Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — The Toronto-Dominion Bank — Q2 2020 Earnings Presentation
35 slides from Toronto-dominion Bank's earnings presentation, May 28, 2020
Slide 1: Q2 2020
Q2 2020 Thursday, May 28, 2020 1
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 supporting our customers, communities and colleagues through these challenging times Purpose-Driven Forward Focused Proven Business Model Centre everything we do on our v
Slide 4: Purpose Driven
Purpose Driven Colleagues Customers Communities • Our people are our greatest asset • Our customers are at the centre • We are only as successful as the and we are supporting their health of everything we do, and we stand communities in which we live and and well-being with them in this time of stre
Slide 5: Purpose Driven: Customers
Purpose Driven: Customers Bank-Led Payment Deferral Programs (as at April 30, 2020) Canada U.S. Product Details Accounts1 $CAD1 Accounts1 $USD1 Canada: Up to 6-month payment deferral Real Estate Secured Lending 126,000 $36 billion 7,000 $2.5 billion U.S.: 3-month minimum forbearance Canada: Up to 4-
Slide 6: Forward Focused
Forward Focused Omni-channel Modernized operations Innovation • Continued to reimagine • Rapidly delivered remote • Developed new ways to create customers' banking experience capabilities to >60,000 colleagues value for our customers • Added COVID-19 functionality to for continued customer support,
Slide 7: Forward Focused: Digital Adoption
Forward Focused: Digital Adoption Digital Adoption Active Mobile Users Self-Serve Transactions (% of total customers)2 (millions)3 (as % of all financial transactions)4 +220 bps YoY +13.3% YoY +480 bps YoY 57.7 5.7 90.0 Canadian 5.4 56.1 Retail1 55.5 86.7 5.0 85.2 Q2/19 Q1/20 Q2/20 Q2/19 Q1/20 Q2/20
Slide 8: Proven Business Model
Proven Business Model Diversification and scale Balance sheet strength Safety, security and trust • Reported earnings of $1.5B • Common Equity Tier 1 ratio of • Standing by our customers while (adjusted $1.6B)1 11.0%, above regulatory remaining within our risk appetite requirements • Reported EPS $0
Slide 9: Q2 2020 Highlights
Q2 2020 Highlights Total Bank Reported Results (YoY) Financial Highlights ($MM) Reported Q2/20 Q1/20 Q2/19 EPS of $0.80 Revenue 10,528 10,609 10,228 Adjusted1 EPS of $0.85 PCL 3,218 919 633 Expenses 5,121 5,467 5,248 Revenue up 3% Net Income 1,515 2,989 3,172 Diluted EPS ($) 0.80 1.61 1.70 Expense
Slide 10: Canadian Retail
Canadian Retail Highlights (YoY) P&L ($MM) Reported Q2/20 QoQ YoY Net income down 37% (down 36% adj.)1 Revenue 6,023 (4%) 1% Insurance Claims 671 (14%) 0% Revenue up 1% Revenue Net of Claims2 5,352 (2%) 1% Loan volumes up 5% PCL 1,153 +762 +873 Deposit volumes up 10% Expenses 2,588 (2%) 4% Wea
Slide 11: U.S. Retail
U.S. Retail Highlights US$MM (YoY) P&L (US$MM) (except where noted) Reported Q2/20 QoQ YoY Net income of $261MM Revenue 2,037 (8%) (7%) PCL 814 +571 +644 Revenue down 7% Expenses 1,218 1% 6% Loan volumes up 7% U.S. Retail Bank Net Income 87 (88%) (88%) Deposits ex-TD Ameritrade up 10% TD AMTD Eq
Slide 12: Wholesale Banking
Wholesale Banking Highlights (YoY) P&L ($MM) Reported Q2/20 QoQ YoY Net income down 5% Revenue 1,261 21% 42% PCL 374 +357 +379 Revenue up 42% Expenses 616 (6%) 3% Trading-related revenue of $625MM, up 52% Net Income 209 (26%) (5%) ROE 10.4% PCL increased by $357MM QoQ Impaired: $194MM (+$142MM)
Slide 13: Corporate Segment
Corporate Segment Highlights (YoY) P&L ($MM) Reported Q2/20 Q1/20 Q2/19 Reported loss of $202MM Net Income (202) (227) (161) Adjusted1 loss of $143MM Adjusted1 Q2/20 Q1/20 Q2/19 Net Corporate Expenses (199) (179) (176) Lower contribution from other items Other 56 11 81 Net Income (143) (168) (95)
Slide 14: Capital
Capital Common Equity Tier 1 ratio of 11.0% Common Equity Tier 1 Ratio Q1 2020 CET1 Ratio 11.7% Internal capital generation includes 19 basis points from a decline in the expected loss shortfall Internal capital generation (earnings less dividends) 20 OSFI transitional arrangements for ECL provisi
Slide 15: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment Highlights GIL Formations1: $MM and Ratios2 24 24 bps Gross impaired loan formations 21 22 20 stable quarter-over-quarter at 24 basis points $1,783 $1,689 $1,516 $217 / 32 bps $1,459 $132 / 24 bps $9 / 2 bps $19 / 4 bps $1,340 $818 / 35 bps $838 /
Slide 16: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment Highlights GIL1: $MM and Ratios2 Increase to gross impaired loans 47 bps 48 45 primarily related to: 43 42 – The Canadian Retail and Wholesale segments $3,606 $3,207 – The impact of foreign $3,296 $341 / 43 bps $3,032 exchange $2,945 $142 / 25 bps $27
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment Highlights PCL1: $MM and Ratios2 $3,221 Provision for credit losses increased across: $374 – All segments $554 – All major asset classes Primarily related to the ongoing COVID-19 pandemic $1,140 $923 Wholesale $893 $664 $41 $17 Corporate $636
Slide 18: Provision for Credit Losses: Impaired and Performing
Provision for Credit Losses (PCL) 1,2 Impaired and Performing Highlights PCL ($MM) Impaired PCL increased quarter-over-quarter Q2/19 Q1/20 Q2/20 driven by: Total Bank 636 923 3,221 – Credit migration in the Wholesale segment, Impaired 596 810 970 largely in the Oil & Gas sector Performing 40 113 2
Slide 19: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) COVID-19 Impacts ACL1: $B and Ratios2 103 bps Highlights 71 69 71 74 $7.9 Allowance for Credit Losses increased $2.6 billion quarter-over-quarter primarily United States $4.9 $4.9 $5.0 $5.3 62% reflecting higher performing allowances Canada related to the COVID-19
Slide 20: Oil and Gas Exposure
Oil and Gas Exposure Corporate and Commercial Gross Loans & BAs by Sector ($B) Highlights Investment Grade / Non-Investment Grade: Oil and Gas Producers and Services Producers 8% 92% $4.8 continue to represent less than 1% of total gross loans and acceptances 1 – Producers have been taking a numbe
Slide 21: Appendix
Appendix 21
Slide 22: Q2 2020: Items of Note
Q2 2020: Items of Note Revenue/ ($MM) EPS ($) Segment Expense Line Item4 Pre Tax After Tax Reported net income and EPS (diluted) 1,515 0.80 Items of note Amortization of intangibles1 68 59 0.03 Corporate page 12, line 14 Charges associated with the Greystone Acquisition2 26 25 0.02 Canadian Retail p
Slide 23: Canadian Retail
Canadian Retail Net Interest Margin Average Deposits $B 355 365 332 337 344 2.99% 26 30 2.96% 2.96% 2.94% 24 25 25 2.83% 113 116 120 122 111 197 200 203 209 213 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Personal Business Wealth Efficiency Ratio1 Average Loans $B 421 427 434 437 440
Slide 24: Canadian Retail Wealth
Canadian Retail Wealth Wealth Revenue $MM Wealth Assets $B1 1,218 1,163 1,129 1,123 1,086 161 439 170 421 419 422 167 165 406 160 136 238 365 128 127 349 350 353 346 137 834 831 857 819 789 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Fee & Other Transaction NII AUA AUM 1. Canadian Re
Slide 25: U.S. Retail
U.S. Retail Net Interest Margin1,2 Average Deposits US$B 3.38% 306 265 265 272 279 3.27% 3.18% 130 105 103 106 111 3.07% 2.93% 68 70 73 75 79 92 92 92 94 97 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 4 Personal Business TD Ameritrade IDAs Efficiency Ratio3 Average Loans US$B 159 162
Slide 26: U.S. Retail Wealth and TD Ameritrade
U.S. Retail Wealth and TD Ameritrade TD Wealth Assets US$B1 TD Ameritrade2 – Q2 2020 47 TD’s share of TD Ameritrade’s net income was 44 44 US$174MM, down 11% YoY reflecting: 43 Reduced trading commissions and higher operating 38 expenses, partially offset by increased trading volumes TD Ameritrade
Slide 27: U.S. Strategic Card Portfolio: Accounting
U.S. Strategic Card Portfolio: Accounting 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 Mechanics: TD collects
Slide 28: Wholesale Banking
Wholesale Banking Revenue Loans1 Q2 2020 5% Q2 2020 3% 23% 22% 26% $1.3B $65.5B 73% 71% Corporate and Global Markets Other2 Canada United States International Investment Banking Highlights Our Global Markets business delivered strong trading-related revenue, reflecting high levels of client activi
Slide 29: Gross Lending Portfolio Includes B/As
Gross Lending Portfolio Includes B/As Balances ($B unless otherwise noted) Q1/20 Q2/20 Canadian Retail Portfolio 437.3 438.7 Personal 354.7 354.1 Residential Mortgages 201.3 202.9 Home Equity Lines of Credit (HELOC) 90.9 91.8 Indirect Auto 25.7 25.4 Credit Cards 18.3 16.0 Other Personal 18.5 18.0 Un
Slide 30: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Highlights Quarterly Portfolio Volumes ($B) $288 $292 $293 $297 $283 Canadian RESL credit quality remained strong Uninsured 67% 68% 69% 70% 71% Uninsured and insured portfolio loan-to- Insured value rates stable 33% 32% 31% 30% 29% Q2/19 Q3/19 Q4/19 Q
Slide 31: Canadian Personal Banking
Canadian Personal Banking Highlights Canadian Personal Banking (Q2/20) Gross Loans ($B) GIL ($MM) GIL/Loans (%) Gross impaired loans Residential Mortgages 202.9 313 0.15 increased quarter-over- 91.8 187 0.20 Home Equity Lines of Credit (HELOC) quarter largely in the RESL Indirect Auto 25.4 92 0.36
Slide 32: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q2/20) Gross Loans/ GIL GIL/Loans Gross impaired loans BAs ($B) ($MM) (%) increased in the Wholesale Commercial Banking1 84.6 421 0.50 segment, largely in the Oil & Wholesale 79.7 341 0.43 Gas sector To
Slide 33: U.S. Personal Banking (USD)
U.S. Personal Banking (USD) Highlights U.S. Personal Banking1 (Q2/20) Gross Loans GIL GIL/Loans Gross impaired loans and ($B) ($MM) (%) loan-to-value stable quarter- Residential Mortgages 27.8 332 1.19 over-quarter in U.S. Personal Home Equity Lines of Credit (HELOC)2 8.6 337 3.91 Indirect Auto 24
Slide 34: U.S. Commercial Banking (USD)
U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking1 (Q2/20) Modest improvement in gross Gross Loans/ GIL GIL/Loans BAs ($B) ($MM) (%) impaired loans quarter-over- Commercial Real Estate (CRE) 26.9 83 0.31 quarter in U.S. Commercial Banking Non-residential Real Estate 19.7 44 0.22 Res
Slide 35: Investor Relations Contacts
Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 35
The Toronto-Dominion Bank — Q2 2020 Earnings Presentation on 6ix