Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — Debt Investor Presentation (June 2012)
38 slides from Toronto-dominion Bank's debt investor presentation, June 2012
Slide 1: Fixed Income Presentation
Fixed Income Presentation June 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: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 3
Slide 4: Snapshot of TD
Snapshot of TD Our Businesses Canadian Personal & Commercial Wealth & Insurance U.S. Personal & Commercial Wholesale Banking Our Results Q2 2012 Adjusted Earnings1 of C$1,736, up 14% YoY Adjusted EPS1 of $1.82, up 12% YoY A North American retail focused bank 4 1. See footnote #3 on slide
Slide 5: Key Takeaways
Key Takeaways Simple Strategy, Consistent Focus Building Building the the Better Better Bank Bank North North America America • Top 10 Bank in North America1 • Leverage platform and brand for growth • One of the few banks in the world rated Aaa by Moody’s2 • Strong employment brand Retail Retail Ear
Slide 6: TD Bank Group: A Top Bank in North America
TD Bank Group A Top 10 Bank in North America Compared to: Q2 20121 Canadian North American (In USD Billions)2 Peers7 Peers8 Total Assets $783B 2nd 6th Total Deposits $476B 2nd 6th Market Cap (as of Jan 31, 2012) $77B 2nd 6th Adj. Net Income3 (Trailing 4 Quarters) $6.8B 2nd 6th Rpt. Net Income (Trail
Slide 7: Key Businesses At a Glance
Key Businesses At a Glance YTD 2012 Earnings Canadian Retail (66%) U.S. Retail (23%) Wholesale (11%) Mix Wealth Management & Insurance Segments Business Canadian P&C1 U.S. P&C1 Wholesale Wealth & Insurance TD Ameritrade2 Sub-Brands 2006-20113 2005-20114 2009-20115 Recognized leader in service and co
Slide 8: Evolution of TD
Evolution of TD Building Franchise Businesses Risk >>> Increasing Retail focus >>> Risk TD Bank Acquired Acquired TD Privatized Acquired Commerce Acquired Acquired and Canada Newcrest 51% of Waterhouse Banknorth Commerce Bank Riverside Chrysler Trust merge Capital Banknorth USA/ Bank integration
Slide 9: Risk Management
Risk Management Our Risk Appetite Integrated risk monitoring and reporting To senior management and Board of Directors Regular review, evaluation and approval of risk framework Structured Risk Appetite governance, from the Business to the Board Executive Committees and Risk Committee of
Slide 10: Q2 2012 Highlights
Q2 2012 Highlights Key Themes Net Income $MM (Adjusted, where applicable)1 Q2/12 QoQ YoY Strong results in Q2 2012 Retail 3 1,559 1% 14% Adjusted earnings1, 2 up 14% YoY Adjusted EPS1 growth of 12% YoY Wholesale 197 2% 5% Corporate (20) nm 31% Record retail earnings Adjusted Net Income $ 1,7
Slide 11: 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 i o Ex M B N A C anad a Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 MBNA Canada portfolio is performing bett
Slide 12: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 12
Slide 13: Why Canadian Economy Outperforms
Why Canadian Economy Outperforms One of the worlds most competitive economies1 Soundest banking system in the world1 Strong Canadian housing market Home values have held up well More prudent regulatory environment Robust economic fundamentals relative to G-7 economies One of the strong
Slide 14: 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 15: Well Developed Residential Mortgage Market in Canada
Well Developed Residential Mortgage Market in Canada Canadian chartered banks account for over 70% of the total mortgage market, including securitizations1 Conservative lending practices Strong competition among lenders Favorable legal environment supporting foreclosure and other types of le
Slide 16: 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 17: Canadian Housing Market Update
Canadian Housing Market Update 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 at Q2 2012 Canadian RESL
Slide 18: North American Economy
North American Economy Outlook Modest growth in store for North American economy U.S. growth to catch up to Canada over the next couple of years Canadian economy to be supported by U.S. growth and domestic demand Canadian economy still tightly linked to U.S. fortunes, and stronger U.S. growt
Slide 19: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 19
Slide 20: Capital
Capital Highlights Tier 1 Capital Ratio2 12.7% 12.9% 13.0% 12.0% Tier 1 capital ratio improved QoQ 11.6% due to strong organic capital growth Q1 capital position affected by MBNA portfolio, Basel II Market Risk Framework and IFRS transition Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Pro forma Basel III rat
Slide 21: TD Credit Ratings
TD Credit Ratings Issuer Ratings¹ Moody's S&P Fitch DBRS Aaa AA- AA- AA Strong credit ratings 21 1. See footnote #2 on slide #5
Slide 22: Robust Liquidity Management
Robust Liquidity Management Treasury paradigm Contribute to stable and growing revenues “Treasury does not have the authority not to hedge” No black boxes Global liquidity risk management framework No reliance on unsecured wholesale funding for liquidity Hold sufficient liquid assets t
Slide 23: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition Funding Mix1 Wholesale Term Debt2: $74B P&C Deposits 65% Commercial Deposits External Personal 20% MBS Sales Term Deposits Short Term 63% 11% Funding & Other 17% Personal Non‐ Term Deposits Covered Bonds Wholesale Term Senior 13% 34% Debt Debt 12% 24% Sub‐ Tradin
Slide 24: Debt Maturities F2012 – F2017
Debt Maturities1 F2012 – F2017 Bullet Debt Maturities (C$ Billions) $20 $15 $10 $5 $0 2012 2013 2014 2015 2016 2017 MBS Covered Bond Senior Debt Subordinated Debt ABS Manageable debt maturities 24 1. For wholesale term debt that has bullet maturities
Slide 25: Funding Strategy
Funding Strategy Large base of stable retail and commercial deposits Customer service business model delivers growing base of sticky deposits Reserve assets held for deposit balance that is not considered permanent Large user of securitization programs, primarily via Canada Mortgage Bond (CM
Slide 26: Key Takeaways
Key Takeaways Strong capital base – well positioned for Basel III Industry leading credit ratings Proactive & disciplined risk management Attractive balance sheet composition Diverse funding strategy to support growth plans 26
Slide 27: Contents
Contents 1. TD Bank Group at a glance 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 27
Slide 28: Simple Strategy, Consistent Focus, Superior Execution
Simple Strategy, Consistent Focus, Superior Execution Adjusted Earnings1 (C$MM) CDN GAAP2 IFRS2 & Segment Transfer3 $6,251 $6,432 GR % r CA s: 13 e a in g % 5-y Earn PS: 8 $5,228 e d E u s t t ed Adj Adjus $4,716 $4,189 $3,813 $3,376 $3,498 Wholesale Banking U.S. P&C Wealth & Insurance Canadian P&C
Slide 29: Global Economic Outlook
Global Economic Outlook World Real GDP Growth1 6% Forecast 4% 2% North America is currently facing a global economic 0% growth slowdown -2% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012F Global slowdown to constrain economic growth North American Real GDP Growth2 in North America 4
Slide 30: Canadian Economic Outlook
Canadian Economic Outlook Canadian Export and U.S. Activity Index1 25% Forecast 15% 5% Canadian economy still -5% tightly linked to U.S. -15% U.S. Activity Index fortunes, and stronger U.S. -25% Canadian Exports growth helps Canada’s 1970 1976 1982 1988 1994 2000 2006 2012 prospects Change in Dome
Slide 31: U.S. Economic Outlook
U.S. Economic Outlook Residential Real Estate1 1.0% Forecast 0.0% Depressed housing market has seriously hampered the -1.0% U.S. recovery Contribution to Real GDP Signs point to residential -2.0% 2001 2003 2005 2007 2009 2011 2013 real estate making a modestly positive Federal Fiscal Stimulus/Dr
Slide 32: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 7% US Federal Funds Rate Forecast Weaker growth and risks to 6% the global economy mean 5% Bank of North American central banks Canada are set to leave monetary Target Rate 4% policy at accommodative levels 3% This should help underpin 2% co
Slide 33: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$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 34: 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 35: 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 36: 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 portfolio $401 $1 / NM losses $6 / 11 bps $350 Higher provisions in US P&C $309 $320 $1 / NM $157 / 83 bps US P&C PCL increased $113 / 61 bps $44
Slide 37: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Email: tdir@td.com Best corporate governance Website: Best investment community meetings www.td.com/investor Best investor relations by a CFO: Large cap Best investor relations by a CEO: Large cap Grand prix for best overall investor
Slide 38: Fixed Income Presentation
Fixed Income Presentation June 2012
Toronto-Dominion Bank — Debt Investor Presentation (June 2012) on 6ix