Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Debt Investor Presentation (2013)
46 slides from Toronto-dominion Bank's debt investor presentation, 2013
Slide 1: TD Bank Group Investor Presentation – Fixed Income Q4 2013
TD Bank Group Investor Presentation – Fixed Income Q4 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, credit cards and auto finance Small business and commercial banking Wealth & Insurance Direct investing Advice-based wealth business Asset management 2,496 Insurance Business Locations1 U.S. Personal & Commerci
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$15.1 trillion Population of 35 million Population of 314 million Canadian Banking System U.S. Banking System Soundest banki
Slide 7: TD Bank Group in North America
TD Bank Group in North America Compared to: Q4 2013 North Canadian (C$ billions) American Peers4 Peers5 Total Assets $863B 1st 5th Total Deposits $544B 2nd 6th Market Cap (as of October 31, 2013) $88B 2nd 6th Adj. Net Income1 (Trailing 4 Quarters) $7.2B 2nd 6th Rpt. Net Income (Trailing 4 Quarters)
Slide 8: Composition of Earnings
Composition of Earnings Highlights TD is a top 10 bank in North America1 Increasing retail focus Strength of retail franchise Reliable and steady earnings mix 3,4 Adjusted Retail Earnings2,5 4 $7,158 Wholesale Earnings 4 13% 9% 91% $2,158 42% 2013 Adjusted Retail Earnings2,5 = 91% 58% 2001 2
Slide 9: Evolution of TD
Evolution of TD Building Franchise Businesses >>> Increasing Retail focus >>> Acquired Acquired Target credit TD Chrysler card portfolio Waterhouse Financial & Epoch and TD Bank Acquired Acquired USA/ Privatized Acquired Commerce Acquired and MBNA announced and Canada Newcrest 51% of Ameritrade TD C
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: Q4 2013 Highlights
Q4 2013 Highlights Key Themes Net Income $MM (Adjusted, where applicable) Adjusted1 EPS growth of 4% YoY Q4/13 QoQ YoY Retail2 $ 1,752 21% 19% Retail earnings up 19% Wholesale 122 -17% -61% Strong loan and deposit volume growth in Canada and the U.S. Corporate (53) n/a -83% Adjusted Net Income
Slide 12: Q4 2013 Credit Highlights
Q4 2013 Credit Highlights Key Credit Themes PCL Ratio (bps)1 Strong credit performance Loss rates for Canadian P&C remain historically low Continued improvement in the U.S. Personal and Commercial portfolios Performance expected to continue through 2014 Release of $40MM of Alberta flood re
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 approximately 75% of the total mortgage market, including securitizations1 Conservative lending practices Strong competition among lenders Legal environment supports foreclosure and other types of legal
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 Canadian RESL credit quality remains strong amidst continued resiliency in the Canadian housing market Portfolio Q4/13 Gross Loans Outstanding $226 B Canadian RESL Average Current LTV 47% Percentage Insured 66% Condo Borrower Gross Loans Outstanding $28 B (Reside
Slide 19: Mortgage Rule Developments in Canada
Mortgage Rule Developments in Canada 2012 Measures Announced by Minister Flaherty (Government of Canada) Maximum amortization period lowered from 30 years to 25 years Maximum amount that Canadians can borrow when refinancing lowered to 80% from 85% Maximum GDS1 and TDS2 ratios of 39% and 44% r
Slide 20: North American Economy
North American Economy Outlook U.S. economy to accelerate as fiscal drag dissipates Fiscal drag to fall from 1.3% in 2013 to 0.5% in 2014 Good news building on state of U.S. economy Buoyed by rising wealth and faster income growth in absence of tax hikes, consumer spending will play a lead r
Slide 21: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 21
Slide 22: Capital
Capital Highlights Basel III Common Equity Tier 11 Basel III Common Equity Tier 1 ratio 9.0% as of October 31, 2013 Announced stock dividend with 2-for-1 stock split effect in January During fiscal 2013 we repurchased 9 million shares under buyback program Dividends paid up 12% in 2013 Risk-
Slide 23: 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 Strong credit ratings 1. See footnote 2 on slide 5. 2. Canadian peers include RY, BNS, BMO and CM. 3. US
Slide 24: Robust Liquidity Management
Robust Liquidity Management Treasury paradigm Contribute to stable and growing earnings Manage non-trading market risk within established limits No black boxes Match terms of assets and liabilities Do not engage in liquidity carry trade Match underlying funding maturities to term of as
Slide 25: Term Funding Strategy
Term Funding Strategy Large base of stable retail and commercial deposits Customer service business model delivers growing base of “sticky” and franchise- based deposits Reserve assets held for deposit balance that is not considered permanent Large user of securitization programs via Canada
Slide 26: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition1 Funding Mix2 Wholesale Term Debt Assets Securitized 54% Other Deposits 3 Personal Term Deposits 26% 8% Residential Residential Mortgages Mortgages 52%58% Short Term Liabilities4 Covered Bonds 11% 14% Personal Non‐ Wholesale Term Covered Bonds Term Deposits Debt
Slide 27: Debt Maturity Profile F2013 – F2018
Debt Maturity Profile1 F2013 – F2018 Bullet Debt Maturities (C$ billions)2 $20 $18 $18 $16 $15 $13 $11 $11 $10 $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 October 31,
Slide 28: Canadian Covered Bond Legislation
Canadian Covered Bond Legislation The Covered Bond legal framework was announced in the 2012 Federal Budget and passed into law in June 2012 Canada Mortgage and Housing Corporation (“CMHC”) was given the responsibility to administer the covered bond legal framework In December 2012, the CMHC i
Slide 29: CMHC Guide Highlights
CMHC Guide Highlights Asset Coverage Test To confirm overcollateralization of the covered bond collateral held against covered bonds outstanding Amortization Test Upon an event of default, to confirm value of covered bond collateral against covered bonds outstanding Valuation Calculation
Slide 30: 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 30
Slide 31: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 31
Slide 32: Global Economic Outlook
Global Economic Outlook World Real GDP Growth1 Y/Y % Change Global economic growth 6 Forecast1 will moderately increase 4 next year 2 0 Europe emerging from -2 recession and accelerating 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 U.S. growth will be the North American Real GDP Growth2 mai
Slide 33: Canadian Economic Outlook
Canadian Economic Outlook Canadian Export and U.S. Activity Index1 Y/Y % Change 25 20 Forecast1 15 10 Canadian economy still 5 tightly linked to U.S. 0 -5 fortunes, and better U.S. -10 growth in medium term to -15 -20 help Canada’s prospects -25 1982 1988 1994 2000 2006 2012 Only modest support
Slide 34: U.S. Economic Outlook
U.S. Economic Outlook Consumers Rebounding on Faster Income Growth Y/Y % Change 6 Forecast1 Tax hikes weighed on 4 income and consumer 2 spending in 2013. 0 Unencumbered by this -2 Real Consumer Spending Real Disposable Income burden, spending growth -4 will accelerate in 2014 and 00 01 02 03 04 0
Slide 35: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 % 7 US Federal Modest outlook and low Funds Rate 6 Forecast inflation mean North 5 Bank of American central banks are Canada Target Rate set to leave monetary policy 4 at exceptionally accommodative levels for a 3 while 2 1 0 2000 2002 2004 20
Slide 36: Solid Growth and Returns Across Businesses
Solid Growth and Returns Across Businesses Adjusted Earnings1,2 (C$MM) $7,075 $7,158 $6,432 $5,228 $4,716 $3,813 Wholesale Banking U.S. P&C Wealth & Insurance2 Canadian P&C2 2008 2009 2010 2011 2012 2013 Adjusted Retail Earnings as % of 98% 78% 83% 87% 88% 91% Adjusted Earnings Targeting 7-10% adjus
Slide 37: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q3/13 Q4/13 Canadian Personal & Commercial Portfolio $ 310.3 $ 314.6 Personal $ 264.1 $ 267.6 Residential Mortgages 161.0 164.7 Home Equity Lines of Credit (HELOC) 62.1 61.3 Indirect Auto 14.5 14.7 Unsecured Lines of Credit
Slide 38: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,218 $1,244 Canadian P&C formations $1,162 remain stable $1,092 $1,041 U.S. P&C formations increased $91MM (6 bps) over Q3/13 due to Target and seasoning in the Indirect Auto portfolio 30 25 26 27 28 bps Ot
Slide 39: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights $2,628 $2,692 Canadian P&C Gross Impaired $2,518 $2,494 $2,531 Loans continued positive trend due to improved resolutions Excluding Target, U.S. P&C Gross Impaired Loan ratio remained flat over Q3/13 Increase in Wholesale
Slide 40: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights Full year PCL decreased $489 $188MM or 11% resulting in the lowest annual loss rates $402 $407 $420 since 2007 $360 Canadian P&C loss rate at 5- year lows U.S. P&C loss rate remained stable during 2013 1 48 35 39 3
Slide 41: Canadian Personal Banking
Canadian Personal Banking Q4/13 Canadian Personal Banking1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 165 0.27% 448 4 Credit quality remains strong Home Equity Lines of Credit (HELOC) 61 0.52% 321 5 Real estate secured lending Indirect Auto 15 0.28% 41 37 l
Slide 42: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q4/13 Canadian Commercial and Gross Highlights GIL PCL1 Loans/BAs Wholesale Banking ($B) ($MM) ($MM) Continued strong credit Commercial Banking2 47 117 3 performance Wholesale 21 69 1 Commercial (including Small Total Canadian Commercial and Wholesale $6
Slide 43: U.S. Personal Banking
U.S. Personal Banking Q4/13 Highlights Gross Loans GIL/ GIL U.S. Personal Banking1 ($B) Loans ($MM) PCL2 Underlying credit quality of the ($MM) Residential Mortgages 21 1.24% 258 2 U.S. Personal portfolio remains Home Equity Lines of Credit (HELOC)3 10 2.07% 220 12 strong Normal seasoning of the
Slide 44: U.S. Commercial Banking
U.S. Commercial Banking Q4/13 U.S. Commercial Banking1 Gross Loans/BAs GIL PCL2 Highlights ($MM) ($MM) ($B) Commercial Real Estate (CRE) 16 335 1 Positive momentum continues Non-residential Real Estate 12 225 1 in U.S. Commercial portfolio Residential Real Estate 4 110 0 Real Estate values have
Slide 45: 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 46: TD Bank Group Investor Presentation – Fixed Income
TD Bank Group Investor Presentation – Fixed Income Q4 2013