Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Debt Investor Presentation (2019)
53 slides from Toronto-dominion Bank's debt investor presentation, 2019
Slide 1: TD Bank Group Fixed Income Investor Presentation
TD Bank Group Fixed Income Investor Presentation Q1 2019
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements From time-to-time, the Bank (as defined in this document) makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the United States (U.S.) Securities and Exchange Commission (SEC), and
Slide 3: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix 3
Slide 4: TD Snapshot
TD Snapshot 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 Q1 20191 Canadian U.S. Property, casualty, life and health (C$) Retail Retail insurance Fina
Slide 5: Our Strategy
Our Strategy Own the future TD aims to stand out from its peers by having a differentiated brand – anchored in our proven business model, and rooted in a desire to give our customers, communities and colleagues the confidence to thrive in a changing world. Proven business model Purpose-driven Forwar
Slide 6: TD Framework
TD Framework Our vision Be the better bank Own the future 1D efe Develop Our purpose Enrich the lives of our customers, communities TD Framework and colleagues Think like a customer; Act like an owner; lead provide legendary with integrity to drive experiences business results and trusted advice and
Slide 7: Competing in Attractive Markets
Competing in Attractive Markets Country Statistics Country Statistics 10th largest economy World’s largest economy Real GDP of C$1.9 trillion Real GDP of US$18.6 trillion Population of 37 million Population of 329 million Canadian Banking System U.S. Banking System One of the soundest
Slide 8: Top North American Bank
Top 10 North American Bank North Q1 2019 Canadian American C$ except otherwise noted Ranking4 Ranking5 Total assets $1,323B 2nd 6th Total deposits $849B 2nd 6th Market capitalization $135.5B 2nd 6th Reported net income (trailing four quarters) $11.4B 2nd 6th Adjusted net income1 (trailing four quart
Slide 9: Diversified Business Mix
Diversified Business Mix Fiscal 2018 Reported Earnings Mix1 Three key business lines Canadian Retail robust retail banking platform in Canada with proven performance Canadian Retail U.S. Retail2 U.S. Retail top 10 bank4 in 58% 28% the U.S. with significant organic growth opportunities Wholesal
Slide 10: Growing platform / North American scale
Growing platform / North American scale… Increasing Retail Focus Acquired Acquired Target Completed TD Became primary Chrysler credit card portfolio Completed strategic acquisition of Acquired Waterhouse Acquired Commerce Acquired issuer of Aeroplan Completed Privatized Financial & Epoch; and credit
Slide 11: Connected Experiences
Connected Experiences Consistent Strategy Q1 2019 Highlights How we compete 12.9 ~4.9 MILLION ~3.1 MILLION Enabling seamless interactions MILLION CANADIAN MOBILE between customers and the ACTIVE DIGITAL U.S. MOBILE USERS USERS entire organization CUSTOMERS Leveraging industry leading Experience
Slide 12: The Better Bank
The Better Bank The Ready Commitment: Targeting $1 billion in community giving by 2030 The Ready Commitment targets Financial Security $ 1 billion by 2030 Opening doors Vibrant Planet for a more inclusive and sustainable tomorrow Connected Communities Better Health Q1 Highlight: Approved funding for
Slide 13: Corporate Responsibility Performance
Corporate Responsibility Performance Highlights TD's low carbon commitment will target $100B by 2030 to support the transition to a low-carbon economy, Low Carbon Early UN PRI Top Green Bond drive innovation, accelerate renewable energy Commitment signatory underwriter targets $100B by and UNEP FI
Slide 14: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix 14
Slide 15: Consistent Earnings Growth
Consistent Earnings Growth Targeting 7-10% adjusted EPS growth over the medium term4 Reported Earnings1,2 (C$MM) $11,334 Canadian Retail $10,517 U.S. Retail $8,936 $8,024 Wholesale Banking $7,883 $6,640 2013 2014 2015 2016 2017 2018 1. For the purpose of calculating contribution by each business seg
Slide 16: Q1 2019 Highlights
Q1 2019 Highlights Total Bank Reported Results (YoY) Financial Highlights $MM Reported Q1/19 Q4/18 Q1/18 EPS up 2% Revenue 9,998 10,136 9,375 Adjusted1 EPS flat PCL 850 670 693 Revenue up 7% Expenses 5,855 5,366 4,861 Net Income 2,410 2,960 2,353 Expenses up 20% Diluted EPS ($) 1.27 1.58 1.24 Ad
Slide 17: High Quality Loan Portfolio
High Quality Loan Portfolio Balances ($B unless otherwise noted) Q4/18 Q1/19 Canadian Retail Portfolio $416.7 $417.7 Personal $341.1 $341.1 Residential Mortgages 194.1 193.9 Home Equity Lines of Credit (HELOC) 86.3 87.1 Indirect Auto 24.2 24.1 Credit Cards 18.1 18.0 Other Personal 18.4 18.0 Unsecure
Slide 18: Strong Credit Quality
Strong Credit Quality GIL and PCL Ratios (bps) 83 81 78 66 63 61 60 58 58 56 50 49 47 50 43 41 39 38 39 37 37 34 34 31 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2 IFRS IFRS 9 Gross Impaired Loans / Gross Loans and Acceptances (bps) Provision for Credit Losses / Average Net Loans
Slide 19: Canadian Personal Banking
Canadian Personal Banking Q1/19 Gross GIL GIL / Highlights Canadian Personal Banking Loans ($B) ($MM) Loans Credit quality remains strong Residential Mortgages $193.9 $272 0.14% in the Canadian Personal Home Equity Lines of Credit (HELOC) 87.1 139 0.16% portfolio Indirect Auto 24.1 71 0.29% Credit
Slide 20: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Quarterly Portfolio Volumes $B Highlights $267 $269 $275 $280 $281 Canadian RESL credit quality remains 59% 61% 63% 65% 66% strong Uninsured Uninsured and insured portfolio loan-to-value Insured 41% rates stable 39% 37% 35% 34% Less than 1% of unins
Slide 21: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix 21
Slide 22: Industry-Leading Credit Ratings
Industry-Leading Credit Ratings Issuer Ratings1 Rating Agencies Senior Debt Ratings2 Outlook / Trend Moody's Aa3 Stable S&P A Stable DBRS AA (low) Positive Ratings vs. Peer Group1 Moody’s Senior Debt2 / HoldCo5 Rating S&P Senior Debt2 / HoldCo5 Rating Aa1 AA- Aa2 A+ Aa3 A A1 A- A2 A3 BBB+ Baa1 BBB T
Slide 23: Strong Capital & Liquidity Positions
Strong Capital & Liquidity Positions Common Equity Tier 11 Highlights Common Equity Tier 1 ratio of 12.0% Q4 2018 CET1 Ratio 12.0% Internal capital generation 36 Leverage ratio of 4.1% Air Canada and Greystone transactions (19) Repurchase of common shares (7) Liquidity coverage ratio of 131% A
Slide 24: Leading Non-Common Equity Capital Ratings
Leading Non-Common Equity Capital Ratings Industry leading ratings1 for Additional Tier 1 and Tier 2 capital instruments NVCC Tier 2 Subordinated Debt Ratings Moody’s S&P 12 A2 12 A- 10 A3 A- 10 Baa18 8 BBB+ Baa26 6 BBB- Baa34 4 BBB- 2 Ba1 2 BB+ a 0 a 0 TD TD Canadian Peers2 Peer Group 1 TD TD Canad
Slide 25: Robust Liquidity Management
Robust Liquidity Management Liquidity Risk Management Framework High Quality Liquid Assets (HQLA) TD holds a variety of liquid assets Target a 90-day survival horizon under a combined commensurate with liquidity needs in the Bank-specific and market-wide stress scenario, and a organization. mini
Slide 26: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition1 Large base of stable retail and commercial deposits Maturity Profile6,7 (To first par redemption date) (C$B) 50 Personal and commercial deposits are TD's 45 Issuance Maturity primary sources of funds 40 Customer service business model delivers 35 stable base o
Slide 27: Wholesale Term Debt Composition
Wholesale Term Debt Composition1 Funding Strategy Wholesale term funding through diversified sources across domestic and international markets Well-established C$50 billion Legislative Covered Bond Program is an important pillar in global funding strategy Programmatic issuance for the establishe
Slide 28: Deposit Overview
Deposit Overview Domestic Leader in Deposits Large base of personal and business deposits4 that make up 68% of the Bank's total funding TD Canada Trust (TDCT) ranked #1 in Total Personal Deposits1 Canadian Retail competes with legendary personal connected customer service and the power of One TD
Slide 29: Key Takeaways
Key Takeaways Strong capital base Industry leading credit ratings Proactive & disciplined risk management Attractive balance sheet composition Diverse funding strategy 29
Slide 30: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Covered Bonds • Bail-in 30
Slide 31: Economic Outlook
Economic Outlook Global: Heightened Uncertainty Economic growth is slowing around the world. From 3.7% in 2018, global real GDP growth is likely to decelerate to 3.3% in 2019. Slowing growth and subdued inflation have prompted central banks to adopt a more patient stance toward normalizing inter
Slide 32: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S. The Federal Reserve shifted to a (%) "wait-and-see" stance in January. It 7 Forecast will likely be the second half of 2019 U.S. Federal Funds Rate before another rate hike. TD 6 Economics anticipates just one final increase in the current rate
Slide 33: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Covered Bonds • Bail-in 33
Slide 34: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment GIL Formations1: $MM and Ratios2 Highlights Gross impaired loan 26 bps formations increased 5 basis 20 21 18 18 points quarter-over-quarter driven by: $1,722 The U.S. Commercial portfolio primarily attributable $1,424 to the power and utilities
Slide 35: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment GIL1: $MM and Ratios2 Highlights Gross impaired loans 53 bps 49 increased 6 basis points 47 47 45 quarter-over-quarter reflecting: $3,534 New formations in the U.S. $3,048 $3,154 Commercial portfolio $31 / 6 bps $2,993 $2,964 primarily attributable
Slide 36: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment PCL1: $MM and Ratios2 Highlights $855 $7 PCL increased $180MM $702 $675 quarter-over-quarter $227 $8 reflecting: $562 $567 $183 $127MM in the U.S. Credit $16 $155 $107 Card and Auto portfolios $117 $311 largely due to seasonal $256 $249 trend
Slide 37: Provision for Credit Losses (PCL) Impaired and Performing
Provision for Credit Losses (PCL)1,2 Impaired and Performing Highlights PCL (C$MM) Q1/18 Q4/18 Q1/19 Total Bank $ 702 $ 675 $ 855 Of the $180MM quarter- Impaired 566 564 722 over-quarter PCL increase, Performing 136 111 133 $158MM is attributed to Canadian Retail $ 270 $ 263 $ 310 Impaired PCL, la
Slide 38: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Gross Q1/19 Highlights Canadian Commercial and GIL GIL/ Loans/BAs Canadian Commercial and Wholesale Banking ($MM) Loans ($B) Commercial Banking1 $76.6 $282 0.37% Wholesale Banking portfolios continue to perform well Wholesale 48.6 - 0.00% Total Canadian Co
Slide 39: U.S. Personal Banking – U.S. Dollars
U.S. Personal Banking – U.S. Dollars Q1/19 Highlights Gross GIL GIL / U.S. Personal Banking1 Loans ($B) ($MM) Loans Continued good asset quality Residential Mortgages $24.0 $336 1.40% in U.S. Personal Home Equity Lines of Credit (HELOC)2 9.2 639 6.94% Gross impaired loans increase Indirect Auto
Slide 40: U.S. Commercial Banking – U.S. Dollars
U.S. Commercial Banking – U.S. Dollars Q1/19 Highlights Gross GIL GIL/ U.S. Commercial Banking1 Loans / BAs Gross impaired loans increase ($B) ($MM) Loans primarily attributable to the Commercial Real Estate (CRE) $23.4 $102 0.43% power and utilities sector Non-residential Real Estate 17.2 81 0.47
Slide 41: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Covered Bonds • Bail-in 41
Slide 42: Canadian Registered Covered Bond Program
Canadian Registered Covered Bond Program Key Highlights ■ Canadian residential real estate property with no more than 4 residential units Covered Bond Collateral ■ Uninsured conventional first lien assets with original loan to value ratio that is 80% or less ■ Latest property valuation shall be adju
Slide 43: TD Global Legislative Covered Bond Program
TD Global Legislative Covered Bond Program TD Covered Bond Programme Highlights Cover Pool as at January 31, 2019 TD has a C$50B legislative covered bond program High quality, conventional first lien Canadian Residential mortgages originated by TD Covered bonds issuance for Canadian issuers go
Slide 44: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Covered Bonds • Bail-in 44
Slide 45: CDIC Resolution Tools
CDIC Resolution Tools Resolution Tools Reimbursement of insured deposits – following a failure, when the bank ceases to operate, CDIC would reimburse all insured deposits up to $100,000. Forced sale of a failing bank – CDIC takes temporary control of a failing bank and completes a sale to a will
Slide 46: Bail-in Implementation
Bail-in Implementation Regulation Overview On April 18, 2018, the Government of Canada published final regulations under the CDIC Act and the Bank Act providing details of the bank recapitalization "bail-in" regime and final Total Loss Absorbing Capacity (TLAC) guideline. The issuance regulation
Slide 47: Bail-in Overview
Bail-in Overview Scope of Bail-in In Scope Liabilities. Senior unsecured long-term debt (original term to maturity of 400 or more days) that is tradable and transferable (has a CUSIP, ISIN or other similar identification) and issued on or after September 23, 20181. Unlike other jurisdictions, Cana
Slide 48: TD TLAC Requirements
TD TLAC Requirements TD Regulatory Capital Ratios1 Canadian D-SIBs will be required to meet their regulatory TLAC requirements by the Notional TLAC: 26.95% November 1, 2021 implementation date. OSFI has stipulated that D-SIBs will be subject to 2 supervisory ratios: Minimum risk based TLAC ratio
Slide 49: Bail-In Resolution Stages
Bail-In Resolution Stages The resolution of a D-SIB would involve a number of key phases. Below is an illustrative timeline that details the various stages of a bail-in resolution, and the actions and events that might take place at each stage. Resolution Bail-in 1. Business 2. Heightened 3. Point
Slide 50: TLAC eligible securities
Illustration of Impact of Bail-in Conversion on Balance Sheet Loss Other Senior Liabilities1 Other Senior Other Senior Liabilities1 Liabilities1 Assets Bail-in Senior TLAC eligible securities Assets Assets NVCC Tier 2 Bail-in Senior NVCC Pref Bail-in Senior NVCC Tier 2 CET1 CET1 NVCC Pref CET1 Pre-l
Slide 51: Compensation Regime
Compensation Regime "No Creditor Worse Off" Under a scenario where CDIC uses a resolution tool to resolve a failing bank, shareholders and creditors are expected to be in a better financial position than if the institution had been liquidated. Bail-in note holders are entitled to compensation eq
Slide 52: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Email: tdir@td.com Website: www.td.com/investor
Slide 53: TD Bank Group Fixed Income Investor Presentation
TD Bank Group Fixed Income Investor Presentation Q1 2019