Good morning, ladies and gentlemen. Welcome to the CIBC Second Quarter Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to John Ferren, Senior Vice-President, Corporate CFO and Investor Relations, CIBC. Please go ahead, Mr. Ferren.

Thank you, good morning and thank you everyone for joining us and also busy day for you all three banks reporting today. This morning, CIBC senior executives will review our Q2 2016 results that were released earlier this morning. The documents referenced on this call, including our Q2 news release, investor presentation and financial supplement, can all be found on our website at cibc.com. In addition, an archive of this audio webcast will be available on our website later today. This morning's agenda will include opening remarks from Victor Dodig, CIBC's President and Chief Executive Officer. Kevin Glass, our Chief Financial Officer, will follow with a financial review. And Laura Dottori-Attanasio, our Chief Risk Officer, will close the formal remarks with a risk management update. After the presentations, there will be a question-and-answer period that will conclude by 8:30 AM. Also, with us for the question-and-answer period are CIBC's business leaders, including Harry Culham, Steve Geist and David Williamson, as well as other senior officers of the bank. Before we begin, let me remind you that any individual speaking on behalf of CIBC on today's call may make forward-looking statements that are subject to a variety of risks and uncertainties. These statements may include material factors or assumptions that could cause CIBC's actual results in future periods to differ materially. For more information, please refer to the note about forward-looking statements in today's press release. With that, let me now turn the meeting over to Victor.

Thanks John, good morning everyone. And thank you for joining us. This morning, CIBC reported adjusted net income of $962 million or $2.40 per share. And that's up 5% from the same period last year. We had solid performance this quarter from all of our businesses; most notably retail and business banking delivered another strong quarter of top-line growth and positive operating leverage and capital markets reported very strong broad-based and client-driven trading results. Overall, our adjusted mix ratio for the quarter was 58%. We continue to make good progress in our journey towards our medium target of achieving a 55% mix ratio, which we outlined at last year's Investor Day presentation. We have controlled expenses and we've balanced that with an approach to investment and cost discipline and solid revenue growth to get these numbers. Turning to our capital position, we ended the quarter with a strong CET1 ratio of 10.4%. With the closing of our American Century divestiture last week, our CET1 ratio increases to approximately 10.9%. Our return on equity for the quarter was 18.4% and we increased our quarterly dividend another $0.03 to $1.21 per share. Our seven consecutive quarters of dividend increases have achieved our goal of moving our dividend payout ratio to the high-end of our 40% to 50% target range. Going forward, our intention is to remain near the 50% payout level by aligning our dividend increases with our earnings growth. Our results this quarter was strong, especially given the continued headwinds faced by the financial services industry of low rates, weak energy prices and low economic growth. In recent months, I have participated in a number of economic forums where a wide range of business leaders have discussed Canada's economy and the market challenges we all face. The overwriting theme from these forums is the importance of innovation for growth and competitiveness. In the financial services sector, the threat of disruptive innovative is here today and it's not going away. Consumers are embracing new technologies that make it easier more convenient for them to carry out everyday transactions. If CIBC is to stay relevant, we need to adopt new technologies and look for secure, more flexible ways to service our clients. Much has been said about the FinTech revolution and its perceives threat on traditional banks and services. At CIBC, we look at the FinTech's both competitors and potential partners. We see opportunities, to work with them side-by-side, have embrace leading edge technologies to help financial services organizations deliver services in new and innovative ways. By working with them, we believe, that we can deliver a better bank for our clients. So, now let me turn to our business units, retail and business banking reported strong quarter with adjusted earnings growth of 7%. The quality of retail earnings was very strong, as revenue growth outpaced higher loan losses and expense growth from investments, we continue to make in our business. Year-over-year funds manage growth of 8% was the highest on record and was driven by strong client driven volume growth across, all personal and business banking products. Our retail business continues, to focus on innovation for the benefit of our clients. With the Hello Home app we launched earlier, this month our clients are able to initiate mortgage applications using their mobile devices and securely, capture and upload information from required documents. This new app provides convenience, ease of use and reduces processing time for our clients, and it recognizes the growing opportunity, we have to use mobile channels to sell our services, as well as to service our clients. With Apple Pay, clients can now for their everyday transactions with the CIBC credit and debit cards using Apple devices. Wherever, contactless payments are accepted. This simple and secure method of payment is another way for our clients, to keep CIBC credit and debit cards and in the digital wallet, instead of a physical one. Both of these new offerings are a great fit with our brand promise of banking that fits your life and represents another important step in delivering on the robust - growing the mobile needs of our clients. My colleague David Williamson is here this morning to take any questions you might have on the progress of our retail and business banking strategy. Let me turn to wealth management where adjusted earnings were down 14% year-over-year. Excluding the impact of divestiture of American Century, earnings were up 7%. Our wealth business is achieving solid growth in the face of challenging markets that have reduced asset values and impacted revenue from a retail brokerage business. We're particularly pleased that the volume growth we've experienced in Canadian-based loans and deposits was in the Private Wealth segment, which is evident that our client focused strategy, is working. During the quarter, CIBC achieved the second highest average rating among the big six banks on brokerages and the investment executive brokerage report card, improving from third place last year. This scorecard, voted on by investment advisers is a good measure of CIBC would gain the advisor satisfaction and reflects the positive impact of culture and process improvements we've made in our business. During the quarter, we also launched two new products for our high net worth clients, the Renaissance Flexible Yield Fund and the Renaissance Private Investment Program. The flexible yield fund is managed by U.S. bond portfolio manager Jeffrey Gundlach of DoubleLine, who is recognized as one of the world's far most global fixed income managers. For high net worth investors looking for customizable and innovative investment solutions, the Renaissance Private Investment Program provides multi-style investment approaches and diversification. My colleague Steve Geist is here with me this morning to answer any questions you have on our wealth business. Our capital markets business reported revenue of C$756 million and adjusted earnings growth of 6% year-over-year. As market conditions and client demand drove strong result across our foreign exchange equity and interest rate trading platforms. Our capital markets team continues to support our clients as they negative market uncertainty and volatility, by delivering integrated advisory lending, trading and research solutions. We continue to hold market leadership positions in Canada, in syndicated loans, debt and equity underwriting, trading and M&A advisory. We've also strengthened our coverage and execution capabilities with addition of new talent in our global markets in corporate banking segment. During the quarter, our capital markets team was financial advisor to Suncor on a $7 billion acquisition of Canadian oil sands. The joint lead book and book runner on a US$2 billion issue for the province of Quebec co-underwriter and joint book runner and co-lead arranger on $1 billion asset sale bridge loan to support, Shaw Communications acquisition win mobile and several other notable transactions. My colleague Harry Culham, who will receive our capital markets business this year this morning to answer any questions you may have on our capital markets business. So, to conclude, our strong results this quarter demonstrates CIBC's earning power and our progress against our strategic pillars. Those strategic pillars have been very, very consistent. Focus on our clients, innovates for the future and simplify our bank. We're pleased with our progress but recognize the challenges and work we have left to do to achieve our goal of being number one in client relationships, while delivering our medium term financial targets for our shareholders. I'd like to thank our entire CIBC team for a strong quarter and I remain very confident that our team will continue to deliver against our strategies, to deliver for our shareholders over the medium term. And with that, let me turn it over to our CFO, Kevin Glass.

Thanks, Victor. To my presentation, we'll refer to the slides that are posted on our website, starting with slide five. So, we're very pleased with our broad based performance in the second quarter and our results reflect strong execution of our time focused strategy. We delivered adjusted net income of $962 million and adjusted earnings per share of $2.40 for the quarter. Our expense growth was well controlled and we achieved positive operating leverage of 2.8% and our strong capital position allowed us to increase our quarterly dividend by $0.03 to a $1.21 per share. We had a few items of note this the quarter, which was altered in a negative impact of $0.05 per share, the more significant ones being $56 million after tax increase in legal provisions, a $47 million after-tax gain net to related transaction and severance costs on the sale of a processing center. The $29 million after-tax charge against our non-impaired loans, which is being included in the collective allowance and a $30 million income tax recovery arising from the settlement of transfer of pricing related masses. The balance of my presentation, we'll be focused on adjusted results, which exclude these items of note. We've included slides with reported results in the appendix through this presentation. Let me now review the performance of our business segments, starting with the results for retail and business banking on slide six. Revenue for the quarter was $2.2 billion, up 6% from last year driven by strong results in both personal and business banking and a modest benefit from one extra day in the quarter. Volume growth was strong with both loans and deposits up 8% year-over-year. Look now at the individual lines of businesses, firstly, personal banking revenue was $1.7 billion up 7% from the same period last year. Performance benefited from volume growth across all products, as well as higher insurance income. Personal banking assets were up 7% driven last year by strong growth in mortgages and personal deposits and GICs were up 6%. Business banking revenue is turned for its $423 million, up 6% from last year driven by strong lending and deposit volume growth and higher credit-related fees, partly offset by narrower spreads. Business lending balances were up 13% and business deposits and GICs up 10% from the same period last year. The other segment had revenue of $14 million, which was down $12 million from the same period last year due to the continued runoff of the FirstLine mortgage balances. Provision for credit losses was $199 million up $20 million or a 11% from the same period last year, due to higher losses in our consumer leading portfolios. Non-interest expenses were $1.1 billion, up 4% from the prior year. We continue to invest in strategic growth initiatives to support our transformation into modern convenient and innovative bank, are remaining committed to improving productivity. Strong top line growth contributed to positive operating leverage 1.4%, this resulted in a mixed ratio of 51% an improvement of approximately 7 basis points from the prior year. Net interest margin was down 1 basis point from the prior quarter, mainly due to business mix. The retail and business banking reported adjusted net income of $623 million, up 7% from the same period last year. Slide seven reflects the result of our Wealth Management segment. Last quarter, we announced the sale of ACI. Our investment is reclassified to help the sale, and we no longer recognized our proportionate share of ACI's income. As announced last week, the sale closed on May 19, and a gain on sale will be recognized in our third quarter results. The other lying in our Wealth Management segment includes the results for of ACI for periods prior to our announcement of this sale. Revenue for the quarter was $583 million, down $33 million were 5% from the prior year, primarily due to the sale of ACI. Excluding ACI revenue for the quarter was $582 million, down $5 million or 1% from the prior year. Retail brokerage revenue of $312 million was down $12 million or 4% mainly due to lower commission revenue as uncertain market conditions drove a decline in client’s transaction volumes. Asset management revenue of $179 million was up $2million or 1% from the prior year, this is largely due to higher assets under management driven by positive net sales of long-term mutual funds over the course of the year, partially offset by market depreciation. Long-term sales of our retail mutual funds of $1.1 billion, while this is below the $2.5 billion reported in the prior year quarter, it is an encouraging rebound of Q1. Private Wealth Management revenue of $91 million was up $5 million or 6%, driven mainly by volume growth in Canadian-based loans and deposits. Other revenue was down $28 million due to the sale of ACI. Non-interest expenses of $429 million were down $14 million or 3%, primarily due to lower performance-based compensation on lower revenue. Adjusted net income in Wealth Management were down $18 million or 14% from the second quarter of last year. Excluding ACI, earnings were up $8 million or 8%. Turning to Capital Markets on slide eight, we continue to deliver strong plan driven results. Revenue this quarter was $756 million, up $92 million or 14% from the same quarter last year. Global Markets' revenue of $469 million was up $110 million from the prior year, driven by higher revenue from interest rate, foreign exchange and equity derivatives trading - trading businesses, and all of these businesses benefited from strong market conditions. Corporate and Investment Banking revenue of $296 million was down $19 million from the prior year, driven by lowest CMBS revenue from our U.S. real estate finance business. Lower investment portfolio gains and lower debt underwriting and advisory activity. The provision for credit losses was $81 million in the quarter, up from $8 million in the prior year, this is due to provision against the small number of accounts in the oil and gas sector. Non-interest expense of $346 million, were up $9 million from the prior year, primarily due to higher employee related cost and the impact of the weaker Canadian dollar. Net income of $260 million was up $15 million from the prior year. Slide 9 nine reflects the results of the Corporate and Other segment. The net loss for the quarter was $36 million, compared to the net loss of $39 million in the prior year, due primarily to higher earnings in CIBC First Caribbean as a result of favorable foreign exchange and better credit performance. Going forward, we expect losses in this segment to be in line with the current quarter. Having said that, revenue in this segment, including Treasury and the TEB revenue offset, can be volatile and are impacted by a number of market variables. CIBC's capital position remains strong, and we continue to remain well-positioned for the evolving regulatory and capital environment. Our CET1 ratio is 10.4%, 20 basis points lower than the prior quarter. Solid organic capital generation was more than offset by the impact of higher risk-weighted assets. Our business growth is up $2.8 billion over the quarter, largely as a result of strong growth in our corporate lending portfolios and, to a lesser extent, portfolio downgrades. Pro forma the closing of the ACI sale last week, our CET1 ratio is 10.9%. Our Basel III leverage ratio remains strong at 3.8%. In summary, we are very pleased with our performance this quarter, and feel confident about our business is heading into the second half of the year. So, with that, I'd like to turn the meeting over to Laura Dottori.

Thanks, Kevin. Good morning, everyone. So, let's begin with our loan loss performance on slide 12. On an adjusted basis, our loan loss ratio was 38 basis points or C$284 million. This represents a C$91 million increase from the prior quarter. This increase was mainly driven by higher losses from the oil and gas sector, with one borrower representing the majority of the losses. We also experienced higher write-offs and bankruptcies in our cards and personal lending portfolios. On a reported basis, loan losses were C$324 million. This includes a C$40 million collective provision for non-impaired loans and it was primarily driven by the continued deterioration of accounts in the oil and gas sector. Losses were in line with our expectations, and as I mentioned on our last analyst call, we did expect to see higher losses start this quarter. Based on our current outlook, we do foresee further losses from this sector, but we would expect the quarterly run rate for the balance of 2016 to be lower than this quarter. I'd like to talk about Fort McMurray. As you know, this has been a very difficult time for our clients and employees in that area and we have taken a number of steps to try to help them through this period. As it relates to our exposure in Fort McMurray, we have about $1.6 billion of drawn exposure with mortgages representing $1.4 billion of the total. At this point, we do not anticipate any significant losses from this portfolio. On slide 13, you'll see that new formations were $1 billion, this is up $696 million from last quarter. Gross impaired loans were $1.9 billion or 62 basis points, as a percentage of gross loans and acceptances and this is up $404 million from the previous quarter. You may recall, the last quarter, I mentioned, that we added nine names to our oil and gas watch list. While, this quarter, the majority of those names moved to impaired status, which is represented in our new formations and gross impaired loan numbers. To review our oil and gas portfolio, slide 14 shows our corporate and business banking exposures. Our direct exposure is down from $18.7 billion last quarter to $16.5 billion this quarter and this is attributable to a combination of the decreased authorizations, as well as the impact of the stronger Canadian dollar. Our loans, outstanding declined 5% quarter-over-quarter to $6.4 billion and that's mostly due to foreign exchange impact. 63% of our exposure is investment-grade and that's down from 74%. From the subsector perspective 58% is to exploration and production companies with only 4% in the services space. This quarter only one name was added to our oil and gas watch list. As you know, we continue to work very closely with our clients through this continued period of low oil and gas prices. Slide 15 shows our retail exposure to the oil provinces of Alberta, Saskatchewan and Newfoundland. Our exposure was flat quarter-over-quarter at $39 billion, excluding insured mortgages, our exposure was also flat quarter-over-quarter at $18 billion. And as discussed last quarter, we are seeing some delinquency increases across various of our retail product, particularly credit cards and unsecured lending. We are actively monitoring our portfolios which continue to perform as expected. Now turning to cards on slide 16. Our net credit losses were $108 million this quarter, that's up $16 million from last quarter and $9 million on a year-over-year basis. The oil provinces at higher losses this quarter, primarily due to deteriorating economic conditions. Outside of these areas, losses this quarter return to more normal levels from all-time lows previously. Our Canadian residential mortgage portfolio is highlighted on slide 17. It shows that 61% of our portfolio is insured, with 79% of the insurance being provided by the CMHC. The weighted average loan-to-value of our uninsured portfolio is 59% and it has remained stable over the last year. Condo mortgages account for roughly 11% of our portfolio. And the loan-to-value of the uninsured portion is 61%. Slide 18 shows the distribution of revenue in our trading portfolios as compared with VaR. You'll see that we have positive trading days every day this quarter. Our average trading VaR was $8.1 million that's up from $4.1 million last quarter. And the majority of the increase was driven by methodology changed that we made at the end of last quarter to reflect more volatile market conditions. With that, I'll turn things back to John.

Thanks, Laura. So, that concludes our prepared remarks. We'll now move to questions on the phone. I would just ask everyone to please limit yourself to one question and then re-queue so we have an opportunity for everyone to participate. So, operator, can we please have the first question.

Certainly. We will now take questions from the telephone lines. [Operator Instructions] The first question is from John Aiken of Barclays. Please go ahead.

Good morning, Dave. I wanted to address the Apple Pay I guess on the positive side, can you let us know what the adoption rate and usage rate is like in the early days, but secondly, going forward what level of compression can we expect to see on the card, few lines going forward?

Good morning, John. Yes, so the adoption rate on Apple Pay has been quite strong. It's not only just the download of the app and more importantly the upload of our credit cards and debit cards into that app, the take up there has been strong, the usage thereafter, sometimes people will download just to investigate, but the usage thereafter is very strong and lot of multiple time users. The big opportunity here is to meet the needs of our clients and Canadian's are some of them are going to want to use that seems to be very much the case, another example of adoption is just the commentary in the social scene, tweets and otherwise the support for us having introduced it, just and very well received by Canadians broadly and our clients. So, strong adoption, I think we've introduced something that will be well received. As far as the impact on financials, it's - I think there is moderating impacts which is transactions that were small in nature and might have been cash will now to a certain extent going to credit, and therefore, there would be pickup, this is not an economic move, this is a client move, this is something that Canadians and our clients are going to want to have, it's all very much consistent with our objective of being number one at client experience, and frankly living the concept of banking that fix the lives of our clients. So, this is all about meeting client needs.

So David, is it fair to periphrase and saying that we do expect to see some pressure on the card fee lines, but we're hoping that someone of that will be moderated by increased usage in terms of what you said credit for cash?

Yeah. I think this is - it's - you're not going to see it really in our earnings, I mean, this is something that is - it's big as far as development and how you pay, it's big as far as the changing way that payments will be affected over time. It's not really big as far as an economic driver in our results. So, it is more client impact change, and how people transact and pay for events, it's big from that perspective, it's not big economically at all.

Understood. Thanks, David.

You're very welcome.

Thank you. The following question is from Gabriel Dechaine of Canaccord Genuity. Please go ahead.

All right. Good morning. I didn't expect to be on this early, but anyway. Just want to ask you about the changes coming on the, the capital front - regulatory capital front, higher floors on internal models, and some restrictions on uses of internal models. As the bank that probably uses the - or has the highest proportion of risk-weighted assets calculated using internal models. How do you see this shift affecting you. If you can maybe quantify in terms of how you may or may not have changed your expectations for internal capital generation in the future, that'll be, that'll be great?

Good morning, Gabriel. It's Laura. So, I'll take that one and invite Kevin to add on if I miss anything. So, we do have a lot of regulatory changes headed our way. As you know a lot of them are in the form of consultative documents today, and so not yet finalized. And so, there will be impacts to all other banks over the next few years. More importantly, I would say in the short-term, so if we're - we're thinking just the next few quarters, we don't expect to see any big changes as it relates to floors probably, the one coming up in the shortest term really relates to some of the off seen mortgage proposals. And as it relates to that where there will be some issue will increases, I'd say that our mortgages already have a loss given default that's higher than what the proposed off see floor is. So we're not expecting a lot of impact and I'd say that when we look at how we think risk-weighted assets will increase our expectation at this time, as it would be below the $500 million mark. And as for other potential regulatory, floor changes, those are further out on the horizon and I don't think we can comment on them at this point.

Do you have an any guidance on, as usually between 15 basis points and 25 basis points a quarter of CET1 capital generation, is that, still a reasonable range for CIBC, and do you see that going down or just staying flat in the future? And we've already seen a lot of volatility on in capital ratios from credit downgrade from spreads widening a whole host of factors, it seems like internal capital generation, just isn't as strong as it used to be for the banks?

So Gabriel it's Kevin. I think, our internal base capital generation, remains extremely strong. So, even if you look at, at this particular quarter, we continue to generate strong internal capital, I think your right there is volatility because of the very much the issue, that you've just raised. And in the current quarter, for us, we are particularly, strong business growth. And so, that actually, largely, offset our internal capital generation, but then we've also going through a credit cycle right now, that's having a negative impact on our CET1 portfolio downgrades in this particular quarter had an negative impact on this. So, items like that are going to continue, continue to be headwinds every now and again. As things turn, I think, they could role tend to be tailwind but I think, the important thing is we still have pretty strong internal capital generation and we continue seeing that, we would anticipate seeing that to continue and grow, as we continue to strengthen the bank.

And just last one in the capital as well, Victor yourself, eager to do a U.S. acquisition any update up there?

Is that your third question Gabriel?

Something like that.

Good one. So, let me just kind of follow-on from Laura's and Kevin's comments on capital, I mean, we went into this as a leadership team recognizing fully that there is regulatory change coming, recognizing fully that we're entering a new economic cycle given what's happen the commodities, and I think we positioned ourselves very well that way from a capital perspective. We've always said that, we have several priorities when it comes to serving our shareholders on the capital front, that is to distribute up to half of our earnings and dividends and I think we've reached that point, and we've been consistent on that point. The second thing is to spur organic growth and again you're seeing in our top line numbers across our businesses, growth that you haven't seen before, that is at or above market levels, and that is a function of investment in our businesses and we're using our capital for that. Being - having the cushion for regulatory change and then having the flexibility to deploy capital for an organic growth, that's all been very consistent, it's all been very well telegraphed to our investors, and that's the approach we're going to - continue to take going forward.

Okay. Thanks.

Thank you. The following question is from Doug Young of Desjardins Capital Markets. Please go ahead.

Hi. Just on - to Laura, the oil and gas, you mentioned the $91 million sequential increase in oil and gas piece or was is it related oil and gas PCLs and all related to - I just want to make sure my numbers are right, all of that $91 million was related to one borrower, is that correct? And I guess the second part of my question is, in your prepared remarks, you mentioned that you see this quarter is a bit of an anomaly and you do expect losses to had lower in the second half of this year. And given the deterioration that we've seen in oil reliant provinces, I'm just curious as to what gives you the confidence around that? And we think in the consolidate PCL level, in the second half of this year are in the 30 basis point to 35 basis point range, is that fair?

Sorry. The $91 million increase relates both to the commercial corporate book as well as the retail book. However, one borrower represented a large part of that, just a little over 50% of that amount was one name, so is that clarifies?

Yeah.

And then, as it relates to your - I guess, your question around loss expectations. Yeah, I would say that feels right. This quarter, does feel like a high watermark as it relates to our loan losses, and my expectation would be for the balance of this quarter is that loan losses would commence somewhat.

And I'm just curious to why, I'm giving the deterioration, is there something why are you comfortable that losses will come down from this level and not expand a little bit if you can elaborate on that?

Well, again, difficult to predict the future, although I do believe we have a very good handle on our book. So, that helps and as I mentioned some of the moves we saw this quarter relate to a few names. And so, we do have a more visibility on those names. As I mentioned when one name represents a little over 50% of the amount of loan losses we've taken, and it represents a good chunk of our impaired loans. Borrowing any event risk, that does give you the ability to have some foresight if you will as to what could happen in the next quarter or two.

There's nothing else that's on the cost - you've added once the watch list this quarter, there's nothing else that really concerning you were on the cost have been or a group of names being added it would appear. Is that fair to assume?

Yeah, that's fair. We had - as I mentioned the nine names last quarter, and most of those move to impaired, only one this quarter. So that would indicate that we would have less impairs as well on a go forward basis. And I just saw the late breaking news that oil is just broken above $50. So if we could get gas to get above $2.75 and $3 on a sustained basis, this could all turn into a better new story on a go forward basis.

Great. Thank you very much.

Thank you. [Operator Instructions] The following question is from Meny Grauman of Cormark Securities. Please go ahead.

Hi, good morning. Laura, I just want to follow-up on the discussion of - of oil prices and as they start to head-up what that means for the outlook is definitely some experts that have been quoted as strong about even at $60 a barrel that there's going to be retention in bankruptcies across the board on the corporate side. I'm wondering, in your perspective what, what kind of number oil price do we have to see, before the picture starts to improve. And is there a different number before we start to see an improvement on the consumer side of those - are those two books tie to different oil price numbers before they start to turn around here.

Well, Meny, this is again my view and again no definitive answer. But, directionally I'd say that oil would have to be over a $55. I think - as I'd probably have to be as I said over $2.75 maybe $3, and I think it would have to stay there for a sustained period of time. So, call it nine months to 12 months. Before we start to see our company is reinvesting in this space, and things looking better. Does that answer to your question?

Yeah, that's helpful. And then, maybe just on a different note, sort of a bigger picture, you talked about ApplePay, and we saw sort of all the banks kind of moving in and make the deal with Apple and I'm wondering, to me raises the question of, is there a way in which technologies that's especially customer facing technology is sort of the competitive advantage, or is it really, are we just seeing sort of all the banks move into using this new technology kind of in the same way at the same time, is there any - is there any - from your perspective, is there any differentiation there? That's possible.

Hi, Meny. It's David Williamson. Yeah, I think you're on the right track, and as Victor said in his comments. I mean, the syntax can be away for us to accelerate our move to - to be a leader in client experience. The offerings that have to extent it there, client friendly, base maybe on non-legacy systems, or something that we can partner with, in some cases we could maybe buy. We've got examples where we've done a little bit of both in the past. And I think if you approach it whether a spirit of opportunity and optimism, your willingness to evolve and adapt how we meet our client needs, and then see FinTech is a potential accelerant than that's I think as frankly how we have positioned ourselves. Apple Pay is an example, but also what we did as far as global money transfer move we made a while ago, which resulted in wireless transfers to a number of countries now being free at CIBC that was as a result of partnering with the FinTech. Accelerated loans for small businesses our partnership with Thinking Capital, they are all - again our objective is to leading client experience. We think that's going to be done through being a convenient bank from a modern perspective and that means allowing people to bank when, where and how they would like and to the extent that FinTech's are putting forward ideas that accelerated out abilities to do that for client then we're going to be positively disposed exploring those opportunities. So I think you're absolutely right. Technology is changing banking. CIBC is open to adapting and evolving using those tools and levers, all of the objective of leading in client experience.

Okay. Thank you very much.

Thanks, Meny.

Thank you. The following question is from Peter Routledge of National Bank Financial. Please go ahead.

David, just a follow up on Apple Pay, and I know you guys have worked on this hard and - I don't mean to put you on the defense with the question. It just feels like you've lead the most and I just CIBC with the Canadian banks have lead one of the most powerful, if not the most powerful consumer brand between them and their customers, in terms of letting Apply Pay come in and so it take payments. So, if the strategic - long-term strategic implication seem problematic to me and I was just wondering what if I got wrong in that few?

Hi, Peter, I know that you'd never put me on the defense, I know you're pursuing a line of thought that's worth exploring. I mean retail and business banking is evolving, it's evolving as a result of the impact of technology. And when I referred global money transfer, it's resulted in fees that I think used to be roughly C$50 to send a wire now being free. So, that's - that disrupted that channel, but our profitability in that space has not been changed because of our change in how the cost of that transaction has occurred as a result of working with a FinTech. So, you referred to Apple and they are a massive firm, but the whole focus here is where is banking going, what are the banks going to play as a role in the evolution of banking. And to be successful, I think one needs to evolve and adapt as opposed to try to put up walls and barriers. The interesting part in the evolution of FinTech's and banking is that FinTech's do tend to have client-friendly front-end, they do tend to be built on the non-legacy lower cost systems. But the banks will retain the trust and reliability, they also retain the distribution, the client base. So, it's - there is no doubt it's a - there is competition, there is opportunity. But I think the objective here for our bank to be a strong bank and to meet the needs of our clients and be relevant in the future that banking will become is to not put up walls, but to adapt in the interest of our clients to the changing environment.

Right. Thanks.

And long as we meet those needs most effectively, I think we will continue to be a strong bank and relevant for our clients.

All right. Thanks for straight answer. Quick credit question for Laura, I noticed on page 24 of your press release, your investment grade, the percent of oil and gas exposure that investment-grade went from 74% last quarter to 63% this quarter, and yet overall exposures drop, so I'm kind of wondering what's up there?

Yeah. That's right. Our investment grade mix did decrease, that was really a result to the continued downgrades that we've had as we are going through our borrowing base redeterminations. And we've also have some notable reductions and cancellations and some of our larger credit lines that were rated investment grade.

Okay. And then, you also sort of classified investment grade as based on your internal risk rating, incorporating security pledged, and I'm wondering if you can unpack that a little, what are you doing there?

So, we referred to our rating, so we have borrower ratings in terms of their probability of default that determine, if you will whether their investment grade or not investment grade when we get into including the collateral, and we're taking facility ratings and that impacts our loss given default, but not our actually borrower rating in terms of probability of default. So, the information that I am providing you which is the probability of default rating, I guess the borrower ratings.

So, the 62% is the, based only on probability default of the borrowers is nothing to do with the collateral pledged.

So we have, sorry we have all of it. I think you referring to our, our Waffler, so the weighted average of our facility rating.

Right.

So just to be clear, you're trying to get to, does our rating includes everything are not to my.

Yeah, yeah. Do you upgrade certain exposures, because the collateral is high-quality?

Yeah, so that would play a role in our rating.

Okay. All right, thanks.

Thank you. The following question is from Mario Mendonca of TD Securities. Please go ahead.

Good morning. Laura. Can we go back to that one account you referring to in oil and gas. And will be helpful understand is, why the normal safeguards like a very senior position having layers of junior below you. Why that didn't feature in limiting your exposure?

Well I don't want to get into the specifics of one name, but I would say that - that actually did play a role in that we could have provisioned more had we not had better, if you will we'd not have the structure that we have. So we did help. But as we you can appreciate each name is, is different, each situation is somewhat different.

Are there other loans that are different in the way that this one is different?

Of course, same way people are different, our borrowers there are all somewhat different was very...

No Laura, I'm referring specifically to the, to the level of subordination below you. Like, you guess what I'm getting that is, are we going to see something like, are there other loans like this one, where you just didn't have that level of subordination necessary to limit of losses?

Well, I guess what I would tell you on this one, we did have a level of subordination, just some companies are more levered, if you will than others, which implies if they go into defaulter bankruptcy that we could lose more. We have others that will and have gone into bankruptcy, where we expect to lose nothing. And so, really has to do with the amount of total debt if you will, the company has when it does get into difficulty, relative to the valuation of the underlying assets.

Okay. So, then the coverage on that particular loan, then where would be, now that you've taken that large provision?

Oh! On this particular one, we are around the 25% level.

And why would that not be like a lot higher considering the level of subordination, maybe wasn't as higher some of your other exposures?

Well again, when we look at the various loans, we have a team that looks at, what is the amount we expect to lose, given the total amount of debt in a transaction and the valuation of the assets and in this particular name, that is the actual amount to the provision, that was deemed to be the right amount that we would lose.

Okay. Then finally you revert the gas and gas is certainly something, I mean your referred to the - like the $2.75 to $3 being an good level and well below that right now. So, it would be helpful to understand, as the extent to which your exposure, your drawn exposure as leverage to gas only names?

So, in the information that we provide, it includes both. We do have quite the a lot of our borrowers that are both in oil and gas. And so, it would be hard for me to give you the actual breakdown of those that are specifically sort of gas or specifically oil. We can certainly go through the portfolio to look at that, but the information I have been providing is oil and gas.

But would you say the majority of the exposure is actually gas?

Yeah, a large part of it.

Thank you.

Thank you. The following question is from Sohrab Movahedi of BMO Capital Markets. Please go ahead.

Thank you. Victor, the last two quarters anyway, business growth has consumed about 50 basis points, 51 basis points of your internal capital generation. If I take that, I'm excited about David's business, revenue growth continues to be a pleasant surprise, but then you're also adding to your collectives. I'm just trying to understand if this business growth is coming with you may be stretching a bit on the credit quality?

Sohrab, I would say, we're not stretching on credit quality, we're just seeing good quality volume growth across all of our businesses that is the straight forward answer. Nothing has really changed here other than much more client facing organization that is getting business across all of our platforms, that's what's simply driving it. It's happening in our retail bank, it's happening in our business bank, it's happening on our capital markets platform, it's happening in wells, if you carve out the American Century divestiture. So, it is - we are just a much more client-focused bank than we were before and that's why you're getting the volume growth. You are not seeing stretch on sort of riskiness.

Thank you.

Thanks.

Thank you. The following question is from Sumit Malhotra of Scotia Bank. Please go, ahead.

Thanks, good morning. My questions are around trading revenue for Harry Culham. First of all on the page 13, of the supplement, Harry, we get to look at trading revenue by product for the bank and specifically, numbers have come up, across the board, but specifically on the interest rate line. This quarter, is a wide margin, the strongest interest rate, number that you've posted over the last couple of years. Let me ask this, all banks will tell us, that, increase client activity, improved market conditions, but more specifically, with credit spreads tightening, as much as they did in the quarter. Was there something unusual here, in terms of a mark-to-market or inventory gain, that made these numbers look, better than we can expect as a run rate contributor?

Hi, Sumit. No, actually, the market conditions, are partially, to resulting in better numbers, in interest space. As you know, we've made foundational investments in our technology, in our systems and our people over the last number years, and we continue to invest including in the interest space. This is enabling us to serve our clients across the capital, markets platform. Including the rate space, in a more meaningful way. And so, it's a well-diversified business, and we're seeing good business come through an interest rate derivatives space in and the fixed income space in general. There been more activity obviously, in the past couple of months, given the markets as you point out, have spreads have come in and have been more receptive for client activity. So, we've got very good momentum across the trading, spectrum and coming out of quarter two, we're seeing very good momentum in the market. So, I think that probably answers your question.

Well, this is related to your business, so let me end with this. A year ago at this time, following the budget in March, we had a lot of questions regarding the synthetic equity derivatives business and at that time I think Kevin told us that the estimate that the bank had was the proposed changes would remove 2% to 3% of your EP - that would be the impact on EPS. Now, a year later it doesn't really seem like much as changed, I know there was a grandfathering that is giving you little bit more time, but I was hoping can you give us an update as to whether that 2% to 3% estimate you gave us a year ago still stands? And more specifically, when I look at your business and this maybe simplistic, but it doesn't look like the TB adjustment benefit that you have in trading has changed in any material way. So what's really the best way for us to measure, how that proposed change is impacting trading revenue at CIBC?

Sure. The 2% to 3% still stands, we are working very closely with our clients on alternative strategies to redeploy resources that are - that will be and are being freed up by the book wind down as you point out, this has started since new legislation was announced, the majority of the impact will be in 2017, but some of the results you're seeing across the trading platform are because of our reinvestment in some of our other business areas and redeploying resources, in particular the rate space would be an example of where we are - where we would redeploy our resources as a result of the TRS book been wind down.

Just lastly, so, would we see this in lower trading revenue, higher taxes or both for your segment?

I'll let Kevin talk about the taxes with respect to trading revenues, I pointed out the redeployments going well.

Okay.

The momentum is strong coming out of quarter too, and I expect that as long as the markets continue to cooperate, we should have strong momentum going forward.

And just following up sort of certainly, would have any impact on the tax rate as we move forward and as this gets implemented, it has a negative impact.

Thanks for your time.

Thank you. There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Ferren.

Okay, thanks again everyone for joining us this morning. That concludes our call. If you do have any follow up questions, please do contact the Investor Relations department. We'd happy to help you. Thanks again for joining us, and we'll see you next quarter.