Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Q2 2013 Earnings Presentation
35 slides from Toronto-dominion Bank's earnings presentation, May 23, 2013
Slide 1: TD Bank Group Quarterly Results Presentation Q2 2013
TD Bank Group Quarterly Results Presentation Q2 2013 Thursday May 23rd, 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: Strategic Overview
Strategic Overview Solid quarter ─ Adjusted1,2 earnings of $1.8B, up 6% versus Q2 2012; Adjusted EPS up 4% ─ Solid results in retail businesses, and strong results in Wholesale ─ Target and Epoch acquisitions impact the quarter Macro environment continues to pose challenges ─ Low interest rate e
Slide 4: 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 5: Q2 2013 Earnings: Items of Note
Q2 2013 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,723 $1.78 Pre Tax After Tax Items of Note EPS (MM) (MM) Amortization of intangibles1 $89 $58 $0.06 Change in fair value of derivatives hedging the reclassified available-for-sale $25 $22 $0.03 securities portfolio Integr
Slide 6: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Key Themes P&L $MM1 Q2/13 QoQ YoY Adjusted1 net income up 5% YoY Revenue $ 2,665 -2% 2% Positive adjusted operating leverage PCL 245 0% -11% Excluding the MBNA credit mark release and Expenses (adjusted) 1,226 3% 1% one extra day last year, revenue grew b
Slide 7: Wealth and Insurance
Wealth and Insurance Key Themes P&L $MM Q2/13 QoQ YoY Wealth earnings up 2% YoY Revenue $ 1,091 1% 4% Strong fee growth partially offset by lower Expenses 710 6% 9% trading and Epoch integration costs Net Income, Wealth $ 158 -4% 2% Ex. Epoch, earnings up 8% YoY Net Income, Insurance $ 153 -7%
Slide 8: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Key Themes P&L US$MM1 Q2/13 QoQ YoY Adjusted1 earnings up 9% YoY Revenue $ 1,707 11% 7% Strong loan and deposit volume growth PCL 193 9% 0% Lower effective tax rate Expenses (adjusted) 1,052 17% 10% Mid-quarter Target acquisition Net Income (adjusted) $ 392
Slide 9: Wholesale Banking
Wholesale Banking Key Themes P&L $MM Q2/13 QoQ YoY Earnings up 12% YoY Revenue $ 643 7% 6% Solid results across our businesses PCL 3 n/a -50% Expenses 375 -5% -2% Strong trading-related revenues of Net Income $ 220 38% 12% $353 million ROE 20.9% Security gains from the investment portfolio c
Slide 10: Corporate Segment
Corporate Segment Key Themes P&L $MM1 Q2/13 QoQ YoY Lower adjusted net income YoY Net Corporate Expenses $ (116) -13% 22% Higher net corporate expenses driven Other 64 -60% 31% by increased employee benefit and Non-Controlling Interests 26 0% 0% strategic initiative costs Net Income (adjusted) $
Slide 11: Expenses
Expenses Highlights Efficiency Ratio, Adjusted2 Core expenses1 up 3% YoY in 57.0% 56.0% line with expectations Adjusted expenses up 7% YoY on Target and Epoch acquisitions Targeting core expense1 growth in 2013 below the 3% rate of YTD 2012 YTD 2013 growth in 2012 Targeting core expense grow
Slide 12: Capital
Capital Highlights Basel III Common Equity Tier 11 8.8% 8.8% 8.2% Basel III Common Equity Tier 1 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 13: Net Interest Income & Margin
Net Interest Income & Margin Management Actions Financial Impact Repositioning balance sheet to Security sales shorten duration Triggering security gains of Increased Better positioned for rising rates in $60-80 million per quarter pressure on NII the future Managing capital volatility Expos
Slide 14: 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 35 Canadian Credit Card loss rates continued to improve PCL rate was comparable to the prior quarter excluding Target Q2/1
Slide 15: Appendix
ID Appendix
Slide 16: Q2 2013 Earnings: Items of Note
Q2 2013 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,723 $1.78 Revenue/ Pre Tax After Tax Items of note EPS Segment Expense Line (MM) (MM) Item2 Amortization of intangibles1 $89 $58 $0.06 Corporate pg 13, line 15 Change in fair value of derivatives hedging the reclassified
Slide 17: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Highlights Net Interest Margin Margin on average earning assets On Average Earning Assets of 2.80%, down 7 bps YoY on an 2.87% 2.86% adjusted basis 2.83% 2.79% 2.80% Primarily due to the impact on deposit margins from the low rate environment Stable margi
Slide 18: Canadian Personal & Commercial Banking: Deposit Growth
Canadian Personal & Commercial Banking Deposit Growth Highlights Average Deposits ($ billions) 6% 6% Growth Growth Personal deposit volumes YoY YoY increased 5% YoY Business deposit volumes $219 $222 $221 increased 8% YoY $209 $215 $70 $71 $71 $69 $66 $146 $149 $151 $150 $143 Q2/12 Q3/12 Q4/12 Q
Slide 19: Canadian Personal & Commercial Banking: Loan Growth
Canadian Personal & Commercial Banking Loan Growth Highlights Average Loans ($ billions) 5% 5% Growth Growth Solid personal lending volume YoY YoY growth of 3% YoY Reflects a slowing housing market and continued consumer deleveraging $295 $300 $302 $304 $290 Real estate secured lending growth
Slide 20: Wealth and Insurance
Wealth and Insurance Highlights Revenue $MM Wealth revenues of $762 million $1,077 $1,091 $1,048 were up 5% versus Q1/13 $1,009 $963 Higher fee-based revenue from growth in asset management and advice $329 $349 businesses $345 $323 $257 Addition of Epoch $112 $118 $111 $113 Insurance revenue
Slide 21: Wealth
Wealth Performance Metrics AUA1 ($B) AUM2 ($B) Epoch adds $28 $247 $275 billion in AUM $270 $258 $250 $207 $211 $249 $202 $204 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Mutual Funds AUM2 ($B) Retail vs. Institutional AUM2 ($B) $74.4 $146 $70.7 $113 $114 $115 $115 $68.1 $93 $96 $1
Slide 22: TD Ameritrade
TD Ameritrade Highlights TD Bank Group’s Share of TD Ameritrade’s Net Income1 TD’s share of TD Ameritrade’s net US$MM income was C$53 million in Q2/13, up 13% YoY mainly due to: $55 $53 Higher TD Ameritrade earnings driven by $51 increased fee-based revenue and lower $47 $47 expenses TD Ameritra
Slide 23: U.S. Personal & Commercial Banking: Deposit Growth
U.S. Personal & Commercial Banking Deposit Growth Highlights Average Deposits (US$ billions) 10% 10% Growth Growth Average personal deposit volumes YoY YoY up 10% YoY Average business deposit volumes $178 $182 $169 $172 up 7% YoY $165 $66 $67 $60 $62 $58 $51 $52 $50 $50 $51 $57 $59 $59 $61 $63 Q
Slide 24: U.S. Personal & Commercial Banking: Loan Growth
U.S. Personal & Commercial Banking Loan Growth Highlights Average Loans (US$ billions) 18% Growth Average personal loans increased YoYY 29% YoY. Target adds $2.9 billion in average assets. $98 Average business loans increased $93 $90 $87 9% YoY $83 $49 $47 $49 $46 $45 $49 $41 $43 $44 $38 Q2/12 Q
Slide 25: 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 $8MM over Q1/1
Slide 26: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$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 27: 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 increased $38 / 17 bps $4 / NM $395 / 46 bps $69MM or 5 bps over Q1/13 $419 / 44 bps due primarily to t
Slide 28: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Gross Impaired Loans $2,494 $2,554 $2,518 remained stable $2,363 $2,367 $3 / NM $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 29: 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 $147 / 73
Slide 30: Canadian Personal Banking
Canadian Personal Banking Q2/13 Canadian Personal Banking 1 Gross Loans ($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 $23MM ov
Slide 31: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q2/13 Gross Highlights Canadian Commercial and Loans/BAs GIL PCL1 Wholesale Banking ($B) ($MM) ($MM) Canadian Commercial GIL Commercial Banking 2 45 165 38 and PCL increased over Wholesale 25 31 0 Q1/13 as a result of a single Total Canadian Commercial and
Slide 32: 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 33: 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 34: 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 35: TD Bank Group Quarterly Results Presentation Q2 2013
TD Bank Group Quarterly Results Presentation Q2 2013 Thursday May 23rd, 2013