Toronto-dominion Bank · TSX:TD

Toronto-dominion Bank — The Toronto-Dominion Bank — Q2 2022 Earnings Presentation

45 slides from Toronto-dominion Bank's earnings presentation, May 26, 2022

  1. Slide 1: TD Bank Group Quarterly Results Presentation Q2 2022

    TD Bank Group Quarterly Results Presentation Q2 2022 May 26, 2022 1

  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 $3.8B, up 3% (adjusted1 $3.7B, down 2%)  Reported EPS of $2.07, up 4% (adjusted1,2 $2.02, down 1%)  Strong revenue performance reflecting increased customer activity and higher deposit marg

  5. Slide 5: 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) 7% 13% 250 18% 1,200 11% 500 101 (2%) 112 1,000 400 87 200 105 85 170 155 395 800 300 351 122 367 150 92 79 95 548 578 85 436 600 261 100

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

    Forward Focused Shaping the future of banking Canadian banking app 2022 Model Bank Award for recognized for AI-powered Customer Engagement insights Added Mastercard to offerings in Target's digital and store Our Modernization Journey channels Highest in Dealer Satisfaction among Co-Structuring Advis

  7. Slide 7: First Horizon Acquisition Update

    Forward Focused First Horizon Acquisition Update First Horizon Accelerates TD's U.S. Growth Strategy Progress to Date Next Steps • Filed all required regulatory applications in March • First Horizon shareholder meeting on May 31st with Fed, OCC and OSFI, among others • Define integration and convers

  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 +90 bps YoY +7.5% YoY -40 bps YoY 63.2 6.7 Canadian 6.5 92.0 92.1 62.3 91.6 Retail8 6.2 61.6 Q2/21 Q1/22 Q2/22 Q2/21 Q1/22 Q2/22

  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 – Announced our interim target for our operational – Announced a US$100 million equity fund in – Formally established the ESG Centre of Expertise emissions to achieve an absolute reduction in support of minority-owned small businesses in to

  11. Slide 11: Q2 2022 Highlights

    Q2 2022 Highlights Strong revenue performance EPS of $2.07, up 4% YoY (Adj1 $2.02, down 1%) P&L ($MM) Reported Q2/22 QoQ YoY Revenue up 10% YoY (Adj1 up 8% YoY) Revenue 11,263 0% 10%  Reported revenue includes an insurance recovery PCL 27 ($45) +$404 related to litigation12 Impaired 314 ($15) ($67)

  12. Slide 12: Canadian Retail

    Canadian Retail Strong revenue growth supported by continued volume momentum Net income up 2% YoY P&L ($MM) Reported Q2/22 QoQ YoY Revenue up 9% YoY Revenue 6,623 (1%) 9%  Volume growth, prior year premium rebates in PCL 60 +$27 +$97 insurance and higher fee-based revenue in Impaired 163 +$13 ($28)

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

    U.S. Retail (US$) Delivered solid loan and deposit volumes Net income up 3% YoY (Adj1 down 10% YoY) P&L (US$MM) (except where noted) Reported Q2/22 QoQ YoY Revenue up 12% YoY (Adj1 up 3% YoY) Revenue 2,323 6% 12%  Reported revenue includes an insurance recovery related to litigation12 PCL (15) ($32

  14. Slide 14: Wholesale

    Wholesale Solid performance in Q2 Net income down 6% YoY P&L ($MM) Reported Q2/22 QoQ YoY Revenue up 8% YoY Revenue 1,250 (7%) 8%  Higher trading-related revenue, partially offset by Trading-related revenue 680 (6%) 22% lower underwriting fees (TEB)2,17 PCL (9) ($4) +$54 PCL recovery of $9MM Impair

  15. Slide 15: Corporate Segment

    Corporate Segment Reported loss of $151MM P&L ($MM)  Adjusted1 loss of $79MM Reported Q2/22 Q1/22 Q2/21 Net Income (151) (227) (186) Adjustments for items of note Amortization of acquired 60 67 69 intangibles before income taxes Acquisition and integration 20 50 19 charges related to Schwab Impact

  16. Slide 16: Capital

    18 Capital Strong capital and liquidity management supporting future growth Common Equity Tier 1 ratio of 14.7% Common Equity Tier 1 Ratio Q1 2022 CET 1 Ratio 15.2%  DRIP discount introduced at 2% Internal capital generation 45 Increase in RWA (net of FX)19 (50) Risk-Weighted Assets up 3.9% QoQ Rep

  17. Slide 17: Gross Impaired Loan Formations

    Gross Impaired Loan Formations By Business Segment Highlights GIL Formations21: $MM and Ratios22  Gross impaired loan formations decreased 4 basis points quarter- over-quarter, reflecting: – Higher prior quarter formations 14 16 in U.S. Commercial, largely 11 11 12 bps related to government guarant

  18. Slide 18: Gross Impaired Loans (GIL)

    Gross Impaired Loans (GIL) By Business Segment GIL23: $MM and Ratios24 Highlights  Gross impaired loans decreased 3 basis points 38 quarter-over-quarter to a new 35 32 33 cyclical low, largely reflecting: 30 bps – Further resolution of PPP loans in the U.S. $2,803 Commercial portfolio $69 / 12 bps

  19. Slide 19: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) By Business Segment Highlights PCL25: $MM and Ratios26  PCL decreased quarter-over-quarter, ($37) $72 reflecting: $2 $23 $21 $27 – Lower impaired PCLs Wholesale ($123) $100 – A larger performing allowance Corporate ($377) $53 $33 $60 ($18) release ($37) U.S. Retail

  20. Slide 20: Provision for Credit Losses: Impaired and Performing

    Provision for Credit Losses (PCL)25,29 Impaired and Performing Highlights PCL ($MM) Q2/21 Q1/22 Q2/22  Impaired PCL remained at cyclically low levels Total Bank (377) 72 27 Impaired 381 329 314  The performing PCL recovery reflects Performing (758) (257) (287) allowance releases across all segment

  21. Slide 21: Allowance for Credit Losses (ACL)

    Allowance for Credit Losses (ACL) ACL25: $B and Coverage Ratios30 124 126 122 Highlights 103 108 103 97 $9.2 $9.4 93 $8.9 87 bps  ACL decreased quarter-over-quarter, 74 $7.9 $8.0 $7.7 $7.3 reflecting improved credit conditions $7.1 $6.9 United States 59% 60% – The release was tempered due to $5.3 5

  22. Slide 22: Appendix

    Appendix 22

  23. Slide 23: Q2 2022: Items of Note

    Q2 2022: Items of Note Revenue/ ($MM) EPS ($)33 Segment Expense Line Item34 Pre After Tax Tax Reported net income and EPS (diluted) 3,811 2.07 Items of note Amortization of acquired intangibles35 60 54 0.03 Corporate Page 4, L13, L19 & L27 Acquisition and integration charges related to Schwab36 20 1

  24. Slide 24: 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

  25. Slide 25: Q2 2022: PTPP & Operating Leverage

    Q2 2022: PTPP1,37 & Operating Leverage1,38 Modified for partners' share of SCP PCL, FX and Insurance Fair Value Change Q2 2022 Q1 2022 Q2 2021 TOTAL BANK SFI Reference Revenue Expenses Revenue Expenses Revenue Expenses 1 Reported Results ($MM) 11,263 6,033 11,281 5,967 10,228 5,729 Page 2, L3 & L6 2

  26. Slide 26: 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 – $293MM increase in NII over a 12-month period from curve a 25 bps rise in short rates (25 bps hike from each of – 1

  27. Slide 27: Canadian Retail: Volumes, Margins and Efficiency

    Canadian Retail Volumes, Margins and Efficiency Net Interest Margin (NIM) Average Loans $B44 484 494 504 460 473 91 94 97 101 87 2.61% 2.61% 2.62% 2.57% 2.53% 403 373 382 390 398 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Personal Business Efficiency Ratio Average Deposits $B44 460

  28. Slide 28: Canadian Retail: Wealth Revenue and Assets

    Canadian Retail Wealth Revenue and Assets Wealth Revenue $MM Wealth Assets14 $B 1,600 600 1,499 1,448 1,428 1,431 1,415 557 557 181 538 537 160 172 169 183 514 1,200 244 245 214 226 427 429 420 411 346 500 397 490 800 457 445 421 400 410 400 942 1,001 1,042 1,075 1,022 0 300 Q2/21 Q3/21 Q4/21 Q1/22

  29. Slide 29: U.S. Retail: Volumes, Margins and Efficiency

    U.S. Retail Volumes, Margins and Efficiency NII and NIM16,45 Average Loans US$B44 2.16% 2.21% 2.21% 2.21% 2.15% 170 167 163 162 162 2.17% 9.3 8.7 4.8 2.4 1.4 2.01% 2.05% 2.11% 2.02% 1,619 1,673 1,671 86 84 83 82 83 1,641 1,548 108 65 28 99 86 1,565 1,606 1,614 75 74 76 77 78 1,462 1,520 Q2/21 Q3/21

  30. Slide 30: U.S. Retail: Wealth Assets and Schwab EPU

    U.S. Retail Wealth Assets and Schwab EPU TD Wealth Assets14 US$B Schwab49 – Q2 2022 TD’s share of Schwab’s net income was C$202MM on a 44 reported basis, of which C$224MM (US$177MM) was 41 41 recorded in the U.S. Retail segment 40 37  TD's share of Schwab's net income was C$248MM on an adjusted bas

  31. Slide 31: Schwab Equity Pickup: Q2 2022 Reconciliation

    Schwab Equity Pickup Q2 2022 Reconciliation U.S. Retail P&L ($MM)51 TDBG Corporate Segment $C $US Reported Schwab Equity Pickup52 202 224 177 (22) Amortization of Intangibles53 34 0 0 34 Acquisition and Integration Charges53,54 12 0 0 12 Adjusted Schwab Equity Pickup1 248 224 177 25 Financial Statem

  32. Slide 32: Wholesale Banking

    Wholesale Banking Revenue Loans55 Q2 2022 5% Q2 2022 6% 34% 33% $1.3B $63.7B 61% 61% Corporate and Global Markets Other56 Canada United States International Investment Banking Highlights  Global Markets business continued to deliver strong results driven by solid trading activity  Corporate and In

  33. Slide 33: Gross Lending Portfolio

    Gross Lending Portfolio Including B/As Balances ($B unless otherwise noted) Q1/22 Q2/22 Canadian Retail Portfolio 499.0 511.0 Personal 400.5 409.1 Residential Mortgages 234.9 239.3 Home Equity Lines of Credit (HELOC) 103.9 107.9 Indirect Auto 27.2 26.9 Credit Cards 15.0 15.6 Other Personal 19.5 19.4

  34. Slide 34: Canadian Real Estate Secured Lending Portfolio

    Canadian Real Estate Secured Lending Portfolio Highlights (Q2 2022) Quarterly Portfolio Volumes ($B) $319 $328 $334 $340 $348 Canadian RESL credit quality remained strong Uninsured Insured 75% 76% 77% 78% 79%  Uninsured and insured portfolio loan-to value rates stable 25% 24% 23% 22% 21% Q2/21 Q3/2

  35. Slide 35: Canadian Personal Banking

    Canadian Personal Banking Canadian Personal Banking (Q2/22) Highlights Gross Loans ($B) GIL ($MM) GIL/Loans (%)  Gross impaired loans Residential Mortgages 239.3 187 0.08 decreased quarter-over- Home Equity Lines of Credit (HELOC) 107.9 96 0.09 quarter, largely reflected in the Indirect Auto 26.9 6

  36. Slide 36: Canadian Commercial and Wholesale Banking

    Canadian Commercial and Wholesale Banking Highlights Canadian Commercial and Wholesale Banking (Q2/22) Gross Loans/ GIL GIL/Loans  Continued good asset quality BAs ($B) ($MM) (%) in Canadian Commercial and Commercial Banking62 101.9 426 0.42 Wholesale Banking. Wholesale 68.4 7 0.01 Total Canadian C

  37. Slide 37: U.S. Personal Banking (USD)

    U.S. Personal Banking (USD) Highlights U.S. Personal Banking66 (Q2/22)  Gross impaired loans Gross Loans GIL GIL/Loans decreased quarter-over- ($B) ($MM) (%) quarter Residential Mortgages 31.6 362 1.14 Home Equity Lines of Credit (HELOC)57 6.8 268 3.92 Indirect Auto 25.9 147 0.56 Credit Cards 12.8

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

    U.S. Commercial Banking (USD) Highlights U.S. Commercial Banking66 (Q2/22) Gross Loans/ GIL GIL/Loans  Gross impaired loans BAs ($B) ($MM) (%) decreased quarter-over- Commercial Real Estate (CRE) 24.3 73 0.30 quarter, largely reflecting: Non-residential Real Estate 17.0 60 0.35 – Further resolution

  39. Slide 39: 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

  40. Slide 40: Endnotes

    Endnotes 13. FX impact solely related to the U.S. Retail Bank. Adjusted expenses excluding the partners' share of PCL for the U.S. SCP and adjusted expenses excluding the partners' share of PCL and FX are non-GAAP financial measures. For further information on accounting for the partners' program, p

  41. Slide 41: Endnotes

    Endnotes 29. PCL-impaired represents Stage 3 PCL under IFRS 9, performing represents Stage 1 and Stage 2 on financial assets, loan commitments, and financial guarantees 30. Coverage Ratio: Total allowance for credit losses as a % of gross loans and acceptances. 31. U.S. Strategic Cards Partners' Sha

  42. Slide 42: Endnotes

    Endnotes 40. Adjusts for fair value changes in investments supporting insurance claims liabilities, as reported on page 6, line 14 of the Bank's Q2 2022 Supplementary Financial Information package (Income (loss) from Financial Instruments designated at FVTPL – Related to Insurance Subsidiaries). 41.

  43. Slide 43: Endnotes

    Endnotes 51. The Bank's share of Schwab's earnings is reported with a one-month lag. 52. Includes the net impact of internal management adjustments which are reclassified to other reporting lines in the Corporate segment. 53. The after-tax amounts for amortization of acquired intangibles and the Ban

  44. Slide 44: Endnotes

    Endnotes 65. Other includes: Power and Utilities; Telecommunications, Cable and Media; Transportation; Professional and Other Services; Other. 66. Excludes acquired credit-impaired loans. 67. Loan To Value based on authorized credit limit and Loan Performance Home Price Index as of February 2022. FI

  45. Slide 45: Investor Relations Contacts

    Investor Relations Contacts Phone: (416) 308-9030 or 1 (866) 486-4826 Email: tdir@td.com Website: www.td.com/investor 45

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