Toronto-dominion Bank · TSX:TD

Toronto-dominion Bank — The Toronto-Dominion Bank — Q3 2022 Earnings Presentation

46 slides from Toronto-dominion Bank's earnings presentation, Aug 25, 2022

  1. Slide 1: TD Bank Group Q3 2022

    TD Bank Group Q3 2022 August 25, 2022

  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 $3.2B, down 9% (adjusted1 $3.8B, up 5%)  Reported EPS of $1.75, down 9% (adjusted1,2 $2.09, up 6%)  Strong revenue performance reflecting margin and volume growth in personal and commercial

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

    Proven Business Model Strong Customer Activity Canadian Personal and Commercial U.S. Retail Average Volumes Total Wealth Assets Average Volumes ($B) (US$B)4 ($B) 8% 10% 250 10% 1,200 500 105 7% 108 (3%) 110 1,000 400 91 200 85 167 96 161 406 800 375 574 300 351 136 150 101 93 86 465 568 600 269 100

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

    Forward Focused Shaping the future of banking Powered Enhancements TD Direct Investing for Canadian Personal recognized as the #1 online Bank broker in Canada Strategic Expansion of TD Securities' U.S. Capabilities & Canadian FX Service Quality Leader Scale to Accelerate Growth for Corporates in Coa

  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 • Integration Management Office has defined Legal • Continue to work with regulators through the normal Day 1 (deal closing), integration and conversion course

  8. Slide 8: Forward Focused: Digital Adoption

    Forward Focused: Digital Adoption Digital Adoption Active Mobile Users Self-Serve Transactions (% of total customers)9 (millions)10 (as % of all financial transactions)11 +380+90 bpsbpsYoY YoY +12.5% YoY +7.9% YoY +860 bps -40 bps YoY YoY 63.2 6.8 Canadian 6.7 92.0 61.6 91.6 91.6 Retail8 60.7 6.3 Q3

  9. Slide 9: Purpose Driven

    Purpose Driven Centered on our vision, purpose and shared commitments 9

  10. Slide 10: Purpose Driven: ESG Highlights

    Purpose Driven ESG Highlights Environment Social Governance • Developed a customized methodology for • Our financial contribution totaled $1 million to • Established the ESG Centre of Expertise to setting Scope 3 financed emissions targets support humanitarian relief efforts in Ukraine coordinate an

  11. Slide 11: Q3 2022 Highlights

    Q3 2022 Highlights Strong revenue performance EPS of $1.75, down 9% YoY (Adj1 $2.09, up 6%) P&L ($MM) Reported Q3/22 QoQ YoY Revenue up 2% YoY (Adj1 up 8% YoY) Revenue 10,925 (3%) 2%  Reported revenue includes the net loss from PCL 351 +$324 +$388 mitigation of interest rate volatility to closing c

  12. Slide 12: Canadian Retail

    Canadian Retail Strong quarter with record revenue Net income up 6% YoY P&L ($MM) Reported Q3/22 QoQ YoY Revenue up 7% YoY Revenue 7,020 6% 7%  Volume and margin growth, higher fee-based PCL 170 +$110 +$70 revenue in banking and higher insurance volumes, Impaired 142 ($21) ($12) partially offset by

  13. Slide 13: U.S. Retail (US$)

    U.S. Retail (US$) Strong quarter with continued momentum Net income up 7% YoY (Adj1 up 8% YoY) P&L (US$MM) (except where noted) Reported Q3/22 QoQ YoY Revenue up 11% YoY Revenue 2,409 4% 11%  Higher deposit margins and volumes, partially offset by lower income from PPP and lower loan margins PCL 83

  14. Slide 14: Wholesale

    Wholesale Solid performance in Q3 Net income down 18% YoY P&L ($MM) Reported Q3/22 QoQ YoY Revenue down 1% YoY Revenue 1,076 (14%) (1%)  Lower underwriting fees and loan underwriting Trading-related revenue 547 (20%) 17% commitment markdowns, partially offset by higher (TEB)2,17 trading-related and

  15. Slide 15: Corporate Segment

    Corporate Segment Reported loss of $752MM P&L ($MM)  Adjusted1 loss of $175MM Reported Q3/22 Q2/22 Q3/21  Reported loss includes the net loss from mitigation of Net Income (752) (151) (205) interest rate volatility to closing capital on First Adjustments for items of note Horizon acquisition Amort

  16. Slide 16: Capital

    18 Capital Strong capital and liquidity management supporting future growth Common Equity Tier 1 ratio of 14.9% Common Equity Tier 1 Ratio Q2 2022 CET 1 Ratio 14.7% Internal capital generation 42 Risk-Weighted Assets up 1.4% QoQ Increase in Common Shares from Dividend 12 Reinvestment Plan Leverage R

  17. Slide 17: First Horizon Acquisition: Mitigation of Interest Rate Volatility

    First Horizon Acquisition Mitigation of 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 therefore the am

  18. Slide 18: Gross Impaired Loan Formations

    Gross Impaired Loan Formations By Business Segment Highlights GIL Formations20: $MM and Ratios21  Gross impaired loan formations were stable quarter-over-quarter 16 11 11 12 12 bps $1,187 $1,006 $937 $830 $16 / 3 bps $796 $779 / 39 bps $512 / 25 bps $594 / 28 bps $424 / 21 bps $416 / 21 bps $390 /

  19. Slide 19: Gross Impaired Loans (GIL)

    Gross Impaired Loans (GIL) By Business Segment GIL22: $MM and Ratios23 Highlights  Gross impaired loans 35 decreased 2 basis points 32 33 30 28 bps quarter-over-quarter to a new cyclical low $2,651 $2,560 $68 / 11 bps $2,411 $2,397 $7 / 1 bp $2,332 $12 / 2 bps $7 / 1 bp $7 / 1 bp $1,543 / $1,621 /

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

    Provision for Credit Losses (PCL) By Business Segment Highlights PCL24: $MM and Ratios25  PCL increased quarter-over-quarter, $351 largely reflecting: $25 – A prior quarter performing Wholesale $49 allowance release Corporate – Coupled with nominal performing U.S. Retail $107 provisions in the curr

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

    Provision for Credit Losses (PCL)24,28 Impaired and Performing Highlights PCL ($MM) Q3/21 Q2/22 Q3/22  Impaired PCLs remain at cyclically low levels Total Bank (37) 27 351 – Quarter-over-quarter increase largely reflected in the U.S. consumer lending Impaired 242 314 340 portfolios Performing (279)

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

    Allowance for Credit Losses (ACL) ACL24: $B and Coverage Ratios29 124 126 122 Highlights 103 108 103 97 $9.2 $9.4 93 $8.9 87 85 bps  ACL remained stable quarter-over- 74 $7.9 $8.0 $7.7 $7.3 $7.1 $6.9 quarter reflecting: $6.9 United States 59% 60% 59% – Deterioration in our macroeconomic $5.3 58% 58

  23. Slide 23: Appendix

    Appendix 23

  24. Slide 24: Q3 2022: Items of Note

    Q3 2022: Items of Note Revenue/ ($MM) EPS ($)32 Segment Expense Line Item33 Pre After Tax Tax Reported net income and EPS (diluted) 3,214 1.75 Items of note Amortization of acquired intangibles34 58 52 0.03 Corporate Page 4, L13, L21 & L31 Acquisition and integration-related charges related to the 2

  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: Q3 2022: PTPP & Operating Leverage

    Q3 2022: PTPP1,37 & Operating Leverage1,38 Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change Q3 2022 Q2 2022 Q3 2021 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 10,925 6,096 11,263 6,033 10,712 5,616 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 – $222MM increase in NII over a 12-month period from curve a 25 bps rise in short rates (25 bps hike from each of – 1

  28. Slide 28: Canadian Retail: Volumes, Margins and Efficiency

    Canadian Retail Volumes, Margins and Efficiency Net Interest Margin (NIM) Average Loans $B45 494 504 518 473 484 2.70% 97 101 105 91 94 2.61% 2.62% 2.57% 2.53% 414 382 390 398 403 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Personal Business Efficiency Ratio Average Deposits $B45 460

  29. Slide 29: Canadian Retail: Wealth Revenue and Assets

    Canadian Retail Wealth Revenue and Assets Wealth Revenue $MM Wealth Assets11 $B 1,600 600 1,499 1,415 1,428 1,431 557 557 181 1,350 538 537 526 169 172 183 207 1,200 244 214 226 427 429 420 411 245 172 500 408 800 457 445 421 400 410 400 393 1,001 1,042 1,075 1,022 971 0 300 Q3/21 Q4/21 Q1/22 Q2/22

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

    U.S. Retail Volumes, Margins and Efficiency NII and NIM16,46 2.62% Average Loans US$B45 167 163 161.5 162.4 166.9 2.16% 2.21% 2.21% 2.21% 2.60% 0.9 8.7 4.8 2.4 1.4 2.17% 1,905 2.05% 2.11% 16 83 86 2.02% 84 83 82 1,619 1,673 1,671 1,641 108 65 28 99 1,889 74 76 77 78 80 1,565 1,606 1,614 1,520 Q3/21

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

    U.S. Retail Wealth Assets and Schwab EPU TD Wealth Assets14 US$B Schwab50 – Q3 2022 TD’s share of Schwab’s net income was C$268MM on a 41 41 40 reported basis, of which C$289MM (US$226MM) was 37 recorded in the U.S. Retail segment 36  TD's share of Schwab's net income was C$315MM on 32 32 32 an adj

  32. Slide 32: Schwab Equity Pickup: Q3 2022 Reconciliation

    Schwab Equity Pickup Q3 2022 Reconciliation U.S. Retail P&L ($MM)52 TDBG Corporate Segment $C $US Reported Schwab Equity Pickup53 268 289 226 (21) Amortization of Intangibles54 35 0 0 35 Acquisition and Integration Charges related to 12 0 0 12 the Schwab transaction54,55 Adjusted Schwab Equity Picku

  33. Slide 33: Wholesale Banking

    Wholesale Banking Revenue Loans56 Q3 2022 5% Q3 2022 5% 39% $1.1B 36% $72.2B 56% 59% Corporate and Global Markets Other57 Canada United States International Investment Banking Highlights  Global Markets business reported solid performance despite mixed trading revenue results.  Corporate and Inves

  34. Slide 34: Gross Lending Portfolio

    Gross Lending Portfolio Including B/As Period-End Balances ($B unless otherwise noted) Q2/22 Q3/22 Canadian Retail Portfolio 511.0 522.8 Personal 409.1 418.7 Residential Mortgages 239.3 244.5 Home Equity Lines of Credit (HELOC) 107.9 112.2 Indirect Auto 26.9 27.0 Credit Cards 15.6 16.4 Other Persona

  35. Slide 35: Canadian Real Estate Secured Lending Portfolio

    Canadian Real Estate Secured Lending Portfolio Highlights (Q3 2022) Quarterly Portfolio Volumes ($B) Canadian RESL credit quality remained $328 $334 $340 $348 $357 strong Uninsured  Uninsured average Bureau score61 of 793 Insured 76% 77% 78% 79% 80%  44% variable interest rate, of which 27% Mortga

  36. Slide 36: Canadian Personal Banking

    Canadian Personal Banking Canadian Personal Banking (Q3/22) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%)  Gross impaired loans Residential Mortgages 244.5 167 0.07 decreased quarter-over- Home Equity Lines of Credit (HELOC) 112.2 87 0.08 quarter in the consumer Indirect Auto 27.0 68 0.25 len

  37. Slide 37: Canadian Commercial and Wholesale Banking

    Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q3/22) Gross Loans/ GIL GIL/Loans  Continued good asset quality BAs ($B) ($MM) (%) in Canadian Commercial and Commercial Banking66 104.1 408 0.39 Wholesale Banking Wholesale 79.3 7 0.01 Total Canadian Co

  38. Slide 38: U.S. Personal Banking (USD)

    U.S. Personal Banking (USD) Highlights U.S. Personal Banking70 (Q3/22)  Gross impaired loans Gross Loans GIL GIL/Loans decreased quarter-over- ($B) ($MM) (%) quarter Residential Mortgages 33.5 368 1.10 Home Equity Lines of Credit (HELOC)58 7.0 216 3.11 Indirect Auto 26.2 158 0.61 Credit Cards 13.6

  39. Slide 39: U.S. Commercial Banking (USD)

    U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking70 (Q3/22) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) increased primarily related Commercial Real Estate (CRE) 24.7 60 0.24 to a new formation this Non-residential Real Estate 17.2 42 0.24 quarter Residential R

  40. Slide 40: 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

  41. Slide 41: Endnotes

    Endnotes 12. Mitigation of interest rate volatility to closing capital on First Horizon acquisition includes i) mark-to-market gains (losses) on interest rate swaps, recorded in non-interest income, and ii) basis adjustment amortization related to de-designated fair value hedge accounting relationsh

  42. Slide 42: Endnotes

    Endnotes 26. Net U.S. Retail PCL ratio excludes credit losses associated with the retailer program partners' share of the U.S. Strategic Cards Portfolio, which is recorded in the Corporate Segment. 27. Gross U.S. Retail & Corporate PCL ratio includes the retailer program partners' share of the U.S.

  43. Slide 43: Endnotes

    Endnotes 38. Operating leverage is a non-GAAP ratio that is typically calculated by dividing revenue growth by expense growth. At the total bank level, TD calculates operating leverage as the difference between the % change in adjusted revenue (U.S. Retail in source currency) net of fair value chang

  44. Slide 44: Endnotes

    Endnotes 50. 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 information, please see the

  45. Slide 45: Endnotes

    Endnotes 62. Investor RESL reflects RESL where collateral is a non-owner-occupied investment property. 63. Condo RESL outstandings reported in Q2'22 have been restated from $62B to $53B. 64. RESL Portfolio Current Loan to Value is calculated with the Teranet-National Bank House Price Index™ and weig

  46. Slide 46: Investor Relations Contacts

    Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 46

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