|---|---| | Net income | $ 3,079 | $ 2,452 | $ 1,174 | | **Other comprehensive income (OCI), net of tax** | | | | | Net foreign currency translation adjustments | | | | | Net gains (losses) on investment in self-sustaining foreign operations | (92) | (290) | (523) | | Net (gains) losses on investment in self-sustaining foreign operations reclassified to net income | 41 | 1,079 | 135 | | Net gains (losses) on hedges of investment in self-sustaining foreign operations | 13 | 88 | 392 | | Net (gains) losses on hedges of investment in self-sustaining foreign operations reclassified to net income | (37) | (957) | (142) | | | (75) | (80) | (138) | | Net change in AFS securities | | | | | Net unrealized gains (losses) on AFS securities | 110 | 303 | 462 | | Net (gains) losses on AFS securities reclassified to net income | (140) | (230) | (236) | | | (30) | 73 | 226 | | Net change in cash flow hedges | | | | | Net gains (losses) on derivatives designated as cash flow hedges | (37) | (9) | (26) | | Net (gains) losses on derivatives designated as cash flow hedges reclassified to net income | 16 | 25 | 10 | | | (21) | 16 | (16) | | **Total OCI** | **(126)** | **9** | **72** | | **Comprehensive income** | **$ 2,953** | **$ 2,461** | **$ 1,246** | $ millions, for the year ended October 31 | | 2011 | 2010 | 2009 | |---|---|---|---| | Income tax (expense) benefit | | | | | Net foreign currency translation adjustments | $ (1) | $ (1) | $ 34 | | Net (gains) losses on hedges of investment in self-sustaining foreign operations | (2) | (18) | (120) | | Net (gains) losses on hedges of investment in self-sustaining foreign operations reclassified to net income | 21 | 536 | 104 | | Net change in AFS securities | | | | | Net unrealized gains (losses) on AFS securities | (29) | (100) | (151) | | Net (gains) losses on AFS securities reclassified to net income | 30 | 68 | 111 | | Net change in cash flow hedges | | | | | Net gains (losses) on derivatives designated as cash flow hedges | 13 | 3 | 13 | | Net (gains) losses on derivatives designated as cash flow hedges reclassified to net income | (4) | (3) | (9) | | | $ 28 | $ 485 | $ (18) | The accompanying notes and shaded sections in “MD\&A – Management of risk” are an integral part of these consolidated financial statements. ### Consolidated statement of changes in shareholders’ equity $ millions, for the year ended October 31 | | 2011 | 2010 | 2009 | |---|---|---|---| | **Preferred shares (Note 17)** | | | | | Balance at beginning of year | $ 3,156 | $ 3,156 | $ 2,631 | | Issue of preferred shares | – | – | 525 | | Redemption of preferred shares | (400) | – | – | | **Balance at end of year** | **$ 2,756** | **$ 3,156** | **$ 3,156** | | **Common shares (Note 17)** | | | | | Balance at beginning of year | $ 6,804 | $ 6,241 | $ 6,063 | | Issue of common shares | 575 | 563 | 178 | | Treasury shares | (3) | – | – | | **Balance at end of year** | **$ 7,376** | **$ 6,804** | **$ 6,241** | | **Contributed surplus** | | | | | Balance at beginning of year | $ 96 | $ 92 | $ 96 | | Stock option expense | 7 | 11 | 12 | | Stock options exercised | (12) | (4) | (1) | | Other | (1) | (3) | (15) | | **Balance at end of year** | **$ 90** | **$ 96** | **$ 92** | | **Retained earnings** | | | | | Balance at beginning of year, as previously reported | $ 6,095 | $ 5,156 | $ 5,483 | | Adjustment for change in accounting policies | – | – | (6)$^{(1)}$ | | Balance at beginning of year, as restated | 6,095 | 5,156 | 5,477 | | Net income | 3,079 | 2,452 | 1,174 | | Dividends (Note 17) | | | | | Common | (1,391) | (1,350) | (1,328) | | Preferred | (165) | (169) | (162) | | Premium on redemption of preferred shares | (12) | – | – | | Other | (1) | 6 | (5) | | **Balance at end of year** | **$ 7,605** | **$ 6,095** | **$ 5,156** | | **AOCI, net of tax** | | | | | Net foreign currency translation adjustments | | | | | Balance at beginning of year | $ (575) | $ (495) | $(357) | | Net change in foreign currency translation adjustments | (75) | (80) | (138) | | **Balance at end of year** | **$ (650)** | **$ (575)** | **$ (495)** | | Net unrealized gains (losses) on AFS securities | | | | | Balance at beginning of year | $ 197 | $ 124 | $ (102) | | Net change in AFS securities | (30) | 73 | 226 | | **Balance at end of year**$^{(2)}$ | **$ 167** | **$ 197** | **$ 124** | | Net gains (losses) on cash flow hedges | | | | | Balance at beginning of year | $ 17 | $1 | $ 17 | | Net change in cash flow hedges | (21) | 16 | (16) | | **Balance at end of year** | **$ (4)** | **$ 17** | **$ 1** | | **Total AOCI, net of tax**$^{(3)}$ | **$ (487)** | **$ (361)** | **$ (370)** | | **Retained earnings and AOCI** | **$ 7,118** | **$ 5,734** | **$ 4,786** | | **Shareholders’ equity at end of year** | **$ 17,340** | **$ 15,790** | **$ 14,275** | $^{(1)}$ Represents the impact of changing the measurement date for employee future benefits. See Note 21 for additional details. $^{(2)}$ Includes $42 million (2010: $53 million; 2009: $101 million) of cumulative loss related to AFS securities measured at fair value. $^{(3)}$ A loss of $1 million (2010: $8 million gain; 2009: $3 million gain) deferred in AOCI is expected to be reclassified to net income during the next 12 months. Remaining amounts will be reclassified to net income over periods up to nine years (2010: eight years; 2009: four years) thereafter. The accompanying notes and shaded sections in “MD\&A – Management of risk” are an integral part of these consolidated financial statements. ### Consolidated statement of cash flows $ millions, for the year ended October 31 | Cash flows provided by (used in) operating activities | 2011 | 2010$^{(1)}$ | 2009$^{(1)}$ | |---|---|---|---| | Net income | $ 3,079 | $ 2,452 | $ 1,174 | | Adjustments to reconcile net income to cash flows provided by (used in) operating activities: | | | | | Provision for credit losses | 841 | 1,046 | 1,649 | | Amortization | 356 | 375 | 403 | | Stock option expense | 7 | 11 | 12 | | Future income taxes | 533 | 800 | 38 | | AFS securities gains, net | (407) | (400) | (275) | | Net (gains) losses on disposal of land, buildings and equipment | (5) | 1 | 2 | | Other non-cash items, net | 205 | (520) | (297) | | Changes in operating assets and liabilities | | | | | Accrued interest receivable | 96 | (108) | 266 | | Accrued interest payable | (203) | 42 | (339) | | Amounts receivable on derivative contracts | (2,561) | (292) | 4,270 | | Amounts payable on derivative contracts | 2,066 | (574) | (6,063) | | Net change in trading securities | (4,240) | (13,447) | 22,278$^{(2)}$ | | Net change in FVO securities | 2,366 | (124) | (445) | | Net change in other FVO assets and liabilities | (3,604) | 118 | 100 | | Current income taxes | 191 | 466 | 2,162 | | Other, net$^{(3)}$ | (172) | 2,178 | – | | | **(1,452)** | **(7,976)** | **24,935** | | **Cash flows provided by (used in) financing activities** | | | | | Deposits, net of withdrawals | 10,471 | 24,588 | (7,569)$^{(4)}$ | | Obligations related to securities sold short | 2,487 | 3,094 | (2,082) | | Net securities lent | (1,456) | (981) | (800) | | Net obligations related to securities sold under repurchase agreements | (12,458) | (8,252) | 230 | | Issue of subordinated indebtedness | 1,500 | 1,100 | – | | Redemption/repurchase of subordinated indebtedness | (1,099) | (1,395) | (1,419) | | Issue of preferred shares | – | – | 525 | | Redemption of preferred shares | (1,016) | – | – | | Issue of common shares, net | 575 | 563 | 178 | | Net proceeds from treasury shares | (3) | – | – | | Dividends paid | (1,556) | (1,519) | (1,490) | | Other, net | 252 | (2,051) | 596 | | | **(2,303)** | **15,147** | **(11,831)** | | **Cash flows provided by (used in) investing activities** | | | | | Interest-bearing deposits with banks | 5,420 | (4,667) | 2,206 | | Loans, net of repayments | (22,586) | (24,509) | (12,496) | | Net proceeds from securitizations | 13,923 | 14,192 | 20,744 | | Purchase of AFS securities | (35,674) | (55,392) | (91,663) | | Proceeds from sale of AFS securities | 14,796 | 41,144 | 30,205 | | Proceeds from maturity of AFS securities | 18,237 | 27,585 | 35,628 | | Net securities borrowed | 563 | 1,582 | 1,935 | | Net securities purchased under resale agreements | 8,939 | (6,173) | 910 | | Net cash provided by dispositions (used in acquisitions) | 54 | (297) | – | | Net purchase of land, buildings and equipment | (235) | (220) | (272) | | | **3,437** | **(6,755)** | **(12,803)** | | Effect of exchange rate changes on cash and non-interest-bearing deposits with banks | (17) | (38) | (47) | | **Net (decrease) increase in cash and non-interest-bearing deposits with banks during year** | **(335)** | **378** | **254** | | Cash and non-interest-bearing deposits with banks at beginning of year | 2,190 | 1,812 | 1,558 | | **Cash and non-interest-bearing deposits with banks at end of year**$^{(5)}$ | **$ 1,855** | **$ 2,190**$^{(6)}$ | **$ 1,812** | | Cash interest paid | $ 3,952 | $ 2,849 | $ 4,242 | | Cash income taxes paid (recovered) | $ 245 | $ 267 | $ (1,775) | $^{(1)}$ Certain prior year information has been reclassified to conform to the presentation adopted in the current year. $^{(2)}$ Includes securities initially bought as trading securities and subsequently reclassified to loans and AFS securities as noted in Note 4. $^{(3)}$ Includes cash used to invest in our equity-accounted investments including $831 million relating to American Century Investments in 2011 and $130 million relating to The Bank of N.T. Butterfield & Son Limited in 2010. $^{(4)}$ Includes $1.6 billion of Notes purchased by CIBC Capital Trust (Note 18). $^{(5)}$ Includes restricted cash balance of $257 million (2010: $246 million; 2009: $268 million). $^{(6)}$ Includes cash reserved for payment on redemption of non-cumulative preferred shares (Note 17). ## Notes to the consolidated financial statements ### Note 1 Summary of significant accounting policies The consolidated financial statements of Canadian Imperial Bank of Commerce (CIBC) are prepared in accordance with Section 308(4) of the Bank Act which states that, except as otherwise specified by the Office of the Superintendent of Financial Institutions (OSFI), the financial statements are to be prepared in accordance with Canadian generally accepted accounting principles (GAAP). The significant accounting policies used in the preparation of these consolidated financial statements, including the accounting requirements of OSFI, conform in all material respects to Canadian GAAP. Unless otherwise indicated, all amounts are expressed in Canadian dollars. A reconciliation of the impact on assets, liabilities, shareholders’ equity, net income, and comprehensive income arising from differences between Canadian and U.S. GAAP is provided in Note 31. The following paragraphs describe our significant accounting policies. New accounting policies which have been adopted are described in the “Accounting changes” section of this note. #### Basis of consolidation The consolidated financial statements include the assets, liabilities, results of operations, and cash flows of CIBC, its controlled subsidiaries and certain variable interest entities (VIEs), for which we are considered to be the primary beneficiary, after the elimination of intercompany transactions and balances. A primary beneficiary is the enterprise that absorbs a majority of a VIE’s expected losses or receives a majority of a VIE’s expected residual returns, or both. Non-controlling interests in subsidiaries and consolidated VIEs are included as a separate line item on the consolidated balance sheet and the consolidated statement of operations. An entity is a VIE if it does not have sufficient equity at risk to permit it to finance its activities without additional subordinated financial support, or in which equity investors do not have the characteristics of a controlling financial interest. The VIE guidelines exempt certain entities from their scope, including qualified special purpose entities (QSPE). Investments in companies over which we have significant influence are accounted for by the equity method, and are included in Investments in equity-accounted associates. Our share of income from these investments is included in Non-interest income – Other. Investments over which we exercise joint control are accounted for using the proportionate consolidation method, with CIBC’s pro-rata share of assets, liabilities, income, and expenses being consolidated. #### Use of estimates and assumptions The preparation of the consolidated financial statements in accordance with Canadian GAAP requires management to make estimates and assumptions that affect the recognized and measured amounts of assets, liabilities, net income, comprehensive income, and related disclosures. Estimates and assumptions are made in the areas of determining the fair value of financial instruments, accounting for allowance for credit losses, securitizations and VIEs, asset impairment, income taxes, contingent liabilities, and employee future benefits. Actual results could differ from these estimates and assumptions. #### Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translated into the functional currencies of operations at prevailing exchange rates at the date of the consolidated balance sheet. Non-monetary assets and liabilities are translated into functional currencies at historical rates. Revenue and expenses are translated using average monthly exchange rates. Realized and unrealized gains and losses arising from translation into functional currencies are included in the consolidated statement of operations. Assets and liabilities of self-sustaining foreign operations with a functional currency other than the Canadian dollar are translated into Canadian dollars at the exchange rates prevailing at the balance sheet dates, while revenue and expenses of these foreign operations are translated into Canadian dollars at the average monthly exchange rates. Exchange gains and losses arising from the translation of these foreign operations and from the results of hedging the net investment in these foreign operations, net of applicable taxes, are reported in **Net foreign currency translation adjustments**, which is included in OCI. A future income tax asset or liability is not recognized in respect of a translation gain or loss arising from an investment in a self-sustaining foreign subsidiary, when the gain or loss is not expected to be realized for tax purposes in the foreseeable future. An appropriate portion of the accumulated exchange gains and losses and any applicable taxes in AOCI are recognized in the consolidated statement of operations when there is a reduction in the net investment in a self-sustaining foreign operation. #### Classification and measurement of financial assets and liabilities All financial assets must be classified at initial recognition as trading, available for sale (AFS), designated at fair value (FVO), held-to-maturity (HTM), or loans and receivables based on the purpose for which the instrument was acquired and its characteristics. All financial assets and derivatives are required to be measured at fair value with the exception of loans and receivables, debt securities classified as HTM, and AFS equities that do not have quoted market values in an active market. Reclassification of non-derivative financial assets from trading to AFS or HTM is allowed under rare circumstances. Such reclassifications are only permitted when there has been a change in management intent with respect to a particular non-derivative financial asset. Financial liabilities other than derivatives, obligations related to securities sold short, and FVO liabilities are carried at amortized cost. Derivatives, obligations related to securities sold short and FVO liabilities are carried at fair value. Interest expense is recognized on an accrual basis using the effective interest method. #### Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are generally recorded at amortized cost, net of an allowance for credit losses. Interest income is recognized on an accrual basis using the effective interest method. See “Impairment of financial assets” section of this note for our accounting for impaired loans. #### Trading financial instruments Trading financial instruments are assets and liabilities held for trading activities or that are part of a managed portfolio with a pattern of short-term profit taking. These are measured at fair value as at the consolidated balance sheet date. Loans that we intend to sell immediately or in the near term are classified as trading financial instruments. Gains and losses realized on disposition and unrealized gains and losses from changes in fair value are reported in Non-interest income as Trading income (loss) except to the extent that they are used as an economic hedge of a financial instrument designated under the FVO in which case the gains or losses are recorded in FVO gains (losses). Dividends and interest income earned and interest expense incurred are included in Interest income and Interest expense, respectively. #### AFS securities AFS financial assets are those non-derivative financial assets that are not classified as trading, FVO or loans and receivables. AFS securities are carried at fair value (other than equities that do not have quoted market values in an active market) with unrealized gains and losses being reported in OCI until sale, or if an other-than-temporary impairment (OTTI) is recognized, at which point cumulative unrealized gains or losses are transferred from AOCI to the consolidated statement of operations. Equities that do not have quoted market values in an active market are carried at cost. Realized gains and losses on sale, determined on an average cost basis, and write-downs to reflect OTTI are included in AFS securities gains (losses), net, except for retained interests on interest-only strips arising from our securitization activities, which are included in Income from securitized assets. Dividends and interest income from AFS securities, other than interest-only strips, are included in Interest income. #### FVO financial instruments FVO financial instruments are those that we designate on initial recognition as financial instruments we will measure at fair value on the consolidated balance sheet. In addition to the requirement that reliable fair values are available, there are regulatory restrictions imposed by OSFI on the use of this designation. The criteria for applying the fair value option are met when (i) the application of the fair value option eliminates or significantly reduces the measurement inconsistency that would arise from measuring assets or liabilities on a different basis, or (ii) the financial instruments are part of a portfolio which is managed on a fair value basis, in accordance with our investment strategy and is reported internally on that basis. Gains and losses realized on dispositions, unrealized gains and losses from changes in fair value of FVO financial instruments, gains and losses arising from changes in fair value of derivatives and obligations related to securities sold short that are managed in conjunction with FVO financial instruments, are included in FVO income (loss). Dividends and interest earned and interest expense incurred on FVO assets and liabilities are included in Interest income and Interest expense, respectively. #### Transaction costs Transaction costs relating to trading and FVO financial instruments are expensed as incurred. Transaction costs for all other financial instruments are generally capitalized. For debt instruments, transaction costs are then amortized over the expected life of the instrument using the effective interest method. For equity instruments, transaction costs are added to the carrying value. #### Date of recognition of securities We account for all securities transactions using settlement date accounting for the consolidated balance sheet. #### Effective interest rate Interest income and expense for all financial instruments measured at amortized cost and for AFS debt securities is recognized in Interest income and Interest expense using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument to the net carrying amount of the financial asset or liability upon initial recognition. Fees related to loan origination, including commitment, restructuring, and renegotiation fees, are considered an integral part of the yield earned on the loan and are accounted for using the effective interest method. Fees received for commitments that are not expected to result in a loan are included in Non-interest income over the commitment period. Loan syndication fees are included in Non-interest income on completion of the syndication arrangement, provided that the yield on the portion of the loan we retain is at least equal to the average yield earned by the other lenders involved in the financing; otherwise, an appropriate portion of the fee is deferred as unearned income and amortized to interest income using the effective interest method. #### Securities purchased under resale agreements and obligations related to securities sold under repurchase agreements Securities purchased under resale agreements are treated as collateralized lending as they represent the purchase of securities effected with a simultaneous agreement to sell them back at a future date, which is generally in the near term. Interest income is accrued and separately disclosed in the consolidated statement of operations. Similarly, securities sold under repurchase agreements are treated as collateralized borrowing with interest expense accrued and reflected in Interest expense – Other liabilities. #### Cash collateral on securities borrowed and securities lent The right to receive back cash collateral paid and the obligation to return cash collateral received on borrowing and lending of securities is recorded as cash collateral on securities borrowed and securities lent, respectively. Interest on cash collateral paid and received is recorded in Interest income – Securities borrowed or purchased under resale agreements and Interest expense – Other liabilities, respectively. #### Impairment of financial assets ##### Impaired loans and allowance for credit losses We classify a loan as impaired when, in our opinion, there is objective evidence of impairment as a result of one or more events that have occurred with a negative impact on the estimated future cash flows of the loan. Evidence of impairment includes indications that the borrower is experiencing significant financial difficulties or a default or delinquency has occurred. Generally, loans on which repayment of principal or payment of interest is contractually 90 days in arrears are automatically considered impaired unless they are fully secured and in the process of collection. Notwithstanding management’s assessment of collectibility, such loans are considered impaired if payments are 180 days in arrears. Exceptions are as follows: * Credit card loans are not classified as impaired and are fully written-off when payments are contractually 180 days in arrears or upon customer bankruptcy. * Loans guaranteed or insured by the Canadian government, the provinces, or a Canadian government agency are classified as impaired only when payments are contractually 365 days in arrears. When a loan is classified as impaired, accrual of interest ceases. All uncollected interest is recorded as part of the loan’s carrying value for the purpose of determining the loan’s estimated realizable value and establishing allowances for credit losses. A loan is returned to performing status when all past due amounts, including interest, have been recovered, and it is determined that the principal and interest are fully collectible in accordance with the original contractual terms of the loan. No portion of cash received on any impaired loan is recorded as income until the loan is returned to performing status. For credit card loans, interest is accrued only to the extent that there is an expectation of receipt. An impaired loan is carried at its estimated realizable value determined by discounting the expected future cash flows at the interest rate inherent in the loan, or its net recoverable value. We establish and maintain an allowance for credit losses that we consider the best estimate of probable credit-related losses existing in our portfolio of on- and off-balance sheet financial instruments, having due regard to current conditions. The allowance for credit losses consists of specific and general components. The allowance on undrawn credit facilities including letters of credit is reported in Other liabilities. Loans are written off, in whole or in part, against the related allowance for credit losses upon settlement (realization) of collateral or in advance of settlement, when the determination of recoverable value is completed and there is no realistic prospect of future recovery above the recoverable value. In subsequent periods, any recoveries of amounts previously written off are credited to provision for credit losses. #### Specific allowance We conduct ongoing credit assessments of the business and government loan portfolios on an account-by-account basis and establish specific allowances when impaired loans are identified. Residential mortgages, personal loans, and certain small business loan portfolios consist of large numbers of homogeneous balances of relatively small amounts, for which specific allowances are established by reference to historical ratios of write-offs to balances in arrears and to balances outstanding. The allowance is provided for on- and off balance sheet credit exposures that are not carried at fair value. Credit card loans are not classified as impaired and a specific allowance is not established. The specific allowance previously established for credit card loans was retroactively reclassified to the general allowance during 2009. #### General allowance A general allowance is provided for losses which we estimate are inherent in the portfolio at the balance sheet date, but not yet specifically identified and, therefore, not yet captured in the determination of specific allowances. The allowance is provided for on- and off-balance sheet credit exposures that are not carried at fair value. The general allowance is established with reference to expected loss rates associated with different credit portfolios at different risk levels and the estimated time period for losses that are present but yet to be specifically identified, adjusting for our view of the current and ongoing economic and portfolio trends. The parameters that affect the general allowance calculation are updated regularly, based on our experience and that of the market in general. Expected loss rates for business loan portfolios are based on the risk rating of each credit facility and on the probability of default (PD) factors, as well as estimates of loss given default (LGD) associated with each risk rating. The PD factors reflect our historical experience over an economic cycle, and is supplemented by data derived from defaults in the public debt markets. LGD estimates are based on our experience over the past years. For consumer loan portfolios, expected losses are based on our historical loss rates and aggregate balances. As at October 31, 2011, our model indicated a range of outcomes for the general allowance between $568 million and $1,613 million. The general allowance of $1,066 million (2010: $1,153 million), which represents our best estimate of losses inherent but not specifically provided for in our loan portfolios, was selected from within the range based on a qualitative analysis of the economic environment and credit trends, as well as the risk profile of the loan portfolios. A uniform 10% increase in the PDs or loss severity across all portfolios would cause the general allowance to increase by approximately $107 million. #### Securitizations and VIEs ##### Securitization of our own assets We have determined that substantially all of our securitizations are accounted for as sales because we surrender control of the transferred assets and receive consideration other than beneficial interests in the transferred assets. We have also determined that the entities to which we have transferred the assets should not be consolidated because they are either QSPEs or we are not the primary beneficiary of the entities. Gains or losses on transfers accounted for as sales depend, in part, upon the allocation of previous carrying amounts to assets sold and retained interests. These carrying amounts are allocated in proportion to the relative fair value of the assets sold and the retained interest. As market prices are generally not available for retained interests, we estimate fair value based on the present value of expected future cash flows. This requires us to estimate expected future cash flows, which incorporate expected credit losses, scheduled payments and unscheduled prepayment rates, discount rates, and other factors that influence the value of retained interests. Actual cash flows may differ significantly from our estimations. These estimates directly affect our calculation of gain on sale from securitizations and the rate at which retained interests are taken into income. For additional information on our securitizations, including key economic assumptions used in measuring the fair value of retained interests and the sensitivity of the changes to those assumptions, see the “Off-balance sheet arrangements” section, Note 6 to the consolidated financial statements, and the “Valuation of financial instruments” section above. ##### Securitization of third-party assets We also sponsor several VIEs that purchase pools of third party financial assets. Our derivative and administrative transactions with these entities are generally not considered variable interests. We monitor the extent to which we support these VIEs through direct investment in the debt issued by the VIEs and through the provision of liquidity protection to the other debt holders, to assess whether we are the primary beneficiary and consolidator of these entities. AcG-15, “Consolidation of Variable Interest Entities” provides guidance on applying consolidation principles to certain entities that are subject to control on a basis other than ownership of voting interests. To determine which VIEs require consolidation under AcG-15, we exercise judgment by identifying our variable interests and comparing them with other variable interests held by unrelated parties to determine if we are exposed to a majority of each of these entities’ expected losses or expected residual returns. We have consolidated certain VIEs as we determined that we were exposed to a majority of the expected losses or residual returns. Where we consider that CIBC is the primary beneficiary of any VIEs, AcG-15 requires that we reconsider this assessment in the following circumstances: (i) when there is a significant change to the design of the VIE or the ownership of variable interests that significantly changes the manner in which expected losses and expected residual returns are allocated; (ii) when we sell or dispose of a part or all of our variable interest to unrelated parties; or (iii) when the VIE issues new variable interests to unrelated parties. Where CIBC is not the primary beneficiary, AcG-15 requires that we reconsider whether we are the primary beneficiary when we acquire additional variable interests. Specifically, in relation to ABCP conduits (the conduits), we reconsider our primary beneficiary assessment whenever our level of interest in the ABCP issued by the conduits changes significantly, or in the less frequent event that the liquidity protection we provide to the conduits is drawn or amended. To the extent that our ABCP holdings in a particular conduit exceed 45%, it is likely that we will consider ourselves to be the primary beneficiary, as a result of the relatively small amount of variability stemming from the other variable interests in the conduit. A significant increase in our holdings of ABCP issued by the conduits would become more likely in a scenario in which the market for bank-sponsored ABCP suffered a significant deterioration such that the conduits were unable to roll their ABCP. Securitizations and VIEs affect all our reporting segments. ##### Asset impairment ###### Goodwill and other intangible assets As at October 31, 2011, we had goodwill of $1.9 billion (2010: $1.9 billion) and other intangible assets with an indefinite life amounting to $136 million (2010: $136 million). Under Canadian GAAP, goodwill is not amortized, but is instead subject to, at least annually, an assessment for impairment by applying a two-step fair value-based test. In the first test, the fair value of the reporting unit is compared to its book value including goodwill. If the book value of the reporting unit exceeds the fair value, an impairment loss is then recognized pursuant to the second test to the extent that, at the reporting unit level, the carrying amount of goodwill exceeds the implied fair value of goodwill. In this second step, the implied fair value of the goodwill is based on determining the fair value of the reporting unit’s tangible and intangible assets and liabilities in a manner similar to a purchase equation and then comparing the net fair value with the fair value of the overall reporting unit determined in the first step. Where appropriate, the carrying values of our reporting units are based on economic capital models and are designed to approximate the net book value a reporting unit would have if it was a stand-alone entity. Acquired intangible assets are separately recognized if the benefits of the intangible assets are obtained through contractual or other legal rights, or if the intangible assets can be sold, transferred, licensed, rented, or exchanged. Determining the useful lives of intangible assets requires judgment and fact-based analysis. Intangibles with an indefinite life are not amortized but are assessed for impairment by comparing the fair value to the carrying value. Long-lived assets and other identifiable intangibles with a definite life are amortized over their estimated useful lives. These assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. In performing the review for recoverability, we estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recognized to the extent that fair value is less than the carrying value. We use judgment to estimate the fair value of the reporting units and other intangible assets with an indefinite life. The fair value of the reporting units and other intangible assets with an indefinite life are derived from internally developed valuation models, using market or discounted cash flow approaches. Under a market approach, the models consider various factors, including normalized earnings, projected forward earnings, and price earnings multiples. Under a discounted cash flow approach, the models consider various factors, including projected cash flows, terminal growth rates and discount rates. Our step 1 goodwill impairment tests conducted using these models during both the current and prior years indicate that the fair value of the reporting units subject to testing exceeded the carrying value, with the exception of our CIBC FirstCaribbean reporting unit, as discussed below with respect to the current year. The valuations determined by these models are sensitive to the underlying business conditions in the markets in which the reporting units operate. Changes in estimated fair values could result in the future depending on various factors, including changes in expected economic conditions in these markets. Using the step 1 test, the estimated fair value of our CIBC FirstCaribbean reporting unit was less than the carrying value by approximately $200 million as of the third quarter of 2011. The decline in the fair value relative to prior estimates was primarily driven by the increasingly challenging economic environment in the Caribbean and its impact on our outlook for the region. As a result of the decline in the fair value of the CIBC FirstCaribbean reporting unit below the carrying value, we were required to perform step 2 of the impairment test as of the third quarter of 2011. The performance of this test demonstrated that the implied fair value of the goodwill continued to exceed the carrying value. Our step 2 calculation indicated that the fair value of CIBC FirstCaribbean’s watch-listed and impaired loans were below their carrying value because of our estimation of the market discount rate that a purchaser of the loans would require relative to the contractual terms of the loans. Incorporating the negative fair value adjustment to the loan portfolio into the hypothetical purchase equation performed as part of the step 2 test has the effect of increasing the implied goodwill that the actual goodwill balance is compared to. As a result, an impairment charge was not required under Canadian GAAP. Under International Financial Reporting Standards (IFRS), the determination of goodwill impairment is based on a single test similar to the step 1 test under Canadian GAAP and as a result, we expect to record a goodwill impairment charge in our 2011 IFRS comparative year results as discussed in the “Transition to International Financial Reporting Standards” section. Our indefinite-lived intangible asset impairment tests during both the current and prior years indicate that the fair value of the indefinite-lived intangible assets subject to testing exceeded their carrying values. These assets are held in all our reporting segments. For additional details, see Note 8 to the consolidated financial statements. ##### Income taxes We use judgment in the estimation of income taxes and future income tax assets and liabilities. As part of the process of preparing our consolidated financial statements, we are required to estimate income taxes in each of the jurisdictions where we operate. This process involves estimating actual current tax exposure, together with assessing temporary differences that result from the different treatments of items for tax and accounting purposes, and any tax loss carryforwards. We are also required to establish a future income tax asset in respect of expenses recorded currently for which a tax deduction will be available in a future period, such as the general allowance for credit losses and loss carryforwards. As at October 31, 2011, we had available gross future income tax assets of $825 million (2010: $1,429 million), before a valuation allowance (VA) of $32 million (2010: $66 million), and gross future income tax liabilities of $574 million (2010: $596 million). We are required to assess whether it is more likely than not that our future income tax assets will be realized prior to their expiration and, based on all the available evidence, determine if a VA is required on all or a portion of our future income tax assets. The factors used to assess the likelihood of realization are our past experience of income and capital gains, forecast of future net income before taxes, available tax planning strategies that could be implemented to realize the future income tax assets, and the remaining expiration period of tax loss carryforwards. Although realization is not assured, we believe, based on all the available evidence, it is more likely than not that the remaining future income tax assets, net of the VA, will be realized prior to their expiration. Income tax accounting impacts all our reporting segments. For further details of our income taxes, see Note 22 to the consolidated financial statements. ##### Contingent liabilities In the ordinary course of its business, CIBC is a party to a number of legal proceedings, including regulatory investigations. In certain of these matters, claims for substantial monetary damages are asserted against CIBC and its subsidiaries. In accordance with Canadian GAAP, amounts are accrued for the financial resolution of claims if, in the opinion of management, it is both likely that a future event will confirm that a liability had been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. In some cases, however, it is either not possible to determine whether such a liability has been incurred or to reasonably estimate the amount of loss until the case is closer to resolution, in which case no accrual can be made until that time. If the reasonable estimate of loss involves a range within which a particular amount appears to be a better estimate, that amount would be accrued. If no such better estimate within a range is indicated, the minimum amount in the range is required to be accrued. We regularly assess the adequacy of CIBC’s contingent liability accrual and make the necessary adjustments to incorporate new information as it becomes available. Adjustments to the accrual in any quarter may be material in situations where significant new information becomes available. While there is inherent difficulty in predicting the outcome of such matters, based on current knowledge and consultation with legal counsel, we do not expect that the outcome of any of these matters, individually or in aggregate, would have a material adverse effect on our consolidated financial position. However, the outcome of any such matters, individually or in aggregate, may be material to our operating results for a particular year. Contingent liabilities impact all our reporting segments. For further details of our contingent liabilities, see Notes 24 and 31 to the consolidated financial statements. ##### Employee future benefit assumptions We are the sponsor of defined benefit pension and other post-employment (including post-retirement) benefit plans for eligible employees. The pension and other post-employment benefit expense and obligations, which impact all of our reporting segments, are dependent upon assumptions used in calculating such amounts. These assumptions include discount rates, projected salary increases, expected returns on assets, health care cost trend rates, turnover of employees, retirement age, and mortality rates. These assumptions are reviewed annually in accordance with accepted actuarial practice and are approved by management. The discount rate assumption used in determining pension and other post-employment benefit obligations and net benefit expense reflects the market yields, as of the measurement date, on high-quality debt instruments with a currency and term to maturity that match the currency and expected timing of benefit payments. Our discount rate is estimated by developing a yield curve based on high-quality corporate bonds. While there is a deep market of high-quality corporate bonds denominated in Canadian dollars with short and medium terms to maturity, there is not a deep market in bonds with terms to maturity that match the timing of all of the expected benefits payments for our Canadian plans. As a result, for our Canadian pension and post-employment benefit plans, we estimate the yields of high-quality bonds with longer term maturities by extrapolating current yields on bonds with short and medium term durations along the yield curve. Judgment is required in constructing the yield curve, and, as a result, different methodologies applied in constructing the yield curve can give rise to different discount rates. The expected rate of return on plan assets assumption is based on expected returns for the various asset classes, weighted by portfolio allocation. Anticipated future long-term performance of individual asset categories is considered, reflecting expected future inflation and expected real yields on fixed-income securities and equities. Other assumptions are based on actual plan experience and our best estimates. Actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation in future periods. As at October 31, 2011, the net amount of unamortized actuarial losses was $1,505 million (2010: $1,423 million) in respect of pension plans and $170 million (2010: $151 million) in respect of other post-employment benefit plans. Our benefit plans are funded to or above the amounts required by relevant legislation or plan term. During the year, we contributed $281 million (2010: $369 million) to the defined benefit pension plans, which included $108 million (2010: $175 million) above the minimum required. Our 2011 funding contributions to our principal Canadian pension plan was the maximum amount allowed by the Income Tax Act (Canada). Our principal post-employment benefit plans are unfunded. We fund benefit payments for these plans as incurred. During the year, these benefit payments totalled $33 million (2010: $33 million). We continue to administer a funded trust in respect of long-term disability benefits. This plan was closed to new claims effective June 1, 2004. During the year, we contributed $15 million (2010: $15 million) to the trust. For further details of our annual pension and other post-employment expense and liability, see Note 21 to the consolidated financial statements. Actual experience different from that anticipated or future changes in assumptions may affect our pension and other post-employment benefit obligations, expenses and funding contributions. The following table outlines the potential impact of changes in certain key assumptions used in measuring the accrued benefit obligations and related expenses for our Canadian plans, which represent more than 90% of our pension and other post-employment benefit plans. **Sensitivity analysis: Impact of a change of 100 basis points in key assumptions** | | **2011** | | | **2011** | | |---|---|---|---|---|---| | **Estimated increase (decrease) in defined benefit plan expenses for the year based on assumptions at the beginning of the year** | Pension benefit plans | Other benefit plans | **Estimated increase (decrease) in accrued benefit obligations as at October 31, 2011** | Pension benefit plans | Other benefit plans | | Discount rate | | | Discount rate | | | | Decrease in assumption | $ 76 | $ 6 | Decrease in assumption | $ 682 | $ 100 | | Increase in assumption | (83) | (5) | Increase in assumption | (654) | (82) | | Expected long-term rate of return on plan assets | | | Rate of compensation increase | | | | Decrease in assumption | 39 | – | Decrease in assumption | (120) | (2) | | Increase in assumption | (39) | – | Increase in assumption | 130 | 2 | | Rate of compensation increase | | | | | | | Decrease in assumption | (30) | – | | | | | Increase in assumption | 33 | 1 | | | | The sensitivity analysis contained in the table should be used with caution, as the changes are hypothetical and the impact of changes in each key assumption may not be linear. ### Financial instruments As a financial institution, our assets and liabilities primarily comprise financial instruments, which include deposits, securities, loans, derivatives, acceptances, repurchase agreements, subordinated debt, and preferred shares. We use these financial instruments for both trading and non-trading activities. Trading activities include the purchase and sale of securities, transacting in foreign exchange and derivative instruments in the course of facilitating client trades, and taking proprietary trading positions with the objective of income generation. Non-trading activities generally include the business of lending, investing, funding, and ALM. The use of financial instruments may either introduce or mitigate exposures to market, credit and/or liquidity risks. See the “Management of risk” section for details on how these risks are managed. Financial instruments are accounted for according to their classification. For details on the accounting for these instruments, see Note 1 to the consolidated financial statements. For significant assumptions made in determining the valuation of financial and other instruments, see the “Valuation of financial instruments” section above. ### U.S. regulatory developments The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) was enacted in the U.S. in July 2010. The Dodd-Frank Act contains financial reforms, including increased consumer protection, regulation of the OTC derivative markets, heightened capital and prudential standards, and restrictions on proprietary trading by banks. The Dodd-Frank Act will affect every financial institution in the U.S. and many financial institutions that operate outside the U.S. As many aspects of the Dodd-Frank Act are subject to rulemaking and will be implemented over several years, the impact on CIBC is difficult to anticipate until all the implementing regulations are finalized and released. The regulations enacted to date do not address the major provisions of the Dodd-Frank Act and have had a minimal effect on CIBC. At this point, we do not expect the Dodd-Frank Act to have a significant impact on our results. ### Accounting developments #### Changes in accounting policies **2011 and 2010** There were no changes to significant accounting policies during 2011 and 2010. **2009** **Financial instruments – recognition and measurement** Effective November 1, 2008, we adopted the revised CICA handbook section 3855 “Financial Instruments – Recognition and Measurement,“ with effect from November 1, 2008. The revised standard defined loans and receivables as non-derivative financial assets with fixed or determinable payments that were not quoted in an active market. As a result of this change in definition, the following transitional provisions were applied effective November 1, 2008: * HTM debt instruments that met the revised definition of loans and receivables were required to be reclassified from HTM to loans and receivables; * Loans and receivables that an entity intended to sell immediately or in the near term were required to be classified as trading financial instruments; and * AFS debt instruments were eligible for reclassification to loans and receivables if they met the revised definition of loans and receivables. AFS debt instruments were eligible for reclassification to HTM if they had fixed and determinable payments and were quoted in an active market and the entity had the positive intention and ability to hold to maturity. The reclassification from AFS to loans and receivables or to HTM was optional and could be made on an instrument by instrument basis. We did not elect to reclassify any AFS securities. Following adoption of the revised standard: * Debt securities that meet the definition of loans and receivables at initial recognition may be classified as loans and receivables or designated as AFS or held for trading, but are precluded from being classified as HTM; * Impairment charges through income for HTM financial instruments are to be recognized for credit losses only, rather than on the basis of a full write-down to fair value; and * Previously recognized OTTI losses on AFS debt securities are to be reversed through income if the increase in their fair value is related to improvement in credit that occurred subsequent to the recognition of the OTTI. The adoption of the revised standard resulted in financial instruments previously classified as HTM being reclassified to loans and receivables with no impact to retained earnings or AOCI. Refer to Note 4 for additional details. **Financial instruments – disclosures and presentation** For the year ended October 31, 2009, we adopted the amended CICA 3862 handbook section “Financial Instruments – Disclosures,“ which expands financial instrument fair value measurement and liquidity risk management disclosures. The disclosures are provided in Notes 2, 14 and 30 to the consolidated financial statements. **Intangible assets** Effective November 1, 2008, we adopted the CICA handbook section 3064, “Goodwill and Intangible Assets,“ which replaced CICA handbook sections 3062, “Goodwill and Other Intangible Assets,“ and 3450, “Research and Development Costs.“ The new section establishes standards for recognition, measurement, presentation and disclosure of goodwill and intangible assets. The adoption of this guidance did not result in a change in the recognition of our goodwill and intangible assets. However, we retroactively reclassified intangible assets relating to application software with net book value of $385 million as at October 31, 2008, from Land, buildings and equipment to Software and other intangible assets on our consolidated balance sheet. ### Transition to International Financial Reporting Standards Canadian publicly accountable enterprises must transition to IFRS for fiscal years beginning on or after January 1, 2011. As a result, we will adopt IFRS commencing November 1, 2011 and will publish our first interim consolidated financial statements, prepared in accordance with IFRS, for the quarter ending January 31, 2012. Upon adoption, we will provide fiscal 2011 comparative financial information, also prepared in accordance with IFRS, including an opening IFRS consolidated balance sheet as at November 1, 2010. The transition to IFRS represents a significant initiative for CIBC and continues to progress on track with our plan. Our transition program is supported by a formal governance structure with an enterprise view and a dedicated project team and appropriately engages our external and internal auditors to review key milestones and activities as we progress through the transition. Our IFRS transition program was divided into three phases: (i) discovery; (ii) execution; and (iii) conversion. The discovery phase included an accounting diagnostic, which identified the accounting standards that are relevant to CIBC, and the identification and planning for the execution phase. The execution phase commenced with a detailed analysis of the IFRS standards and continued through to the preparation of the policies, processes, technologies, strategies, and reporting for the upcoming transition. The final conversion phase, which we are currently in, will report under IFRS in 2012 and will also report on the reconciliation of Canadian GAAP to IFRS for the fiscal 2011 comparative year. We have included our November 1, 2010 opening IFRS consolidated balance sheet in Note 32 to our 2011 consolidated financial statements. ### Process, financial reporting controls and technology During the fourth quarter of 2011, we continued with the development and implementation of the business processes and internal controls over financial reporting to enable us to prepare our comparative opening November 1, 2010 consolidated balance sheet and restate our comparative fiscal 2011 consolidated financial statements to IFRS, while at the same time preparing normal course fiscal 2011 Canadian GAAP financial information. These processes included the continued use of our technology-based comparative year reporting facility to track 2011 comparative IFRS financial information. In the first and second quarters of fiscal 2011, the focus was on preparing the IFRS opening November 1, 2010 consolidated balance sheet and our first comparative quarter of 2011. In the third quarter, we focused on the preparation of the statement of operations for the second quarter of 2011, while in the fourth quarter our focus was on the statement of operations for the third and fourth quarters of 2011. Throughout 2011, we have also been preparing the IFRS 1, “First-Time Adoption of International Financial Reporting Standards“, transition note with the accompanying reconciliations that will be included in our first published IFRS consolidated financial statements for the quarter ending January 31, 2012. We used our comparative year reporting facility together with our associated controls and processes to prepare these IFRS reconciliations. The information in our comparative year reporting facility is being transferred into our general ledger effective November 1, 2011. In addition, the realignment of system feeds to more efficiently report our securitized mortgages on the consolidated balance sheet was tested in the fourth quarter of 2011 and was put into production on November 1, 2011. Concurrent with preparing for the impact of IFRS on our financial reporting, we have also prepared CIBC for impacts that IFRS has on the consolidated financial statements of our clients and counterparties, including impacts to our loan management processes, controls, and risk rating system. ### Communications and training Information regarding the progress of the project continued to be communicated to internal stakeholders throughout fiscal 2011, including our Audit Committee, senior executives and the Program Steering Committee, and to external stakeholders including our external auditor and OSFI. We also participated in an industry-sponsored IFRS education event to communicate the broad impacts of IFRS on the banking industry to analysts and investors. We have also communicated IFRS impacts to rating agencies and expect to issue a news release in late January 2012 on the impacts of IFRS to our 2011 statement of operations. We believe we have the financial reporting expertise to support our transition to IFRS. We have accounting policy staff dedicated to assessing the impact of current and future IFRS and they consult with external advisors as necessary. In 2009, we launched an enterprise-wide training program to raise the level of awareness of IFRS throughout CIBC, and to prepare staff to perform in an IFRS environment. We completed the delivery of our training program during fiscal 2010, which included separate learning paths for: (i) groups that need to understand and execute on the impact of IFRS on CIBC and its subsidiaries; and (ii) groups, such as Risk Management and the businesses, that need to understand the impact of transitioning away from Canadian GAAP on CIBC as well as our Canadian clients and counterparties. While the training was completed during fiscal 2010, refresh sessions were provided in 2011 as required. ### Financial impacts The requirements concerning the transition to IFRS are set out in IFRS 1, “First-time Adoption of International Financial Reporting Standards,” which requires the preparation of an opening comparative IFRS consolidated balance sheet at November 1, 2010 (opening IFRS balance sheet). Our opening IFRS balance sheet is included in Note 32 to our consolidated financial statements, including a description of the transitional elections and exceptions that were applied in the preparation of our opening IFRS balance sheet, as well as differences between Canadian GAAP and IFRS accounting policies that gave rise to adjustments in our opening IFRS consolidated balance sheet. As a result of the transition to IFRS, at November 1, 2010, our consolidated assets increased by $27.3 billion, our consolidated liabilities increased by $28.4 billion (including the reclassification of non-controlling interests to equity), and our total shareholders’ equity decreased by $1.1 billion. The decrease in our total shareholders’ equity of $1.1 billion as at November 1, 2010 included a $1.9 billion decrease in our retained earnings and a $0.8 billion increase in our AOCI. The decrease in our retained earnings was primarily due to the recognition of cumulative unamortized actuarial losses for post-employment defined benefit plans, along with other employee benefit adjustments, totalling a $1.1 billion charge (net of tax), and the reclassification of cumulative translation losses for foreign operations of $575 million at November 1, 2010 from AOCI to retained earnings. The majority of the gross-up of the consolidated balance sheet was the result of the impact of our accounting for residential mortgages securitized through the creation of MBS, which were derecognized under Canadian GAAP upon sale to the Canada Housing Trust, but which are accounted for as secured borrowings under IFRS. Other areas of adjustment to our opening IFRS consolidated balance sheet include, but are not limited to, consolidations, accounting for share-based compensation, measurement and impairment of equity instruments and the accounting for joint ventures. For more information on financial impacts, refer to Note 32 of our consolidated financial statements. In addition, in the third quarter of our 2011 comparative year, we expect to record a goodwill impairment charge of about US$200 million related to our CIBC FirstCaribbean cash generating unit. This charge results under IFRS because the determination of goodwill impairment is based on a single test similar to the step 1 test under Canadian GAAP. As discussed in the “Asset impairment” part of the “Critical accounting policies and estimates” section, a goodwill impairment charge did not result under Canadian GAAP because the step 2 impairment test, that is only required under Canadian GAAP, determined that the implied fair value of the goodwill still exceeded its carrying value. The goodwill impairment charge expected under IFRS in our comparative year is a non-cash item and does not impact our regulatory capital as goodwill is excluded from the calculation of Tier 1 Capital. ### Regulatory capital impacts The transition to IFRS is estimated to reduce Tier 1 capital and the Tier 1 ratio under Basel II as at November 1, 2011 by approximately $1.4 billion and 110 basis points, respectively, before the impact of OSFI’s transitional relief guideline. Pursuant to this guideline, we will phase-in approximately $1.3 billion of the negative Tier 1 impact on a straight-line basis such that we will obtain relief for 80% of the amount as at January 31, 2012, 60% of the amount as at April 30, 2012, 40% of the amount as at July 31, 2012, and 20% of the amount as at October 31, 2012. The transition to IFRS will also increase our ACM of 16.0x as at October 31, 2011 under Canadian GAAP to a pro-forma ACM of approximately 18.6x under IFRS as at November 1, 2011, before the impact of OSFI’s transitional relief. The application of OSFI’s IFRS transition guideline, that excludes the mortgages that are recognized back on the consolidated balance sheet with respect to securitizations completed prior to March 31, 2010 under the CMB program, will decrease the pro-forma November 1, 2011 ACM to approximately 17.4x, while the impact of 100% of the estimated $1.3 billion of Tier 1 relief as at November 1, 2011 will further reduce the pro forma November 1, 2011 ACM to approximately 16.3x. ### Future changes The opening IFRS balance sheet has been prepared on the basis of accounting policies that we expect to apply in the preparation of our first annual IFRS consolidated financial statements for the year ending October 31, 2012, which reflect the currently effective requirements of IFRS. The evolving nature of IFRS will result in additional accounting changes, some of which may be significant, in the years following our initial transition. A future change to IFRS which may be significant for us is in the area of employee benefits, which will require us to reflect the funded status of our post-employment defined benefit plans on our consolidated balance sheet beginning in fiscal 2014. In addition, the IASB has issued a new standard for the classification and measurement of financial instruments, which will be effective for us in fiscal 2016, although significant revisions to the requirements of the standard may be made prior to the standard becoming effective. Additional possible future changes to IFRS that may have a significant impact on CIBC include the areas of loan loss provisioning, hedge accounting, and lease accounting. Any changes arising from the proposed standards or revisions to existing standards will not be effective for us until the years following our IFRS transition in fiscal 2012. We will continue to monitor these proposed changes to IFRS through 2012. ### Related-party transactions We have various processes in place to ensure that the relevant related-party information is identified and reported to the Corporate Governance Committee (CGC) of the Board on a quarterly basis, as required by the Bank Act. The CGC has the responsibility for reviewing our policies and practices in identifying transactions with our related parties that may materially affect us, and reviewing the associated procedures for promoting compliance with the Bank Act. For further details, see Note 26 to the consolidated financial statements. ### Controls and procedures #### Disclosure controls and procedures CIBC’s management, with the participation of the President and Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of CIBC’s disclosure controls and procedures (as defined in the rules of the SEC and the Canadian Securities Administrators) as at October 31, 2011, and has concluded that such disclosure controls and procedures were effective. #### Management’s annual report on internal control over financial reporting CIBC’s management is responsible for establishing and maintaining adequate internal control over financial reporting for CIBC. Internal control over financial reporting is a process designed by, or under the supervision of, the President and Chief Executive Officer and the Chief Financial Officer and effected by the Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. CIBC’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of CIBC; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of CIBC are being made only in accordance with authorizations of CIBC’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of CIBC’s assets that could have a material effect on the financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. CIBC’s management has used the COSO framework to evaluate the effectiveness of CIBC’s internal control over financial reporting. As at October 31, 2011, management assessed the effectiveness of CIBC’s internal control over financial reporting and concluded that such internal control over financial reporting was effective and that there were no material weaknesses in CIBC’s internal control over financial reporting that have been identified by management. Ernst \& Young LLP, who has audited the consolidated financial statements of CIBC for the year ended October 31, 2011, has also issued a report on internal control over financial reporting under Auditing Standard No. 5 of the Public Company Accounting Oversight Board (United States). This report is located on page 112 of this Annual Report. #### Changes in internal control over financial reporting There have been no changes in CIBC’s internal control over financial reporting during the year ended October 31, 2011, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. ## Business line overview We have three SBUs: Retail and Business Banking, Wealth Management and Wholesale Banking. These SBUs are supported by Corporate and Other. Retail and Business Banking provides clients across Canada with financial advice, products and services through a strong team of advisors and nearly 1,100 branches, as well as our ABMs, mobile sales force, telephone banking, online and mobile banking. Wealth Management comprises asset management, retail brokerage and private wealth management businesses. Combined, these businesses offer an extensive suite of leading investment and relationship-based advisory services to meet the needs of institutional, retail, and high net worth clients. Wholesale Banking provides a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and in key markets around the world. These SBUs are supported by six functional groups – Technology and Operations; Corporate Development; Finance; Treasury; Administration; and Risk Management, which form part of Corporate and Other. The revenue, expenses and balance sheet resources of these functional groups are generally allocated to the business lines within the SBUs. It also includes our International Banking operations comprising mainly CIBC FirstCaribbean; strategic investments in the CIBC Mellon joint ventures and The Bank of N.T. Butterfield & Son Limited; and other income statement and balance sheet items not directly attributable to the business lines. The impact of securitization is also retained within Corporate and Other. ### Business unit allocations Treasury activities impact the reported financial results of the SBUs. Each line of business within our SBUs is charged or credited with a market-based cost of funds on assets and liabilities, respectively, which impacts the revenue performance of the SBUs. Once the interest and liquidity risk inherent in our customer-driven assets and liabilities is transfer priced into Treasury, it is managed within CIBC’s risk framework and limits. The majority of the revenue from these Treasury activities is then allocated to the Other line of business within relevant SBUs. Treasury also allocates capital to the SBUs in a manner that is intended to consistently measure and align economic costs with the underlying benefits and risks associated with SBU activities. Earnings on unallocated capital remain in Corporate and Other. We review our transfer pricing and treasury allocation methodologies on an ongoing basis to ensure they reflect changing market environments and industry practices. The nature of transfer pricing and treasury allocation methodologies is such that the presentation of certain line items in segmented results is different compared to consolidated CIBC results. To measure and report the results of operations of the lines of business within our Retail and Business Banking and Wealth Management SBUs, we use a Manufacturer/Customer Segment/Distributor Management Model. The model uses certain estimates and allocation methodologies in the preparation of segmented financial information. Under this model, internal payments for sales and trailer commissions and distribution service fees are made among the lines of business and SBUs. Periodically, the sales and trailer commission rates paid to customer segments for certain products are revised and applied prospectively. Non-interest expenses are attributed to the SBUs to which they relate based on appropriate criteria. Specific allowances for credit losses and related provisions are reported in the respective business segments, while the general allowance and related provision is reported only in Corporate and Other. Revenue, expenses, and balance sheet resources relating to certain activities are fully allocated to the lines of business within SBUs. The impact of the securitization activities on the net income including provision for credit losses is reported in Corporate and Other. ### Changes made to our business segments **2011** On March 28, 2011, we announced a new organizational structure to build on the progress of implementing our business strategy and delivering strong financial performance. Accordingly, wealth management and international banking operations (including CIBC FirstCaribbean) have been reported separately from CIBC Retail Markets and included in the newly created Wealth Management SBU and Corporate and Other, respectively. Following these changes, CIBC Retail Markets, which includes the remaining businesses, was renamed Retail and Business Banking. **2010** The global repurchase agreement (repo) business that was previously part of Treasury in Corporate and Other was retroactively transferred to Capital markets within Wholesale Banking. The results of this repo business were previously allocated substantially to Other within CIBC Retail Markets. Also during the year, large corporate cash management revenue previously reported in Business banking within CIBC Retail Markets, was retroactively transferred to Corporate and investment banking within Wholesale Banking. Prior period information was restated. **2009** We moved the impact of securitization for CIBC Retail Markets to Corporate and Other. In addition, the provision for credit losses related to general allowance (excluding FirstCaribbean) was moved to Corporate and Other. We also reclassified the specific allowance related to credit card loans to general allowance. As a consequence, all changes in credit allowance related to credit card loans were reflected in Corporate and Other. Prior period information was restated to reflect these changes. In the first quarter, we moved sublease income and related operating costs of our New York premises from Wholesale Banking to Corporate and Other. In the third quarter, we made certain modifications to our transfer pricing and treasury allocations methodologies to more appropriately reflect funding costs and observed client behaviour in our SBUs in the current environment. The modifications resulted in an increase in the revenue of CIBC Retail Markets with a corresponding decrease in the revenue of Wholesale Banking and Corporate and Other. These changes and modifications were applied prospectively and prior period information was not restated. ### Other segment reporting changes In the third quarter of 2011, we realigned certain items from Other to Capital markets and Corporate and investment banking business lines within Wholesale Banking to better reflect the nature and management of the activities. Prior period information has been restated. Beginning in the first quarter of 2011, general allowance for credit losses related to CIBC FirstCaribbean has been included within Corporate and Other. This allowance was previously reported within CIBC Retail Markets. Prior period information has been restated. ## Retail and Business Banking Retail and Business Banking provides clients across Canada with financial advice, products and services through a strong team of advisors and nearly 1,100 branches, as well as our ABMs, mobile sales force, telephone banking, online and mobile banking. Across Retail and Business Banking, we are focused on our priorities which are: to build deeper relationships with our clients; improve our sales and service capabilities; and acquire and retain clients who seek deeper and more rewarding relationships. In 2011, we invested in delivering greater access and choice to our clients in how they do their everyday banking: * We were recognized by *Global Finance* magazine as “Best in Mobile Banking” among banks globally, the first time this award has been given, reflecting the rapid growth of this channel. This recognition was based on criteria including strength of strategy for attracting and servicing customers, success in driving usage of mobile apps, and overall functionality; * We became the first bank to bring a mobile brokerage App to Canadian investors enabling them to execute trades using their mobile device; * We added Visa payWave, a contactless payment feature, on all newly issued and renewing credit cards in the Aerogold family, as well as on the CIBC Classic credit card, to further enhance the client experience; and * We completed the successful transition of more than 600,000 accounts to CIBC as part of the Citi MasterCard acquisition. ### Priorities * Deepen client relationships * Improve sales and service capabilities * Acquire and retain clients ### 2011 in review #### Personal banking * Completed the successful transition of the Citi MasterCard acquisition, becoming the largest dual issuer of Visa and MasterCard credit cards in Canada * Integrated our sales and service and distribution organization into a single team to increase our focus on our clients * Celebrated a milestone with more than 100 new branches opened in the past four years * Introduced a continuous process improvement working across all products and sales channels | | 2009 ($ billions) | 2010 ($ billions) | 2011 ($ billions) | |---|---|---|---| | **Funds managed** | 277.4 | 290.7 | 300.4 | #### Business banking * Strong growth in business lending and core deposits * Integrated business sales forces to create a better client experience within Commercial Banking * Established a new integrated Global Transaction Banking team * Recruited strong new executive talent in Business Banking | | 2009 ($ billions) | 2010 ($ billions) | 2011 ($ billions) | |---|---|---|---| | **Funds managed** | 68.7 | 73.0 | 77.9 | ## Wealth Management Wealth Management comprises asset management, retail brokerage and private wealth management businesses. Combined, these businesses offer an extensive suite of leading investment and relationship-based advisory services to meet the needs of institutional, retail, and high net worth clients. Our objective is to be a leader in wealth management solutions in markets where we offer advice and to be a leading global asset manager by delivering exceptional value for our clients, our employees, our shareholders, and our communities. Deepening relationships with our clients and achieving what matters to them are at the core of our business and underpins our organizational and leadership focus. ### Priorities * Provide advice and solution innovation to meet the current and evolving needs of our clients * Deliver superior investment performance for our clients through a disciplined process * Enhance the client experience by simplifying processes and building on the value that we provide each and every day ### 2011 in review #### Retail brokerage * Introduced innovative loyalty pricing for self-directed clients * Leadership in mobile brokerage with first Canadian mobile brokerage App * Enhancing value for our CIBC Wood Gundy clients with the introduction of Financial Planners * New advisor training program launched to build advisory capabilities | | 2009 ($ billions) | 2010 ($ billions) | 2011 ($ billions) | |---|---|---|---| | **CIBC Wood Gundy – Assets under administration** | 98.6 | 110.7 | 111.9 | #### Asset management * Investment performance consistently ranked amongst the Canadian leaders * Record net sales of long-term mutual funds * Fastest growing Top 40 Canadian Money Manager * Enhanced our investment and research capabilities with key hires * Leader in managed solutions, as measured by assets * Completed the acquisition of a minority interest of 41% in ACI (the assets under management do not include assets of ACI) | | 2009 ($ billions) | 2010 ($ billions) | 2011 ($ billions) | |---|---|---|---| | **Assets under management** | 71.4 | 76.7 | 80.1 | #### Private wealth management * Funds managed growth of 14% * Expanded or opened offices in four locations across the country * CIBC Private Investment Counsel fastest growing investment counselor amongst its peers | | 2009 ($ billions) | 2010 ($ billions) | 2011 ($ billions) | |---|---|---|---| | **Funds managed** | 9.9 | 11.3 | 12.8 | ### Financial overview Net income was up $54 million or 24% from 2010, primarily due to higher revenue from retail brokerage and asset management, partially offset by higher non-interest expenses. #### Revenue Revenue was up $157 million or 11% from 2010. * Retail brokerage revenue was up $95 million or 10%, primarily due to higher fee-based revenue, wider spreads, and higher commissions from new issues. * Asset management revenue was up $64 million or 16%, primarily due to higher client assets under management driven by higher net sales of long-term mutual funds and improved capital markets. Starting in the fourth quarter of 2011, it also includes revenue from our investment in ACI. * Private wealth management revenue was comparable to 2010. | | 2009 ($ millions) | 2010 ($ millions) | 2011 ($ millions) | |---|---|---|---| | **Revenue** | 1,384 | 1,479 | 1,636 | | **Net income** ($ millions) | 189 | 225 | 279 | | **Efficiency ratio (b/a)** | 79.2% | 78.6% | 75.8% | | **Return on equity**$^{(2)}$ | 21.5% | 26.3% | 31.3% | | **Economic profit**$^{(2)}$ (c+e) | $ 73 | $ 110 | $ 163 | | **Assets under administration** ($ billions) | 179.6 | 198.9 | 202.9 | #### Non-interest expenses Non-interest expenses were up $78 million or 7%, primarily due to higher performance-based compensation and pension expense. #### Income taxes Income taxes were up $22 million or 24% from 2010, mainly due to an increase in income. #### Assets under administration Assets under administration were up $4.0 billion or 2% from 2010, primarily due to higher net sales of long-term mutual funds and higher average balances in client assets. ## Wholesale Banking Wholesale Banking provides a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and in key markets around the world. Our objective is to be the premier client-focused wholesale bank centred in Canada with a reputation for consistent and sustainable earnings, for risk-controlled growth and for being a well-managed firm known for excellence in everything we do. In 2011, CIBC participated in a number of key transactions as: * financial advisor to Equinox Minerals Limited on its $7.3 billion sale to Barrick Gold; * lead manager of Intact Financial Corporation’s (Intact) $962 million common equity offering – the largest Canadian bought deal in 2011 – and lead arranger of $1.6 billion in credit facilities for Intact; * financial advisor to Ontario Power Generation’s award-winning $1.9 billion debt financing program to fund the redevelopment and expansion of four hydroelectric generating stations on the Lower Mattagami River; mandate included acting as joint bookrunner on the program’s inaugural $475 million bond transaction; * joint bookrunner on two unsecured debenture offerings for Bell Canada totalling $2.0 billion; * sole lead arranger for a $1.5 billion revolving credit facility for TransAlta; and * lead manager of the Whistler Blackcomb Holdings Inc., Parallel Energy Trust and Pretium Resources Inc., Initial Public Offerings (IPO), as well as senior co-manager of the General Motors IPO. ### 2011 in review #### Capital markets * Participated in 250 deals, more than any other Canadian dealer * Ranked \#1 in market share (up from \#2 in 2010), maintaining our status as the \#1 or \#2 equity underwriter in Canada since 2003 * Led several large offerings, most notably Intact’s $962 million offering and Brookfield Asset Management’s $578 million offering * \#1 in market share in equity trading by both volume and value * Broadened client-focused product capabilities, including the delivery of the CORE platform * Improved foreign exchange market share | | 2009 (Revenue, $ millions) | 2010 (Revenue, $ millions) | 2011 (Revenue, $ millions) | |---|---|---|---| | **Capital markets** | 1,291 | 1,051 | 1,111 | #### Corporate and investment banking * Maintained strong position in mergers and acquisitions, debt underwriting, and syndicated lending, and improved market position in equity underwriting * Improved Canadian lending market share; global authorized loan commitments up 21% * Expanded our U.S. Energy lending capabilities, to more effectively serve both existing and new clients * Increased focus on Infrastructure, with our Project Finance team leading, co-leading, or participating in debt financing for a number of power projects across a variety of industries including renewable power, conventional power, transmission, health-care, justice, and transportation | | 2009 (Revenue, $ millions) | 2010 (Revenue, $ millions) | 2011 (Revenue, $ millions) | |---|---|---|---| | **Corporate and investment banking** | 690 | 714 | 952 | ### Priorities * Client-focused strategy * Profitable leadership in core businesses * Grow with CIBC ### Financial overview Net income was up $223 million or 65% from 2010. This was primarily due to higher revenue from corporate and investment banking, a lower provision for credit losses, and a lower effective tax rate, partially offset by higher non-interest expenses. #### Revenue (TEB)$^{(3)}$ Revenue was up $297 million or 17% from 2010. * Capital markets revenue was up $60 million or 6%, driven by higher tax-exempt revenue and higher equity sales and new issuances revenue, partially offset by lower fixed income revenue. The prior year included a reversal of credit valuation adjustment (CVA) charges against credit exposures to derivative counterparties (other than financial guarantors) whereas the current year included an expense. * Corporate and investment banking revenue was up $234 million or 33%, primarily due to higher merchant banking gains and higher revenue from corporate credit and advisory, partially offset by lower revenue from U.S. real estate finance. * Other revenue was up $3 million, primarily due to lower MTM losses on corporate loan hedges, and lower losses in the structured credit run-off business. The prior year included the reversal of interest expense on tax reassessments. | Metric | 2009 ($ millions) | 2010 ($ millions) | 2011 ($ millions) | |---|---|---|---| | **Net income (loss)** (d) | (472) | 342 | 565 | | **Economic profit (loss)**$^{(3)}$ (d+f) | (819) | 88 | 328 | #### Provision for credit losses Provision for credit losses was down $56 million or 64% from 2010, mainly due to lower losses in the U.S. real estate finance portfolio as a result of relative stabilization in the U.S. commercial real estate market. #### Non-interest expenses Non-interest expenses were up $51 million or 4%, primarily due to higher performance-based compensation and expenses related to the sale of a merchant banking investment, higher employee salaries and benefits, and communication expenses, partially offset by lower capital taxes. The prior year included expenses related to the ABCP settlement with the OSC. #### Income taxes Income tax expense was down $46 million or 37% from 2010, largely due to higher tax-exempt income, partially offset by an increase in the relative proportion of income earned in jurisdictions subject to higher income tax rates. #### Average assets Average assets were up $7.2 billion or 7% from 2010, primarily due to increased trading activity. ## Financial condition ### Review of condensed consolidated balance sheet $ millions, as at October 31 | Assets | 2011 | 2010 | |---|---|---| | Cash and deposits with banks | $ 6,297 | $ 12,052 | | Securities | | | | Trading | 32,797 | 28,557 | | AFS | 29,212 | 26,621 | | FVO | 20,064 | 22,430 | | | 82,073 | 77,608 | | Cash collateral on securities borrowed | 1,838 | 2,401 | | Securities borrowed or purchased under resale agreements | 26,002 | 37,342 | | Loans | | | | Residential mortgages | 99,603 | 93,568 | | Personal | 34,842 | 34,335 | | Credit card | 10,408 | 12,127 | | Business and government | 41,812 | 38,582 | | Allowance for credit losses | (1,647) | (1,720) | | | 185,018 | 176,892 | | Derivative instruments | 28,259 | 24,682 | | Customers’ liability under acceptances | 9,361 | 7,684 | | Other assets | 14,851 | 15,780 | | **Total assets** | **$ 353,699** | **$ 352,040** | | **Liabilities and shareholders’ equity** | | | | Deposits | | | | Personal | $ 116,592 | $ 113,294 | | Business and government | 134,636 | 127,759 | | Bank | 4,181 | 5,618 | | | 255,409 | 246,671 | | Derivative instruments | 29,807 | 26,489 | | Acceptances | 9,396 | 7,684 | | Obligations related to securities lent or sold short or under repurchase agreements | 24,622 | 37,893 | | Other liabilities | 11,823 | 12,572 | | Subordinated indebtedness | 5,138 | 4,773 | | Non-controlling interests | 164 | 168 | | Shareholders’ equity | 17,340 | 15,790 | | **Total assets** | **$ 353,699** | **$ 352,040** | #### Assets As at October 31, 2011, total assets were up by $1.7 billion from 2010. * Cash and deposits with banks decreased $5.8 billion or 48%, mainly due to lower treasury deposit placements. * Securities were up $4.5 billion or 6%, due to increases in trading and AFS securities, partially offset by a decrease in FVO securities. Trading securities increased mainly in the equity portfolio, partially offset by a decrease in government-issued securities. AFS securities increased mainly due to higher government-issued bonds and an increase in market valuations as a result of market changes. FVO securities decreased largely due to the sale of mortgage-backed and government-issued securities. Further details on the composition of securities are provided in Note 4 to the consolidated financial statements and in the “Supplementary annual financial information” section. * Securities borrowed or purchased under resale agreements decreased by $9.5 billion or 25% primarily due to reduced client demand and our funding requirements. * Loans increased by $8.1 billion or 5%. Residential mortgages were up $6.0 billion due to volume growth, net of securitizations and repayments. Personal loans were up $507 million due to business growth. Credit card loans were down $1.7 billion mostly due to securitizations. Business and government loans increased by $3.2 billion, primarily due to growth in U.S. real estate finance and corporate lending and the purchase of certain retained interests related to the credit card securitizations, partially offset by a reduction in our CLO exposure. A detailed discussion of the loan portfolios is included in the “Management of risk” section. Further details on the composition of loans are provided in Note 5 to the consolidated financial statements and in the “Supplementary annual financial information” section. * Derivative instruments increased $3.6 billion or 14% ($0.3 billion or 1%, net of derivative liabilities) due to a change in market valuation of interest rate and equity derivatives as well as an increase in volume of transactions. Further details on the composition of derivatives are provided in Notes 2 and 14 to the consolidated financial statements. * Customers’ liability under acceptances increased by $1.7 billion or 22%, driven by growth in corporate and commercial lending. * Other assets were down by $929 million or 6%, mainly due to lower future income tax assets, collateral pledged, and items in transit, partially offset by our equity-accounted investment in ACI. #### Liabilities Total liabilities as at October 31, 2011 were up by $109 million from 2010. * Deposits were up $8.7 billion or 4%, mainly due to growth in deposits and wholesale funding activity. Further details on the composition of deposits are provided in Note 10 to the consolidated financial statements and in the “Supplementary annual financial information” section. * Derivative instruments increased $3.3 billion or 13% due to the reasons noted above for derivative assets. * Acceptances increased by $1.7 billion or 22% due to the reasons noted above. * Obligations related to securities lent or sold short or under repurchase agreements decreased by $13.3 billion or 35%, reflecting our funding requirements and client-driven activities. * Other liabilities decreased by $749 million or 6%, mainly arising from the settlement of preferred share liabilities redeemed on October 31, 2010. * Subordinated indebtedness increased by $365 million or 8% reflecting our net issuance and redemption activities. See the “Capital resources” section for more details. #### Shareholders’ equity Shareholders’ equity as at October 31, 2011 was up by $1.6 billion or 10%, mainly due to a net increase in retained earnings and the issuance of common shares pursuant to the stock option, shareholder investment, and employee share purchase plans (ESPP). These were partially offset by the redemption of the preferred shares and a decrease in AOCI. ### Capital resources Our capital strength protects our depositors and creditors from risks inherent in our businesses, allows us to absorb unexpected losses, and enables us to take advantage of attractive business opportunities. It also enables us to maintain a favourable credit standing and to raise additional capital or other funding on attractive terms. Our objective is to maintain a strong and efficient capital base. We manage and monitor our capital to maximize risk-adjusted return to shareholders and to meet regulatory requirements. #### Regulatory capital and ratios Our minimum regulatory capital requirements are determined in accordance with guidelines issued by the Office of the Superintendent of Financial Institutions (OSFI). The OSFI guidelines evolved from the Basel II framework of risk-based capital standards developed by the Bank for International Settlements (BIS). The BIS framework allows some domestic regulatory discretion in determining capital. Capital ratios of banks in different countries are, therefore, not strictly comparable unless adjusted for discretionary differences. Current Basel II standards require that banks maintain minimum Tier 1 and Total capital ratios of 4% and 8%, respectively. OSFI has established that Canadian deposit taking financial institutions maintain Tier 1 and Total capital ratios of at least 7% and 10%, respectively. Capital adequacy requirements are applied on a consolidated basis. The consolidation basis applied to our financial statements is described in Note 1 to the consolidated financial statements. All subsidiaries, except certain investments and holdings which are not subject to risk assessment under Basel II and are instead deducted from regulatory capital, are included for regulatory capital calculation purposes. A deduction approach applies to investments in insurance subsidiaries, substantial investments, and applicable securitization-related activities. Our Canadian insurance subsidiary, CIBC Life Insurance Company Limited, is subject to OSFI’s Minimum Continuing Capital Surplus Requirements for life insurance companies. Under the Basel II AIRB approach, credit RWAs are calculated according to the mathematical formula utilizing probability of default (PD), loss given default (LGD), and exposure at default (EAD), and in some cases, maturity adjustments. Under the Basel II standardized approach, credit RWAs are calculated by applying the weighting factors specified in the OSFI guidelines to on- and off-balance sheet exposures. RWAs for market risk in the trading portfolio are statistically determined based on models approved by OSFI. RWAs for operational risk related to losses from inadequate or failed processes, people, and systems are determined under a model-based approach approved by OSFI. The components of our RWAs are shown in the table below: | Credit risk | Risk-weighted amounts ($ millions, as at October 31) | |---|---| | | **2011** | **2010** | | **Standardized approach** | | | | Corporate | 3,735 | 4,729 | | Sovereign | 676 | 178 | | Banks | 428 | 394 | | Real estate secured personal lending | 1,652 | 1,653 | | Other retail | 1,961 | 2,288 | | **Total Standardized approach** | **8,452** | **9,242** | | **AIRB approach** | | | | Corporate | 34,988 | 31,236 | | Sovereign | 1,544 | 1,595 | | Banks | 3,077 | 3,902 | | Real estate secured personal lending | 4,876 | 4,213 | | Qualifying revolving retail | 15,544 | 14,281 | | Other retail | 5,764 | 5,302 | | Equity$^{(1)}$ | 613 | 695 | | Trading book | 2,574 | 3,516 | | Securitizations | 2,119 | 1,761 | | Adjustment for scaling factor | 4,266 | 3,990 | | **Total AIRB approach** | **75,365** | **70,491** | | Other credit risk-weighted assets | 6,293 | 7,049 | | **Total credit risk** | **90,110** | **86,782** | | Market risk (Internal Models Approach) | 1,646 | 1,625 | | Operational risk (Advanced Measurement Approach) | 18,212 | 18,256 | | **Total risk-weighted assets** | **$ 109,968** | **$ 106,663** | $^{(1)}$ 100% risk-weighted. RWAs increased mainly due to increased corporate exposures and updates to our advanced internal ratings-based (AIRB) model parameters, partially offset by decreased exposure to banks and structured credit. The components of our regulatory capital and ratios are shown in the table below: | $ millions, as at October 31 | 2011 | 2010 | |---|---|---| | **Tier 1 capital** | | | | Common shares | $ 7,376 | $ 6,804 | | Contributed surplus | 90 | 96 | | Retained earnings | 7,605 | 6,095 | | Net after-tax fair value losses arising from changes in institution’s own credit risk | – | 1 | | Foreign currency translation adjustments | (650) | (575) | | Non-cumulative preferred shares | 2,756 | 3,156 | | Innovative instruments | 1,600 | 1,599 | | Certain non-controlling interests in subsidiaries | 164 | 168 | | Goodwill | (1,894) | (1,913) | | Gains on sale of applicable securitized assets | (60) | (58) | | 50/50 deductions from each of Tier 1 and Tier 2$^{(1)}$ | (779) | (522) | | **Total Tier 1 capital** | **16,208** | **14,851** | | **Tier 2 capital** | | | | Perpetual subordinated indebtedness | 234 | 270 | | Other subordinated indebtedness (net of amortization) | 4,741 | 4,404 | | Net after-tax unrealized holding gains on AFS equity securities | 5 | 4 | | Eligible general allowance (standardized approach) | 108 | 126 | | 50/50 deductions from each of Tier 1 and Tier 2$^{(1)}$ | (779) | (522) | | Investment in insurance activities$^{(2)}$ | (230) | (167) | | **Total Tier 2 capital** | **4,079** | **4,115** | | **Total capital available for regulatory purposes** | **$ 20,287** | **$ 18,966** | | **Regulatory capital ratios** | | | | Tier 1 capital | 14.7% | 13.9% | | Total capital | 18.4% | 17.8% | | Assets-to-capital multiple (ACM) | 16.0x | 17.0x | $^{(1)}$ Items which are deducted 50% from each of Tier 1 capital and Tier 2 capital include allowance shortfall calculated under AIRB approach, securitization exposures (other than gain on sale of applicable securitized assets), and substantial investments in unconsolidated entities. $^{(2)}$ Investment in insurance activities continues to be deducted 100% from Tier 2 capital in accordance with OSFI’s transition rules. Tier 1 and Total regulatory capital increased mainly due to internal capital generation and the issuance of common shares, offset in part by regulatory deductions related to our investment in ACI and the redemption of preferred shares noted in the “Capital management” section. Total regulatory capital as at October 31, 2011 also reflected the issuance and redemption of subordinated debt noted in the “Capital management” section. The Tier 1 ratio was up 0.8% and the Total capital ratio was up 0.6% from October 31, 2010. The capital ratios benefited from an increase in both Tier 1 and Total regulatory capital, offset in part by an increase in RWAs. We are required to hold regulatory capital for the underlying securitized credit card receivables (both for our Cards II and Broadway Trusts) as if they had remained on our consolidated balance sheet. Applying this treatment resulted in a reduction of our Tier 1 and Total capital ratios by approximately 0.49% and 0.63%, respectively (2010: 0.34% and 0.42%, respectively). ### Basel III and revisions to regulatory capital requirements In order to promote a more resilient banking sector and strengthen global capital standards, the Basel Committee on Banking Supervision (BCBS) proposed significant enhancements and capital reforms to the current framework. Revisions to the Basel II market risk framework, effective in the first quarter of fiscal 2012, will raise capital requirements for the trading book and complex securitization exposures. The complete revised framework, referred to as Basel III, will be effective January 1, 2013 and provides lengthy periods for transitioning to numerous new requirements. Significant Basel III reforms include the following: * Introducing a new common equity ratio (the Common Equity Tier 1 ratio). Certain adjustments are made to common equity, for example the deduction of goodwill, intangible assets and a portion of significant equity investments in financial entities, for the purpose of calculating this new ratio. The adjustments will be phased-in commencing January 1, 2013. Banks will be required to meet the new Common Equity Tier 1 ratio standard during a transition period beginning January 1, 2013 and ending on January 1, 2019. The minimum Common Equity Tier 1 ratio requirement of 4.5% and an incremental 2.5% conservation buffer will be phased-in during the transition period; * Increasing the minimum Tier 1 capital and Total capital ratios to 8.5% and 10.5%, respectively, including a 2.5% conservation buffer. These increases will also be phased-in commencing January 1, 2013 with banks expected to meet the new standards through a transition period ending on January 1, 2019; * Amending the rules on instruments that can be considered qualifying capital instruments for the purposes of calculating regulatory capital. In particular, Basel III requires that capital instruments be capable of absorbing loss at the point of non viability of a financial institution. The inclusion of non-qualifying capital instruments in regulatory capital calculations will be phased-out between January 1, 2013 and January 1, 2022; * Increasing capital requirements for counterparty credit exposures arising from derivative, repo and securities financing activities; and * Introducing a new global leverage ratio to address balance sheet leverage. The BCBS will be monitoring and refining this new ratio between 2011 and 2017 before its final implementation in 2018. In February 2011, OSFI issued advisories confirming the adoption of Basel III in Canada and clarifying the treatment of non-qualifying capital instruments. Non-qualifying capital instruments are subject to a 10% phase-out per annum commencing 2013. Banks are expected to develop and maintain a redemption schedule for non-qualifying capital instruments that gives priority to redeeming instruments at their regular par redemption dates before exercising any regulatory event redemption rights. We expect to exercise our regulatory event redemption right in fiscal 2022 in respect of the $300 million CIBC Tier 1 Notes – Series B due June 30, 2108 issued by CIBC Capital Trust. On August 16, 2011, we received confirmation from OSFI that our non-cumulative Class A preferred shares, Series 26, 27 and 29 (the Convertible Preferred Shares) will be treated as non-viability contingent capital (NVCC) for the purposes of determining regulatory capital under Basel III. In connection with receiving this confirmation, we have irrevocably renounced by way of a deed poll, our right to convert the Convertible Preferred Shares into CIBC common shares except in circumstances that would be a “Trigger Event” as described in the August 2011 NVCC Advisory issued by OSFI; and we have provided an undertaking to OSFI that we will immediately exercise our right to convert each of the Convertible Preferred Shares into CIBC common shares upon the occurrence of a Trigger Event. On November 4, 2011, the BCBS issued rules to reduce the moral hazard and probability of failure of global systemically important banks (G-SIBs). The rules include an assessment methodology for determining global systemic importance and increased minimum common equity requirements for banks identified as G-SIBs. CIBC was not identified as a G-SIB under the BCBS methodology. We maintain prudent capital planning practices to ensure we are adequately capitalized and continue to exceed minimum standards and internal targets. While OSFI has confirmed that Basel III will be adopted in Canada, revised national regulations are not expected to be released until 2012. Based on our current understanding of the revised capital requirements, we expect to exceed the new requirements ahead of implementation timelines that have been proposed by BCBS and confirmed by OSFI, while continuing to invest for future growth. ### Capital management Our capital management policies, established by the Board, relate to capital strength, capital mix, dividends and return of capital, and the unconsolidated capital adequacy of regulated entities. Each year a capital plan and three-year outlook are established, which encompass all the associated elements of capital: forecasts of sources and uses, maturities, redemptions, new issuances, corporate initiatives and business growth. The capital plan is stress-tested in various ways to ensure that it is sufficiently robust under all reasonable scenarios. We maintain a process which determines plausible but stressed economic scenarios, and then apply these stresses to the vast majority of our exposures to determine the impact on the consolidated statement of operations, RWA requirements, and consequently, key capital ratios. This helps us analyze the potential risks within our portfolios and establish prudent capital levels in excess of the regulatory minimum requirements. All of the elements of capital are monitored throughout the year and the capital plan is adjusted as appropriate. The following were the main capital initiatives undertaken in 2011: #### Subordinated debt On November 2, 2010, we issued $1,500 million principal amount of 3.15% Debentures (subordinated indebtedness) due November 2, 2020. The Debentures qualify as Tier 2 capital. On March 28, 2011, we redeemed all $1,080 million of our remaining 4.55% Medium Term Notes (subordinated indebtedness) due March 28, 2016. In accordance with their terms, the Medium Term Notes were redeemed at 100% of their principal amount, plus accrued and unpaid interest thereon. On October 31, 2011, we purchased and cancelled US$30 million ($29 million) of our Floating Rate Debenture Notes due 2084. As a result, the principal balance outstanding on this issue was reduced to US$169 million ($168 million). #### Preferred shares On April 28, 2011, we redeemed all 2,000 of the remaining outstanding Non-cumulative Class A Series 28 Preferred Shares with a par value of $10 each at a redemption price of $10.00 per share for cash. On July 31, 2011, we redeemed all of our 16 million Non-cumulative Class A Series 30 Preferred Shares with a par value of $25 each at a redemption price of $25.75 per share for a total amount of $412 million. #### Common shares During the year, we issued 1.2 million (2010: 1.9 million) new common shares for a total consideration of $79 million (2010: $88 million), pursuant to stock option plans. Under CIBC’s Shareholder Investment Plan (Plan), shareholders may elect to reinvest dividends received on common or preferred shares into additional common shares, and purchase additional common shares through optional cash contributions. Under the Plan, we may elect to have shares issued from Treasury or purchased in the open market. If the shares are issued from Treasury, we may offer a discount on reinvested dividends. Commencing with dividends paid on April 28, 2011, the participants in the Dividend Reinvestment Option and Stock Dividend Option of the Plan receive a 2% discount from average market price (as defined in the Plan) on the reinvested dividends in additional common shares. Previously, the shares were issued at a 3% discount. During 2011, we issued 5.5 million (2010: 6.0 million) new common shares for a total consideration of $411 million (2010: $419 million), pursuant to the Plan. Effective February 2010, employee contributions to CIBC’s Canadian ESPP have been used to purchase common shares issued from Treasury. For additional details about the ESPP, see Note 20 to the consolidated financial statements. During 2011, we issued 1.1 million (2010: 0.8 million) new common shares for a total consideration of $85 million (2010: $56 million), pursuant to the ESPP. #### Dividends We paid quarterly dividends of 87 cents per common share for the first three quarters of fiscal 2011. For the fourth quarter of 2011, we increased our quarterly dividend from 87 cents per share to 90 cents per share. Common and preferred share dividends are declared quarterly at the discretion of the Board. The declaration and payment of dividends is governed by Section 79 of the Bank Act (Canada), the terms of the preferred shares, and the terms of the Notes issued by CIBC Capital Trust, as explained in Notes 17 and 18 to the consolidated financial statements. #### Economic capital Economic capital provides the financial framework to evaluate the returns of each business line, commensurate with the risk taken. It comprises the capital required to protect against unexpected losses, in periods of near catastrophic “worst case” loss scenarios, while remaining an independent going concern. Economic capital is therefore an estimate of the amount of equity capital required by the businesses to absorb losses consistent with our targeted risk rating over a one-year horizon. The economic capital methodologies that we employ quantify the level of inherent risk within our products, clients, and business lines, as required. This enables us to measure and compare risk-adjusted returns across products and business lines, and contributes to the analysis of where to direct the allocation of balance sheet resources. Our economic capital methodology comprises a number of key risk types including credit, strategic, operational, investment, and market. ```mermaid pie title Total economic capital by risk type "Credit" : 46 "Operational" : 15 "Market" : 14 "Strategic" : 22 "Investment" : 3 ``` ```mermaid pie title Total economic capital by operating segments "Retail and Business Banking" : 46 "Wholesale Banking" : 22 "Corporate and Other" : 19 "Wealth Management" : 13 ``` ## Shareholder information Common shares of CIBC (CM) are listed on the Toronto Stock Exchange and the New York Stock Exchange. Preferred shares are listed on the Toronto Stock Exchange. ### Dividends Quarterly dividends were paid on CIBC common and preferred shares in 2011: #### Common shares | Ex-dividend date | Record date | Payment date | Dividends per share | Number of common shares on record date | |---|---|---|---|---| | Sep 26/11 | Sep 28/11 | Oct 28/11 | $0.90 | 399,103,823 | | Jun 24/11 | Jun 28/11 | Jul 28/11 | $0.87 | 397,211,604 | | Mar 24/11 | Mar 28/11 | Apr 28/11 | $0.87 | 395,454,543 | | Dec 23/10 | Dec 29/10 | Jan 28/11 | $0.87 | 393,238,456 | #### Preferred shares | Stock | Series 18 | Series 26 | Series 27 | Series 29 | Series 31 | Series 32 | Series 33 | Series 35 | Series 37 | |---|---|---|---|---|---|---|---|---|---| | Ticker symbol | CM.PR.P | CM.PR.D | CM.PR.E | CM.PR.G | CM.PR.I | CM.PR.J | CM.PR.K | CM.PR.L | CM.PR.M | | Quarterly dividend | $0.343750 | $0.359375 | $0.350000 | $0.337500 | $0.293750 | $0.281250 | $0.334375 | $0.406250 | $0.406250 | ### 2012 dividend payment dates (Subject to approval by the CIBC Board of Directors) | Record dates | Payment dates | |---|---| | December 28/2011 | January 27 | | March 28 | April 27 | | June 28 | July 27 | | September 28 | October 29 | ### Eligible dividends CIBC designates any and all dividends paid or deemed for Canadian federal, provincial or territorial income tax purposes to be paid on or after January 1, 2006 to be “eligible dividends”, unless otherwise indicated in respect of dividends paid subsequent to this notification, and hereby notifies all recipients of such dividends of this designation. ### Credit ratings Credit rating information can be found on page 84 in this report. ### Shareholder investment plan All Canadian and U.S. resident registered holders of CIBC common shares and designated Class A preferred shares may participate in one or more of the following options and pay no brokerage commissions or service charges: #### Dividend reinvestment option Canadian residents may have dividends reinvested in additional CIBC common shares. #### Share purchase option Canadian residents may purchase up to $50,000 of additional CIBC common shares during the fiscal year. #### Stock dividend option U.S. residents may elect to receive stock dividends on CIBC common shares. Further information is available through CIBC Mellon Trust Company and on the CIBC website at www.cibc.com. ### Transfer agent and registrar For information relating to shareholdings, shareholder investment plan, dividends, direct dividend deposit, dividend reinvestment accounts and lost certificates, or to eliminate duplicate mailings of shareholder material, please contact: CIBC Mellon Trust Company\* c/o Canadian Stock Transfer Company Inc. P.O. Box 700, Postal Station B Montreal, QC H3B 3K3 416 682-3860 or fax 1 888 249-6189 1 800 387-0825 (toll-free in Canada and the U.S.) Email: inquiries@canstockta.com Website: www.canstockta.com \* Canadian Stock Transfer Company Inc. acts as the Administrative agent for CIBC Mellon Trust Company Common and preferred shares are transferable in Canada at the offices of our agent, CIBC Mellon Trust Company, in Toronto, Montreal, Halifax, Calgary and Vancouver. In the United States, common shares are transferable at: BNY Mellon Shareowner Services 480 Washington Blvd, 27th Floor Jersey City, NJ 07310 1 800 589-9836 Email: shrrelations@bnymellon.com Website: www.bnymellon.com/shareowner/equityaccess ## How to reach us: Where to find more information ### CIBC Head Office Commerce Court, Toronto, Ontario, Canada M5L 1A2 Telephone number: (416) 980-2211 SWIFT code: CIBCCATT Website: www.cibc.com ### CIBC Telephone Banking Toll-free across Canada: 1 800 465-2422 ### Investor Relations Call: 416 980-6433 Fax: 416 980-5028 Email: investorrelations@cibc.com ### Communications and Public Affairs Call: 416 980-4523 Fax: 416 363-5347 Email: corpcommmailbox@cibc.com ### Corporate Secretary Call: 416 980-3096 Fax: 416 980-7012 Email: corporate.secretary@cibc.com ### Customer Care Toll-free across Canada: 1 800 465-2255 Fax: 1 877 861-7801 Toronto: 416 218-9440 Email: customer.care@cibc.com ### Office of the CIBC Ombudsman Toll-free across Canada: 1 800 308-6859 Toronto: 416 861-3313 Fax: 1 800 308-6861 Toronto: 416 980-3754 Email: ombudsman@cibc.com ### CIBC Annual Report 2011 Additional print copies of the Annual Report may be obtained by calling 416 980-6433 or emailing investorrelations@cibc.com. The Annual Report is also available online at www.cibc.com/ca/investor-relations/annual-reports.html. La version française: Sur simple demande, nous nous ferons un plaisir de vous faire parvenir la version française du présent rapport. Veuillez composer le 416 980-6433 ou nous faire parvenir un courriel à relationsinvestisseurs@cibc.com. La Reddition de comptes annuelle est aussi disponible en ligne à www.cibc.com/ca/investor-relations/annual-reports-fr.html. ### CIBC Corporate Responsibility Report and Public Accountability Statement 2011 This report reviews our economic, environmental, social and governance activities over the past year and will be available in February 2012 at www.cibc.com/ca/cibc-and-you/public-account.html. ### Management Proxy Circular 2012 The management proxy circular contains information for shareholders about CIBC’s annual meeting, including information relating to the election of CIBC’s directors, appointment of auditors and shareholder proposals, as well as other matters. The 2012 proxy circular will be available in March 2012 at www.cibc.com/ca/about.html. ### Corporate Governance CIBC’s Statement of Corporate Governance Practices describes the governance framework that guides the Board and management in fulfilling their obligations to CIBC and our shareholders. This statement and other information on Corporate Governance at CIBC, including our CIBC Code of Conduct for all employees and CIBC Code of Ethics for Directors, can be found on our corporate website at www.cibc.com/ca/inside-cibc/governance/governance-practices.html. ### Regulatory Filings In Canada with the Canadian Securities Administrators at www.sedar.com. In the United States with the Securities and Exchange Commission at www.sec.gov/edgar.shtml. ### Key Dates #### Annual Meeting of Shareholders 2012 CIBC’s Annual Meeting of Shareholders will be held on Thursday, April 26, 2012, at 10:00 a.m. (Atlantic Time) in Halifax, Nova Scotia at The World Trade and Convention Centre, 1800 Argyle Street, Halifax, Nova Scotia, B3J 2V9. #### Reporting dates 2012 Q1 Results – Thursday, March 8, 2012 Q2 Results – Thursday, May 31, 2012 Q3 Results – Thursday, August 30, 2012 Q4 Results – Thursday, December 6, 2012 #### Fiscal Year November 1st to October 31st ### Incorporation Canadian Imperial Bank of Commerce (CIBC) is a diversified financial institution governed by the Bank Act (Canada). CIBC was formed through the amalgamation of The Canadian Bank of Commerce and Imperial Bank of Canada in 1961. The Canadian Bank of Commerce was originally incorporated as Bank of Canada by special act of the legislature of the Province of Canada in 1858. Subsequently, the name was changed to The Canadian Bank of Commerce and it opened for business under that name in 1867. Imperial Bank of Canada was incorporated in 1875 by special act of the Parliament of Canada and commenced operations in that year. The following are trademarks of CIBC or its subsidiaries: Achieve what matters.; Advantage Debit Card; CIBC For what matters.; CIBC logo; CIBC Private Wealth Management; CIBC Youthvision Scholarship; Investor’s Edge; Kids, Cures and Community; Miracle Day; Renaissance Investments; Wood Gundy. The following are trademarks of other parties: American Century Investments is a trademark of American Century Proprietary Holdings, Inc.; Barrick Gold is a trademark of Barrick Gold Corporation; Bell Canada is a registered trademark of Bell Canada; Canada Housing Trust is a trademark of Canada Mortgage and Housing Corporation; Canada’s Top 40 Under 40 40 Canadiens Performants – Moins de 40 Ans is a registered trademark of The Caldwell Partners International Inc.; Canadian Breast Cancer Foundation and Run for the Cure are registered trademarks of Canadian Breast Cancer Foundation; Carbon Disclosure Project is a trademark of Carbon Disclosure Project Limited; CIBC is a licensee of the mark; Encana is a registered trademark of Encana Corporation; Enerplus is a registered trademark of Enermark Inc.; Forest Stewardship Council is a registered trademark of Forest Stewardship Council, A.C.; FTSE is a registered trademark of FTSE International Limited; General Motors is a registered trademark of General Motors LLC; Intact Financial Corp. is a trademark of Intact Financial Corporation/Intact Corporation Financière; Jantzi Social Index is a registered trademark of Michael Jantzi Research Associates Inc.; MasterCard is a registered trademark of MasterCard International Incorporated, CIBC is a licensee of this mark; MasterCard is a registered trademark of MasterCard Worldwide; Movember is a registered trademark of Forideas Pty Limited; New York Stock Exchange is a registered trademark of NYSE Group, Inc.; Parallel Energy is a trademark of Parallel Energy Inc.; PayPass is a registered trademark of MasterCard International Incorporated; Penn West Energy Trust; President’s Choice Financial is a registered trademark of Loblaws Inc.; Pretium is a trademark of Pretium Resources Inc.; Prostate Cancer Canada is a trademark of Prostate Cancer Canada; Sibos is a registered trademark of Society for Worldwide Interbank Financial Telecommunication SCRL; Toronto Stock Exchange is a registered trademark of The Toronto Stock Exchange; TransAlta is a registered trademark of TransAlta Corporation; TSX is a registered trademark of TSX Inc.; United Way is a registered trademark of United Way of Canada – Centraide Canada; Visa is a registered trademark of Visa International Inc./CIBC Licensed User; Visa payWave is a registered trademark of Visa International Service Association; Waterstone is a registered trademark of Waterstone Partners Inc. Only those trademarks that are pending or registered before the Canadian Trademarks office are identified. *** All paper used in the production of the CIBC 2011 Annual Report is Forest Stewardship Council® (FSC®) certified. Paper fibre for the text of this report has 50% post-consumer waste. This paper is acid free and elemental chlorine free. Only vegetable-based, low-VOC inks have been used. DESIGN: BRYAN MILLS IRADESSO WWW.BMIR.COM, TORONTO PRINTED BY TRANSCONTINENTAL PLM *** ## Our Vision To be the leader in client relationships ## Our Mission To fulfill the commitments we have made to our stakeholders: * Help our clients achieve what matters to them * Create an environment where all employees can excel * Make a real difference in our communities * Generate strong total returns for shareholders ## Our Values Our vision and mission are driven by an organizational culture based on core values of Trust, Teamwork and Accountability CIBC For what matters.