Toronto-Dominion Bank · TSX:TD
Toronto-Dominion Bank — TD Bank Group — Q2 2012 Earnings Presentation
36 slides from Toronto-Dominion Bank's earnings presentation, May 24, 2012
Slide 1: TD Bank Group Q2 2012 Investor Presentation
TD Bank Group Q2 2012 Investor Presentation Thursday May 24th, 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. Strong adjusted earnings1, 2 of $1.7B, up 14% versus Q2 2011 2. Record retail adjusted earnings of $1.6B 3. Good returns from Wholesale despite challenging markets late in the quarter 4. Managing expenses proactively to target positive operating leverage in a slow-growth econom
Slide 4: Q2 2012 Highlights
Q2 2012 Highlights Key Themes Net Income $MM (Adjusted, where applicable)1 Q2/12 QoQ YoY • Strong adjusted EPS growth of Retail 2 1,559 1% 14% 12% YoY Wholesale 197 2% 5% Corporate (20) nm 31% • Record retail earnings Adjusted Net Income $ 1,736 -1% 14% Reported Net Income $ 1,693 15% 21% • Delivere
Slide 5: Q2 2012 Earnings: Items of Note
Q2 2012 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,693 $1.78 Pre Tax After Tax Items of note EPS (MM) (MM) Amortization of intangibles $911 $591 $0.06 Loss due to the change in fair value of derivatives hedging the $5 $9 $0.01 reclassified available-for-sale securities p
Slide 6: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Key Themes P&L $MM1 Q2/12 QoQ YoY • Adjusted net income1 up 14% YoY Revenue (adjusted) $ 2,625 2% 14% • Adjusted operating leverage of 2% PCL 274 -3% 43% • Credit quality remains stable Expenses (adjusted) 1,208 6% 12% • Solid organic loan and deposit growth Ne
Slide 7: Wealth and Insurance
Wealth and Insurance Key Themes P&L $MM Q2/12 QoQ YoY • Record net income up 16% YoY Revenue $ 1,048 5% 7% (up 23% ex TD Ameritrade) Expenses 653 2% 1% • Operating leverage of 6% Net Income, Wealth $ 155 8% 3% • Wealth earnings up 3% YoY Net Income, Insurance $ 163 9% 51% • Higher fee-based revenue
Slide 8: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Key Themes P&L US$MM1 (except where mentioned) Q2/12 QoQ YoY • Record adjusted net income1 Revenue $ 1,597 9% 12% • Continued strong organic loan PCL 193 25% 7% growth, particularly in residential Expenses (adjusted) 959 10% 15% mortgages and commercial lending Net
Slide 9: Wholesale Banking
Wholesale Banking Key Themes P&L $MM Q1/12 QoQ YoY • Good quarter for Wholesale Revenue $ 608 -11% 5% PCL 6 -50% -14% • Very strong results in Investment Expenses 384 -5% 12% Banking led by M&A Net Income $ 197 2% 5% ROE1 19.5% • Risk Weighted Assets down by $3.5B Revenue $MM 726 683 608 581 459 303
Slide 10: Corporate Segment
Corporate Segment Key Themes P&L $MM1 Q2/12 QoQ YoY • Corporate segment includes: Net Corporate Expenses $ (95) -3% 8% • Net treasury and capital management related activities Other 49 -41% 0% • Corporate expenses and other Non-Controlling Interests 26 0% 4% items not fully allocated to Net Income -
Slide 11: Expenses
Expenses Highlights Efficiency Ratio, Adjusted1 59.4% • Committed to managing core 58.3% expense growth 55.8% 56.8% 55.3% • Continue to expect positive adjusted operating leverage in 2012 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 • Proactively managing the rate of expense growth with a focus on 2013 and 2014 Ex
Slide 12: Capital
Capital Highlights Tier 1 Capital Ratio2 12.7% 12.9% 13.0% 11.6% 12.0% • Tier 1 capital ratio improved QoQ due to strong organic capital growth • Q1 capital position affected by MBNA portfolio, Basel II Market Risk Framework and IFRS transition • Remain well-positioned for evolving Q2/11 Q3/11 Q4/11
Slide 13: Outlook
Outlook Total Bank Performance Continue to face increasing headwinds Expect positive operating leverage for 2012 Earnings in the second half are expected to be similar to the first half of 2012 Segment Performance CAD P&C Expected to post good results in the second half of 2012 driven by pos
Slide 14: Credit Portfolio Highlights
Credit Portfolio Highlights Highlights PCL Ratio (bps)1 2 46 • Continued strong credit performance 38 42 37 36 in the Canadian Personal and Commercial, and Wholesale Banking 38 35 36 Portfolios PC L R at io Ex M B N A C anad a Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 • MBNA Canada is performing better than exp
Slide 15: Appendix
ID Appendix
Slide 16: Q2 2012 Earnings: Items of Note
Q2 2012 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,693 $1.78 Revenue/ Pre Tax After Tax Items of note EPS Segment Expense (MM) (MM) Line Item2 Amortization of intangibles $911 $591 $0.06 Corporate pg 13, line 15 Loss due to the change in fair value of derivatives hedging
Slide 17: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Highlights Net Interest Margin On Average Earning Assets • Excluding MBNA, margin on 2.87% average earning assets 2.79% decreased 12 bps YoY due to: • Low interest rate environment 2.77% 2.77% 2.71% • Portfolio mix NIM Ex MBNA Canada 2.67% 2.65% • Competitive p
Slide 18: Canadian Personal & Commercial Banking: Deposit Growth
Canadian Personal & Commercial Banking Deposit Growth Highlights Average Deposits 7% 7% ($ billions) Growth Growth YoY YoY • Personal deposit volumes increased 6% YoY $206 $209 • Business deposit volumes $195 $198 $200 increased 9% YoY $66 $66 $61 $62 $64 $134 $136 $136 $140 $143 Q2/11 Q3/11 Q4/11 Q
Slide 19: Canadian Personal & Commercial Banking: Loan Growth
Canadian Personal & Commercial Banking Loan Growth Highlights Average Loans 10% 10% ($ billions) Growth Growth YoY YoY • Generated good, but slower, personal lending volume growth, and strong business lending $277 $286 $290 volume growth $264 $271 $38 $39 $37 • Real estate secured lending $35 $36 $1
Slide 20: Wealth and Insurance
Wealth and Insurance Highlights Revenue $MM • Wealth revenues of $703 million $1,048 $1,029 $1,039 were up 4% versus Q1/12 $980 $999 • Fee based revenue growth in Wealth advice-based and asset 345 Insurance 340 342 management businesses Net Revenue 274 324 • Fewer days impacted revenue in Q2 vs. Q1
Slide 21: Wealth
Wealth Performance Metrics AUA1 ($B) AUM2 ($B) $255 $202 $250 $196 $248 $191 $242 $190 $189 $241 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Mutual Funds AUM2 ($B) Retail vs. Institutional AUM ($B) $65.4 $106 $109 $113 $104 $104 $63.2 $86 $85 $85 $87 $89 $62.4 $61.8 $61.3 Q2/11 Q3/11
Slide 22: TD Ameritrade
TD Ameritrade Highlights TD Bank Group’s Share of TD Ameritrade’s Net Income1 • TD’s share of TD Ameritrade’s net US$MM income: C$47 million in Q2/12 • TD Ameritrade’s net income $58 $55 $54 US$137 million in Q2/12 down $49 20% from last year $47 • Average trades per day were 388,000, down 12% YoY •
Slide 23: U.S. Personal & Commercial Banking: Deposit Growth
U.S. Personal & Commercial Banking Deposit Growth Highlights Average Deposits 12% 12% (US$ billions) Growth Growth YoY YoY • Average deposits, excluding TD Ameritrade IDAs1 and Government deposits were up $164 $165 8% YoY $160 $148 $151 $60 $58 $57 $48 $50 $37 $37 $37 $34 $35 $13 $12 $12 $12 $12 $53
Slide 24: U.S. Personal & Commercial Banking: Loan Growth
U.S. Personal & Commercial Banking Loan Growth Highlights Average Loans 18% 18% (US$ billions) Growth Growth YoY YoY • Continued momentum in residential mortgage volumes, up 30% YoY $83 $80 $76 $77 • Commercial loans growth $71 continued, up 7% YoY • Core growth excluding $44 $45 $43 $43 acquisition
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 TD Economics expects house prices to moderate slowly The Canadian RESL portfolio continues to produce strong credit quality Continuing to closely monitor and adjust underwriting standards where appropriate Topic TD Positioning Canadian RESL $211 billion por
Slide 27: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q1/12 Q2/12 Canadian Personal & Commercial Portfolio $ 286.8 $ 290.3 Personal $ 248.4 $ 250.8 Residential Mortgages 144.1 146.4 Home Equity Lines of Credit (HELOC) 64.2 64.6 Indirect Auto 13.5 13.7 Unsecured Lines of Credit
Slide 28: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $996 Gross Impaired Loan $949 $981 formations decreased $15MM $6 / NM $4 / NM $927 $9 / NM over Q1/12 due to improving $815 credit conditions in the U.S. $337 / 45 bps $313 / 40 bps $347 / 53 bps $346 / 50 bps
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 $2,447 $2,432 $3 / NM $2,369 $4 / NM $3 / NM $41 / 17 bps for the ninth consecutive $45 / 21 bps $3 / NM $65 / 38 bps $47 / 23 bps $45 / 20 bps quarter US
Slide 30: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights PCL increased $32MM over Q1/12 due to: $433 A full quarter of MBNA losses $401 $1 / NM Higher provisions in US P&C $6 / 11 bps $350 $320 $1 / NM US P&C PCL increased $309 $157 / 83 bps $113 / 61 bps $44MM (US$46M
Slide 31: Canadian Personal Banking
Canadian Personal Banking Q2/12 Canadian Personal Banking 1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 146 0.38% 551 1 Continued strong credit Home Equity Lines of Credit (HELOC) 65 0.30% 191 2 performance Indirect Auto 14 0.28% 38 29 $20MM decrease in GIL
Slide 32: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q2/12 Gross Highlights Canadian Commercial and Loans/BAs GIL PCL1 Wholesale Banking ($B) ($MM) ($MM) The Canadian Commercial Commercial Banking2 40 132 14 and Wholesale Banking Wholesale 22 45 1 portfolio continues to Total Canadian Commercial and Wholesal
Slide 33: U.S. Personal Banking
U.S. Personal Banking Q2/12 Highlights 1 Gross Loans GIL/ GIL U.S. Personal Banking PCL2 ($B) Loans ($MM) Improving credit trends ($MM) Residential Mortgages 15 1.16% 171 (2) continued Home Equity Lines of Credit (HELOC)3 10 1.02% 99 6 $36MM reduction in Gross Indirect Auto 11 0.07% 8 13 Impaire
Slide 34: U.S. Commercial Banking
U.S. Commercial Banking Q2/12 U.S. Commercial Banking1 Gross Loans/BAs GIL PCL2 Highlights ($MM) ($MM) ($B) Commercial Real Estate (CRE) 13 490 49 Continued positive trend in Non-residential Real Estate 10 298 20 U.S. Commercial Banking Residential Real Estate 3 192 29 credit quality Commercial &
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 Q2 2012 Investor Presentation
TD Bank Group Q2 2012 Investor Presentation Thursday May 24th, 2012