Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Q2 2022 Earnings Presentation
74 slides from Toronto-dominion Bank's earnings presentation, Dec 6, 2022
Slide 1: TD Bank Group Investor Presentation Q2 2022
TD Bank Group Investor Presentation Q2 2022
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: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 5th largest bank by Market Cap1 Q2 2022 Financial Results 2 For the three months ended April 30, 2022. Proven Performance, Future Growth Opportunities 3 Delivering solid long-term shareholder returns2 Strong Bala
Slide 4: 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
Slide 5: Our Strategy
Our Strategy We're in this together – Anchored by our proven business model and propelled by our forward-focused strategy, we are helping our customers, colleagues and communities thrive in a changing world Proven Business Model Forward Focused Purpose-Driven Deliver consistent earnings growth, Shap
Slide 6: Proven Business Model: TD Snapshot
Proven Business Model: TD Snapshot Diversification and scale, underpinned by a strong risk culture Our Businesses Canadian Retail Personal banking, credit cards and auto finance Small business, commercial banking, merchant solutions and equipment finance Direct investing, advice-based wealth,
Slide 7: Competing in Attractive Markets
Competing in Attractive Markets Country Statistics Country Statistics 10th largest economy W orld’s largest economy Real GDP of C$2.1 trillion Real GDP of US$20 trillion Population of ~38 million Population of ~330 million Canadian Banking System U.S. Banking System One of the soundest
Slide 8: Top North American Bank
Top 10 North American Bank Canadian North American Q2 2022 (C$ except otherwise noted) TD Bank Group Ranking20 Ranking21 Total assets $1,825B 2nd 6th Total deposits $1,184B 1st 5th Market capitalization $167.4B 2nd 5th Reported net income (trailing four quarters) $14.9B 2nd 6th Adjusted net income17
Slide 9: Diversified Business Mix
Diversified Business Mix Three key business lines Q2 2022 Reported Earnings Mix22 Canadian Retail – Robust retail banking platform in Canada with proven performance 23 Canadian U.S. Retail Bank, 29% U.S. Retail – Top 10 bank25 in Retail, 56% the U.S. with attractive growth opportunities Wholes
Slide 10: Growing Platform / North American Scale
Growing Platform / North American Scale 2000-2010: Canadian Leadership, 2011-2015 – Acquiring Assets New Capabilities and Partnerships Accelerating Growth Entry into US • Acquired Chrysler Financial auto • Acquired Epoch (2013) • Announced proposed acquisition of finance portfolio (2011) • Acquired
Slide 11: Forward Focused: First Horizon Acquisition Update
Forward Focused First Horizon Acquisition Update st Horizon Accelerates TD's U.S. Growth Strategy Progress to Date Next Steps • Filed all required regulatory applications in March • Define integration and conversion roadmap with Fed, OCC and OSFI, among others • Continue community outreach sessions
Slide 12: Forward Focused: Shaping the future of banking
Forward Focused Shaping the future of banking Canadian banking app 2022 Model Bank Award for recognized for AI-powered Customer Engagement insights Added Mastercard to offerings in Target's digital and store Our Modernization Journey channels Highest in Dealer Satisfaction among Co-Structuring Advis
Slide 13: Connected Experiences
Connected Experiences Consistent Strategy Q2 2022 Adoption and Recent Awards28 How we compete: Enabling seamless interactions between customers and the 15.6MM 6.7MM 4.4MM entire organization Active Active Active Digital Canadian U.S. Mobile Leveraging our industry-leading Experience Design Cente
Slide 14: Forward Focused: Digital Adoption
Forward Focused: Digital Adoption Digital Adoption Active Mobile Users Self-Serve Transactions (% of total customers)30 (millions)11 (as % of all financial transactions)31 +3 +90 bps YoY +7.5% YoY -40 bps YoY 63.2 6.7 Canadian 6.5 92.0 92.1 62.3 91.6 Retail29 6.2 61.6 Q2/21 Q1/22 Q2/22 Q2/21 Q1/22 Q
Slide 15: Purpose Driven
Purpose Driven Centered on our vision, purpose and shared commitments 15
Slide 16: Our Strategy: ESG
Our Strategy Our Environmental, Social and Governance strategy reflects the commitments we make and is represented by the actions we take together to drive progress. It is embedded in our proven business model, guided by our purpose and inspired by our forward focus. The TD Ready Commitment accelera
Slide 17: Purpose Driven: ESG Highlights
Purpose Driven ESG Highlights Environment Social Governance – Announced our interim target for our operational – Announced a US$100 million equity fund in – Formally established the ESG Centre of Expertise emissions to achieve an absolute reduction in support of minority-owned small businesses in to
Slide 18: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 5th largest bank by Market Cap1 Q2 2022 Financial Results 2 For the three months ended April 30, 2022. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Bala
Slide 19: Q2 2022 Highlights
Q2 2022 Highlights Strong revenue performance EPS of $2.07, up 4% YoY (Adj1 $2.02, down 1%) P&L ($MM) Reported Q2/22 QoQ YoY Revenue up 10% YoY (Adj1 up 8% YoY) Revenue 11,263 0% 10% Reported revenue includes an insurance recovery PCL 27 ($45) +$404 related to litigation32 Impaired 314 ($15) ($67)
Slide 20: Canadian Retail
Canadian Retail Strong revenue growth supported by continued volume momentum Net income up 2% YoY P&L ($MM) Reported Q2/22 QoQ YoY Revenue up 9% YoY Revenue 6,623 (1%) 9% Volume growth, prior year premium rebates in PCL 60 +$27 +$97 insurance and higher fee-based revenue in Impaired 163 +$13 ($28)
Slide 21: U.S. Retail (US$)
U.S. Retail (US$) Delivered solid loan and deposit volumes Net income up 3% YoY (Adj17 down 10% YoY) P&L (US$MM) (except where noted) Reported Q2/22 QoQ YoY Revenue up 12% YoY (Adj17 up 3% YoY) Revenue 2,323 6% 12% Reported revenue includes an insurance recovery related to litigation32 PCL (15) ($
Slide 22: Wholesale
Wholesale Solid performance in Q2 Net income down 6% YoY P&L ($MM) Reported Q2/22 QoQ YoY Revenue up 8% YoY Revenue 1,250 (7%) 8% Higher trading-related revenue, partially offset by Trading-related revenue 680 (6%) 22% lower underwriting fees (TEB)7,37 PCL (9) ($4) +$54 PCL recovery of $9MM Impair
Slide 23: Capital
38 Capital Strong capital and liquidity management supporting future growth Common Equity Tier 1 ratio of 14.7% Common Equity Tier 1 Ratio Q1 2022 CET 1 Ratio 15.2% DRIP discount introduced at 2% Internal capital generation 45 Increase in RWA (net of FX)39 (50) Risk-Weighted Assets up 3.9% QoQ Rep
Slide 24: Gross Lending Portfolio
Gross Lending Portfolio Including B/As Balances ($B unless otherwise noted) Q1/22 Q2/22 Canadian Retail Portfolio 499.0 511.0 Personal 400.5 409.1 Residential Mortgages 234.9 239.3 Home Equity Lines of Credit (HELOC) 103.9 107.9 Indirect Auto 27.2 26.9 Credit Cards 15.0 15.6 Other Personal 19.5 19.4
Slide 25: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment Highlights PCL44: $MM and Ratios45 PCL decreased quarter-over-quarter, ($37) $72 reflecting: $2 $23 $21 $27 – Lower impaired PCLs Wholesale ($123) $100 – A larger performing allowance Corporate ($377) $53 $33 $60 ($18) release ($37) U.S. Retail
Slide 26: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) ACL44: $B and Coverage Ratios48 124 126 122 Highlights 103 108 103 97 $9.2 $9.4 93 $8.9 87 bps ACL decreased quarter-over-quarter, 74 $7.9 $8.0 $7.7 $7.3 reflecting improved credit conditions $7.1 $6.9 United States 59% 60% – The release was tempered due to $5.3 5
Slide 27: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 5th largest bank by Market Cap1 Q2 2022 Financial Results 2 For the three months ended April 30, 2022. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Bala
Slide 28: Consistent Earnings Growth
Consistent Earnings Growth Reported Earnings (C$MM)51 5-year CAGR52 $14,298 Reported Earnings: 9.9% (9.5% adjusted17) Reported EPS: 10.6% (10.2% adjusted17) $11,334 $11,686 $11,895 $10,517 $8,936 Corporate Wholesale Banking U.S. Retail Canadian Retail 2016 2017 2018 2019 2020 53 2021 28
Slide 29: Strong, Consistent Dividend History
Strong, Consistent Dividend History 54 Dividends Per Share (C$) $3.56 164-year continuous dividend history Dividend yield: 3.6%7 Target payout $0.22 range: 40%-50% Annual Dividend 29
Slide 30: Solid Total Shareholder Returns
Solid Total Shareholder Returns7 Canadian North American TD Bank Group Ranking20 Ranking21 One-Year 13.9% 4th 4th Three-Year 11.2% 3rd 4th Five-Year 12.0% 1st 2nd Ten-Year 12.5% 3rd 7th 30
Slide 31: Canadian Retail
Canadian Retail Consistent Strategy Reported Net Income (C$MM) How we compete: $8,481 Legendary personal connected $7,183 $6,525 $6,863 customer service $6,026 Focus on underrepresented products and markets The power of One TD W inning culture and team $6,525 $7,183 $7,421 $6,124 $8,481 High
Slide 32: Canadian Retail
Canadian Retail Personal Banking Business Banking #1 or #2 market share in most retail products14 #2 in Business Banking deposit and loan market share14 Canadian branch network continues to lead the market in total hours $11.6B of Canada Emergency Business Account (CEBA) relief loans open, w
Slide 33: U.S. Retail
U.S. Retail Consistent Strategy Reported Net Income (US$MM) How we compete: $3,750 $3,967 Legendary service and convenience $3,253 Grow and deepen customer relationships $2,536 Differentiated brand as the “human” bank $2,278 Productivity initiatives that enhance both the customer and colleag
Slide 34: U.S. Retail
U.S. Retail Personal & Commercial Banking Credit Cards Top 10 bank66 with over 9MM customers, operating retail stores in 15 Private label and co-brand credit card offering for U.S. customers of states and the District of Columbia regional and nationwide retail partners, including Target and Nord
Slide 35: Wholesale Banking
Wholesale Banking Consistent Strategy Net Income (C$MM) Our Strategic Objectives: $1,570 Continue to build an integrated North American dealer franchise $1,418 with global reach – In Canada, we will be the top-ranked investment dealer. $1,039 $1,054 – In the U.S., we will deliver value and trusted
Slide 36: Wholesale Banking: Positioned for Growth
Wholesale Banking Positioned for Growth Growing our Environmental, Social and Governance (ESG) capabilities as we bring advice, thought-leadership and products to our clients: – Co-structuring Advisor and Joint Lead Manager on Government of Canada's $5 billion inaugural Green Bond – Lead Left Plac
Slide 37: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 5th largest bank by Market Cap1 Q2 2022 Financial Results 2 For the three months ended April 30, 2022. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Bala
Slide 38: TD TLAC Requirements
TD TLAC Requirements Canadian D-SIBs were required to meet their regulatory TLAC requirements by November 1, 2021. OSFI has stipulated that D-SIBs will be subject to 2 supervisory ratios: 1. Minimum risk-based TLAC ratio: 24.00% (21.50% + 2.50% Domestic Stability Buffer ("DSB")68) 2. TLAC levera
Slide 39: Industry-Leading Credit Ratings
Industry-Leading Credit Ratings Issuer Ratings19 Rating Agencies Senior Debt Ratings74 Outlook Moody's A1 Stable S&P A Stable DBRS AA Stable Ratings vs. Peer Group19 Moody’s Senior Debt75 / HoldCo76 Rating S&P Senior Debt75 / HoldCo76 Rating Aa1 AA+ Aa2 AA Aa3 AA- A1 A+ A2 A A3 A- Baa1 BBB+ TD Canad
Slide 40: Leading Non-Common Equity Capital Ratings
Leading Non-Common Equity Capital Ratings NVCC Tier 2 Subordinated Debt Ratings19 Moody’s S&P A2 A A3 A- Baa1 BBB+ Baa2 BBB Baa3 BBB- Ba1 BB+ TD CanadianPeers Peers 20 TD Canadian Peers TD Canadian TD Canadian Peers20 Additional Tier 1 NVCC LRCN and Preferred Share Ratings74 Moody’s S&P A2 A A3 A- B
Slide 41: 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
Slide 42: Deposit Overview
Deposit Overview Leader in Deposits Large base of personal and business deposits77 that make up 75% of the Bank's total funding TD Canada Trust ("TDCT") ranked #1 in Total Personal Deposits78 – legendary customer service and the power of One TD U.S. Retail is a top 1066 bank in the U.S. with 9.6
Slide 43: Low Risk, Deposit Rich Balance Sheet
Low Risk, Deposit Rich Balance Sheet60 Large base of stable retail and commercial Maturity Profile83,84 (C$B) (To first par redemption date) deposits 50 Issuance Maturity Personal and business deposits are TD's primary sources of funds 40 – Customer service business model delivers stable base of “
Slide 44: Wholesale Term Debt Composition
Wholesale Term Debt Composition62 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 establi
Slide 45: 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
Slide 46: TD Global Legislative Covered Bond Program
TD Global Legislative Covered Bond Program Highlights Cover Pool as at April 30, 2022 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
Slide 47: 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 48: 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, 201894. Unlike other jurisdictions, Can
Slide 49: Appendix: Economic Outlook
Appendix Economic Outlook
Slide 50: TD Economics Update
TD Economics Update97 Global Outlook: War in Ukraine tops downside risks to global outlook In addition to the humanitarian crisis, the war in Ukraine presents a meaningful downside risk to the global economic outlook. Uncertainty is compounded by the rapid escalation in energy prices and increasin
Slide 51: Interest Rate Outlook
Interest Rate Outlook98 Interest Rates, Canada and U.S. % The Federal Reserve raised the federal 7 Forecast funds rate target to the 0.75% to 1.00% range in May and is set to begin its U.S. Federal 6 Funds Rate Quantitative Tightening (QT) program. We anticipate two more 50 basis point hikes in ne
Slide 52: Appendix: Credit Quality
Appendix Credit Quality
Slide 53: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment Highlights GIL Formations99: $MM and Ratios100 Gross impaired loan formations decreased 4 basis points quarter- over-quarter, reflecting: – Higher prior quarter formations 14 16 in U.S. Commercial, largely 11 11 12 bps related to government guaran
Slide 54: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment GIL101: $MM and Ratios102 Highlights Gross impaired loans decreased 3 basis points 38 quarter-over-quarter to a new 35 32 33 cyclical low, largely reflecting: 30 bps – Further resolution of PPP loans in the U.S. $2,803 Commercial portfolio $69 / 12 bp
Slide 55: Credit Quality
Credit Quality Net impaired loans and PCL ratios (bps) 100 Net impaired loans as a % of net loans and acceptances (bps) Provision for credit losses as a % of net average loans and acceptances (bps) 56 52 50 46 48 46 45 39 38 43 32 41 24 25 39 38 37 34 34 37 Q2 2022 33 22 4 Q2 2022 1 IFRS IFRS 9 103
Slide 56: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL)44,104 Impaired and Performing Highlights PCL ($MM) Q2/21 Q1/22 Q2/22 Impaired PCL remained at cyclically low levels Total Bank (377) 72 27 Impaired 381 329 314 The performing PCL recovery reflects Performing (758) (257) (287) allowance releases across all segmen
Slide 57: Canadian Personal Banking
Canadian Personal Banking Canadian Personal Banking (Q2/22) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%) Gross impaired loans Residential Mortgages 239.3 187 0.08 decreased quarter-over- Home Equity Lines of Credit (HELOC) 107.9 96 0.09 quarter, largely reflected in the Indirect Auto 26.9 6
Slide 58: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Highlights (Q2 2022) Quarterly Portfolio Volumes ($B) $319 $328 $334 $340 $348 Canadian RESL credit quality remained strong Uninsured Insured 75% 76% 77% 78% 79% Uninsured and insured portfolio loan-to value rates stable 25% 24% 23% 22% 21% Q2/21 Q3/2
Slide 59: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q2/22) Gross Loans/ GIL GIL/Loans Continued good asset quality BAs ($B) ($MM) (%) in Canadian Commercial and Commercial Banking107 101.9 426 0.42 Wholesale Banking. Wholesale 68.4 7 0.01 Total Canadian
Slide 60: U.S. Personal Banking (USD)
U.S. Personal Banking (USD) Highlights U.S. Personal Banking111 (Q2/22) Gross impaired loans Gross Loans GIL GIL/Loans decreased quarter-over- ($B) ($MM) (%) quarter Residential Mortgages 31.6 362 1.14 Home Equity Lines of Credit (HELOC)41 6.8 268 3.92 Indirect Auto 25.9 147 0.56 Credit Cards 12.8
Slide 61: U.S. Commercial Banking (USD)
U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking111 (Q2/22) Gross Loans/ GIL GIL/Loans Gross impaired loans BAs ($B) ($MM) (%) decreased quarter-over- Commercial Real Estate (CRE) 24.3 73 0.30 quarter, largely reflecting: Non-residential Real Estate 17.0 60 0.35 – Further resolutio
Slide 62: Appendix: Additional Information
Appendix Additional Information
Slide 63: Q2 2022: PTPP & Operating Leverage
Q2 2022: PTPP17,114 & Operating Leverage17,115 Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change Q2 2022 Q1 2022 Q2 2021 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 11,263 6,033 11,281 5,967 10,228 5,729 Page 2, L3 &
Slide 64: Endnotes
Endnotes
Slide 65: Endnotes
Endnotes 1. See slide 8. 2. See slide 30. 3. See slide 39. 4. Q2 2022 is the quarter comprising the period from February 1, 2022 to April 30, 2022. 5. Deposits based on total of average personal and business deposits during the quarter. U.S. Retail includes Schwab Insured Deposit Accounts (IDAs), Ca
Slide 66: Endnotes
Endnotes 17. The Bank prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), the current generally accepted accounting principles (GAAP), and refers to results prepared in accordance with IFRS as the “reported” results. The Bank also uti
Slide 67: Endnotes
Endnotes 28. Enterprise active digital users include Canadian Personal and Commercial Banking, TD WebBroker, MBNA active users, TD Insurance active users, and U.S. Retail. Canadian active mobile users based on Canadian Personal and Commercial Banking. U.S. active mobile users based on U.S. Retail an
Slide 68: Endnotes
Endnotes 39. FX impact on RWA has a negligible impact on the CET 1 ratio, because the CET 1 ratio is currency hedged. 40. Excludes Schwab's unrealized losses on FVOCI securities. 41. U.S. HELOC includes Home Equity Lines of Credit and Home Equity Loans. 42. Includes acquired credit impaired loans an
Slide 69: Endnotes
Endnotes 58. As at February 28, 2022. 59. "Managed Money Advisory Service (as of June 30, 2021)" Investor Economics, Fall 2021. 60. "The Top 40 Money Managers (as of December 31, 2021)" Benefits Canada, May 2022. 61. "The 2022 Globe and Mail digital broker ranking: Does the zero-commission revolutio
Slide 70: Endnotes
Endnotes 73. Includes par value of outstanding senior unsecured long-term debt issued after September 23, 2018 with a remaining term to maturity of greater than 1 year. Senior unsecured long-term debt with original term to maturity less than 400 days will not be eligible for bail-in and would not qu
Slide 71: Endnotes
Endnotes 91. Ratings by Moody’s and DBRS, respectively, as at April 30, 2022. 92. The Covered Bond Label Foundation and its affiliates are not associated with and do not approve or endorse TD's covered bond products. 93. Current Loan to Value is calculated with the Teranet-National Bank House Price
Slide 72: Endnotes
Endnotes 106.The territories are included as follows: Yukon is included in British Columbia; Nunavut is included in Ontario; and Northwest Territories is included in the Prairies region. 107.Includes Small Business Banking and Business Credit Cards. 108.Consumer includes: Food, Beverage and Tobacco;
Slide 73: Endnotes
Endnotes 118.Adjusts for the impact of the accounting requirements for the U.S. strategic card portfolio. Subtracting the partners' share of the PCL removes a source of volatility that is not reflective of the Bank's underlying economic exposure. This can be done by adding Corporate PCL (which consi
Slide 74: Investor Relations Contacts
Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 74