Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — The Toronto-Dominion Bank — Q4 2022 Earnings Presentation
52 slides from Toronto-dominion Bank's earnings presentation, Dec 1, 2022
Slide 1: Quarterly Results Presentation Q4 2022
TD Bank Group Quarterly Results Presentation Q4 2022 December 1, 2022
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: Our Strategy
Our Strategy We're in this together – Anchored by our proven business model and propelled by our forward-focused strategy, we are helping our customers, colleagues and communities thrive in a changing world Proven Business Model Forward Focused Purpose-Driven Deliver consistent earnings growth, Shap
Slide 4: Proven Business Model
Proven Business Model Diversification and scale, underpinned by a strong risk culture ▪ Fiscal 2022 reported earnings of $17.4B, up 22% (adjusted1 $15.4B, up 5%) ▪ Fiscal 2022 reported EPS of $9.47, up 23% (adjusted1,2 $8.36 up 6%) ▪ Strong revenue performance reflecting margin and volume growth in
Slide 5: Proven Business Model: Strong Customer Activity
Proven Business Model Strong Customer Activity Canadian Personal and Commercial U.S. Retail Average Volumes Global Wealth Assets Banking Average Volumes ($B) (US$B)4 ($B) 8% 300 8% 1,200 500 8% 7% 107 250 (1%) 1,000 400 94 112 112 85 167 413 164 200 100 800 594 300 357 143 383 563 150 98 87 600 465
Slide 6: Forward Focused: Shaping the future of banking
Forward Focused Shaping the future of banking Most Awarded Card Issuer by Among FIs, Largest Best Consumer Digital Bank Rewards Canada readers with Patent Portfolio in Canada in North America, 2nd Best-in-Category TD Aeroplan and 5th Largest in U.S. Consecutive Year Visa Infinite and TD Cash Back Vi
Slide 7: First Horizon Acquisition Update
Forward Focused First Horizon Acquisition Update First Horizon Accelerates TD's U.S. Retail Bank Growth Strategy Progress to Date Next Steps • Integration Management Office has defined Legal • Continue to work towards obtaining required Day 1 (deal closing), integration and conversion regulatory app
Slide 8: Forward Focused: Digital Adoption
Forward Focused: Digital Adoption Self-Serve Transactions Digital Adoption Active Mobile Users (as % of all financial (% of customers)9 (millions)10 transactions)11 +120 bps YoY +8.1% YoY -20 bps YoY 62.1 6.9 6.8 61.6 92.0 91.8 Canadian 91.6 6.4 Retail8 60.9 Q4/21 Q3/22 Q4/22 Q4/21 Q3/22 Q4/22 Q4/21
Slide 9: Purpose Driven
Purpose Driven Centered on our vision, purpose and shared commitments $10MM Investment into Boreal Wildlands Carbon Inclusive Lending Project Program for Black Entrepreneurs US$5MM Investment to Support Sponsored Certification Program for Inclusive Growth in U.S. Southeast Businesses Owned by Entrep
Slide 10: Purpose Driven: ESG Highlights
Purpose Driven ESG Highlights Environment Social Governance • Developed a methodology for setting Scope • Agreed to conduct a racial-equity assessment • Established the ESG Centre of Expertise to 3 financed emissions targets and set 2030 of its Canadian and U.S. employment policies coordinate and st
Slide 11: Fiscal 2022 Highlights
Fiscal 2022 Highlights Strong performance P&L ($MM) EPS of $9.47, up 23% Reported 2022 2021 YoY ▪ Adjusted1 EPS of $8.36, up 6% Revenue 49,032 42,693 15% PCL 1,067 (224) +$1,291 Revenue up 15% (Adj1 up 8%) Expenses 24,641 23,076 7% ▪ Reported revenue includes net gain from mitigation Net Income 17,4
Slide 12: Q4 2022 Highlights
Q4 2022 Highlights Strong performance P&L ($MM) EPS of $3.62, up 77% YoY Reported Q4/22 QoQ YoY ▪ Adjusted1 EPS of $2.18, up 4% YoY Revenue 15,563 42% 42% PCL 617 +$266 +$740 Revenue up 42% YoY (Adj1 up 12% YoY) Expenses 6,545 7% 10% ▪ Reported revenue includes net gain from mitigation Net Income 6,
Slide 13: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strong quarter with record earnings from continued growth momentum P&L ($MM) Net income up 11% YoY Reported Q4/22 QoQ YoY Revenue 4,454 5% 16% Revenue up 16% YoY PCL 229 +$59 +$176 ▪ Margin expansion, volume growth and increased Impaired 184 +$42 +$44 client ac
Slide 14: U.S. Retail (US$)
U.S. Retail (US$) Strong results supported by broad-based growth in its businesses P&L (US$MM) (except where noted) Net income up 7% YoY (Adj1 up 10% YoY) Reported Q4/22 QoQ YoY Revenue 2,699 12% 22% Revenue up 22% YoY PCL 169 +$86 +$231 ▪ Higher deposit margins and volumes and higher Impaired 125 +
Slide 15: Wealth Management & Insurance
Wealth Management & Insurance Solid performance amid challenging market conditions P&L ($MM) Net income down 15% YoY Reported Q4/22 QoQ YoY Revenue 2,631 (5%) (1%) Revenue down 1% YoY Insurance Claims 723 (13%) 11% ▪ Lower transaction and fee-based revenue in wealth Expenses 1,208 5% 1% and decrease
Slide 16: Wholesale Banking
Wholesale Banking Solid performance reflects strength of diversified business model P&L ($MM) Net income down 38% YoY (Adj1 down 35% YoY) Reported Q4/22 QoQ YoY Revenue 1,159 8% 1% Revenue up 1% YoY Trading-related revenue 560 2% 10% ▪ Higher global transaction banking, trading-related, (TEB)2,19 an
Slide 17: Corporate Segment
Corporate Segment P&L ($MM) Reported net income of $2.7B Reported Q4/22 Q3/22 Q4/21 ▪ Adjusted1 loss of $10MM Net Income 2,661 (752) (150) ▪ Reported net income includes net gain from Adjustments for items of note mitigation of interest rate volatility to closing capital Amortization of acquired 57
Slide 18: Capital
20 Capital Strong capital and liquidity management supporting future growth Common Equity Tier 1 ratio of 16.2% Common Equity Tier 1 Ratio Q3 2022 CET 1 Ratio 14.9% Internal capital generation 44 Risk-Weighted Assets up 4.3% QoQ Increase in RWA (net of FX)21 (19) Increase in Common Shares from Divid
Slide 19: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment Highlights GIL Formations23: $MM and Ratios24 ▪ Gross impaired loan formations increased 2 basis points quarter- over-quarter, reflecting: 16 14 bps – Some normalization of credit 11 12 12 performance $1,187 $1,209 $38 / 4 bps $1 / 1 bp $1,006 $937
Slide 20: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment GIL25: $MM and Ratios26 Highlights ▪ Gross impaired loans were 33 32 stable quarter-over-quarter, remaining at cyclically low 30 29 bps 28 levels $2,411 $2,560 $2,397 $2,503 $2,332 $3 / 3 bps $3 / 4 bps $2 / 2 bps $3 / 3 bps $3 / 4 bps $7 / $12 / 1 bp $
Slide 21: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment Highlights PCL27: $MM and Ratios28 $617 ▪ Quarter-over-quarter PCL increase largely recorded in the Canadian and U.S. consumer Canadian Personal & Commercial Banking $229 lending portfolios U.S. Retail $351 Corporate Wholesale Banking $170 $225 W
Slide 22: Provision for Credit Losses (PCL): Impaired and Performing
Provision for Credit Losses (PCL)27,31 Impaired and Performing Highlights PCL ($MM) Q4/21 Q3/22 Q4/22 ▪ Impaired PCL remains well below pre- pandemic levels Total Bank (123) 351 617 – Quarter-over-quarter increase largely in the Impaired 220 340 454 Canadian and U.S. consumer lending Performing (343
Slide 23: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) ACL27: $B and Coverage Ratios32 124 126 122 108 103 Highlights 103 97 93 $9.2 $9.4 $8.9 87 85 86 bps 74 ▪ ACL increased $445 million quarter-over- $7.9 $8.0 $7.7 $7.3 $7.1 $6.9 $7.4 quarter, reflecting: $6.9 United States 59% 60% 59% – The impact of foreign exchange
Slide 24: Appendix
Appendix 24
Slide 25: Fiscal 2022: Items of Note
Fiscal 2022: Items of Note Revenue/ ($MM) EPS ($)35 Segment Expense Line Item36 Pre Tax After Tax Reported net income and EPS (diluted) 17,429 9.47 Items of note Amortization of acquired intangibles37 242 216 0.12 Corporate Page 4, L13, L21 & L31 Acquisition and integration-related charges related t
Slide 26: Q4 2022: Items of Note
Q4 2022: Items of Note Revenue/ ($MM) EPS ($)35 Segment Expense Line Item36 Pre Tax After Tax Reported net income and EPS (diluted) 6,671 3.62 Items of note Amortization of acquired intangibles37 57 51 0.03 Corporate Page 4, L13, L21 & L31 Acquisition and integration-related charges related to 18 16
Slide 27: 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 $MM Credit Card Portfolio 1,000 Me
Slide 28: Fiscal 2022: PTPP & Operating Leverage
1,41 1,42 Fiscal 2022: PTPP & Operating Leverage Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change FY 2022 FY 2021 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 49,032 24,641 42,693 23,076 Page 2, L3 & L6 2 PTPP 24,391 19,617 3 PTPP (Yo
Slide 29: Q4 2022: PTPP & Operating Leverage
Q4 2022: PTPP1,41 & Operating Leverage1,42 Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change Q4 2022 Q3 2022 Q4 2021 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 15,563 6,545 10,925 6,096 10,941 5,947 Page 2, L3 & L6 2
Slide 30: Net Interest Income Sensitivity (NIIS)
Net Interest Income Sensitivity (NIIS) Strong deposit base and disciplined ALM management ▪ 25 bps increase in short-term interest rates ▪ 100 bps change in interest rates across the – $182MM increase in NII over a 12-month period from a curve 25 bps rise in short rates (25 bps hike from each of – 1
Slide 31: First Horizon Acquisition: Mitigation of Interest Rate Volatility
First Horizon Acquisition Mitigation of Interest Rate Volatility to Closing Capital ▪ Purchase accounting requires TD to fair value First Horizon's assets and liabilities at closing ▪ Since fair values are sensitive to interest rates, changes in rates will impact the fair values and therefore the am
Slide 32: Canadian Personal & Commercial Banking: Volumes, Margins and Efficiency
Canadian Personal & Commercial Banking Volumes, Margins and Efficiency Net Interest Margin (NIM)15 2.70% Average Loans $B52 496 511 520 476 486 2.59% 105 107 94 97 101 2.52% 2.48% 383 390 395 406 413 2.44% Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Personal Business Efficiency Ratio
Slide 33: U.S. Retail: Volumes, Margins and Efficiency
U.S. Retail Volumes, Margins and Efficiency NII and NIM16,53 Average Loans US$B52 3.13% 163 162 166 170 2.62% 3.12% 162 4.8 1.4 0.9 0.4 2.21% 2,220 2.4 2.21% 2.21% 2.60% 9 87 2.17% 83 82 83 86 2.05% 2.11% 1,905 16 1,673 1,671 1,641 108 65 2,211 28 1,889 76 77 78 80 83 1,565 1,606 1,614 Q4/21 Q1/22 Q
Slide 34: U.S. Retail: Wealth Assets and Schwab EPU
U.S. Retail Wealth Assets and Schwab EPU TD Wealth Assets US$B Schwab57 – Q4 2022 TD’s share of Schwab’s net income was C$290MM on a 41 40 reported basis, of which C$310MM (US$237MM) was 37 recorded in the U.S. Retail segment 36 34 ▪ TD's share of Schwab's net income was C$335MM on 33 32 32 32 an ad
Slide 35: Schwab Equity Pickup: Q4 2022 Reconciliation
Schwab Equity Pickup Q4 2022 Reconciliation U.S. Retail P&L ($MM)59 TDBG Corporate Segment $C $US Reported Schwab Equity Pickup60 290 310 237 (20) Amortization of Acquired Intangibles61 33 0 0 33 Acquisition and Integration Charges related to 12 0 0 12 the Schwab transaction61,62 Adjusted Schwab Equ
Slide 36: Wealth Management & Insurance: Volumes, Premiums and Efficiency
Wealth Management & Insurance Volumes, Premiums and Efficiency Insurance Premiums ($MM) Average Loans $B 1,527 7.9 7.8 1,334 1,271 1,428 1,116 7.4 7.2 7.1 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Efficiency Ratio Average Deposits $B 45.9% 44.7% 43.9% 42.2% 41.7% 42.7 40.5 41.2 39.
Slide 37: Wealth Management & Insurance: Wealth Revenue and Assets
Wealth Management & Insurance Wealth Revenue and Assets Wealth Revenue $MM Wealth Assets $B 1,600 600 1,499 1,428 1,431 1,350 1,344 557 557 181 537 172 183 526 517 207 217 1,200 244 226 427 429 214 500 411 408 172 170 397 800 457 421 400 410 400 393 362 1,042 1,075 1,022 971 957 0 300 Q4/21 Q1/22 Q2
Slide 38: Wholesale Banking
Wholesale Banking 2% Revenue Loans63 Q4 2022 Q4 2022 5% 33% 41% $1.2B $85.0B 57% 62% Corporate and Global Markets Other64 Canada United States International Investment Banking 38
Slide 39: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Period-End Balances ($B unless otherwise noted) Q3/22 Q4/22 Canadian Personal & Commercial Banking Portfolio 514.8 520.0 Personal 411.5 414.6 Residential Mortgages 244.5 244.9 Home Equity Lines of Credit (HELOC) 112.2 113.7 Indirect Auto 27.0 27.2 Credit Cards 1
Slide 40: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Highlights (Q4 2022) Quarterly Portfolio Volumes ($B) Canadian RESL credit quality remained $334 $340 $348 $357 $360 strong Uninsured ▪ Uninsured average Bureau score68 of 793 Insured 77% 78% 79% 80% 80% ▪ 45% variable interest rate, of which 27% 23% 22
Slide 41: Canadian Personal Banking
Canadian Personal Banking Canadian Personal Banking (Q4/22) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%) ▪ Continued strong asset quality Residential Mortgages 244.9 172 0.07 in Canadian Personal Banking Home Equity Lines of Credit (HELOC) 113.7 94 0.08 Indirect Auto 27.2 74 0.27 Credit Cards
Slide 42: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q4/22) Gross Loans/ GIL GIL/Loans ▪ Gross impaired loans BAs ($B) ($MM) (%) increased quarter-over- Commercial Banking73 105.4 461 0.44 quarter as new formations Wholesale Banking 95.4 46 0.05 outpaced re
Slide 43: U.S. Personal Banking (USD)
U.S. Personal Banking (USD) Highlights U.S. Personal Banking77 (Q4/22) ▪ Continued strong asset quality Gross Loans GIL GIL/Loans in U.S. Personal Banking ($B) ($MM) (%) Residential Mortgages 35.0 343 0.98 Home Equity Lines of Credit (HELOC)65 7.3 205 2.83 Indirect Auto 26.7 156 0.59 Credit Cards 13
Slide 44: U.S. Commercial Banking (USD)
U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking77 (Q4/22) Gross Loans/ GIL GIL/Loans ▪ Gross impaired loans BAs ($B) ($MM) (%) decreased quarter-over- Commercial Real Estate (CRE) 25.8 49 0.19 quarter Non-residential Real Estate 18.2 35 0.19 Residential Real Estate 7.6 14 0.18 Comme
Slide 45: 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
Slide 46: Endnotes
Endnotes 12. Mitigation of interest rate volatility to closing capital on First Horizon acquisition includes the following components, reported in the Corporate Segment: i) mark-to-market gains (losses) on interest rate swaps, recorded in non-interest income, ii) basis adjustment amortization relate
Slide 47: Endnotes
Endnotes 22. "Other" represents the impact of unrealized losses on FVOCI securities, partially offset by a decrease in the threshold deduction. Both impacts are mainly due to TD's share of Schwab's AOCI. 23. Gross Impaired Loan formations represent additions to Impaired Loans & Acceptances during th
Slide 48: Endnotes
Endnotes 38. Acquisition and integration charges related to the Schwab transaction include the Bank’s own integration and acquisition costs, as well as the Bank’s share of acquisition and integration charges associated with Schwab’s acquisition of TD Ameritrade on an after-tax basis, both reported i
Slide 49: Endnotes
Endnotes 46. Adjusts for the impact of the accounting requirements for the U.S. strategic card portfolio. Eliminating the partners' share of the PCL removes a source of volatility that is not reflective of the Bank's underlying economic exposure. This can be done by adding Corporate PCL (which consi
Slide 50: Endnotes
Endnotes 58. Non-GAAP net income is a non-GAAP financial measure as defined by SEC Regulation G. Schwab defines non-GAAP net income as net income adjusted to remove the after-tax effect of amortization of acquired intangible assets and acquisition and integration-related expenses. Schwab considers n
Slide 51: Endnotes
Endnotes 71. RESL Portfolio Current Loan to Value is calculated with the Teranet-National Bank House Price Index™ and weighted by the total exposure, based on outstanding mortgage balance and/or the HELOC authorized credit limit for both insured and uninsured exposures. The Teranet- National Bank Ho
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 52
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