Toronto-Dominion Bank · TSX:TD
Toronto-Dominion Bank — TD Bank Financial Group — Q4 2001 Earnings Presentation
30 slides from Toronto-Dominion Bank's earnings presentation, 2001
Slide 1: Overview: Fourth Quarter 2001
TD Bank Financial Group Dan Marinangeli EVP & CFO INVESTOR PRESENTATION FOURTH QUARTER 2001 Overview* Fourth Quarter 2001 • EPS of $0.79 • Revenue of $ 2.6 billion, down 2% • ROE 16.8% versus 18.0% last year • TDCT net income $277 million, up 12% YoY • TDS net income $239 million, up 42% YoY • PCL $
Slide 2: Overview and Special Items
Overview* 2000 2001 vs 2001 2000 Revenue $10,204 $10,733 5% PCL 480 620 29 Expenses 6,307 6,925 10 Cash Net Income 2,018 2,158 7 Preferred Dividend 56 83 48 Cash NI to Common $1,962 $2,075 6 Cash EPS $3.16 $3.31 5% Cash ROE 18.0% 18.0% 0 bps * Results are on a cash basis and exclude special items. S
Slide 3: Key Goals and Revenue Growth
Key Goals How did we do? 2001 Goals Cash basis ROE 18.0% 17 - 20% PCL/Loans & BAs 48 bps* 35 bps (excluding general provisions & reverse repos) TDCT Efficiency** 59.6% 58.0% * Based on full year PCL of $620 million. **Cash operating basis for TDCT which excludes non-cash charges, one-time items & ac
Slide 4: EPS Growth and Segment Performance
EPS Growth Base = Q4/00 109 U.S. U.S. Peers* Peers* 99 100 72 Cdn. Cdn. Peers** Peers** Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 * Universe includes accrual EPS for largest 13 comparable banks and 3 brokerage comparables. Source: UBS, October 30, 2001 Calendar quarters to closest Cdn. quarters. ** Based on Q4/
Slide 5: Operating Performance - TD Canada Trust: Revenue
Segment Performance Retail Wholesale Canada Waterhouse Wealth Securities Trust Management Operating Performance - TD Canada Trust Revenue $Millions Top-line growth $1,432 $1,447 $1,335 $1,372 $1,388 continues: •Revenue growth is $15 million or 1.0% higher than Q3/01 •Growth of $112 million or 8.4% o
Slide 6: TD Canada Trust: Cash Net Income and Efficiency
Operating Performance - TD Canada Trust Cash Net Income $Millions Strong earnings growth: $275 $277 $267 $271 •Cash net income of $277 $248 million for the quarter •Up $2 million or 1% versus Q3/01 and $29 million or 12% higher than Q4/00 Impressive operating ROE1: •Q4/01 ROE = 29% versus 29% Q4/00
Slide 7: TD Canada Trust: Net Interest Margin and Volume
Operating Performance - TD Canada Trust Net Interest Margin1 3.39% 3.38% 3.40% Net interest margin stable: 3.34% 3.28% •3.40% this quarter from 3.38% in Q3/01 and 3.28% a year ago •Full year 2001 3.38% versus 3.34% last year •Reflects benefits of hedging model Q4 00 Q1 01 Q2/01 Q3/01 Q4/01 1. Margin
Slide 8: TD Canada Trust: Personal Deposits and Market Share
Operating Performance - TD Canada Trust $ Billions Personal Deposits Volume $80 Market share to Sept/01 23% $76 22% $72 21% Market Market share share down down $68 44 bps bps since since merger merger 20% $64 Volume Volume Growth Growth Q4/00 Q4/00 to to Q4/01 Q4/01 == 2.3% 2.3% Q3/01 Q3/01 to to Q4
Slide 9: TD Waterhouse Segment Performance
Segment Performance Retail Wholesale Canada Waterhouse Wealth Securities Trust Management TD Waterhouse Revenue Cash Net $ Millions Income $ Millions $519 $497 $409 $58 $367 $343 $47 $7 $1 ($7) Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Slide 18: TDW 9
Slide 10: Margin Loans and TD Waterhouse Group
Margin Loans $CDN billion (period end) Margin loans declining: $12.3 •$5.5 billion this quarter from $6.6 billion in Q3/01 and $12.3 $9.3 billion a year ago $6.5 $6.6 $5.5 •Industry-wide reduction in leverage reflecting weakening economy, market uncertainty & volatility and subsequent Q4/00 Q1/01 Q2
Slide 11: TD Wealth Management
Segment Performance Retail Wholesale Canada Waterhouse Wealth Securities Trust Management TD Wealth Management Revenue Cash Net $ Millions Income $ Millions $196 $185 $175 $174 $164 $33 $29 $26 $25 $20 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Slide 22: TDWM 11
Slide 12: Assets Under Management and Mutual Funds
TD Wealth Management Assets Under Management $ Billions $117 $119 $112 $113 $116 Assets under management increasing: $43 $45 $47 •$119 billion this quarter $42 $39 from $117 billion in Q3/01 and $112 billion a year ago $25 $26 $27 $22 $23 •Over 20% growth in institutional quantitative capital from n
Slide 13: TD Securities: Revenue
Segment Performance Retail Wholesale Canada Waterhouse Wealth Securities Trust Management TD Securities: Revenue $ Millions $794 $807 $766 $770 TDS revenues up: $653 •$807 million this quarter up $37 million or 5% from Q3/01 •Up $154 million or 24% from a year ago Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Slide
Slide 14: TD Securities Revenue Mix and Cash Net Income
TD Securities: Revenue Q4/00 Q4/01 Total Revenue = $653MM Total Revenue = $807MM 5% 17% 3% 40% 23% 18% 9% 8% 14% 22% 21% 4% 5% 11% Interest rate & credit Merchant banking & other investment securities Foreign exchange Corporate banking Equity & other TD Newcrest Investment banking Slide 27: TDSI TD
Slide 15: Strong Asset Quality
TD Bank Financial Group Tom Spencer EVP, Risk Management FOURTH QUARTER 2001 Strong Asset Quality Ratio of PCL to Loans & BAs % 1.00 Four Bank Peer 0.80 0.71 0.60 0.46 0.40 0.48 0.39 0.20 0.00 1994 1995 1996 1997 1998 1999 2000 2001 Excludes special general provisions and reverse repos. Peers based
Slide 16: General Reserves and New Formations
General Reserves General Reserves General Reserves $ Millions as a % of RWA 0.92 $1,175 0.69 $862 0.66 0.61 $753 $636 0.39 $402 0.18 $159 1996 1997 1998 1999 2000 2001 1996 1997 1998 1999 2000 2001 Q3/01 4 Bank Peer Average: 0.89% Slide 31: TDBFG New Formations New Formation of Impaired Loans & Loan
Slide 17: Impaired Loans and Telecom & Cable Loans
Impaired Loans $ Millions $1,600 1.60% $1,400 1.40% $1,200 1.20% $1,000 1.00% $800 0.80% $600 0.60% $400 0.40% $200 0.20% $0 0.00% -$200 -0.20% -$400 -0.40% -$600 -0.60% Q4/98 Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Gross Impaired Net Impaired GIL as % of Gross Loans
Slide 18: CLEC, Long Haul/Fibre & Paging; September 11th Industries
CLEC, Long Haul/Fibre & Paging Loans & BAs* Write Offs, Net $C million Gross Gross Impaired Allowances Impaired & M2M % of Gross # Accts $MM # Accts $MM $MM $MM Impaired CLEC 10 $ 583 4 $ 287 $186 $ 101 35% Long Haul/Fibre 6 $ 294 2 $ 129 $66 $ 63 49% Paging 3 $ 161 2 $ 138 $23 $ 115 83% *October 31
Slide 19: Market Risk
Market Risk Net Trading Revenue vs. Value-at-Risk -- Q4 2001 30 Net Trading Revenue 20 Value at Risk CAD$ (m illions) 10 0 (10) (20) (30) 1-Aug-01 3-Aug-01 8-Aug-01 10-Aug-01 14-Aug-01 16-Aug-01 20-Aug-01 22-Aug-01 24-Aug-01 28-Aug-01 30-Aug-01 4-Sep-01 6-Sep-01 10-Sep-01 12-Sep-01 14-Sep-01 18-Sep-
Slide 20: TD Canada Trust Accomplishments: Our Integration Plan
TD Canada Trust Accomplishments Ed Clark President and COO, TDBFG FOURTH QUARTER 2001 Our Integration Plan TD Bank • Integrate successfully • Maintain business momentum • Build a better bank Canada Trust Slide 40: Integration 20
Slide 21: What We Had to Accomplish: Integration Timeline
What We Had to Accomplish Integration timeline CUSTOMER Feb 00 June 00 Sep 00 Aug 01 Nov 01 s s ion io n i n g ns v er s ver s n s e e e app sio Con n io se tur Sal rg r Co rs ou st i Me t M ve f ic ue onve te rh i ve Card und duc Con Paci / Q C D o / sk Wa ch ter M F Pr nti c rta n/Sa tario TD an M
Slide 22: Integration Summary - Plan and Execution
Integration Summary- Plan August 19991 October 20011 Expense Synergies $310 million $450 million 69% realized FTE Reductions2 3,000 4,900 61% realized Restructuring Costs $282 million $475 million 59% utilized 1. Across entire TDBFG 2. Attrition and reductions Slide 43: Integration Integration Summa
Slide 23: Integration Summary - Results
Integration Summary- Results August 1999 October 2001 Market share gains Loans & mortgages 82bps Non-term deposits 106bps Dip during conversion Employee satisfaction with recovery to prior levels following Customer Satisfaction Solid Performance Slide 45: Integration Integration Summary- Results Cus
Slide 24: Customer Service Ahead of our Peers
Customer Service % rating customer service as excellent 2001 2000 2001 24.5% TDCT 26.3% 2000 2001 23.5% Peer 2000 21.8% 26.7% BNS 24.3% 24.3% RY 22.0% 22.0% BMO 21.3% 21.0% CIBC 19.6% Source: Canadian Facts, 2001 Market Facts CSI Study Slide 47: Integration Ahead of our Peers % rating customer servi
Slide 25: Customer Attrition and Revenue Gains
Integration Summary- Results Customer Attrition Basis point change • Experts warned customer attrition would increase 60 dramatically during integration bps 10 – Acquired FI’s lose at least 5 to 10 percent of their customers bps beyond normal attrition levels • TDBFG’s integration business case assu
Slide 26: Realizing Integration Efficiencies and Superior Earnings
Realizing Integration Efficiencies Operating efficiency ratio % Four Bank 62.8 Peer 62.5 62.5 60.8 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Slide 51: Integration ..Resulting in Superior Earnings Growth Net income growth 137 119 Four Bank Peer 100 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Cash opera
Slide 27: Annual Operating Performance - TD Canada Trust
Our Integration Plan TD Bank • Integrate successfully • Maintain business momentum • Build a better bank Canada Trust Slide 53: Integration Annual Operating Performance - TD Canada Trust Revenue Operating Efficiency Ratio1 10% CAGR 66.1% 6.5% pts. pro forma $5.6 $5.1 $4.6 $0.4 60.9% $1.6 $4.7 59.6%
Slide 28: Annual Operating Performance: Net Income and ROE
Annual Operating Performance - TD Canada Trust Cash Net Income1 Return on Equity1,2 $Millions % 8% pts. 29% $1,090 2.2 times 24% 21% $825 $499 1999 2000 2001 1999 2000 2001 % of TDBFG 34% 41% 50% 1. Includes CT from Q2/00. 2. Excludes acquisition funding cost Slide 55: Integration The integration is
Slide 29: Building A Better Bank; Forward Looking Statements
Building A Better Bank A customer centric organization - focused on what matters Forward Looking Statements This presentation may contain forward-looking statements, including statements regarding the business and anticipated financial performance of TD. These statements are subject to a number of r
Slide 30: TD Bank Financial Group
TD Bank Financial Group 30
TD Bank Financial Group — Q4 2001 Earnings Presentation on 6ix