Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Q4 2019 Earnings Presentation
56 slides from Toronto-dominion Bank's earnings presentation, 2019
Slide 1: TD Bank Group Investor Presentation Q4 2019
TD Bank Group Investor Presentation Q4 2019
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: TD Bank Group – Key Themes
TD Bank Group – Key Themes 6th largest N.A. bank by Total Assets1 1 Top 10 North American Bank 6th largest N.A. bank by Market Cap1 Delivering 2 Proven Performance top tier long term shareholder returns2 Targeting 7-10% 3 Focus on Growth Opportunities adjusted EPS growth over the medium term3 Highly
Slide 4: Our Strategy
Own the future Our Strategy TD aims to stand out from its peers by having a differentiated brand – anchored in our proven business model, and rooted in a desire to give our customers, communities and colleagues the confidence to thrive in a changing world. Proven business model Purpose-driven Forwar
Slide 5: TD Framework
TD Framework Our vision Be the better bank Own the future 1D efe Develop Our purpose Enrich the lives of our customers, communities TD Framework and colleagues Think like a customer; Act like an owner; lead provide legendary with integrity to drive experiences business results and trusted advice and
Slide 6: 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 Q4 20191 Canadian U.S. Property, casualty, life and health (C$) Retail Retail insurance Fina
Slide 7: Competing in Attractive Markets
Competing in Attractive Markets Country Statistics Country Statistics 10th largest economy World’s largest economy Real GDP of C$2.1 trillion Real GDP of US$19 trillion Population of 37 million Population of 332 million Canadian Banking System U.S. Banking System One of the soundest ba
Slide 8: Top 10 North American Bank
Top 10 North American Bank North Q4 2019 Canadian American C$ except otherwise noted Ranking4 Ranking5 Total assets $1,415B 2nd 6th Total deposits $887B 1st 5th Market capitalization $136.3B 2nd 6th Reported net income (trailing four quarters) $11.7B 2nd 6th Adjusted net income1 (trailing four quart
Slide 9: Diversified Business Mix
Diversified Business Mix Fiscal 2019 Reported Earnings Mix1 Three key business lines Canadian Retail robust retail banking platform in Canada with proven performance U.S. Retail2 Canadian Retail 31% U.S. Retail top 10 bank4 in 55% the U.S. with significant organic growth opportunities Wholesal
Slide 10: Growing platform / North American scale
Growing platform / North American scale… Increasing Retail Focus Acquired Became Completed Announced Acquired Target credit primary issuer TD acquisition of Layer ownership stake Chrysler card portfolio & of Aeroplan Completed Acquired Waterhouse Acquired Acquired Completed 6 and Greystone, in Schwa
Slide 11: Connected Experiences
Connected Experiences Consistent Strategy Q4 2019 Highlights How we compete 13.4 Enabling seamless interactions MILLION 5.3 MILLION 3.3 MILLION CANADIAN MOBILE between customers and the ACTIVE DIGITAL U.S. MOBILE USERS USERS entire organization CUSTOMERS Leveraging industry leading Experience De
Slide 12: The Better Bank
The Better Bank The Ready Commitment: Targeting $1 billion in community giving by 2030 The Ready Commitment targets Financial Security $ 1 billion by 2030 Opening doors Vibrant Planet for a more inclusive and sustainable tomorrow Connected Communities Better Health Q4 Highlights: TD announced that i
Slide 13: ESG Performance
ESG Performance ENVIRONMENT: Highlights TD's low carbon commitment targets $100B, in total, towards initiatives in low-carbon lending, financing, asset management and internal corporate programs by 2030. TD is the only financial institution globally to participate $30.3B TD has been carbon neutr
Slide 14: TD Bank Group – Key Themes
TD Bank Group – Key Themes 6th largest N.A. bank by Total Assets1 1 Top 10 North American Bank 6th largest N.A. bank by Market Cap1 Delivering 2 Proven Performance top tier long term shareholder returns2 Targeting 7-10% 3 Focus on Growth Opportunities adjusted EPS growth over the medium term3 Highly
Slide 15: Consistent Earnings Growth
Consistent Earnings Growth Targeting 7-10% adjusted EPS growth over the medium term4 $11,686 Reported Earnings1 $11,334 (C$MM) $10,517 Wholesale Banking $8,936 $8,024 U.S. Retail $7,883 Canadian Retail 2014 2015 2016 2017 2018 2019 1. For the purpose of calculating contribution by each business segm
Slide 16: Strong, Consistent Dividend History
Strong, Consistent Dividend History $2.89 Dividends Per Share (C$) Q1/19: Announced $0.07 dividend increase1 Dividend yield: 4.0%2 $0.33 Target payout range: 40%-50% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 3 1. For the quarter ended Ap
Slide 17: Solid Total Shareholder Returns
Solid Total Shareholder Returns Top tier total shareholder returns in 5 and 10 year periods1 Canadian North American Ranking2 Ranking3 1-Year 7.1% 3rd 6th 3-Year 11.3% 2nd 3rd 5-Year 10.3% 1st 4th 10-Year 13.3% 1st 3rd 1. Total shareholder return (TSR) calculated based on share price movement and di
Slide 18: High Quality Loan Portfolio
High Quality Loan Portfolio Balances ($B unless otherwise noted) Q3/19 Q4/19 Canadian Retail Portfolio $429.5 $434.1 Personal $349.6 $353.5 Residential Mortgages 197.5 200.0 Home Equity Lines of Credit (HELOC) 90.0 91.0 Indirect Auto 25.2 25.7 Credit Cards 18.5 18.5 Other Personal 18.4 18.3 Unsecure
Slide 19: Strong Credit Quality
Strong Credit Quality GIL and PCL Ratios (bps) 83 81 78 66 63 61 60 58 58 56 50 49 47 50 45 43 41 39 38 39 37 37 45 34 34 31 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2 IFRS IFRS 9 Gross Impaired Loans / Gross Loans and Acceptances (bps) Provision for Credit Losses / Average
Slide 20: Q4 2019 Highlights
Q4 2019 Highlights Total Bank Reported Results (YoY) Financial Highlights $MM Reported Q4/19 Q3/19 Q4/18 EPS down 3% Revenue 10,340 10,499 10,136 Adjusted1 EPS down 2% PCL 891 655 670 Revenue up 2% Expenses 5,543 5,374 5,366 Net Income 2,856 3,248 2,960 Expenses up 3% Diluted EPS ($) 1.54 1.74 1.5
Slide 21: F'2019 Segment Highlights
F'2019 Segment Highlights Net income was $6.7B, down 4% (+3% adj.), reflecting charges related to the agreement with Air Canada and the acquisition of Greystone, higher non-interest expenses, insurance claims, and PCL, partially offset by revenue growth. Canadian PCL increased 27% QoQ with growt
Slide 22: TD Bank Group – Key Themes
TD Bank Group – Key Themes 6th largest N.A. bank by Total Assets1 1 Top 10 North American Bank 6th largest N.A. bank by Market Cap1 Delivering 2 Proven Performance top tier long term shareholder returns2 Targeting 7-10% 3 Focus on Growth Opportunities adjusted EPS growth over the medium term3 Highly
Slide 23: Canadian Retail
Canadian Retail Consistent Strategy Reported Net Income (C$MM) $7,183 $6,863 $6,525 $5,988 How we compete $5,938 Legendary personal connected customer service Focus on underrepresented products and markets $5,490 $5,938 $6,525 $7,183 $7,421 Adjusted1 The power of One TD 2015 2016 2017 2018 201
Slide 24: Canadian Retail
Canadian Retail Personal Banking Credit Cards #1 or #2 market share in most retail products1 #1 card issuer in Canada measured by outstanding card loan balances1 On average, 38% longer branch hours than peers2 with 346 branches Dual card issuer of high value brands, including TD First Class
Slide 25: U.S. Retail
U.S. Retail Reported Net Income Consistent Strategy (US$MM) $3,750 How we compete $3,253 Legendary service and convenience $2,536 $2,234 $2,007 Grow and deepen customer relationships Differentiated brand as the “human” bank $2,053 $2,234 $2,565 $3,401 $3,750 Adjusted1 Productivity initiative
Slide 26: U.S. Retail
U.S. Retail Personal & Commercial Banking Wealth Rated #1 in Customer Satisfaction for Retail Banking in the Southeast Building U.S. wealth capability in the high net worth and private banking by J.D. Power¹ space Ranked Highest in Customer Satisfaction with Small Business Banking Acquired i
Slide 27: Wholesale Banking
Wholesale Banking Consistent Strategy Net Income (C$MM) $1,039 $1,054 How we compete $920 $873 Continue to build an integrated North American $608 dealer franchise with global execution capabilities. In Canada, we will be the top-ranked investment dealer. In the U.S., we will grow client relatio
Slide 28: Wholesale Banking: Positioned for Growth
Wholesale Banking Positioned for Growth Maintain top market shares in our Canadian franchise − #1 or #2 ranking in key domestic categories, including fixed income trading, equity options block trading, corporate and government debt underwriting, syndicated loans, and M&A announced and M&A complete
Slide 29: TD Bank Group – Key Themes
TD Bank Group – Key Themes 6th largest N.A. bank by Total Assets1 1 Top 10 North American Bank 6th largest N.A. bank by Market Cap1 Delivering 2 Proven Performance top tier long term shareholder returns2 Targeting 7-10% 3 Focus on Growth Opportunities adjusted EPS growth over the medium term3 Highly
Slide 30: Strong Capital & Liquidity Positions
Strong Capital & Liquidity Positions Common Equity Tier 11 Highlights Common Equity Tier 1 ratio of 12.1% Q3 2019 CET1 Ratio 12.0% Internal capital generation 32 Leverage ratio of 4.0% Organic RWA increase and other (4) Actuarial losses on employee pension plans (5) Liquidity coverage ratio of
Slide 31: TD TLAC Requirements
TD TLAC Requirements TD Regulatory Capital Ratios1,3 Canadian D-SIBs will be required to meet their Notional TLAC: 27.5% regulatory TLAC requirements by the November 1, 2021 implementation date. OSFI has stipulated that D-SIBs will be subject to 2 supervisory ratios: Minimum risk-based TLAC rati
Slide 32: Industry-Leading Credit Ratings
Industry-Leading Credit Ratings Issuer Ratings1 Rating Agencies Senior Debt Ratings2 Outlook / Trend Moody's Aa3 Stable S&P A Stable DBRS AA Stable Ratings vs. Peer Group1 Moody’s Senior Debt2 / HoldCo5 Rating S&P Senior Debt2 / HoldCo5 Rating Aa1 AA- Aa2 A+ Aa3 A A1 A- A2 A3 BBB+ Baa1 BBB TD Canadi
Slide 33: Leading Non-Common Equity Capital Ratings
Leading Non-Common Equity Capital Ratings Industry leading ratings1 for Additional Tier 1 and Tier 2 capital instruments NVCC Tier 2 Subordinated Debt Ratings Moody’s S&P 12 A2 12 A- 10 A3 A- 10 Baa18 8 BBB+ Baa26 6 BBB- Baa34 4 BBB- 2 Ba1 2 BB+ a 0 a 0 TD TD Canadian Peers2 Peer Group 1 TD TD Canad
Slide 34: Robust Liquidity Management
Robust Liquidity Management Liquidity Risk Management Framework High Quality Liquid Assets (HQLA) TD holds a variety of liquid assets Target a 90-day survival horizon under a combined commensurate with liquidity needs in the Bank-specific and market-wide stress scenario, and a organization. mini
Slide 35: Deposit Overview
Deposit Overview Domestic Leader in Deposits Large base of personal and business deposits4 that make up 70% of the Bank's total funding TD Canada Trust (TDCT) ranked #1 in Total Personal Deposits1 Canadian Retail competes with legendary personal connected customer service and the power of One TD
Slide 36: Low Risk, Deposit Rich Balance Sheet
Low Risk, Deposit Rich Balance Sheet1 Large base of stable retail and commercial deposits Maturity Profile6,7 (To first par redemption date) (C$B) 50 Personal and commercial deposits are TD's Issuance Maturity primary sources of funds 40 Customer service business model delivers 30 stable base of “
Slide 37: Wholesale Term Debt Composition
Wholesale Term Debt Composition1 Funding Strategy Wholesale term funding through diversified sources across domestic and international markets Well-established C$55 billion Legislative Covered Bond Program is an important pillar in global funding strategy Programmatic issuance for the establishe
Slide 38: Canadian Registered Covered Bond Program
Canadian Registered Covered Bond Program Key Highlights ■ Canadian residential real estate property with no more than 4 residential units Covered Bond Collateral ■ Uninsured conventional first lien assets with original loan to value ratio that is 80% or less ■ Latest property valuation shall be adju
Slide 39: TD Global Legislative Covered Bond Program
TD Global Legislative Covered Bond Program TD Covered Bond Programme Highlights Cover Pool as at Oct 31, 2019 TD has a C$55B legislative covered bond program High quality, conventional first lien Canadian Residential mortgages originated by TD Covered bonds issuance for Canadian issuers govern
Slide 40: Bail-in Implementation
Bail-in Implementation Regulation Overview On April 18, 2018, the Government of Canada published final regulations under the CDIC Act and the Bank Act providing details of the bank recapitalization "bail-in" regime and final Total Loss Absorbing Capacity (TLAC) guideline. The issuance regulation
Slide 41: Bail-in Overview
Bail-in Overview Scope of Bail-in In Scope Liabilities. Senior unsecured long-term debt (original term to maturity of 400 or more days) that is tradable and transferable (has a CUSIP, ISIN or other similar identification) and issued on or after September 23, 20181. Unlike other jurisdictions, Cana
Slide 42: Contents
Contents Appendix • Economic Outlook • Credit Quality 42
Slide 43: TD Economics Update
TD Economics Update Global: Signs of Stabilization but Still Vulnerable Global growth for 2019 is on track to come in at 2.8%, the weakest rate in a decade. It is expected to edge up slightly to 3.0% in 2020. With interest rates nearing effective lower limits in Europe and Japan, the push is on
Slide 44: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S. % After cutting rates 75 basis points 7 Forecast in 2019, we expect the Federal U.S. Federal Funds Reserve to stand pat going 6 Rate forward, watching how global growth and trade uncertainty 5 Bank of Canada unfold. Overnight Policy 4 Rate Th
Slide 45: Contents
Contents Appendix • Economic Outlook • Credit Quality 45
Slide 46: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Business Segment Highlights GIL Formations1: $MM and Ratios2 Gross impaired loan formations stable quarter- 26 21 20 21 22 bps over-quarter at 22 basis points $1,722 $1,516 $1,459 $9 / 2 bps $1,424 $19 / 4 bps $1,340 $1,117 / 55 bps $725 / 36 bps $758 / 36 bps $83
Slide 47: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Business Segment Highlights GIL1: $MM and Ratios2 Gross impaired loans stable quarter-over-quarter at 43 47 53 48 basis points 42 43 bps $3,534 $3,154 $3,296 $2,945 $3,032 $27 / 5 bps $19 / 3 bps $2,590 / 126 bps $2,356 / 112 bps $1,933 / 91 bps $2,225 / 110 bps $1,90
Slide 48: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Business Segment Highlights PCL1: $MM and Ratios2 PCL increased $229MM $855 $893 $7 $41 quarter-over-quarter reflecting: $675 $664 $155 $8 $227 $636 $1 The U.S. Credit Card and $83 Auto Portfolios, largely due $155 $132 $297 to seasonal trends $311 $264 The
Slide 49: Provision for Credit Losses (PCL): Impaired and Performing
Provision for Credit Losses (PCL)1,2 Impaired and Performing Highlights Impaired PCL increase PCL (C$MM) Q4/18 Q3/19 Q4/19 Total Bank $ 675 $ 664 $ 893 quarter-over-quarter driven by: Impaired 564 590 741 The U.S. Credit Card and Performing 111 74 152 Auto portfolios, reflecting Canadian Retail
Slide 50: Canadian Personal Banking
Canadian Personal Banking Q4/19 Highlights Gross GIL GIL / Good asset quality in the Canadian Personal Banking Canadian Personal Banking Loans ($B) ($MM) Loans Residential Mortgages $200.0 $280 0.14% portfolio Home Equity Lines of Credit (HELOC) 91.0 147 0.16% Indirect Auto 25.7 82 0.32% Credit Ca
Slide 51: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q4/19 Highlights Gross GIL GIL/ Canadian Commercial and Loans/BAs Canadian Commercial and Wholesale Banking ($MM) Loans ($B) Commercial Banking1 $80.6 376 0.47% Wholesale Banking GIL stable quarter-over-quarter Wholesale2 57.5 27 0.05% Total Canadian Comme
Slide 52: Canadian Real Estate Lending Portfolio
Canadian Real Estate Lending Portfolio Quarterly Portfolio Volumes $B Highlights $280 $281 $283 $288 $292 Canadian RESL credit quality 65% 66% 67% 68% 69% remained strong Uninsured Uninsured and insured portfolio loan-to-value Insured rates stable 35% 34% 33% 32% 31% Less than 1% of uninsured mo
Slide 53: U.S. Personal Banking – U.S. Dollars
U.S. Personal Banking – U.S. Dollars Q4/19 Highlights Gross GIL GIL / U.S. Personal Banking1 Continued good asset quality in Loans ($B) ($MM) Loans Residential Mortgages $26.2 $337 1.29% U.S. Personal Home Equity Lines of Credit (HELOC)2 8.8 373 4.27% Indirect Auto 24.6 196 0.79% Credit Cards 13.8
Slide 54: U.S. Commercial Banking – U.S. Dollars
U.S. Commercial Banking – U.S. Dollars Q4/19 Highlights Gross GIL GIL/ U.S. Commercial Banking1 Loans / BAs Sustained good credit quality ($B) ($MM) Loans in U.S. Commercial Banking Commercial Real Estate (CRE) $24.2 $74 0.31% Non-residential Real Estate 17.6 55 0.31% Residential Real Estate 6.6 1
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
Slide 56: TD Bank Group Investor Presentation
TD Bank Group Investor Presentation Q4 2019