Toronto-dominion Bank · TSX:TD

Toronto-dominion Bank — TD Bank Group — Q2 2020 Earnings Presentation

63 slides from Toronto-dominion Bank's earnings presentation, 2020

  1. Slide 1: TD Bank Group Investor Presentation Q2 2020

    TD Bank Group Investor Presentation Q2 2020

  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 6th largest bank by Total Assets1 6th largest bank by Market Cap1 TD's Response to COVID-19 2 We're in this together and are supporting our customers, communities and colleagues through this challenging time. Q2 2020 Financial Results 3 For the t

  4. 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  Property, casualty, life and health insurance U.S. Retail Q2 20201 Canadian U.S. (C$) Retail

  5. Slide 5: 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

  6. Slide 6: Top 10 North American Bank

    Top 10 North American Bank Canadian North American Q2 2020 (C$ except otherwise noted) TD Bank Group Ranking4 Ranking5 Total assets $1,674B 2nd 6th Total deposits $1,078B 1st 5th Market capitalization $104.9B 2nd 6th Reported net income (trailing four quarters) $10.6B 2nd 6th Adjusted net income1 (t

  7. Slide 7: Diversified Business Mix

    Diversified Business Mix Three Key Business Lines Fiscal 2019 Reported Earnings Mix1  Canadian Retail Robust retail banking platform in Canada with proven performance  U.S. Retail Top 10 bank4 in the U.S. with significant organic growth opportunities U.S. Retail2 31%  Wholesale Banking North Amer

  8. Slide 8: 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 • Acquisition of Chrysler Financial auto • Acquisition of Epoc

  9. Slide 9: Connected Experiences

    Connected Experiences Consistent Strategy Q2 2020 Highlights How we compete:  Enabling seamless interactions 5.7M between customers and the 14.3M 3.6M Active Active Digital Active U.S. entire organization Canadian Mobile Users2 Customers1 Mobile Users2  Leveraging industry leading Experience Desig

  10. Slide 10: The Better Bank

    The Better Bank The Ready Commitment Targeting $1 billion in community giving by 2030, opening doors for a more inclusive and sustainable tomorrow Financial Security Vibrant Planet Connected Communities Better Health Q2 Highlight Introduced the TD Community Resilience Initiative, allocating $25MM to

  11. Slide 11: ESG Performance

    ESG Performance Highlights  TD's low carbon commitment targets $100B, in total, towards initiatives in low-carbon lending, financing, asset management and internal corporate programs by 2030. $43+BN TD has been carbon Insurance discount  Conducting TCFD scenario analysis by testing industry Toward

  12. Slide 12: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 6th largest bank by Market Cap1 TD's Response to COVID-19 2 We're in this together and are supporting our customers, communities and colleagues through this challenging time. Q2 2020 Financial Results 3 For the t

  13. Slide 13: 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

  14. Slide 14: 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

  15. Slide 15: Purpose Driven

    Purpose Driven Colleagues Customers Communities • Our people are our greatest asset • Our customers are at the centre • We are only as successful as the and we are supporting their health of everything we do, and we stand communities in which we live and and well-being with them in this time of stre

  16. Slide 16: Purpose Driven: Customers

    Purpose Driven: Customers Bank-Led Payment Deferral Programs (as at April 30, 2020) Canada U.S. Product Details Accounts1 $CAD1 Accounts1 $USD1 Canada: Up to 6-month payment deferral Real Estate Secured Lending 126,000 $36 billion 7,000 $2.5 billion U.S.: 3-month minimum forbearance Canada: Up to 4-

  17. Slide 17: Forward Focused

    Forward Focused Omni-channel Modernized operations Innovation • Continued to reimagine • Rapidly delivered remote • Developed new ways to create customers' banking experience capabilities to >60,000 colleagues value for our customers • Added COVID-19 functionality to for continued customer support,

  18. Slide 18: Forward Focused: Digital Adoption

    Forward Focused: Digital Adoption Digital Adoption Active Mobile Users Self-Serve Transactions (% of total customers)2 (millions)3 (as % of all financial transactions)4 +220 bps YoY +13.3% YoY +480 bps YoY 57.7 5.7 90.0 Canadian 5.4 56.1 Retail1 55.5 86.7 5.0 85.2 Q2/19 Q1/20 Q2/20 Q2/19 Q1/20 Q2/20

  19. Slide 19: Proven Business Model

    Proven Business Model Diversification and scale Balance sheet strength Safety, security and trust • Reported earnings of $1.5B • Common Equity Tier 1 ratio of • Standing by our customers while (adjusted $1.6B)1 11.0%, above regulatory remaining within our risk appetite requirements • Reported EPS $0

  20. Slide 20: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 6th largest bank by Market Cap1 TD's Response to COVID-19 2 We're in this together and are supporting our customers, communities and colleagues through this challenging time. Q2 2020 Financial Results 3 For the t

  21. Slide 21: Q2 2020 Highlights

    Q2 2020 Highlights Total Bank Reported Results (YoY) Financial Highlights ($MM) Reported Q2/20 Q1/20 Q2/19 EPS of $0.80 Revenue 10,528 10,609 10,228  Adjusted1 EPS of $0.85 PCL 3,218 919 633 Expenses 5,121 5,467 5,248 Revenue up 3% Net Income 1,515 2,989 3,172 Diluted EPS ($) 0.80 1.61 1.70 Expense

  22. Slide 22: Q2 2020 Segment Highlights

    Q2 2020 Segment Highlights Canadian Retail  Reported net income was $1,172 million, down 37% YoY, reflecting higher PCL and non-interest expenses, partially offset by revenue growth. Adjusted1 net income was $1,197 million, down 36%.  PCL was $1,153 million, an increase of $762 million QoQ. PCL im

  23. Slide 23: Strong Capital and Liquidity Positions

    Strong Capital and Liquidity Positions Common Equity Tier 1 ratio of 11.0% Common Equity Tier 1 Ratio Q1 2020 CET1 Ratio 11.7%  Internal capital generation includes 19 basis points from a decline in the expected loss shortfall Internal capital generation (earnings less dividends) 20 OSFI transition

  24. Slide 24: High Quality Loan Portfolio

    High Quality Loan Portfolio Balances ($B unless otherwise noted) Q1/20 Q2/20 Canadian Retail Portfolio 437.3 438.7 Personal 354.7 354.1 Residential Mortgages 201.3 202.9 Home Equity Lines of Credit (HELOC) 90.9 91.8 Indirect Auto 25.7 25.4 Credit Cards 18.3 16.0 Other Personal 18.5 18.0 Unsecured Li

  25. Slide 25: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) By Business Segment Highlights PCL1: $MM and Ratios2 $3,221  Provision for credit losses increased across: $374 – All segments $554 – All major asset classes  Primarily related to the ongoing COVID-19 pandemic $1,140 $923 Wholesale $893 $664 $41 $17 Corporate $636

  26. Slide 26: Allowance for Credit Losses (ACL)

    Allowance for Credit Losses (ACL) COVID-19 Impacts ACL1: $B and Ratios2 103 bps Highlights 71 69 71 74 $7.9  Allowance for Credit Losses increased $2.6 billion quarter-over-quarter primarily United States $4.9 $4.9 $5.0 $5.3 62% reflecting higher performing allowances Canada related to the COVID-19

  27. Slide 27: Oil and Gas Exposure

    Oil and Gas Exposure Corporate and Commercial Gross Loans & BAs by Sector ($B) Highlights Investment Grade / Non-Investment Grade:  Oil and Gas Producers and Services Producers 8% 92% $4.8 continue to represent less than 1% of total gross loans and acceptances 1 – Producers have been taking a numbe

  28. Slide 28: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 6th largest bank by Market Cap1 TD's Response to COVID-19 2 We're in this together and are supporting our customers, communities and colleagues through this challenging time. Q2 2020 Financial Results 3 For the t

  29. Slide 29: Consistent Earnings Growth

    Consistent Earnings Growth Reported Earnings (C$MM)1 $11,686 $11,334 $10,517 $8,936 $8,024 Wholesale Banking $7,883 U.S. Retail Canadian Retail 2014 2015 2016 2017 2018 2019 1. For the purpose of calculating contribution by each business segment, earnings from the Corporate segment are excluded. 2.

  30. Slide 30: Strong, Consistent Dividend History

    Strong, Consistent Dividend History Dividends Per Share (C$) $3.012 Q2/20: Introduced DRIP discount at 2% Dividend yield: 5.0%1 $0.46 Target payout range: 40%-50% 1. As of Q2/20. Dividend yield is calculated as the dividend per common share divided by the average daily closing stock price in the rel

  31. Slide 31: Solid Total Shareholder Returns

    Solid Total Shareholder Returns Canadian North American TD Bank Group Ranking1 Ranking2 One-Year -20.6% 3rd 6th Three-Year 0.5% 2nd 5th Five-Year 4.8% 2nd 4th Ten-Year 8.3% 1st 2nd Ranked 1st for ten-year total shareholder return3 among Canadian peers. 1. Canadian Peer Ranking based on other 4 big b

  32. Slide 32: Canadian Retail

    Canadian Retail Consistent Strategy Reported Net Income (C$MM) How we compete: $7,183 $6,863  Legendary personal connected $6,525 customer service $5,938 $5,988  Focus on underrepresented products and markets  The power of One TD  Winning culture and team $5,490 $5,938 $6,525 $7,183 $7,421 Highe

  33. Slide 33: Canadian Retail

    Canadian Retail Personal Banking Credit Cards  #1 or #2 market share in most retail products1  #1 card issuer in Canada measured by outstanding card loan  Responding to COVID-19 by with measures including: adapting balances1 branch distribution to enable service continuity, implementing  Dual ca

  34. Slide 34: 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 $2,234 $2,536 $2,007  Differentiated brand as the “human” bank  Productivity initiatives that enhance both the employee and custome

  35. Slide 35: U.S. Retail

    U.S. Retail Personal & Commercial Banking Wealth  Top 10 bank1 with over 9MM customers, operating retail stores in 15 states  Building U.S. wealth capability in the high net worth and private banking and the District of Columbia space  Rated #1 SBA lender in our footprint for third year in a row

  36. Slide 36: Wholesale Banking

    Wholesale Banking Consistent Strategy Net Income (C$MM) How we compete: $1,054 $1,039  Continue to build an integrated North American dealer franchise $920 with global execution capabilities. $873 – In Canada, be the top-ranked investment dealer. – In the U.S., continue to grow client relationships

  37. Slide 37: Wholesale Banking

    Wholesale Banking Positioned for Growth  Lead mandates and awards highlighting TD Securities' objective to build an integrated North American dealer franchise with global execution capabilities are: – Recognized as #1 Canadian FX Services Quality and Share Leader in the Greenwich Associates 2020 Ca

  38. Slide 38: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 6th largest bank by Market Cap1 TD's Response to COVID-19 2 We're in this together and are supporting our customers, communities and colleagues through this challenging time. Q2 2020 Financial Results 3 For the t

  39. Slide 39: TD TLAC Requirements

    TD TLAC Requirements  Canadian D-SIBs will be required to meet TD Regulatory Capital Ratios1,3 their regulatory TLAC requirements by the November 1, 2021 implementation date.  OSFI has stipulated that D-SIBs will be Notional TLAC: 23.3% subject to 2 supervisory ratios: Minimum risk-based TLAC Rati

  40. Slide 40: 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

  41. Slide 41: 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

  42. Slide 42: Robust Liquidity Management

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

  43. Slide 43: Deposit Overview

    Deposit Overview Domestic Leader in Deposits Large base of personal and business deposits3 that make up 72% 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

  44. Slide 44: 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 commercial deposits are TD's primary sources of funds – Customer service business model delivers stable base of “s

  45. Slide 45: 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

  46. Slide 46: 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

  47. Slide 47: TD Global Legislative Covered Bond Program

    TD Global Legislative Covered Bond Program Highlights Cover Pool as at April 30, 2020  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

  48. Slide 48: 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

  49. Slide 49: 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

  50. Slide 50: Appendix: Economic Outlook

    Appendix Economic Outlook

  51. Slide 51: TD Economics Update

    TD Economics Update Global : Mired in An Unprecedented Crisis  The global economy is mired in its steepest contraction on record due to the effects of COVID-19 and subsequent containment measures. We expect global real GDP to contract by 4.8% in 2020.  As shutdowns are lifted, a rebound in activit

  52. Slide 52: Interest Rate Outlook

    Interest Rate Outlook Interest Rates, Canada and U.S.  The Federal Reserve responded to the global pandemic by cutting the federal funds rate to the % effective lower bound and committing to open ended Treasury and MBS purchases. We expect 7 Forecast the Fed to hold rates at the current level until

  53. Slide 53: Appendix: Credit Quality

    Appendix Credit Quality

  54. Slide 54: Gross Impaired Loan Formations

    Gross Impaired Loan Formations By Business Segment Highlights GIL Formations1: $MM and Ratios2 24 24 bps  Gross impaired loan formations 21 22 20 stable quarter-over-quarter at 24 basis points $1,783 $1,689 $1,516 $217 / 32 bps $1,459 $132 / 24 bps $9 / 2 bps $19 / 4 bps $1,340 $818 / 35 bps $838 /

  55. Slide 55: Gross Impaired Loans (GIL)

    Gross Impaired Loans (GIL) By Business Segment Highlights GIL1: $MM and Ratios2  Increase to gross impaired loans 47 bps 48 45 primarily related to: 43 42 – The Canadian Retail and Wholesale segments $3,606 $3,207 – The impact of foreign $3,296 $341 / 43 bps $3,032 exchange $2,945 $142 / 25 bps $27

  56. Slide 56: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) By Business Segment Highlights PCL1: $MM and Ratios2 $3,221  Provision for credit losses increased across: $374 – All segments $554 – All major asset classes  Primarily related to the ongoing COVID-19 pandemic $1,140 $923 Wholesale $893 $664 $41 $17 Corporate $636

  57. Slide 57: Provision for Credit Losses (PCL): Impaired and Performing

    Provision for Credit Losses (PCL) 1,2 Impaired and Performing Highlights PCL ($MM)  Impaired PCL increased quarter-over-quarter Q2/19 Q1/20 Q2/20 driven by: Total Bank 636 923 3,221 – Credit migration in the Wholesale segment, Impaired 596 810 970 largely in the Oil & Gas sector Performing 40 113 2

  58. Slide 58: Canadian Personal Banking

    Canadian Personal Banking Highlights Canadian Personal Banking (Q2/20) Gross Loans ($B) GIL ($MM) GIL/Loans (%)  Gross impaired loans Residential Mortgages 202.9 313 0.15 increased quarter-over- 91.8 187 0.20 Home Equity Lines of Credit (HELOC) quarter largely in the RESL Indirect Auto 25.4 92 0.36

  59. Slide 59: Canadian Real Estate Secured Lending Portfolio

    Canadian Real Estate Secured Lending Portfolio Highlights Quarterly Portfolio Volumes ($B) $288 $292 $293 $297 $283 Canadian RESL credit quality remained strong Uninsured 67% 68% 69% 70% 71%  Uninsured and insured portfolio loan-to- Insured value rates stable 33% 32% 31% 30% 29% Q2/19 Q3/19 Q4/19 Q

  60. Slide 60: Canadian Commercial and Wholesale Banking

    Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q2/20) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) increased in the Wholesale Commercial Banking1 84.6 421 0.50 segment, largely in the Oil & Wholesale 79.7 341 0.43 Gas sector To

  61. Slide 61: U.S. Personal Banking (USD)

    U.S. Personal Banking (USD) Highlights U.S. Personal Banking1 (Q2/20) Gross Loans GIL GIL/Loans  Gross impaired loans and ($B) ($MM) (%) loan-to-value stable quarter- Residential Mortgages 27.8 332 1.19 over-quarter in U.S. Personal Home Equity Lines of Credit (HELOC)2 8.6 337 3.91 Indirect Auto 24

  62. Slide 62: U.S. Commercial Banking (USD)

    U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking1 (Q2/20)  Modest improvement in gross Gross Loans/ GIL GIL/Loans BAs ($B) ($MM) (%) impaired loans quarter-over- Commercial Real Estate (CRE) 26.9 83 0.31 quarter in U.S. Commercial Banking Non-residential Real Estate 19.7 44 0.22 Res

  63. Slide 63: Investor Relations Contacts

    Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 63

TD Bank Group — Q2 2020 Earnings Presentation on 6ix