Toronto-dominion Bank · TSX:TD

Toronto-dominion Bank — The Toronto-Dominion Bank — Q2 2023 Earnings Presentation

50 slides from Toronto-dominion Bank's earnings presentation, May 25, 2023

  1. Slide 1: Q2 2023

    Q2 2023 May 25, 2023 Restricted 1

  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: 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

  4. Slide 4: Proven Business Model

    Proven Business Model Diversification and scale, underpinned by a strong risk culture  Reported earnings of $3.4B, down 12% (adjusted1 $3.8B, up 1%)  Reported EPS2 of $1.72, down 17% (adjusted1 $1.94, down 4%)  Strong revenue performance reflecting margin expansion  Strength in core deposits acr

  5. 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 Assets5 Banking Average Volumes ($B) (US$B)4 ($B) 600 8% 300 5% 1,200 2% 3% 500 250 3% 1,000 112 112 101 200 105 400 87 105 800 155 395 170 415 157 548 578 597 300 367 150 95 93

  6. Slide 6: Forward Focused

    Forward Focused Shaping the future of banking Launched TD Clear and TD Flex Pay Partnering with Top Brands Enhanced Existing Card Offerings Restricted 6

  7. Slide 7: Forward Focused: Digital Metrics

    Forward Focused: Digital Metrics Canadian P&C8 U.S. Retail8 Innovating for our Customers 62.0 63.6 53.0 52.7  Launched New To Bank Experience in the Digital Canadian mobile app to welcome new users, Adoption invite them to explore TD products, and +160 bps -30 bps (% of total YoY YoY become custome

  8. 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 automotive, Inclusion, our new social framework focusing Senior Executive Team (SET)

  9. Slide 9: Q2 2023 Highlights

    Q2 2023 Highlights Strong business fundamentals P&L ($MM) EPS of $1.72, down 17% YoY Reported Q2/23 QoQ YoY  Adjusted1 EPS of $1.94, down 4% YoY Revenue 12,366 1% 10% PCL 599 -$91 +$572 Revenue up 10% YoY (Adj1 up 14% YoY) Expenses 6,987 (16%) 16%  Margin growth in the personal and commercial Net

  10. Slide 10: Canadian Personal & Commercial Banking

    Canadian Personal & Commercial Banking Double digit revenue growth P&L ($MM) Net income up 4% YoY Reported Q2/23 QoQ YoY Revenue 4,404 (4%) 11% Revenue up 11% YoY PCL 247 ($80) +$187  Higher margins and volume growth Impaired 234 +$14 +$71  Loan volumes up 6% Performing 13 -$94 +$116  Deposit vol

  11. Slide 11: U.S. Retail

    U.S. Retail Strong quarter despite a challenging environment P&L (US$MM) (except where noted) Net income down 3% YoY (Adj1 up 19% YoY) Reported Q2/23 QoQ YoY Revenue up 14% YoY (Adj1 up 24% YoY) Revenue 2,654 (5%) 14% PCL 140 ($9) +$155  Prior year reported revenue includes an insurance Impaired 13

  12. Slide 12: Wealth Management & Insurance

    Wealth Management & Insurance Solid performance amid challenging market conditions P&L ($MM) Net income down 16% YoY Reported Q2/23 QoQ YoY Revenue 2,735 (6%) 2% Revenue up 2% YoY PCL 1 +$1 +$1  Higher investment income in the insurance business, Insurance Claims 804 (18%) 36% an increase in fair v

  13. Slide 13: Wholesale Banking

    Wholesale Banking Closed acquisition of Cowen P&L ($MM) Net income down 58% YoY (Adj1 down 41% YoY) Reported Q2/23 QoQ YoY Revenue 1,417 5% 13% Revenue up 13% YoY Trading-related revenue 482 (27%) (29%)  Reflects the inclusion of TD Cowen (TEB)2,19 PCL 12 ($20) +$21  Higher advisory fees, equity c

  14. Slide 14: Corporate Segment

    Corporate Segment P&L ($MM) Reported net loss of $399MM Reported Q2/23 Q1/23 Q2/22 Net Income (Loss) (399) (2,617) (151)  Adjusted1 loss of $177MM Adjustments for items of note Amortization of acquired intangibles before income 79 54 60 taxes21 Acquisition and integration charges related to 30 34 2

  15. Slide 15: Capital

    26 Capital Strong capital and liquidity management accelerating future growth Common Equity Tier 1 ratio of 15.3% Common Equity Tier 1 Ratio Q1 2023 CET 1 Ratio 15.5%  DRIP discount removed beginning with dividend declared today Internal capital generation 28 Increase in RWA (net of FX)27 (2)  Sma

  16. Slide 16: Gross Impaired Loan Formations

    Gross Impaired Loan Formations By Business Segment Highlights GIL Formations28: $MM and Ratios29  Gross impaired loan formations decreased 2 basis points 16 14 14 bps quarter-over-quarter 12 12 – Reflected in the Commercial lending portfolios $1,350 $1,259 – Partially offset by further $1,209 $2 /

  17. Slide 17: Gross Impaired Loans (GIL)

    Gross Impaired Loans (GIL) By Business Segment Highlights GIL30: $MM and Ratios31  Gross impaired loans were stable quarter-over-quarter, remaining at low levels 30 30 30 bps 29 28 $2,503 $2,591 $2,659 $2,397 $3 / 4 bps $5 / 7 bps $2,332 $3 / 4 bps $3 / 3 bps $3 / 4 bps $47 / $46 / 5 bps $7 / 5 bps

  18. Slide 18: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) By Business Segment Highlights PCL32: $MM and Ratios33 $690  PCL quarter-over-quarter decrease largely reflects a $617 $599 smaller performing allowance Canadian Personal & Commercial Banking build U.S. Retail $327 $229 $247 Corporate $351 Wholesale Banking $170 $2

  19. Slide 19: Provision for Credit Losses: Impaired and Performing

    Provision for Credit Losses (PCL)32,36 Impaired and Performing Highlights PCL ($MM) Q2/22 Q1/23 Q2/23  Impaired PCL was stable quarter-over-quarter Total Bank 27 690 599 Impaired 314 553 551  Performing PCL decreased quarter-over- Performing (287) 137 48 quarter Canadian Personal & – The smaller c

  20. Slide 20: Allowance for Credit Losses (ACL)

    Allowance for Credit Losses (ACL) ACL32: $B and Coverage Ratios37 124 126 122 108 103 Highlights 103 97 93 $9.2 $9.4 $8.9 87 85 86 86 87 bps 74  ACL increased $168 million quarter-over- $7.9 $8.0 $7.7 $7.3 $7.1 $6.9 $7.4 $7.5 $7.6 quarter, reflecting: $6.9 United States 59% 60% 59% – An $83 million

  21. Slide 21: Appendix

    Appendix Restricted 21

  22. Slide 22: Q2 2023: Items of Note

    Q2 2023: Items of Note Revenue/ ($MM) EPS ($)40 Segment Expense Line Item41 Pre Tax After Tax Reported net income and EPS (diluted) 3,351 1.72 Items of note Amortization of acquired intangibles21 79 67 0.03 Corporate Page 4, L13, L21 & L32 Acquisition and integration charges related to the 30 26 0.0

  23. Slide 23: 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

  24. Slide 24: Q2 2023: PTPP & Operating Leverage

    Q2 2023: PTPP1,43 & Operating Leverage1,44 Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change Q2 2023 Q1 2023 Q2 2022 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 12,366 6,987 12,226 8,316 11,263 6,033 Page 2, L3 & L6 2

  25. Slide 25: 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 – $89MM increase in NII over a 12-month period from a curve 25 bps rise in short rates (25 bps hike from each of – 10

  26. Slide 26: Mutual Termination of First Horizon Agreement

    Mutual Termination of First Horizon Agreement Related Life-to-Date Pre-tax Gain (Loss), $MM Q2 2023 Financial Notes Q2 2023 Statement Line  At the time of the merger announcement in Feb. '22, TD invested US$494MM in non-voting FHN preferred stock Series G Preferred Stock US$(147) US$(147) OCI  In

  27. Slide 27: Well-Diversified Deposit Base

    Well-Diversified Deposit Base Deposit Concentration by Top Depositors $483B $312B $106B $902B 34% 22% 14% 2% 3% 3% 2% 3% 4% 2% 3% 5% 52 51, 53 CAD P&C + WM&I U.S. Retail 51 Wholesale Banking Total Bank Top 5 Top 10 Top 20 Total Business Deposit Concentration by Industry54, $B Insured / Secured Depos

  28. Slide 28: Canadian Personal & Commercial Banking: Volumes, Margins and Efficiency

    Canadian Personal & Commercial Banking Volumes, Margins and Efficiency Net Interest Margin (NIM) Average Loans $B57 2.80% 520 524 527 496 511 2.74% 2.70% 101 105 107 110 112 2.59% 2.52% 415 395 406 413 414 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Personal Business Efficiency Ratio

  29. Slide 29: U.S. Retail: Volumes, Margins and Efficiency

    U.S. Retail Volumes, Margins and Efficiency NII and NIM19,58 US$B57 Average Loans US$B57 175 179 3.29% 3.25% 162 166 170 3.13% 2.62% 2.21% 87 90 93 85 86 2,220 2,349 2,241 1,905 78 80 83 85 87 1,641 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 1,58 NII 1,58 NIM Personal Business Effic

  30. Slide 30: U.S. Retail: Wealth Assets and Schwab EPU

    U.S. Retail Wealth Assets and Schwab EPU TD Wealth Assets US$B Schwab61 – Q2 2023 TD’s share of Schwab’s net income was C$241MM on a 37 reported basis, of which C$250MM (US$185MM) was recorded in the U.S. Retail segment 36 36  TD's share of Schwab's net income was C$283MM on an adjusted basis1 35 3

  31. Slide 31: Schwab Equity Pickup: Q2 2023 Reconciliation

    Schwab Equity Pickup Q2 2023 Reconciliation U.S. Retail P&L ($MM)63 TDBG Corporate Segment $C $US Reported Schwab Equity Pickup64 241 250 185 (9) Amortization of Intangibles65 30 0 0 30 Acquisition and Integration Charges65,66 12 0 0 12 Adjusted Schwab Equity Pickup1 283 250 185 33 Financial Stateme

  32. Slide 32: Wealth Management & Insurance: Volumes, Premiums and Efficiency

    Wealth Management & Insurance Volumes, Premiums and Efficiency Insurance Premiums $MM Average Loans $B 7.8 7.4 7.1 1,527 1,428 6.7 6.5 1,271 1,188 1,316 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Efficiency Ratio Average Deposits $B 45.9% 43.9% 42.6% 41.7% 40.7% 42.7 41.2 38.8 35.8

  33. Slide 33: Wealth Management & Insurance: Wealth Revenue and Assets

    Wealth Management & Insurance Wealth Revenue and Assets Wealth Revenue $MM Wealth Assets $B 1,600 600 1,431 1,350 1,344 1,339 549 537 526 541 183 1,278 517 207 217 218 1,200 186 411 414 422 226 172 500 408 397 170 159 145 800 421 400 400 393 328 362 351 1,022 971 957 962 947 0 300 Q2/22 Q3/22 Q4/22

  34. Slide 34: Wholesale Banking

    Wholesale Banking 2% Revenue Loans67 Q2 2023 Q2 2023 5% 33% $1.4B 47% $95.2B 51% 62% Corporate and Global Markets Other68 Canada United States International Investment Banking Restricted 34

  35. Slide 35: Gross Lending Portfolio Includes B/As

    Gross Lending Portfolio Includes B/As Period-End Balances ($B unless otherwise noted) Q1/23 Q2/23 Canadian Personal & Commercial Portfolio 521.5 528.8 Personal 413.5 418.9 Residential Mortgages 244.5 247.7 Home Equity Lines of Credit (HELOC) 113.3 114.4 Indirect Auto 27.2 27.6 Credit Cards 17.2 17.8

  36. Slide 36: Commercial Real Estate (CRE)

    Commercial Real Estate (CRE) Highlights Commercial Real Estate Portfolio Overview: $91B  Commercial Real Estate represents $91B or Residential (excl. MUR) 10% of Total Bank gross loans and 12% Other acceptances72 6% – Portfolio is well diversified across Retail geographies and sub segments 17% • $1

  37. Slide 37: Canadian Real Estate Secured Lending (RESL) Portfolio

    Canadian Real Estate Secured Lending (RESL) Portfolio Highlights (Q2 2023) Quarterly Portfolio Volumes ($B) Canadian RESL credit quality remained $348 $357 $360 $359 $363 strong Uninsured  Uninsured average Bureau score73 of 793, Insured 79% 80% 80% 81% 81% stable quarter-over-quarter  Less than 1

  38. Slide 38: Canadian Personal Banking

    Canadian Personal Banking Canadian Personal Banking (Q2/23) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%)  Gross impaired loans Residential Mortgages 247.7 174 0.07 increased quarter-over- Home Equity Lines of Credit (HELOC) 114.4 127 0.11 quarter, but remained at low Indirect Auto 27.6 75 0.

  39. Slide 39: Canadian Commercial and Wholesale Banking

    Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q2/23) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) increased quarter-over- Commercial Banking78 109.9 618 0.56 quarter Wholesale Banking 91.9 46 0.05 – Reflected in the Canadian T

  40. Slide 40: U.S. Personal Banking (USD)

    U.S. Personal Banking (USD) Highlights U.S. Personal Banking82 (Q2/23)  Continued strong asset quality Gross Loans GIL GIL/Loans in U.S. personal ($B) ($MM) (%) Residential Mortgages 37.6 323 0.86 Home Equity Lines of Credit (HELOC)69 7.4 172 2.33 Indirect Auto 27.4 167 0.61 Credit Cards 13.9 229 1

  41. Slide 41: U.S. Commercial Banking (USD)

    U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking82 (Q2/23) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) decreased quarter-over- Commercial Real Estate (CRE) 27.8 51 0.18 quarter as resolutions Non-residential Real Estate 19.6 19 0.10 outpaced formations Reside

  42. Slide 42: Endnotes

    Endnotes 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” results. The Bank also util

  43. Slide 43: Endnotes

    Endnotes 13. FX impact solely related to the U.S. Retail Bank. Adjusted expenses excluding the partners' share of net profits for the U.S. SCP and adjusted expenses excluding the partners' share of net profits and FX are non-GAAP financial measures. For further information on accounting for the part

  44. Slide 44: Endnotes

    Endnotes 22. Acquisition and integration charges related to the Schwab transaction include the Bank’s own integration and acquisition costs, as well as the Bank’s share of acquisition and integration charges associated with Schwab’s acquisition of TD Ameritrade on an after-tax basis, both reported i

  45. Slide 45: Endnotes

    Endnotes 31. GIL Ratio: Gross Impaired Loans/Gross Loans & Acceptances (both are spot) by portfolio. 32. Includes acquired credit impaired (ACI) loans. 33. PCL Ratio: Provision for Credit Losses on a quarterly annualized basis/Average Net Loans & Acceptances. 34. Net U.S. Retail PCL ratio excludes c

  46. Slide 46: Endnotes

    Endnotes 44. Operating leverage is a non-GAAP ratio that is typically calculated by dividing revenue growth by expense growth. At the total bank level, TD calculates operating leverage as the difference between the % change in adjusted revenue (U.S. Retail in source currency) net of fair value chang

  47. Slide 47: Endnotes

    Endnotes 56. Deposits uninsured by the FDIC. 57. Numbers may not add due to rounding. 58. The impact from certain treasury and balance sheet management activities relating to the U.S. Retail segment is recorded in the Corporate segment. 59. U.S. Retail Bank efficiency ratio is shown on a reported ba

  48. Slide 48: Endnotes

    Endnotes 68. Other includes investment portfolios and other accounting adjustments. 69. U.S. HELOC includes Home Equity Lines of Credit and Home Equity Loans. 70. Includes acquired credit impaired loans and loans booked in the Corporate segment. 71. Includes loans measured at fair value through othe

  49. Slide 49: Endnotes

    Endnotes 83. Loan To Value is calculated with the Loan Performance Home Price Index as of February 2023, based on outstanding mortgage balance and/or the HELOC authorized credit limit. FICO Scores updated March 2023. 84. Other includes: Agriculture; Power and utilities; Telecommunications, cable and

  50. Slide 50: Investor Relations Contacts

    Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor Restricted 50

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