Toronto-dominion Bank · TSX:TD

Toronto-dominion Bank — The Toronto-Dominion Bank — Q4 2021 Earnings Presentation

47 slides from Toronto-dominion Bank's earnings presentation, Dec 2, 2021

  1. Slide 1: TD Bank Group Quarterly Results Presentation Q4 2021

    TD Bank Group Quarterly i Results = Presentation Q4 2021 December 2 , 2021

  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 supporting our customers, communities and colleagues through these challenging times Proven Business Model Forward Focused Purpose-Driven Deliver consistent earnings grow

  4. Slide 4: Proven Business Model

    Proven Business Model Diversification and scale, underpinned by a strong risk culture  Fiscal 2021 reported earnings of $14.3B, up 20% (adjusted1 $14.6B, up 47%)  Fiscal 2021 reported EPS of $7.72, up 20% (adjusted1,2 $7.91, up 48%)  Record results in all businesses, reflecting improved credit co

  5. Slide 5: Proven Business Model: Strong Customer Activity

    Proven Business Model Strong Customer Activity Canadian Personal and Commercial Canadian Cards Spend Trends4 TD Direct Investing Average Trades per Average Volumes ($B) (YoY % Change) Day5 (% Change) 5% 15% 30% 500 160% 400 94 20% 82 85 167 120% 143 383 10% 300 347 357 80% 116 200 254 0% 234 40% 204

  6. Slide 6: Forward Focused: Shaping the future of banking

    Forward Focused Shaping the future of banking #1 patent filer in Canada Award-winning credit cards6 Invested in and joined Akoya Data Access Highest in Customer Satisfaction Highest in Dealer Satisfaction Network for Small Business Banking among Non-Captive Lenders in the South Region7 with Prime Cr

  7. Slide 7: Forward Focused: Digital Adoption

    Forward Focused: Digital Adoption Digital Adoption Active Mobile Users Self-Serve Transactions (% of total customers)10 (millions)11 (as % of all financial transactions)12 +380 bps +190 YoY bps YoY +12.5% YoY +8.0% YoY +860 bps 0 bps YoYYoY 92.0 92.0 92.0 60.7 60.9 6.4 Canadian 6.3 Retail9 59.0 5.9

  8. Slide 8: Purpose Driven

    Purpose Driven Centered on our vision, purpose and shared commitments 8th consecutive year 8

  9. Slide 9: Purpose Driven: ESG Highlights

    Purpose Driven ESG Highlights Environment Social Governance – Continued to participate in evolving industry – Established a strategic alliance with Canada – Launched the ESG Centre of Expertise initiatives including pledging to join the Net-Zero Post to expand finance services for Canadians, – Embed

  10. Slide 10: Fiscal 2021 Highlights

    Fiscal 2021 Highlights Higher fee income and volumes, improved credit conditions EPS of $7.72, up 20% P&L ($MM)  Adjusted1 EPS of $7.91, up 48% Reported 2021 2020 YoY Revenue 42,693 43,646 (2%) Revenue down 2% (incl. the net gain on the PCL (224) 7,242 ($7,466) sale of the Bank's investment in TD A

  11. Slide 11: Q4 2021 Highlights

    Q4 2021 Highlights Higher fee income and strong volumes on rising customer activity EPS of $2.04, down 27% YoY P&L ($MM)  Adjusted1 EPS of $2.09, up 31% Reported Q4/21 QoQ YoY Revenue 10,941 2% -8% Revenue down 8% YoY (incl. the net gain on the PCL (123) ($86) ($1,040) sale of the Bank's investment

  12. Slide 12: Canadian Retail

    Canadian Retail Strong revenue growth, continued investment in our businesses Net income up 19% YoY (17% adjusted1) P&L ($MM) Reported Q4/21 QoQ YoY Revenue up 8% YoY Revenue 6,520 (1%) 8%  Higher fee-based revenue and strong volume growth PCL 53 ($47) ($198) more than offset lower margins Impaired

  13. Slide 13: U.S. Retail (US$)

    U.S. Retail (US$) Record earnings on lower PCL and sustained consumer recovery Net income up 66% YoY P&L (US$MM) (except where noted) Reported Q4/21 QoQ YoY Revenue up 8% YoY Revenue 2,212 1% 8%  Higher income from PPP loan forgiveness, deposit PCL (62) +$12 ($495) growth, higher fee income and val

  14. Slide 14: Wholesale

    Wholesale Strong earnings, continued investment in the business Net income down 14% YoY P&L (MM) Reported Q4/21 QoQ YoY Revenue down 8% YoY Revenue 1,150 6% (8%)  Trading-related revenue of $510MM, down from Q4 Trading-related revenue 510 9% (33%) 2020's elevated level (TEB)2,19 PCL (77) ($79) ($71

  15. Slide 15: Corporate Segment

    Corporate Segment Reported loss of $150MM P&L ($MM)  Adjusted 1 loss of $65MM Reported Q4/21 Q3/21 Q4/20 Net Income (150) (205) 1,984 Adjustments for items of note Amortization of acquired 74 68 61 intangibles before income taxes Acquisition and integration 22 24 - charges related to Schwab Net gai

  16. Slide 16: Capital

    20 Capital Robust capital and liquidity positions Common Equity Tier 1 ratio of 15.2% Common Equity Tier 1 Ratio Q3 2021 CET 1 Ratio 14.5% Risk-Weighted Assets down 1% QoQ Internal capital generation 49 Decrease in threshold deduction 13 Decrease in RWA (net of FX)21 and other 12 Leverage Ratio of 4

  17. Slide 17: Gross Impaired Loan Formations

    Gross Impaired Loan Formations By Business Segment Highlights GIL Formations22: $MM and Ratios23  Gross impaired loan formations stable quarter-over-quarter, remaining at cyclically low levels 15 16 14 11 11 bps $1,203 $1,125 $13 / 2 bps $36 / 6 bps $1,010 $47 / 8 bps $830 $16 / 3 bps $796 $588 / 2

  18. Slide 18: Gross Impaired Loans (GIL)

    Gross Impaired Loans (GIL) By Business Segment GIL24: $MM and Ratios25 Highlights  Gross impaired loans decreased quarter-over-quarter to a new cyclical low reflecting the 42 42 ongoing impact of: 38 – Support programs 35 32 bps – Customer resilience $3,157 $3,057 $97 / 17 bps $18 / 3 bps – The eco

  19. Slide 19: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) By Business Segment Highlights PCL26: $MM and Ratios27 $921  The PCL recovery this quarter $100 reflects: – A performing allowance release – Partially offset by continued low $576 impaired provisions $316 $20 $16 $138 ($35) ($373) $2 ($124) $251 $53 Wholesale $142

  20. Slide 20: Provision for Credit Losses: Impaired and Performing

    Provision for Credit Losses (PCL)26,30 Impaired and Performing Highlights PCL ($MM) Q4/20 Q3/21 Q4/21  Impaired PCL reached a new cyclical low this quarter Total Bank 921 (35) (124) Impaired 363 244 219 Performing 558 (279) (343)  The performing PCL recovery reflects allowance releases across all

  21. Slide 21: Allowance for Credit Losses (ACL)

    Allowance for Credit Losses (ACL) ACL31: $B and Coverage Ratios32 124 126 122 108 103 Highlights 103 $9.2 $9.4 $8.9 97 bps 74 $7.9 $8.0  ACL decreased quarter-over-quarter, $7.7 $7.2 reflecting: United States 59% 60% $5.3 59% – Further improvement in credit Canada 62% 58% 58% 57% conditions 61% – T

  22. Slide 22: Appendix

    Appendix 22

  23. Slide 23: Fiscal 2021: Items of Note

    Fiscal 2021: Items of Note EPS Revenue/ ($MM) ($)35 Segment Expense Line Item36 Pre After Tax Tax Reported net income and EPS (diluted) 14,298 7.72 Items of note Amortization of acquired intangibles37 285 253 0.14 Corporate Page 4, L15, L21 & L29 Acquisition and integration charges related to Schwab

  24. Slide 24: Q4 2021: Items of Note

    Q4 2021: Items of Note Revenue/ ($MM) EPS ($)35 Segment Expense Line Item36 Pre After Tax Tax Reported net income and EPS (diluted) 3,781 2.04 Items of note Amortization of acquired intangibles37 74 65 0.04 Corporate Page 4, L15, L21 & L29 Acquisition and integration charges related to Schwab38 22 2

  25. Slide 25: 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

  26. Slide 26: Fiscal 2021: PTPP & Operating Leverage

    Fiscal 2021: PTPP1,39 & Operating Leverage1,40 Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change FY 2021 FY 2020 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 42,693 23,076 43,646 21,604 Page 2, L3 & L6 2 PTPP 19,617 22,042 3 PTPP (YoY

  27. Slide 27: Q4 2021: PTPP & Operating Leverage

    Q4 2021: PTPP1,39 & Operating Leverage1,40 Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change Q4 2021 Q3 2021 Q4 2020 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 10,941 5,947 10,712 5,616 11,844 5,709 Page 2, L3 & L6 2

  28. Slide 28: Canadian Retail: Volumes, Margins and Efficiency

    Canadian Retail Volumes, Margins and Efficiency Net Interest Margin (NIM) Average Loans $B49 460 473 484 447 454 2.71% 85 87 91 94 85 2.65% 2.61% 2.61% 2.57% 362 369 373 382 390 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Personal Business Efficiency Ratio48 Average Deposits $B49 437

  29. Slide 29: Canadian Retail: Wealth Revenue and Assets

    Canadian Retail Wealth Revenue and Assets Wealth Revenue $MM Wealth Assets $B15 1,600 600 1,448 1,428 1,402 1,415 557 160 538 155 169 172 514 1,237 484 1,200 150 214 346 245 433 420 427 306 500 397 380 358 210 490 800 464 445 410 400 400 369 877 941 942 1,001 1,042 0 300 Q4/20 Q1/21 Q2/21 Q3/21 Q4/2

  30. Slide 30: U.S. Retail: Volumes, Margins and Efficiency

    U.S. Retail Volumes, Margins and Efficiency NII and NIM17,50 Average Loans US$B49 2.27% 2.24% 2.15% 2.21% 2.16% 174 172 170 167 163 2.18% 8.5 8.2 9.3 8.7 4.8 2.13% 2.01% 2.02% 2.05% 1,673 89 87 86 84 83 1,579 1,619 1,566 1,548 108 53 70 99 86 1,513 1,509 1,520 1,565 76 77 75 74 76 1,462 Q4/20 Q1/21

  31. Slide 31: U.S. Retail: Wealth Assets and Schwab EPU

    U.S. Retail Wealth Assets and Schwab EPU TD Wealth Assets US$B15 Schwab54 – Q4 2021 TD’s share of Schwab’s net income was C$224MM on a 44 reported basis, of which C$246MM (US$195MM) was 43 41 41 recorded in the U.S. Retail segment 39  TD's share of Schwab's net income was C$271MM on an adjusted bas

  32. Slide 32: Schwab Equity Pickup Q4 2021 Reconciliation

    Schwab Equity Pickup Q4 2021 Reconciliation U.S. Retail P&L ($MM)56 TDBG Corporate Segment $C $US Reported Schwab Equity Pickup57 224 246 195 (22) Amortization of Intangibles58 34 0 0 34 Acquisition and Integration Charges58,59 13 0 0 13 Adjusted Schwab Equity Pickup1 271 246 195 25 Financial Statem

  33. Slide 33: Wholesale Banking

    Wholesale Banking Revenue Loans60 Q4 2021 2% Q4 2021 5% 35% 27% $1.2B $58.1B 63% 68% Corporate and Global Markets Other61 Canada United States International Investment Banking Highlights  Our Global Markets business continued to perform well as market activity normalized compared to last year  Our

  34. Slide 34: Gross Lending Portfolio

    Gross Lending Portfolio Including B/As Balances ($B unless otherwise noted) Q3/21 Q4/21 Canadian Retail Portfolio 479.2 488.2 Personal 387.4 394.6 Residential Mortgages 226.3 230.5 Home Equity Lines of Credit (HELOC) 99.9 102.1 Indirect Auto 27.6 27.6 Credit Cards 14.9 15.2 Other Personal 18.7 19.2

  35. Slide 35: COVID-19 Industries of Focus

    COVID-19 Industries of Focus Total Gross Loans & Acceptances: $749B Highlights (Q4 2021)  Gross loans and acceptances to industries of heightened focus were $40 billion Residential Mortgages & – Representing ~5.4% of Total Bank HELOC, gross loans and acceptances 50.6%  Lending portfolio remained w

  36. Slide 36: Canadian Real Estate Secured Lending Portfolio

    Canadian Real Estate Secured Lending Portfolio Highlights (Q4 2021) Quarterly Portfolio Volumes ($B) $308 $312 $319 $328 $334 Canadian RESL credit quality remained strong Uninsured Insured 73% 74% 75% 76% 77%  Uninsured and insured portfolio loan-to value rates stable 27% 26% 25% 24% 23% Q4/20 Q1/2

  37. Slide 37: Canadian Personal Banking

    Canadian Personal Banking Canadian Personal Banking (Q4/21) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%)  Gross impaired loans declined Residential Mortgages 230.5 233 0.10 quarter-over-quarter, Home Equity Lines of Credit (HELOC) 102.1 121 0.12 remaining at low levels Indirect Auto 27.6 51

  38. Slide 38: Canadian Commercial and Wholesale Banking

    Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q4/21) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) decreased in both portfolios Commercial Banking68 93.5 409 0.44 quarter-over-quarter Wholesale 59.1 12 0.02 Total Canadian Comme

  39. Slide 39: U.S. Personal Banking (USD)

    U.S. Personal Banking (USD) Highlights U.S. Personal Banking72 (Q4/21)  Gross impaired loans Gross Loans GIL GIL/Loans decreased quarter-over- ($B) ($MM) (%) quarter, remaining at low Residential Mortgages 29.5 320 1.09 levels. Home Equity Lines of Credit (HELOC)62 7.1 272 3.85 Indirect Auto 25.5 1

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

    U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking24 (Q4/21) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) decreased quarter-over- Commercial Real Estate (CRE) 24.0 122 0.51 quarter as resolutions Non-residential Real Estate 16.7 81 0.49 outpaced new formations.

  41. Slide 41: 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

  42. Slide 42: Endnotes

    Endnotes 13. FX impact solely related to the U.S. Retail Bank. Adjusted revenue, excluding FX and the insurance fair value change is a non-GAAP financial measure. For further information about this non-GAAP financial measure and a reconciliation, please see endnote 1 and slides 26 and 27. 14. FX imp

  43. Slide 43: Endnotes

    Endnotes 27. PCL Ratio: Provision for Credit Losses on a quarterly annualized basis/Average Net Loans & Acceptances. 28. Net U.S. Retail PCL ratio excludes credit losses associated with the retailer program partners' share of the U.S. Strategic Cards Portfolio, which is recorded in the Corporate Seg

  44. Slide 44: Endnotes

    Endnotes 40. 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

  45. Slide 45: Endnotes

    Endnotes 53. Insured deposit accounts. 54. 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 additiona

  46. Slide 46: Endnotes

    Endnotes 66. RESL Portfolio Loan to Value is calculated with the Teranet-National Bank House Price Index™ and weighted by the total exposure. The Teranet-National Bank House Price Index™ is a trademark of Teranet Enterprises Inc. and National Bank of Canada and has been licensed for internal use by

  47. Slide 47: Investor Relations Contacts

    Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 47

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