Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — The Toronto-Dominion Bank — Q3 2024 Earnings Presentation
55 slides from Toronto-dominion Bank's earnings presentation, Aug 22, 2024
Slide 1: Quarterly Results Presentation
Quarterly Results Presentation TD Bank Group Q3 2024 August 22, 2024
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 Proven Business Model Forward-Focused Purpose-Driven Leading Customer Reimagining Financial Relentless Customer Franchises Services Focus Strong Balance Sheet Delivering OneTD Diverse Talent and with Conservative Risk Inclusive Culture Appetite Consistent and Investing for Growth Creati
Slide 4: AML Update
AML Update ▪ TD continues to actively pursue a global resolution of the civil and criminal investigations into its U.S. BSA / AML program ▪ In anticipation of a global resolution, TD has taken a further provision of US$2.6B ▪ TD expects that a global resolution will be finalized by calendar year end
Slide 5: Proven Business Model
Proven Business Model Diversification and scale, underpinned by a strong risk culture Net Income/(Loss) EPS2 PTPP1,3 Growth (YoY) Total Assets Reported: $(181)MM Reported: $(0.14) Reported: (43.0)% $2.0T Adjusted1: $3.6B Adjusted1: $2.05 Adjusted1: 5.9% Efficiency Ratio2 ROE2 ROTCE2 CET 14 Reported:
Slide 6: Proven Business Model: Customer Activity
Proven Business Model Customer Activity Canadian Personal and Commercial U.S. Retail Average Volumes Global Wealth Assets2 Banking Average Volumes ($B) (US$B)1 ($B) 2 Year CAGR 9% 600 6% 300 1,200 122 3% 500 114 250 -3% 1,000 105 110 8% 101 689 400 450 161 200 104 800 611 406 167 425 158 572 300 150
Slide 7: Forward Focused
Forward Focused Shaping the future of banking Best Consumer Digital Bank in Canada TD credit cards ranked #1 across major Launched TD Innovation Partners, offering for 4th consecutive year issuers in program loyalty according to a broad suite of services for technology Best Transformation & Innovati
Slide 8: Forward Focused: Digital Metrics
Forward Focused: Digital Metrics Canadian P&C1 U.S. Retail1 Innovating for our Customers Digital Adoption (% of total customers)2 +140 bps +225 bps ▪ On U.S. Mobile App, launched 63.3 64.7 54.4 56.7 personalization features and hub for debit and credit cards Q3/23 Q3/24 Q3/23 Q3/24 ▪ Simplified mone
Slide 9: Purpose Driven: Q3 2024 ESG Highlights
Purpose Driven: Q3 2024 ESG Highlights ▪ Named a "Best Place to Work for Disability ▪ Announced the 2024 TD Ready Challenge, Inclusion" in Canada on the 2024 Disability with $10MM in grants available for innovative Equality index, which has expanded to Canada solutions to address systemic barriers f
Slide 10: Purpose Driven
Purpose Driven Centered on our vision, purpose and shared commitments New addition to Toronto city Celebrating 10 years of the skyline: TD Terrace TD Thanks You campaign 100 Score in 2024 Disability Equality 100 Score in 2024 Disability Equality Index in Canada Index in the U.S. for the 10th consecu
Slide 11: Q3 2024 Highlights
Q3 2024 Highlights Record revenue in two segments EPS of $(0.14) P&L ($MM) ▪ Adjusted1 EPS of $2.05, up 5% YoY Reported Q3/24 QoQ YoY Revenue 14,176 3% 10% Revenue up 10% YoY (Adj1 up 8% YoY) PCL 1,072 +$1 +$306 ▪ Reported revenue includes the impact of the Impaired 920 +$50 +$257 terminated First H
Slide 12: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Record net income & revenue, with volume growth & strong operating P&L ($MM) leverage Reported Q3/24 QoQ YoY Revenue 5,003 3% 9% Net income up 13% YoY PCL 435 -$32 +$56 Impaired 338 -$59 +$53 Revenue up 9% YoY Performing 97 +$27 +$3 Expenses 1,967 1% 4% ▪ Volum
Slide 13: U.S. Retail
U.S. Retail Operating momentum P&L (US$MM) (except where noted) Reported Q3/24 QoQ YoY Net loss of $1.7B (Adj1 net income of $942MM) Revenue 2,594 2% (1%) PCL 276 -$4 +$91 Revenue down 1% YoY 242 +$13 +$49 Impaired ▪ Lower deposit volumes and loan margins, partially Performing 34 -$17 +$42 offset by
Slide 14: Wealth Management & Insurance
Wealth Management & Insurance Record revenue; net income impacted by severe weather events P&L ($MM) Reported Q3/24 QoQ YoY Net income flat YoY Revenue 3,349 8% 13% Revenue up 13% YoY Insurance Service Expenses 1,669 34% 20% (ISE) ▪ Higher insurance premiums, fee-based revenue, deposit margins and t
Slide 15: Wholesale Banking
Wholesale Banking Continued growth; revenues up on broader & stronger capabilities P&L ($MM) Net income up 17% YoY (Adj1 flat YoY) Reported Q3/24 QoQ YoY Revenue 1,795 (7%) 14% Revenue up 14% YoY Global Markets 1,046 (3%) 8% Investment Banking 777 (11%) 20% ▪ Higher trading-related revenue, lending
Slide 16: Corporate Segment
Corporate P&L ($MM) Segment Reported Q3/24 Q2/24 Q3/23 Reported net loss of $525MM Net Income (Loss) (525) (737) (782) ▪ Adjusted1 loss of $324MM Adjustments for items of note Amortization of acquired intangibles2 64 72 88 Acquisition and integration charges related 21 21 54 to the Schwab transactio
Slide 17: Capital
Capital1 Strong capital and liquidity management supporting future growth Common Equity Tier 1 Ratio (bps) Q2 2024 CET 1 Ratio 13.4% Common Equity Tier 1 ratio of 12.8% ▪ Expected Q4 operational risk RWA impact to Internal capital generation 25 CET1 from Q3 AML investigations provision of Increase i
Slide 18: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment GIL Formations1: $MM and Ratios2 Highlights ▪ Gross impaired loan formations 22 22 bps stable quarter-over-quarter 18 21 18 $2,056 $2,005 $196 / 20 bps $1,937 $1,677 $1,599 $1 / 1 bp $55 / 6 bps $927 / $932 / $805 / 17 bps $678 / 16 bps 14 bps $699
Slide 19: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment GIL1: $MM and Ratios2 Highlights 44 bps 40 41 ▪ Gross impaired loans 36 33 increased 3 basis points quarter-over-quarter, $4,170 largely recorded in: $3,895 $5 / 7 bps $3,709 $5 / 6 bps – Wholesale Banking $5 / 6 bps $27 / and U.S. Commercial $3,299 $21
Slide 20: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment PCL1: $MM and Ratios2,3,4 Highlights Wealth Management & Insurance $1,071 $1,072 ▪ PCL stable quarter-over-quarter Wholesale Banking $1,001 $10 $55 Canadian Personal & Commercial Banking $118 $878 U.S. Retail (net) $766 $57 $25 $423 $467 Corporat
Slide 21: Provision for Credit Losses (PCL): Impaired and Performing
Provision for Credit Losses (PCL) Impaired and Performing PCL1,2 ($MM) Highlights Q3/23 Q2/24 Q3/24 ▪ Impaired PCL quarter-over- Total Bank 766 1,071 1,072 quarter increase driven by Impaired 663 870 920 Wholesale Banking Performing 103 201 152 Canadian Personal & Commercial Banking 379 467 435 ▪ Pe
Slide 22: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) ACL1: $B and Coverage Ratios2 Highlights 91 93 bps 89 89 74 87 ▪ ACL increased $288 million quarter-over-quarter, related to: United States – Current credit conditions, $8.8 Canada $8.2 $8.3 $8.6 including: $7.8 − Credit migration 56% 56% $5.3 57% 57% 56% – Volume g
Slide 23: Appendix
Appendix 23
Slide 24: Q3 2024: Items of Note
Q3 2024: Items of Note Revenue/ ($MM) EPS ($) Segment Expense Line Item1 Pre-Tax After Tax Reported net income/(loss) and EPS (diluted) (181) (0.14) Items of note Amortization of acquired intangibles2 64 56 0.03 Corporate Page 4, L13, L27 & L40 Acquisition and integration charges related to the Schw
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 $MM Credit Card Portfolio 1,000 Me
Slide 26: Q3 2024: PTPP & Operating Leverage
1,2 1,3 Q3 2024: PTPP & Operating Leverage Modified for partners' share of SCP PCL, FX and Insurance Service Expense Q3 2024 Q2 2024 Q3 2023 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 14,176 11,012 13,819 8,401 12,914 7,359 Page 2, L3 & L6 2
Slide 27: Completed Restructuring Program
Completed Restructuring Program Pre-tax restructuring charges ▪ Q4'23: $363MM ▪ Restructuring costs primarily related to: ▪ Q1'24: $291MM ▪ Employee severance and other personnel ▪ Q2'24: $165MM related costs (including a 3% FTE reduction) ▪ Q3'24: $110MM ▪ Real estate optimization ▪ Asset impairmen
Slide 28: Net Interest Income Sensitivity (NIIS)
Net Interest Income Sensitivity (NIIS) Strong deposit base and disciplined ALM management 25 bps change in short-term interest rates 100 bps change in interest rates across the curve ▪ 25 bps increase: $75MM increase in NII over a 12-month ▪ 100 bps increase: $785MM increase in NII over a 12-month p
Slide 29: Well-Diversified Deposit Base
Well-Diversified Deposit Base Deposit Concentration by Top Depositors $508B $321B $131B $960B 30% 20% 13% 6% 2% 3% 4% 3% 5% 2% 3% 5% 2 1, 3, 4 CAD P&C + WM&I U.S. Retail 1 Wholesale Banking Total Bank Top 5 Top 10 Top 20 Total Business Deposit Concentration by Industry5, $B Insured / Secured Deposit
Slide 30: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Margins, Volumes and Efficiency Net Interest Margin (NIM) Average Loans $B1 552 560 564 572 539 2.84% 2.84% 2.81% 117 119 121 122 2.78% 114 2.74% 425 436 441 444 450 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Personal Business Efficiency Ratio
Slide 31: U.S. Retail
U.S. Retail Margins, Volumes and Efficiency Net Interest Margin (NIM)1,2 Average Loans US$B3 188 191 192 193 183 94 95 96 98 97 3.07% 3.00% 3.03% 2.99% 3.02% 89 93 95 95 96 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Personal Business Efficiency Ratio US$ Average Deposits US$B3 154.6
Slide 32: U.S. Retail: Wealth Assets and Schwab EPU
U.S. Retail Wealth Assets and Schwab EPU TD Wealth Assets US$B Schwab1 – Q3 2024 TD’s share of Schwab’s net income was C$190MM on a reported basis, of which C$178MM (US$129MM) was recorded in the U.S. Retail segment ▪ TD's share of Schwab's net income was C$225MM on an adjusted2 basis 40 41 40 40 40
Slide 33: Schwab Equity Pickup
Schwab Equity Pickup Q3 2024 Reconciliation U.S. Retail P&L ($MM)1 TDBG Corporate Segment $C $US Reported Schwab Equity Pickup2 190 178 129 12 Amortization of acquired intangibles3 30 0 0 30 Acquisition and integration charges related 5 0 0 5 to the Schwab transaction3,4 Adjusted5 Schwab Equity Pick
Slide 34: Wealth Management & Insurance
Wealth Management & Insurance Volumes and Efficiency Insurance Premiums ($MM) Average Loans $B 1,658 1,853 6.7 1,616 1,460 1,337 6.5 6.4 6.4 6.2 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Efficiency Ratio Average Deposits $B 65.7% 62.3% 59.4% 59.2% 55.0% 32.4% 33.4% 30.0 33.1% 33.0%
Slide 35: Wealth Management & Insurance
Wealth Management & Insurance Wealth Revenue $MM Wealth Assets $B 1,600 1,558 600 1,481 1,409 1,366 1,344 233 632 217 201 576 596 188 184 188 559 1,200 531 523 185 157 489 154 141 479 500 460 441 800 418 415 400 369 400 355 358 1,137 1,024 1,019 1,051 1,079 0 300 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q3/23
Slide 36: Wholesale Banking
Wholesale Banking Revenue Loans1 Q3 2024 Q3 2024 -2% 4% 34% 43% $1.8B $97.4B 58% 62% Corporate and Canada United States International Global Markets Other2 Investment Banking 36
Slide 37: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Period-End Balances ($B unless otherwise noted) Q2/24 Q3/24 Canadian Personal & Commercial Portfolio 569.8 577.8 Personal 446.5 452.4 Residential Mortgages 266.4 269.1 Home Equity Lines of Credit (HELOC) 119.2 121.2 Indirect Auto 29.0 29.4 Credit Cards 19.6 20.2
Slide 38: Commercial Real Estate (CRE)
Commercial Real Estate (CRE) Commercial Real Estate Portfolio Overview: Highlights $97B ▪ Commercial Real Estate represents $97B or 10% of Total Bank gross loans and acceptances1 Office Retail – Portfolio is well diversified across 11% 18% geographies and sub segments Other 6% – 56% of CRE portfolio
Slide 39: Canadian Real Estate Secured Lending Portfolio
Canadian Real Estate Highlights Secured Lending Portfolio ▪ Total Canadian real estate secured lending portfolio at $393B Maturity Schedule ($B)1 $112.6 – 92% of RESL portfolio is amortizing4, of $100.0 which 73% of HELOC portfolio is $79.3 $31.0 $8.0 amortizing Variable Rate $46.2 $46.3 Fixed Rate
Slide 40: Canadian Personal Banking
Canadian Personal Banking Canadian Personal Banking (Q3/24)1 Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%) ▪ Gross impaired loans were Residential Mortgages 269.1 230 0.09 stable quarter-over-quarter Home Equity Lines of Credit (HELOC) 121.2 169 0.14 Indirect Auto 29.4 112 0.38 Credit Cards 20
Slide 41: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Canadian Commercial and Wholesale Banking (Q3/24) Highlights Gross Loans/ GIL GIL/Loans BAs ($B) ($MM) (%) ▪ Gross impaired loans Commercial Banking1 125.4 975 0.78 increased quarter-over- Wholesale Banking 95.0 219 0.23 quarter driven by a few impairments i
Slide 42: U.S. Personal Banking
U.S. Personal Banking U.S. Personal Banking (Q3/24) Highlights Gross Loans GIL GIL/Loans In USD unless otherwise specified ($B) ($MM) (%) ▪ Gross impaired loans were Residential Mortgages 42.0 341 0.81 stable quarter-over-quarter Home Equity Lines of Credit (HELOC)1 8.1 190 2.37 Indirect Auto 30.6 2
Slide 43: U.S. Commercial Banking
U.S. Commercial Banking U.S. Commercial Banking (Q3/24) Highlights Gross Loans/ GIL GIL/Loans In USD unless otherwise specified BAs ($B) ($MM) (%) ▪ Gross impaired loans Commercial Real Estate (CRE) 29.4 420 1.43 quarter-over-quarter Non-residential Real Estate 20.1 279 1.39 increase related to a fe
Slide 44: Endnotes on Slides 5-6
Endnotes on Slides 5-6 Slide 5 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” resul
Slide 45: Endnotes on Slides 7-12
Endnotes on Slides 7-12 Slide 7 1. For J.D. Power 2024 award information, visit jdpower.com/awards. Slide 8 1. Canadian Personal and Commercial: based on Canadian Personal & Small Business banking. U.S. Retail: based on U.S. Retail and Small Business banking. 2. Active digital users as a percentage
Slide 46: Endnotes on Slides 13-15
Endnotes on Slides 13-15 Slide 13 1. Please refer to Slide 5, Endnote 1. 2. Net interest margin is calculated by dividing U.S. Retail segment’s net interest income by average interest-earning assets. For the U.S. Retail segment, this calculation excludes the impact related to sweep deposits arrangem
Slide 47: Endnotes on Slides 16-17
Endnotes on Slides 16-17 Slide 16 1. Please refer to Slide 5, Endnote 1. 2. Amortization of acquired intangibles relates to intangibles acquired as a result of asset acquisitions and business combinations, including the after-tax amounts for amortization of acquired intangibles relating to the share
Slide 48: Endnotes on Slides 18-22
Endnotes on Slides 18-22 Slide 18 1. Gross Impaired Loan formations represent additions to Impaired Loans & Acceptances during the quarter; excludes the impact of acquired credit- impaired loans. 2. GIL Formations Ratio: Gross Impaired Loan Formations/Average Gross Loans & Acceptances. Slide 19 1. G
Slide 49: Endnotes on Slides 24-26
Endnotes on Slides 24-26 Slide 24 1. This column refers to specific page(s) and line items of the Bank's Q3 2024 Supplementary Financial Information package. 2. Please refer to Slide 16, Endnote 2. 3. Please refer to Slide 16, Endnote 3. 4. Please refer to Slide 16, Endnote 4. 5. Please refer to Sli
Slide 50: Endnotes on Slides 29-31
Endnotes on Slides 29-31 Slide 29 1. U.S. Retail deposits exclude deposits from the Schwab Insured Deposit Agreement. 2. Wholesale deposit concentration by top depositors includes all global transaction banking (i.e., corporate deposits). 3. Total Bank deposit concentration by top deposits does not
Slide 51: Endnotes on Slides 32-33
Endnotes on Slides 32-33 Slide 32 1. TD's share of net income in US$ is the corresponding C$ net income contribution of Schwab to the U.S. Retail segment included in the Bank's Report to Shareholders (www.td.com/investor) for the relevant quarters, divided by the average FX rate. For additional info
Slide 52: Endnotes on Slides 34-38
Endnotes on Slides 34-38 Slide 34 1. Please refer to Slide 5, Endnotes 1 and 2. Slide 35 1. Please refer to Slide 14, Endnote 2. Slide 36 1. Average gross lending portfolio includes gross loans and bankers' acceptances relating to Wholesale Banking, excluding letters of credit, cash collateral, cred
Slide 53: Endnotes on Slides 39-40
Endnotes on Slides 39-40 Slide 39 1. Excludes revolving HELOC, Wholesale mortgage portfolio. 2. RESL Portfolio Current Loan to Value is calculated with the Teranet-National Bank House Price Index™ and weighted by the total exposure, based on outstanding mortgage balance and/or the HELOC authorized c
Slide 54: Endnotes on Slides 41-43
Endnotes on Slides 41-43 Slide 41 1. Includes Small Business Banking and Business Credit Cards. 2. Consumer includes: Food, Beverage and Tobacco; Retail Sector. 3. Industrial/Manufacturing includes: Industrial Construction and Trade Contractors; Sundry Manufacturing and Wholesale Banking. 4. Other i
Slide 55: Investor Relations Contacts
Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 55
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