Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — Debt Investor Presentation (April 2012)
44 slides from Toronto-dominion Bank's debt investor presentation, April 2012
Slide 1: Fixed Income Presentation
Fixed Income Presentation April 2012
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 presentation, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, and in other communications. In addition, represent
Slide 3: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 3
Slide 4: Snapshot of TD
Snapshot of TD Our Businesses Canadian Personal & Commercial Wealth & Insurance U.S. Personal & Commercial Wholesale Banking Our Results Adjusted Earnings1 YTD 2012 of C$1,762, up 9% YoY Adjusted EPS of $1.86, up 8% YoY A North American retail focused bank 4 1. See footnote #3 on slide #
Slide 5: Key Takeaways
Key Takeaways Simple Strategy, Consistent Focus Building Building the the Better Better Bank Bank North North America America • Top 10 Bank in North America1 • Leverage platform and brand for growth • One of the few banks in the world rated Aaa by Moody’s2 • Strong employment brand Retail Retail Ear
Slide 6: A Top Bank in North America
TD Bank Group A Top 10 Bank in North America Compared to: Q1 20121 Canadian North American (In USD Billions)2 Peers7 Peers8 Total Assets $771B 2nd 6th Total Deposits $468B 2nd 6th Market Cap (as of Jan 31, 2012) $71B 2nd 6th Adj. Net Income3 (Trailing 4 Quarters) $6.7B 1st 5th Rpt. Net Income (Trail
Slide 7: Key Businesses At a Glance
Key Businesses At a Glance YTD 2012 Earnings Canadian Retail (66%) U.S. Retail (23%) Wholesale (11%) Mix Wealth Management & Insurance Segments Business Canadian P&C1 U.S. P&C1 Wholesale Wealth & Insurance TD Ameritrade2 Sub-Brands 2006-20113 2005-20114 2009-20115 Recognized leader in service and co
Slide 8: Evolution of TD
Evolution of TD Building Franchise Businesses Risk >>> Increasing Retail focus >>> Risk TD Bank Acquired Acquired TD Privatized Acquired Commerce Acquired Acquired and Canada Newcrest 51% of Waterhouse Banknorth Commerce Bank Riverside Chrysler Trust merge Capital Banknorth USA/TD Bank integrati
Slide 9: Snapshot of Personal and Commercial Banking
Key Businesses Snapshot of Personal and Commercial Banking Personal and Commercial Banking Canada As at Q1 2012 Canada U.S. More than 1,100 branches In C$ More than 2,700 ATMs Total Assets $289B $202B Approximately 12 million customers Total Deposits1 $206B $167B United States Total Loans2
Slide 10: Risk Management
Risk Management Our Risk Appetite Integrated risk monitoring and reporting To senior management and Board of Directors Regular review, evaluation and approval of risk framework Structured Risk Appetite governance, from the Business to the Board Executive Committees and Risk Committee of
Slide 11: Q1 2012 Highlights
Q1 2012 Highlights Key Themes Net Income $MM (Adjusted, where applicable)1 Q1/12 QoQ YoY • Record adjusted EPS Retail 2 1,551 12% 11% Wholesale 194 -31% -17% • Delivered positive adjusted Corporate 17 +100% +100% operating leverage Adjusted Net Income $ 1,762 6% 9% Reported Net Income $ 1,478 -7% -5
Slide 12: Credit Portfolio Highlights
Credit Portfolio Highlights Highlights PCL Ratio (bps)1 42 42 • Continued strong asset quality in the 37 38 36 Canadian Personal and Commercial, and Wholesale Banking Portfolios 35 PC L R at i o Ex M B N A C anad a • The MBNA Canada acquisition added Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 $7B in Canadian cre
Slide 13: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 13
Slide 14: Canada is a Small Open Economy with Exposure to Commodities and the United States
Canada is a Small Open Economy with Exposure to Commodities and the United States Canada is the 10th largest economy in the world1 Population: 34.5 million2 Unemployment Rate: 7.5%3 Nominal GDP: $1,624 billion1 Core CPI (Y/Y): 2.0%3 Composition of Nominal GDP (2010) Composition of Canadian
Slide 15: Why Canadian Economy Outperforms
Why Canadian Economy Outperforms One of the worlds most competitive economies1 Soundest banking system in the world1 Strong Canadian housing market Home values have held up well More prudent regulatory environment Robust economic fundamentals relative to G‐7 economies One of the strong
Slide 16: 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 17: Well Developed Residential Mortgage Market in Canada
Well Developed Residential Mortgage Market in Canada Canadian chartered banks account for over 70% of the total mortgage market, including securitizations1 Home Equity Lines of Credit (“HELOC”) represent approximately 15% of the total residential mortgages outstanding2 Conservative lending pra
Slide 18: Default Insurance Required for High LTV Mortgages
Default Insurance Required for High LTV Mortgages Bank Act requires mortgage default insurance for mortgages with a loan to value (LTV) over 80% Mortgage default insurance in Canada is provided by CMHC and private insurers with government backing CMHC derives its authority and legal standing f
Slide 19: 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 20: North American Economy
North American Economy Outlook North America is currently facing a global economic growth slowdown Economic growth in North America to continue at a more modest pace U.S. growth to catch up to Canada over the next couple of years Canadian economy still tightly linked to U.S. fortunes – stron
Slide 21: Contents
Contents 1. TD Bank Group 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 21
Slide 22: Tier 1 Capital Ratio
Tier 1 Capital Ratio Highlights Risk Weighted Assets2 ($B) 244 • Risk Weighted Asset growth due to: 199 203 208 219 • MBNA portfolio acquisition and implementation of Basel II Market Risk Framework • Strong capital position Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 • Tier 1 capital ratio down as expected (incre
Slide 23: TD Credit Ratings
TD Credit Ratings Issuer Ratings¹ Moody's S&P Fitch DBRS Aaa AA‐ AA‐ AA Strong credit ratings 23 1. Ratings on long term debt (deposits) of The Toronto‐Dominion Bank, as at January 31, 2012.
Slide 24: Robust Liquidity Management
Robust Liquidity Management Treasury paradigm Contribute to stable and growing revenues “Treasury does not have the authority not to hedge” No black boxes Global liquidity risk management framework No reliance on unsecured wholesale funding for liquidity Hold sufficient liquid assets t
Slide 25: Attractive Balance Sheet Composition
Attractive Balance Sheet Composition Funding Mix1 Wholesale Term Debt3: $70B P&C Deposits 65% Commercial Deposits External Personal 20% MBS Sales Term Deposits Short Term 65% 11% Funding & Other 17% Personal Non‐ Term Deposits Covered Bonds Wholesale Term Senior 10% 34% Deposits Debt 12% 25% Sub‐ Ot
Slide 26: Debt Maturities F2012 – F2017
Debt Maturities1 F2012 – F2017 Debt Maturities (C$ Billions) $20 $15 $10 $5 $0 2012 2013 2014 2015 2016 2017 MBS Covered Bond Senior Debt Subordinated Debt ABS Manageable debt maturities 26 1. For wholesale term debt that has bullet maturities
Slide 27: Funding Strategy
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, primarily via Canada Mortgage Bond (CM
Slide 28: 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 28
Slide 29: Contents
Contents 1. TD Bank Group at a glance 2. Canadian Economy 3. Treasury & Balance Sheet Management 4. Appendix 29
Slide 30: Simple Strategy, Consistent Focus, Superior Execution
Simple Strategy, Consistent Focus, Superior Execution Adjusted Earnings1 CDN GAAP2 IFRS 2 & Segment Transfer 3 $6,251 $6,432 GR % r CA s: 13 e a in g % 5-y Earn PS: 8 $5,228 e d E u s t t ed Adj Adjus $4,716 $4,189 $3,813 $3,376 $1,762 2006 2007 2008 2009 2010 2011 2011 1Q2012 Retail as % of Adj. 81
Slide 31: Global Economic Outlook
Global Economic Outlook World Real GDP Growth1 6% Forecast 4% 2% • Global economic growth to slow down 0% -2% 1990 1993 1996 1999 2002 2005 2008 2011F • Economic growth in North America to continue at a North American Real GDP Growth2 more modest pace 4% Forecast 2% • U.S. growth to catch up to Cana
Slide 32: Canadian Economic Outlook
Canadian Economic Outlook Canadian Export and U.S. Activity Index1 25% Forecast 15% 5% • Canadian economy still -5% tightly linked to U.S. -15% U.S. Activity Index Canadian Exports fortunes -25% 1970 1976 1982 1988 1994 2000 2006 2012 • Stronger U.S. growth helps Change in Domestic Demand2 Canada’s
Slide 33: U.S. Economic Outlook
U.S. Economic Outlook Residential Real Estate1 1.0% Forecast 0.0% • Depressed housing market has seriously hampered -1.0% the U.S. recovery Contribution to Real GDP -2.0% • Signs point to residential 2001 2003 2005 2007 2009 2011 2013 real estate making a Federal Fiscal Stimulus/Drag2 positive contr
Slide 34: Interest Rate Outlook
Interest Rate Outlook Interest Rates, Canada and U.S.1 7% US Federal Funds Rate • Weaker growth and risks 6% Forecast to the global economy 5% mean North American Bank of Canada Target Rate central banks are set to 4% leave monetary policy at 3% exceptionally accommodative levels 2% 1% • This should
Slide 35: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q4/11 Q1/12 Canadian Personal & Commercial Portfolio $ 277.2 $ 286.8 Personal $ 240.6 $ 248.4 Residential Mortgages 142.5 144.1 Home Equity Lines of Credit (HELOC) 64.5 64.2 Indirect Auto 13.6 13.5 Unsecured Lines of Credit
Slide 36: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $996 Gross Impaired Loan Formation $949 $919 $927 $6 / NM ratio remained stable $9 / NM Canadian P&C formation ratio is $815 $337 / 45 bps consistent with the strong credit $317 / 53 bps $347 / 53 bps $346 /
Slide 37: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Gross Impaired Loans $2,581 $2,432 $2,493 $2,538 increased $45MM over $2,447 $3 / NM $3 / NM Q4/11 due to MBNA $69 / 39 bps $4 / NM $45 / 21 bps $41 / 17 bps $65 / 38 bps $47 / 23 bps Canada Gross Impaired Loan resolutions
Slide 38: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights PCL increased $51MM over Q4/11 due to $73MM PCL $401 for MBNA Canada Excluding MBNA Canada, $350 $6 /11 bps PCL decreased $22MM and $355 $320 1/NM 3 bps over Q4/11 and $309 $113 / 61 bps decreased $27MM and 7 $141 /
Slide 39: Canadian Personal Banking
Canadian Personal Banking Q1/12 Canadian Personal Banking 1 Gross Loans ($B) GIL/ Loans GIL ($MM) PCL2 ($MM) Highlights Residential Mortgages 144 0.42% 610 (2) Continued strong credit Home Equity Lines of Credit (HELOC) 64 0.31% 200 3 Indirect Auto 13 0.32% 43 37 performance Unsecured Lines of Cre
Slide 40: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Canadian Commercial and Gross Q1/12 GIL PCL1 Highlights Loans/BAs Wholesale Banking ($B) ($MM) ($MM) The Canadian Commercial Commercial Banking2 39 128 26 and Wholesale Banking Wholesale 24 41 6 portfolio continued to Total Canadian Commercial and Wholesal
Slide 41: U.S. Personal Banking
U.S. Personal Banking Q1/12 Gross Loans GIL/ GIL Highlights U.S. Personal Banking1 Loans PCL2 ($B) ($MM) ($MM) Credit quality remained Residential Mortgages 14 1.35% 186 4 stable in the quarter Home Equity Lines of Credit (HELOC)3 10 1.12% 110 22 GIL ratios held steady over Indirect Auto 11 0.09
Slide 42: U.S. Commercial Banking
U.S. Commercial Banking Q1/12 U.S. Commercial Banking1 Gross Loans/BAs GIL ($MM) PCL2 ($MM) Highlights ($B) Continued positive trend in Commercial Real Estate (CRE) 12 572 52 Non-residential Real Estate 10 337 31 U.S. Commercial Banking Residential Real Estate 3 235 21 credit quality Commercial &
Slide 43: Investor Relations Contacts
Investor Relations Contacts Phone: 416‐308‐9030 or 1‐866‐486‐4826 Email: tdir@td.com Best corporate governance Best investment community meetings Website: Best investor relations by a CFO: Large cap www.td.com/investor Best investor relations by a CEO: Large cap Grand prix for best overall investor
Slide 44: Fixed Income Presentation
Fixed Income Presentation April 2012
Toronto-Dominion Bank — Debt Investor Presentation (April 2012) on 6ix