Report to Shareholders for the First Quarter, 2024

Report to Shareholders for the First Quarter, 2024

www.cibc.com February 29, 2024

Report of the President and Chief Executive Officer

Overview of results

CIBC today announced its financial results for the first quarter ended January 31, 2024.

First quarter highlights

		Q1/24			Q1/23 (1)			Q4/23 (1)		YoY	QoQ
							Variance	Variance
Revenue		$6,221 million			$5,929 million			$5,847 million		+5%	+6%
Reported Net Income		$1,728 million			$433 million			$1,485 million		+299%	+16%
Adjusted Net Income (2)		$1,770 million			$1,842 million			$1,522 million		-4%	+16%
Adjusted pre-provision,pre-tax earnings (2)		$2,862 million			$2,662 million			$2,452 million		+8%	+17%
Reported Diluted Earnings Per Share (EPS)	$1.77		$0.39		$1.53		+354%	+16%
Adjusted Diluted EPS (2)	$1.81		$1.94		$1.57		-7%	+15%
Reported Retuon Common Shareholders' Equity (ROE) (3)	13.5%		3.1%		11.8%
Adjusted ROE (2)	13.8%		15.5%		12.2%
Net interest margin on average interest-earnings assets (3)(4)	1.43%		1.49%		1.44%
Net interest margin on average interest-earnings assets	1.72%		1.66%		1.66%
(excluding trading) (3)(4)
Common Equity Tier 1 (CET1) Ratio (5)	13.0%		11.6%		12.4%

Results for the first quarter of 2024 were affected by the following items of note aggregating to a negative impact of $0.04 per share:

• $91 million ($68 million after-tax) charge related to the special assessment imposed by the Federal Deposit Insurance Corporation (FDIC) on U.S. depository institutions, which impacted CIBC Bank USA (U.S. Commercial Banking and Wealth Management);
• $37 million recovery to income tax that would be eliminated by a Federal proposal, if enacted in its current form(6) ($52 million tax equivalent basis (TEB) revenue and tax expense in Capital Markets and Direct Financial Services with offsets in Corporate and Other; $37 million tax recovery in Capital Markets and Direct Financial Services); and
• $15 million ($11 million after-tax) amortization of acquisition-related intangible assets.

Our CET1 ratio(5) was 13.0% at January 31, 2024, compared with 12.4% at the end of the prior quarter. CIBC's leverage ratio(5)(7) and liquidity coverage ratio(5) at January 31, 2024 were 4.3% and 137%, respectively.

These first quarter results demonstrate our success in executing on our client-focused strategy which is delivering results for our stakeholders. We have clear momentum in attracting and deepening client relationships, underpinned by continued expense discipline, a robust capital position, and strong credit quality, giving us a strong foundation as we continue to proactively manage our bank to further our progress and momentum in 2024.

Core business performance

Canadian Personal and Business Banking reported net income of $650 million for the first quarter, up $60 million or 10% from the first quarter a year ago, primarily due to higher revenue driven by higher net interest margin and volume growth and lower expenses, partially offset by a higher provision for credit losses. Adjusted pre-provision,pre-tax earnings(2) were $1,224 million, up $245 million from the first quarter a year ago, from higher revenue and lower adjusted(1) non-interest expenses mainly due to timing of spend on strategic initiatives.

Canadian Commercial Banking and Wealth Management reported net income of $498 million for the first quarter, up $29 million or 6% from the first quarter a year ago, primarily due to a lower provision for credit losses and higher revenue. The increase in revenue was primarily due to higher fee-based revenue from market appreciation and higher commission revenue from increased client activity in wealth management. Commercial banking revenue was comparable with the prior year as volume growth and higher fees were offset by lower loan and deposit margins. Expenses increased primarily due to higher performance-based compensation. Adjusted pre-provision,pre-tax earnings(2) were $705 million, up $19 million from the first quarter a year ago, primarily due to higher revenue in wealth management.

1. Certain information has been restated to reflect the adoption of IFRS 17. See Note 1 to the interim consolidated financial statements for additional details.
2. This measure is a non-GAAP measure. For additional information, see the "Non-GAAP measures" section, including the quantitative reconciliations of reported GAAP measures to: adjusted non-interest expenses and adjusted net income on pages 9 to 11; and adjusted pre-provision,pre-tax earnings on page 11.
3. For additional information on the composition, see the "Glossary" section.
4. Average balances are calculated as a weighted average of daily closing balances.
5. Our capital ratios are calculated pursuant to the Office of the Superintendent of Financial Institution's (OSFI's) Capital Adequacy Requirements (CAR) Guideline and the leverage ratio is calculated pursuant to OSFI's Leverage Requirements Guideline, all of which are based on the Basel Committee on Banking Supervision (BCBS) standards. The January 31, 2024 results reflect the impacts from implementation of Basel III reforms related to market risk and credit valuation adjustments that became effective as of November 1, 2023. The first quarter of 2024 and the fourth quarter of 2023 reflected the impacts from the implementation of Basel III reforms that became effective as of February 1, 2023. For additional information, see the "Capital management" and "Liquidity risk" sections.
6. This item of note reports the impact on consolidated income tax expense that could be subject to an adjustment to our reported results in future periods if a Federal tax proposal were to be substantively enacted in its current form. The corresponding impact on TEB in Capital Markets and Direct Financial Services and Corporate and Other is also included in this item of note with no impact on the consolidated item of note.
7. The temporary exclusion of Central bank reserves from the leverage ratio exposure measure in response to the onset of the COVID-19 pandemic was no longer applicable beginning in the second quarter of 2023.

U.S. Commercial Banking and Wealth Management reported a net loss of $9 million (US$7 million) for the first quarter, down $210 million

(US$157 million or 105%) from the first quarter a year ago, primarily due to higher expenses including a $91 million (US$67 million) charge related to the special assessment imposed by the FDIC, higher provision for credit losses, lower annual performance-based mutual fund fees, lower net interest income due to higher cost of deposits partially offset by higher loan margins, and higher employee-related compensation. Adjusted pre-provision, pre- tax earnings(1) were $302 million (US$224 million), down $40 million (US$31 million) from the first quarter a year ago, due to lower revenue and higher expenses.

Capital Markets and Direct Financial Services reported net income of $612 million for the first quarter, which was comparable with the first quarter a year ago, primarily due to higher revenue, offset by higher non-interest expenses and a higher provision for credit losses. Higher revenue from our global markets, investment banking and direct financial services businesses was partially offset by lower corporate banking revenue. Expenses were up due to higher spending on strategic initiatives and higher performance-based and employee-related compensation. Adjusted pre-provision,pre-tax earnings(1) were down $34 million or 4% from the first quarter a year ago as higher revenue was more than offset by higher expenses.

(1) This measure is a non-GAAP measure. For additional information and a reconciliation of reported results to adjusted results, where applicable, see the "Non-GAAP measures" section.

Making a difference in our communities

At CIBC, we believe there should be no limits to ambition. We invest our time and resources to remove barriers to ambitions and demonstrate that when we come together, positive change happens that helps our communities thrive. This quarter:

• CIBC announced that $6 million will be donated to children's charities globally, following the 39th annual CIBC Miracle Day held on December 6, 2023.
• CIBC made an additional donation of $5 million to the CIBC Foundation, reinforcing its commitment to grow the CIBC Foundation and advancing the bank's efforts to creating a world without limits to ambition by creating access to opportunities.
• CIBC donated $500,000 to establish a suite of scholarships at Concordia University to empower women students, students of colour, Indigenous students, students with disabilities and students from the LGBTQ+ community.
• CIBC teamed up with professional hockey player Connor Bedard of the Chicago Blackhawks to be ambassador for the bank and increased its donation to the Christine Sinclair Foundation to a total of $190,000 in honour of Christine ending her international soccer career with a world-record 190 goals for Canada.

Victor G. Dodig

President and Chief Executive Officer

1. CIBC FIRST QUARTER 2024

Enhanced Disclosure Task Force

The Enhanced Disclosure Task Force (EDTF), established by the Financial Stability Board, released its report "Enhancing the Risk Disclosures of Banks" in 2012, which included thirty-two disclosure recommendations. The index below provides the listing of these disclosures, along with their locations. EDTF disclosures are located in our 2023 Annual Report, quarterly Report to Shareholders, and supplementary packages, which may be found on our website (www.cibc.com). No information on CIBC's website, including the supplementary packages, should be considered incorporated herein by reference.

(1) Included in our supplementary financial information package.

CIBC FIRST QUARTER 2024 iii

Management's discussion and analysis

Management's discussion and analysis (MD&A) is provided to enable readers to assess CIBC's financial condition and results of operations as at and for the quarter ended January 31, 2024 compared with corresponding periods. The MD&A should be read in conjunction with our 2023 Annual Report and the unaudited interim consolidated financial statements included in this report. Unless otherwise indicated, all financial information in this MD&A has been prepared in accordance with International Financial Reporting Standards (IFRS or GAAP) and all amounts are expressed in Canadian dollars (CAD). Certain disclosures in the MD&A have been shaded as they form an integral part of the interim consolidated financial statements. The MD&A is current as of February 28, 2024. Additional information relating to CIBC is available on SEDAR+ at www.sedarplus.com and on the United States (U.S.) Securities and Exchange Commission's (SEC) website at www.sec.gov. No information on CIBC's website (www.cibc.com) should be considered incorporated herein by reference. A glossary of terms used throughout this quarterly report can be found on pages 41 to 47.

Contents

A NOTE ABOUTFORWARD-LOOKINGSTATEMENTS: From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this report, in other filings with Canadian securities regulators or the SEC and in other communications. All such statements are made pursuant to the "safe harbour" provisions of, and are intended to be forward-looking statements under applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements made in the "Financial performance overview - Economic outlook", "Financial performance overview - Significant events", "Financial performance overview - Financial results review", "Financial performance overview - Review of quarterly financial information", "Financial condition - Capital management", "Management of risk - Risk overview", "Management of risk - Top and emerging risks", "Management of risk - Credit risk", "Management of risk - Market risk", "Management of risk - Liquidity risk", "Accounting and control matters - Critical accounting policies and estimates", and "Accounting and control matters - Other regulatory developments" sections of this report and other statements about our operations, business lines, financial condition, risk management, priorities, targets and sustainability commitments (including with respect to net-zero emissions and our environmental, social and governance (ESG) related activities), ongoing objectives, strategies, the regulatory environment in which we operate and outlook for calendar year 2024 and subsequent periods. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate", "forecast", "target", "predict", "commit", "ambition", "goal", "strive", "project", "objective" and other similar expressions or future or conditional verbs such as "will", "may", "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 - Economic outlook" section of this report, and are subject to inherent risks and uncertainties that may be general or specific. Given the continuing impact of high inflation, rising interest rates, ongoing adverse developments in the U.S. banking sector which adds pressure on liquidity and funding conditions for the financial industry, the impact of hybrid work arrangements and higher interest rates on the U.S. real estate sector, potential recession and the war in Ukraine and conflict in the Middle East on the global economy, financial markets, and our business, results of operations, reputation and financial condition, there is inherently more uncertainty associated with our assumptions as compared to prior periods. A variety of factors, many of which are beyond our control, affect our operations, performance and results, and could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements. These factors include: inflationary pressures; global supply-chain disruptions; geopolitical risk, including from the war in Ukraine and conflict in the Middle East, the occurrence, continuance or intensification of public health emergencies, such as the impact of post-pandemic hybrid work arrangements, and any related government policies and actions; credit, market, liquidity, strategic, insurance, operational, reputation, conduct and legal, regulatory and environmental risk; currency value and interest rate fluctuations, including as a result of market and oil price volatility; the effectiveness and adequacy of our risk management and valuation models and processes; legislative or regulatory developments in the jurisdictions where we operate, including the Organisation for Economic Co-operation and Development Common Reporting Standard, and regulatory reforms in the United Kingdom and Europe, the Basel Committee on Banking Supervision's global standards for capital and liquidity reform, and those relating to bank recapitalization legislation and the payments system in Canada; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions, and interest rate and liquidity regulatory guidance; exposure to, and the resolution of, significant litigation or regulatory matters, our ability to successfully appeal adverse outcomes of such matters and the timing, determination and recovery of amounts related to such matters; the effect of changes to accounting standards, rules and interpretations; changes in our estimates of reserves and allowances; changes in tax laws; changes to our credit ratings; political conditions and developments, including changes relating to economic or trade matters; the possible effect on our business of international conflicts, such as the war in Ukraine and conflict in the Middle East, and terrorism; natural disasters, disruptions to public infrastructure and other catastrophic events; reliance on third parties to provide components of our business infrastructure; potential disruptions to our information technology systems and services; increasing cyber security risks which may include theft or disclosure of assets, unauthorized access to sensitive information, or operational disruption; social media risk; losses incurred as a result of internal or external fraud; anti-money laundering; the accuracy and completeness of information provided to us concerning clients and counterparties; the failure of third parties to comply with their obligations to us and our affiliates or associates; intensifying competition from established competitors and new entrants in the financial services industry including through internet and mobile banking; technological change including the use of data and artificial intelligence in our business; global capital market activity; changes in monetary and economic policy; general business and economic conditions worldwide, as well as in Canada, the U.S. and other countries where we have operations, including increasing Canadian household debt levels and global credit risks; climate change and other ESG related risks including our ability to implement various sustainability-related initiatives internally and with our clients under expected time frames and our ability to scale our sustainable finance products and services; our success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels; changes in client spending and saving habits; our ability to attract and retain key employees and executives; our ability to successfully execute our strategies and complete and integrate acquisitions and joint ventures; the risk that expected benefits of an acquisition, merger or divestiture will not be realized within the expected time frame or at all; and our ability to anticipate and manage the risks associated with these factors. This list is not exhaustive of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Any forward-looking statements contained in this report represent the views of management only as of the date hereof and are presented for the purpose of assisting our shareholders and financial analysts in understanding our financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statement that is contained in this report or in other communications except as required by law.

External reporting changes

The following external reporting changes were made in the first quarter of 2024. Prior period amounts were restated accordingly. Regulatory capital measures for the corresponding period have not been restated.

Adoption of IFRS 17 "Insurance Contracts" (IFRS 17)

We adopted IFRS 17 "Insurance Contracts" (IFRS 17), commencing November 1, 2023, which replaces IFRS 4 "Insurance Contracts" (IFRS 4). The adoption of IFRS 17 required us to restate the comparative year ended October 31, 2023. Insurance results are now presented in Income from insurance activities, net under Non-interest income, which replaced Insurance fees, net of claims in the income statement. For further details on the adoption of IFRS 17, see Note 1 to the interim consolidated financial statements.

Financial performance overview

Economic outlook

Tight monetary policy is expected to result in below-normal global growth in 2024. The United Kingdom (U.K.) and some eurozone countries are likely to see recessions as higher interest rates hit a region already vulnerable due to the spillover from the war in Ukraine. China's economy has decelerated as it moved past one-time gains associated with the end of COVID-19 lockdowns. The global slowdown will result in most commodity prices at lower average levels in 2024 than persisted earlier in this expansion, although geopolitical risks to supply could bring upward pressure in some commodities. Although there are near term risks due to military activity in a major shipping lane, supply chains should continue to see further improvement from the continued reduction in COVID-19 disruptions, and from the expected easing in global demand pressures.

In Canada, the Bank of Canada is expected to maintain its 5% overnight rate until roughly mid-year as it awaits for more evidence that sluggish growth is leading to a further easing in inflation. Growth has already experienced a significant slowdown, and we expect that weakness in quarterly GDP growth will persist throughout the first half of 2024 as more households refinance mortgages at higher interest rates and cut back on discretionary purchases. Such an economic slowdown should, however, allow inflation to end this year close to the 2% target. For 2024 as a whole, we forecast growth of less than 1%, and expect the unemployment rate to peak above 6%. However, if as we expect, overnight interest rates end the year 125 basis points lower, growth should be stronger in the second half of 2024 and the unemployment rate should have started to move down again from that peak.

The U.S. has been much more resilient in the face of higher interest rates so far, but more moderate employment growth and weak business loan demand point to a deceleration in growth over the course of 2024. While growth for 2024 as a whole could still be close to 2%, the deceleration in quarterly growth is expected to see the unemployment rate climb modestly over 4%, allowing wage inflation to ease. There are still downside risks to the U.S. growth outlook tied to sluggish business lending activity. However, we expect that reduced inflation will allow the Federal Reserve to cut its target rate by 100 basis points in the latter half of the year, helping to avoid an outright recession.

A softer pace for economic growth, and high interest rates in the first half of the year, are likely to have broad implications across our strategic business units (SBUs). Rising unemployment and the higher leveled off interest rates are likely to result in a moderate deterioration in business and household credit quality. Further deterioration in credit quality in select portfolios, such as the U.S. office real estate market, could be more pronounced in response to worsening economic or market conditions. Deposit growth will be slow, as quantitative tightening will require bonds currently held by the central bank to be financed in the public markets, with higher rates resulting in greater growth in term deposits relative to short-term deposits. While the increase in interest rates appears to have leveled off with an expectation of declines, we expect the impact on our net interest margins for all our SBUs to be relatively stable for 2024.

For Canadian Personal Banking, mortgage growth is expected to remain soft before picking up later this year, in line with sluggish home sale volumes and little change in average house prices due to the high level of interest rates in the first half of 2024. Although year-over-yearnon-mortgage consumer credit demand will be supported by population growth, lower inflation and weaker discretionary spending will contribute to slower growth in dollar terms.

Canadian commercial, and corporate banking loan growth is expected to continue to decelerate through to mid-2024 with softer economic growth and lower levels of residential construction, before improving in the second half of the year. In our U.S. commercial banking and wealth businesses, loan growth has slowed, consistent with industry trends, but is expected to improve later in the year in conjunction with expected interest rate reductions. Deposit levels have stabilized, with growth experienced over the last two quarters, partially related to seasonal inflows and deposit initiatives.

Financial markets have benefitted from expectations for central bank interest rate reductions later in the year. While we expect that softer economic conditions will impact corporate earnings, Canadian and U.S. wealth management businesses should benefit as 2024 progresses and markets look ahead to better growth in 2025.

Our Capital Markets and Direct Financial Services business is expected to continue to benefit as merger and acquisition activity continues to recover from the low levels in early 2023, while corporate bond issuance could pick up later in 2024, given that long term rates are off their peak.

The economic outlook described above reflects numerous assumptions regarding the economic impact of high interest rates, the easing of inflationary pressures, the impact from events in the U.S. banking sector, as well as the global economic risks emanating from the war in Ukraine, conflict in the Middle East and the slowdown in the Chinese economy. As a result, actual experience may differ materially from expectations. The impact of geopolitical events and the slowdown in the Chinese economy on our risk environment, are discussed in the "Top and emerging risks" section. Changes in the level of economic uncertainty continue to impact key accounting estimates and assumptions, particularly the estimation of expected credit losses (ECL). See the "Accounting and control matters" section and Note 6 to our interim consolidated financial statements for further details.

Significant events

Sale of certain banking assets in the Caribbean

On October 31, 2023, FirstCaribbean International Bank Limited (CIBC FirstCaribbean) announced that it had entered into an agreement to sell its banking assets in Curaçao and Sint Maarten. The transactions are subject to regulatory approvals and other closing conditions, which are expected to be finalized by the first quarter of 2025. The impacts upon closing are not expected to be material.

Financial results review

Reported net income for the quarter was $1,728 million, compared with $433 million for the same quarter last year, and $1,485 million for the prior quarter.

Adjusted net income(1) for the quarter was $1,770 million, compared with $1,842 million for the same quarter last year, and $1,522 million for the prior quarter.

Reported diluted EPS for the quarter was $1.77, compared with $0.39 for the same quarter last year, and $1.53 for the prior quarter. Adjusted diluted EPS(1) for the quarter was $1.81, compared with $1.94 for the same quarter last year, and $1.57 for the prior quarter.

In the current quarter, the following items of note increased non-interest expenses by $106 million, decreased income taxes by $64 million and decreased net income by $42 million:

• $91 million ($68 million after-tax) charge related to the special assessment imposed by the FDIC on U.S. depository institutions, which impacted CIBC Bank USA (U.S. Commercial Banking and Wealth Management);
• $37 million recovery to income tax that would be eliminated by a Federal proposal, if enacted in its current form(2) ($52 million TEB revenue and tax expense in Capital Markets and Direct Financial Services with offsets in Corporate and Other; $37 million tax recovery in Capital Markets and Direct Financial Services); and
• $15 million ($11 million after-tax) amortization of acquisition-related intangible assets ($5 million after-tax in Canadian Personal and Business Banking, and $6 million after-tax in U.S. Commercial Banking and Wealth Management).

Net interest income(3)

Net interest income was up $44 million or 1% from the same quarter last year, primarily due to higher net interest margin and volume growth across most of our non-trading businesses, partially offset by lower trading net interest income.

Net interest income was up $52 million or 2% from the prior quarter, primarily due to higher net interest margin, partially offset by lower trading net interest income.

Non-interest income(3)

Non-interest income was up $248 million or 9% from the same quarter last year, primarily due to higher trading non-interest income, higher underwriting and advisory fees, higher fee-based revenue, higher credit fees and income from equity-accounted associates and joint ventures, partially offset by lower gains from foreign exchange other than trading and lower mutual fund fees.

Non-interest income was up $322 million or 12% from the prior quarter, primarily due to higher trading non-interest income, higher underwriting and advisory fees, higher mutual fund fees and income from equity-accounted associates and joint ventures.

1. Adjusted measures are non-GAAP measures. For additional information and a reconciliation of reported results to adjusted results, where applicable, see the "Non-GAAP measures" section.
2. This item of note reports the impact on consolidated income tax expense that could be subject to an adjustment to our reported results in future periods if a Federal tax proposal were to be substantively enacted in its current form. The corresponding impact on TEB in Capital Markets and Direct Financial Services and Corporate and Other is also included in this item of note with no impact on the consolidated item of note.
3. Trading activities include those that meet the risk definition of trading for regulatory capital and trading market risk management purposes as defined in accordance with OSFI's CAR Guideline. Starting in the first quarter of 2024, a revised risk definition for trading was implemented resulting in a change in the classification of certain fixed income financing activities that were previously considered non-trading that are now classified as trading, which included the fixed income financing activities that were already included in trading activities starting in the first quarter of 2023. The revised definition was adopted as part of our implementation of the Fundamental Review of the Trading Book (FRTB) rules under the Basel III reforms for market risk that became effective on November 1, 2023. Trading activities and related risk management strategies can periodically shift trading income between net interest income and non-interest income. Therefore, we view total trading income as the most appropriate measure of trading performance.

Provision for credit losses

Provision for credit losses was $585 million, up $290 million from the same quarter last year. Provision for credit losses on performing loans was up as the same quarter last year included a favourable change in our economic outlook, partially offset by a higher level of unfavourable credit migration. Provision for credit losses on impaired loans was up mainly due to higher provisions in Canadian Personal and Business Banking, and U.S. Commercial Banking and Wealth Management.

Provision for credit losses was up $44 million from the prior quarter. Provision for credit losses on performing loans was up due to higher levels of unfavourable credit migration and model parameter updates. Provision for credit losses on impaired loans was up mainly due to higher provisions in Canadian Personal and Business Banking, partially offset by lower provisions in U.S. Commercial Banking and Wealth Management.

4 CIBC FIRST QUARTER 2024

Non-interest expenses

Non-interest expenses were down $997 million or 22% from the same quarter last year, as the same quarter last year included increases in legal provisions, shown as an item of note, partially offset by a charge related to the special assessment imposed by the FDIC in the current quarter, shown as an item of note, higher computer, software and office equipment expenses, and higher performance-based and employee-related compensation.

Non-interest expenses were up $25 million or 1% from the prior quarter, primarily due to a charge related to the special assessment imposed by the FDIC in the current quarter, as noted above, and higher performance-based compensation, partially offset by lower computer, software and office equipment expenses, lower employee-related compensation, including from higher employee termination costs in the prior quarter, and lower professional fees.

Taxes

Income tax expense was down $296 million or 40% from the same quarter last year, as the first quarter of 2023 included an income tax charge taken to recognize the Canada Recovery Dividend (CRD) tax and the retroactive impact of the 1.5% tax rate increase, which was shown as an item of note.

Income tax expense was up $62 million or 16% from the prior quarter, primarily due to higher income.

The Canadian federal government has released tax proposals that would impact CIBC if enacted. On November 28, 2023, the Canadian federal government tabled Bill C-59 in Parliament, which includes draft legislation to implement certain tax measures from the 2023 fall economic statement and 2023 federal budget. Bill C-59 includes a proposed denial of the dividends received deduction for Canadian shares held as mark-to-market property by Canadian banks and insurance companies, as well as a 2% tax on certain share buy backs, and has been the subject of ongoing industry discussions with the federal government throughout this quarter. The proposed application date for these measures is January 1, 2024. Bill C-59 was not substantively enacted as at January 31, 2024, and is therefore not reflected in the reported income tax expense of this quarter.

On August 4, 2023, the Canadian federal government released a draft Global Minimum Tax Act (GMTA). The GMTA is not included in Bill C-59 and was not otherwise tabled in Parliament as at January 31, 2024. The GMTA would implement rules in Canada for a 15% global minimum tax regime as part of Canada's agreement to adopt the Organisation for Economic Co-operation and Development (OECD) Pillar Two regime for a global minimum tax. More than 135 OECD member countries have agreed to adopt the regime. Certain countries in which CIBC operates have enacted Pillar Two legislation, however, the legislation is not yet in effect in those countries. In order to meet OECD's recommended timing, the GMTA is expected to be enacted in 2024 and with application as of CIBC's 2025 fiscal year. CIBC continues to evaluate the impact of these changes on our global operations.

The IASB issued "International Tax Reform - Pillar Two Model Rules", which amended IAS 12 "Income Taxes" (IAS 12), to provide temporary relief from the accounting and disclosure for deferred taxes arising from the implementation of Pillar Two model rules. CIBC has applied this exception to recognizing and disclosing deferred taxes related to Pillar Two income taxes. Further amendments to IAS 12 require additional disclosures during the periods where the Pillar Two legislation has been enacted or substantively enacted but is not yet in effect.

Foreign exchange

The following table provides the estimated impact of U.S. dollar (USD) translation on key lines of our interim consolidated statement of income, as a result of changes in average exchange rates.

Review of quarterly financial information

1. Certain information has been restated to reflect the adoption of IFRS 17. See Note 1 to the interim consolidated financial statements for additional details.
2. Capital Markets and Direct Financial Services revenue and income taxes are reported on a TEB with an equivalent offset in the revenue and income taxes of Corporate and Other.

Our quarterly results are modestly affected by seasonal factors. The second quarter has fewer days as compared with the other quarters, generally leading to lower earnings. The summer months (July - third quarter and August - fourth quarter) typically experience lower levels of market activity, which affects our brokerage, investment management, and capital markets activities.

Revenue

Revenue in our lending and deposit-taking businesses is generally driven by volume growth, fees related to client transaction activity and the interest rate environment. Our wealth management businesses are driven by net sales activity impacting AUA and AUM, the level of client investment activity and market conditions. Capital markets revenue is also influenced, to a large extent, by market conditions affecting client trading, underwriting and advisory activity.

Canadian Personal and Business Banking has benefitted from loan and deposit growth through the last eight quarters driven by organic client growth, and deepening relationships across our client base. In more recent periods, the rising rate environment has contributed to slower growth in loans and deposits and improved net interest margin, through wider deposit margins, partially offset by compressed loan margins.

Canadian Commercial Banking and Wealth Management revenue has benefitted from commercial banking volume growth, offset by market-related headwinds in wealth management. In commercial banking, revenue growth was driven by client demand that has tempered in recent quarters and from an increase in interest rates. In wealth management, AUA and AUM growth and associated fee income have been impacted by volatility in equity markets along with the impact of macro environmental factors, which are recently showing signs of recovery.

U.S. Commercial Banking and Wealth Management continues to benefit from organic client acquisition which helps offset some of the interest rate and market headwinds experienced during the prior eight quarters. Deposit balances decreased in the second and third quarters of 2023 which was accompanied by a shift in deposit mix due to the interest rate environment, but balances increased in the fourth quarter of 2023 and the first quarter of 2024. Loans have declined in the most recent two quarters while revolver usage and demand remains low. Wealth Management AUA and AUM experienced market-related headwinds and market volatility in the first half of 2023, recent growth has been positively impacted by market appreciation.

Capital Markets and Direct Financial Services had lower trading revenue in the third and fourth quarters of 2022 and 2023. The first quarters of 2023 and 2024 had higher trading revenue driven by robust market conditions and strong client activity.

Corporate and Other included the impact of higher net interest margins in International banking from rising interest rates. Starting in the second quarter of 2023, funding costs increased due to interest rate volatility, which negatively impacted Corporate and Other. The negative impact lessened as the increased funding costs were passed on to the SBUs over time.

6 CIBC FIRST QUARTER 2024

Provision for credit losses

Provision for credit losses is dependent upon the credit cycle, on the credit performance of the loan portfolios, and changes in our economic outlook. We continue to operate in an uncertain macroeconomic environment due to concerns related to higher levels of interest rates and inflation, geopolitical events and slower economic growth. There is considerable judgment involved in the estimation of expected credit losses in the current environment.

The faster than expected pace of interest rate increases, along with rising inflation, continued supply chain disruption and the increase in global geopolitical concerns, impacted our provision for credit losses on performing loans in the second, third and fourth quarters of 2022, and the third and fourth quarters of 2023. Unfavourable credit migration also impacted our provision for credit losses in all quarters in 2023 and the first quarter of 2024. An unfavourable outlook for the U.S. real estate and construction sector contributed to an increase in provision for credit losses on performing loans in the second, third and fourth quarters of 2023 and the first quarter of 2024.

In Canadian Personal and Business Banking, lower insolvencies and write-offs in credit cards relative to pre-pandemic levels impacted the second quarter of 2022. The decrease in insolvencies was in line with the national Canadian trend and the decrease in write-offs was a benefit from the household savings that built up during the pandemic. Commencing in the second quarter of 2022, our loan losses included write-offs from the seasoning of the acquired Canadian Costco credit card portfolio. Starting from the third quarter of 2022, consumer write-offs have trended higher.

In Canadian Commercial Banking and Wealth Management, we have seen higher provisions on impaired loans in fiscal 2023 and the first quarter of 2024.

In U.S. Commercial Banking and Wealth Management, the second and fourth quarters of 2022, all quarters of 2023 and the first quarter of 2024 included higher provisions on impaired loans. The increased provision in the second, third and fourth quarters of 2023 and the first quarter of 2024 was mainly attributable to the real estate and construction sector.

In Capital Markets and Direct Financial Services, impaired loan losses have continued to remain low.

In Corporate and Other, provisions for impaired loans in International banking have remained relatively stable. The fourth quarter of 2023 and the first quarter of 2024 included provision reversals.

Non-interest expenses

Non-interest expenses have fluctuated over the period largely due to changes in employee compensation expenses, investments in strategic initiatives and movement in foreign exchange rates. The first quarter of 2024 included a charge related to the special assessment imposed by the FDIC, shown as an item of note. The fourth quarter of 2022 and the first quarter of 2023 included increases in legal provisions in Corporate and Other, all shown as items of note. The second quarter of 2023 included a decrease in legal provisions, shown as an item of note. The fourth quarter of 2022 included charges related to the consolidation of our real estate portfolio as a result of our move to our new global headquarters, both shown as items of note.

Income taxes

Income taxes vary with changes in taxable income in the jurisdictions in which the income is earned. The first quarter of 2023 included an income tax charge taken to recognize the CRD tax and the retroactive impact of the 1.5% tax rate increase, which was shown as an item of note.