Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Debt Investor Presentation (2014)
47 slides from Toronto-dominion Bank's debt investor presentation, 2014
Slide 1: Investor Presentation – Fixed Income
TD Bank Group Investor Presentation – Fixed Income Q4 2014
Slide 2: Caution regarding forward-looking statements
Caution regarding forward-looking statements From time to time, the Bank makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, and in other communications. In addition, representativ
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 20141 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 10th largest economy World’s largest economy Nominal GDP of C$1.7 trillion Nominal GDP of US$15.1 trillion Population of 35 million Population of 314 million Canadian Banking System U.S. Banking System Soundest banki
Slide 7: TD in North America
TD in North America North Q4 2014 Canadian American C$ except otherwise noted Ranking5 Ranking6 Total assets $945B 1st 5th Total deposits $601B 2nd 6th Market capitalization $102B 2nd 6th Adjusted net income1 (trailing four quarters) $8.1B 2nd 6th Reported net income (trailing four quarters) $7.9B n
Slide 8: Composition of Earnings
Composition of Earnings Adjusted Earnings1 2014 Adjusted (C$MM) Retail Earnings1,4 = 90% Adjusted Retail Earnings1,4 Wholesale Earnings $8,127 10% Canadian 90% Retail U.S Retail2 65% 21% 4 TD AMTD3 4% $2,158 42% Wholesale 10% 58% 2001 2014 Retail-focused earnings mix 1. See slide 5, footnote 3, for
Slide 9: Strategic Evolution of TD
Strategic Evolution of TD INCREASING RETAIL FOCUS Acquired Acquired Target Became primary TD Chrysler credit card issuer of Waterhouse Financial portfolio & Epoch; Aeroplan Visa; TD Bank Acquired Acquired USA / Privatized Acquired Commerce Acquired and MBNA and announced acquired ~50% of and Canada
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 2014 Highlights
Q4 2014 Highlights Key Themes Net Income $MM Adjusted, where applicable1 Adjusted1 EPS growth of 3% YoY Q4/14 QoQ YoY Earnings were impacted by Funding Retail2 $ 1,867 -7% 7% Valuation Adjustments, elevated expenses Wholesale 160 -26% 31% and higher tax rate Corporate (165) n/a n/a Retail earn
Slide 12: Q4 2014 Credit Highlights
Q4 2014 Credit Highlights Highlights PCL Ratio (bps)1 Loss rates remain at cyclically low levels 40 Favourable U.S. Retail performance 38 resulted in full year PCL reduction 35 33 Ongoing strong performance across all 28 portfolios Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 GIL Ratio (bps)2 62 60 59 56 55
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 Sour
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. Conservative product offerings: fixed or variable Outstanding mortgages include earlier exotic interest rate option products (interest only, options ARMs) Product Default insured mortgages use a 5-year fixed Borrowers often qual
Slide 18: Canadian Housing Market
Canadian Housing Market Highlights Canadian RESL credit quality remains solid Portfolio Q4/14 Gross Loans Outstanding $235 B Canadian RESL Percentage Insured 62% Uninsured Residential Mortgages Current LTV1 60% Condo Borrower Gross Loans Outstanding $30 B (Residential Mortgages) Percentage Insured
Slide 19: Mortgage Rule Developments in Canada
Mortgage Rule Developments in Canada 2012 Measures Announced by Minister Flaherty (Government of Canada) Maximum amortization period lowered from 30 years to 25 years Maximum amount that Canadians can borrow when refinancing lowered to 80% from 85% Maximum GDS1 and TDS2 ratios of 39% and 44% r
Slide 20: North American Economy
North American Economy Outlook Economic momentum is building in the United States The economy generated more jobs over the first eight months of the year than any period since 1999 Consumer spending will be buoyed by job and income growth Residential real estate will make a positive contribu
Slide 21: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 21
Slide 22: Strong Capital Position
Strong Capital Position Highlights Basel III Common Equity Tier 11 9.4% Basel III Common Equity Tier 1 9.2% 9.3% ratio 9.4% 9.0% 8.9% Increase of 10 bps QoQ reflects solid organic capital generation partially offset by increase in risk- weighted assets Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 CET1 Capital
Slide 23: TD Credit Ratings
TD Credit Ratings Issuer Ratings1 Moody's S&P DBRS Ratings Aa1 AA- AA Outlook Negative Negative Stable Ratings vs. Peer Group S&P Long-Term Debt Rating Moody’s Long-Term Debt Rating Aa1 18 Aa2 16 14 Aa3 12 A1 10 A2 A38 6 Baa1 4 Baa2 2 TD Canadian Peers U.S. Peers Strong credit ratings 1. See footnot
Slide 24: 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 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 balance that is not considered permanent User of securitization programs via Canada Mortga
Slide 26: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition1 Funding Mix2 Wholesale Term Debt Assets Securitized 31% Other OtherDeposits Deposits 33 Covered Bonds Personal Personal 26% 26% 20% TermDeposits Term Deposits 8% 7% Short Term Mortgage Short Term 44 Liabilities Liabilities Securitization 11%11% 29% Personal Non-
Slide 27: Wholesale Term Debt Composition
Wholesale Term Debt Composition1 By Currency2 By Term2 Covered Bonds 16% Residential Mortgages 58% 4 Year 4% USD 59% $3B CAD 24% $33B 5 Year 53% $13B $30B Covered Bonds 3 Year 17% Senior Unsecured 15% $10B 5 Senior MTN Unsecured 48% MTN 26% EURO 14% 2 Year 11% $8B $6B 7 Year 7% $4B GBP 3% $2B 6 Year
Slide 28: Debt Maturity Profile F2015 – F2019
Debt Maturity Profile1 F2015 – F2019 Bullet Debt Maturities (C$ billions)2 $25 $21 $20 $15 $15 $14 $13 $12 $10 $5 $0 2015 2016 2017 2018 2019 MBS Covered Bond Senior Debt ABS Subordinated 3 Debt Manageable debt maturities 1. For wholesale term debt that has bullet maturities. 2. As of October 31, 20
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: 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 31
Slide 32: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 32
Slide 33: Global Economic Outlook
Global Economic Outlook World Real GDP Growth1 Global economic growth Y/Y % Change will remain modest with a 6 Forecast1 mild acceleration expected 4 over the next two years 2 0 Faster U.S. growth, -2 coupled with sluggish 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 economic acti
Slide 34: Canadian Economic Outlook
Canadian Economic Outlook Canadian Export and U.S. Activity Index1 Y/Y % Change 25 20 Forecast1 15 10 Canadian economy still 5 tightly linked to U.S. 0 -5 fortunes, and better U.S. -10 -15 Canadian Real Exports growth in medium term to -20 U.S. Activity Index help Canada’s prospects -25 1982 1988
Slide 35: U.S. Economic Outlook
U.S. Economic Outlook Consumers Rebounding on Faster Income Growth1 Y/Y % Change 6 Forecast1 4 Supported by 2 strengthening job growth 0 and falling energy prices, Real Consumer Spending consumer spending -2 Real Disposable Income growth will accelerate in -4 00 01 02 03 04 05 06 07 08 09 10 11 12
Slide 36: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 % 7 US Federal 6 Funds Rate Forecast Modest outlook and low inflation mean North American 5 Bank of Canada Target central banks are set to leave 4 monetary policy at exceptionally accommodative 3 levels 2 Interest rate increases will be 1 gr
Slide 37: Stable Earnings Growth
Stable Earnings Growth Adjusted Earnings1,2,4 (C$MM) 8,127 2010 – 20112: 7,136 7,064 Wholesale Banking 6,432 Wealth & Insurance 5,228 U.S. P&C Canadian P&C 2012 – 20144: Wholesale Banking U.S. Retail Canadian Retail 2010 2011 2012 2013 2014 IFRS Segment realignment Targeting 7-10% adjusted EPS growt
Slide 38: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q3/14 Q4/14 Canadian Retail Portfolio $ 332.5 $ 337.9 Personal $ 280.2 $ 285.0 Residential Mortgages 170.9 175.3 Home Equity Lines of Credit (HELOC) 59.8 59.4 Indirect Auto 15.7 16.5 Unsecured Lines of Credit 8.6 9.1 Credit
Slide 39: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,210 $1,233 GIL formations remain at $1,163 satisfactory levels and are $22 / 11 bps $1,125 $1,092 stable over 2013 $476 / 42 bps $476 / 45 bps $452 / 36 bps $403 / 34 bps $397 / 33 bps $712 / 23 bps $757 / 2
Slide 40: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Gross Impaired Loans ratio continues within acceptable $2,861 $2,746 $2,731 ranges $2,692 $41 / 19 bps $2,636 $41 / 18 bps $12 / 5 bps $69 / 32 bps $21 / 9 bps $1,610 / 137 bps $1,465 / 136 bps $1,523 / 130 bps $1,607 / 126 b
Slide 41: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights PCL remains at low levels Full year PCL rate was 34 bps, a $454 4 bps reduction over 2013 $420 $395 $397 $ 1 / 2 bps $3 / NM $329 $3 / NM $236 / 84 bps $197 / 75 bps $174/ 62 bps $164 / 53 bps $119 / 40 bps $228 / 28
Slide 42: Canadian Personal Banking
Canadian Personal Banking Q4/14 Canadian Personal Banking1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 175 0.25% 441 4 Credit quality remains strong in Home Equity Lines of Credit (HELOC) 60 0.45% 268 3 the Canadian Personal portfolio Indirect Auto 16 0.24% 39
Slide 43: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q4/14 Canadian Commercial and Gross GIL PCL1 Highlights Loans/BAs Wholesale Banking ($B) ($MM) ($MM) Canadian Commercial and Commercial Banking2 53 130 21 Wholesale Banking portfolios Wholesale 26 12 (2) continue to perform well Total Canadian Commercial a
Slide 44: U.S. Personal Banking
U.S. Personal Banking Q4/14 Highlights Gross Loans GIL/ GIL U.S. Personal Banking1 ($B) Loans ($MM) PCL2 Increased GIL due to court ($MM) Residential Mortgages 23 1.34% 311 2 related foreclosure delays and full implementation of Home Equity Lines of Credit (HELOC)3 12 2.95% 344 7 regulatory guidan
Slide 45: U.S. Commercial Banking
U.S. Commercial Banking Q4/14 U.S. Commercial Banking1 Gross Loans/BAs GIL PCL2 Highlights ($MM) ($MM) ($B) Commercial Real Estate (CRE) 18 253 0 Sustained portfolio quality in Non-residential Real Estate 14 168 (1) U.S. Commercial Banking Residential Real Estate 4 85 1 Return to normal PCL leve
Slide 46: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Grand Prix for Best Overall Email: Investor Relations: Large Cap Best Investor Relations by tdir@td.com Sector: Financial Services Best Investor Relations by a CEO: Large Cap Website: Best Investor Relations by a CFO: Large Cap www.td
Slide 47: Investor Presentation – Fixed Income
TD Bank Group Investor Presentation – Fixed Income Q4 2014