Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Debt Investor Presentation (March 2014)
46 slides from Toronto-dominion Bank's debt investor presentation, March 2014
Slide 1: Investor Presentation – Fixed Income Q1 2014
TD Bank Group Investor Presentation – Fixed Income Q1 2014
Slide 2: Caution regarding forward-looking statements
Caution regarding forward-looking statements From time to time, the Bank makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, and in other communications. In addition, representativ
Slide 3: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 3
Slide 4: TD Bank Group
TD Bank Group Our Businesses Canadian Retail Personal banking, credit cards and auto finance Small business and commercial banking Direct investing, advice-based wealth businesses, and asset management Property, casualty, life and health insurance Q1 20141 Canadian U.S. U.S. Retail (C$ excep
Slide 5: TD Strategy
TD Strategy To be the Better Bank North America Top 10 Bank in North America1 Leverage platform and brand for growth One of only a few banks globally to be rated Aa1 by Moody’s2 Strong employment brand Retail Earnings Focus Leader in customer service and convenience Strong organic growth
Slide 6: Competing in Attractive Markets
Competing in Attractive Markets Country Statistics Country Statistics 10th largest economy World’s largest economy Nominal GDP of C$1.7 trillion Nominal GDP of US$15.1 trillion Population of 35 million Population of 314 million Canadian Banking System U.S. Banking System Soundest banki
Slide 7: TD in North America
TD in North America North Q1 2014 Canadian American (C$ except otherwise noted) Ranking4 Ranking5 Total assets $909B 1st 5th Total deposits $562B 2nd 6th Market capitalization $89B 2nd 6th Adjusted net income1 (trailing four quarters) $7.3B 2nd 6th Reported net income (trailing four quarters) $6.9B
Slide 8: Composition of Earnings
Composition of Earnings Adjusted Earnings1 2013 Adjusted (C$MM) Retail Earnings1,4 = 91% Adjusted Retail Earnings1,4 Wholesale Earnings $7,136 9% Canadian Retail U.S Retail2 91% 65% 23% 4 TD AMTD3 $2,158 3% 42% Wholesale 9% 58% 2001 2013 Retail-focused earnings mix 1. See slide 5, footnote 3, for de
Slide 9: Strategic Evolution of TD
Strategic Evolution of TD INCREASING RETAIL FOCUS Acquired Acquired Target Became primary TD Chrysler credit card issuer of Waterhouse Financial portfolio & Epoch; Aeroplan Visa; TD Bank Acquired Acquired USA / Privatized Acquired Commerce Acquired and MBNA and announced acquired ~50% of and Canada
Slide 10: Risk Management Framework
Risk Management Framework Our Risk Appetite We take risks required to build our business, but only if those risks: Fit our business strategy and can be understood and managed Do not expose the enterprise to any significant single loss events; we don’t “bet the bank” on any single acquisition, bu
Slide 11: Q1 2014 Highlights
Q1 2014 Highlights Key Themes Net Income $MM Adjusted, where applicable1 Adjusted1 EPS growth of 6% YoY Q1/14 QoQ YoY Retail2 $ 1,832 5% 8% Retail earnings up 8% Wholesale 230 89% 44% Good volume and asset growth in Corporate (38) -32% n/a Canada and the U.S. Adjusted Net Income $ 2,024 12% 6%
Slide 12: Q1 2014 Credit Highlights
Q1 2014 Credit Highlights Highlights PCL Ratio (bps)1 Continued stable credit performance Loss rates for Canadian P&C remain historically low Ongoing improvement in the U.S. Commercial portfolio Increase in GIL driven by weaker Canadian dollar GIL Ratio (bps)2 Great quarter on Credit fundame
Slide 13: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 13
Slide 14: Canada's Relative Strengths
Canada’s Relative Strengths One of the world’s most competitive economies1 Soundest banking system in the world1 Unemployment rate remains below prior recessionary peaks One of the strongest fiscal positions among G-7 industrialized countries Relatively low projected deficits and debt Sour
Slide 15: Solid Financial System in Canada
Solid Financial System in Canada Strong retail and commercial banks Conservative lending standards All major wholesale dealers owned by Canadian banks, with stable retail earnings base to absorb any wholesale write-offs Responsive government and central bank Proactive policies and programs
Slide 16: Well Developed Residential Mortgage Market in Canada
Well Developed Residential Mortgage Market in Canada Canadian chartered banks account for approximately 75% of the total mortgage market, including securitizations1 Conservative lending practices Strong competition among lenders Legal environment supports foreclosure and other types of legal
Slide 17: Canadian Mortgage Market is Different from the U.S.
Canadian Mortgage Market is Different from the U.S. Canada U.S. Conservative product offerings: fixed or variable Outstanding mortgages include earlier exotic interest rate option products (interest only, options ARMs) Product Default insured mortgages use a 5-year fixed Borrowers often qual
Slide 18: Canadian Housing Market
Canadian Housing Market Highlights Canadian RESL credit quality remains solid amidst continued resiliency in the Canadian housing market Portfolio Q1/14 Gross Loans Outstanding $226 B Canadian RESL Percentage Insured 65% Uninsured Residential Mortgages Current LTV1 60% Condo Borrower Gross Loans O
Slide 19: Mortgage Rule Developments in Canada
Mortgage Rule Developments in Canada 2012 Measures Announced by Minister Flaherty (Government of Canada) Maximum amortization period lowered from 30 years to 25 years Maximum amount that Canadians can borrow when refinancing lowered to 80% from 85% Maximum GDS1 and TDS2 ratios of 39% and 44% r
Slide 20: North American Economy
North American Economy Outlook U.S. economy to accelerate as fiscal drag dissipates Federal fiscal drag to fall from 1.3% in 2013 to 0.5% in 2014 Good news building on state of U.S. economy Buoyed by rising wealth and faster income growth in absence of tax hikes, consumer spending will play
Slide 21: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 21
Slide 22: Strong Capital Position
Strong Capital Position Highlights Basel III Common Equity Tier 1 Ratio1 Basel III Common Equity Tier 1 ratio 8.9% as of January 31, 2014 Announced a dividend increase of $0.04 this quarter, up 9% Timing of dividend increases may vary CET 1 capital allocated to business segments increased to
Slide 23: TD Credit Ratings
TD Credit Ratings Issuer Ratings1 Moody's S&P DBRS Ratings Aa1 AA- AA Outlook Stable Stable Stable Ratings vs. Peer Group S&P Long-Term Debt Rating Moody’s Long-Term Debt Rating AA- 14 Aa1 18 A+ 12 Aa2 16 14 Aa3 A10 12 A1 A-8 10 A2 6 BBB+ A38 6 Baa1 BBB4 4 Baa2 2 2 TD Canadian Peers U.S. Peers TD Ca
Slide 24: Robust Liquidity Management
Robust Liquidity Management Treasury paradigm Contribute to stable and growing earnings Manage non-trading market risk within established limits Match terms of assets and liabilities Do not engage in liquidity carry trade Match underlying funding maturities to term of assets or stressed
Slide 25: Term Funding Strategy
Term Funding Strategy Large base of stable retail and commercial deposits Customer service business model delivers growing base of “sticky” and franchise- based deposits Reserve assets held for deposit balance that is not considered permanent Large user of securitization programs via Canada
Slide 26: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition1 Funding Mix2 Wholesale Term Debt Assets Securitized 46% Personal Personal Other Deposits33 Other Deposits Term TermDeposits Deposits 25% 26% 8% Covered Bonds 8% Mortgage Residential Mortgages Short Term 15% Securitization 58% Liabilities4 Short Term Liabilities4
Slide 27: Debt Maturity Profile F2014 – F2019
Debt Maturity Profile1 F2014 – F2019 Bullet Debt Maturities (C$ billions)2 $20 $18 $18 $15 $13 $11 $11 $10 $5 $2 $0 2014 2015 2016 2017 2018 2019 MBS Covered Bond Senior Debt ABS Subordinated Debt 3 Manageable debt maturities 1. For wholesale term debt that has bullet maturities 2. As of January 31,
Slide 28: Canadian Covered Bond Legislation
Canadian Covered Bond Legislation The Covered Bond legal framework was announced in the 2012 Federal Budget through amendment to the National Housing Act and was passed into law in June 2012 Issuance must be in accordance with the legislation and issuers are prohibited from using insured mortgag
Slide 29: CMHC Guide Highlights
CMHC Guide Highlights Asset Coverage Test To confirm overcollateralization of the covered bond collateral held against covered bonds outstanding Indexation requirement (July 1, 2014) provides adjustment for market development Value to be adjusted at least quarterly Valuation Calculation
Slide 30: Key Takeaways
Key Takeaways Strong capital base – well positioned for Basel III Industry leading credit ratings Proactive & disciplined risk management Attractive balance sheet composition Diverse funding strategy 30
Slide 31: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 31
Slide 32: Global Economic Outlook
Global Economic Outlook World Real GDP Growth1 Y/Y % Change Global economic growth 6 Forecast1 will moderately increase 4 this year with a further rise 2 expected next year 0 -2 Europe emerging from 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 recession and accelerating North 4% American Re
Slide 33: Canadian Economic Outlook
Canadian Economic Outlook Canadian Export and U.S. Activity Index1 Y/Y % Change 25 20 15 Forecast1 10 Canadian economy still 5 0 tightly linked to U.S. -5 fortunes, and better U.S. -10 -15 growth in medium term to -20 -25 help Canada’s prospects 1982 1988 1994 2000 2006 2012 Only modest support
Slide 34: U.S. Economic Outlook
U.S. Economic Outlook Consumers Rebounding on Faster Income Growth Y/Y % Change 6 Forecast1 Tax hikes weighed on 4 income and consumer 2 spending in 2013. 0 Unencumbered by this -2 burden, spending growth -4 will accelerate in 2014 and 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 2015 Expected
Slide 35: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 % 7 U.S. Federal 6 Funds Rate Forecast Modest outlook and low inflation mean North American 5 Bank of Canada Target central banks are set to leave 4 monetary policy at exceptionally accommodative 3 levels for a while 2 1 0 2000 2002 2004 2006
Slide 36: Stable Earnings Growth
Stable Earnings Growth Adjusted Earnings1,2,4 (C$MM) 2009 – 20112: Wholesale Banking Wealth & Insurance U.S. P&C Canadian P&C 2012 – 20134: Wholesale Banking U.S. Retail Canadian Retail IFRS Segment realignment Targeting 7-10% adjusted EPS growth over the medium term 1. The Bank transitioned from Ca
Slide 37: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q4/13 Q1/14 Canadian Retail Portfolio $ 318.7 $ 323.7 Personal $ 270.9 $ 274.0 Residential Mortgages 164.7 166.0 Home Equity Lines of Credit (HELOC) 61.3 60.3 Indirect Auto 14.7 14.7 Unsecured Lines of Credit 8.4 8.5 Credit
Slide 38: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,233 Excluding impact of foreign $1,167 $1,210 exchange, overall GIL $1,111 Formations were stable $1,058 On a USD basis, improving credit quality led to a notable decrease in Commercial GIL formations 26 2
Slide 39: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Increase in Gross Impaired ratio is due to: $2,861 $2,692 Real Estate foreclosure delays in $2,531 $2,628 New York and New Jersey $2,494 Weaker Canadian dollar 60 59 60 60 62 bps Other3 Wholesale Portfolio Cdn Peers4 81 7
Slide 40: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights Canadian PCL rate remained stable $454 $420 QoQ Increase in U.S. PCL was $402 $407 primarily due to Credit Cards $360 1 35 39 37 38 40 bps Other3 Wholesale Portfolio4 Cdn Peers5 31 30 25 31 NA bps U.S. Retail Portfol
Slide 41: Canadian Personal Banking
Canadian Personal Banking Q1/14 Canadian Personal Banking1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 166 0.30% 494 4 High credit quality continues in Home Equity Lines of Credit (HELOC) 60 0.52% 313 1 the Canadian Personal portfolio Indirect Auto 15 0.31% 46
Slide 42: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q1/14 Canadian Commercial and Gross GIL PCL1 Highlights Loans/BAs Wholesale Banking ($B) ($MM) ($MM) Commercial (including Small Commercial Banking2 50 118 14 Business Banking) loss rate Wholesale 21 41 (3) for the trailing 4-quarter Total Canadian Commerc
Slide 43: U.S. Personal Banking
U.S. Personal Banking Q1/14 Highlights Gross Loans GIL/ GIL U.S. Personal Banking1 ($B) Loans ($MM) PCL2 Increase in GIL is driven by ($MM) Residential Mortgages 22 1.27% 286 4 foreclosure delays in New York and New Jersey and the Home Equity Lines of Credit (HELOC)3 11 2.31% 263 11 weaker Canadia
Slide 44: U.S. Commercial Banking
U.S. Commercial Banking Q1/14 U.S. Commercial Banking1 Gross Loans/BAs GIL PCL2 Highlights ($MM) ($MM) ($B) Commercial Real Estate (CRE) 17 341 11 Positive momentum continues Non-residential Real Estate 13 227 8 in U.S. Commercial portfolio: Residential Real Estate 4 114 3 Real Estate prices are
Slide 45: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Grand Prix for Best Overall Email: Investor Relations: Large Cap Best Investor Relations by [email protected] Sector: Financial Services Best Investor Relations by a CEO: Large Cap Website: Best Investor Relations by a CFO: Large Cap www.td
Slide 46: Investor Presentation – Fixed Income Q1 2014
TD Bank Group Investor Presentation – Fixed Income Q1 2014
TD Bank Group — Debt Investor Presentation (March 2014) on 6ix