Toronto-dominion Bank · TSX:TD

Toronto-dominion Bank — TD Bank Group — Q2 2021 Earnings Presentation

58 slides from Toronto-dominion Bank's earnings presentation, 2021

1. Slide 1: TD Bank Group Investor Presentation Q2 2021

   TD Bank Group Investor Presentation Q2 2021

2. 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

3. Slide 3: TD Bank Group Key Themes

   TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q2 2021 Financial Results 2 For the three months ended April 30, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Bala

4. Slide 4: Our Strategy

   Our Strategy We're in this together – Anchored by our proven business model and propelled by our forward-focused strategy, we are supporting our customers, communities and colleagues through these challenging times Purpose-Driven Forward Focused Proven Business Model Centre everything we do on our v

5. Slide 5: TD Framework

   TD Framework Execute Own Innovate Think Customer Develop Our Vision Our Purpose Be the better bank To enrich the lives of our customers, communities TD Framework and colleagues Our Shared Commitments Think like a Act like an owner; Execute with Innovate with Develop our customer; lead with integrity

6. Slide 6: 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  Property, casualty, life and health insurance U.S. Retail Q2 20211 Canadian U.S. (C$) Retail

7. 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$2.1 trillion  Real GDP of US$19 trillion  Population of 37 million  Population of 332 million Canadian Banking System U.S. Banking System  One of the soundest ba

8. Slide 8: Top North American Bank

   Top 10 North American Bank Canadian North American Q2 2021 (C$ except otherwise noted) TD Bank Group Ranking4 Ranking5 Total assets $1,669B 1st 5th Total deposits $1,118B 1st 5th Market capitalization $153.7B 2nd 6th Reported net income (trailing four quarters) $14.4B 1st 4th Adjusted net income1 (t

9. Slide 9: Diversified Business Mix

   Diversified Business Mix F'2020 Reported Earnings Mix1 - 86% Retail Three key business lines  Canadian Retail robust retail banking platform in Canada with proven performance U.S. Retail Bank,2 18% Canadian  U.S. Retail top 10 bank4 in Retail, 58% the U.S. with significant 3 TD Ameritrade, organic

10. Slide 10: Growing Platform / North American Scale

    Growing Platform / North American Scale 2000-2004 – A Canadian Leader 2005-2010 – Building U.S. Platform 2011-2015 – Acquiring Assets New Capabilities and Partnerships • Acquisition of Canada Trust (2000) • TD Waterhouse USA / Ameritrade • Acquired Chrysler Financial auto • Acquired Epoch (2013) • T

11. Slide 11: Connected Experiences

    Connected Experiences Consistent Strategy Q2 2021 Highlights How we compete:  Enabling seamless interactions 6.2M between customers and the 15.1M 4.0M Active Active Digital Active U.S. entire organization Canadian Mobile Users Users1 Mobile Users  Leveraging our industry-leading Experience Design

12. Slide 12: Digital Adoption

    Digital Adoption Digital Adoption Active Mobile Users Self-Serve Transactions (% of total customers)2 (millions)3 (as % of all financial transactions)4 +270bps +380 bps YoY YoY +8.9% YoY +12.5% YoY +290 bps +860 bps YoY YoY 62.1 92.1 91.9 6.2 Canadian 6.1 60.6 Retail1 59.4 89.0 5.7 Q2/20 Q1/21 Q2/21

13. Slide 13: TD's ESG Strategy

    TD's ESG Strategy: TD READY COMMITMENT Working together towards an inclusive and sustainable future | By creating the conditions for economic inclusion and environmental health | Environment Bolster environmental health through sustainable financial products & services, and programs Resource Use Soc

14. Slide 14: Purpose Driven

    14 Purpose Driven Centered on our vision, purpose and shared commitments Environment Social Governance – Global Climate Action Plan, launched in 2020: – Committed to 50% increase in minority – Created Senior Executive Team (SET) Forum to – Target of net-zero greenhouse gas (GHG) executive representa

15. Slide 15: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q2 2021 Financial Results 2 For the three months ended April 30, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Bala

16. Slide 16: Q2 2021 Highlights

    Q2 2021 Highlights Total Bank Reported Results (YoY) Financial Highlights ($MM) Reported Q2/21 QoQ YoY EPS of $1.99, up $1.19 Revenue 10,228 (5%) (3%)  Adjusted1 EPS of $2.04, up $1.19 PCL (377) ($690) ($3,595) Expenses 5,729 (1%) 12% Revenue down 3% Net Income 3,695 13% +$2,180  Volume growth and

17. Slide 17: Q2 2021 Segment Highlights

    Q2 2021 Segment Highlights (YoY unless otherwise indicated) Canadian Retail (C$)  Net income for the quarter was $2,182 million, an increase of $1,010 million, or 86%, compared with the second quarter last year. Revenue increased 1%. Net interest income decreased 4% reflecting lower margins, partia

18. Slide 18: Strong Capital and Liquidity Positions

    Strong Capital and Liquidity Positions Common Equity Tier 1 ratio of 14.2% Common Equity Tier 1 Ratio Q1 2021 CET 1 Ratio 13.6% Internal capital generation 47 Risk-Weighted Assets down 3% QoQ Actuarial gains on employee benefit plans 17 Decrease in RWA (net of FX)1 8 Leverage ratio of 4.6% Other ite

19. Slide 19: High Quality Loan Portfolio

    High Quality Loan Portfolio Balances ($B unless otherwise noted) Q1/21 Q2/21 Canadian Retail Portfolio 456.7 466.8 Personal 371.5 378.9 Residential Mortgages 215.3 220.5 Home Equity Lines of Credit (HELOC) 95.2 97.7 Indirect Auto 27.2 27.4 Credit Cards 14.6 14.5 Other Personal 19.2 18.8 Unsecured Li

20. Slide 20: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) By Business Segment Highlights PCL1: $MM and Ratios2 $3,221  PCL recovery for the quarter $374 reflects: – A performing allowance $554 $2,189 release $123 – Partially offset by cyclically low $217 impaired provisions $1,140 $898 Wholesale $921 $100 Corporate $316 $

21. Slide 21: Allowance for Credit Losses (ACL)

    Allowance for Credit Losses (ACL) ACL1: $B and Ratios2 124 126 122 103 108 bps Highlights $9.2 $9.4 $8.9 74 $8.0 $7.9  ACL decreased by $968MM quarter- over-quarter, reflecting: United States 59% 60% $5.3 59% – A performing allowance release, Canada 62% 58% largely related to improvement in our 61%

22. Slide 22: COVID-19 Industries of Focus

    COVID-19 Industries of Focus Total Gross Loans & Acceptances: $736B Highlights (Q2 2021)  Gross loans and acceptances to industries of heightened focus were $44 billion Residential – Representing ~5.9% of Total Bank Mortgages & HELOC, gross loans and acceptances 49.3%  Lending portfolio remained w

23. Slide 23: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q2 2021 Financial Results 2 For the three months ended April 30, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Bala

24. Slide 24: Consistent Earnings Growth

    Consistent Earnings Growth Reported Earnings (C$MM)1 5-year CAGR2 Reported Earnings: 8.2% (2.6% adjusted3) Reported EPS: 8.8% (3.1% adjusted3) $11,334 $11,686 $11,895 $10,517 $8,936 $8,024 Corporate Wholesale Banking U.S. Retail Canadian Retail 4 2015 2016 2017 2018 2019 2020 Results in 2020 were si

25. Slide 25: Strong, Consistent Dividend History

    Strong, Consistent Dividend History Dividends Per Share (C$) $3.11 164-year continuous dividend history Dividend yield: 3.9%1 Target payout $0.22 range: 40%-50% Annual Dividend 1. As of Q2/21. Dividend yield is calculated as the dividend per common share divided by the average daily closing stock pr

26. Slide 26: Solid Total Shareholder Returns

    Solid Total Shareholder Returns Canadian North American TD Bank Group Ranking1 Ranking2 One-Year 52.1% 3rd 9th Three-Year 9.9% 4th 8th Five-Year 13.0% 1st 4th Ten-Year 11.7% 1st 4th Ranked 1st in total shareholder return3 among Canadian peers for the 5- and 10-year periods 1. Canadian Peer Ranking b

27. Slide 27: Canadian Retail

    Canadian Retail Consistent Strategy Reported Net Income (C$MM) How we compete: $7,183 $6,863  Legendary personal connected $6,525 $5,988 $6,026 customer service  Focus on underrepresented products and markets  The power of One TD  Winning culture and team $5,938 $6,525 $7,183 $7,421 $6,124 Highe

28. Slide 28: Canadian Retail

    Canadian Retail Personal Banking Credit Cards  #1 or #2 market share in most retail products1  Dual card issuer of high value brands, including TD First Class Visa  Nearly all of TD's branches continue to be open with health and and TD Aeroplan Visa, and MBNA World Elite Mastercard safety measure

29. Slide 29: U.S. Retail

    U.S. Retail Consistent Strategy Reported Net Income (US$MM) How we compete: $3,750  Legendary service and convenience $3,253  Grow and deepen customer relationships $2,536  Differentiated brand as the “human” bank $2,234 $2,278  Productivity initiatives that enhance both the customer and colleag

30. Slide 30: U.S. Retail

    U.S. Retail Personal & Commercial Banking Credit Cards  Top 10 bank1 with over 9MM customers, operating retail stores in 15  Private label and co-brand credit card offering for U.S. customers states and the District of Columbia of regional and nationwide retail partners, including Target and  Off

31. Slide 31: Wholesale Banking

    Wholesale Banking Consistent Strategy Net Income (C$MM) How we compete: $1,418  Continue to build an integrated North American dealer franchise with global reach. $1,054 $1,039 – In Canada, we will be the top-ranked investment dealer. $920 – In the U.S., we will deliver value and trusted advice in

32. Slide 32: Wholesale Banking

    Wholesale Banking Positioned for Growth  Lead mandates highlighting TD Securities' objective to build an integrated North American dealer franchise with global reach include: – Joint Lead Manager on International Finance Facility for Immunization Company (IFFIm) US$750 million 5-year Vaccine Bonds

33. Slide 33: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q2 2021 Financial Results 2 For the three months ended April 30, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Bala

34. Slide 34: TD TLAC Requirements

    TD TLAC Requirements  Canadian D-SIBs will be required to meet TD Regulatory Capital Ratios2,3 their regulatory TLAC requirements by the November 1, 2021 implementation date.  OSFI has stipulated that D-SIBs will be Current Risk-based TLAC Ratio: 25.1%5 subject to 2 supervisory ratios: Minimum ris

35. Slide 35: Industry-Leading Credit Ratings

    Industry-Leading Credit Ratings Issuer Ratings1 Rating Agencies Senior Debt Ratings2 Outlook Moody's Aa3 Stable S&P A Stable DBRS AA Stable 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 BBB+ A3 Baa1 BBB TD Canadian Peers

36. Slide 36: Leading Non-Common Equity Capital Ratings

    Leading Non-Common Equity Capital Ratings NVCC Tier 2 Subordinated Debt Ratings Moody’s S&P A2 A A3 A- Baa1 BBB+ Baa2 BBB Baa3 BBB- Ba1 BB+ TD Peers 2 Canadian Peers TD Canadian Peers TD Canadian TD Canadian Peers2 Additional Tier 1 NVCC Preferred Share Ratings Moody’s S&P A2 A A3 A- Baa1 BBB+ Baa2

37. Slide 37: Robust Liquidity Management

    Robust Liquidity Management Liquidity Risk Management Framework Liquidity Risk Management Framework  Target a 90-day survival horizon under a combined  TD holds a variety of liquid assets commensurate with Bank-specific and market-wide stress scenario, and a liquidity needs in the organization. mi

38. Slide 38: Deposit Overview

    Deposit Overview Domestic Leader in Deposits Large base of personal and business deposits1 that make up 75% of the Bank's total funding  TD Canada Trust ("TDCT") ranked #1 in Total Personal Deposits2 – legendary customer service and the power of One TD  U.S. Retail is a top 103 bank in the U.S. wi

39. Slide 39: Low Risk, Deposit Rich Balance Sheet

    Low Risk, Deposit Rich Balance Sheet1 Large base of stable retail and commercial Maturity Profile6,7 (C$B) (To first par redemption date) 50 deposits Issuance Maturity 40  Personal and business deposits are TD's primary sources of funds – Customer service business model delivers stable base of “sti

40. Slide 40: Wholesale Term Debt Composition

    Wholesale Term Debt Composition1 Funding Strategy  Wholesale term funding through diversified sources across domestic and international markets  Well-established C$80 billion Legislative Covered Bond Program is an important pillar in global funding strategy  Programmatic issuance for the establis

41. Slide 41: Canadian Registered Covered Bond Program

    Canadian Registered Covered Bond Program Key Highlights Covered Bond Collateral  Canadian residential real estate property with no more than 4 residential units  Uninsured conventional first lien assets with original loan to value ratio that is 80% or less Housing Market Risks  Latest property va

42. Slide 42: TD Global Legislative Covered Bond Program

    TD Global Legislative Covered Bond Program Highlights Cover Pool as at April 30, 2021  TD has a C$80B legislative covered bond program  High quality, conventional first lien Canadian  Covered bonds issuance for Canadian issuers governed by CMHC-administered guidelines Residential mortgages origin

43. Slide 43: 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

44. Slide 44: 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

45. Slide 45: Appendix: Economic Outlook

    Appendix Economic Outlook

46. Slide 46: TD Economics Update

    TD Economics Update Global Outlook: Covid-19 cases are declining in advanced economies but remain elevated in emerging markets  The reopening of economic activity is moving to the forefront as new cases ease in most advanced economies (AEs). Most AEs are set for robust growth in the second half of

47. Slide 47: Interest Rate Outlook

    Interest Rate Outlook Interest Rates, Canada and U.S. (%) 7 Forecast  The federal funds rate still rests on the 0% to U.S. Federal 0.25% range. The Federal Reserve has iterated 6 Funds Rate that its willingness to allow inflation to push above its 2% long-term target clamming it is transitory. Stil

48. Slide 48: Appendix: Credit Quality

    Appendix Credit Quality

49. Slide 49: Gross Impaired Loan Formations

    Gross Impaired Loan Formations By Business Segment Highlights GIL Formations1: $MM and Ratios2  Gross impaired loan formations 24 23 remained low, reflecting: – The impact of support $1,783 $1,708 15 16 programs 14 bps – Customer resilience $40 / 5 bps $217 / 32 bps – The continued economic recover

50. Slide 50: Gross Impaired Loans (GIL)

    Gross Impaired Loans (GIL) By Business Segment Highlights GIL1: $MM and Ratios2  Gross impaired loans decreased 51 quarter-over-quarter, reflecting: 47 – Resolutions outpacing formations in the Canadian 42 42 and U.S. consumer lending $3,606 $3,821 portfolios $343 / 52 bps 38 bps $3,157 – The impac

51. Slide 51: Credit Quality

    Credit Quality Net impaired loans and PCL ratios (bps) 100 Q1 2021 56 52 50 45 31 46 48 46 38 39 Q2 2021 32 43 41 28 39 38 37 34 34 37 33 Q1 2021 17 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 IFRS IFRS 9 1 Q2 2021 -21 Net impaired loans as a % of net loans and acceptances (bps) Provision

52. Slide 52: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) 1,2 Impaired and Performing Highlights PCL ($MM) Q2/20 Q1/21 Q2/21  Impaired PCL remained at low levels, decreasing $84 million quarter-over-quarter. Total Bank 3,221 316 (373) primarily reflected in: Impaired 970 469 385 – The U.S. consumer lending portfolios Perf

53. Slide 53: Canadian Personal Banking

    Canadian Personal Banking Canadian Personal Banking (Q2/21) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%)  Gross impaired loans Residential Mortgages 220.5 299 0.14 decreased quarter-over- Home Equity Lines of Credit (HELOC) 97.7 154 0.16 quarter Indirect Auto 27.4 56 0.20 Credit Cards 14.5 8

54. Slide 54: Canadian Real Estate Secured Lending Portfolio

    Canadian Real Estate Secured Lending Portfolio Highlights (Q2 2021) Quarterly Portfolio Volumes ($B) $297 $300 $308 $312 Canadian RESL credit quality remained strong Uninsured 71% 72% 73% 74% 75% Insured  Uninsured and insured portfolio loan-to- 29% 28% 27% 26% 25% value rates stable Q2/20 Q3/20 Q4

55. Slide 55: Canadian Commercial and Wholesale Banking

    Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q2/21) Gross Loans/ GIL GIL/Loans  Quarter-over-quarter gross BAs ($B) ($MM) (%) impaired loan increase largely Commercial Banking1 87.9 495 0.56 reflected in: Wholesale 59.8 69 0.12 – The Wholesale segm

56. Slide 56: U.S. Personal Banking (USD)

    U.S. Personal Banking (USD) Highlights U.S. Personal Banking1 (Q2/21)  Gross impaired loans Gross Loans GIL GIL/Loans decreased quarter-over- ($B) ($MM) (%) quarter Residential Mortgages 28.1 335 1.19 Home Equity Lines of Credit (HELOC)2 7.5 294 3.91 Indirect Auto 24.6 179 0.73 Credit Cards 12.1 13

57. Slide 57: U.S. Commercial Banking (USD)

    U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking1 (Q2/21) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) decreased quarter-over- Commercial Real Estate (CRE) 25.6 144 0.56 quarter largely related to the Non-residential Real Estate 17.8 105 0.59 Commercial & Indu

58. Slide 58: Investor Relations Contacts

    Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 58

TD Bank Group — Q2 2021 Earnings Presentation on 6ix