Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Q4 2023 Earnings Presentation
61 slides from Toronto-dominion Bank's earnings presentation, Nov 30, 2023
Slide 1: Quarterly Results Presentation
Quarterly Results Presentation TD Bank Group Q4 2023 November 30, 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 $2.9B, down 57% (adjusted1 $3.5B, down 14%) ■ Reported EPS2 of $1.49, down 59% (adjusted1 $1.83, down 16%) ■ Common Equity Tier 1 ratio3 of 14.4%, including repurchase of almost 38MM common s
Slide 5: Proven Business Model: Customer Activity
Proven Business Model Customer Activity Canadian Personal and Commercial U.S. Retail Average Volumes Global Wealth Assets2 Banking Average Volumes ($B) (US$B)1 ($B) 600 8% 300 1,200 3% -2% 250 -1% 500 117 1,000 107 112 7% 400 94 200 112 106 800 167 413 164 436 159 594 563 581 300 383 150 95 600 87 8
Slide 6: Forward Focused
Forward Focused Shaping the future of banking Launched TD Invent, the Bank's Enterprise Approach to Innovation Rewards Canada Readers Recognized TD with More Awards in 2023 than All Other Card Issuers Combined TD Direct Investing Named the Best Best Consumer Digital TD's Layer 6 Won the Annual Canad
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 +130 bps +230 bps 63.7 53.2 55.5 ■ Launched TD Invent, the Bank's 62.4 enterprise approach to innovation, focused on human-centered experiences and the integration of Q4/
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 Announced an Agreement with TD and Indigenous Communities in 1PointFive to Purchase Carbon Canada 2023 Report Released Dioxide Removal Credits1 9
Slide 10: Fiscal 2023 Highlights
Fiscal 2023 Highlights EPS of $5.60, down 41% YoY P&L ($MM) ■ Adjusted1 EPS of $7.99, down 4% YoY Reported 2023 2022 YoY Revenue 50,492 49,032 3% Revenue up 3% YoY (Adj1 up 12% YoY) PCL 2,933 1,067 +$1,866 ■ Reported revenue includes the impact of the Expenses 30,768 24,641 25% terminated First Hori
Slide 11: Restructuring Program
Restructuring Program The Bank undertook certain measures in the fourth quarter of 2023 to reduce its cost base and achieve greater efficiency ■ What is the size of the restructuring program? – $363MM pre-tax / $266MM after-tax was incurred in Q4'23 – The Bank expects to incur additional restructuri
Slide 12: Q4 2023 Highlights
Q4 2023 Highlights Mixed quarter EPS of $1.49, down 59% YoY P&L ($MM) ■ Adjusted1 EPS of $1.83, down 16% YoY Reported Q4/23 QoQ YoY Revenue 13,121 3% (16%) Revenue down 16% YoY (Adj1 up 8% YoY) PCL 878 +$112 +$261 ■ Prior year reported revenue includes gain from the Expenses 7,883 4% 20% impact of t
Slide 13: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strong quarter supported by NIM expansion and volume growth P&L ($MM) Reported Q4/23 QoQ YoY Revenue 4,754 4% 7% Net income down 1% YoY PCL 390 +$11 +$161 Impaired 274 -$11 +$90 Revenue up 7% YoY Performing 116 +$22 +$71 ■ Volume growth and higher margins Expen
Slide 14: U.S. Retail
U.S. Retail Operating momentum in a challenging environment P&L (US$MM) (except where noted) Reported Q4/23 QoQ YoY Net income down 19% YoY (Adj1 down 21% YoY) Revenue 2,622 -1% -3% Revenue down 3% YoY PCL 213 +$28 +$44 Impaired 227 +$34 +$102 ■ Lower deposit volumes, loan margins and overdraft Perf
Slide 15: Wealth Management & Insurance
Wealth Management & Insurance Solid results P&L ($MM) Reported Q4/23 QoQ YoY Net income down 3% YoY Revenue 2,864 3% 9% Revenue up 9% YoY PCL - - - ■ Higher insurance premiums, an increase in fair value Insurance Claims 1,002 9% 39% of investments supporting claims liabilities and Expenses 1,191 2%
Slide 16: Wholesale Banking
Wholesale Banking Challenging quarter P&L ($MM) Net income down 93% YoY (Adj1 down 35% YoY) Reported Q4/23 QoQ YoY Revenue 1,488 -5% 28% ■ Reported net income includes acquisition and integration-related charges for TD Cowen2 Trading-related revenue 590 -6% 5% (TEB)3,4 PCL 57 +$32 +$31 Revenue up 28
Slide 17: Corporate Segment
Corporate Segment P&L ($MM) Reported Q4/23 Q3/23 Q4/22 Reported net loss of $591MM Net Income (Loss) (591) (782) 2,661 ■ Adjusted1 loss of $133MM Adjustments for items of note Amortization of acquired intangibles2 92 88 57 Acquisition and integration charges related 31 54 18 to the Schwab transactio
Slide 18: Capital
1 Capital Strong capital and liquidity management supporting future Common Equity Tier 1 Ratio growth Q3 2023 CET 1 Ratio 15.2% Internal capital generation 27 Common Equity Tier 1 ratio of 14.4% Increase in RWA (excluding impact of FX)2 (33) Repurchase of common shares (57) Risk-Weighted Assets up 4
Slide 19: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment GIL Formations1: $MM and Ratios2 Highlights ■ Gross impaired loan formations were stable quarter-over-quarter 16 18 18 bps 14 14 $1,677 $1,599 $1 / 1 bp $55 / 6 bps $1,350 $1,259 $1,209 $38 / 4 bps $2 / 3 bps $845 / $998 / 34 bps 39 bps $730 / $645
Slide 20: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment GIL1: $MM and Ratios2 Highlights 36 bps ■ Gross impaired loans 30 33 29 30 increased quarter-over- quarter, driven by: ■ The impact of foreign $3,299 exchange $5 / 7 bps $2,980 ■ U.S. Retail and Canadian $4 / 5 bps $2,591 $2,659 $84 / Personal & Commerc
Slide 21: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment PCL1: $MM and Ratios2 Highlights $878 ■ PCL increase quarter-over- Canadian Personal & Commercial Banking quarter, largely reflected in: $766 U.S. Retail $690 – Canadian and U.S. consumer $617 $390 lending portfolios Corporate $599 $379 – Wholesa
Slide 22: Provision for Credit Losses (PCL): Impaired and Performing
Provision for Credit Losses (PCL) Impaired and Performing PCL1,2 ($MM) Highlights Q4/22 Q3/23 Q4/23 ■ Impaired PCL quarter-over- Total Bank 617 766 878 quarter increase largely Impaired 454 663 719 reflected in the consumer lending portfolios Performing 163 103 159 Canadian Personal & Commercial Ban
Slide 23: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) ACL1: $B and Coverage Ratios2 Highlights 124 126 122 108 103 ■ ACL increased $415 million 103 97 93 87 85 86 86 87 87 89 bps quarter-over-quarter, related to: 74 $9.2 $9.4 $8.9 – A $214 million impact from $7.9 $8.0 $7.7 $7.8 $8.2 United States $7.3 $7.1 $6.9 $6.9 $
Slide 24: Appendix
Appendix 24
Slide 25: Fiscal 2023: Items of Note
Fiscal 2023: Items of Note Revenue/ ($MM) EPS ($)1 Segment Expense Line Item2 Pre Tax After Tax Reported net income and EPS (diluted) 10,782 5.60 Items of note Amortization of acquired intangibles3 313 271 0.15 Corporate Page 4, L13, L25 & L37 Acquisition and integration charges related to the 149 1
Slide 26: Q4 2023: Items of Note
Q4 2023: Items of Note Revenue/ ($MM) EPS ($)1 Segment Expense Line Item2 Pre Tax After Tax Reported net income and EPS (diluted) 2,886 1.49 Items of note Amortization of acquired intangibles3 92 83 0.04 Corporate Page 4, L13, L25 & L37 Acquisition and integration charges related to the Schwab trans
Slide 27: 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 $MM Credit Card Portfolio 1,000 Me
Slide 28: Fiscal 2023: PTPP & Operating Leverage
1,2,3 1,4 Fiscal 2023: PTPP & Operating Leverage Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change FY 2023 FY 2022 FY 2021 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 50,492 30,768 49,032 24,641 42,693 23,076 Page 2,
Slide 29: Q4 2023: PTPP & Operating Leverage
1,2,3 1,4 Q4 2023: PTPP & Operating Leverage Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change Q4 2023 Q3 2023 Q4 2022 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 13,121 7,883 12,779 7,582 15,563 6,545 Page 2, L3 & L6
Slide 30: 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 – $130MM 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 31: Well-Diversified Deposit Base
Well-Diversified Deposit Base Deposit Concentration by Top Depositors $488B $320B $128B $935B 31% 21% 13% 6% 5% 2% 3% 3% 3% 5% 2% 4% CAD P&C + WM&I U.S. Retail 1 Wholesale Banking Total Bank 2 1, 3, 4 Top 5 Top 10 Top 20 Total Business Deposit Concentration by Industry5, $B Insured / Secured Deposit
Slide 32: Canadian Personal & Commercial Banking: Volumes, Margins and Efficiency
Canadian Personal & Commercial Banking Volumes, Margins and Efficiency Net Interest Margin (NIM) Average Loans $B1 524 527 539 552 520 2.80% 107 110 112 114 117 2.78% 2.74% 2.74% 2.70% 413 414 415 425 436 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Personal Business Efficiency Ratio
Slide 33: U.S. Retail: Volumes, Margins and Efficiency
U.S. Retail Volumes, Margins and Efficiency NIM1,2 Average Loans US$B3 179 183 188 170 175 3.29% 3.25% 95 3.13% 87 90 93 94 3.07% 3.00% 83 85 87 89 93 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Personal Business Efficiency Ratio4 US$B3 Average Deposits US$B3 58.0% 378 362 57.0% 56.9
Slide 34: U.S. Retail: Wealth Assets and Schwab EPU
U.S. Retail Wealth Assets and Schwab EPU TD Wealth Assets US$B Schwab1 – Q4 2023 TD’s share of Schwab’s net income was C$156MM on a reported basis, of which C$197MM (US$146MM) was recorded in the U.S. Retail segment ■ TD's share of Schwab's net income was C$234MM on 37 37 an adjusted basis2 36 36 35
Slide 35: Schwab Equity Pickup
Schwab Equity Pickup Q4 2023 Reconciliation U.S. Retail P&L ($MM)1 TDBG Corporate Segment $C $US Reported Schwab Equity Pickup2 156 197 146 (41) Amortization of acquired intangibles3 30 0 0 30 Share of restructuring charges3 35 0 0 35 Acquisition and integration charges3,4 13 0 0 13 Adjusted Schwab
Slide 36: Wealth Management & Insurance: Volumes and Efficiency
Wealth Management & Insurance Volumes and Efficiency Insurance Premiums ($MM) Average Loans $B 1,658 1,616 7.1 1,428 1,316 1,188 6.7 6.5 6.4 6.5 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Efficiency Ratio Average Deposits $B 45.9% 42.6% 42.1% 41.6% 40.7% 38.8 35.8 32.4 30.0 28.1 Q4/
Slide 37: Wealth Management & Insurance
Wealth Management & Insurance Wealth Revenue $MM Wealth Assets $B 1,600 600 1,344 1,339 549 559 1,323 1,309 541 531 1,278 517 217 218 186 180 1,200 186 414 422 421 154 140 500 397 405 170 159 145 800 400 362 360 400 351 347 328 957 962 947 982 989 0 300 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q4/22 Q1/23 Q2/2
Slide 38: Wholesale Banking
Wholesale Banking Revenue Loans1 Q4 2023 Q4 2023 -2% 5% 32% 42% $1.5B $93.0B 60% 63% Corporate and Canada Global Markets Other2 United States International Investment Banking 38
Slide 39: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Period-End Balances ($B unless otherwise noted) Q3/23 Q4/23 Canadian Personal & Commercial Portfolio 549.1 557.6 Personal 431.1 438.4 Residential Mortgages 255.6 261.3 Home Equity Lines of Credit (HELOC) 116.7 117.6 Indirect Auto 28.3 28.8 Credit Cards 18.7 18.8
Slide 40: Commercial Real Estate (CRE)
Commercial Real Estate (CRE) Commercial Real Estate Portfolio Overview: Highlights $93B ■ Commercial Real Estate represents $93B or 10% of Total Bank gross loans and acceptances1 Office Retail – Portfolio is well diversified across 11% 17% geographies and sub segments Other – 57% of CRE portfolio in
Slide 41: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Quarterly Portfolio Volumes ($B) Highlights Canadian RESL credit quality remained $360 $359 $363 $374 $381 strong Uninsured 80% 81% 81% 82% 83% ■ Uninsured average Bureau score3 of Insured 792, stable quarter-over-quarter ■ Less than 1% of the RESL port
Slide 42: Canadian Personal Banking
Canadian Personal Banking Canadian Personal Banking (Q4/23) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%) ■ Gross impaired loans Residential Mortgages 261.3 186 0.07 increased quarter-over- Home Equity Lines of Credit (HELOC) 117.6 148 0.13 quarter, reflective of Indirect Auto 28.8 95 0.33 – S
Slide 43: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Canadian Commercial and Wholesale Banking (Q4/23) Highlights Gross Loans/ GIL GIL/Loans BAs ($B) ($MM) (%) ■ Good asset quality in the Commercial Banking1 119.2 767 0.64 Canadian Commercial and Wholesale Banking 94.6 84 0.09 Wholesale Banking portfolios Tota
Slide 44: U.S. Personal Banking
U.S. Personal Banking U.S. Personal Banking1 (Q4/23) Highlights Gross Loans GIL GIL/Loans In USD unless otherwise specified ($B) ($MM) (%) ■ Gross impaired loans Residential Mortgages 40.8 312 0.76 increased quarter-over- Home Equity Lines of Credit (HELOC)2 7.6 167 2.19 quarter, reflective of Indir
Slide 45: U.S. Commercial Banking
U.S. Commercial Banking U.S. Commercial Banking1 (Q4/23) Highlights Gross Loans/ GIL GIL/Loans In USD unless otherwise specified BAs ($B) ($MM) (%) ■ Gross impaired loans Commercial Real Estate (CRE) 28.0 221 0.79 increased quarter-over- Non-residential Real Estate 19.5 163 0.84 quarter, driven by t
Slide 46: Endnotes on Slides 4-5
Endnotes on Slides 4-5 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 47: 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 48: Endnotes on Slides 12-13
Endnotes on Slides 12-13 Slide 12 1. Please refer to Slide 4, Endnote 1. 2. Prior to May 4, 2023, the impact shown covers periods before the termination of the First Horizon transaction and includes the following components, reported in the Corporate segment: i) mark-to-market gains (losses) on inte
Slide 49: Endnotes on Slides 14-16
Endnotes on Slides 14-16 Slide 14 1. Please refer to Slide 4, Endnote 1. 2. U.S. Retail NIM is calculated by dividing segment's net interest income by average interest-earning assets excluding the impact related to deposit sweep arrangements and the impact of intercompany deposits and cash collatera
Slide 50: Endnotes on Slide 17
Endnotes on Slide 17 Slide 17 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 51: Endnotes on Slides 18-22
Endnotes on Slides 18-22 Slide 18 1. Capital and liquidity measures on slide 18 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 52: Endnotes on Slides 23-25
Endnotes on Slides 23-25 Slide 23 1. Please refer to Slide 21, 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 53: Endnotes on Slide 26
Endnotes on Slide 26 Slide 26 1. EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares outstanding during the period. Numbers may not add due to rounding. 2. This column refers to specific page(s) and line items of the Bank's Q4 2023 Supplem
Slide 54: Endnotes on Slide 28
Endnotes on Slide 28 Slide 28 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 55: Endnotes on Slide 29
Endnotes on Slide 29 Slide 29 1. Please refer to Slide 4, Endnote 1. 2. Please refer to Slide 28, Endnote 2. 3. At a segment level, At a segment level, TD calculates PTPP as the difference between adjusted revenue and adjusted expenses in source currency. For Canadian Personal & Commercial Banking,
Slide 56: Endnotes on Slides 31-33
Endnotes on Slides 31-33 Slide 31 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 57: Endnotes on Slides 34-35
Endnotes on Slides 34-35 Slide 34 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 58: Endnotes on Slides 37-40
Endnotes on Slides 37- 40 Slide 37 1. Please refer to Slide 15, Endnote 1. Slide 38 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.
Slide 59: Endnotes on Slides 41-43
Endnotes on Slides 41-43 Slide 41 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 60: Endnotes on Slides 44-45
Endnotes on Slides 44-45 Slide 44 1. Excludes acquired credit-impaired loans. 2. Please refer to Slide 39, Endnote 1. 3. Loan To Value is calculated with the Loan Performance Home Price Index, based on outstanding mortgage balance and/or the HELOC authorized credit limit. Slide 45 1. Please refer to
Slide 61: Investor Relations Contacts
Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 61