Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Group — Q2 2014 Earnings Presentation
34 slides from Toronto-dominion Bank's earnings presentation, May 22, 2014
Slide 1: TD Bank Group Quarterly Results Presentation Q2 2014
TD Bank Group Quarterly Results Presentation Q2 2014 Thursday May 22nd, 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: Strategic Overview
Strategic Overview Strong financial results in Q2 2014 Record adjusted Retail earnings1 Strong Wholesale quarter Good organic growth, currency translation, favourable credit and contribution from acquisitions Well positioned to deliver 7 to 10% medium-term EPS growth in Fiscal 20142 1. The
Slide 4: Q2 2014 Highlights
Q2 2014 Highlights Key Themes Net Income $MM Adjusted, where applicable1 Adjusted1 EPS growth of 15% Q2/14 QoQ YoY YoY Retail2 $ 1,897 4% 16% Retail earnings up 16% YoY Wholesale 207 -10% -6% Good volume and asset growth in Corporate (30) -21% 3% Canada and the U.S. Adjusted Net Income $ 2,074
Slide 5: Q2 2014 Earnings: Items of Note
Q2 2014 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,988 $1.04 Pre Tax After Tax Items of Note EPS (MM) (MM) Amortization of intangibles1 $74 $63 $0.04 Integration charges relating to the acquisition of the credit card portfolio of $32 $23 $0.01 MBNA Canada Excluding Items
Slide 6: Canadian Retail
Canadian Retail Key Themes P&L $MM1 Record adjusted1 net income up 12% Q2/14 QoQ YoY YoY Revenue $ 4,678 1% 8% Positive adjusted1 operating leverage of PCL 238 3% -3% ~240bps Insurance Claims 659 -4% 8% Revenue up 8% YoY Expenses (adjusted) 1,987 3% 6% Solid loan and deposit volume growth Ne
Slide 7: U.S. Retail
U.S. Retail Key Themes P&L US$MM Net income up 15% YoY Q2/14 QoQ YoY YoY impact from Target and Epoch Revenue $ 1,886 -3% 8% Higher TD Ameritrade earnings PCL 155 -30% -20% Security gains1 of US$27MM versus Expenses 1,213 -1% 9% US$80MM in Q2/13 Net Income, U.S. Retail Bank $ 425 7% 13% Re
Slide 8: Wholesale Banking
Wholesale Banking Key Themes P&L $MM Q2/14 QoQ YoY Earnings down 6% YoY Revenue $ 678 -6% 5% PCL 7 n/a 133% Revenue up 5% YoY Expenses 405 -1% 8% Higher trading, advisory fees and underwriting Net Income $ 207 -10% -6% ROE 18.2% Expenses up 8% YoY Settlement of a commercial dispute and hig
Slide 9: Corporate Segment
Corporate Segment Key Themes P&L $MM1 Q2/14 Q1/14 Q2/13 Adjusted1 net income flat YoY Net Corporate Expenses $ (159) $ (165) $ (118) Gain on sale of TD Ameritrade shares Other 103 100 63 ($46 million in Q2/14; $39 million in Non-Controlling Interests 26 27 26 Q1/14) offset by higher corporate ex
Slide 10: Expenses
Expenses Highlights Efficiency Ratio, Adjusted2 Core expenses1 up 3.9% YoY Positive operating leverage of ~100 bps 55.4% Increase was partly attributable to higher personnel costs and ongoing investment in 53.1% enterprise projects and initiatives Excluding variable compensation increase, 52
Slide 11: Capital
Capital Highlights Basel III Common Equity Tier 11 Basel III Common Equity Tier 1 ratio 9.2% as of April 30, 2014 9.2% Increase of 30 bps QoQ reflects 9.0% 8.9% 8.9% solid organic capital generation 8.8% Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Remain Greatwell-positioned quarter on strong for evolving Ret
Slide 12: Credit Portfolio Highlights
Credit Portfolio Highlights Highlights PCL Ratio (bps)1 Loss rates and GIL ratios at historically low levels 39 38 40 37 35 Reduced impairment in Canadian and U.S. Residential Mortgages Continued improvement in the U.S. Commercial portfolio Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 GIL Ratio (bps)2 62 60
Slide 13: Appendix
Appendix
Slide 14: Q2 2014 Earnings: Items of Note
Q2 2014 Earnings: Items of Note MM EPS Reported net income and EPS (diluted) $1,988 $1.04 Revenue/ Pre Tax After Tax Items of note EPS Segment Expense (MM) (MM) Line Item2 Amortization of intangibles1 $74 $63 $0.04 Corporate pg 9, line 10 Integration charges relating to the acquisition of the credit
Slide 15: Canadian Retail: Net Interest Margin
Canadian Retail Net Interest Margin Highlights Net Interest Margin Margin on average earning assets On Average Earning Assets of 2.97%, up 3 bps QoQ and 5 bps 2.97% YoY 2.92% 2.94% 2.92% 2.94% Primarily due to the addition of Aeroplan On Loans 1.92% 2.00% 1.85% 1.86% 1.86% On Deposits 1.42% 1.38
Slide 16: Canadian Retail: Deposit Growth
Canadian Retail Deposit Growth Highlights Average Deposits $B 4% Growth Average personal deposit volumes YoY increased 2% YoY Average business deposit volumes 246 248 247 241 increased 8% YoY 238 17 17 17 17 17 Average wealth deposit volumes increased 2% YoY 76 77 76 71 74 150 150 153 154 154
Slide 17: Canadian Retail: Loan Growth
Canadian Retail Loan Growth Highlights Average Loans $B 6% Growth Solid personal lending volume YoY growth of 5% YoY Real estate secured lending growth of 321 325 311 317 4% YoY 307 47 49 50 Strong business lending volume 45 46 19 growth of 12% YoY 15 15 16 15 17 15 15 15 15 14 14 14 15 14 C
Slide 18: Canadian Retail: Personal and Commercial Banking
Canadian Retail Personal and Commercial Banking 25 Revenue Average Card Balances $MM $B 20 18.1 2,821 2,831 2,919 2,906 14.9 15.4 2,665 15 695 680 723 729 655 10 8.3 2,126 2,151 2,196 2,177 2,010 5 0 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 2011 2012 2013 2014 YTD Net Interest Income Non-interest Income Net In
Slide 19: Canadian Retail: Wealth
Canadian Retail Wealth Revenue AUA1 and AUM2 $MM $B 754 778 786 724 737 285 278 115 116 112 267 270 111 112 264 136 135 138 140 136 221 213 205 199 204 473 489 503 527 536 AUA AUM Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Wealth Fee & Other Wealth Transaction Wealth NII Net Income
Slide 20: Canadian Retail: Insurance
Canadian Retail Insurance Revenue Gross Originated Insurance $MM1 Premiums $MM 1 012 986 1 049 938 930 932 993 950 923 839 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Net Income Insurance Claims and Related $MM Expenses $MM 1 140 153 141 149 92 711 683 659 609 -243 Q2/13 Q3/13 Q4/13
Slide 21: U.S. Retail: Deposit Growth
U.S. Retail Deposit Growth Highlights Average Deposits US$B 8% Growth Average personal deposit volumes YoY up 7% YoY Average business deposit volumes up 9% YoY Average TD Ameritrade IDAs1 up 9% YoY 1. Insured Deposit Accounts 21
Slide 22: U.S. Retail: Loan Growth
U.S. Retail Loan Growth Highlights Average Loans US$B 10% Growth Average personal loans increased YoY 11% YoY including Target Average business loans increased 10% YoY Excluding Target, average loans were up 8% YoY with a 6% increase in personal and a 10% increase in commercial 22
Slide 23: TD Ameritrade
TD Ameritrade Highlights TD Bank Group’s Share of TD Ameritrade’s Net Income1 TD’s share of TD Ameritrade’s net US$MM income was C$78 million in Q2/14, up 47% YoY mainly due to: Increased earnings in TD Ameritrade and FX translation, partially offset by reduced $73 $68 $70 ownership in TD Amerit
Slide 24: Canadian Housing Market
Canadian Housing Market Highlights Canadian RESL credit quality remains solid amidst continued resiliency in the Canadian housing market Portfolio Q2/14 Gross Loans Outstanding $227 B Canadian RESL Percentage Insured 65% Uninsured Residential Mortgages Current LTV1 60% Condo Borrower Gross Loans O
Slide 25: Gross Lending Portfolio
Gross Lending Portfolio Includes B/As Balances (C$B unless otherwise noted) Q1/14 Q2/14 Canadian Retail Portfolio $ 323.7 $ 326.2 Personal $ 274.0 $ 275.0 Residential Mortgages 166.0 166.7 Home Equity Lines of Credit (HELOC) 60.3 60.2 Indirect Auto 14.7 15.0 Unsecured Lines of Credit 8.5 8.5 Credit
Slide 26: Gross Impaired Loan Formations
Gross Impaired Loan Formations By Portfolio GIL Formations1: $MM and Ratios2 Highlights $1,233 Improvement in GIL formations $1,210 $1,167 occurred across the portfolio $1,111 $17 / 8 bps $22 / 11 bps $1,125 U.S. decrease is largely due to Indirect Auto and Commercial $476 / 42 bps $428 / 42 bps
Slide 27: Gross Impaired Loans (GIL)
Gross Impaired Loans (GIL) By Portfolio GIL1: $MM and Ratios2 Highlights Decreases in the GIL ratio were driven by continued credit $2,861 $2,746 quality improvements in the $2,628 $2,692 $2,531 $69 / 32 bps $41 / 19 bps $41 / 18 bps U.S. $47 / 23 bps $31 / 13 bps $1,610 / 137 bps $1,465 / 136 bps
Slide 28: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) By Portfolio PCL1: $MM and Ratios2 Highlights 5 bps reduction in PCL rate driven by: $454 Credit quality improvements in $407 $420 $395 $402 U.S. Commercial $ 19 / 34 bps $1 / 2 bps $3 / NM Reduced impairment and charge- offs in Canadian and U.S. Indirect $181
Slide 29: Canadian Personal Banking
Canadian Personal Banking Q2/14 PCL2 Canadian Personal Banking1 Gross Loans ($B) GIL/ Loans GIL ($MM) ($MM) Highlights Residential Mortgages 167 0.28% 463 3 Credit quality remains strong in Home Equity Lines of Credit (HELOC) 60 0.49% 295 2 the Canadian Personal portfolio Indirect Auto 15 0.23% 35
Slide 30: Canadian Commercial and Wholesale Banking
Canadian Commercial and Wholesale Banking Q2/14 Canadian Commercial and Gross GIL PCL1 Highlights Loans/BAs Wholesale Banking ($B) ($MM) ($MM) Increase in Commercial GIL Commercial Banking2 51 149 33 and PCL was due largely to a Wholesale 23 41 3 single borrower Total Canadian Commercial and Whole
Slide 31: U.S. Personal Banking
U.S. Personal Banking Q2/14 Highlights Gross Loans GIL/ GIL U.S. Personal Banking1 ($B) Loans ($MM) PCL2 Increase in U.S. Personal PCL ($MM) Residential Mortgages 23 1.24% 277 2 is attributable to Target Portfolio continues to perform Home Equity Lines of Credit (HELOC)3 11 2.45% 276 11 within e
Slide 32: U.S. Commercial Banking
U.S. Commercial Banking Q2/14 U.S. Commercial Banking1 Gross Loans/BAs GIL PCL2 Highlights ($MM) ($MM) ($B) Commercial Real Estate (CRE) 17 288 (10) Positive momentum continues Non-residential Real Estate 13 189 (5) in U.S. Commercial portfolio: Residential Real Estate 4 99 (5) Net charge-off ra
Slide 33: Investor Relations Contacts
Investor Relations Contacts Phone: 416-308-9030 or 1-866-486-4826 Email: tdir@td.com Grand Prix for Best Overall Investor Relations: Large Cap Best Investor Relations by Website: Sector: Financial Services www.td.com/investor Best Investor Relations by a CEO: Large Cap Best Investor Relations by a C
Slide 34: TD Bank Group Quarterly Results Presentation Q2 2014
TD Bank Group Quarterly Results Presentation Q2 2014 Thursday May 22nd, 2014