Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Debt Investor Presentation (2018)
53 slides from Toronto-dominion Bank's debt investor presentation, 2018
Slide 1: TD Bank Group Fixed Income Investor Presentation Q3 2018
TD Bank Group Fixed Income Investor Presentation Q3 2018
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: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix 3
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 Q3 20181 Canadian U.S. Property, casualty, life and health (C$) Retail Retail insurance Fina
Slide 5: TD Framework
TD Framework Our purpose Our vision To enrich the lives of our Be the better bank customers, communities and colleagues Our shared commitments Think like a Act like an owner Execute with Innovate Develop our customer Lead with integrity to speed and impact with colleagues Provide legendary drive bus
Slide 6: TD Strategy
TD Strategy We will be the premier Canadian retail bank, a peer-leading U.S. retail bank, and a leading Wholesale business Customer- centric experiences One TD Operational excellence Unique and inclusive Strong employee risk culture culture Customer-centric Operational Unique and Inclusive Strong Ri
Slide 7: Competing in Attractive Markets
Competing in Attractive Markets Country Statistics Country Statistics 10th largest economy World’s largest economy Nominal GDP of C$2.2 trillion Nominal GDP of US$19.5 trillion Population of 37 million Population of 323 million Canadian Banking System U.S. Banking System One of the sou
Slide 8: Top North American Bank
Top 10 North American Bank North Q3 2018 Canadian American C$ except otherwise noted Ranking4 Ranking5 Total assets $1,293B 1st 5th Total deposits $839B 1st 5th Market capitalization $140.9B 2nd 6th Reported net income (trailing four quarters) $11.1B 2nd 5th Adjusted net income1 (trailing four quart
Slide 9: Diversified Business Mix
Diversified Business Mix Fiscal 2017 Reported Earnings Mix1 Three key business lines Canadian Retail robust retail banking platform in Canada with proven performance Canadian Retail U.S. Retail top 10 bank4 in 60% U.S. Retail2 26% the U.S. with significant organic growth opportunities Wholesal
Slide 10: Growing platform / North American scale…
Growing platform / North American scale… Increasing Retail Focus Acquired Acquired Target Completed TD Became primary Chrysler credit card portfolio Completed strategic acquisition of Acquired Waterhouse Acquired Commerce Acquired issuer of Aeroplan Completed Privatized Financial & Epoch; and credit
Slide 11: Connected Experiences
Connected Experiences Consistent Strategy Q3 2018 Highlights How we compete ~12 MILLION ~4.5 MILLION Enabling seamless interactions ACTIVE ONLINE & ~2.9 MILLION CANADIAN MOBILE between customers and the MOBILE CUSTOMERS U.S. MOBILE USERS USERS entire organization Leveraging industry leading Expe
Slide 12: The Better Bank
The Better Bank The Ready Commitment: Targeting $1 billion in community giving by 2030 The Ready Commitment targets Financial Security $ 1 billion by 2030 Opening doors Vibrant Planet for a more inclusive tomorrow Connected Communities Better Health Q3 Highlight: Launched The Ready Challenge Each ye
Slide 13: Corporate Responsibility Performance
Corporate Responsibility Performance Highlights TD's low carbon commitment will target $100B by 2030 to support the transition to a low-carbon economy, Low Carbon Early UN PRI Top Green Bond drive innovation, accelerate renewable energy Commitment signatory underwriter targets $100B by and UNEP FI
Slide 14: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix 14
Slide 15: Consistent Earnings Growth
Consistent Earnings Growth Targeting 7-10% adjusted EPS growth over the medium term4 Reported Earnings1,2 (C$MM) $10,517 $8,936 Wholesale Banking $8,024 U.S. Retail $7,883 Canadian Retail $6,640 $6,460 2012 2013 2014 2015 2016 2017 1. For the purpose of calculating contribution by each business segm
Slide 16: Q3 2018 Highlights
Q3 2018 Highlights Total Bank Reported Results (YoY) Financial Highlights $MM Reported Q3/18 Q2/18 Q3/17 EPS up 13% Revenue 9,885 9,467 9,286 Adjusted1 EPS up 10% PCL 561 556 505 Expenses 5,117 4,822 4,855 Revenue up 6% Net Income 3,105 2,916 2,769 Expenses up 5% Diluted EPS ($) 1.65 1.54 1.46 Adj
Slide 17: High Quality Loan Portfolio
High Quality Loan Portfolio Balances (C$B unless otherwise noted) Q2/18 Q3/18 Canadian Retail Portfolio $401.3 $409.1 Personal $328.5 $335.1 Residential Mortgages 190.4 191.8 Home Equity Lines of Credit (HELOC) 79.5 83.4 Indirect Auto 22.8 23.8 Unsecured Lines of Credit 9.9 9.9 Credit Cards 18.0 17.
Slide 18: Strong Credit Quality
Strong Credit Quality GIL and PCL Ratios (bps) 83 81 78 66 63 61 60 58 58 56 50 49 50 45 43 41 39 38 37 37 34 34 35 31 2007 2008 2009 1 2010 2011 2012 2013 2014 2015 2016 2017 Q3/18 2 IFRS IFRS 9 Gross Impaired Loans / Gross Loans and Acceptances (bps) Provision for Credit Losses / Average Net Loans
Slide 19: Canadian Personal Banking
Canadian Personal Banking Q3/18 Highlights Gross Loans GIL GIL / Canadian Personal Banking ($B) ($MM) Loans Credit quality remains strong Residential Mortgages $192 $241 0.13% in the Canadian Personal Home Equity Lines of Credit (HELOC) 83 124 0.15% portfolio Indirect Auto 24 59 0.25% Credit Cards
Slide 20: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Quarterly Portfolio Volumes $B Highlights $261 $265 $267 $269 $275 Canadian RESL credit quality remains 56% 58% 59% 61% 63% strong Uninsured Uninsured and insured portfolio loan-to- Insured 44% 42% value rates stable 41% 39% 37% Q3/17 Q4/17 Q1/18 Q2/1
Slide 21: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix 21
Slide 22: Industry-Leading Credit Ratings
Industry-Leading Credit Ratings Issuer Ratings1 Senior Debt Legacy Senior Rating Agencies Outlook Ratings2 Debt Ratings3 S&P A Stable AA- Moody's Aa3 Stable Aa1 DBRS Aa (low) Positive AA Ratings vs. Peer Group1 S&P Senior Debt2 / HoldCo6 Rating Moody’s Senior Debt2 / HoldCo6 Rating 14- AA 18 Aa1 16
Slide 23: Strong Capital & Liquidity Positions
Strong Capital & Liquidity Positions Common Equity Tier 11 Highlights Common Equity Tier 1 ratio of 11.7% Q2 2018 CET1 Ratio 11.8% Internal capital generation 43 Leverage ratio of 4.1% Impact of repurchase of common shares (35) Organic RWA increase and other (24) Liquidity coverage ratio of 12
Slide 24: Leading Non-Common Equity Capital Ratings
Leading Non-Common Equity Capital Ratings Industry leading ratings1 for Additional Tier 1 and Tier 2 capital instruments NVCC Tier 2 Subordinated Debt Ratings S&P Moody’s 12 A- 12 A2 10 A- 10 A3 8 BBB+ 8 Baa1 6 BBB- Baa26 4 BBB- Baa34 2 BB+ Ba1 2 a 0 a 0 TD TD Canadian Peer Peers Group 12 TD TD Peer
Slide 25: Robust Liquidity Management
Robust Liquidity Management Liquidity Risk Management Framework High Quality Liquid Assets (HQLA) TD holds a variety of liquid assets Target a 90-day survival horizon under a combined commensurate with liquidity needs in the Bank-specific and market-wide stress scenario, and a organization. mini
Slide 26: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition1 Large base of stable retail and commercial deposits Maturity Profile6,7 (To first par redemption date) (C$B) 50 Personal and commercial deposits are TD's Issuance Maturity primary sources of funds 40 Customer service business model delivers 30 stable base of “
Slide 27: Wholesale Term Debt Composition
Wholesale Term Debt Composition1 Funding Strategy Wholesale term funding through diversified sources across domestic and international markets Well-established C$50 billion Legislative Covered Bond Program is an important pillar in global funding strategy Programmatic issuance for the establishe
Slide 28: Deposit Overview
Deposit Overview Domestic Leader in Deposits Large base of personal and business deposits that make up 66% of the Bank's total funding TD Canada Trust (TDCT) ranked #1 in Total Personal Deposits1 TDCT remains a leader in service and convenience, leveraging the strength of our customer service bu
Slide 29: Key Takeaways
Key Takeaways Strong capital base Industry leading credit ratings Proactive & disciplined risk management Attractive balance sheet composition Diverse funding strategy 29
Slide 30: Contents
Contents 1. TD Bank Group 2. Economic Outlook 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Covered Bonds • Bail-in 30
Slide 31: Economic Outlook
Economic Outlook Global: Divergent Growth Marks the Forecast Global growth in 2018 is expected to be close to that of last year (3.8% versus 3.7% in 2017), before edging down to 3.5% in 2020. Within the G7, divergent economic performances are likely to continue through the end of this year, with E
Slide 32: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S. The Federal Reserve, is expected to 7 (%) raise interest rates two more times in Forecast 2018 followed by three hikes in U.S. Federal 6 Funds Rate 2019, bringing the federal funds rate to 3.25% by the end of the year. 5 Bank of Canada The Ba
Slide 33: Contents
Contents 1. TD Bank Group 2. Economic Outlook 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Covered Bonds • Bail-in 33
Slide 34: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights Gross impaired loan formations stable quarter-over-quarter and 20 year-over-year at 18 basis points 19 18 18 18 bps $1,257 $1,189 $1,149 $1,182 $1,100 $718 / 38 bps $669 / 36 bps $641 / 33 bps $648 / 34 bps $60
Slide 35: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Gross impaired loans decreased 49 49 2 basis points quarter-over- 49 47 quarter and 4 basis points year- 45 bps over-year with contribution from all segments $2,985 $3,085 $3,048 $37 / 8 bps $37 / 8 bps $31 / 6 bps $2,993 $2,
Slide 36: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights $702 PCL stable quarter-over-quarter $602 $562 $567 at 35 basis points, remaining at $183 $512 $16 cyclically low levels $132 $107 $86 $117 $256 $188 $226 $228 $210 Wholesale $244 $270 $246 $238 $219 Corporate U.S. Ret
Slide 37: Provision for Credit Losses (PCL) By Business Segment
Provision for Credit Losses (PCL)1,2 By Business Segment IAS 39 IFRS 9 Highlights PCL (C$MM) Q3/17 Q2/18 Q3/18 Both Impaired and Total Bank $ 512 $ 562 $567 Performing PCL stable Impaired $ 517 $ 526 $ 536 quarter-over-quarter Performing (5) 36 31 Canadian Retail $ 238 $ 219 $ 246 Impaired 238 219
Slide 38: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q3/18 Highlights Canadian Commercial and Gross GIL GIL/ Wholesale Banking Loans/BAs ($MM) Loans Canadian Commercial and ($B) Commercial Banking1 $74 $191 0.26% Wholesale Banking portfolios Wholesale 52 - 0.00% continue to perform well Total Canadian Commer
Slide 39: U.S. Personal Banking – U.S. Dollars
U.S. Personal Banking – U.S. Dollars Q3/18 Gross Loans GIL GIL / Highlights U.S. Personal Banking1 ($B) ($MM) Loans Residential Mortgages $23 $360 1.57% Continued good asset quality Home Equity Lines of Credit (HELOC)2 9 649 7.20% in U.S. Personal Banking Indirect Auto 23 171 0.74% Credit Cards 13
Slide 40: U.S. Commercial Banking – U.S. Dollars
U.S. Commercial Banking – U.S. Dollars Q3/18 Highlights Gross Loans / GIL GIL/ U.S. Commercial Banking1 BAs ($B) ($MM) Loans Sustained good credit Commercial Real Estate (CRE) $23 $105 0.46% quality in U.S. Commercial Non-residential Real Estate 17 83 0.49% Banking Residential Real Estate 6 22 0.3
Slide 41: Contents
Contents 1. TD Bank Group 2. Economic Outlook 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Covered Bonds • Bail-in 41
Slide 42: Canadian Registered Covered Bond Program
Canadian Registered Covered Bond Program Key Highlights ■ Canadian residential real estate property with no more than 4 residential units Covered Bond Collateral ■ Uninsured conventional first lien assets with original loan to value ratio that is 80% or less ■ Latest property valuation shall be adju
Slide 43: TD Global Legislative Covered Bond Program
TD Global Legislative Covered Bond Program TD Covered Bond Program Highlights Cover Pool as at July 31, 2018 High quality, conventional first lien Canadian Residential TD has a C$50B legislative covered bond program mortgages originated by TD Covered bonds issuance for Canadian issuers governe
Slide 44: Contents
Contents 1. TD Bank Group 2. Economic Outlook 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Covered Bonds • Bail-in 44
Slide 45: CDIC Resolution Tools
CDIC Resolution Tools Resolution Tools Reimbursement of insured deposits – following a failure, when the bank ceases to operate, CDIC would reimburse all insured deposits up to $100,000. Forced sale of a failing bank – CDIC takes temporary control of a failing bank and completes a sale to a will
Slide 46: 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 47: 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
Slide 48: TD TLAC Requirements
TD TLAC Requirements TD Regulatory Capital Ratios1 Canadian D-SIBs will be required to meet their Notional regulatory TLAC requirements by the TLAC: 26.4% November 1, 2021 implementation date. OSFI has stipulated that D-SIBs will be Minimum risk based TLAC ratio: 23.0% subject to 2 supervisory r
Slide 49: Bail-In Resolution Stages
Bail-In Resolution Stages The resolution of a D-SIB would involve a number of key phases. Below is an illustrative timeline that details the various stages of a bail-in resolution, and the actions and events that might take place at each stage. Resolution Bail-in 1. Business 2. Heightened 3. Point
Slide 50: Illustration of Impact of Bail-in Conversion on Balance Sheet
Illustration of Impact of Bail-in Conversion on Balance Sheet Loss Other Senior Liabilities1 Other Senior Other Senior Liabilities1 Liabilities1 Bail-in Senior Assets TLAC eligible securities Assets Assets NVCC Tier 2 Bail-in Senior NVCC Pref Bail-in Senior NVCC Tier 2 CET1 CET1 NVCC Pref CET1 Pre-l
Slide 51: Compensation Regime
Compensation Regime "No Creditor Worse Off" Under a scenario where CDIC uses a resolution tool to resolve a failing bank, shareholders and creditors are expected to be in a better financial position than if the institution had been liquidated. Bail-in note holders are entitled to compensation eq
Slide 52: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Email: tdir@td.com Website: www.td.com/investor
Slide 53: TD Bank Group Fixed Income Investor Presentation
TD Bank Group Fixed Income Investor Presentation Q3 2018