Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Debt Investor Presentation (February 2015)
50 slides from Toronto-dominion Bank's debt investor presentation, February 2015
Slide 1: Investor Presentation – Fixed Income Q1 2015
TD Bank Group Investor Presentation – Fixed Income Q1 2015
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 Retail Personal banking, credit cards and auto finance Small business and commercial banking Direct investing, advice-based wealth businesses, and asset management Property, casualty, life and health insurance Q1 20151 Canadian U.S. U.S. Retail (C$ excep
Slide 5: TD Strategy
TD Strategy To be 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 convenience Strong organic growth
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$15.1 trillion Population of 35 million Population of 314 million Canadian Banking System U.S. Banking System Soundest banki
Slide 7: TD in North America
TD in North America North Q1 2015 Canadian American C$ except otherwise noted Ranking5 Ranking6 Total assets $1,080B 2nd 6th Total deposits $673B 1st 5th Market capitalization $93B 2nd 6th Adjusted net income1 (trailing four quarters) $8.2B 2nd 6th Reported net income (trailing four quarters) $7.9B
Slide 8: Composition of Earnings
Composition of Earnings Adjusted Earnings1 2014 Adjusted (C$MM) Retail Earnings1,4 = 90% Adjusted Retail Earnings1,4 Wholesale Earnings $8,127 10% Canadian 90% Retail U.S Retail2 65% 21% 4 TD AMTD3 4% $2,158 42% Wholesale 10% 58% 2001 2014 Retail-focused earnings mix 1. See slide 5, footnote 3, for
Slide 9: Strategic Evolution of TD
Strategic Evolution of TD INCREASING RETAIL FOCUS Acquired Acquired Target Became primary TD Chrysler credit card issuer of Waterhouse Financial portfolio & Epoch; Aeroplan Visa; TD Bank Acquired Acquired USA / Privatized Acquired Commerce Acquired and MBNA and announced acquired ~50% of and Canada
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: Q1 2015 Highlights
Q1 2015 Highlights Key Themes Financial Highlights $MM Adjusted1 EPS of $1.12, up 6% from Q1/14 Results shown are Adjusted1 Q1/15 Q4/14 Q1/14 Adjusted Net income up 5% YoY Revenue2 $ 6,915 6,732 6,629 Strong growth in Retail businesses Solid Wholesale performance Expenses 4,092 4,188 3,841
Slide 12: Q1 2015 Credit Highlights
Q1 2015 Credit Highlights Highlights PCL Ratio (bps)1 Ongoing strong performance across all portfolios 40 Loss rates remain at cyclically low levels 35 33 Small increase in Gross Impaired Loans (GIL) due to weakened Canadian dollar 28 29 Oil & Gas exposure is Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 ma
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 Portfolio Q1/15 Gross Loans Outstanding $236 B Canadian RESL Percentage Insured 61% Uninsured Residential Mortgages Current LTV1 60% Condo Borrower Gross Loans Outstanding $30 B (Residential Mortgages) Percentage Insured 71% Gross Loans Outstanding $6 B Condo Borrower 39% (HE
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 Economic momentum is building in the United States Over the course of 2014, the economy generated the most jobs since 1999 and the most private-sector jobs since 1997 Income growth and low energy prices will buoy consumer spending Residential real estate will m
Slide 21: Impact of Lower Oil Prices
Impact of Lower Oil Prices West Texas Intermediate (WTI) oil benchmark decreased from US$76 per barrel (Nov 2014) to US$45 per barrel (Jan 2015) Direct exposure to oil and gas producers is expected to be manageable for TD TD's non-retail oil and gas loan portfolio is a well-diversified mix of
Slide 22: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 22
Slide 23: Capital Position
Capital Position Highlights Basel III Common Equity Tier 11 Basel III Common Equity Tier 1 9.4% 9.5% 9.3% ratio 9.5% 9.2% 8.9% Increase QoQ reflects solid organic capital generation partially offset by actuarial losses on employee pension plans Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Capital allocation
Slide 24: TD Credit Ratings
TD Credit Ratings Issuer Ratings1 Moody's S&P DBRS Ratings Aa1 AA- AA Outlook Negative Negative Stable Ratings vs. Peer Group S&P Long-Term Debt Rating Moody’s Long-Term Debt Rating 18 Aa1 14 AA- 16 Aa2 12 A+ 14 Aa3 10 A 12 A1 10 A2 A-8 8 A3 6 BBB+ 6 Baa1 4 BBB 4 Baa2 2 2 TD Canadian Peers U.S. Peer
Slide 25: Robust Liquidity Management
Robust Liquidity Management Treasury paradigm Contribute to stable and growing earnings Manage non-trading market risk within established limits Match terms of assets and liabilities Do not engage in liquidity carry trade Match underlying funding maturities to term of assets or stressed
Slide 26: 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 balances based on LCR run-off requirements User of mortgage securitization programs via Can
Slide 27: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition1 Funding Mix2 Wholesale Term Debt Assets Securitized 29% Other Deposits33 Personal Personal Other27% Deposits Covered Bonds TermDeposits Term Deposits 26% 20% 8% 6% Residential Mortgages Short Term Liabilities 4 Mortgage 58% Short Term Liabilities4 Securitization
Slide 28: Wholesale Term Debt Composition
Wholesale Term Debt Composition1 By Currency2 By Term2 4 Year 4% $3B Covered Bonds 16% Residential Mortgages 58% 5 Year 53% USD 60% $37B $40B 3 Year 16% CAD 22% $11B Covered Bonds Senior $15B Unsecured15% MTN5 Senior Unsecured 48% MTN 2 Year 13% 26% EUR 12% $9B $8B 7 Year 8% $5B AUD 2% $2B GBP 4% 1.
Slide 29: Debt Maturity Profile F2015 – F2019
Debt Maturity Profile1 F2015 – F2019 Bullet Debt Maturities (C$ billions)2 $25 $23 $20 $18 $17 $15 $15 $13 $10 $5 $0 3 2015 2016 2017 2018 2019 MBS Covered Bond Senior Debt ABS Subordinated Debt Manageable debt maturities 1. For wholesale term debt that has bullet maturities. 2. As of January 31, 20
Slide 30: Canadian Covered Bond Legislation
Canadian Covered Bond Legislation The Covered Bond legal framework was announced in the 2012 Federal Budget through amendment to the National Housing Act and was passed into law in June 2012 Issuance must be in accordance with the legislation and issuers are prohibited from using insured mortgag
Slide 31: CMHC Guide Highlights
CMHC Guide Highlights Asset Coverage Test To confirm overcollateralization of the covered bond collateral held against covered bonds outstanding Indexation requirement (July 1, 2014) provides adjustment for market development Value to be adjusted at least quarterly Valuation Calculation
Slide 32: TD Legislative Covered Bonds
TD Legislative Covered Bonds TD Covered Bond Programme Highlights Cover Pool as at January 31, 2015 TD has a US$15B legislative covered bond program High quality, conventional first lien Canadian Residential mortgages originated by TD Covered bonds issuance for Canadian issuers governed by CMH
Slide 33: Key Takeaways
Key Takeaways Strong capital base – well positioned for Basel III Industry leading credit ratings Proactive & disciplined risk management Attractive balance sheet composition Diverse funding strategy 33
Slide 34: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 34
Slide 35: Global Economic Outlook
Global Economic Outlook World Real GDP Growth1 Global economic growth will Y/Y % Change 6 remain modest with a mild Forecast1 acceleration expected over 4 the next two years 2 0 Faster U.S. growth, coupled -2 with sluggish economic 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 acti
Slide 36: Canadian Economic Outlook
Canadian Economic Outlook Canadian Export and U.S. Activity Index1 Y/Y % Change 25 20 Forecast1 15 10 Canadian economy still 5 tightly linked to U.S. 0 -5 fortunes, and better U.S. -10 Canadian Real Exports growth in medium term to -15 U.S. Activity Index help Canada’s prospects -20 -25 1982 1988
Slide 37: U.S. Economic Outlook
U.S. Economic Outlook Consumers Rebounding on Faster Income Growth1 Y/Y % Change 6 Forecast1 4 Supported by 2 strengthening job growth and falling energy prices, 0 Real Consumer Spending consumer spending -2 Real Disposable Income growth will accelerate in -4 2015 and 2016. 00 01 02 03 04 05 06 07
Slide 38: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 % 7 US Federal Funds Rate 6 Forecast Modest outlook and low 5 inflation mean North American Bank of central banks are set to leave Canada Target 4 monetary policy at exceptionally accommodative 3 levels 2 Interest rate increases will be 1 gr
Slide 39: Stable Earnings Growth
Stable Earnings Growth Adjusted Earnings1,2,4 (C$MM) 8,127 2010 – 20112: 7,136 7,064 Wholesale Banking 6,432 Wealth & Insurance 5,228 U.S. P&C Canadian P&C 2012 – 20144: Wholesale Banking U.S. Retail Canadian Retail 2010 2011 2012 2013 2014 IFRS Segment realignment Targeting 7-10% adjusted EPS growt
Slide 40: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q4/14 Q1/15 Canadian Retail Portfolio $ 337.9 $ 339.6 Personal $ 285.0 $ 285.6 Residential Mortgages 175.3 175.3 Home Equity Lines of Credit (HELOC) 59.4 59.7 Indirect Auto 16.5 16.9 Unsecured Lines of Credit 9.1 9.2 Credit
Slide 41: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,233 GIL formations remain stable $1,163 $1,168 in the Canadian Retail portfolio $1,125 $1,092 Excluding the impact of foreign $476 / 42 bps exchange, U.S. GIL formations $403 / 34 bps $397 / 33 bps $452 /
Slide 42: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Gross Impaired Loans ratio $2,967 remains stable $2,861 $2,746 $2,731 $13 / 4 bps Excluding the impact of foreign $41 / 19 bps $2,636 $41 / 18 bps $12 / 5 bps exchange, U.S. GIL increased by $21 / 9 bps $29MM USD $1,610 / 1
Slide 43: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights PCL remains at low levels Canadian PCL reduction driven $454 by proceeds from a debt sale and $395 $397 a recovery in the Commercial $ (3) / NM $368 Bank $329 $(2) / NM $236 / 84 bps $3 / NM $174 / 62 bps $164 / 53 b
Slide 44: Canadian Personal Banking
Canadian Personal Banking Q1/15 Canadian Personal Banking1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 175 0.26% 452 3 Credit quality remains strong in Home Equity Lines of Credit (HELOC) 60 0.44% 260 1 the Canadian Personal portfolio Indirect Auto 17 0.26% 44
Slide 45: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q1/15 Canadian Commercial and Gross GIL PCL1 Highlights Loans/BAs Wholesale Banking ($B) ($MM) ($MM) Canadian Commercial and Commercial Banking2 54 118 3 Wholesale Banking portfolios Wholesale 30 13 0 continue to perform well Total Canadian Commercial and
Slide 46: U.S. Personal Banking – U.S. Dollars
U.S. Personal Banking – U.S. Dollars Q1/15 Highlights Gross Loans GIL/ GIL U.S. Personal Banking1 ($B) Loans ($MM) PCL2 Continued good asset quality ($MM) Residential Mortgages 21 1.36% 282 3 in U.S. Personal Home Equity Lines of Credit (HELOC)3 10 3.32% 342 19 Increasing GILs are a result of co
Slide 47: U.S. Commercial Banking – U.S. Dollars
U.S. Commercial Banking – U.S. Dollars Q1/15 U.S. Commercial Banking1 Gross Loans/BAs GIL ($MM) PCL2 ($MM) Highlights ($B) Commercial Real Estate (CRE) 17 216 4 Sustained portfolio quality in Non-residential Real Estate 13 141 2 U.S. Commercial Banking Residential Real Estate 4 75 2 PCL increase
Slide 48: Q1 2015 Financial Highlights
Q1 2015 Financial Highlights Description of Adjusted and Reported Results Financial Highlights $MM Q1/15 Q4/14 Q1/14 Revenue2 (adjusted1) $ 6,915 6,732 6,629 Revenue (reported) 7,614 7,452 7,565 Expenses (adjusted) $ 4,092 4,188 3,841 Expenses (reported) 4,165 4,331 4,096 Net Income (adjusted) $ 2,1
Slide 49: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Grand Prix for Best Overall Investor Relations: Large Cap Email: Best Investor Relations by Sector: Financial Services tdir@td.com Best Investor Relations by a CFO: Large Cap Best Investor Relations Officer: Large Cap Website: Best Fi
Slide 50: Investor Presentation – Fixed Income
TD Bank Group Investor Presentation – Fixed Income Q1 2015
TD Bank Group — Debt Investor Presentation (February 2015) on 6ix