Toronto-dominion Bank · TSX:TD

Toronto-dominion Bank — TD Bank Group — Q1 2020 Earnings Presentation

55 slides from Toronto-dominion Bank's earnings presentation, February 2020

  1. Slide 1: TD Bank Group Investor Presentation Q1 2020

    TD Bank Group Investor Presentation Q1 2020

  2. 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

  3. Slide 3: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 6th largest bank by Market Cap1 Proven Performance 2 Delivering top tier long term shareholder returns2 Focus on Growth Opportunities 3 Targeting 7-10% adjusted EPS growth over the medium term3 Strong Balance She

  4. Slide 4: Our Strategy

    Our Strategy TD aims to stand out from its peers by having a differentiated brand – anchored in our proven business model, and rooted in a desire to give our customers, communities and colleagues the confidence to thrive in a changing world. Proven Business Model Forward Focused Purpose-Driven Deliv

  5. Slide 5: TD Framework

    TD Framework Execute Own Innovate Think Customer Develop Our Vision Our Purpose Be the better bank To enrich the lives of our customers, communities TD Framework and colleagues Our Shared Commitments Think like a Act like an owner; Execute with Innovate with Develop our customer; lead with integrity

  6. Slide 6: TD Snapshot

    TD Snapshot 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 U.S. Retail Q1 20201 Canadian U.S. (C$) Retail

  7. Slide 7: Competing in Attractive Markets

    Competing in Attractive Markets Country Statistics Country Statistics  10th largest economy  World’s largest economy  Real GDP of C$2.1 trillion  Real GDP of US$19 trillion  Population of 37 million  Population of 332 million Canadian Banking System U.S. Banking System  One of the soundest ba

  8. Slide 8: Top 10 North American Bank

    Top 10 North American Bank Canadian North American Q1 2020 (C$ except otherwise noted) TD Bank Group Ranking4 Ranking5 Total assets $1,457B 2nd 6th Total deposits $908B 1st 5th Market capitalization $132.3B 2nd 6th Reported net income (trailing four quarters) $12.3B 2nd 6th Adjusted net income1 (tra

  9. Slide 9: Diversified Business Mix

    Diversified Business Mix Three Key Business Lines Fiscal 2019 Reported Earnings Mix1  Canadian Retail Robust retail banking platform in Canada with proven performance  U.S. Retail Top 10 bank4 in the U.S. with significant organic growth opportunities U.S. Retail2 31%  Wholesale Banking North Amer

  10. Slide 10: Growing Platform / North American Scale

    Growing Platform / North American Scale 2000-2004 – A Canadian Leader 2005-2010 – Building U.S. Platform 2011-2015 – Acquiring Assets New Capabilities and Partnerships • Acquisition of Canada Trust (2000) • TD Waterhouse USA / Ameritrade • Acquisition of Chrysler Financial auto • Acquisition of Epoc

  11. Slide 11: Connected Experiences

    Connected Experiences Consistent Strategy Q1 2020 Highlights How we compete:  Enabling seamless interactions between customers and the 13.7M 5.4M 3.4M Active Digital Canadian U.S. Mobile entire organization Users Customers Mobile Users  Leveraging industry leading Experience Design Center of Excel

  12. Slide 12: The Better Bank

    The Better Bank The Ready Commitment Targeting $1 billion in community giving by 2030, opening doors for a more inclusive and sustainable tomorrow Financial Security Vibrant Planet Connected Communities Better Health Q1 Highlights TD committed to donate $1 million to the Multiple Sclerosis (MS) Thro

  13. Slide 13: ESG Performance

    ESG Performance Highlights  TD's low carbon commitment targets $100B, in total, towards initiatives in low-carbon lending, financing, asset management and internal corporate programs by 2030. $43+BN TD has been carbon Insurance discount  TCFD – TD is conducting scenario analysis by testing industr

  14. Slide 14: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 6th largest bank by Market Cap1 Proven Performance 2 Delivering top tier long term shareholder returns2 Focus on Growth Opportunities 3 Targeting 7-10% adjusted EPS growth over the medium term3 Strong Balance She

  15. Slide 15: Consistent Earnings Growth

    Consistent Earnings Growth Reported Earnings (C$MM)1 $11,686 $11,334 $10,517 $8,936 $8,024 Wholesale Banking $7,883 U.S. Retail Canadian Retail 2014 2015 2016 2017 2018 2019 Targeting 7-10% adjusted EPS growth over the medium term 1. For the purpose of calculating contribution by each business segme

  16. Slide 16: Strong, Consistent Dividend History

    Strong, Consistent Dividend History Dividends Per Share (C$) $3.013 Q1/20: Announced $0.05 dividend increase1 Dividend yield: 4.0%2 $0.46 Target payout range: 40%-50% 1. For the quarter ended April 30, 2020. 2. As of Q1/20. Dividend yield is calculated as the dividend per common share divided by the

  17. Slide 17: Solid Total Shareholder Returns

    Solid Total Shareholder Returns Canadian North American TD Bank Group Ranking1 Ranking2 One-Year 2.8% 3rd 8th Three-Year 6.6% 2nd 6th Five-Year 11.7% 2nd 5th Ten-Year 12.8% 1st 3rd Ranked 1st for ten-year total shareholder return3 among Canadian peers. 1. Canadian Peer Ranking based on other 4 big b

  18. Slide 18: High Quality Loan Portfolio

    High Quality Loan Portfolio Balances ($B unless otherwise noted) Q4/19 Q1/20 Canadian Retail Portfolio $434.1 $437.3 Personal $353.5 $354.7 Residential Mortgages 200.0 201.3 Home Equity Lines of Credit (HELOC) 91.0 90.9 Indirect Auto 25.7 25.7 Credit Cards 18.5 18.3 Other Personal 18.3 18.5 Unsecure

  19. Slide 19: Strong Credit Quality

    Strong Credit Quality GIL and PCL Ratios (bps) 83 81 78 66 63 61 60 58 58 56 52 49 50 50 47 45 43 45 41 39 38 39 37 37 34 34 31 IFRS IFRS 9 2 2007 2008 20091 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Gross Impaired Loans / Gross Loans and Acceptances (bps) Provision for Credit Losses /

  20. Slide 20: Q1 2020 Highlights

    Q1 2020 Highlights Total Bank Reported Results (YoY) Financial Highlights ($MM) Reported Q1/20 Q4/19 Q1/19 EPS up 27% Revenue 10,609 10,340 9,998  Adjusted1 EPS up 6% PCL 919 891 850 Expenses 5,467 5,543 5,855 Revenue up 6% Net Income 2,989 2,856 2,410 Diluted EPS ($) 1.61 1.54 1.27 Expenses down 7

  21. Slide 21: Q1 2020 Segment Highlights

    Q1 2020 Segment Highlights Canadian Retail  Reported net income was $1,789 million, up 30% YoY, primarily due to charges related to the agreement with Air Canada in the prior year. Adjusted1 net income was $1,813 million, down 2% YoY, reflecting higher adjusted non-interest expenses, PCL, and insur

  22. Slide 22: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 6th largest bank by Market Cap1 Proven Performance 2 Delivering top tier long term shareholder returns2 Focus on Growth Opportunities 3 Targeting 7-10% adjusted EPS growth over the medium term3 Strong Balance She

  23. Slide 23: Canadian Retail

    Canadian Retail Consistent Strategy Reported Net Income (C$MM) How we compete: $7,183 $6,863  Legendary personal connected $6,525 customer service $5,938 $5,988  Focus on underrepresented products and markets  The power of One TD  Winning culture and team $5,490 $5,938 $6,525 $7,183 $7,421 Highe

  24. Slide 24: Canadian Retail

    Canadian Retail Personal Banking Credit Cards  #1 or #2 market share in most retail products1  #1 card issuer in Canada measured by outstanding card loan  On average, 38% longer branch hours than peers2 with 346 branches balances1 offering Sunday banking  Dual card issuer of high value brands, i

  25. Slide 25: U.S. Retail

    U.S. Retail Consistent Strategy Reported Net Income (US$MM) How we compete: $3,750  Legendary service and convenience $3,253  Grow and deepen customer relationships $2,234 $2,536 $2,007  Differentiated brand as the “human” bank  Productivity initiatives that enhance both the employee and custome

  26. Slide 26: U.S. Retail

    U.S. Retail Personal & Commercial Banking  Ranked Highest in Customer Satisfaction among National Banks by J.D. Power U.S. National Banking Satisfaction Study.1 Wealth  Ranked highest in the Southeast for overall customer satisfaction in Retail Banking, according to the J.D. Power 2019 U.S. Retail

  27. Slide 27: Wholesale Banking

    Wholesale Banking Consistent Strategy Net Income (C$MM) How we compete: $1,054 $1,039  Continue to build an integrated North American dealer franchise $920 with global execution capabilities. $873 – In Canada, we will be the top-ranked investment dealer. – In the U.S., we will grow client relations

  28. Slide 28: Wholesale Banking: Positioned for Growth

    Wholesale Banking Positioned for Growth  Maintain top market shares in our Canadian franchise – #1 or #2 ranking in key domestic categories, including fixed income trading, money market trading, equity options block trading, corporate and government debt underwriting, syndicated loans, and M&A anno

  29. Slide 29: TD Bank Group Key Themes

    TD Bank Group Key Themes Top 10 North American Bank 1 6th largest bank by Total Assets1 6th largest bank by Market Cap1 Proven Performance 2 Delivering top tier long term shareholder returns2 Focus on Growth Opportunities 3 Targeting 7-10% adjusted EPS growth over the medium term3 Strong Balance She

  30. Slide 30: Strong Capital and Liquidity Positions

    Strong Capital and Liquidity Positions Highlights Common Equity Tier 11  Common Equity Tier 1 ratio of Q4 2019 CET1 Ratio 12.1% 11.7% Internal capital generation 35  Leverage ratio of 4.0%  Liquidity coverage ratio of 137% Actuarial losses on employee pension plans (3)  CET 1 capital allocated t

  31. Slide 31: TD TLAC Requirements

    TD TLAC Requirements  Canadian D-SIBs will be required to meet TD Regulatory Capital Ratios1,3 their regulatory TLAC requirements by the November 1, 2021 implementation date.  OSFI has stipulated that D-SIBs will be Notional TLAC: 24.6% subject to 2 supervisory ratios: Minimum risk-based TLAC rati

  32. Slide 32: Industry-Leading Credit Ratings

    Industry-Leading Credit Ratings Issuer Ratings1 Rating Agencies Senior Debt Ratings2 Outlook Moody's Aa3 Stable S&P A Stable DBRS Aa Stable Ratings vs. Peer Group1 Moody’s Senior Debt2 / HoldCo5 Rating S&P Senior Debt2 / HoldCo5 Rating Aa1 AA- Aa2 A+ Aa3 A A1 A- A2 BBB+ A3 Baa1 BBB TD Canadian Peers

  33. Slide 33: Leading Non-Common Equity Capital Ratings

    Leading Non-Common Equity Capital Ratings NVCC Tier 2 Subordinated Debt Ratings Moody’s S&P A2 A A3 A- Baa1 BBB+ Baa2 BBB Baa3 BBB- Ba1 BB+ TD Peers 2 Canadian Peers TD Canadian Peers TD Canadian TD Canadian Peers2 Additional Tier 1 NVCC Preferred Share Ratings Moody’s S&P A2 A A3 A- Baa1 BBB+ Baa2

  34. Slide 34: Robust Liquidity Management

    Robust Liquidity Management Liquidity Risk Management Framework Liquidity Risk Management Framework  Target a 90-day survival horizon under a combined Bank-  TD holds a variety of liquid assets commensurate with specific and market-wide stress scenario, and a liquidity needs in the organization. m

  35. Slide 35: Deposit Overview

    Deposit Overview Domestic Leader in Deposits Large base of personal and business deposits4 that make up 70% of the Bank's total funding  TD Canada Trust (TDCT) ranked #1 in Total Personal Deposits1  Canadian Retail competes with legendary personal connected customer service and the power of One TD

  36. Slide 36: Low Risk, Deposit Rich Balance Sheet

    Low Risk, Deposit Rich Balance Sheet1 Large base of stable retail and commercial Maturity Profile6,7 (C$B) (To first par redemption date) deposits 60 Issuance Maturity 50  Personal and commercial deposits are TD's primary sources of funds 40 – Customer service business model delivers stable base of

  37. Slide 37: Wholesale Term Debt Composition

    Wholesale Term Debt Composition1 Funding Strategy  Wholesale term funding through diversified sources across domestic and international markets  Well-established C$55 billion Legislative Covered Bond Program is an important pillar in global funding strategy  Programmatic issuance for the establis

  38. Slide 38: Canadian Registered Covered Bond Program

    Canadian Registered Covered Bond Program Key Highlights Covered Bond Collateral  Canadian residential real estate property with no more than 4 residential units  Uninsured conventional first lien assets with original loan to value ratio that is 80% or less Housing Market Risks  Latest property va

  39. Slide 39: TD Global Legislative Covered Bond Program

    TD Global Legislative Covered Bond Program Highlights Cover Pool as at January 31, 2020  TD has a C$55B legislative covered bond program  High quality, conventional first lien Canadian  Covered bonds issuance for Canadian issuers governed by CMHC-administered guidelines Residential mortgages orig

  40. Slide 40: Bail-in Implementation

    Bail-in Implementation Regulation Overview  On April 18, 2018, the Government of Canada published final regulations under the CDIC Act and the Bank Act providing details of the bank recapitalization "bail-in" regime and final Total Loss Absorbing Capacity (TLAC) guideline.  The issuance regulation

  41. Slide 41: Bail-in Overview

    Bail-in Overview Scope of Bail-in  In Scope Liabilities. Senior unsecured long-term debt (original term to maturity of 400 or more days) that is tradable and transferable (has a CUSIP, ISIN or other similar identification) and issued on or after September 23, 20181. Unlike other jurisdictions, Cana

  42. Slide 42: Appendix: Economic Outlook

    Appendix Economic Outlook

  43. Slide 43: TD Economics Update

    TD Economics Update Global : Coronavirus Shifts the Sands Under the Global Economy  The coronavirus (COVID-19) pandemic represents a unique shock to the global economy. What started as a China-based supply shock has since morphed into a demand shock, as a steep drop in travel and tourism has been f

  44. Slide 44: Interest Rate Outlook

    Interest Rate Outlook Interest Rates, Canada and U.S.  The Federal Reserve delivered an emergency intra-meeting rate cut due to increased concerns about the fallout from COVID-19 on the global % and U.S. economy. The Fed lowered the target 7 range for the federal funds rate half a point to Forecast

  45. Slide 45: Appendix: Credit Quality

    Appendix Credit Quality

  46. Slide 46: Gross Impaired Loan Formations

    Gross Impaired Loan Formations By Business Segment Highlights GIL Formations1: $MM and Ratios2  Gross impaired loan formations 26 22 24 bps increased 2 basis points quarter- 20 21 over-quarter primarily driven by: – Borrower specific idiosyncratic $1,722 $1,689 events in the Wholesale $1,516 segmen

  47. Slide 47: Gross Impaired Loans (GIL)

    Gross Impaired Loans (GIL) By Business Segment Highlights GIL1: $MM and Ratios2  Gross impaired loans increased 2 basis points quarter-over-quarter 53 48 45 bps 42 43 largely reflected in: – The Wholesale segment $3,534 $3,207 $3,296 $3,032 $2,945 $142 / 25 bps $27 / 5 bps $19 / 3 bps $2,590 / 126

  48. Slide 48: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) By Business Segment Highlights PCL1: $MM and Ratios2 $923  PCL stable quarter-over-quarter $893 $855 at 52 bps $41 $17 $7 $192 $664 $155 $227 $636 $1 $83 $132 $297 $323 $311 $264 Wholesale $229 Corporate U.S. Retail $400 $391 $310 $280 $316 Canadian Retail ($5) PCL

  49. Slide 49: Provision for Credit Losses (PCL): Impaired and Performing

    Provision for Credit Losses (PCL) 1,2 Impaired and Performing Highlights PCL ($MM)  Impaired PCL increase quarter-over-quarter Q1/19 Q4/19 Q1/20 primarily driven by: Total Bank $ 855 $ 893 $ 923 – Credit migration in the Wholesale lending Impaired 722 741 810 portfolio Performing 133 152 113 – The

  50. Slide 50: Canadian Personal Banking

    Canadian Personal Banking Highlights Canadian Personal Banking (Q1/20) Gross Loans ($B) GIL ($MM) GIL/Loans  Good asset quality in the Residential Mortgages $201.3 $276 0.14% Canadian Personal Banking 90.9 147 0.16% Home Equity Lines of Credit (HELOC) portfolio Indirect Auto 25.7 88 0.34% Credit Ca

  51. Slide 51: Canadian Commercial and Wholesale Banking

    Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q1/20) Gross Loans/ GIL  Canadian Commercial stable BAs ($B) ($MM) GIL/Loans quarter-over-quarter Commercial Banking1 $82.6 $358 0.43% Wholesale 56.6 142 0.25%  Wholesale Banking GIL Total Canadian Comm

  52. Slide 52: Canadian Real Estate Secured Lending Portfolio

    Canadian Real Estate Secured Lending Portfolio Highlights Quarterly Portfolio Volumes ($B) $283 $288 $292 $293 $281 Canadian RESL credit quality remained strong Uninsured 66% 67% 68% 69% 70%  Uninsured and insured portfolio loan-to- Insured value rates stable 34% 33% 32% 31% 30% Q1/19 Q2/19 Q3/19 Q

  53. Slide 53: U.S. Personal Banking (USD)

    U.S. Personal Banking (USD) Highlights U.S. Personal Banking1 (Q1/20) Gross Loans ($B) GIL ($MM) GIL/Loans  Continued good asset quality Residential Mortgages $27.2 $336 1.23% in U.S. Personal Home Equity Lines of Credit (HELOC)2 8.5 347 4.05% Indirect Auto 24.7 212 0.86% Credit Cards 14.3 279 1.95

  54. Slide 54: U.S. Commercial Banking (USD)

    U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking1 (Q1/20)  Sustained good credit quality Gross Loans/ GIL BAs ($B) ($MM) GIL/Loans in U.S. Commercial Banking Commercial Real Estate (CRE) $25.0 $85 0.34% Non-residential Real Estate 18.0 44 0.24% Residential Real Estate 7.0 41 0.59% C

  55. Slide 55: Investor Relations Contacts

    Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 55

TD Bank Group — Q1 2020 Earnings Presentation on 6ix