Toronto-Dominion Bank · TSX:TD
Toronto-Dominion Bank — TD Bank Group — Debt Investor Presentation (2013)
45 slides from Toronto-Dominion Bank's debt investor presentation, Nov 24, 2013
Slide 1: TD Bank Group Investor Presentation – Fixed Income Q3 2013
TD Bank Group Investor Presentation – Fixed Income Q3 2013
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 Personal & Commercial Personal banking, credit cards and auto finance Small business and commercial banking Wealth & Insurance Direct investing Advice-based wealth business Asset management 2,481 Insurance Business Locations1 U.S. Personal & Commerci
Slide 5: Simple Strategy, Consistent Focus
Simple Strategy, Consistent Focus Building 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 convenienc
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$15.1 trillion Population of 35 million Population of 314 million Canadian Banking System U.S. Banking System Soundest banki
Slide 7: TD Bank Group in North America
TD Bank Group in North America Compared to: Q3 2013 North Canadian (C$ billions) American Peers5 Peers6 Total Assets $835B 2nd 6th Total Deposits $508B 2nd 6th Market Cap (as of August 30, 2013) $82B 2nd 6th Adj. Net Income1 (Trailing 4 Quarters) $7.1B 2nd 6th Rpt. Net Income (Trailing 4 Quarters) $
Slide 8: Composition of Earnings
Composition of Earnings Highlights TD is a top 10 bank in North America1 Increasing retail focus Strength of retail franchise Reliable and steady earnings mix 3,4 Adjusted Retail Earnings2,6 $7,075 4,5 13% 12% 4 Wholesale Earnings 88% $2,158 42% YTD’13 Normalized Adj. Retail Earnings2,5,6 =
Slide 9: Evolution of TD
Evolution of TD Building Franchise Businesses >>> Increasing Retail focus >>> Acquired Acquired Target credit TD Chrysler card portfolio Waterhouse Financial & Epoch and TD Bank Acquired Acquired USA/ Privatized Acquired Commerce Acquired and MBNA announced and Canada Newcrest 51% of Ameritrade TD C
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: Q3 2013 Highlights
Q3 2013 Highlights Key Themes Net Income $MM (Adjusted, where applicable)1 Adjusted1 EPS decline of 14% Q3/13 QoQ YoY YoY driven by Insurance loss Retail2 $ 1,449 -12% -10% Wholesale 147 -33% -18% Record quarter for Canadian Corporate (8) -69% n/a P&C, Wealth Management and Adjusted Net Income $
Slide 12: Credit Portfolio Highlights
Credit Portfolio Highlights Key Credit Themes PCL Ratio (bps)1,2 Continued solid credit performance: Canadian Credit Cards loss rates continued to improve Lowest charge-off rate for the U.S. Commercial portfolio in over 3 years Increased Gross Impaired Loans due to seasoning of the Target po
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 around 75% of the total mortgage market, including securitizations1 Conservative lending practices Strong competition among lenders Favorable legal environment supporting foreclosure and other types of
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 Housing sales continue to be supported by attractive affordability, demographics and employment stability Canadian RESL credit quality remains strong General Allowance of $65 million taken for the Alberta flood Topic TD Positioning Canadian RESL $223 billio
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 GDS and TDS ratios of 39% and 44% res
Slide 20: North American Economy
North American Economy Outlook 2013 will be another year of moderate growth for Canada and the U.S. Uncertainty over government policies has somewhat dissipated, but unresolved issues remain in both the U.S. and Europe U.S. economy remains a mix of good news and bad news Residential real est
Slide 21: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 21
Slide 22: Capital
Capital Highlights Basel III Common Equity Tier 11 Basel III Common Equity Tier 1 ratio of 8.9% as of July 31, 2013 Includes 30 bps of relief from OSFI on treatment of CVA Managing capital volatility – AOCI Dividend increase of $0.04 per share payable in Q4 2013 Share buyback program on tr
Slide 23: TD Credit Ratings
TD Credit Ratings Issuer Ratings1 Moody's S&P Fitch DBRS Ratings Aa1 AA- AA- AA Outlook Stable Stable Stable Stable Ratings vs. Peer Group S&P Long-Term Debt Rating Moody’s Long-Term Debt Rating AA Aa1 AA- Aa2 A+ Aa3 A A1 A- A2 BBB+ A3 BBB Baa1 BBB- Baa2 TD Canadian Peers U.S. Peers TD Canadian Peer
Slide 24: Robust Liquidity Management
Robust Liquidity Management Treasury paradigm Contribute to stable and growing earnings “Treasury does not have the authority not to hedge,” within limits No black boxes Match terms of assets and liabilities Do not engage in liquidity carry trade Match underlying funding maturities to
Slide 25: Term Funding Strategy
Term Funding Strategy Large base of stable retail and commercial deposits Customer service business model delivers growing base of “sticky” deposits Reserve assets held for deposit balance that is not considered permanent Large user of securitization programs via Canada Mortgage Bond (CMB) a
Slide 26: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition Funding Mix1 Wholesale Term Debt2 Assets Securitized 59% Other Deposits3 3 Other Deposits Personal Personal 26%25% Term TermDeposits Deposits Residential Mortgages 9% 9% 58% Short Term Short Term Liabilities4 4 Liabilities 10%11% Personal Non‐ Covered Bonds Perso
Slide 27: Debt Maturity Profile F2013 – F2018
Debt Maturity Profile1 F2013 – F2018 Bullet Debt Maturities (C$ billions)2 $20 $18 $18 $15 $13 $13 $10 $9 $8 $5 $0 2013 2014 2015 2016 2017 2018 MBS Covered Bond Senior Debt ABS Subordinated Debt Manageable debt maturities 1. For wholesale term debt that has bullet maturities 2. As of July 31, 2013
Slide 28: Canada Covered Bond Legislation
Canada Covered Bond Legislation The Covered Bond legal framework was announced in the 2012 Budget and passed into law in June 2012 Canada Mortgage and Housing Corporation (“CMHC”) was given responsibility to administer the covered bond legal framework In December 2012, the CMHC issued the “Can
Slide 29: 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 to support growth plans 29
Slide 30: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 30
Slide 31: Global Economic Outlook
Global Economic Outlook World Real GDP Growth1 Y/Y % Change 6 Global economic growth Forecast1 4 will moderately increase next year 2 0 Fiscal consolidation in the -2 2004 2006 2008 2010 2012 2014 U.S. and weak global growth means North North American Real GDP Growth2 American economy to (%) exp
Slide 32: Canadian Economic Outlook
Canadian Economic Outlook Canadian Export and U.S. Activity Index1 Y/Y % Change 25 Forecast 1 20 Forecast 15 10 Canadian economy still 5 tightly linked to U.S. 0 -5 fortunes, and better U.S. -10 U.S. ActivityReal Canadian Index Exports growth in medium term to -15 Canadian Exports U.S. Activity In
Slide 33: U.S. Economic Outlook
U.S. Economic Outlook Residential Real Estate Contribution to real GDP growth1 (Y/Y % Change) 1.5 Forecast1 1.0 Housing, the culprit of the 0.5 0.0 Great Recession, has -0.5 begun to recover in -1.0 -1.5 earnest. Residential -2.0 investment contributed 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 34: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 % 7 US Federal Funds Rate Modest outlook and risks to 6 Forecast the global economy mean 5 Bank of North American central Canada Target Rate banks are set to leave 4 monetary policy at 3 exceptionally accommodative levels for a 2 while 1 0 200
Slide 35: Solid Growth and Returns Across Businesses
Solid Growth and Returns Across Businesses Adjusted Earnings1,2 $7,075 (C$MM) $6,432 $5,228 $5,337 $4,716 $4,189 $3,813 Wholesale Banking U.S. P&C Wealth & Insurance2 Canadian P&C2 2007 2008 2009 2010 2011 2012 YTD 2013 Adjusted Retail Earnings as % of 80% 98% 78% 83% 87% 88% 90% Adjusted Earnings T
Slide 36: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q2/13 Q3/13 Canadian Personal & Commercial Portfolio $ 304.5 $ 310.3 Personal $ 259.6 $ 264.1 Residential Mortgages 156.7 161.0 Home Equity Lines of Credit (HELOC) 62.7 62.1 Indirect Auto 14.0 14.5 Unsecured Lines of Credit
Slide 37: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,218 Canadian P&C formations $1,172 remained stable $1,061 $1,115 $1,041 Excluding Target, U.S. P&C formation ratio improved to the lowest level in over 5 years 26 30 25 26 27 bps Other3 Wholesale Portfolio
Slide 38: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights $2,664 Gross Impaired Loans $2,518 $2,494 $2,554 increased $110MM (2 bps) $2,367 over Q2/13 largely due to seasoning in the Target portfolio Canadian P&C Gross Impaired Loans decreased $43MM (2 bps) due to resolutions in th
Slide 39: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights PCL ratio decreased 2 bps $489 over Q2/13 $454 Canadian P&C loss rates at $402 $407 $360 the lowest levels in over 5 years U.S. P&C PCL continued favourable trend when adjusted for Target and the normal build up in
Slide 40: Canadian Personal Banking
Canadian Personal Banking Q3/13 Gross Loans GIL PCL2 Canadian Personal Banking1 ($B) GIL/ Loans ($MM) ($MM) Highlights Residential Mortgages 161 0.27% 437 5 Continued strong credit Home Equity Lines of Credit (HELOC) 62 0.51% 317 4 performance Indirect Auto 15 0.28% 40 30 Unsecured Lines of Credit
Slide 41: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q3/13 Canadian Commercial and Gross Highlights GIL PCL1 Loans/BAs Wholesale Banking ($B) ($MM) ($MM) Credit quality remains strong Commercial Banking2 46 158 7 Commercial (including Small Wholesale 20 47 19 Business Banking) loss rate Total Canadian Comm
Slide 42: U.S. Personal Banking
U.S. Personal Banking Q3/13 Highlights Gross Loans GIL/ GIL U.S. Personal Banking1 ($B) Loans ($MM) PCL2 Loan to Values have improved ($MM) Residential Mortgages 20 1.22% 247 (2) due to housing price Home Equity Lines of Credit (HELOC)3 10 2.07% 216 6 appreciation over last year The proportion o
Slide 43: U.S. Commercial Banking
U.S. Commercial Banking Q3/13 U.S. Commercial Banking1 Gross Loans/BAs GIL PCL2 Highlights ($MM) ($MM) ($B) Commercial Real Estate (CRE) 15 362 10 Positive momentum continues Non-residential Real Estate 12 239 16 in U.S. Commercial portfolio Residential Real Estate 3 123 (6) Lowest charge-off ra
Slide 44: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Email: Grand Prix for Best Overall Investor Relations: Large Cap tdir@td.com Best Investor Relations by Sector: Financial Services Website: Best Investor Relations www.td.com/investor by a CEO: Large Cap Best Investor Relations by a C
Slide 45: TD Bank Group Investor Presentation – Fixed Income
TD Bank Group Investor Presentation – Fixed Income Q3 2013