Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — Q4 2021 Earnings Presentation
71 slides from Toronto-dominion Bank's earnings presentation, 2021
Slide 1: Investor Presentation Q4 2021
TD Bank Group Investor Presentation Q4 2021 1
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: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q4 2021 Financial Results 2 For the three months ended October 31, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long-term shareholder returns2 Strong Ba
Slide 4: TD Framework
TD Framework Execute Own Innovate Think Customer Develop Our Vision Our Purpose Be the better bank To enrich the lives of our customers, communities TD Framework and colleagues Our Shared Commitments Think like a Act like an owner; Execute with Innovate with Develop our customer; lead with integrity
Slide 5: 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
Slide 6: Proven Business Model: TD Snapshot
Proven Business Model: TD Snapshot Diversification and scale, underpinned by a strong risk culture Our Businesses Canadian Retail ▪ Personal banking, credit cards and auto finance ▪ Small business, commercial banking, merchant solutions and equipment finance ▪ Direct investing, advice-based wealth,
Slide 7: Competing in Attractive Markets
Competing in Attractive Markets Country Statistics Country Statistics ▪ 10th largest economy ▪ World’s largest economy ▪ Real GDP of C$2.1 trillion ▪ Real GDP of US$19 trillion ▪ Population of ~38 million ▪ Population of ~333 million Canadian Banking System U.S. Banking System ▪ One of the soundest
Slide 8: Top North American Bank
Top 10 North American Bank Canadian North American Q4 2021 (C$ except otherwise noted) TD Bank Group Ranking21 Ranking22 Total assets $1,729B 1st 5th Total deposits $1,125B 1st 5th Market capitalization $163.7B 2nd 6th Reported net income (trailing four quarters) $14.3B 2nd 6th Adjusted net income18
Slide 9: Diversified Business Mix
Diversified Business Mix Three key business lines Q4 2021 Reported Earnings Mix23 ▪ Canadian Retail – Robust retail banking platform in Canada with proven performance 24 U.S. Retail Bank, 29% Canadian ▪ U.S. Retail – Top 10 bank26 in Retail, 54% the U.S. with attractive growth opportunities ▪ Wholes
Slide 10: Growing Platform / North American Scale
Growing Platform / North American Scale 2000-2004 – A Canadian Leader 2005-2010 – Building U.S. Platform 2011-2015 – Acquiring Assets New Capabilities and Partnerships • Acquisition of Canada Trust (2000) • TD Waterhouse USA / Ameritrade • Acquired Chrysler Financial auto • Acquired Epoch (2013) • T
Slide 11: Forward Focused: Q4 Highlights
Forward Focused: Q4 Highlights Shaping the future of banking #1 patent filer in Canada Award-winning credit cards28 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 Regio
Slide 12: Connected Experiences
Connected Experiences Consistent Strategy Q4 2021 Highlights31 How we compete: ▪ Enabling seamless interactions between customers and the entire 6.4M organization 15.3M 4.2M Active Active Digital Active U.S. ▪ Leveraging our industry-leading Experience Design Center of Canadian Users Mobile Users Mo
Slide 13: Forward Focused: Digital Adoption
Forward Focused: Digital Adoption Digital Adoption Active Mobile Users Self-Serve Transactions (% of total customers)33 (millions)11 (as % of all financial transactions)34 +190 bps YoY +8.0% YoY 0 bps YoY 92.0 92.0 92.0 60.7 60.9 6.4 Canadian 6.3 Retail32 59.0 5.9 Q4/20 Q3/21 Q4/21 Q4/20 Q3/21 Q4/21
Slide 14: Purpose Driven: Q4 Highlights
Purpose Driven: Q4 Highlights Centered on our vision, purpose and shared commitments 8th consecutive year 14
Slide 15: Our Strategy
Our Strategy Our Environmental, Social and Governance strategy reflects the commitments we make and is represented by the actions we take together to drive progress. It is embedded in our proven business model, guided by our purpose and inspired by our forward focus. The TD Ready Commitment accelera
Slide 16: 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
Slide 17: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q4 2021 Financial Results 2 For the three months ended October 31, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Ba
Slide 18: Fiscal 2021 Highlights
Fiscal 2021 Highlights Higher fee income and volumes, improved credit conditions EPS of $7.72, up 20% P&L ($MM) ▪ Adjusted18 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
Slide 19: 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) ▪ Adjusted18 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) ($1,040) sale of the Bank's investmen
Slide 20: Canadian Retail
Canadian Retail Strong revenue growth, continued investment in our businesses Net income up 19% YoY (17% adjusted18) P&L ($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) ($198) more than offset lower margins Impaire
Slide 21: U.S. Retail (US$)
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
Slide 22: 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)7,41 PCL (77) ($79) ($71
Slide 23: Capital
Capital42 Robust capital and liquidity positions Common Equity Tier 1 ratio of 15.2% Common Equity Tier 1 Ratio Q3 2021 CET 1 Ratio 14.5% Internal capital generation 49 Risk-Weighted Assets down 1% QoQ Decrease in threshold deduction 13 Decrease in RWA (net of FX)43 and other 12 Leverage Ratio of 4.
Slide 24: Gross Lending Portfolio
Gross Lending Portfolio Including B/As Balances ($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
Slide 25: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment Highlights PCL47: $MM and Ratios48 $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
Slide 26: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) ACL51: $B and Coverage Ratios52 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
Slide 27: 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 $40 billion Residential Mortgages & – Representing ~5.4% of Total Bank HELOC, gross loans and acceptances 50.6% ▪ Lending portfolio remained w
Slide 28: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q4 2021 Financial Results 2 For the three months ended October 31, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Ba
Slide 29: Consistent Earnings Growth
Consistent Earnings Growth Reported Earnings (C$MM)57 5-year CAGR58 $14,298 Reported Earnings: 9.9% (9.5% adjusted18) Reported EPS: 10.6% (10.2% adjusted18) $11,334 $11,686 $11,895 $10,517 $8,936 Corporate Wholesale Banking U.S. Retail Canadian Retail 2016 2017 2018 2019 2020 59 2021 29
Slide 30: Strong, Consistent Dividend History
Strong, Consistent Dividend History Dividends Per Share (C$) $3.16 164-year continuous dividend history Dividend yield: 3.7%7 Target payout $0.22 range: 40%-50% Annual Dividend 30
Slide 31: Solid Total Shareholder Returns
Solid Total Shareholder Returns7 Canadian North American TD Bank Group Ranking21 Ranking22 One-Year 58.9% 2nd 9th Three-Year 11.8% 4th 8th Five-Year 12.4% 4th 8th Ten-Year 13.3% 2nd 6th 31
Slide 32: Canadian Retail
Canadian Retail Consistent Strategy Reported Net Income (C$MM) How we compete: $8,481 ▪ Legendary personal connected $7,183 $6,525 $6,863 customer service $6,026 ▪ Focus on underrepresented products and markets ▪ The power of One TD ▪ Winning culture and team $6,525 $7,183 $7,421 $6,124 $8,481 Highe
Slide 33: Canadian Retail
Canadian Retail Personal Banking Credit Cards ▪ #1 or #2 market share in most retail products14 ▪ Dual card issuer of high value brands, including TD First Class Visa ▪ TD's branch network in Canada continues to lead the market in total and TD Aeroplan Visa, and MBNA World Elite Mastercard hours ope
Slide 34: U.S. Retail
U.S. Retail Consistent Strategy Reported Net Income (US$MM) How we compete: $3,750 $3,967 ▪ Legendary service and convenience $3,253 ▪ Grow and deepen customer relationships $2,536 ▪ Differentiated brand as the “human” bank $2,278 ▪ Productivity initiatives that enhance both the customer and colleag
Slide 35: U.S. Retail
U.S. Retail Personal & Commercial Banking Credit Cards ▪ Top 10 bank70 with over 9MM customers, operating retail stores in ▪ Private label and co-brand credit card offering for U.S. customers 15 states and the District of Columbia of regional and nationwide retail partners, including Target and ▪ Of
Slide 36: Wholesale Banking
Wholesale Banking Consistent Strategy Net Income (C$MM) How we compete: $1,570 ▪ Continue to build an integrated North American dealer franchise $1,418 with global reach – In Canada, we will be the top-ranked investment dealer. $1,039 $1,054 – In the U.S., we will deliver value and trusted advice in
Slide 37: Wholesale Banking: Positioned for Growth
Wholesale Banking Positioned for Growth ▪ Lead mandates highlighting TD Securities' objective to build an integrated North American dealer franchise with global reach include: – Joint Lead Manager on the European Union's first NextGenerationEU (NGEU) Green Bond. This represents the world's largest g
Slide 38: TD Bank Group Key Themes
TD Bank Group Key Themes Top 10 North American Bank 1 5th largest bank by Total Assets1 6th largest bank by Market Cap1 Q4 2021 Financial Results 2 For the three months ended October 31, 2021. Proven Performance, Future Growth Opportunities 3 Delivering solid long term shareholder returns2 Strong Ba
Slide 39: TD TLAC Requirements
TD TLAC Requirements ▪ Canadian D-SIBs were required to meet their regulatory TLAC requirements by November 1, 2021. ▪ OSFI has stipulated that D-SIBs will be subject to 2 supervisory ratios: 1. Minimum risk-based TLAC ratio: 24.00% (21.50% + 2.50% Domestic Stability Buffer ("DSB")72) 2. TLAC levera
Slide 40: Industry-Leading Credit Ratings
Industry-Leading Credit Ratings Issuer Ratings78 Rating Agencies Senior Debt Ratings82 Outlook Moody's A1 Stable S&P A Stable DBRS AA Stable Ratings vs. Peer Group78 Moody’s Senior Debt79 / HoldCo80 Rating S&P Senior Debt79 / HoldCo80 Rating Aa1 AA+ Aa2 AA Aa3 AA- A1 A+ A2 A A3 A- Baa1 BBB+ TD Canad
Slide 41: Leading Non-Common Equity Capital Ratings
Leading Non-Common Equity Capital Ratings NVCC Tier 2 Subordinated Debt Ratings78 Moody’s S&P A2 A A3 A- Baa1 BBB+ Baa2 BBB Baa3 BBB- Ba1 BB+ TD CanadianPeers Peers 21 TD Canadian Peers TD Canadian TD Canadian Peers21 Additional Tier 1 NVCC Preferred Share Ratings78 Moody’s S&P A2 A A3 A- Baa1 BBB+
Slide 42: Robust Liquidity Management
Robust Liquidity Management Liquidity Risk Management Framework Liquidity Risk Management Framework ▪ Target a 90-day survival horizon under a combined ▪ TD holds a variety of liquid assets commensurate with Bank-specific and market-wide stress scenario, and a liquidity needs in the organization. mi
Slide 43: Deposit Overview
Deposit Overview Leader in Deposits Large base of personal and business deposits83 that make up 75% of the Bank's total funding ▪ TD Canada Trust ("TDCT") ranked #1 in Total Personal Deposits84 – legendary customer service and the power of One TD ▪ U.S. Retail is a top 1070 bank in the U.S. with 9.6
Slide 44: Low Risk, Deposit Rich Balance Sheet
Low Risk, Deposit Rich Balance Sheet64 Large base of stable retail and commercial Maturity Profile89,90 (C$B) (To first par redemption date) deposits 50 Issuance Maturity 40 ▪ Personal and business deposits are TD's primary sources of funds – Customer service business model delivers stable base of “
Slide 45: Wholesale Term Debt Composition
Wholesale Term Debt Composition64 Funding Strategy ▪ Wholesale term funding through diversified sources across domestic and international markets ▪ Well-established C$80 billion Legislative Covered Bond Program is an important pillar in global funding strategy ▪ Programmatic issuance for the establi
Slide 46: Canadian Registered Covered Bond Program
Canadian Registered Covered Bond Program Key Highlights Covered Bond Collateral ▪ Canadian residential real estate property with no more than 4 residential units ▪ Uninsured conventional first lien assets with original loan to value ratio that is 80% or less Housing Market Risks ▪ Latest property va
Slide 47: TD Global Legislative Covered Bond Program
TD Global Legislative Covered Bond Program Highlights Cover Pool as at October 31, 2021 ▪ TD has a C$80B legislative covered bond program ▪ High quality, conventional first lien Canadian ▪ Covered bonds issuance for Canadian issuers governed by CMHC-administered guidelines Residential mortgages orig
Slide 48: 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 49: 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, 2018100. Unlike other jurisdictions, Ca
Slide 50: Appendix: Economic Outlook
Appendix Economic Outlook
Slide 51: TD Economics Update
TD Economics Update103 Global Outlook: Elevated inflation and Omicron variant present downside risks to growth ▪ The global economy continues to recover, but is being impeded by COVID-19, most recently through its impact on supply chains and inflation. The higher trajectory of inflation reduces the
Slide 52: Interest Rate Outlook
Interest Rate Outlook103 Interest Rates, Canada and U.S. ▪ The federal funds rate is in the 0% to 0.25% (%) 7 range. The Federal Reserve has announced a Forecast reduction to its Quantitative Easing (QE) program U.S. Federal by $10 billion a month for Treasury securities and 6 Funds Rate $5 billion
Slide 53: Appendix: Credit Quality
Appendix Credit Quality
Slide 54: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment Highlights GIL Formations104: $MM and Ratios105 ▪ 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 /
Slide 55: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment GIL106: $MM and Ratios55 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 $18 / 3 bps – The ec
Slide 56: Credit Quality
Credit Quality Net impaired loans and PCL ratios (bps) 100 56 52 50 45 46 48 46 39 38 Q4 2021 32 24 43 41 39 38 37 34 34 37 33 Q1 2021 17 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q4 2021 Q2 2021 -21 -7 IFRS IFRS 9 107 Q3 2021 -2 Net impaired loans as a % of net loans and acceptances (b
Slide 57: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL)47,108 Impaired and Performing Highlights PCL ($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
Slide 58: 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
Slide 59: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Highlights (Q4 2021) Quarterly Portfolio Volumes ($B) $308 $312 $319 $328 $334 Canadian RESL credit quality remained strong Uninsured Insured 73% 74% 75% 76% 77% ▪ Uninsured and insured portfolio loan-to value rates stable 27% 26% 25% 24% 23% Q4/20 Q1/2
Slide 60: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q4/21) Gross Loans/ GIL GIL/Loans ▪ Gross impaired loans BAs ($B) ($MM) (%) decreased in both portfolios Commercial Banking111 93.5 409 0.44 quarter-over-quarter Wholesale 59.1 12 0.02 Total Canadian Comm
Slide 61: U.S. Personal Banking (USD)
U.S. Personal Banking (USD) Highlights U.S. Personal Banking106 (Q4/21) ▪ Gross impaired loans Gross Loans GIL GIL/Loans decreased quarter-over- ($B) ($MM) (%) quarter, remaining at low Residential Mortgages 29.5 320 1.09 levels. Home Equity Lines of Credit (HELOC)45 7.1 272 3.85 Indirect Auto 25.5
Slide 62: U.S. Commercial Banking (USD)
U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking106 (Q4/21) Gross Loans/ GIL GIL/Loans ▪ Gross impaired loans BAs ($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.
Slide 63: Endnotes
Endnotes 1. See slide 8. 2. See slide 31. 3. See slide 40. 4. Q4 2021 is the quarter comprising the period from August 1, 2021 to October 31, 2021. 5. Deposits based on total of average personal and business deposits during the quarter. U.S. Retail includes Schwab Insured Deposit Accounts (IDAs), Ca
Slide 64: Endnotes
Endnotes 18. 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 uti
Slide 65: Endnotes
Endnotes 28. TD’s suite of credit cards received multiple awards, with TD Aeroplan Infinite named top airline card (Rewards Canada) and best travel rewards card (GreedyRates), and MBNA Rewards Platinum Plus named best rewards card for everyday spending (GreedyRates) and best no-fee travel rewards ca
Slide 66: Endnotes
Endnotes 40. Q4 2021 reflects the contribution from the Bank's investment in Schwab. Q4 2020 reflect the contribution from the Bank's investment in TD Ameritrade. 41. Wholesale Banking trading-related revenue on a taxable equivalent basis is part of the total Bank's trading-relating income disclosed
Slide 67: Endnotes
Endnotes 58. Compound annual growth rate for the five-year period ended October 31, 2021. 59. Corporate results in 2020 include a net gain on sale of the Bank's investment in TD Ameritrade. 60. Total Deposits based on total of average personal, business and wealth deposits. Total Loans based on tota
Slide 68: Endnotes
Endnotes 74. Reflects debt outstanding as at, and converted at FX rate as at October 31, 2021. 75. Sums may not add up precisely due to rounding. 76. These measures have been calculated in accordance with OSFI's Total Loss Absorbing Capacity (TLAC) guideline. 77. Includes outstanding senior unsecure
Slide 69: Endnotes
Endnotes 91. Includes Limited Recourse Capital Notes, Preferred Shares and Innovative T1. 92. Includes Limited Recourse Capital Notes, Preferred Shares, Innovative T1, and Subordinated Debt. Subordinated debt includes certain private placement notes. These instruments are not considered wholesale fu
Slide 70: Endnotes
Endnotes 107.Effective November 1, 2017, the Bank adopted IFRS 9, which replaces the guidance in IAS 39. The Bank made the decision not to restate comparative period financial information and has recognized any measurement differences between the previous carrying amount and the new carrying amount
Slide 71: Investor Relations Contacts
Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 71
Toronto-Dominion Bank (TD Bank Group) — Q4 2021 Earnings Presentation on 6ix