Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — The Toronto-Dominion Bank — Q3 2023 Earnings Presentation
55 slides from Toronto-dominion Bank's earnings presentation, Aug 24, 2023
Slide 1: Quarterly Results Presentation
Quarterly Results Presentation TD Bank Group Q3 2023 AUGUST 24, 2023
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: Our Strategy
Our Strategy Proven Business Model Forward-Focused Purpose-Driven Leading Customer Reimagining Financial Relentless Customer Franchises Services Focus Strong Balance Sheet Delivering OneTD Diverse Talent and with Conservative Risk Inclusive Culture Appetite Consistent and Investing for Growth Creati
Slide 4: Proven Business Model
Proven Business Model Diversification and scale, underpinned by a strong risk culture ▪ Reported earnings of $3.0B, down 8% (adjusted1 $3.7B, down 2%) ▪ Reported EPS2 of $1.57, down 10% (adjusted1 $1.99, down 5%) ▪ In our retail businesses, strong loan growth and revenue performance ▪ Common Equity
Slide 5: Proven Business Model: Strong Customer Activity
Proven Business Model Strong Customer Activity Canadian Personal and Commercial U.S. Retail Average Volumes Global Wealth Assets2 Banking Average Volumes ($B) (US$B)1 ($B) 600 8% 300 1,200 4% 0% 2% 500 250 5% 1,000 114 105 110 400 91 200 108 104 800 607 161 406 167 425 158 574 568 300 375 150 94 600
Slide 6: Forward Focused
Forward Focused Shaping the future of banking #1 in Customer Satisfaction with Mobile Banking Apps1 Best Consumer Digital Bank in Canada Best Transformation & Innovation in North America Unique relationship between TD and the Toronto Blue Jays Joint bookrunner on Acelyrin's TD Auto Finance U.S. rank
Slide 7: Forward Focused: Digital Metrics
Forward Focused: Digital Metrics Canadian P&C1 U.S. Retail1 Innovating for our Digital Adoption (% of total customers)2 Customers +150 bps +160 bps 54.4 ▪ For Canadian mobile and online 61.8 63.3 52.8 banking, enhanced digital appointment booking by providing increased access points and the Q3/22 Q3
Slide 8: Purpose Driven: ESG Highlights
Purpose Driven: ESG Highlights Environment Social Governance ▪ Expanded Scope 3 financed emissions ▪ Announced TD Pathways to Economic ▪ Continued to educate Board of Directors and footprint disclosure to include the Inclusion, our new social framework focusing Senior Executive Team (SET) on ESG- au
Slide 9: Purpose Driven
Purpose Driven Centered on our vision, purpose and shared commitments 100 Score in 2023 Disability Announced first cohort of Equality Index for 9th recipients of the TD Scholarship consecutive year for Indigenous Peoples Recognized as a certified Great Place to Work in both Canada and the U.S. 9
Slide 10: Q3 2023 Highlights
Q3 2023 Highlights TD's diversified business model continues to deliver EPS of $1.57, down 10% YoY P&L ($MM) ▪ Adjusted1 EPS of $1.99, down 5% YoY Reported Q3/23 QoQ YoY Revenue 12,779 3% 17% Revenue up 17% YoY (Adj1 up 12% YoY) PCL 766 +$167 +$415 ▪ Reported revenue reflects a lower net loss from E
Slide 11: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strong results on continued loan and deposit growth P&L ($MM) Reported Q3/23 QoQ YoY Net income down 1% YoY Revenue 4,570 4% 7% PCL 379 +$132 +$209 Revenue up 7% YoY Impaired 285 +$51 +$143 ▪ Volume growth and higher margins Performing 94 +$81 +$66 ▪ Loan volum
Slide 12: U.S. Retail
U.S. Retail Strong loan growth and resilient personal and business deposits P&L (US$MM) (except where noted) Reported Q3/23 QoQ YoY Net income down 12% YoY (Adj1 down 9% YoY) Revenue 2,642 0% 10% Revenue up 10% YoY PCL 185 +$45 +$102 Impaired 193 +$56 +$88 ▪ Higher deposit margins and loan volumes a
Slide 13: Wealth Management & Insurance
Wealth Management & Insurance Strong operating momentum P&L ($MM) Reported Q3/23 QoQ YoY Net income down 12% YoY Revenue 2,779 2% 1% Revenue up 1% YoY PCL 0 -$1 - ▪ Higher insurance volumes, fee-based revenue in Insurance Claims 923 15% 11% wealth and investment income in insurance, partially Expens
Slide 14: Wholesale Banking
Wholesale Banking Strong performance and growth, including TD Cowen P&L ($MM) Net income flat YoY (Adj1 up 39% YoY) Reported Q3/23 QoQ YoY Revenue 1,568 11% 46% Revenue up 46% YoY Trading-related revenue 626 30% 14% (TEB)3,4 ▪ Reflects the inclusion of TD Cowen PCL 25 +$13 $0 ▪ Higher equity commiss
Slide 15: Corporate Segment
Corporate Segment P&L ($MM) Reported Q3/23 Q2/23 Q3/22 Reported net loss of $782MM Net Income (Loss) (782) (399) (752) ▪ Adjusted1 loss of $182MM Adjustments for items of note Amortization of acquired intangibles2 88 79 58 Acquisition and integration charges related 54 30 23 to the Schwab transactio
Slide 16: Capital
1 Capital Strong capital and liquidity management supporting future growth Common Equity Tier 1 Ratio Q2 2023 CET 1 Ratio 15.3% Common Equity Tier 1 ratio of 15.2% Internal capital generation 31 Increase in RWA (excluding impact of FX and TD (20) Cowen integration)2 Risk-Weighted Assets down 0.8% Qo
Slide 17: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment GIL Formations1: $MM and Ratios2 Highlights 18 bps ▪ Gross impaired loan formations 14 16 increased 4 basis points quarter- 12 14 over-quarter, driven by – The Commercial and Wholesale lending portfolios $1,599 – Some further normalization of $55 /
Slide 18: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment GIL1: $MM and Ratios2 Highlights 33 bps ▪ Gross impaired loans 28 29 30 30 increased 3 basis points quarter-over-quarter, largely recorded in – The Commercial and $2,980 Wholesale lending $2,659 $4 / 5 bps portfolios across varying $2,503 $2,591 $5 / 7
Slide 19: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment PCL1: $MM and Ratios2 $766 Highlights $690 $617 ▪ PCL increase quarter-over- Canadian Personal & Commercial Banking $599 quarter, largely reflected in: U.S. Retail $379 – Canadian Personal & $327 Corporate $229 Commercial Banking $247 Wholesale B
Slide 20: Provision for Credit Losses (PCL): Impaired and Performing
Provision for Credit Losses (PCL) Impaired and Performing PCL1,2 ($MM) Highlights Q3/22 Q2/23 Q3/23 ▪ Impaired PCL quarter-over- Total Bank 351 599 766 quarter increase largely Impaired 340 551 663 reflected in the Commercial lending portfolios across Performing 11 48 103 varying industries Canadian
Slide 21: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) ACL1: $B and Coverage Ratios2 124 126 122 Highlights 108 103 103 97 93 74 87 85 86 86 87 87 bps ▪ ACL increased $127 million $9.2 $9.4 $8.9 quarter-over-quarter, related to: $7.9 $8.0 $7.7 $7.8 $7.3 $7.1 $6.9 $6.9 $7.4 $7.5 $7.6 – Credit migration in the United Stat
Slide 22: Appendix
Appendix 22
Slide 23: Q3 2023: Items of Note
Q3 2023: Items of Note Revenue/ ($MM) EPS ($)1 Segment Expense Line Item2 Pre Tax After Tax Reported net income and EPS (diluted) 2,963 1.57 Items of note Amortization of acquired intangibles3 88 75 0.04 Corporate Page 4, L13, L23 & L35 Acquisition and integration charges related to the 54 44 0.02 C
Slide 24: U.S. Strategic Card Portfolio: Accounting
U.S. Strategic Card Portfolio: Accounting Illustrative Example Values below are shown for illustrative purposes only. The percent share is representative of the agreements with the retailer card partners, but the exact split differs by partner. Illustrative Example $MM Credit Card Portfolio 1,000 Me
Slide 25: Q3 2023: PTPP & Operating Leverage
1,2,3 1,4 Q3 2023: PTPP & Operating Leverage Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change Q3 2023 Q2 2023 Q3 2022 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 12,779 7,582 12,366 6,987 10,925 6,096 Page 2, L3& L6
Slide 26: Net Interest Income Sensitivity (NIIS)
Net Interest Income Sensitivity (NIIS) Strong deposit base and disciplined ALM management ▪ 25 bps increase in short-term interest rates ▪ 100 bps change in interest rates across the – $143MM increase in NII over a 12-month period from a curve 25 bps rise in short rates (25 bps hike from each of – 1
Slide 27: Termination of First Horizon Transaction
Termination of First Horizon Transaction Related Life-to-Date Pre-tax Gain (Loss), $MM Q3 2023 Financial Notes Q3 2023 Statement Line ▪ At the time of the merger announcement in Feb. '22, TD invested US$494MM in non-voting FHN preferred stock ▪ In Q3'23, these preferred shares were converted into ~1
Slide 28: Well-Diversified Deposit Base
Well-Diversified Deposit Base Deposit Concentration by Top Depositors $481B $303B $115B $900B 28% 18% 12% 6% 2% 2% 3% 3% 5% 2% 3% 4% CAD P&C + WM&I U.S. Retail 1 Wholesale Banking Total Bank 2 1, 3 Top 5 Top 10 Top 20 Total Business Deposit Concentration by Industry4, $B Insured / Secured Deposits,
Slide 29: Canadian Personal & Commercial Banking: Volumes, Margins and Efficiency
Canadian Personal & Commercial Banking Volumes, Margins and Efficiency Net Interest Margin (NIM) Average Loans $B1 2.80% 520 524 527 539 511 2.74% 2.74% 2.70% 105 107 110 112 114 2.59% 406 413 414 415 425 Q3/22 Q4/22 Q1/23 Q2/23 Q2/23 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Personal Business Efficiency Ratio
Slide 30: U.S. Retail: Volumes, Margins and Efficiency
U.S. Retail Volumes, Margins and Efficiency NII and NIM1,2 US$B3 Average Loans US$B3 175 179 183 3.13% 3.29% 3.25% 166 170 3.00% 2.62% 90 93 94 86 87 2,220 2,349 2,241 2,157 1,905 80 83 85 87 89 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 NII 2,4 NIM 2,4 Personal Business Efficiency
Slide 31: U.S. Retail: Wealth Assets and Schwab EPU
U.S. Retail Wealth Assets and Schwab EPU TD Wealth Assets US$B Schwab1 – Q3 2023 TD’s share of Schwab’s net income was C$182MM on a 37 reported basis, of which C$191MM (US$142MM) was recorded in the U.S. Retail segment 36 36 36 ▪ TD's share of Schwab's net income was C$228MM on an adjusted basis2 35
Slide 32: Schwab Equity Pickup
Schwab Equity Pickup Q3 2023 Reconciliation U.S. Retail P&L ($MM)1 TDBG Corporate Segment $C $US Reported Schwab Equity Pickup2 182 191 142 (9) Amortization of Intangibles3 30 0 0 30 Acquisition and Integration Charges3,4 16 0 0 16 Adjusted Schwab Equity Pickup5 228 191 142 37 Financial Statement Re
Slide 33: Wealth Management & Insurance: Volumes, Margins and Efficiency
Wealth Management & Insurance Volumes, Margins and Efficiency Insurance Premiums ($MM) Average Loans $B 1,527 1,658 7.4 1,428 1,316 7.1 1,188 6.7 6.5 6.4 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Efficiency Ratio Average Deposits $B 41.2 38.8 35.8 32.4 30.0 Q3/22 Q4/22 Q1/23 Q2/23
Slide 34: Wealth Management & Insurance
Wealth Management & Insurance Wealth Revenue $MM Wealth Assets $B 1,600 600 559 1,350 1,344 1,339 1,323 541 549 1,278 526 517 207 217 218 186 1,200 186 414 422 421 154 500 408 397 170 159 145 172 800 393 400 362 360 400 351 328 971 957 962 947 982 0 300 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q3/22 Q4/22 Q1/2
Slide 35: Wholesale Banking
Wholesale Banking Revenue Loans1 Q3 2023 Q3 2023 -3% 5% 32% 41% $1.6B $93.8B 62% 63% Corporate and Canada Global Markets Other2 United States International Investment Banking 35
Slide 36: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Period-End Balances ($B unless otherwise noted) Q2/23 Q3/23 Canadian Personal & Commercial Portfolio 528.8 544.2 Personal 418.9 432.3 Residential Mortgages 247.7 256.5 Home Equity Lines of Credit (HELOC) 114.4 117.0 Indirect Auto 27.6 28.3 Credit Cards 17.8 18.7
Slide 37: Commercial Real Estate (CRE)
Commercial Real Estate (CRE) Commercial Real Estate Portfolio Overview: Highlights $91B ▪ Commercial Real Estate represents $91B or 10% of Total Bank gross loans and acceptances1 Office Retail – Portfolio is well diversified across 11% 17% geographies and sub segments Other – 57% of CRE portfolio in
Slide 38: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Quarterly Portfolio Volumes ($B) Highlights Canadian RESL credit quality remained $357 $360 $359 $363 $374 strong Uninsured 80% 80% 81% 81% 82% ▪ Uninsured average Bureau score3 of Insured 793, stable quarter-over-quarter ▪ Less than 1% of the RESL port
Slide 39: Canadian Personal Banking
Canadian Personal Banking Canadian Personal Banking (Q3/23) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%) ▪ Gross impaired loans Residential Mortgages 256.5 178 0.07 increased quarter-over- Home Equity Lines of Credit (HELOC) 117.0 148 0.13 quarter, reflective of Indirect Auto 28.3 85 0.30 – S
Slide 40: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Canadian Commercial and Wholesale Banking (Q3/23) Highlights Gross Loans/ GIL GIL/Loans BAs ($B) ($MM) (%) ▪ Gross impaired loans Commercial Banking1 111.9 743 0.66 increased quarter-over- Wholesale Banking 94.1 86 0.09 quarter primarily related to a few bor
Slide 41: U.S. Personal Banking
U.S. Personal Banking U.S. Personal Banking1 (Q3/23) Highlights Gross Loans GIL GIL/Loans In USD unless otherwise specified ($B) ($MM) (%) ▪ Gross impaired loans Residential Mortgages 39.3 332 0.84 increased quarter-over- Home Equity Lines of Credit (HELOC)2 7.5 174 2.33 quarter, reflective of Indir
Slide 42: U.S. Commercial Banking
U.S. Commercial Banking U.S. Commercial Banking1 (Q3/23) Highlights Gross Loans/ GIL GIL/Loans In USD unless otherwise specified BAs ($B) ($MM) (%) ▪ Gross impaired loans Commercial Real Estate (CRE) 28.3 95 0.34 increased quarter-over- Non-residential Real Estate 19.9 60 0.30 quarter primarily rela
Slide 43: Endnotes on Slides 4-6
Endnotes on Slides 4-6 Slide 4 1. 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” resul
Slide 44: Endnotes on Slides 7-10
Endnotes on Slides 7-10 Slide 7 1. Canadian Personal and Commercial: based on Canadian Personal & Small Business banking. U.S. Retail: based on U.S. Retail and Small Business banking. 2. Active digital users as a percentage of total customer base. Canadian Personal & Small Business Banking excludes
Slide 45: Endnotes on Slides 11-14
Endnotes on Slides 11-14 Slide 11 1. Please refer to Slide 4, Endnote 1. 2. Net interest margin (NIM) is calculated by dividing net interest income by average interest-earning assets. Average interest-earning assets used in the calculation of NIM is a non-GAAP financial measure. NIM and average inte
Slide 46: Endnotes on Slide 15
Endnotes on Slide 15 Slide 15 1. Please refer to Slide 4, Endnote 1. 2. Amortization of acquired intangibles relates to intangibles acquired as a result of asset acquisitions and business combinations, including the after-tax amounts for amortization of acquired intangibles relating to the share of
Slide 47: Endnotes on Slides 16-20
Endnotes on Slides 16-20 Slide 16 1. Capital and liquidity measures on slide 16 are calculated in accordance with OSFI's Capital Adequacy Requirements, Leverage Requirements, and Liquidity Adequacy Requirements guidelines. 2. FX impact on RWA has a negligible impact on the CET 1 ratio, because the C
Slide 48: Endnotes on Slides 21-23
Endnotes on Slides 21-23 Slide 21 1. Please refer to Slide 19, Endnote 1. 2. Coverage Ratio: Total allowance for credit losses as a % of gross loans and acceptances. 3. U.S. Strategic Cards Partners' Share represents the retailer program partners' share of the U.S. Strategic Cards Portfolio ACL. 4.
Slide 49: Endnotes on Slide 25
Endnotes on Slide 25 Slide 25 1. Please refer to Slide 4, Endnote 1. 2. Pre-tax, pre-provision earnings (PTPP) is a non-GAAP financial measure that is typically calculated by subtracting expenses from revenues. At the total Bank level, TD calculates PTPP as the difference between adjusted revenue (U
Slide 50: Endnotes on Slides 28-30
Endnotes on Slides 28-30 Slide 28 1. U.S. Retail deposits exclude deposits from the Schwab Insured Deposit Agreement. 2. Wholesale deposit concentration by top depositors includes all global transaction banking (i.e., corporate deposits). 3. Total Bank deposit concentration by top deposits does not
Slide 51: Endnotes on Slides 31-32
Endnotes on Slides 31-32 Slide 31 1. TD's share of net income in US$ is the corresponding C$ net income contribution of Schwab to the U.S. Retail segment included in the Bank's Report to Shareholders (www.td.com/investor) for the relevant quarters, divided by the average FX rate. For additional info
Slide 52: Endnotes on Slides 34-37
Endnotes on Slides 34-37 Slide 34 1. Please refer to Slide 13, Endnote 1. Slide 35 1. Average gross lending portfolio includes gross loans and bankers' acceptances relating to Wholesale Banking, excluding letters of credit, cash collateral, credit default swaps, and allowance for credit losses. 2. O
Slide 53: Endnotes on Slides 38-40
Endnotes on Slides 38-40 Slide 38 1. RESL Portfolio Current Loan to Value is calculated with the Teranet-National Bank House Price Index™ and weighted by the total exposure, based on outstanding mortgage balance and/or the HELOC authorized credit limit for both insured and uninsured exposures. The T
Slide 54: Endnotes on Slides 41-42
Endnotes on Slides 41-42 Slide 41 1. Excludes acquired credit-impaired loans. 2. Please refer to Slide 36, Endnote 1. 3. Loan To Value is calculated with the Loan Performance Home Price Index as of July 2023, based on outstanding mortgage balance and/or the HELOC authorized credit limit. FICO Scores
Slide 55: Investor Relations Contacts
Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 55
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