This quarterly earnings news release should be
read in conjunction with the Bank's unaudited Third Quarter 2015
Report to Shareholders for the three and nine months ended July 31,
2015, prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB), which is available on our website at
http://www.td.com/investor/. This analysis is dated August 26,
2015. Unless otherwise indicated, all amounts are expressed in
Canadian dollars, and have been primarily derived from the Bank's
Annual or Interim Consolidated Financial Statements prepared in
accordance with IFRS. Certain comparative amounts have been
reclassified to conform to the presentation adopted in the current
period. Additional information relating to the Bank is available on
the Bank's website at http://www.td.com, as well as on SEDAR at
http://www.sedar.com and on the U.S. Securities and Exchange
Commission's SEC website at http://www.sec.gov (EDGAR filers
section).
The Bank implemented new and amended standards under IFRS, which
required retrospective application, effective the first quarter of
fiscal 2015 (2015IFRS Standards and Amendments). As a result,
certain comparative amounts have been restated where applicable.
For more information refer to Note 2 of the third quarter 2015
Interim Consolidated Financial Statements. The 2015 IFRS Standards
and Amendments were not incorporated into the regulatory capital
disclosures presented prior to the first quarter of 2015.
Reported results conform to generally accepted accounting
principles (GAAP), in accordance with IFRS. Adjusted measures are
non-GAAP measures. Refer to the "How the Bank Reports" section of
the Third Quarter 2015 Management's Discussion and Analysis
(MD&A) for an explanation of reported and adjusted
results. |
THIRD QUARTER FINANCIAL HIGHLIGHTS, compared with the third
quarter a year ago:
- Reported diluted earnings per share were $1.19, compared with $1.11.
- Adjusted diluted earnings per share were $1.20 compared with $1.15.
- Reported net income was $2,266
million, compared with $2,107
million.
- Adjusted net income was $2,285
million, compared with $2,167
million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, nine months ended
July 31, 2015, compared with the
corresponding period a year ago:
- Reported diluted earnings per share were $3.25, compared with $3.22.
- Adjusted diluted earnings per share were $3.47, compared with $3.29.
- Reported net income was $6,185
million, compared with $6,137
million.
- Adjusted net income was $6,577
million, compared with $6,265
million.
THIRD QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The third quarter reported earnings figures included the
following items of note:
- Amortization of intangibles of $62
million after tax (3 cents per
share), compared with $60 million
after tax (3 cents per share) in the
third quarter a year ago.
- Recovery of litigation losses of $24
million after tax (1 cent per
share) related to certain litigation matters recognized as an item
of note in prior quarters.
- A gain of $19 million after
tax (1 cent per share) due to the
change in fair value of derivatives hedging the reclassified
available-for-sale securities portfolio, compared with a gain of
$24 million after tax (1 cent per share) in the third quarter a year
ago.
TORONTO, Aug. 27, 2015 /CNW/ - TD Bank Group ("TD" or the
"Bank") today announced its financial results for the third quarter
ended July 31, 2015. The Bank recorded adjusted earnings of
$2.3 billion, an increase of 5%
compared with the same quarter last year, reflecting strong
contributions from the Canadian Retail and Wholesale Banking
segments.
"TD's third quarter performance demonstrates the strength of our
diversified business model," said Bharat Masrani, Group President
and Chief Executive Officer. "Our results were fueled by good
organic growth, continued strong credit performance, favourable
currency translation, and positive operating leverage."
Canadian Retail
Canadian Retail delivered net income of $1.6 billion, an increase of 11% over the third
quarter last year on a reported basis, and 8% over the third
quarter last year on an adjusted basis. Earnings were primarily
driven by good loan, deposit, and wealth asset volume growth and
very strong insurance earnings.
"Our Canadian Retail businesses performed very well,"
said Tim Hockey, Group Head,
Canadian Banking and Wealth Management. "We are delighted that
TD Canada Trust was recognized for the tenth consecutive year
by J.D. Power for attaining 'Highest in Customer Satisfaction Among
the Big Five Retail Banks.' Looking ahead, we will continue to
focus on providing legendary customer experiences through all of
our channels."
U.S. Retail
U.S. Retail reported net income for the third quarter
was US$543 million and
adjusted net income was US$524
million. Excluding the Bank's investment in
TD Ameritrade, the segment generated adjusted net income
of US$450 million, in line with
the third quarter last year. The results reflect strong loan and
deposit growth, and disciplined expense management, partially
offset by lower margins and normalizing credit losses.
TD Ameritrade contributed US$74
million in earnings, an increase of 7% compared with
the third quarter last year.
"Our U.S. Retail business had a strong quarter, with very good
volume growth and excellent expense management,"
said Mike Pedersen, Group Head,
U.S. Banking. "Our ongoing focus on customer experience, deepening
relationships, and productivity positions us well going
forward."
Wholesale Banking
Wholesale Banking net income for the quarter was $239 million, an increase of 11% compared with
the third quarter last year, driven by higher trading, mergers and
acquisitions fees, and corporate lending revenue.
"Our results reflected strong trading, good debt capital market
originations activity, and a growing U.S. loan portfolio," said
Bob Dorrance, Group Head, Wholesale
Banking. "We remain focused on growing and strengthening client
relationships and managing our risk."
Capital
TD's Common Equity Tier 1 Capital ratio on a Basel III fully
phased-in basis was 10.1%, compared with 9.9% last quarter.
Conclusion
"Our results this quarter reflect the growth engines, earnings
power and resilience of our businesses against a challenging
operating and economic backdrop," said Masrani. "We remain
relentlessly focused on delivering and pursuing growth
opportunities, increasing our productivity, and adapting our
organization for the future."
The foregoing contains forward-looking statements. Please see
the "Caution Regarding Forward-Looking Statements" on page 3.
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 in
other communications. In addition, representatives of the Bank may
make forward-looking statements orally to analysts, investors, the
media and others. All such statements are made pursuant to the
"safe harbour" provisions of, and are intended to be
forward-looking statements under, applicable Canadian and U.S.
securities legislation, including the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements
include, but are not limited to, statements made in this document,
the Management's Discussion and Analysis ("MD&A") in the Bank's
2014 Annual Report under the heading "Economic Summary and
Outlook", for each business segment under headings "Business
Outlook and Focus for 2015", and in other statements regarding the
Bank's objectives and priorities for 2015 and beyond and strategies
to achieve them, and the Bank's anticipated financial performance.
Forward-looking statements are typically identified by words such
as "will", "should", "believe", "expect", "anticipate", "intend",
"estimate", "plan", "may", and "could".
By their very nature, these forward-looking statements require the
Bank to make assumptions and are subject to inherent risks and
uncertainties, general and specific. Especially in light of the
uncertainty related to the physical, financial, economic,
political, and regulatory environments, such risks and
uncertainties - many of which are beyond the Bank's control and the
effects of which can be difficult to predict - may cause actual
results to differ materially from the expectations expressed in the
forward-looking statements. Risk factors that could cause,
individually or in the aggregate, such differences include: credit,
market (including equity, commodity, foreign exchange, and interest
rate), liquidity, operational (including technology), reputational,
insurance, strategic, regulatory, legal, environmental, capital
adequacy, and other risks. Examples of such risk factors include
the general business and economic conditions in the regions in
which the Bank operates; the ability of the Bank to execute on key
priorities, including to successfully complete acquisitions and
strategic plans and to attract, develop and retain key executives;
disruptions in or attacks (including cyber attacks) on the Bank's
information technology, internet, network access or other voice or
data communications systems or services; the evolution of various
types of fraud or other criminal behaviour to which the Bank is
exposed; the failure of third parties to comply with their
obligations to the Bank or its affiliates, including relating to
the care and control of information; the impact of new and changes
to current laws and regulations; the overall difficult litigation
environment, including in the U.S.; increased competition,
including through internet and mobile banking; changes to the
Bank's credit ratings; changes in currency and interest rates;
increased funding costs and market volatility due to market
illiquidity and competition for funding; changes to accounting
standards, policies and methods used by the Bank; existing and
potential international debt crises; and the occurrence of natural
and unnatural catastrophic events and claims resulting from such
events. The Bank cautions that the preceding list is not exhaustive
of all possible risk factors and other factors could also adversely
affect the Bank's results. For more detailed information, please
see the "Risk Factors and Management" section of the 2014 MD&A,
as may be updated in subsequently filed quarterly reports to
shareholders and news releases (as applicable) related to any
transactions or events discussed under the heading "Significant
Events" in the relevant MD&A, which applicable releases may be
found on www.td.com. All such factors should be considered
carefully, as well as other uncertainties and potential events, and
the inherent uncertainty of forward-looking statements, when making
decisions with respect to the Bank and the Bank cautions readers
not to place undue reliance on the Bank's forward-looking
statements.
Material economic assumptions underlying the forward-looking
statements contained in this document are set out in the 2014
MD&A under the headings "Economic Summary and Outlook", and for
each business segment, "Business Outlook and Focus for 2015", each
as updated in subsequently filed quarterly reports to
shareholders.
Any forward-looking statements contained in this document represent
the views of management only as of the date hereof and are
presented for the purpose of assisting the Bank's shareholders and
analysts in understanding the Bank's financial position, objectives
and priorities and anticipated financial performance as at and for
the periods ended on the dates presented, and may not be
appropriate for other purposes. The Bank does not undertake to
update any forward-looking statements, whether written or oral,
that may be made from time to time by or on its behalf, except as
required under applicable securities legislation. |
This document was reviewed by the Bank's Audit Committee and
was approved by the Bank's Board of Directors, on the Audit
Committee's recommendation, prior to its release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 1: FINANCIAL
HIGHLIGHTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars, except
as noted) |
|
As at or for the three months ended |
|
As at or for the nine months ended |
|
|
|
July 31 |
|
|
April 30 |
|
|
July 31 |
|
|
July 31 |
|
|
July 31 |
|
|
|
2015 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Results of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
$ |
8,006 |
|
$ |
7,759 |
|
$ |
7,509 |
|
$ |
23,379 |
|
$ |
22,509 |
|
Provision for credit losses (PCL) |
|
437 |
|
|
375 |
|
|
338 |
|
|
1,174 |
|
|
1,186 |
|
Insurance claims and related
expenses |
|
600 |
|
|
564 |
|
|
771 |
|
|
1,863 |
|
|
2,113 |
|
Non-interest expenses |
|
4,292 |
|
|
4,705 |
|
|
4,040 |
|
|
13,162 |
|
|
12,165 |
|
Net income - reported |
|
2,266 |
|
|
1,859 |
|
|
2,107 |
|
|
6,185 |
|
|
6,137 |
|
Net income -
adjusted1 |
|
2,285 |
|
|
2,169 |
|
|
2,167 |
|
|
6,577 |
|
|
6,265 |
|
Return on common equity -
reported |
|
14.9 |
% |
|
12.8 |
% |
|
16.3 |
% |
|
14.2 |
% |
|
16.3 |
% |
Return on common equity -
adjusted2 |
|
15.0 |
|
|
15.0 |
|
|
16.8 |
|
|
15.1 |
|
|
16.6 |
|
Financial position |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
1,099,202 |
|
$ |
1,030,954 |
|
$ |
939,680 |
|
$ |
1,099,202 |
|
$ |
939,680 |
|
Total equity |
|
65,965 |
|
|
61,597 |
|
|
54,755 |
|
|
65,965 |
|
|
54,755 |
|
Total Common Equity Tier 1 (CET1)
Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
risk-weighted assets
(RWA)3,4 |
|
369,495 |
|
|
343,596 |
|
|
316,716 |
|
|
369,495 |
|
|
316,716 |
|
Financial ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio - reported |
|
53.6 |
% |
|
60.6 |
% |
|
53.8 |
% |
|
56.3 |
% |
|
54.0 |
% |
Efficiency ratio -
adjusted1 |
|
53.4 |
|
|
54.8 |
|
|
52.3 |
|
|
54.0 |
|
|
52.5 |
|
Common Equity Tier 1 Capital
ratio3 |
|
10.1 |
|
|
9.9 |
|
|
9.3 |
|
|
10.1 |
|
|
9.3 |
|
Tier 1 Capital
ratio3 |
|
11.5 |
|
|
11.5 |
|
|
11.0 |
|
|
11.5 |
|
|
11.0 |
|
Provision for credit losses as a % of
net average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
loans and
acceptances5 |
|
0.33 |
|
|
0.32 |
|
|
0.28 |
|
|
0.31 |
|
|
0.34 |
|
Common share information - reported
(dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.20 |
|
$ |
0.98 |
|
$ |
1.12 |
|
$ |
3.26 |
|
$ |
3.23 |
|
|
Diluted |
|
1.19 |
|
|
0.97 |
|
|
1.11 |
|
|
3.25 |
|
|
3.22 |
|
Dividends per share |
|
0.51 |
|
|
0.51 |
|
|
0.47 |
|
|
1.49 |
|
|
1.37 |
|
Book value per share |
|
33.25 |
|
|
30.90 |
|
|
27.48 |
|
|
33.25 |
|
|
27.48 |
|
Closing share price |
|
52.77 |
|
|
55.70 |
|
|
57.02 |
|
|
52.77 |
|
|
57.02 |
|
Shares outstanding (millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average basic |
|
1,851.1 |
|
|
1,848.3 |
|
|
1,840.2 |
|
|
1,847.9 |
|
|
1,838.1 |
|
|
Average diluted |
|
1,855.7 |
|
|
1,853.4 |
|
|
1,846.5 |
|
|
1,853.0 |
|
|
1,844.3 |
|
|
End of period |
|
1,853.6 |
|
|
1,851.6 |
|
|
1,841.6 |
|
|
1,853.6 |
|
|
1,841.6 |
|
Market capitalization (billions of
Canadian dollars) |
$ |
97.8 |
|
$ |
103.1 |
|
$ |
105.0 |
|
$ |
97.8 |
|
$ |
105.0 |
|
Dividend yield |
|
3.7 |
% |
|
3.6 |
% |
|
3.3 |
% |
|
3.6 |
% |
|
3.4 |
% |
Dividend payout ratio |
|
42.7 |
|
|
52.2 |
|
|
42.0 |
|
|
45.7 |
|
|
42.3 |
|
Price-earnings ratio |
|
12.7 |
|
|
13.7 |
|
|
14.0 |
|
|
12.7 |
|
|
14.0 |
|
Common share
information - adjusted (dollars)1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.21 |
|
$ |
1.15 |
|
$ |
1.15 |
|
$ |
3.47 |
|
$ |
3.30 |
|
|
Diluted |
|
1.20 |
|
|
1.14 |
|
|
1.15 |
|
|
3.47 |
|
|
3.29 |
|
Dividend payout ratio |
|
42.3 |
% |
|
44.5 |
% |
|
40.9 |
% |
|
42.9 |
% |
|
41.5 |
% |
Price-earnings ratio |
|
11.9 |
|
|
12.7 |
|
|
13.4 |
|
|
11.9 |
|
|
13.4 |
|
|
|
1 |
Adjusted measures are non-GAAP measures. Refer to the "How the
Bank Reports" section of this document for an explanation of
reported and adjusted results. |
2 |
Adjusted return on common equity is a non-GAAP financial
measure. Refer to the "Return on Common Equity" section of this
document for an explanation. |
3 |
Prior to the first quarter of 2015, amounts have not been
adjusted to reflect the impact of the 2015 IFRS Standards and
Amendments. |
4 |
Effective the third quarter of 2014, each capital ratio has its
own RWA measure due to the Office of the Superintendent of
Financial Institutions Canada (OSFI) prescribed scalar for
inclusion of the Credit Valuation Adjustment (CVA). For the third
and fourth quarter of 2014, the scalars for inclusion of CVA for
CET1, Tier 1, and Total Capital RWA were 57%, 65%, and 77%,
respectively. For fiscal 2015, the scalars are 64%, 71%, and 77%,
respectively. |
5 |
Excludes acquired credit-impaired (ACI) loans and debt
securities classified as loans. For additional information on ACI
loans, see the "Credit Portfolio Quality" section of the MD&A
and Note 5 to the Interim Consolidated Financial Statements. For
additional information on debt securities classified as loans, see
the "Exposure to Non-Agency Collateralized Mortgage Obligations"
discussion and tables in the "Credit Portfolio Quality" section of
the MD&A and Note 5 to the Interim Consolidated Financial
Statements. |
|
|
HOW WE PERFORMED
How the Bank Reports
The Bank prepares its Interim Consolidated Financial Statements in
accordance with IFRS, the current GAAP, and refers to results
prepared in accordance with IFRS as "reported" results. The Bank
also utilizes non-GAAP financial measures to arrive at "adjusted"
results to assess each of its businesses and to measure the overall
Bank performance. To arrive at adjusted results, the Bank removes
"items of note", net of income taxes, from reported results. The
items of note relate to items which management does not believe are
indicative of underlying business performance. The Bank believes
that adjusted results provide the reader with a better
understanding of how management views the Bank's performance. The
items of note are disclosed on Table 3. As explained, adjusted
results are different from reported results determined in
accordance with IFRS. Adjusted results, items of note, and related
terms used in this document are not defined terms under IFRS and,
therefore, may not be comparable to similar terms used by other
issuers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 2: OPERATING RESULTS - Reported |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars) |
|
|
For the
three months ended |
|
For the nine months ended |
|
|
|
|
|
July 31 |
|
|
April 30 |
|
|
July 31 |
|
|
July 31 |
|
July 31 |
|
|
|
|
|
2015 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
2014 |
|
Net interest income |
|
|
$ |
4,697 |
|
$ |
4,580 |
|
$ |
4,435 |
|
$ |
13,837 |
$ |
13,127 |
|
Non-interest income |
|
|
|
3,309 |
|
|
3,179 |
|
|
3,074 |
|
|
9,542 |
|
9,382 |
|
Total revenue |
|
|
|
8,006 |
|
|
7,759 |
|
|
7,509 |
|
|
23,379 |
|
22,509 |
|
Provision for credit losses |
|
|
|
437 |
|
|
375 |
|
|
338 |
|
|
1,174 |
|
1,186 |
|
Insurance claims and related expenses |
|
|
|
600 |
|
|
564 |
|
|
771 |
|
|
1,863 |
|
2,113 |
|
Non-interest expenses |
|
|
|
4,292 |
|
|
4,705 |
|
|
4,040 |
|
|
13,162 |
|
12,165 |
|
Income before income taxes and equity in net
income of an |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment in associate |
|
|
|
2,677 |
|
|
2,115 |
|
|
2,360 |
|
|
7,180 |
|
7,045 |
|
Provision for income taxes |
|
|
|
502 |
|
|
344 |
|
|
330 |
|
|
1,264 |
|
1,142 |
|
Equity in net income of an investment in
associate, net of income taxes |
|
|
|
91 |
|
|
88 |
|
|
77 |
|
|
269 |
|
234 |
|
Net income - reported |
|
|
|
2,266 |
|
|
1,859 |
|
|
2,107 |
|
|
6,185 |
|
6,137 |
|
Preferred dividends |
|
|
|
25 |
|
|
24 |
|
|
25 |
|
|
73 |
|
111 |
|
Net income available to common shareholders and
non-controlling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests in subsidiaries |
|
|
$ |
2,241 |
|
$ |
1,835 |
|
$ |
2,082 |
|
$ |
6,112 |
$ |
6,026 |
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests |
|
|
$ |
28 |
|
$ |
28 |
|
$ |
27 |
|
$ |
83 |
$ |
80 |
|
Common shareholders |
|
|
|
2,213 |
|
|
1,807 |
|
|
2,055 |
|
|
6,029 |
|
5,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation between the Bank's
adjusted and reported results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 3: NON-GAAP
FINANCIAL MEASURES - Reconciliation of Adjusted to Reported Net
Income |
|
(millions of Canadian dollars) |
|
For the three months ended |
|
For the nine months ended |
|
|
|
|
July
31 |
|
|
April
30 |
|
|
July
31 |
|
|
July
31 |
|
July
31 |
|
|
|
|
2015 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
2014 |
|
Operating results - adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
4,697 |
|
$ |
4,580 |
|
$ |
4,435 |
|
$ |
13,837 |
$ |
13,127 |
|
Non-interest income1 |
|
|
3,288 |
|
|
3,162 |
|
|
3,047 |
|
|
9,504 |
|
9,102 |
|
Total revenue |
|
|
7,985 |
|
|
7,742 |
|
|
7,482 |
|
|
23,341 |
|
22,229 |
|
Provision for credit losses2 |
|
|
437 |
|
|
375 |
|
|
363 |
|
|
1,174 |
|
1,211 |
|
Insurance claims and related expenses |
|
|
600 |
|
|
564 |
|
|
771 |
|
|
1,863 |
|
2,113 |
|
Non-interest expenses3 |
|
|
4,261 |
|
|
4,243 |
|
|
3,912 |
|
|
12,596 |
|
11,675 |
|
Income before income taxes and equity in net
income of an investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in associate |
|
|
2,687 |
|
|
2,560 |
|
|
2,436 |
|
|
7,708 |
|
7,230 |
|
Provision for income taxes4 |
|
|
508 |
|
|
495 |
|
|
359 |
|
|
1,445 |
|
1,239 |
|
Equity in net income of an investment in
associate, net of income taxes5 |
|
|
106 |
|
|
104 |
|
|
90 |
|
|
314 |
|
274 |
|
Net income - adjusted |
|
|
2,285 |
|
|
2,169 |
|
|
2,167 |
|
|
6,577 |
|
6,265 |
|
Preferred dividends |
|
|
25 |
|
|
24 |
|
|
25 |
|
|
73 |
|
111 |
|
Net income available to common shareholders
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling interests in
subsidiaries - adjusted |
|
|
2,260 |
|
|
2,145 |
|
|
2,142 |
|
|
6,504 |
|
6,154 |
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests in subsidiaries, net of
income taxes |
|
|
28 |
|
|
28 |
|
|
27 |
|
|
83 |
|
80 |
|
Net income available to common shareholders -
adjusted |
|
|
2,232 |
|
|
2,117 |
|
|
2,115 |
|
|
6,421 |
|
6,074 |
|
Adjustments for items of note, net of income
taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles6 |
|
|
(62) |
|
|
(65) |
|
|
(60) |
|
|
(190) |
|
(184) |
|
Litigation and litigation-related
charge/reserve7 |
|
|
24 |
|
|
(32) |
|
|
- |
|
|
(8) |
|
- |
|
Fair value of derivatives hedging the reclassified
available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities portfolio8 |
|
|
19 |
|
|
15 |
|
|
24 |
|
|
34 |
|
43 |
|
Restructuring charges9 |
|
|
- |
|
|
(228) |
|
|
- |
|
|
(228) |
|
- |
|
Integration charges and direct transaction costs
relating to the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition of the credit card portfolio of
MBNA Canada10 |
|
|
- |
|
|
- |
|
|
(27) |
|
|
- |
|
(71) |
|
Set-up, conversion and other
one-time costs related to affinity relationship |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with Aimia and acquisition of Aeroplan Visa
credit card accounts11 |
|
|
- |
|
|
- |
|
|
(16) |
|
|
- |
|
(131) |
|
Impact of Alberta flood on the loan
portfolio12 |
|
|
- |
|
|
- |
|
|
19 |
|
|
- |
|
19 |
|
Gain on sale of TD Waterhouse Institutional
Services13 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
196 |
|
Total adjustments for items of note |
|
|
(19) |
|
|
(310) |
|
|
(60) |
|
|
(392) |
|
(128) |
|
Net income available to common shareholders -
reported |
|
$ |
2,213 |
|
$ |
1,807 |
|
$ |
2,055 |
|
$ |
6,029 |
$ |
5,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Adjusted non-interest income excludes
the following items of note: third quarter 2015 - $21
million gain due to change in fair value of derivatives hedging the
reclassified available‑for‑sale (AFS) securities portfolio, as
explained in footnote 8; second quarter 2015 - $17 million
gain due to change in fair value of derivatives hedging the
reclassified AFS securities portfolio; third quarter 2014 -
$27 million gain due to change in fair value of derivatives hedging
the reclassified AFS securities portfolio; first quarter
2014 - $22 million gain due to change in fair value of
derivatives hedging the reclassified AFS securities portfolio; $231
million gain due to the sale of TD Waterhouse Institutional
Services, as explained in footnote 13. |
2 |
Adjusted provision for credit losses
(PCL) excludes the following items of note: third quarter
2014 - $25 million release of the provision for the impact of
the Alberta flood on the loan portfolio, as explained in footnote
12. |
3 |
Adjusted non-interest expenses
excludes the following items of note: third quarter 2015 -
$70 million amortization of intangibles, as explained in footnote
6; $39 million recovery of litigation losses, as explained in
footnote 7; second quarter 2015 - $73 million amortization
of intangibles; $337 million due to the initiatives to reduce
costs; $52 million of litigation charges; first quarter 2015
- $73 million amortization of intangibles; third quarter
2014 - $70 million amortization of intangibles; $36 million of
integration charges relating to the acquisition of the credit card
portfolio of MBNA Canada, as explained in footnote 10; $22 million
of costs in relation to the affinity relationship with Aimia and
acquisition of Aeroplan Visa credit card accounts, as explained in
footnote 11; second quarter 2014 - $75 million amortization
of intangibles; $32 million of integration charges relating to the
acquisition of the credit card portfolio of MBNA Canada; first
quarter 2014 - $71 million amortization of intangibles; $28
million of integration charges relating to the acquisition of the
credit card portfolio of MBNA Canada; $156 million of costs in
relation to the affinity relationship with Aimia and acquisition of
Aeroplan Visa credit card accounts. |
4 |
For reconciliation between reported
and adjusted provision for income taxes, see the "Non-GAAP
Financial Measures - Reconciliation of Reported to Adjusted
Provision for Income Taxes" table in the "Income Taxes" section of
the MD&A. |
5 |
Adjusted equity in net income of an
investment in associate excludes the following items of note:
third quarter 2015 - $15 million amortization of
intangibles, as explained in footnote 6; second quarter 2015
- $16 million amortization of intangibles; first quarter
2015 - $14 million amortization of intangibles; third
quarter 2014 - $13 million amortization of intangibles;
second quarter 2014 - $13 million amortization of
intangibles; first quarter 2014 - $14 million amortization
of intangibles. |
6 |
Amortization of intangibles relate to
intangibles acquired as a result of asset acquisitions and business
combinations. Although the amortization of software and asset
servicing rights are recorded in amortization of intangibles, they
are not included for purposes of the items of note. |
7 |
As a result of an adverse judgment
and evaluation of certain other developments and exposures in the
U.S. in 2015, the Bank took prudent steps to reassess its
litigation provision. Having considered these factors, including
related or analogous cases, the Bank determined, in accordance with
applicable accounting standards, that an increase of $52 million
($32 million after tax) to the Bank's litigation provision was
required in the second quarter of 2015. During the third quarter of
2015, distributions of $39 million ($24 million after tax) were
received by the Bank as a result of previous settlements reached on
certain matters in the U.S., whereby the Bank was assigned the
right to these distributions, if and when made available. The
amount in the third quarter of 2015 reflects this recovery of
previous settlements. |
8 |
During 2008, the Bank changed its
trading strategy with respect to certain trading debt securities
and reclassified these securities from trading to the
available-for-sale category effective August 1, 2008.
These debt securities are economically hedged, primarily with
credit default swap and interest rate swap contracts which are
recorded on a fair value basis with changes in fair value recorded
in the period's earnings. Management believes that this asymmetry
in the accounting treatment between derivatives and the
reclassified debt securities results in volatility in earnings from
period to period that is not indicative of the economics of the
underlying business performance in Wholesale Banking. The Bank may
from time to time replace securities within the portfolio to best
utilize the initial, matched fixed term funding. As a result, the
derivatives are accounted for on an accrual basis in Wholesale
Banking and the gains and losses related to the derivatives in
excess of the accrued amounts are reported in the Corporate
segment. Adjusted results of the Bank exclude the gains and losses
of the derivatives in excess of the accrued amount. |
9 |
The Bank recorded $337 million ($228
million after tax) of restructuring charges in the second quarter
of 2015, to reduce costs and manage expenses in a sustainable
manner and to achieve greater operational efficiencies. These
measures include process redesign and business restructuring,
retail branch and real estate optimization, and organizational
review. These restructuring charges have been recorded as an
adjustment to net income within the Corporate segment. |
10 |
As a result of the acquisition of the
credit card portfolio of MBNA Canada, as well as certain other
assets and liabilities, the Bank incurred integration charges.
Integration charges consist of costs related to information
technology, employee retention, external professional consulting
charges, marketing (including customer communication and
rebranding), integration-related travel, employee severance costs,
consulting, and training. The Bank's integration charges related to
the MBNA acquisition were higher than what were anticipated when
the transaction was first announced. The elevated spending was
primarily due to additional costs incurred (other than the amounts
capitalized) to build out technology platforms for the business.
Integration charges related to this acquisition were incurred by
the Canadian Retail segment. The fourth quarter of 2014 was the
last quarter Canadian Retail included any further MBNA-related
integration charges as an item of note. |
11 |
On December 27, 2013, the Bank
acquired approximately 50% of the existing Aeroplan credit card
portfolio from the Canadian Imperial Bank of Commerce (CIBC) and on
January 1, 2014, the Bank became the primary issuer of
Aeroplan Visa credit cards. The Bank incurred program set-up,
conversion, and other one-time costs related to the acquisition of
the portfolio and related affinity agreement, consisting of
information technology, external professional consulting,
marketing, training, and program management, as well as a
commercial subsidy payment of $127 million ($94 million after tax)
payable to CIBC. These costs were included as an item of note in
the Canadian Retail segment. The third quarter of 2014 was the last
quarter Canadian Retail included any set-up, conversion, or other
one-time costs related to the acquired Aeroplan credit card
portfolio as an item of note. |
12 |
In the third quarter of 2013, the
Bank recorded a provision for credit losses of $65 million ($48
million after tax) for residential loan losses from Alberta
flooding. In the fourth quarter of 2013, a provision of $40 million
($29 million after tax) was released. In the third quarter of 2014,
the Bank released the remaining provision of $25 million ($19
million after tax). The release of the remaining provision reflects
low levels of delinquency and impairments to date, as well as a low
likelihood of future material losses within the portfolio. |
13 |
On November 12, 2013, TD Waterhouse
Canada Inc., a subsidiary of the Bank, completed the sale of the
Bank's institutional services business, known as TD Waterhouse
Institutional Services, to a subsidiary of National Bank of Canada.
The transaction price was $250 million in cash, subject to certain
price adjustment mechanisms which were settled in the third and
fourth quarters of 2014. On the transaction date, a gain of $196
million after tax was recorded in the Corporate segment in other
income. The gain is not considered to be in the normal course of
business for the Bank. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 4:
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE
(EPS)1 |
|
(Canadian dollars) |
|
|
|
|
|
For the
three months ended |
|
For the nine months ended |
|
|
|
|
|
|
|
|
July
31 |
|
|
April
30 |
|
|
July 31 |
|
|
July 31 |
|
July 31 |
|
|
|
|
|
|
|
|
2015 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
2014 |
|
Basic earnings per share - reported |
|
|
|
|
|
$ |
1.20 |
|
$ |
0.98 |
|
$ |
1.12 |
|
$ |
3.26 |
$ |
3.23 |
|
Adjustments for items of
note2 |
|
|
|
|
|
|
0.01 |
|
|
0.17 |
|
|
0.03 |
|
|
0.21 |
|
0.07 |
|
Basic earnings per share - adjusted |
|
|
|
|
|
$ |
1.21 |
|
$ |
1.15 |
|
$ |
1.15 |
|
$ |
3.47 |
$ |
3.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share -
reported |
|
|
|
|
|
$ |
1.19 |
|
$ |
0.97 |
|
$ |
1.11 |
|
$ |
3.25 |
$ |
3.22 |
|
Adjustments for items of
note2 |
|
|
|
|
|
|
0.01 |
|
|
0.17 |
|
|
0.04 |
|
|
0.22 |
|
0.07 |
|
Diluted earnings per share -
adjusted |
|
|
|
|
|
$ |
1.20 |
|
$ |
1.14 |
|
$ |
1.15 |
|
$ |
3.47 |
$ |
3.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
EPS is computed by dividing net income available to common
shareholders by the weighted-average number of shares outstanding
during the period. |
2 |
For explanations of items of note, see the "Non-GAAP Financial
Measures - Reconciliation of Adjusted to Reported Net Income" table
in the "How We Performed" section of this document. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 5: NON-GAAP
FINANCIAL MEASURES - Reconciliation of Reported to Adjusted
Provision for Income Taxes |
|
(millions of Canadian dollars, except as
noted) |
|
For the three months ended |
|
For the nine months ended |
|
|
|
|
July
31 |
|
|
|
April
30 |
|
|
|
July
31 |
|
|
July
31 |
|
|
July
31 |
|
|
|
|
2015 |
|
|
|
2015 |
|
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Provision for income taxes - reported |
|
$ |
502 |
|
|
$ |
344 |
|
|
$ |
330 |
|
$ |
1,264 |
|
$ |
1,142 |
|
Adjustments for items of note: Recovery of
(provision for) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes1,2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles |
|
|
23 |
|
|
|
24 |
|
|
|
23 |
|
|
71 |
|
|
72 |
|
Litigation and litigation-related
charge/reserve |
|
|
(15) |
|
|
|
20 |
|
|
|
- |
|
|
5 |
|
|
- |
|
Fair value of derivatives hedging the reclassified
available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities portfolio |
|
|
(2) |
|
|
|
(2) |
|
|
|
(3) |
|
|
(4) |
|
|
(6) |
|
Restructuring charges |
|
|
- |
|
|
|
109 |
|
|
|
- |
|
|
109 |
|
|
- |
|
Integration charges relating to the acquisition of
the credit card portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of MBNA Canada |
|
|
- |
|
|
|
- |
|
|
|
9 |
|
|
- |
|
|
25 |
|
Set-up, conversion and other
one-time costs related to affinity relationship |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with Aimia and acquisition of Aeroplan Visa
credit card accounts |
|
|
- |
|
|
|
- |
|
|
|
6 |
|
|
- |
|
|
47 |
|
Impact of Alberta flood on the loan portfolio |
|
|
- |
|
|
|
- |
|
|
|
(6) |
|
|
- |
|
|
(6) |
|
Gain on sale of TD Waterhouse Institutional
Services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
(35) |
|
Total adjustments for items of note |
|
|
6 |
|
|
|
151 |
|
|
|
29 |
|
|
181 |
|
|
97 |
|
Provision for income taxes - adjusted |
|
$ |
508 |
|
|
$ |
495 |
|
|
$ |
359 |
|
$ |
1,445 |
|
$ |
1,239 |
|
Effective income tax rate -
adjusted3 |
|
|
18.9 |
% |
|
|
19.3 |
% |
|
|
14.7 |
% |
|
18.7 |
% |
|
17.1 |
% |
1 |
For explanations of items of note,
see the "Non-GAAP Financial Measures - Reconciliation of Adjusted
to Reported Net Income" table in the "How We Performed" section of
this document. |
2 |
The tax effect for each item of note
is calculated using the effective statutory income tax rate of the
applicable legal entity. |
3 |
Adjusted effective income tax rate is
the adjusted provision for income taxes before other taxes as a
percentage of adjusted net income before taxes. |
Return on Common Equity
The Bank's methodology for allocating capital to its business
segments is aligned with the common equity capital requirements
under Basel III. Beginning November 1,
2014, capital allocated to the business segments is based on
9% Common Equity Tier 1 (CET1) Capital.
Adjusted return on common equity (ROE) is adjusted net income
available to common shareholders as a percentage of average common
equity.
Adjusted ROE is a non-GAAP financial measure as it is not a
defined term under IFRS. Readers are cautioned that earnings and
other measures adjusted to a basis other than IFRS do not have
standardized meanings under IFRS and, therefore, may not be
comparable to similar terms used by other issuers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 6: RETURN ON COMMON
EQUITY |
|
(millions of Canadian dollars, except as
noted) |
|
|
For the three months ended |
|
For the nine months ended |
|
|
|
|
|
July 31 |
|
|
|
April 30 |
|
|
|
July 31 |
|
|
July 31 |
|
|
July 31 |
|
|
|
|
|
2015 |
|
|
|
2015 |
|
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Average common equity |
|
|
$ |
58,891 |
|
|
$ |
57,744 |
|
|
$ |
49,897 |
|
$ |
56,932 |
|
$ |
48,902 |
|
Net income available to common shareholders -
reported |
|
|
|
2,213 |
|
|
|
1,807 |
|
|
|
2,055 |
|
|
6,029 |
|
|
5,946 |
|
Items of note, net of income
taxes1 |
|
|
|
19 |
|
|
|
310 |
|
|
|
60 |
|
|
392 |
|
|
128 |
|
Net income available to common shareholders -
adjusted |
|
|
|
2,232 |
|
|
|
2,117 |
|
|
|
2,115 |
|
|
6,421 |
|
|
6,074 |
|
Return on common equity - adjusted |
|
|
|
15.0 |
% |
|
|
15.0 |
% |
|
|
16.8 |
% |
|
15.1 |
% |
|
16.6 |
% |
|
|
1 |
For explanations of items of note, see the
"Non-GAAP Financial Measures - Reconciliation of Adjusted to
Reported Net Income" table
in the "How We Performed" section of this document. |
|
|
SIGNIFICANT EVENTS IN 2015
Restructuring Charges
The Bank undertook certain measures in the second quarter of 2015,
to reduce costs and manage expenses in a sustainable manner and to
achieve greater operational efficiencies. In connection with these
measures, the Bank recorded restructuring charges of $337 million ($228
million after tax) related to process redesign and business
restructuring, retail branch and real estate optimization, and
organizational review. This phase focused mainly on activities in
the United States and some
functions in Canada. The Bank
expects to complete its restructuring measures by the end of the
year.
Agreement with Nordstrom, Inc.
On May 26, 2015, the Bank and
Nordstrom, Inc. (Nordstrom) announced an agreement under which the
Bank will acquire substantially all of Nordstrom's existing U.S.
Visa and private label consumer credit card portfolio, which
currently totals approximately US$2.2
billion in receivables. In addition, the Bank and Nordstrom
entered into a long-term agreement under which the Bank will become
the exclusive U.S. issuer of Nordstrom-branded Visa and private
label consumer credit cards to Nordstrom customers. Subject to
regulatory approvals and other customary conditions, this
transaction is expected to close in the second half of
calendar 2015.
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank reports its results
under three key business segments: Canadian Retail, which includes
the results of the Canadian personal and commercial banking
businesses, Canadian credit cards, TD Auto Finance Canada, and
Canadian wealth and insurance businesses; U.S. Retail, which
includes the results of the U.S. personal and commercial banking
businesses, U.S. credit cards, TD Auto Finance U.S., U.S. wealth
business, and the Bank's investment in TD Ameritrade; and Wholesale
Banking. The Bank's other activities are grouped into the Corporate
segment.
Effective December 27, 2013, and
January 1, 2014, the results of the
acquired Aeroplan credit card portfolio and the results of the
related affinity relationship with Aimia Inc. (collectively,
"Aeroplan") are reported in the Canadian Retail segment.
Results of each business segment reflect revenue, expenses,
assets, and liabilities generated by the businesses in that
segment. The Bank measures and evaluates the performance of each
segment based on adjusted results where applicable, and for those
segments the Bank indicates that the measure is adjusted. Net
income for the operating business segments is presented before any
items of note not attributed to the operating segments. For further
details, see the "How the Bank Reports" section of this document,
the "Business Focus" section in the 2014 MD&A, and Note 31 to
the Bank's 2014 Consolidated Financial Statements for the year
ended October 31, 2014. For
information concerning the Bank's measure of adjusted return on
average common equity, which is a non-GAAP financial measure, see
the "How We Performed" section of this document.
Net interest income within Wholesale Banking is calculated on a
taxable equivalent basis (TEB), which means that the value of
non-taxable or tax-exempt income, including dividends, is adjusted
to its equivalent before-tax value. Using TEB allows the Bank to
measure income from all securities and loans consistently and makes
for a more meaningful comparison of net interest income with
similar institutions. The TEB increase to net interest income and
provision for income taxes reflected in Wholesale Banking results
are reversed in the Corporate segment. The TEB adjustment for the
quarter was $91 million, compared
with $131 million in the third
quarter last year, and $91 million in
the prior quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 7: CANADIAN RETAIL |
|
(millions of Canadian dollars, except as
noted) |
|
For the
three months ended |
|
For the nine months ended |
|
|
|
|
July 31 |
|
|
|
April 30 |
|
|
|
July 31 |
|
|
July 31 |
|
|
July 31 |
|
|
|
|
2015 |
|
|
|
2015 |
|
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Net interest income |
|
$ |
2,480 |
|
|
$ |
2,369 |
|
|
$ |
2,436 |
|
$ |
7,284 |
|
$ |
7,103 |
|
Non-interest income |
|
|
2,531 |
|
|
|
2,409 |
|
|
|
2,498 |
|
|
7,404 |
|
|
7,138 |
|
Total revenue |
|
|
5,011 |
|
|
|
4,778 |
|
|
|
4,934 |
|
|
14,688 |
|
|
14,241 |
|
Provision for credit losses |
|
|
237 |
|
|
|
239 |
|
|
|
228 |
|
|
666 |
|
|
696 |
|
Insurance claims and related expenses |
|
|
600 |
|
|
|
564 |
|
|
|
771 |
|
|
1,863 |
|
|
2,113 |
|
Non-interest expenses - reported |
|
|
2,104 |
|
|
|
2,075 |
|
|
|
2,076 |
|
|
6,264 |
|
|
6,214 |
|
Non-interest expenses - adjusted |
|
|
2,104 |
|
|
|
2,075 |
|
|
|
2,018 |
|
|
6,264 |
|
|
5,940 |
|
Net income - reported |
|
|
1,557 |
|
|
|
1,436 |
|
|
|
1,400 |
|
|
4,442 |
|
|
3,930 |
|
Adjustments for items of note, net of income
taxes1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration charges relating to the acquisition of
the credit card portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of MBNA Canada |
|
|
- |
|
|
|
- |
|
|
|
27 |
|
|
- |
|
|
71 |
|
Set-up, conversion and other one-time costs
related to affinity relationship |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with Aimia and acquisition of Aeroplan Visa
credit card accounts |
|
|
- |
|
|
|
- |
|
|
|
16 |
|
|
- |
|
|
131 |
|
Net income - adjusted |
|
$ |
1,557 |
|
|
$ |
1,436 |
|
|
$ |
1,443 |
|
$ |
4,442 |
|
$ |
4,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common equity -
reported2 |
|
|
44.6 |
% |
|
|
42.3 |
% |
|
|
43.4 |
% |
|
42.9 |
% |
|
42.0 |
% |
Return on common equity -
adjusted2 |
|
|
44.6 |
|
|
|
42.3 |
|
|
|
44.7 |
|
|
42.9 |
|
|
44.1 |
|
Margin on average earning assets (including
securitized assets) |
|
|
2.88 |
|
|
|
2.89 |
|
|
|
2.98 |
|
|
2.88 |
|
|
2.96 |
|
Efficiency ratio - reported |
|
|
42.0 |
|
|
|
43.4 |
|
|
|
42.1 |
|
|
42.6 |
|
|
43.6 |
|
Efficiency ratio - adjusted |
|
|
42.0 |
|
|
|
43.4 |
|
|
|
40.9 |
|
|
42.6 |
|
|
41.7 |
|
Number of Canadian retail branches |
|
|
1,166 |
|
|
|
1,165 |
|
|
|
1,164 |
|
|
1,166 |
|
|
1,164 |
|
Average number of full-time equivalent staff |
|
|
39,180 |
|
|
|
39,312 |
|
|
|
39,429 |
|
|
39,365 |
|
|
39,293 |
|
1 |
For explanations of items of note, see the "Non-GAAP Financial
Measures − Reconciliation of Adjusted to Reported Net Income" table
in the "How We Performed" section of this document. |
2 |
Effective November 1, 2014, capital allocated to the business
segments is based on 9% CET1 Capital. These changes have been
applied prospectively. |
Quarterly comparison - Q3 2015 vs. Q3 2014
Canadian Retail net income for the quarter on a reported basis was
$1,557 million, an increase of
$157 million, or 11%, compared with
the third quarter last year. Adjusted net income for the quarter
was $1,557 million, an increase of
$114 million, or 8%, compared with
the third quarter last year. The increase in adjusted earnings was
primarily driven by good loan and deposit volume growth, wealth
asset growth, and higher insurance earnings, partially offset by
higher expenses. The reported and adjusted annualized return on
common equity for the quarter was 44.6%, compared with 43.4% and
44.7%, respectively, in the third quarter last year.
Canadian Retail revenue is derived from the Canadian personal
and commercial banking businesses, including credit cards, auto
finance, wealth, and insurance businesses. Revenue was $5,011 million, an increase of $77 million, or 2%, compared with the third
quarter last year. Net interest income increased $44 million, or 2%, compared with the third
quarter last year, primarily driven by good loan and deposit volume
growth, partially offset by lower margins. Non-interest income
increased $33 million, or 1%, largely
due to wealth asset growth and higher fee-based revenue in personal
and commercial banking, partially offset by a change in mix of
reinsurance contracts and the change in fair value of investments
supporting insurance claims liabilities.
The personal banking business generated good average lending
volume growth of $12.8 billion, or
5%. Average real estate secured lending volume increased
$9.6 billion, or 4%. Auto lending
average volume increased $2.6
billion, or 17%, while all other personal lending average
volumes increased $0.6 billion, or
2%. Business loans and acceptances average volume increased
$4.8 billion, or 9%. Average personal
deposit volumes increased $7.5
billion, or 5%, due to strong growth in core chequing and
savings volumes, partially offset by lower term deposit volume.
Average business deposit volumes increased $5.8 billion, or 7%. Margin on average earning
assets was 2.88%, a 10 basis point (bps) decrease, primarily due to
the low rate environment and competitive pricing.
Assets under administration were $314
billion as at July 31, 2015,
an increase of $29 billion, or 10%,
and assets under management were $249
billion as at July 31, 2015, an increase of
$22 billion, or 10%, compared with
the third quarter of last year, driven primarily by strong new
asset growth and increases in market value.
Provision for credit losses (PCL) for the quarter was
$237 million, an increase of
$9 million, or 4%, compared with the
third quarter last year. Personal banking PCL was $205 million, a decrease of $11 million, or 5%, primarily due to lower
provisions in the credit cards, personal lending, and auto
portfolios. Business banking PCL increased by $20 million, primarily due to provisions against
two commercial clients. Annualized PCL as a percentage of credit
volume was 0.27%, or flat to last year. Net impaired loans were
$706 million, a decrease of
$132 million, or 16%, compared with
the third quarter last year. Net impaired loans as a percentage of
total loans were 0.20%, compared with 0.25% as at July 31, 2014.
Insurance claims and related expenses for the quarter were
$600 million, a decrease of
$171 million, or 22%, compared with
the third quarter last year, primarily due to a change in mix of
reinsurance contracts, lower current year claims costs, more
favourable prior years' claims development, the change in the fair
value of investments supporting claims liabilities, and better
claims management.
Reported non-interest expenses were $2,104 million, an increase of $28 million, or 1%, compared with the third
quarter last year. Adjusted non-interest expenses for the quarter
were $2,104 million, an increase of
$86 million, or 4%. The increase was
driven primarily by higher employee-related costs, including higher
revenue-based variable expenses in the wealth business, and
business growth, partially offset by productivity savings.
The reported and adjusted efficiency ratio for the quarter was
42.0%, compared with 42.1% and 40.9%, respectively, in the third
quarter last year.
Quarterly comparison - Q3 2015 vs. Q2 2015
Canadian Retail net income for the quarter increased $121 million, or 8%, compared with the prior
quarter. The increase in earnings was primarily due to three extra
calendar days in the third quarter and volume growth. The reported
and adjusted annualized return on common equity for the quarter was
44.6%, compared with 42.3% in the prior quarter.
Revenue increased $233 million
compared with the prior quarter. Net interest income increased
$111 million, or 5%, compared with
the prior quarter, primarily due to three extra calendar days in
the third quarter, volume growth and seasonal factors, partially
offset by the prior quarter credit mark release in the acquired
credit card portfolios. Non-interest income increased $122 million, or 5%, due to three extra
calendar days in the third quarter, higher fee-based revenue,
wealth asset growth, and insurance revenue growth. Margin on
average earning assets was 2.88%, or a 1 bps decrease, primarily
due to the impact of a credit mark release in the acquired credit
card portfolios in the prior quarter and the low rate environment,
partially offset by seasonal factors.
The personal banking business average volume growth increased
$4.5 billion, or 2%, compared with
the prior quarter. Average real estate secured lending volume
increased $2.9 billion, or 1%. Auto
lending average volume increased $0.7
billion, or 4%. All other personal lending average volumes
increased $0.9 billion, or 3%,
compared with the prior quarter. Business loans and acceptances
average volumes increased $1.4
billion, or 3%. Average personal deposit volumes increased
$2.1 billion, or 1%, while average
business deposit volumes increased $2.6
billion, or 3%.
Assets under administration were $314
billion as at July 31, 2015,
an increase of $2 billion, or 1%, and
assets under management were $249
billion as at July 31, 2015, an increase of
$5 billion, or 2%, compared with the
prior quarter, driven by strong new asset growth, partially offset
by decreases in market value.
PCL for the quarter decreased $2
million, or 1%, compared with the prior quarter. Personal
banking PCL for the quarter decreased $27
million, or 12%, primarily due to lower provisions in the
credit cards, personal lending, and auto portfolios. Business
banking PCL increased $25 million
primarily due to provisions against two commercial clients.
Annualized PCL as a percentage of credit volume was 0.27%, a
decrease of 2 bps compared with the prior quarter. Net impaired
loans decreased $91 million, or 11%,
compared with the prior quarter. Net impaired loans as a percentage
of total loans were 0.20%, compared with 0.23% as at April 30, 2015.
Insurance claims and related expenses increased $36 million, or 6%, compared with the prior
quarter, primarily due to seasonality of claims experience, the
change in fair value of investments supporting claims liabilities,
and a change in mix of reinsurance contracts, partially offset by
more favourable prior years' claims development.
Reported non-interest expenses increased $29 million, primarily due to three extra
calendar days in the quarter and business growth, partially offset
by lower employee-related costs.
The reported and adjusted efficiency ratio for the quarter was
42.0%, compared with 43.4%, in the prior quarter.
Year-to-date comparison - Q3 2015 vs. Q3 2014
Canadian Retail reported net income for the nine months ended
July 31, 2015, was $4,442 million, an increase of $512 million, or 13%, compared with the same
period last year. Adjusted net income was $4,442 million, an increase of $310 million, or 8%, compared with the same
period last year. The increase in adjusted earnings was primarily
due to loan and deposit volume growth, wealth asset growth, higher
insurance earnings, and the full three quarter impact of Aeroplan,
partially offset by higher expenses. The reported and adjusted
annualized return on common equity was 42.9%, compared with 42.0%
and 44.1%, respectively, in the same period last year.
Revenue was $14,688 million, an
increase of $447 million, or 3%,
compared with the same period last year. Net interest income
increased $181 million, or 3%, driven
primarily by good loan and deposit volume growth and the full three
quarter impact of Aeroplan, partially offset by lower margins.
Non-interest income increased $266 million, or 4%, largely driven by
wealth asset growth, higher personal and business banking fee-based
revenue, insurance revenue growth, and the full three quarter
impact of Aeroplan, partially offset by a change in mix of
reinsurance contracts. Margin on average earning assets was 2.88%,
an 8 bps decrease, primarily due to the low rate environment and
competitive pricing.
The personal banking business generated solid average lending
volume growth of $12.5 billion, or
5%. Compared with the same period last year, average real estate
secured lending volume increased $9.0
billion, or 4%. Auto lending average volume increased
$2.4 billion, or 16%, while all other
personal lending average volumes increased $1.1 billion, or 3%. Business loans and
acceptances average volume increased $4.5
billion, or 9%. Average personal deposit volumes increased
$6.3 billion, or 4%, due to strong
growth in core chequing and savings volumes, partially offset by
lower term deposit volumes. Average business deposit volumes
increased $5.5 billion, or 7%.
Assets under administration were $314
billion as at July 31, 2015,
an increase of $29 billion, or 10%,
and assets under management were $249
billion as at July 31, 2015, an increase of
$22 billion, or 10%, compared with
the same period last year, primarily driven by strong new asset
growth and increases in market value.
PCL was $666 million, a decrease
of $30 million, or 4%, compared with
the same period last year. Personal banking PCL was $627 million, a decrease of $16 million, or 2%, due primarily to a sale
of charged-off accounts and better credit performance, partially
offset by the full three quarter impact of Aeroplan. Business
banking PCL was $39 million, a
decrease of $14 million, compared
with the same period last year, primarily due to higher recoveries.
Annualized PCL as a percentage of credit volume was 0.26%, a
decrease of 3 bps, compared with the same period last year.
Insurance claims and related expenses were $1,863 million, a decrease of $250 million, or 12%, compared with the same
period last year, due to a change in mix of reinsurance contracts,
less severe weather conditions, and better claims management,
partially offset by business growth and the change in fair value of
investments supporting claims liabilities.
Reported non-interest expenses were $6,264 million, an increase of $50 million, or 1%, compared with the same period
last year. Adjusted non-interest expenses were $6,264 million, an increase of $324 million, or 5%, compared with the same
period last year. The increase was driven primarily by higher
employee-related costs, including higher revenue-based variable
expenses in the wealth business, business growth, and initiative
spend, partially offset by productivity savings.
The reported and adjusted efficiency ratio for the quarter was
42.6%, compared with 43.6% and 41.7% respectively, in the same
period last year.
Business Outlook
During the third quarter, TD Canada Trust was recognized as an
industry leader in customer service. We will continue to focus on
maintaining our leadership position in providing legendary customer
service and convenience across all channels. Our commitment to
invest across our businesses to enhance our customer value
proposition positions us well for growth over the long term. We
expect current levels of loan growth to largely hold, while margins
are expected to remain under pressure in the fourth quarter as a
result of balance sheet mix, seasonal factors, and competitive
pricing. Credit loss rates are expected to remain stable. We will
continue to generate new wealth asset growth; however benefits from
market appreciation continue to be subject to capital markets
performance. Insurance results will continue to depend upon, among
other things, the frequency and severity of weather-related events,
as well as the impact of regulatory reforms and legislative
changes. We will continue to focus on productivity, to enhance the
customer and employee experience, simplify processes, and manage
expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 8: U.S. RETAIL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars, except as
noted) |
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
Canadian dollars |
|
|
|
|
|
|
U.S. dollars |
|
|
|
July
31 |
|
April 30 |
|
July 31 |
|
July
31 |
|
April 30 |
|
July 31 |
|
|
|
|
2015 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2015 |
|
|
2014 |
|
Net interest income |
$ |
1,734 |
|
$ |
1,730 |
|
$ |
1,500 |
|
$ |
1,392 |
|
$ |
1,385 |
|
$ |
1,387 |
|
Non-interest income |
|
647 |
|
|
585 |
|
|
545 |
|
|
519 |
|
|
468 |
|
|
504 |
|
Total revenue |
|
2,381 |
|
|
2,315 |
|
|
2,045 |
|
|
1,911 |
|
|
1,853 |
|
|
1,891 |
|
Provision for credit losses -
loans1 |
|
199 |
|
|
142 |
|
|
125 |
|
|
160 |
|
|
113 |
|
|
116 |
|
Provision for
(recovery of) credit losses - debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities classified as
loans |
|
1 |
|
|
(11) |
|
|
2 |
|
|
1 |
|
|
(9) |
|
|
2 |
|
Provision for credit losses |
|
200 |
|
|
131 |
|
|
127 |
|
|
161 |
|
|
104 |
|
|
118 |
|
Non-interest expenses
- reported |
|
1,470 |
|
|
1,579 |
|
|
1,320 |
|
|
1,179 |
|
|
1,265 |
|
|
1,220 |
|
Non-interest expenses
- adjusted |
|
1,509 |
|
|
1,527 |
|
|
1,320 |
|
|
1,209 |
|
|
1,223 |
|
|
1,220 |
|
U.S. Retail Bank net income -
reported2 |
|
582 |
|
|
509 |
|
|
485 |
|
|
469 |
|
|
407 |
|
|
449 |
|
Adjustments for
items of note3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation and litigation-related
charge/reserve |
|
(24) |
|
|
32 |
|
|
- |
|
|
(19) |
|
|
26 |
|
|
- |
|
U.S. Retail Bank net income -
adjusted2 |
|
558 |
|
|
541 |
|
|
485 |
|
|
450 |
|
|
433 |
|
|
449 |
|
Equity in net income
of an investment in associate, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income taxes |
|
92 |
|
|
85 |
|
|
76 |
|
|
74 |
|
|
69 |
|
|
69 |
|
Net income -
adjusted |
|
650 |
|
|
626 |
|
|
561 |
|
|
524 |
|
|
502 |
|
|
518 |
|
Net income -
reported |
$ |
674 |
|
$ |
594 |
|
$ |
561 |
|
$ |
543 |
|
$ |
476 |
|
$ |
518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common equity -
reported4 |
|
8.6 |
% |
|
7.9 |
% |
|
9.0 |
% |
|
8.6 |
% |
|
7.9 |
% |
|
9.0 |
% |
Return on common
equity - adjusted4 |
|
8.3 |
|
|
8.3 |
|
|
9.0 |
|
|
8.3 |
|
|
8.3 |
|
|
9.0 |
|
Margin on average
earning assets (TEB)5 |
|
3.50 |
|
|
3.62 |
|
|
3.76 |
|
|
3.50 |
|
|
3.62 |
|
|
3.76 |
|
Efficiency ratio -
reported |
|
61.7 |
|
|
68.2 |
|
|
64.5 |
|
|
61.7 |
|
|
68.2 |
|
|
64.5 |
|
Efficiency ratio -
adjusted |
|
63.4 |
|
|
66.0 |
|
|
64.5 |
|
|
63.4 |
|
|
66.0 |
|
|
64.5 |
|
Number of U.S. retail
stores |
|
1,305 |
|
|
1,302 |
|
|
1,306 |
|
|
1,305 |
|
|
1,302 |
|
|
1,306 |
|
Average number of
full-time equivalent staff |
|
25,546 |
|
|
25,775 |
|
|
26,056 |
|
|
25,546 |
|
|
25,775 |
|
|
26,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended |
|
|
|
|
|
|
|
|
|
|
Canadian dollars |
|
|
|
U.S.
dollars |
|
|
|
|
|
|
|
|
|
July
31 |
|
July 31 |
|
July
31 |
|
July 31 |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Net interest income |
|
|
|
|
|
|
$ |
5,106 |
|
$ |
4,485 |
|
$ |
4,185 |
|
$ |
4,133 |
|
Non-interest income |
|
|
|
|
|
|
|
1,814 |
|
|
1,713 |
|
|
1,486 |
|
|
1,579 |
|
Total revenue |
|
|
|
|
|
|
|
6,920 |
|
|
6,198 |
|
|
5,671 |
|
|
5,712 |
|
Provision for credit losses -
loans1 |
|
|
|
|
|
|
|
517 |
|
|
531 |
|
|
426 |
|
|
490 |
|
Provision for (recovery of) credit
losses - debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities classified as loans |
|
|
|
|
|
|
|
(9) |
|
|
6 |
|
|
(7) |
|
|
6 |
|
Provision for credit losses |
|
|
|
|
|
|
|
508 |
|
|
537 |
|
|
419 |
|
|
496 |
|
Non-interest expenses - reported |
|
|
|
|
|
|
|
4,440 |
|
|
3,971 |
|
|
3,637 |
|
|
3,658 |
|
Non-interest expenses - adjusted |
|
|
|
|
|
|
|
4,427 |
|
|
3,971 |
|
|
3,625 |
|
|
3,658 |
|
U.S. Retail Bank net income -
reported2 |
|
|
|
|
|
|
|
1,626 |
|
|
1,379 |
|
|
1,333 |
|
|
1,272 |
|
Adjustments for items of
note3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation and litigation-related
charge/reserve |
|
|
|
|
|
|
|
8 |
|
|
- |
|
|
7 |
|
|
- |
|
U.S. Retail Bank net income -
adjusted2 |
|
|
|
|
|
|
|
1,634 |
|
|
1,379 |
|
|
1,340 |
|
|
1,272 |
|
Equity in net income
of an investment in associate, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income taxes |
|
|
|
|
|
|
|
267 |
|
|
222 |
|
|
222 |
|
|
204 |
|
Net income - adjusted |
|
|
|
|
|
|
|
1,901 |
|
|
1,601 |
|
|
1,562 |
|
|
1,476 |
|
Net income - reported |
|
|
|
|
|
|
$ |
1,893 |
|
$ |
1,601 |
|
$ |
1,555 |
|
$ |
1,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common equity -
reported4 |
|
|
|
|
|
|
|
8.3 |
% |
|
8.7 |
% |
|
8.3 |
% |
|
8.7 |
% |
Return on common equity -
adjusted4 |
|
|
|
|
|
|
|
8.4 |
|
|
8.7 |
|
|
8.4 |
|
|
8.7 |
|
Margin on average earning assets
(TEB)5 |
|
|
|
|
|
|
|
3.61 |
|
|
3.78 |
|
|
3.61 |
|
|
3.78 |
|
Efficiency ratio - reported |
|
|
|
|
|
|
|
64.2 |
|
|
64.1 |
|
|
64.2 |
|
|
64.1 |
|
Efficiency ratio - adjusted |
|
|
|
|
|
|
|
64.0 |
|
|
64.1 |
|
|
64.0 |
|
|
64.1 |
|
Number of U.S. retail stores |
|
|
|
|
|
|
|
1,305 |
|
|
1,306 |
|
|
1,305 |
|
|
1,306 |
|
Average number of full-time equivalent
staff |
|
|
|
|
|
|
|
25,781 |
|
|
26,044 |
|
|
25,781 |
|
|
26,044 |
|
|
|
1 |
Includes provisions for credit losses on ACI loans
including all Federal Deposit Insurance Corporation (FDIC) covered
loans. |
2 |
Results exclude the
impact related to the equity in net income of the investment in TD
Ameritrade. |
3 |
For explanations of
items of note, see the "Non-GAAP Financial Measures −
Reconciliation of Adjusted to Reported Net Income" table
in the "How We Performed" section of this document. |
4 |
Effective November 1,
2014, capital allocated to the business segments is based on 9%
CET1 Capital. These changes have been
applied prospectively. |
5 |
The margin on average
earning assets excludes the impact related to the TD Ameritrade
insured deposit accounts (IDA). On a
prospective basis, beginning in the second quarter of 2015, the
margin on average earning assets (a) excludes the impact of
cash
collateral deposited by affiliates with the U.S. banks, which have
been eliminated at the U.S. Retail segment level and (b) the
allocation
of investments to the IDA has been changed to reflect the Basel III
liquidity rules. |
|
|
Revenue from and PCL on Target Corporation (Target) credit card
accounts are presented on a gross basis in the U.S. Retail Bank's
results, with Target's share of net earnings included in
non-interest expenses. In the third quarter of 2015, the
contribution to net income from Target was lower than the prior
quarter and relatively flat compared to the same period last
year.
Quarterly comparison - Q3 2015 vs. Q3 2014
U.S. Retail net income for the quarter on a reported basis was
$674 million (US$543 million). U.S. Retail adjusted net income
for the quarter was $650 million
(US$524 million), which included
net income of $558 million
(US$450 million) from the U.S. Retail
Bank and $92 million (US$74 million) from TD's investment in TD
Ameritrade. Canadian dollar earnings benefited from the
strengthening of the U.S. dollar with adjusted earnings increasing
16% to $650 million. The reported
annualized return on common equity for the quarter was 8.6%,
compared to 9.0% for the third quarter last year. The adjusted
annualized return on common equity for the quarter was 8.3%,
compared to 9.0% for the third quarter last year.
U.S. Retail Bank net income for the quarter on a reported basis
increased US$20 million, or 4%,
compared with the third quarter last year. U.S. Retail Bank
adjusted net income increased US$1
million compared to the third quarter last year due to
strong organic volume growth, largely offset by lower margins and
higher PCL. The contribution from TD Ameritrade of US$74 million was up 7% compared with the
third quarter last year, primarily due to an increase in asset
growth and transaction revenue, partially offset by higher
operating expenses.
U.S. Retail Bank revenue is derived from personal banking,
business banking, investments, auto lending, credit cards, and
wealth management. Revenue for the quarter was US$1,911 million, an increase of US$20 million, or 1%, compared with the third
quarter last year, primarily due to strong loan and deposit growth
and broad-based fee growth, partially offset by lower loan margins.
Other non-interest income increased primarily due to customer
account growth and higher transaction volume. Margin on average
earning assets was 3.50%, a 26 bps decrease compared with the
third quarter last year, due to lower loan margins, lower accretion
on acquired portfolios, and change in balance sheet mix. Average
loan volumes increased US$12 billion, or 11%, compared with the
third quarter last year due to 17% growth in business loans and 4%
growth in personal loans. Average deposit volumes increased
US$11 billion, or 6%, compared with
the third quarter last year, driven by 7% growth in personal
deposit volume, 5% growth in business deposit volume, and 4% growth
in TD Ameritrade deposit volume.
PCL for the quarter was US$161
million, an increase of US$43
million, or 36%, compared with the third quarter last year,
primarily due to higher provisions for commercial loans. Personal
banking PCL was US$115 million, a
decrease of US$11 million, or 9%,
compared with the third quarter last year, primarily due to lower
provisions for home equity loans, partially offset by volume
growth. Business banking PCL was US$45 million, an increase of US$55 million compared to the third quarter last
year primarily due to an increase in allowance build. Net impaired
loans, excluding acquired credit-impaired (ACI) loans and debt
securities classified as loans, were US$1.4
billion, an increase of US$181
million, or 15%, compared with the third quarter last year
driven primarily by increases in performing home equity loans, as
certain borrowers who are current on their interest-only payment
but are shifting to interest and principal payments have been
reported as impaired. Net impaired loans as a percentage of total
loans were 1.1% as at July 31, 2015, flat compared with the
third quarter last year. Net impaired debt securities classified as
loans were US$812 million, a decrease
of US$109 million, or 12%, compared
with the third quarter last year.
Reported non-interest expenses for the quarter were US$1,179 million, a decrease of US$41 million, or 3%, compared with the third
quarter last year, primarily due to a recovery of litigation costs.
Adjusted non-interest expenses for the quarter were US$1,209 million, a decrease of US$11 million, or 1%, compared with the third
quarter last year, primarily due to ongoing productivity savings,
partially offset by higher expenses to support growth and higher
regulatory costs.
The reported efficiency ratio for the quarter was 61.7%,
compared with 64.5% in the third quarter last year, while the
adjusted efficiency ratio was 63.4%, compared with 64.5% in the
third quarter last year.
Quarterly comparison - Q3 2015 vs. Q2 2015
U.S. Retail Bank net income for the quarter on a reported basis
increased US$62 million, or 15%,
compared with the prior quarter. U.S. Retail Bank adjusted net
income increased US$17 million, or
4%, primarily due to three additional days in the current quarter,
higher fee income, and disciplined expense management, partially
offset by higher PCL. The contribution from TD Ameritrade increased
US$5 million, or 7%, compared
with the prior quarter primarily due to an increase in asset
growth, partially offset by lower transaction revenue and a
favourable settlement of uncertain tax positions in the prior
quarter. The reported annualized return on common equity for the
quarter was 8.6%, compared to 7.9% in the prior quarter. The
adjusted annualized return on common equity for the quarter was
8.3%, flat compared to the prior quarter.
Revenue for the quarter increased US$58
million, or 3%, primarily due to good fee growth, strong
loan and deposit growth, and three additional days in the current
quarter, partially offset by lower loan and deposit margins. Margin
on average earning assets was 3.50%, a 12 bps decrease driven by
lower loan margins, a decline in U.S. Partner Card programs, and
change in balance sheet mix. Average loan volumes increased
US$3 billion, or 3%, compared
with the prior quarter due to 4% growth in business loans and 1%
growth in personal loans. Average deposit volumes increased
US$2 billion, or 1%, compared with
the prior quarter driven by 1% growth in personal deposit volume
and 1% growth in TD Ameritrade deposit volume, while business
deposits remained relatively flat.
PCL for the quarter increased US$57
million, or 55%, compared with the prior quarter, primarily
due to increased provisions on business banking and credit card
loans. Personal banking PCL was US$115
million, an increase of US$15 million, or 15%, from the prior
quarter primarily due to higher provisions for credit card loans,
partially offset by lower provisions for residential mortgage
loans. Business banking PCL was US$45 million, an increase of US$32 million, compared with the prior quarter,
primarily due to an increase in allowance build. Net impaired
loans, excluding ACI loans and debt securities classified as loans,
were US$1.4 billion, which was
1.1% of total loans as at July 31, 2015, flat compared with prior
quarter. Net impaired debt securities classified as loans decreased
US$38 million, or 4%, compared
with the prior quarter.
Reported non-interest expenses for the quarter decreased
US$86 million, or 7%, compared with
the prior quarter. Adjusted non-interest expenses for the quarter
decreased US$14 million, or 1%,
compared with the prior quarter, primarily due to ongoing
productivity savings, partially offset by three additional days in
the current quarter.
The reported efficiency ratio for the quarter was 61.7%,
compared with 68.2% in the prior quarter, while the adjusted
efficiency ratio was 63.4%, compared with 66.0% in the prior
quarter.
Year-to-date comparison - Q3 2015 vs. Q3 2014
U.S. Retail net income for the nine months ended July 31, 2015, on a reported basis was
$1,893 million (US$1,555 million). U.S. Retail adjusted net
income for the nine months ended July 31,
2015, was $1,901 million
(US$1,562 million), which included
net income of $1,634 million
(US$1,340 million) from the U.S.
Retail Bank and $267 million
(US$222 million) from TD's investment
in TD Ameritrade. Canadian dollar earnings benefited from a
strengthening of the U.S. dollar. The reported and adjusted
annualized return on common equity for the nine months ended
July 31, 2015, was 8.3% and 8.4%,
respectively, compared with 8.7% for the same period last year.
U.S. Retail Bank net income on a reported basis increased
US$61 million, or 5%, compared with
the same period last year. U.S. Retail Bank adjusted net income
increased US$68 million, or 5%,
compared with the same period last year, primarily due to lower
PCL, good expense management, and strong organic volume growth,
partially offset by lower margins and lower gains on sales of
securities. The contribution from TD Ameritrade of US$222 million increased US$18 million, or 9%, compared with the same
period last year, primarily due to increased asset growth, higher
transaction revenue, and the favourable settlement of uncertain tax
positions, partially offset by higher operating expenses.
Revenue was US$5,671 million, a
decrease of US$41 million, or 1%,
compared with the same period last year, primarily due to lower
loan and deposit margins, lower revenue from Target, and lower
gains on sales of securities, partially offset by strong loan and
deposit growth. Margin on average earning assets was 3.61%, a
17 bps decrease compared with the same period last year,
primarily due to lower loan margins. Average loan volumes increased
US$11 billion, or 10%, compared
with the same period last year, with a 16% increase in business
loans and a 4% increase in personal loans. Average deposit volumes
increased US$10 billion, or 5%,
compared with the same period last year driven by 5% growth in
business deposits, 7% growth in personal deposits, and 3% growth in
TD Ameritrade deposits.
PCL was US$419 million, a decrease
of US$77 million, or 16%, compared
with the same period last year. Personal banking PCL was
US$368 million, a decrease of
US$145 million, or 28%, compared with
the same period last year, primarily due to lower provisions for
credit card loans and auto loans. Business banking PCL was
US$58 million compared to a recovery
of US$25 million in the same period
last year, primarily due to an increase in allowance build and
volume growth. Annualized PCL as a percentage of credit volume for
loans excluding debt securities classified as loans was 0.47%, a
decrease of 32 bps compared to the same period last year.
Reported non-interest expenses were US$3,637 million, a decrease of US$21 million, or 1%, compared with the same
period last year. Adjusted non-interest expenses were US$3,625 million, a decrease of US$33 million, or 1%, compared with the same
period last year, primarily due to ongoing productivity savings and
a benefit resulting from elective early lump sum pension payouts,
partially offset by higher expenses to support growth and an
increase in regulatory costs.
The reported efficiency ratio was 64.2%, compared with 64.1% for
the same period last year, and the adjusted efficiency ratio was
64.0%, compared with 64.1% for the same period last year.
Business Outlook
The U.S. Retail business remains focused on delivering legendary
customer service and convenience and deepening relationships across
all distribution channels. We do not anticipate any significant
changes in the operating environment for the remainder of the year.
Although competition for loans and deposits will remain intense, we
expect to post strong volume loan and deposit growth. In the
absence of rate increases, we expect margins to remain under
pressure. Similar to this quarter, we expect an increase in
year-over-year credit losses driven by volume growth, increases in
allowance build, and recoveries in the prior year. The year-to-date
expenses have been very well managed and we expect our full year
expenses will be in line with the prior year. We remain committed
to making the necessary investments to support future growth and
regulatory compliance, while maintaining our focus on productivity
initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 9: WHOLESALE BANKING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars,
except as noted) |
|
|
|
|
For the three months ended |
|
For the nine months ended |
|
|
|
|
|
|
|
July 31 |
|
|
April 30 |
|
|
July 31 |
|
July 31 |
|
July 31 |
|
|
|
|
|
|
|
2015 |
|
|
2015 |
|
|
2014 |
|
2015 |
|
2014 |
|
Net interest income (TEB) |
|
|
|
|
$ |
564 |
|
|
$ |
584 |
|
|
$ |
589 |
|
$ |
1,745 |
|
$ |
1,673 |
|
Non-interest income |
|
|
|
|
|
201 |
|
|
|
200 |
|
|
|
91 |
|
|
515 |
|
|
403 |
|
Total revenue |
|
|
|
|
|
765 |
|
|
|
784 |
|
|
|
680 |
|
|
2,260 |
|
|
2,076 |
|
Provision for credit losses |
|
|
|
|
|
2 |
|
|
|
- |
|
|
|
5 |
|
|
4 |
|
|
12 |
|
Non-interest expenses |
|
|
|
|
|
431 |
|
|
|
447 |
|
|
|
392 |
|
|
1,311 |
|
|
1,208 |
|
Net income |
|
|
|
|
$ |
239 |
|
|
$ |
246 |
|
|
$ |
216 |
|
$ |
677 |
|
$ |
653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading-related revenue |
|
|
|
|
$ |
425 |
|
|
$ |
424 |
|
|
$ |
325 |
|
$ |
1,229 |
|
$ |
1,098 |
|
Return on common equity1 |
|
|
|
|
|
17.2 |
% |
|
|
17.7 |
% |
|
|
18.4 |
% |
|
15.9 |
% |
|
19.0 |
% |
Efficiency ratio |
|
|
|
|
|
56.3 |
|
|
|
57.0 |
|
|
|
57.6 |
|
|
58.0 |
|
|
58.2 |
|
Average number of full-time
equivalent staff |
|
|
|
|
|
3,736 |
|
|
|
3,771 |
|
|
|
3,726 |
|
|
3,751 |
|
|
3,630 |
|
|
|
1 |
Effective November 1, 2014, capital allocated
to the business segments is based on 9% CET1 Capital. These changes
have been
applied prospectively. |
|
|
Quarterly comparison - Q3 2015 vs. Q3 2014
Wholesale Banking net income for the quarter was $239 million, an increase of $23 million, or 11%, compared with the third
quarter last year due to higher revenue, partially offset by higher
non-interest expenses and a higher effective tax rate. The
annualized return on common equity for the quarter was 17.2%,
compared with 18.4% in the third quarter last year.
Wholesale Banking revenue is derived primarily from capital
markets services and corporate lending. The capital markets
businesses generate revenue from advisory, underwriting, trading,
facilitation, and trade execution services. Revenue for the quarter
was $765 million, an increase of
$85 million, or 13%, compared with
the third quarter last year. Revenue increased primarily due to
higher fixed income and equity trading revenue, increased mergers
and acquisitions (M&A) fees, and higher corporate lending
revenue on strong loan volume growth both in Canada and the U.S. The increase in revenue
was partially offset by lower equity underwriting fees as the third
quarter last year benefitted from strong client activity.
PCL for the quarter decreased $3
million compared with the third quarter last year and
consisted primarily of the accrual cost of credit protection.
Non-interest expenses for the quarter were $431 million, an increase of $39 million, or 10%, compared with the third
quarter last year. The increase was primarily due to higher
initiative spend, the impact of foreign exchange translation, and
higher variable compensation commensurate with increased
revenue.
Quarterly comparison - Q3 2015 vs. Q2 2015
Wholesale Banking net income for the quarter decreased $7 million, or 3%, compared with the prior
quarter due to lower revenue, partially offset by lower
non-interest expenses. The annualized return on common equity for
the quarter was 17.2%, compared with 17.7% in the prior
quarter.
Revenue for the quarter decreased $19
million, or 2%, compared with the prior quarter. Revenue
decreased primarily due to lower underwriting fees as the prior
quarter benefited from stronger client activity in debt and equity
capital markets. The decrease in revenue was partially offset by
higher M&A fees, higher corporate lending revenue on strong
loan volume growth, and security gains in the investment
portfolio.
PCL for the quarter increased $2
million compared with the prior quarter and consisted
primarily of the accrual cost of credit protection.
Non-interest expenses for the quarter decreased $16 million, or 4%, primarily due to lower
variable compensation.
Year-to-date comparison - Q3 2015 vs. Q3 2014
Wholesale Banking net income for the nine months ended July 31, 2015, was $677
million, an increase of $24
million, or 4%, compared with the same period last year due
to higher revenue, partially offset by higher non-interest expenses
and a higher effective tax rate. The annualized return on common
equity was 15.9%, compared with 19.0% in the same period last
year.
Revenue was $2,260 million, an
increase of $184 million, or 9%,
compared with the same period last year. The increase in revenue
was primarily due to higher foreign exchange and equity trading on
improved client activity, and stronger corporate lending and
underwriting volumes from our continued focus on origination in
Canada and the U.S. The increase
in revenue was partially offset by lower fixed income trading
revenue and lower M&A fees.
PCL was $4 million, a decrease of
$8 million compared with the same
period last year, and consisted primarily of the accrual cost of
credit protection.
Non-interest expenses were $1,311
million, an increase of $103
million, or 9%, compared with the same period last year. The
increase was primarily due to higher variable compensation
commensurate with increased revenue, the impact of foreign exchange
translation, and higher initiative spend.
Business Outlook
Overall, the global economy is showing modest growth and we
continue to see gradual improvements in capital markets even with
recent uncertainty in European markets. However, we remain cautious
as a combination of evolving capital and regulatory changes,
uncertainty over the outlook for interest rates, volatile energy
markets, and the weaker Canadian dollar will continue to impact our
business. While these factors will likely affect corporate and
investor sentiment in the near term, we believe our diversified,
integrated business model will continue to deliver solid results
and grow our franchise. We remain focused on growing and deepening
client relationships, being a valued counterparty, and managing our
risks and productivity for the remainder of the year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 10:
CORPORATE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars) |
For the three months ended |
|
For the nine months ended |
|
|
July 31 |
|
April 30 |
|
July 31 |
|
July 31 |
|
July 31 |
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
Net income (loss) -
reported |
$ |
(204) |
|
$ |
(417) |
|
$ |
(70) |
|
$ |
(827) |
|
$ |
(47) |
|
Adjustments for items of
note1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles |
|
62 |
|
|
65 |
|
|
60 |
|
|
190 |
|
|
184 |
|
Fair value of derivatives hedging the
reclassified available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities portfolio |
|
(19) |
|
|
(15) |
|
|
(24) |
|
|
(34) |
|
|
(43) |
|
Restructuring charges |
|
- |
|
|
228 |
|
|
- |
|
|
228 |
|
|
- |
|
Impact of Alberta flood on the loan
portfolio |
|
- |
|
|
- |
|
|
(19) |
|
|
- |
|
|
(19) |
|
Gain on sale of TD Waterhouse
Institutional Services |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(196) |
|
Total adjustments for items of
note |
|
43 |
|
|
278 |
|
|
17 |
|
|
384 |
|
|
(74) |
|
Net income (loss) -
adjusted |
$ |
(161) |
|
$ |
(139) |
|
$ |
(53) |
|
$ |
(443) |
|
$ |
(121) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) - adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net corporate expenses |
$ |
(193) |
|
$ |
(177) |
|
$ |
(170) |
|
$ |
(542) |
|
$ |
(494) |
|
Other |
|
4 |
|
|
10 |
|
|
90 |
|
|
16 |
|
|
293 |
|
Non-controlling interests |
|
28 |
|
|
28 |
|
|
27 |
|
|
83 |
|
|
80 |
|
Net income (loss) -
adjusted |
$ |
(161) |
|
$ |
(139) |
|
$ |
(53) |
|
$ |
(443) |
|
$ |
(121) |
|
|
|
1 |
For explanations of items of note, see the
"Non-GAAP Financial Measures - Reconciliation of Adjusted to
Reported Net Income"
table in the "How We Performed" section of this document. |
|
|
Quarterly comparison - Q3 2015 vs. Q3 2014
Corporate segment's reported net loss for the quarter was
$204 million, compared with a
reported net loss of $70 million in
the third quarter last year. Adjusted net loss was $161 million, compared with an adjusted net loss
of $53 million in the third quarter
last year. Adjusted net loss increased largely due to lower
contribution from Other items, primarily driven by positive tax
items recognized in the third quarter last year. Net corporate
expenses increased as a result of ongoing investment in enterprise
and regulatory projects.
Quarterly comparison - Q3 2015 vs. Q2 2015
Corporate segment's reported net loss for the quarter was
$204 million, compared with a
reported net loss of $417 million in
the prior quarter. Adjusted net loss was $161 million, compared with an adjusted net loss
of $139 million in the prior quarter.
The increase in adjusted net loss was primarily due to higher net
corporate expenses.
Year-to-date comparison - Q3 2015 vs. Q3 2014
Corporate segment's reported net loss for the nine months ended
July 31, 2015, was $827 million, compared with a reported net loss
of $47 million in the same period
last year. Current period reported net loss includes restructuring
charges of $337 million ($228 million after tax). Adjusted net loss for
the nine months ended July 31, 2015,
was $443 million, compared with an
adjusted net loss of $121 million in
the same period last year. The increase in adjusted net loss was
due to lower contribution from Other items and higher net corporate
expenses. The unfavourable impact of Other items was due to the
gains on sales of TD Ameritrade shares last year ($85 million after tax), lower revenue from
treasury and balance sheet management activities, prior year
releases for incurred but not identified credit losses related to
the Canadian loan portfolio, and positive tax items recognized last
year. Net corporate expenses increased as a result of ongoing
investment in enterprise and regulatory projects.
SHAREHOLDER AND INVESTOR INFORMATION
Shareholder Services
If you: |
And your inquiry relates
to: |
Please contact: |
Are a registered
shareholder (your name
appears on your TD share certificate) |
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lost share certificates, estate
questions, address changes to the share register,
dividend bank account changes, the dividend
reinvestment plan, eliminating duplicate mailings of
shareholder materials or stopping (and resuming)
receiving annual and quarterly reports |
Transfer
Agent:
CST Trust Company
P.O. Box 700, Station B
Montréal, Québec H3B 3K3
1-800-387-0825 (Canada and U.S. only)
or 416-682-3860
Facsimile: 1-888-249-6189
inquiries@canstockta.com or
www.canstockta.com
|
Hold your TD shares through
the
Direct Registration System
in the United States |
Missing dividends,
lost share certificates, estate
questions, address changes to the share register,
eliminating duplicate mailings of shareholder materials
or stopping (and resuming) receiving annual and
quarterly reports |
Co-Transfer Agent
and Registrar
Computershare
P.O. Box 30170
College Station, TX 77842-3170
or
Computershare
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1-866-233-4836
TDD for hearing impaired: 1-800-231-5469
Shareholders outside of U.S.: 201-680-6578
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www.computershare.com
|
Beneficially own TD shares
that are held in
the name of an intermediary, such as a bank,
a trust company, a securities broker or other
nominee |
Your TD shares,
including questions regarding the
dividend reinvestment plan and mailings of shareholder
materials |
Your intermediary |
For all other shareholder inquiries, please contact TD
Shareholder Relations at 416-944-6367 or 1-866-756-8936 or email
tdshinfo@td.com. Please note that by leaving us an e-mail or
voicemail message, you are providing your consent for us to forward
your inquiry to the appropriate party for response.
Access to Quarterly Results Materials
Interested investors, the media and others may view this third
quarter earnings news release, results slides, supplementary
financial information, and the Report to Shareholders on the TD
Investor Relations website at www.td.com/investor/.
General Information
Contact Corporate & Public Affairs: 416-982-8578
Products and services: Contact TD Canada Trust, 24 hours a day,
seven days a week: 1-866-567-8888
French: 1-866-233-2323
Cantonese/Mandarin: 1-800-328-3698
Telephone device for the hearing impaired (TTY): 1-800-361-1180
Website: http://www.td.com
Email: customer.service@td.com
Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference call in Toronto, Ontario on August 27, 2015. The call will be audio webcast
live through TD's website at 3 p.m. ET. The call and audio webcast
will feature presentations by TD executives on the Bank's financial
results for the third quarter, discussions of related disclosures,
and will be followed by a question-and-answer period with analysts.
The presentation material referenced during the call will be
available on the TD website at www.td.com/investor/qr_2015.jsp on
August 27, 2015, by approximately
12 p.m. ET. A listen-only telephone
line is available at 416-204-9269 or 1-800-499-4035 (toll
free).
The audio webcast and presentations will be archived at
www.td.com/investor/qr_2015.jsp. Replay of the teleconference will
be available from 6 p.m. ET on
August 27, 2015, until 6 p.m. ET on September 30,
2015, by calling 647-436-0148 or 1-888-203-1112 (toll free).
The passcode is 9859717.
Annual Meeting
Thursday, March 31, 2016
Fairmont The Queen Elizabeth
Montréal, Québec
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively
known as TD Bank Group ("TD" or the "Bank"). TD is the seventh
largest bank in North America by
branches and serves more than 24 million customers in three key
businesses operating in a number of locations in financial centres
around the globe: Canadian Retail, including TD Canada Trust, TD
Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD
Insurance; U.S. Retail, including TD Bank, America's Most
Convenient Bank, TD Auto Finance U.S., TD Wealth (U.S.), and an
investment in TD Ameritrade; and Wholesale Banking, including
TD Securities. TD also ranks among the world's leading online
financial services firms, with approximately 10 million active
online and mobile customers. TD had CDN$1.1
trillion in assets on July 31,
2015. The Toronto-Dominion Bank trades under the symbol "TD"
on the Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group