Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Q4 2012 Earnings Presentation
36 slides from Toronto-dominion Bank's earnings presentation, Dec 6, 2012
Slide 1: TD Bank Group Q4 2012 Investor Presentation
TD Bank Group Q4 2012 Investor Presentation Thursday December 6th, 2012
Slide 2: Caution regarding forward-looking statements
Caution regarding forward-looking statements From time to time, The Toronto-Dominion Bank (the “Bank”) makes written and/or oral forward-looking statements, including in this presentation, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, and in other communic
Slide 3: Strategic Overview: Fiscal 2012
Strategic Overview: Fiscal 2012 1. Strong financial results in 2012 ─ Record adjusted1,2 earnings of $7.1B, up 10% from 2011 ─ Adjusted EPS2 up 8% from 2011 ─ Dividend increase of 11% in 2012 and dividend payout range increased to 40 – 50% 2. Continue to deliver sustainable earnings growth 3. Remain
Slide 4: 2012 Highlights
2012 Highlights Key Themes Net Income $MM (Adjusted, where applicable)1 Earnings growth solidly within 2012 2011 YoY 7-10% medium term objective Canadian Retail2 $ 4,566 $ 4,158 10% U.S. Retail3 1,631 1,477 10% Canadian Retail adjusted1 earnings Total Retail 6,197 5,635 10% up 10% Wholesale 880
Slide 5: Q4 2012 Highlights
Q4 2012 Highlights Key Themes Net Income $MM (Adjusted, where applicable)1 Solid adjusted1 EPS growth of 5% Q4/12 QoQ YoY YoY Retail2 $ 1,477 -8% 6% Wholesale 309 72% 10% Strong performances from most Corporate (29) -197% 93% segments Adjusted Net Income $ 1,757 -3% 6% Volume growth was good i
Slide 6: Q4 2012 Earnings: Items of Note
Q4 2012 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,597 $1.66 Pre Tax After Tax Items of Note EPS (MM) (MM) Amortization of intangibles1 $91 $60 $0.06 Decrease in fair value of derivatives hedging the reclassified available-for- $33 $35 $0.04 sale securities portfolio Int
Slide 7: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Key Themes P&L $MM1 Q4/12 QoQ YoY Solid adjusted1 net income Revenue $ 2,749 1% 12% Adjusted operating leverage of 2% PCL 306 6% 44% 1,310 7% 10% Good loan and deposit growth Expenses (adjusted) Net Income (adjusted) $ 831 -7% 10% Retail lending good, b
Slide 8: Wealth and Insurance
Wealth and Insurance Key Themes P&L $MM Q4/12 QoQ YoY Performed well in a difficult Revenue $ 963 -5% -7% operating environment Expenses 676 7% 1% Net Income, Wealth $ 148 -4% 6% Wealth earnings up 6% YoY Net Income, Insurance $ 94 -37% -37% Higher fee-based revenues and lower expenses offset
Slide 9: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Key Themes P&L US$MM1 Q4/12 QoQ YoY Strong adjusted1 earnings Revenue (adjusted) $ 1,545 3% 6% Strong organic growth and lower tax rate PCL (adjusted) 202 17% 55% Durbin Amendment impacts continue Expenses (adjusted) 934 2% -4% NIM down 12 bps YoY Net Incom
Slide 10: Wholesale Banking
Wholesale Banking Key Themes P&L $MM Q4/12 QoQ YoY Strong quarter in difficult markets Revenue $ 725 14% 0% Higher revenue and reduced expenses in PCL 8 -62% 167% core businesses Expenses 374 -8% -5% Lower effective tax rate Net Income $ 309 72% 10% Trading revenues inline with ROE 30.3% gui
Slide 11: Corporate Segment
Corporate Segment Key Themes P&L $MM1 Q4/12 QoQ YoY Lower adjusted net income YoY Net Corporate Expenses $ (191) 247% 97% Due to higher net corporate expenses, Other 136 131% 143% largely offset by the favorable impact of Non-Controlling Interests 26 0% 0% other items including tax Net Income (a
Slide 12: Expenses
Expenses Highlights Efficiency Ratio – Adjusted1 Q4 adjusted1 expense growth 57.5% 56.6% within guidance Expenses in 2012 grew 3% excluding acquisitions and FX Targeting core expense2 growth in 2013 at or below the rate of 2011 2012 growth in 2012 Productivity Levers for 2013 Sourcing and Le
Slide 13: Capital
Capital Highlights Tier 1 Capital Ratio1,2 13.0% Tier 1 capital ratio improved QoQ 12.0% 12.2% 12.6% 11.6% due to strong organic capital growth Remain well-positioned for evolving regulatory environment Pro forma Basel III ratio of 8.2% Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 at Oct 31, 2012 Risk Weight
Slide 14: Credit Portfolio Highlights
Credit Portfolio Highlights Highlights PCL Ratio (bps)1,2 48 Overall credit quality remains 46 46 strong 42 38 Key credit ratios increased in 40 Q4/12 due to one-time items in 35 36 37 Canadian and U.S. P&C PCL Ratio Ex MBNA Canada Residential Mortgage, U.S. Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Indir
Slide 15: Epoch Investment Partners
Epoch Investment Partners A Complement to TD Asset Management’s (TDAM) Existing Capabilities Strategic rationale Adds highly successful U.S. and global equities capability to TDAM Broadens offer for both institutional and retail clients in Canada Immediately and significantly strengthens TD’
Slide 16: Appendix
ID Appendix
Slide 17: Q4 2012 Earnings: Items of Note
Q4 2012 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,597 $1.66 Revenue/ Pre Tax After Tax Items of note EPS Segment Expense Line (MM) (MM) Item2 Amortization of intangibles1 $91 $60 $0.06 Corporate pg 13, line 15 Decrease in fair value of derivatives hedging the $33 $35 $0
Slide 18: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Highlights Net Interest Margin Excluding MBNA, margin on On Average Earning Assets average earning assets decreased 2.87% 2.86% 2.83% 11 bps YoY due to: 2.71% 2.79% Low interest rate environment Competitive pricing NIM 2.67% 2.65% Portfolio mix Ex MBNA
Slide 19: Canadian Personal & Commercial Banking: Deposit Growth
Canadian Personal & Commercial Banking Deposit Growth Highlights Average Deposits ($ billions) 10% 10% Personal deposit volumes Growth Growth increased 10% YoY YoY YoY Business deposit volumes increased 10% YoY $209 $215 $219 $206 $200 $69 $70 $66 $66 $64 $143 $146 $149 $136 $140 Q4/11 Q1/12 Q2/
Slide 20: Canadian Personal & Commercial Banking: Loan Growth
Canadian Personal & Commercial Banking Loan Growth Highlights Average Loans ($ billions) 8% 8% Good, but slower, personal lending Growth Growth volume growth YoY YoY Real estate secured lending volume increased 6% YoY $300 $286 $290 $295 Auto lending volume increased 3% YoY $277 All other pe
Slide 21: Wealth and Insurance
Wealth and Insurance Highlights Revenue $MM Wealth revenues of $706 million $1,048 $1,039 were up 3% versus Q3/12 $999 $1,009 $963 Higher fee-based revenue from asset growth in advice and asset management $342 $345 Increased trading income from higher $324 $323 $257 new securities issues in ad
Slide 22: Wealth
Wealth Performance Metrics AUA1 ($B) AUM2 ($B) $258 $207 $202 $204 $250 $249 $196 $245 $189 $237 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Mutual Funds AUM2 ($B) Retail vs. Institutional AUM ($B) $68.1 $109 $113 $114 $115 $104 $65.4 $65.6 $85 $87 $89 $90 $93 $63.2 $61.3 Q4/11 Q1/12
Slide 23: TD Ameritrade
TD Ameritrade Highlights TD Bank Group’s Share of TD Ameritrade’s Net Income1 TD’s share of TD Ameritrade’s net US$MM income: C$51 million in Q4/12 $55 $54 $55 TD Ameritrade’s net income $51 US$143 million in Q4/12 down $47 13% from last year Average trades per day were 328,000, down 21% YoY
Slide 24: U.S. Personal & Commercial Banking: Deposit Growth
U.S. Personal & Commercial Banking Deposit Growth Highlights Average Deposits (US$ billions) 8% 8% Average deposits, excluding TD Growth Growth Ameritrade IDAs1 and Government YoY YoY deposits were up 7% YoY $169 $172 $160 $164 $165 $60 $62 $57 $60 $58 $37 $38 $39 $37 $37 $12 $12 $12 $12 $12 $54 $
Slide 25: U.S. Personal & Commercial Banking: Loan Growth
U.S. Personal & Commercial Banking Loan Growth Highlights Average Loans (US$ billions) 16% 16% Organic loan growth of 16% YoY Growth Growth YoY YoY Continued momentum in residential mortgage volumes, up $90 37% YoY $87 $83 $80 Commercial loans growth $77 continued, up 10% YoY $47 $46 $45 $44 $
Slide 26: Canadian Housing Market
Canadian Housing Market Highlights The Canadian housing market continues to moderate Canadian RESL credit quality remains strong Topic TD Positioning Canadian RESL $218 billion portfolio (69% insured) Portfolio Average LTV of 51% $31 billion portfolio (74% insured) Condo Borrower Exposure
Slide 27: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q3/12 Q4/12 Canadian Personal & Commercial Portfolio $ 295.8 $ 299.8 Personal $ 255.0 $ 258.1 Residential Mortgages 150.9 154.3 Home Equity Lines of Credit (HELOC) 64.3 64.2 Indirect Auto 14.0 14.0 Unsecured Lines of Credit
Slide 28: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,218 GIL formations increased $12 / 6 bps $157MM and 4bps over Q3/12 $1,061 due to two one-time $996 $981 $949 $38 / 17 bps reclassifications of certain $6 / NM $4 / NM $395 / 46 bps $9 NM performing loans to
Slide 29: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Positive trend in Gross $2,493 $2,530 $2,518 Impaired Loans ratio, down $3 / NM $3 / NM $2,363 $2,367 $3 / NM 5bps since Q4/11 $45 / 21 bps $41 / 17 bps $3 / NM $3 / NM $76 / 39 bps $45 / 20 bps $79 / 34 bps Excluding a one
Slide 30: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights PCL increased $35MM and $489 2bps over Q3/12 driven by $433 $454 $4 / 7 bps two one-time reclassifications $401 $1 / NM $16 / 28 bps of certain performing loans to $350 $6 / 11 bps impaired status: $175 / 82 bps $1 / N
Slide 31: Canadian Personal Banking
Canadian Personal Banking Q4/12 Canadian Personal Banking 1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 154 0.31% 479 7 Continued strong credit Home Equity Lines of Credit (HELOC) 64 0.51% 327 12 performance Indirect Auto 14 0.26% 37 33 Excluding a one-time
Slide 32: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q4/12 Gross Highlights Canadian Commercial and Loans/BAs GIL PCL1 Wholesale Banking ($B) ($MM) ($MM) The Canadian Commercial Commercial Banking2 42 150 22 and Wholesale Banking Wholesale 19 76 4 portfolio continues to Total Canadian Commercial and Wholesal
Slide 33: U.S. Personal Banking
U.S. Personal Banking Q4/12 Highlights Gross Loans GIL/ GIL U.S. Personal Banking1 ($B) Loans ($MM) PCL2 Credit quality remained stable ($MM) Residential Mortgages 17 1.16% 200 11 in the quarter Home Equity Lines of Credit (HELOC)3 10 1.98% 200 36 Increased GIL and PCL in Indirect Auto 14 0.21%
Slide 34: U.S. Commercial Banking
U.S. Commercial Banking Q4/12 U.S. Commercial Banking1 Gross Loans/BAs GIL PCL2 Highlights ($MM) ($MM) ($B) Commercial Real Estate (CRE) 13 376 28 U.S. Commercial PCL Non-residential Real Estate 10 225 13 increased $27MM over Q3/12 Residential Real Estate 3 151 15 due to inherent lumpiness in Comm
Slide 35: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Email: tdir@td.com Website: Best corporate governance www.td.com/investor Best investment community meetings Best investor relations by a CFO: Large cap Best investor relations by a CEO: Large cap Grand prix for best overall investor
Slide 36: TD Bank Group Q4 2012 Investor Presentation
TD Bank Group Q4 2012 Investor Presentation Thursday December 6th, 2012