Growth to be driven by skilled people from around the world reaching their goals in Canada: CIBC CEO
Canadian Imperial Bank of Commerce CEO Victor Dodig says the country’s consumers are poised to start spending again once coronavirus vaccines become more widely available.
Dodig, who leads the country’s fifth-largest lender by assets, says an accelerated vaccine campaign will allow Canada to ease pandemic restrictions as other countries have. That should spur consumers whose finances weren’t hit hard by the pandemic to spend some of the extra cash they have saved over the last year, he said.
“There are parts of the economy that are more scarred than others, but I think that with that inflection point coming, I am reasonably confident that you will see a healthy, consumer-led recovery,” Dodig said in an interview last week.
Canada is set to ramp up its vaccination activity in the coming weeks, with as many as 14.5 million, or 38 per cent, of the country’s 38 million people expected to be fully inoculated by the end of June, the government said in an update last month. All Canadians who want the vaccine will have a chance to receive it by the end of September, the government has said.
Canada had just 1.4 per cent of its population fully vaccinated as of March 1, according to the Bloomberg Vaccine Tracker, which compiles data from government websites, news conferences and other sources. That trails countries including the U.S., which has fully vaccinated 7.7 per cent of its population, and Israel, where about 38 per cent are inoculated.
Dodig said he expects that restrictions like mask-wearing and distancing measures, along with more frequent testing, will remain a part of life even after vaccinations become widespread in Canada. Although Canadians will probably travel once they’re able to, that sector will still need some time before rebounding to 2019 levels, Dodig said.
He said he expects consumer spending to remain concentrated in many of the same categories that flourished through the pandemic, such as home improvement.
“What we’ve seen during the pandemic is much more of a focus on the home and lifestyle at home, and that will be a notable shift at least for the short to medium term,” Dodig said. “People will focus on their life and everything around them, their family, those most important to them, in terms of spending.”
With some restrictions remaining a way of life, CIBC is looking to build on the progress it made with its digital capabilities to give customers more self-serve options and to give workers more convenient ways to serve customers.
Those capabilities include a financial goal planner for customers, electronic signatures to reduce the need to visit branches and “full mobility” for relationship managers so they can work from anywhere and still be connected, he said.
“That focus on how technology can continue to advance banking, continue to strengthen the relationships that we’re building, is important,” Dodig said. “That’s what we’re obsessing about right now.”
So far, Dodig sees that focus paying off in CIBC’s results. The bank last week reported fiscal first-quarter profit that handily topped analysts’ estimates, driven by growth in its domestic mortgage business as well as strong results from its capital markets, commercial banking and wealth management segments.
The bank’s shares are up 16 per cent over the past 12 months, the second-best performance of the country’s six largest banks, behind Bank of Montreal.
For Canada as a whole, Dodig says policy makers need to ensure that businesses can to turn the consumer-led recovery into an investment-led one. Dodig has previously recommended policies such as using Quebec’s subsidized child-care system as a model for the country and allowing Canada’s tax-advantaged education savings plans to help mid-career workers acquire new skills.
“How do we ensure that the private-sector capital that is on the sidelines today -- inside and outside our country -- is put to good use to drive meaningful quality, sustainable and inclusive growth going forward?” Dodig said. “That’s got to be top of the agenda for policy makers.”