Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Debt Investor Presentation (2013)
44 slides from Toronto-dominion Bank's debt investor presentation, 2013
Slide 1: TD Bank Group Investor Presentation – Fixed Income Q2 2013
TD Bank Group Investor Presentation – Fixed Income Q2 2013
Slide 2: Caution regarding forward-looking statements
Caution regarding forward-looking statements From time to time, the Bank makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, and in other communications. In addition, representativ
Slide 3: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 3
Slide 4: TD Bank Group
TD Bank Group Our Businesses Canadian Personal & Commercial Personal banking Small business and commercial banking Wealth & Insurance Direct investing Advice-based wealth business Asset management 2,475 Insurance Business Locations1 U.S. Personal & Commercial CAD U.S. Personal banking
Slide 5: Simple Strategy, Consistent Focus
Simple Strategy, Consistent Focus Building the Better Bank North America Top 10 Bank in North America1 Leverage platform and brand for growth One of only a few banks globally to be rated Aa1 by Moody’s2 Strong employment brand Retail Earnings Focus Leader in customer service and convenienc
Slide 6: Competing in Attractive Markets
Competing in Attractive Markets Country Statistics Country Statistics 10th largest economy World’s largest economy Nominal GDP of C$1.7 trillion Nominal GDP of US$15.1 trillion Population of 35 million Population of 314 million Canadian Banking System U.S. Banking System Soundest banki
Slide 7: TD Bank Group in North America
TD Bank Group in North America Compared to: Q2 2013 North Canadian American Peers5 (C$ billions) Peers6 Total Assets $826B 2nd 6th Total Deposits $501B 3nd 7th Market Cap (as of May 22, 2013) $77B 2nd 6th Adj. Net Income1 (Trailing 4 Quarters) $7.3B 2nd 6th Rpt. Net Income (Trailing 4 Quarters) $6.8
Slide 8: Composition of Earnings
Composition of Earnings Highlights TD is a top 10 bank in North America1 Increasing retail focus Wholesale 10% Strength of retail franchise Reliable and steady earnings mix U.S. P&C Canadian 21% P&C 49% 3,4 TD AMTD Adjusted Retail Earnings2,5 $7,075 3% 12% Wealth & Wholesale Earnings 13% Ins
Slide 9: Evolution of TD
Evolution of TD Building Franchise Businesses >>> Increasing Retail focus >>> Acquired Acquired TD Chrysler Target credit Waterhouse Financial card portfolio TD Bank Acquired Acquired USA/ Privatized Acquired Commerce Acquired and MBNA and Epoch and Canada Newcrest 51% of Ameritrade TD Commerce Bank
Slide 10: Risk Management Framework
Risk Management Framework Our Risk Appetite We take risks required to build our business, but only if those risks: Fit our business strategy and can be understood and managed Do not expose the enterprise to any significant single loss events; we don’t “bet the bank” on any single acquisition, bu
Slide 11: Q2 2013 Highlights
Q2 2013 Highlights Key Themes Net Income $MM (Adjusted, where applicable) Adjusted1 EPS growth of 4% YoY Q2/13 QoQ YoY and 6% YTD Retail2 $ 1,639 -4% 5% Wholesale 220 38% 12% Solid earnings growth in retail Corporate (26) n/a 30% businesses and a strong Adjusted Net Income $ 1,833 -4% 6% perform
Slide 12: Credit Portfolio Highlights
Credit Portfolio Highlights Highlights PCL Ratio (bps)1 48 Positive credit trends continue: 46 46 Decreased delinquencies in the Canadian and U.S. Personal portfolios 39 Canadian Credit Card loss rates 35 continued to improve PCL rate was comparable to the prior quarter excluding Target Q2/1
Slide 13: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 13
Slide 14: Canada's Relative Strengths
Canada’s Relative Strengths One of the world’s most competitive economies1 Soundest banking system in the world1 Unemployment rate remains below prior recessionary peaks One of the strongest fiscal positions among G-7 industrialized countries Relatively low projected deficits and debt Sour
Slide 15: Solid Financial System in Canada
Solid Financial System in Canada Strong retail and commercial banks Conservative lending standards All major wholesale dealers owned by Canadian banks, with stable retail earnings base to absorb any wholesale write-offs Responsive government and central bank Proactive policies and programs
Slide 16: Well Developed Residential Mortgage Market in Canada
Well Developed Residential Mortgage Market in Canada Canadian chartered banks account for over 70% of the total mortgage market, including securitizations1 Conservative lending practices Strong competition among lenders Favorable legal environment supporting foreclosure and other types of le
Slide 17: Canadian Mortgage Market is Different from the U.S.
Canadian Mortgage Market is Different from the U.S. Canada U.S. Conservative product offerings: fixed or variable Outstanding mortgages include earlier exotic interest rate option products (interest only, options ARMs) Product Default insured mortgages use a 5-year fixed Borrowers often qual
Slide 18: Canadian Housing Market
Canadian Housing Market Highlights Housing sales are down, home prices continued to grow moderately but are expected to come under downward pressure Canadian RESL credit quality remains strong Loss rate for the trailing 4-quarter period was 2 bps Gross Impaired Loans decreased $8MM over Q1/1
Slide 19: North American Economy
North American Economy Outlook 2013 will be another year of moderate growth for Canada and the U.S. Uncertainty over government policies has somewhat dissipated, but unresolved issues remain in both the U.S. and Europe U.S. economy remains a mix of good news and bad news Residential real est
Slide 20: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 20
Slide 21: Capital
Capital Highlights Basel III Common Equity Tier 11 8.8% 8.8% Basel III Common Equity Tier 1 8.2% 7.4% 7.7% ratio of 8.8% as of Apr 30, 2013 Exceeds 7% regulatory requirement on a fully phased-in basis Includes 30 bps of relief from OSFI on treatment of CVA Target and Epoch acquisitions Q2/12
Slide 22: TD Credit Ratings
TD Credit Ratings Issuer Ratings1 Moody's S&P Fitch DBRS Ratings Aa1 AA- AA- AA Outlook Stable Stable Stable Stable Ratings vs. Peer Group S&P Long-Term Debt Rating Moody’s Long-Term Debt Rating AA Aa1 AA- Aa2 A+ Aa3 A A1 A- A2 BBB+ A3 BBB Baa1 BBB- Baa2 TD Canadian Peers U.S. Peers TD Canadian Peer
Slide 23: Robust Liquidity Management
Robust Liquidity Management Treasury paradigm Contribute to stable and growing revenues “Treasury does not have the authority not to hedge” No black boxes Match terms of assets and liabilities Do not engage in liquidity carry trade Match underlying debt funding maturities to term of as
Slide 24: Term Funding Strategy
Term Funding Strategy Large base of stable retail and commercial deposits Customer service business model delivers growing base of “sticky” deposits Reserve assets held for deposit balance that is not considered permanent Large user of securitization programs, primarily via Canada Mortgage B
Slide 25: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition Funding Mix1 Wholesale Term Debt2 P&C Deposits 71% Other Deposits3 Personal 26% Term Deposits 9% Assets Securitized 61% Short Term Liabilities 4 11% Covered Bonds Personal Non-Term 15% Deposits 36% Wholesale Term Debt 10% Senior Unsecured MTN 24% Trading Sub-Debt
Slide 26: Debt Maturity Profile F2013 – F2018
Debt Maturity Profile1 F2013 – F2018 Bullet Debt Maturities (C$ Billions)2 $20 $18 $17 $15 $13 $10 $10 $8 $8 $5 $0 2013 2014 2015 2016 2017 2018 MBS Covered Bond Senior Debt ABS Subordinated Debt Manageable debt maturities 1. For wholesale term debt that has bullet maturities 2. As of April 30, 2013
Slide 27: Canada Covered Bond Legislation
Canada Covered Bond Legislation The Covered Bond legal framework was announced in the 2012 Budget and passed into law in June 2012 Canada Mortgage and Housing Corporation (“CMHC”) was given responsibility to administer the covered bond legal framework In December 2012, the CMHC issued the “Can
Slide 28: Key Takeaways
Key Takeaways Strong capital base – well positioned for Basel III Industry leading credit ratings Proactive & disciplined risk management Attractive balance sheet composition Diverse funding strategy to support growth plans 28
Slide 29: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 29
Slide 30: Global Economic Outlook
Global Economic Outlook World Real GDP Growth1 Y/Y % Change 6 Global economic growth Forecast1 4 will moderately increase next year 2 0 Fiscal consolidation in the -2 2004 2006 2008 2010 2012 2014 U.S. and weak global growth means North North American Real GDP Growth2 American economy to (%) exp
Slide 31: Canadian Economic Outlook
Canadian Economic Outlook Canadian Export and U.S. Activity Index1 Y/Y % Change 25 Forecast 1 20 Forecast 15 10 Canadian economy still 5 tightly linked to U.S. 0 -5 fortunes, and better U.S. -10 U.S. ActivityReal Canadian Index Exports growth in medium term to -15 Canadian Exports U.S. Activity In
Slide 32: U.S. Economic Outlook
U.S. Economic Outlook Residential Real Estate Contribution to real GDP growth1 (Y/Y % Change) 1.5 Forecast1 1.0 Housing, the culprit of the 0.5 0.0 Great Recession, has -0.5 begun to recover in -1.0 -1.5 earnest. Residential -2.0 investment contributed 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 33: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 % 7 US Federal Funds Rate Modest outlook and risks to 6 Forecast the global economy mean 5 Bank of North American central Canada Target Rate banks are set to leave 4 monetary policy at 3 exceptionally accommodative levels for a 2 while 1 0 200
Slide 34: Solid Growth and Returns Across Businesses
Solid Growth and Returns Across Businesses Adjusted Earnings1,2 $7,075 (C$MM) $6,432 $5,228 $4,716 $4,189 $3,813 $3,749 Wholesale Banking U.S. P&C Wealth & Insurance2 Canadian P&C2 2007 2008 2009 2010 2011 2012 YTD 2013 Adjusted Retail Earnings as % of 80% 98% 78% 83% 87% 88% 90% Adjusted Earnings T
Slide 35: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q1/13 Q2/13 Canadian Personal & Commercial Portfolio $ 301.6 $ 304.5 Personal $ 258.0 $ 259.6 Residential Mortgages 155.2 156.7 Home Equity Lines of Credit (HELOC) 63.5 62.7 Indirect Auto 13.8 14.0 Unsecured Lines of Credit
Slide 36: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,218 Canadian P&C formations $12 / 6 bps remained stable $1,115 $1,061 $981 $1,041 U.S. P&C formations $38 / 17 bps $4 / NM $395 / 46 bps increased $69MM or 5 bps $419 / 44 bps over Q1/13 due primarily to t
Slide 37: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Gross Impaired Loans $2,494 $2,554 $2,518 $3 / NM remained stable $2,363 $2,367 $3 / NM $3 / NM $31 / 13 bps $3 / NM $3 / NM $76 / 39 bps $38 / 18 bps U.S. P&C Gross Impaired Loan $45 / 20 bps $79 / 34 bps rate was flat to
Slide 38: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights Excluding the impact of Target, $489 PCL decreased over the prior $454 $4 / 7 bps quarter $433 $1 / NM $16 / 28 bps $402 $25MM release of general $360 $175 / 82 bps allowance due to continued $157 / 83 bps $147 / 73
Slide 39: Canadian Personal Banking
Canadian Personal Banking Q2/13 Canadian Personal Banking1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 157 0.30% 465 5 Continued strong credit Home Equity Lines of Credit (HELOC) 63 0.50% 316 3 performance Indirect Auto 14 0.27% 38 26 PCL decreased $23MM ove
Slide 40: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q2/13 Canadian Commercial and Gross GIL PCL1 Highlights Loans/BAs Wholesale Banking ($B) ($MM) ($MM) Canadian Commercial GIL Commercial Banking2 45 165 38 and PCL increased over Wholesale 25 31 0 Q1/13 as a result of a single Total Canadian Commercial and
Slide 41: U.S. Personal Banking
U.S. Personal Banking Q2/13 Highlights Gross Loans GIL/ GIL U.S. Personal Banking1 ($B) Loans ($MM) PCL2 Target acquisition added $6B ($MM) Residential Mortgages 19 1.24% 239 11 of Credit Card loans in the quarter Home Equity Lines of Credit (HELOC)3 10 2.17% 222 19 Increased impairment is Indir
Slide 42: U.S. Commercial Banking
U.S. Commercial Banking Q2/13 U.S. Commercial Banking1 Gross Loans/BAs GIL PCL2 Highlights ($MM) ($MM) ($B) Commercial Real Estate (CRE) 14 338 12 Overall credit quality continues Non-residential Real Estate 11 210 7 to improve despite lumpiness Residential Real Estate 3 128 5 in Commercial and In
Slide 43: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Email: Grand Prix for Best Overall Investor Relations: Large Cap tdir@td.com Best Investor Relations by Sector: Financial Services Website: Best Investor Relations www.td.com/investor by a CEO: Large Cap Best Investor Relations by a C
Slide 44: TD Bank Group Investor Presentation – Fixed Income
TD Bank Group Investor Presentation – Fixed Income Q2 2013