Wealth Management – 2016 Financial Review

  • Revenue(1A)
    ($ billions)
     
    2014: 2.2, 2015: 2.5, 2016: 2.8
  • Net income(1A)
    ($ millions)
     
    2014: 470, 2015: 518, 2016: 864
  • Assets under administration and management(2A)
    ($ billions)
    2014 AUM: 151.5, 2014: 288.6, 2015 AUM:  169.9, 2015: 304.8, 2016 AUM: 183.2, 2016: 325.5
  • Canadian retail mutual funds(3A)
    ($ billions)
     
    2014: 77.0, 2015: 84.2, 2016: 90.8
(1A)
Certain prior period information has been reclassified to conform to the presentation adopted in the current year. See “External reporting changes” for additional details.
(2A)
AUM amounts are included in the amounts reported under AUA.
(3A)
Included in AUM.

Retail brokerage

  • Strong growth in both AUM and AUA, up 17% and 7%, respectively
  • Strong Investment Executive 2016 Brokerage Report Card results, achieving the second highest average rating by investment advisors among the Big 6 bank-owned brokerage firms
  • Launched new CIBC Mobile Wealth app
  • Assets under administration and management(1B)
    ($ billions)
     
    2014 AUM: 18.2, 2014: 149.4, 2015 AUM: 21.3, 2015: 150.0, 2016 AUM: 25.0, 2016: 160.6

Asset management

  • 6% growth in AUM
  • Launched several new products to deliver superior results for our clients
  • Realignment of trailing commissions and management fees for a simpler and more consistent pricing approach for clients
  • Assets under administration and management(1B)
    ($ billions)
     
    2014 AUM: 103.0, 2015 AUM: 111.1, 2016 AUM: 118.0

Private wealth management

  • 7% growth in both AUM and AUA
  • Achieved record net flows in our Canadian private wealth management business
  • Achieved above industry average Net Promoter Score in CIBC Private Banking
  • Assets under administration and management(1B)
    ($ billions)
     
    2014 AUM: 30.3, 2014: 36.2, 2015 AUM: 37.5, 2015: 43.7, 2016 AUM: 40.2, 2016: 46.9
(1B)
AUM amounts are included in the amounts reported under AUA.

Results(1C)

Table of Results for Wealth Management for the last three years from 2016 to 2014.
$ millions, for the year ended October 31 2016 2015(2C) 2014(2C)
Revenue
Retail brokerage $ 1,269 $ 1,282 $ 1,232
Asset management 746 707 601
Private wealth management 381 379 275
Other 443 100 92
Total revenue 2,839 2,468 2,200
Provision for (reversal of) credit losses (1)
Non-interest expenses 1,753 1,784 1,582
Income before income taxes 1,086 685 618
Income taxes 222 167 148
Net income $ 864 $ 518 $ 470
Net income attributable to:
Non-controlling interests $ $   $ 2  
Equity shareholders (a)   864   518   468
Efficiency ratio 61.7 % 72.3 % 71.9 %
Return on equity(3C) 43.5 % 22.4 % 22.3 %
Charge for economic capital(3C) (b) $ (193) $ (276) $ (256)
Economic profit(3C) (a+b) $ 671 $ 242 $ 212
Average assets ($ billions) $ 4.5 $ 4.8 $ 4.4
Average loans ($ billions) $ 2.1   $ 2.1   $ 1.9
Average deposits ($ billions) $ 9.8   $ 9.0   $ 8.5
AUA ($ billions) $ 325.5   $ 304.8   $ 288.6
AUM ($ billions) $ 183.2 $ 169.9 $ 151.5
Full-time equivalent employees 4,295 4,350 4,169
(1C)
For additional segmented information, see Note 28 to the consolidated financial statements.
(2C)
Certain information has been reclassified to conform to the presentation adopted in the current year. See “External reporting changes” for additional details.
(3C)
For additional information, see the “Non-GAAP measures” section.

Financial overview

Net income was up $346 million or 67% from 2015, mainly due to the gain, net of transaction costs, on the sale of our minority investment in ACI, shown as an item of note.

Revenue

Revenue was up $371 million or 15% from 2015.

Retail brokerage revenue was down $13 million or 1%, primarily due to lower commission revenue as a result of a decline in transaction volume, partially offset by higher investment management and custodial fees, driven by higher average AUM and AUA.

Asset management revenue was up $39 million or 6%, primarily due to higher average AUM, driven by net sales of long-term mutual funds and market appreciation, and mark-to-market gains on seed capital investments in recently launched mutual funds and institutional pools.

Private wealth management revenue was up $2 million or 1%, primarily due to higher average AUM, including the favourable impact of foreign exchange rates, and volume growth in loans and deposits. This was partially offset by lower annual performance fees earned by Atlantic Trust.

Other revenue was up $343 million due to the gain on sale of ACI noted above, partially offset by lower ACI revenue following the announcement of the sale.

Non-interest expenses

Non-interest expenses were down $31 million or 2% from 2015, primarily due to lower performance-based compensation.

Income taxes

Income taxes were up $55 million or 33% from 2015, primarily due to the gain on sale of ACI noted above.

Assets under administration

AUA were up $21 billion or 7% from 2015, from market appreciation and strong net flows. AUM amounts are included in the amounts reported under AUA.