Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Debt Investor Presentation (2017)
46 slides from Toronto-dominion Bank's debt investor presentation, 2017
Slide 1: TD Bank Group Fixed Income Investor Presentation
TD Bank Group Fixed Income Investor Presentation Q1 2017
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: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix 3
Slide 4: 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 Q1 20171 Canadian U.S. U.S. Retail (C$ except
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$1.5 trillion Nominal GDP of US$18.6 trillion Population of 36 million Population of 322 million Canadian Banking System U.S. Banking System One of the sou
Slide 7: TD in North America
TD in North America North Q1 2017 Canadian American C$ except otherwise noted Ranking3 Ranking4 Total assets $1,187B 1st 5th Total deposits $775B 1st 5th Market capitalization $125.1B 2nd 6th Reported net income (trailing four quarters) $9.2B 2nd 6th Adjusted net income1 (trailing four quarters) $9.
Slide 8: Composition of Earnings
Composition of Earnings 2016 Reported Earnings Mix1 Three key business lines Canadian Retail robust retail banking platform in Canada with proven performance U.S. Retail2 U.S. Retail top 10 bank4 in 26% Canadian the U.S. with significant Retail organic growth opportunities 61% Wholesale Bankin
Slide 9: Strategic Evolution of TD
Strategic Evolution of TD Increasing Retail Focus Acquired Acquired Target credit TD card portfolio & Became primary Announced Chrysler Completed strategic Acquired Waterhouse Acquired Commerce Acquired Epoch; and issuer of Aeroplan agreement to Privatized Financial credit card 51% of USA / Commerce
Slide 10: Connected Comfort and Convenience
Connected Comfort and Convenience Digital Enhancements Consistent Strategy How we compete Connected experiences enable seamless interactions between TD app for eligible iOS and Android devices now TD ASAP1 capability provides a seamless, customers and the entire allows customers to view TD credit
Slide 11: Corporate & Social Responsibility
Corporate & Social Responsibility TD Friends of the Environment Foundation celebrates 25 years with over C$76 million in funds disbursed in support of more than 24,000 local Highlights environmental projects More than 235,000 trees planted through TD Tree Days, TD’s flagship volunteer program
Slide 12: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix 12
Slide 13: Stable Earnings Growth
Stable Earnings Growth Reported Earnings1,2 (C$MM) $8,024 Wholesale Banking $7,883 U.S. Retail $6,640 Canadian Retail Targeting 7-10% adjusted EPS growth4 over the medium term 1. For the purpose of calculating contribution by each business segment, earnings from the Corporate segment are excluded. 2
Slide 14: Q1 2017 Highlights
Q1 2017 Highlights Financial Highlights $MM Total Bank Reported Results (YoY) Reported Q1/17 Q4/16 Q1/16 Revenue 9,120 8,745 8,610 EPS up 13% PCL 633 548 642 Adjusted EPS up 13%1 Expenses 4,897 4,848 4,653 Net Income 2,533 2,303 2,223 Revenue up 6% Adjusted revenue excluding M&A and FX up 7%2 Di
Slide 15: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q4/16 Q1/17 Canadian Retail Portfolio $ 372.2 $ 373.0 Personal $ 309.1 $ 309.0 Residential Mortgages 189.0 188.1 Home Equity Lines of Credit (HELOC) 65.0 65.9 Indirect Auto 20.6 20.5 Unsecured Lines of Credit 9.5 9.6 Credit
Slide 16: Strong Credit Quality
Strong Credit Quality GIL and PCL Ratios (bps) IFRS Gross Impaired Loans / Gross Loans and Acceptances (bps) Provision for Credit Losses / Average Net Loans and Acceptances (bps) Credit quality remains strong 16
Slide 17: Canadian Personal Banking
Canadian Personal Banking Q1/17 Highlights Gross Loans GIL GIL / Canadian Personal Banking1 ($B) ($MM) Loans Credit quality remains strong Residential Mortgages 188 385 0.21% in the Canadian Personal Home Equity Lines of Credit (HELOC) 66 145 0.22% portfolio Indirect Auto 21 55 0.27% Unsecured Lin
Slide 18: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Secured Lending Portfolio Canadian Portfolio1 $B Highlights Canadian RESL credit quality remains strong Provision for Credit Loss rates remain stable Uninsured and Insured portfolio loan-to-value rates stable Condo borrower credit quality consistent with the broader port
Slide 19: Oil and Gas Exposure
Oil and Gas Exposure Corporate and Commercial Outstandings Highlights by Sector ($B): Corporate and Commercial Oil and Gas portfolio quality is returning to normalized levels due to stronger commodity prices, improved capital markets, and borrower actions including recapitalizations and asset sale
Slide 20: Contents
Contents 1. TD Bank Group 2. Financial Highlights 3. Treasury & Balance Sheet Management 4. Appendix 20
Slide 21: Bail-in Update
Bail-in Update The Budget Implementation Act, providing amendments to the CDIC Act, Bank Act and other statutes to allow for bail-in, was passed in June 2016 The regime provides the Canada Deposit Insurance Corporation ("CDIC") with a new statutory power to convert specified eligible liabilities
Slide 22: TD Credit Ratings
TD Credit Ratings Issuer Ratings1 Moody's S&P DBRS Ratings Aa1 AA- AA Outlook Negative Stable Negative Ratings vs. Peer Group S&P Long-Term Debt Rating Moody’s Long-Term Debt Rating 1. See footnote 2 on slide 5 for more information on credit ratings. 2. In the context of long-term debt ratings, Cana
Slide 23: Non-Common Equity Capital Ratings
Non-Common Equity Capital Ratings TD has industry leading ratings1 for both Additional Tier 1 and Tier 2 capital instruments Ratings vs. Peers NVCC Tier 2 Subordinated Debt Ratings Additional Tier 1 NVCC Preferred Share Ratings 1. Subordinated Debt and Preferred Share ratings are as at January 31,
Slide 24: Capital
Capital Common Equity Tier 11 Highlights Common Equity Tier 1 ratio of 10.9% Q4 2016 CET1 Ratio 10.4% Leverage ratio of 4.0% Internal capital generation 36 bps Actuarial gain on employee pension plans 11 bps Tier 1 and Total Capital ratios were RWA increase and other (3 bps) 12.6% and 15.1%, r
Slide 25: Robust Liquidity Management
Robust Liquidity Management HQLA Distribution Treasury paradigm contributes to stable (Weighted & Includes Excess U.S. HQLA) and growing earnings Matching funding maturities to term of Level 1 Cash & assets or stressed trading market depth Central Bank Reserve Disciplined transfer pricing pr
Slide 26: Term Funding Strategy
Term Funding Strategy Large base of stable retail and commercial deposits – primary source of funding Customer service business model delivers stable base of “sticky” and franchise deposits Reserve assets held for deposit balances based on LCR run-off requirements Wholesale term funding through
Slide 27: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition1 Funding Mix2 Wholesale Term Debt6 Personal and commercial deposits are primary sources of funds 1. As of January 31, 2017. 2. Excludes certain liabilities which do not create funding which are: acceptances, trading derivatives, other liabilities, wholesale mortg
Slide 28: Wholesale Term Debt Composition
Wholesale Term Debt Composition1 By Currency2,3 By Term2,3 1. As of January 31, 2017. 2. Excludes certain private placement notes and mortgage securitization. 28 3. In Canadian dollars equivalent.
Slide 29: Debt Maturity Profile F2017 – 2021
Debt Maturity Profile1 F2017 – 2021 Bullet Debt Maturities (C$ billions)2 Manageable debt maturities 1. For wholesale term debt that has bullet maturities. 2. As of January 31, 2017. 29 3. Based on first par redemption date. The timing of an actual redemption is subject to management’s view at the t
Slide 30: Key Takeaways
Key Takeaways Strong capital base Industry leading credit ratings Proactive & disciplined risk management Attractive balance sheet composition Diverse funding strategy 30
Slide 31: Contents
Contents 1. TD Bank Group 2. Economic Outlook 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Funding Instruments 31
Slide 32: Economic Outlook
Economic Outlook Canadian GDP growth is expected to remain modest Real GDP expected to increase by 2.2% in 2017 and 1.9% in 2018 Rebounds in the oil & gas, manufacturing and engineering construction sectors will lead growth in 2017 The unemployment rate is expected to fall to 6.7% by the end o
Slide 33: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 With U.S. unemployment nearing (%) post-recession lows, the Federal Reserve is likely to continue to edge up interest rates In Canada, remaining economic slack will likely lead the Bank of Canada to leave monetary policy at exceptionally acc
Slide 34: Contents
Contents 1. TD Bank Group 2. Economic Outlook 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Funding Instruments 34
Slide 35: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights Total formations stable quarter over quarter at 21bps U.S. Retail formations quarterly increase of $71MM driven by: US$51MM in the Indirect Auto and Credit Card portfolios due to seasonal trends $20MM neg
Slide 36: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights GIL rate remains at cyclically low level $90MM Wholesale GIL decrease quarter over quarter due to resolutions in the Oil & Gas sector 65 63 59 58 57 bps Other3 Wholesale Portfolio Cdn Peers4 68 75 74 74 NA bps U.S. Retail P
Slide 37: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio Highlights PCL1: $MM and Ratios2 PCL increased $81MM quarter over quarter driven by: US$57MM largely due to seasonal trends in the U.S. Credit Card and Indirect Auto portfolios $30MM negative impact of foreign exchange Offset by $25MM in resolut
Slide 38: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Canadian Commercial and Gross Q1/17 Highlights GIL GIL/ Loans/BAs Wholesale Banking ($B) ($MM) Loans Canadian Commercial and Commercial Banking1 64 211 0.33% Wholesale Banking portfolios Wholesale 41 73 0.18% continue to perform well Total Canadian Commerc
Slide 39: U.S. Personal Banking – U.S. Dollars
U.S. Personal Banking – U.S. Dollars Q1/17 U.S. Personal Banking1 Gross Loans GIL GIL / Highlights ($B) ($MM) Loans Residential Mortgages 21 351 1.70% Continued good asset quality Home Equity Lines of Credit (HELOC)2 10 717 7.33% in U.S. Personal Indirect Auto 21 162 0.76% Credit Cards 11 183 1.69
Slide 40: U.S. Commercial Banking – U.S. Dollars
U.S. Commercial Banking – U.S. Dollars Q1/17 Gross Loans / GIL GIL/ Highlights U.S. Commercial Banking1 BAs ($B) ($MM) Loans Commercial Real Estate (CRE) 21 94 0.45% Sustained good quality in Non-residential Real Estate 16 52 0.33% U.S. Commercial Banking Residential Real Estate 5 42 0.83% US$40
Slide 41: Contents
Contents 1. TD Bank Group 2. Economic Outlook 3. Treasury & Balance Sheet Management 4. Appendix • Economic Outlook • Credit Quality • Funding Instruments 41
Slide 42: 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 43: CMHC Guide Highlights
CMHC Guide Highlights Asset Coverage Test To confirm overcollateralization of the covered bond collateral held against covered bonds outstanding Quarterly indexation of property values provides adjustment for market developments Valuation Calculation Test to monitor a covered bond program’s ex
Slide 44: TD Legislative Covered Bonds
TD Legislative Covered Bonds TD Covered Bond Programme Highlights Cover Pool as at January 31, 2017 TD has a C$40B legislative covered bond program High quality, conventional first lien Canadian Residential Covered bonds issuance for Canadian issuers governed by mortgages originated by TD CMHC
Slide 45: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Email: tdir@td.com Website: Best Investor Relations by Sector: Financial Services www.td.com/investor Best Corporate Governance 45
Slide 46: TD Bank Group Fixed Income Investor Presentation
TD Bank Group Fixed Income Investor Presentation Q1 2017