Toronto-dominion Bank · TSX:TD

Toronto-dominion Bank — The Toronto-Dominion Bank — Q1 2023 Earnings Presentation

51 slides from Toronto-dominion Bank's earnings presentation, Mar 2, 2023

  1. Slide 1: TD Bank Group Q1 2023

    TD Bank Group Q1 2023 March 2, 2023

  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: Our Strategy

    Our Strategy We're in this together – Anchored by our proven business model and propelled by our forward-focused strategy, we are helping our customers, colleagues and communities thrive in a changing world Proven Business Model Forward Focused Purpose-Driven Deliver consistent earnings growth, Shap

  4. Slide 4: Proven Business Model

    Proven Business Model Diversification and scale, underpinned by a strong risk culture  Reported earnings of $1.6B, down 58% (adjusted1 $4.2B, up 8%)  Reported EPS2 of $0.82, down 59% (adjusted1 $2.23, up 7%)  Strong revenue performance reflecting margin expansion, volume growth and our diversifie

  5. Slide 5: Proven Business Model: Strong Customer Activity

    Proven Business Model Strong Customer Activity Canadian Personal and Commercial U.S. Retail Average Volumes Global Wealth Assets5 Banking Average Volumes ($B) (US$B)4 ($B) 8% 300 6% 1,200 500 5% 5% 110 250 1% 1,000 97 114 400 85 109 150 390 170 414 162 200 102 800 598 587 300 363 150 518 95 85 90 60

  6. Slide 6: Forward Focused: Shaping the future of banking

    Forward Focused Shaping the future of banking Exclusive strategic relationship with 20-year extension of agreement CanadaVisa with Delaware North Ranked 1st in the 2023 Globe and Several TDAM ETFs and mutual funds Closed TD's acquisition of Cowen Mail digital brokerage ranking recognized with FundGr

  7. Slide 7: First Horizon Acquisition Update

    Forward Focused First Horizon Acquisition Update First Horizon Accelerates TD's U.S. Retail Bank Growth Strategy Progress to Date Next Steps • Extended merger agreement to May 27, 2023 • Continuing to engage with regulators on applications • Announced Community Benefits Plans to provide US$50 billio

  8. Slide 8: Forward Focused: Digital Adoption

    Forward Focused: Digital Adoption Canadian P&C9 U.S. Retail9 Innovating for our Customers 61.4 62.7 52.3 53.6  Launched TD Goal Builder, a goal planning Digital platform that enables personalized advice and Adoption recommendations based on customer needs +130 bps +130 bps (% of total YoY YoY and g

  9. Slide 9: Purpose Driven

    Purpose Driven Centered on our vision, purpose and shared commitments Member of Dow Jones Sustainability Indices Powered by the S&P Global CSA 9

  10. Slide 10: ESG Highlights

    Purpose Driven ESG Highlights Environment Social Governance • Developed a customized methodology for • Agreed to conduct a racial-equity assessment • Established the ESG Centre of Expertise to setting Scope 3 financed emissions targets of its Canadian and U.S. employment policies coordinate and stre

  11. Slide 11: Q1 2023 Highlights

    Q1 2023 Highlights Strong performance P&L ($MM) EPS of $0.82, down 59% YoY Reported Q1/23 QoQ YoY  Reported EPS includes the Stanford litigation Revenue 12,226 (21%) 8% settlement14, a net loss from mitigation of impact PCL 690 +$73 +$618 from interest rate volatility to closing capital on First Ex

  12. Slide 12: Canadian Personal & Commercial Banking

    Canadian Personal & Commercial Banking Strong quarter with record earnings from continued growth momentum P&L ($MM) Net income up 7% YoY Reported Q1/23 QoQ YoY Revenue 4,589 3% 17% Revenue up 17% YoY PCL 327 +$98 +$295  Higher margins and volume growth Impaired 220 +$36 +$70  Loan volumes up 8% Pe

  13. Slide 13: U.S. Retail

    U.S. Retail Strong quarter with record earnings from continued growth momentum P&L (US$MM) (except where noted) Net income up 17% YoY (Adj1 up 23% YoY) Reported Q1/23 QoQ YoY Revenue 2,791 3% 27% Revenue up 27% YoY PCL 149 ($20) +$132  Higher deposit margins and loan volumes, partially Impaired 158

  14. Slide 14: Wealth Management & Insurance

    Wealth Management & Insurance Solid performance amid challenging market conditions P&L ($MM) Net income down 14% YoY Reported Q1/23 QoQ YoY Revenue 2,902 10% 4% Revenue up 4% YoY Insurance Claims 976 35% 29%  Higher margins, an increase in fair value of Expenses 1,182 (2%) 0% investments supporting

  15. Slide 15: Wholesale Banking

    Wholesale Banking Performance reflects strength of diversified business model P&L ($MM) Net income down 24% YoY (Adj1 down 20% YoY) Reported Q1/23 QoQ YoY Revenue 1,345 16% 0% Revenue largely unchanged YoY Trading-related revenue 662 18% (9%)  Lower trading-related revenue and underwriting fees, (T

  16. Slide 16: Corporate Segment

    Corporate Segment P&L ($MM) Reported net loss of $2.6B Reported Q1/23 Q4/22 Q1/22  Adjusted1 loss of $140MM Net Income (Loss) (2,617) 2,661 (227)  Reported net loss includes the Stanford Adjustments for items of note litigation settlement, a net loss from Amortization of acquired intangibles befor

  17. Slide 17: Capital

    27 Capital Strong capital and liquidity management supporting future growth Common Equity Tier 1 ratio of 15.5% Common Equity Tier 1 Ratio Q4 2022 CET 1 Ratio 16.2%  Increase in RWA (net of FX)28 of (62) bps due to: Internal capital generation 42  Higher volumes (26) bps Increase in RWA (net of FX

  18. Slide 18: Gross Impaired Loan Formations

    Gross Impaired Loan Formations By Business Segment Highlights GIL Formations29: $MM and Ratios30  Gross impaired loan formations increased 2 basis points quarter- 16 16 bps over-quarter, driven by: 12 14 12 – Canadian Commercial Banking, primarily related to a new formation in the health $1,350 and

  19. Slide 19: Gross Impaired Loans (GIL)

    Gross Impaired Loans (GIL) By Business Segment Highlights GIL31: $MM and Ratios32  Gross impaired loans were 33 stable quarter-over-quarter, remaining at cyclically low 30 30 bps 28 29 levels $2,560 $2,503 $2,591 $3 / 3 bps $2,397 $3 / 4 bps $2,332 $3 / 4 bps $3 / 3 bps $7 / $3 / 4 bps $46 / 1 bp $

  20. Slide 20: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) By Business Segment Highlights PCL33: $MM and Ratios34 $690  PCL quarter-over-quarter increase largely recorded in $617 Canadian Personal & Canadian Personal & Commercial Banking Commercial Banking U.S. Retail $327 $229 Corporate $351 Wholesale Banking Wealth Manag

  21. Slide 21: Provision for Credit Losses: Impaired and Performing

    Provision for Credit Losses (PCL)33,37 Impaired and Performing Highlights PCL ($MM) Q1/22 Q4/22 Q1/23  Impaired PCL increased quarter-over-quarter, reflecting: Total Bank 72 617 690 – Some further normalization of credit Impaired 329 454 553 performance, largely reflected in the Performing (257) 16

  22. Slide 22: Allowance for Credit Losses (ACL)

    Allowance for Credit Losses (ACL) ACL33: $B and Coverage Ratios38 124 126 122 Highlights 103 108 103 97 93 $9.2 $9.4 $8.9 87 85 86 86 bps  ACL remained stable quarter-over- 74 $7.9 $8.0 quarter, related to: $7.7 $7.3 $7.1 $6.9 $7.4 $7.5 $6.9 – Volume growth United States 59% 60% 59% $5.3 58% 58% –

  23. Slide 23: Appendix

    Appendix 23

  24. Slide 24: Q1 2023: Items of Note

    Q1 2023: Items of Note Revenue/ ($MM) EPS ($)41 Segment Expense Line Item42 Pre Tax After Tax Reported net income and EPS (diluted) 1,582 0.82 Items of note Amortization of acquired intangibles24 54 46 0.03 Corporate Page 4, L13, L21 & L32 Acquisition and integration-related charges related to 34 28

  25. Slide 25: U.S. Strategic Card Portfolio: Accounting

    U.S. Strategic Card Portfolio: Accounting Illustrative Example 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 Me

  26. Slide 26: Q1 2023: PTPP & Operating Leverage

    Q1 2023: PTPP1,44 & Operating Leverage1,45 Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change Q1 2023 Q4 2022 Q1 2022 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 12,226 8,316 15,563 6,545 11,281 5,967 Page 2, L3 & L6 2

  27. Slide 27: Net Interest Income Sensitivity (NIIS)

    Net Interest Income Sensitivity (NIIS) Strong deposit base and disciplined ALM management  25 bps increase in short-term interest rates  100 bps change in interest rates across the – $173MM increase in NII over a 12-month period from a curve 25 bps rise in short rates (25 bps hike from each of – 1

  28. Slide 28: First Horizon Acquisition: Mitigation of Rate Impact

    First Horizon Acquisition Mitigation of Impact from Interest Rate Volatility to Closing Capital  Purchase accounting requires TD to fair value First Horizon's assets and liabilities at closing  Since fair values are sensitive to interest rates, changes in rates will impact the fair values and ther

  29. Slide 29: Canadian P&C: Volumes, Margins and Efficiency

    Canadian Personal & Commercial Banking Volumes, Margins and Efficiency Net Interest Margin (NIM) Average Loans $B52 2.80% 520 524 486 496 511 2.70% 101 105 107 110 97 2.59% 2.52% 414 390 395 406 413 2.44% Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Personal Business Efficiency Ratio

  30. Slide 30: U.S. Retail: Volumes, Margins and Efficiency

    U.S. Retail Volumes, Margins and Efficiency NII and NIM19,53 US$B52 Average Loans US$B51 3.29% 3.13% 175 162 166 170 3.28% 162 0.4 0.2 2.62% 3.12% 2.4 1.4 0.9 2.21% 2,349 2.21% 2,220 8 2.60% 90 9 82 83 86 87 2.11% 2.17% 1,905 16 1,671 1,641 2,341 65 28 2,211 1,889 77 78 80 83 85 1,606 1,614 Q1/22 Q2

  31. Slide 31: U.S. Retail: Wealth Assets and Schwab EPU

    U.S. Retail Wealth Assets and Schwab EPU TD Wealth Assets US$B Schwab57 – Q1 2023 TD’s share of Schwab’s net income was C$285MM on a 40 reported basis, of which C$301MM (US$222MM) was 37 recorded in the U.S. Retail segment 36 35 35 34 33  TD's share of Schwab's net income was C$328MM on 32 32 32 an

  32. Slide 32: Schwab Equity Pickup Reconciliation

    Schwab Equity Pickup Q1 2023 Reconciliation U.S. Retail P&L ($MM)59 TDBG Corporate Segment $C $US Reported Schwab Equity Pickup60 285 301 222 (16) Amortization of Intangibles61 30 0 0 30 Acquisition and Integration Charges61,62 13 0 0 13 Adjusted Schwab Equity Pickup1 328 301 222 27 Financial Statem

  33. Slide 33: Wealth Management & Insurance: Volumes, Premiums and Efficiency

    Wealth Management & Insurance Volumes, Premiums and Efficiency Insurance Premiums ($MM) Average Loans $B 7.9 7.8 7.4 7.1 1,527 1,428 6.7 1,116 1,271 1,188 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Efficiency Ratio Average Deposits $B 45.9% 43.9% 42.2% 41.7% 40.7% 40.5 42.7 41.2 38.

  34. Slide 34: Wealth Management & Insurance: Wealth Revenue and Assets

    Wealth Management & Insurance Wealth Revenue and Assets Wealth Revenue $MM Wealth Assets $B 1,600 600 1,499 1,431 181 1,350 1,344 1,339 557 541 537 526 183 517 207 217 218 1,200 244 226 429 500 411 408 414 172 170 159 397 800 457 421 400 400 393 362 1,075 351 1,022 971 957 962 0 300 Q1/22 Q2/22 Q3/2

  35. Slide 35: Wholesale Banking

    Wholesale Banking -1% Revenue Loans63 Q1 2023 Q1 2023 4% 34% 46% $1.3B $96.9B 55% 62% Corporate and Global Markets Other64 Canada United States International Investment Banking 35

  36. Slide 36: Gross Lending Portfolio

    Gross Lending Portfolio Includes B/As Period-End Balances ($B unless otherwise noted) Q4/22 Q1/23 Canadian Personal & Commercial Portfolio 520.0 521.5 Personal 414.6 413.5 Residential Mortgages 244.9 244.5 Home Equity Lines of Credit (HELOC) 113.7 113.3 Indirect Auto 27.2 27.2 Credit Cards 17.4 17.2

  37. Slide 37: Commercial Real Estate (CRE)

    Commercial Real Estate (CRE) Highlights Commercial Real Estate Portfolio Overview: $89B  Commercial Real Estate represents $89B or Residential (excl. MUR) 10% of Total Bank gross loans and 14% Other acceptances68 6% – Portfolio is well diversified across Retail geographies and sub segments 18% • $1

  38. Slide 38: Canadian Real Estate Secured Lending Portfolio

    Canadian Real Estate Secured Lending Portfolio Highlights (Q1 2023) Quarterly Portfolio Volumes ($B) Canadian RESL credit quality remained $340 $348 $357 $360 $359 strong Uninsured  Uninsured average Bureau score69 of 793, Insured 78% 79% 80% 80% 81% stable quarter-over-quarter  Less than 1% of th

  39. Slide 39: Canadian Personal Banking

    Canadian Personal Banking Canadian Personal Banking (Q1/23) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%)  Gross impaired loans increased quarter-over- Residential Mortgages 244.5 169 0.07 quarter, but remained at low Home Equity Lines of Credit (HELOC) 113.3 109 0.10 levels Indirect Auto 27.

  40. Slide 40: Canadian Commercial and Wholesale Banking

    Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q1/23) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) increased quarter-over- Commercial Banking73 108.0 563 0.52 quarter, primarily related to a Wholesale Banking 97.4 47 0.05 new f

  41. Slide 41: U.S. Personal Banking (USD)

    U.S. Personal Banking (USD) Highlights U.S. Personal Banking78 (Q1/23)  Gross impaired loans stable Gross Loans GIL GIL/Loans quarter-over-quarter ($B) ($MM) (%) Residential Mortgages 36.4 329 0.90 Home Equity Lines of Credit (HELOC)65 7.4 176 2.40 Indirect Auto 26.8 166 0.62 Credit Cards 14.1 231

  42. Slide 42: U.S. Commercial Banking (USD)

    U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking78 (Q1/23) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) decreased quarter-over- Commercial Real Estate (CRE) 27.3 63 0.23 quarter as resolutions Non-residential Real Estate 19.5 30 0.15 outpaced formations Reside

  43. Slide 43: Endnotes

    Endnotes 1. The Bank prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), the current generally accepted accounting principles (GAAP), and refers to results prepared in accordance with IFRS as the “reported” results. The Bank also util

  44. Slide 44: Endnotes

    Endnotes 11. Number of active mobile users, in millions. Active mobile users are users who have logged in via their mobile device at least once in the last 90 days. 12. Canadian mobile sessions represent the total number of Canadian Personal banking and Small Business banking customer logins using a

  45. Slide 45: Endnotes

    Endnotes 19. U.S. Retail NIM is calculated by dividing segment's net interest income by average interest-earning assets excluding the impact related to deposit sweep arrangements and the impact of intercompany deposits and cash collateral, which management believes better reflects segment performanc

  46. Slide 46: Endnotes

    Endnotes 29. Gross Impaired Loan formations represent additions to Impaired Loans & Acceptances during the quarter; excludes the impact of acquired credit- impaired loans. 30. GIL Formations Ratio: Gross Impaired Loan Formations/Average Gross Loans & Acceptances. 31. Gross Impaired Loans (GIL) exclu

  47. Slide 47: Endnotes

    Endnotes 44. Pre-tax, pre-provision earnings (PTPP) is a non-GAAP financial measure that is typically calculated by subtracting expenses from revenues. At the total Bank level, TD calculates PTPP as the difference between adjusted revenue (U.S. Retail in $US) net of fair value changes in investments

  48. Slide 48: Endnotes

    Endnotes 54. Adjusts for the impact of Paycheck Protection Program (PPP) loan forgiveness on NII and NIM. NII excluding PPP used in the calculation of NIM excluding PPP is a non-GAAP financial measure. Collectively, these adjustments provide a measure of NII and NIM that management believes is more

  49. Slide 49: Endnotes

    Endnotes 66. Includes acquired credit impaired loans and loans booked in the Corporate segment. 67. Includes loans measured at fair value through other comprehensive income. 68. Gross Loans and Banker's Acceptances outstanding and percentage of Gross Loans and Banker's Acceptances outstanding. 69. A

  50. Slide 50: Endnotes

    Endnotes 78. Excludes acquired credit-impaired loans. 79. Loan To Value is calculated with the Loan Performance Home Price Index as of November 2022, based on outstanding mortgage balance and/or the HELOC authorized credit limit. FICO Scores updated December 2022. 80. Other includes: Agriculture; Po

  51. Slide 51: Investor Relations Contacts

    Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 51

The Toronto-Dominion Bank — Q1 2023 Earnings Presentation on 6ix