Toronto-Dominion Bank · TSX:TD
Toronto-Dominion Bank — TD Bank Group — Q3 2012 Earnings Presentation
36 slides from Toronto-Dominion Bank's earnings presentation, Aug 30, 2012
Slide 1: TD Bank Group Q3 2012 Investor Presentation
TD Bank Group Q3 2012 Investor Presentation Thursday August 30th, 2012
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 presentation, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, and in other communications. In addition, represent
Slide 3: Strategic Overview
Strategic Overview 1. Record adjusted earnings1, 2 of $1.8B, up 11% versus Q3 2011 2. Record adjusted1 retail earnings of $1.6B 3. Solid results from Wholesale in challenging markets 4. Dividend increase of $0.05 per share payable in October 2012. Increasing dividend payout range to 40 – 50%. 1. The
Slide 4: Q3 2012 Highlights
Q3 2012 Highlights Key Themes Net Income $MM (Adjusted, where applicable)1 Q3/12 QoQ YoY • Record quarter for the bank Retail 2 1,610 3% 9% Wholesale 180 -9% 61% • Strong adjusted1 EPS growth of Corporate 30 nm -33% 9% YoY Adjusted Net Income $ 1,820 5% 11% Reported Net Income $ 1,703 1% 14% • Good
Slide 5: Q3 2012 Earnings: Items of Note
Q3 2012 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,703 $1.78 Pre Tax After Tax Items of note EPS (MM) (MM) Amortization of intangibles $901 $591 $0.06 Gain due to the change in fair value of credit default swaps hedging ($6) ($2) - the corporate loan book, net of provisi
Slide 6: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Key Themes P&L $MM1 Q3/12 QoQ YoY • Record adjusted1 net income Revenue (adjusted) $ 2,730 4% 13% • Adjusted operating leverage of 2% PCL 288 5% 40% • Elevated contribution from MBNA Expenses (adjusted) 1,224 1% 11% • Good loan and deposit growth Net Income (ad
Slide 7: Wealth and Insurance
Wealth and Insurance Key Themes P&L $MM Q3/12 QoQ YoY • Solid result in a challenging Revenue $ 1,009 -4% -2% economic environment Expenses 632 -3% -1% • Wealth earnings up 5% YoY Net Income, Wealth $ 154 -1% 5% • Lower transaction revenue largely Net Income, Insurance $ 150 -8% -3% offset by higher
Slide 8: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Key Themes P&L US$MM1 (except where mentioned) Q3/12 QoQ YoY • Solid adjusted earnings1 Revenue $ 1,500 -6% -2% • Strong core growth and a lower effective tax rate PCL 173 -10% -4% • Decline due to Durbin amendment Expenses (adjusted) 915 -5% 2% impacts and run-off
Slide 9: Wholesale Banking
Wholesale Banking Key Themes P&L $MM Q3/12 QoQ YoY • Solid quarter in challenging markets Revenue $ 638 5% 39% PCL 21 250% 250% • Results buoyed by higher than Expenses 406 6% 23% expected trading revenues Net Income $ 180 -9% 61% ROE1 16.7% • Expenses up primarily due to additional legal provisions
Slide 10: Corporate Segment
Corporate Segment Key Themes P&L $MM1 Q3/12 QoQ YoY • Corporate segment includes: Net Corporate Expenses $ (55) -42% -21% • Net treasury and capital management related activities Other 59 20% -33% • Corporate expenses and other Non-Controlling Interests 26 0% -4% items not fully allocated to Net Inc
Slide 11: Expenses
Expenses Highlights Efficiency Ratio, Adjusted1 • Committed to managing the rate of 56.8% 55.8% core expense growth • Making productivity a competitive advantage • Focus on 2013 and 2014 YTD 2011 YTD 2012 • Pattern of increased Q4 adjusted expenses vs. Q3 to continue in 2012. Expect increase of Expe
Slide 12: Capital
Capital Highlights Tier 1 Capital Ratio1,2 12.9% 13.0% 12.0% 12.2% • Tier 1 capital ratio improved QoQ 11.6% due to strong organic growth • Remain well-positioned for evolving regulatory environment • Pro forma Basel III ratio of 7.7% at Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 July 31, 2012 • We remain comfor
Slide 13: Dividends
Dividends Highlights Dividends Per Share (C$) • Dividend increase of $0.05 per share $2.89 • Second dividend increase in 2012 Announced • Dividend will grow 11% in fiscal 2012 11% Annualized • Target payout range increase to 40- Growth 50% $0.38 • Change reflects the confidence of the Board of Direc
Slide 14: Credit Portfolio Highlights
Credit Portfolio Highlights Highlights PCL Ratio (bps)1,2 46 46 • Continued strong credit performance 38 42 36 in the Canadian Personal and Commercial, and Wholesale Banking 38 35 36 37 Portfolios PC L R at io Ex M B N A C anad a Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 • MBNA Canada is performing better than
Slide 15: Appendix
ID Appendix
Slide 16: Q3 2012 Earnings: Items of Note
Q3 2012 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,703 $1.78 Revenue/ Pre Tax After Tax Items of note EPS Segment Expense (MM) (MM) Line Item2 Amortization of intangibles $901 $591 $0.06 Corporate pg 13, line 15 Gain due to the change in fair value of credit default swap
Slide 17: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Highlights Net Interest Margin On Average Earning Assets • Excluding MBNA, margin on 2.87% 2.86% average earning assets 2.79% decreased 14 bps YoY due to: • Low interest rate environment 2.77% 2.71% 2.67% • Portfolio mix NIM Ex MBNA Canada 2.65% 2.63% • Competi
Slide 18: Canadian Personal & Commercial Banking: Deposit Growth
Canadian Personal & Commercial Banking Deposit Growth Highlights Average Deposits 9% 9% ($ billions) Growth Growth YoY YoY • Personal deposit volumes increased 8% YoY $209 $215 • Business deposit volumes $200 $206 $198 increased 10% YoY $66 $69 $66 $62 $64 $136 $136 $140 $143 $146 Q3/11 Q4/11 Q1/12
Slide 19: Canadian Personal & Commercial Banking: Loan Growth
Canadian Personal & Commercial Banking Loan Growth Highlights Average Loans 9% 9% ($ billions) Growth Growth YoY YoY • Generated good, but slower, personal lending volume growth, and strong business lending $295 $286 $290 volume growth $271 $277 • Real estate secured lending $39 $41 $38 $36 $37 volu
Slide 20: Wealth and Insurance
Wealth and Insurance Highlights Revenue $MM • Wealth revenues of $686 million $1,048 $1,029 $1,039 $1,009 were down 2% versus Q2/12 $999 • Lower trading volumes in direct investing Insurance 340 342 345 324 323 Net Revenue • Insurance revenues of $323 million were down 6% versus Wealth NII 106 111 Q
Slide 21: Wealth
Wealth Performance Metrics AUA1 ($B) AUM2 ($B) $202 $204 $255 $253 $250 $196 $191 $189 $242 $241 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Mutual Funds AUM2 ($B) Retail vs. Institutional AUM ($B) $109 $113 $114 $106 $104 $65.4 $65.6 $85 $85 $87 $89 $90 $63.2 $61.8 $61.3 Q3/11 Q4/11
Slide 22: TD Ameritrade
TD Ameritrade Highlights TD Bank Group’s Share of TD Ameritrade’s Net Income1 • TD’s share of TD Ameritrade’s net US$MM income: C$56 million in Q3/12 $55 $55 $54 • TD Ameritrade’s net income $49 $47 US$154 million in Q3/12 down 2% from last year • Average trades per day were 355,000, down 4% YoY • T
Slide 23: U.S. Personal & Commercial Banking: Deposit Growth
U.S. Personal & Commercial Banking Deposit Growth Highlights Average Deposits 12% 12% (US$ billions) Growth Growth YoY YoY • Average deposits, excluding TD Ameritrade IDAs1 and Government deposits were up $169 $164 $165 9% YoY $160 $151 $58 $60 $57 $60 $50 $37 $38 $35 $37 $37 $12 $12 $12 $12 $12 $54
Slide 24: U.S. Personal & Commercial Banking: Loan Growth
U.S. Personal & Commercial Banking Loan Growth Highlights Average Loans 14% 14% (US$ billions) Growth Growth YoY YoY • Organic loan growth of 14% YoY • Continued momentum in residential mortgage volumes, up $87 36% YoY $80 $83 $76 $77 • Commercial loans growth continued, up 9% YoY $46 $45 $43 $44 $4
Slide 25: Accounting for Acquired Assets
Accounting for Acquired Assets Background Accounting for acquired portfolios can give rise to different P&L treatment and different reporting than loans originated by the Bank There are two noticeable impacts from the accounting: It creates swings in both NII and PCL as expectations of cash fl
Slide 26: Canadian Housing Market
Canadian Housing Market Highlights Housing market has started to show signs of moderation Credit quality of the Canadian RESL portfolio remains strong Continuing to closely monitor and adjust underwriting standards where appropriate Topic TD Positioning Canadian RESL $215 billion portfolio (
Slide 27: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q2/12 Q3/12 Canadian Personal & Commercial Portfolio $ 290.3 $ 295.8 Personal $ 250.8 $ 255.0 Residential Mortgages 146.4 150.9 Home Equity Lines of Credit (HELOC) 64.6 64.3 Indirect Auto 13.7 14.0 Unsecured Lines of Credit
Slide 28: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,061 Gross Impaired Loan $996 $981 $949 $6 / NM $38 / 17 bps formation ratio of 26bps $4 / NM $927 $9 / NM remained consistent with recent quarters $337 / 45 bps $313 / 40 bps $374 / 46 bps $347 / 53 bps $346
Slide 29: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Positive trend in Gross $2,493 $2,538 Impaired Loan ratio continued $2,432 $3 / NM $2,369 $2,383 $4 / NM $3 / NM $41 / 17 bps for the tenth consecutive $45 / 21 bps $3 / NM $3 / NM $47 / 23 bps $45 / 20 bps $79 / 34 bps quart
Slide 30: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights PCL increased $134MM since Q3/11 largely driven by the $454 acquisition of MBNA Canada $433 $16 / 28 bps $401 $1 / NM Excluding MBNA Canada, PCL $6 / 11 bps increased $38MM since Q3/11, $350 $1 / NM $147 / 73 bps whi
Slide 31: Canadian Personal Banking
Canadian Personal Banking Q3/12 Canadian Personal Banking 1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 151 0.32% 479 4 Continued strong credit Home Equity Lines of Credit (HELOC) 64 0.28% 183 4 performance Indirect Auto 14 0.29% 40 32 $72MM decrease in Unse
Slide 32: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q3/12 Gross Highlights Canadian Commercial and Loans/BAs GIL PCL1 Wholesale Banking ($B) ($MM) ($MM) The Canadian Commercial Commercial Banking2 41 139 21 and Wholesale Banking Wholesale 23 79 16 portfolio continues to Total Canadian Commercial and Wholesa
Slide 33: U.S. Personal Banking
U.S. Personal Banking Q3/12 Highlights 1 Gross Loans GIL/ GIL U.S. Personal Banking PCL2 ($B) Loans ($MM) ($MM) US Personal PCL increased Residential Mortgages 16 1.05% 170 9 by $50MM (US$48MM) over Home Equity Lines of Credit (HELOC)3 10 2.00% 200 29 the low levels of Q2/12 Indirect Auto 13 0.07%
Slide 34: U.S. Commercial Banking
U.S. Commercial Banking Q3/12 U.S. Commercial Banking1 Gross Loans/BAs GIL PCL2 Highlights ($MM) ($MM) ($B) Commercial Real Estate (CRE) 13 448 9 Continued positive trend in Non-residential Real Estate 10 280 2 U.S. Commercial Banking Residential Real Estate 3 168 7 credit quality Commercial & Ind
Slide 35: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Email: [email protected] Website: Best corporate governance www.td.com/investor Best investment community meetings Best investor relations by a CFO: Large cap Best investor relations by a CEO: Large cap Grand prix for best overall investor
Slide 36: TD Bank Group Q3 2012 Investor Presentation
TD Bank Group Q3 2012 Investor Presentation Thursday August 30th, 2012