Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Debt Investor Presentation (December 2015)
48 slides from Toronto-dominion Bank's debt investor presentation, December 2015
Slide 1: Investor Presentation – Fixed Income
TD Bank Group Investor Presentation – Fixed Income Q4 2015
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. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 3
Slide 4: TD Bank Group
TD Bank Group 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 Q4 20151 Canadian U.S. U.S. Retail (C$ excep
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 11th largest economy World’s largest economy Nominal GDP of C$2.0 trillion Nominal GDP of US$17.3 trillion Population of 36 million Population of 319 million Canadian Banking System U.S. Banking System Soundest banki
Slide 7: TD in North America
TD in North America North Q4 2015 Canadian American C$ except otherwise noted Ranking5 Ranking6 Total assets $1,104B 1st 5th Total deposits $696B 2nd 6th Market capitalization $100B 2nd 6th Adjusted net income1 (trailing four quarters) $8.8B 2nd 6th Reported net income (trailing four quarters) $8.0B
Slide 8: Composition of Earnings
Composition of Earnings Adjusted Earnings1 2015 Adjusted (C$MM) Retail Earnings1,4 = 91% Adjusted Retail Earnings1,4 Wholesale Earnings $8,754 9% 91% Canadian U.S Retail2 Retail 23% 64% 4 TD AMTD3 4% $2,158 Wholesale 42% 9% 58% 2001 2015 Retail-focused earnings mix 1. See slide 5, footnote 3, for de
Slide 9: Strategic Evolution of TD
Strategic Evolution of TD INCREASING RETAIL FOCUS Became primary Completed Acquired Acquired Target issuer of transaction TD Chrysler credit card Aeroplan Visa; of strategic Waterhouse Financial portfolio & Epoch; acquired ~50% credit card TD Bank Acquired Acquired USA / Acquired Commerce Acquired a
Slide 10: Risk Management Framework
Risk Management Framework Our Risk Appetite We take risks required to build our business, but only if those risks: Fit our business strategy and can be understood and managed Do not expose the enterprise to any significant single loss events; we don’t “bet the bank” on any single acquisition, bu
Slide 11: Q4 2015 Highlights
Q4 2015 Highlights Key Themes Financial Highlights $MM Adjusted1 EPS of $1.14, up 16% YoY P&L Summary Adjusted1 Adjusted1 Q4/15 Q3/15 Q4/14 Adjusted Net Income up 17% YoY Revenue2 $ 7,459 7,385 6,732 Strong results for Canadian and U.S. Retail; solid Expenses 4,480 4,261 4,188 quarter for Whol
Slide 12: Q4 2015 Credit Highlights
Q4 2015 Credit Highlights Highlights PCL Ratio (bps)1 40 Ongoing good performance and volume growth across the broad 33 33 portfolio 32 29 PCL ratio increase of 7 bps largely 28 attributed to: 3 bps due to one-time provisions Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 for South Carolina floods An i
Slide 13: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 13
Slide 14: Canada’s Relative Strengths
Canada’s Relative Strengths One of the world’s most competitive economies1 Soundest banking system in the world1 Unemployment rate remains below prior recessionary peaks One of the strongest fiscal positions among G-7 industrialized countries Relatively low projected deficits and debt 14 1
Slide 15: Solid Financial System in Canada
Solid Financial System in Canada Strong retail and commercial banks Conservative lending standards All major wholesale dealers owned by Canadian banks, with stable retail earnings base to absorb any wholesale write-offs Responsive government and central bank Proactive policies and programs
Slide 16: Well Developed Residential Mortgage Market in Canada
Well Developed Residential Mortgage Market in Canada Canadian chartered banks account for approximately 75% of the total mortgage market, including securitizations1 Conservative lending practices Strong competition among lenders Legal environment supports foreclosure and other types of legal
Slide 17: Canadian Mortgage Market is Different from the U.S.
Canadian Mortgage Market is Different from the U.S. Canada U.S. Largely fixed product (85% of new originations) and amortizing Adjustable Rate Mortgage Conservative product offerings: fixed or variable (ARMs) (15% of new originations). Interest only interest rate option ARM products are a small
Slide 18: Canadian Housing Market
Canadian Housing Market Portfolio Q4/15 Gross Loans Outstanding $246 B Canadian RESL Percentage Insured 56% Uninsured Residential Mortgages Current LTV1 61% Condo Borrower Gross Loans Outstanding $31 B (Residential Mortgages) Percentage Insured 67% Gross Loans Outstanding $6 B Condo Borrower 33% (HE
Slide 19: North American Economy
North American Economy Outlook Economic momentum is building in the United States Over the course of 2014, the economy generated the most jobs since 1999 and the most private-sector jobs since 1997 Income growth and low energy prices will buoy consumer spending Residential real estate will m
Slide 20: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 20
Slide 21: Capital
Capital Highlights Basel III Common Equity Tier 11 10.1% Basel III Common Equity Tier 1 9.9% 9.9% ratio 9.9% 9.4% 9.5% Decrease QoQ driven mainly by Q4 restructuring charge and RWA growth Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Leverage ratio of 3.7% Announced an NCIB for up to 9.5 million shares or a
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 14 AA- 18 Aa1 12 A+ 16 Aa2 14 Aa3 A 10 12 A1 A- 8 10 A2 8 A3 6+ BBB Baa1 6 BBB 4 Baa2 4 2 2 2 3 TD Canadian Peers 2 U.
Slide 23: Robust Liquidity Management
Robust Liquidity Management Treasury paradigm Contribute to stable and growing earnings Manage non-trading market risk within established limits Match terms of assets and liabilities Do not engage in liquidity carry trade Match underlying funding maturities to term of assets or stressed
Slide 24: Liquidity Position
Liquidity Position Average LCR for Q4 2015 HQLA Distribution (Weighted & Includes Excess U.S. HQLA) Level 1 Cash & Central Bank U.S. P&C Reserve Excess Level 1 126% Sovereign Issued/ 80% Level 2A 100% Guaranteed Sovereign Level 1 MDBs, Issued/Guaranteed PSEs, Level 2A PSEs, Provincials Cor
Slide 25: Term Funding Strategy
Term Funding Strategy Large base of stable retail and commercial deposits Customer service business model delivers growing base of “sticky” and franchise-based deposits Reserve assets held for deposit balances based on LCR run-off requirements User of mortgage securitization programs via Can
Slide 26: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition1 Funding Mix2 Wholesale Term Debt Assets Securitized 26% Other Deposits33 Personal Other Deposits Covered Bonds Covered Bonds Personal 25% Term Deposits 26% 23% 23% Term Deposits 8% 5% Short Term Residential Mortgages Liabilities 4 58% Short Term Liabilities4 Mor
Slide 27: Wholesale Term Debt Composition
Wholesale Term Debt Composition1 By Currency2,3 By Term2,3 4 Year 3% Covered Bonds $3B 16% Residential Mortgages 58% 5 Year 53% USD 55% $42B CAD 25% $43B Covered Bonds Senior $20B 3 Year 23% Unsecured15% $18B MTN5 Senior Unsecured 48% MTN 2 Year 7% 26% $5B 7 Year 5% EUR 13% $4B $10B AUD 2% $2B 6 Yea
Slide 28: Debt Maturity Profile F2015 – F2019
Debt Maturity Profile1 F2015 – F2019 Bullet Debt Maturities (C$ billions)2 $25 $23 $21 $20 $18 $17 $15 $13 $10 $5 3 $0 2015 2016 2017 2018 2019 MBS Covered Bond Senior Debt ABS Subordinated Debt 3 Manageable debt maturities 1. For wholesale term debt that has bullet maturities. 2. As of October 31,
Slide 29: 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 30: CMHC Guide Highlights
CMHC Guide Highlights Asset Coverage Test To confirm overcollateralization of the covered bond collateral held against covered bonds outstanding Indexation requirement (July 1, 2014) provides adjustment for market development Value to be adjusted at least quarterly Valuation Calculation
Slide 31: TD Legislative Covered Bonds
TD Legislative Covered Bonds TD Covered Bond Programme Highlights Cover Pool as at October 31, 2015 TD has a C$40B legislative covered bond program High quality, conventional first lien Canadian Residential mortgages originated by TD Covered bonds issuance for Canadian issuers governed by CMHC
Slide 32: Key Takeaways
Key Takeaways Strong capital base – well positioned for Basel III Industry leading credit ratings Proactive & disciplined risk management Attractive balance sheet composition Diverse funding strategy 32
Slide 33: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 33
Slide 34: Global Economic Outlook
Global Economic Outlook World Real GDP Growth1 Global economic growth will Y/Y % Change remain modest with a mild 6 acceleration expected over Forecast1 5 the next two years 4 3 2 Faster U.S. growth, coupled 1 0 with sluggish economic -1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 201
Slide 35: Canadian Economic Outlook
Canadian Economic Outlook Canadian Export and U.S. Activity Index1 Y/Y % Change 30 Forecast1 20 Canadian economy still 10 tightly linked to U.S. 0 fortunes, and better U.S. -10 Canadian Real Exports growth in medium term to -20 U.S. Activity Index help Canada’s prospects -30 1982 1985 1988 1991 19
Slide 36: U.S. Economic Outlook
U.S. Economic Outlook Consumption Rising on Faster Income Growth1 Y/Y % Change 6 Forecast1 4 Supported by strong job 2 growth, rising wages, falling energy prices, 0 Real Consumer Spending consumer spending -2 Real Disposable Income growth will accelerate in -4 2015 and 2016 00 01 02 03 04 05 06 0
Slide 37: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 With U.S. unemployment 7 % nearing healthy levels the US Federal Federal Reserve is likely to Funds Rate 6 Forecast raise rates soon. 5 In Canada, a modest Bank of Canada economic and inflationary 4 outlook implies the Bank of 3 Canada is se
Slide 38: Stable Earnings Growth
Stable Earnings Growth Adjusted Earnings1,2 (C$MM) 8,754 8,127 20112: 7,064 7,136 Wholesale Banking 6,432 Wealth & Insurance U.S. P&C Canadian P&C 2012 – 20153: Wholesale Banking U.S. Retail Canadian Retail 2011 Segment realignment 2012 2013 2014 2015 Targeting 7-10% adjusted EPS growth1 over the me
Slide 39: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q3/15 Q4/15 Canadian Retail Portfolio $ 350.6 $ 355.9 Personal $ 293.6 $ 298.6 Residential Mortgages 180.2 184.5 Home Equity Lines of Credit (HELOC) 60.9 61.2 Indirect Auto 18.3 19.0 Unsecured Lines of Credit 9.5 9.6 Credit
Slide 40: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,338 New Formations stable in $1,206 Canadian retail portfolio $1,163 $1,168 $1,124 $33 / 10 bps U.S. GIL Formations increase $14 / 5bps $16 / 5bps driven by ongoing renewal of legacy interest-only HELOCs.
Slide 41: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights $3,244 TD Gross Impaired Loans ratio $3,077 $2,967 $2,905 $55 / 16 bps stable at 58bps. $2,731 $36 / 12 bps $13 / 4 bps U.S. Gross Impaired Loans $28 / 9 bps $12 / 5 bps increase driven by ongoing renewal of legacy interest
Slide 42: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights $550 PCL increase driven by: $11 / NM One-time provision of $34MM $443 $36 / NM USD for South Carolina $397 $396 floods $1 / NM $368 $18MM provision relating to $6 / NM $283 / 69 bps two borrowers in the oil & gas
Slide 43: Canadian Personal Banking
Canadian Personal Banking Q4/15 Canadian Personal Banking1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 185 0.22% 396 5 Credit quality remains strong in Home Equity Lines of Credit (HELOC) 61 0.29% 180 2 the Canadian Personal portfolio Indirect Auto 19 0.25% 47
Slide 44: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q4/15 Gross Highlights Canadian Commercial and Loans/BAs GIL PCL1 Wholesale Banking ($B) ($MM) ($MM) Canadian Commercial and Commercial Banking2 57 170 -2 Wholesale Banking portfolios Wholesale 34 55 11 continue to perform well Total Canadian Commercial an
Slide 45: U.S. Personal Banking - U.S. Dollars
U.S. Personal Banking- U.S. Dollars Q4/15 Highlights Gross Loans GIL/ GIL U.S. Personal Banking1 ($B) Loans ($MM) PCL2 Continued good asset quality ($MM) Residential Mortgages 21 1.45% 298 1 in U.S. Personal Home Equity Lines of Credit (HELOC)3 10 6.22% 634 10 Gross Impaired Loans Indirect Auto
Slide 46: U.S. Commercial Banking - U.S. Dollars
U.S. Commercial Banking - U.S. Dollars Q4/15 U.S. Commercial Banking1 Gross Loans/BAs GIL ($MM) PCL2 ($MM) Highlights ($B) Commercial Real Estate (CRE) 18 173 4 Strong portfolio growth and Non-residential Real Estate 14 113 3 sustained good quality in U.S. Residential Real Estate 4 60 1 Commercial
Slide 47: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Grand Prix for Best Overall Investor Relations: Large Cap Email: Best Investor Relations by Sector: Financial Services tdir@td.com Best Investor Relations by a CFO: Large Cap Best Investor Relations Officer: Large Cap Website: Best Fi
Slide 48: Investor Presentation – Fixed Income
TD Bank Group Investor Presentation – Fixed Income Q4 2015
TD Bank Group — Debt Investor Presentation (December 2015) on 6ix