This quarterly earnings news release should be read in
conjunction with our unaudited fourth quarter 2012 consolidated
financial results ended October 31, 2012, included in this Earnings
News Release and with our audited 2012 Consolidated Financial
Statements, which is available on our website at
http://www.td.com/investor/. This analysis is dated December 5,
2012. 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 International Financial Reporting Standards (IFRS).
The accounting policies used in the preparation of these
consolidated financial results are consistent with those used in
the Bank's October 31, 2012 Consolidated Financial Statements.
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's) website at http://www.sec.gov (EDGAR filers
section).
The Bank transitioned from Canadian Generally Accepted Accounting
Principles (Canadian GAAP) to IFRS effective for interim and annual
periods beginning the first quarter of fiscal 2012. Comparative
periods in 2011 have also been prepared under IFRS, unless
otherwise indicated.
Reported results conform to generally accepted accounting
principles (GAAP) under IFRS. Adjusted measures are non-GAAP
measures. Refer to the "How the Bank Reports" section of the
Management's Discussion and Analysis for an explanation of reported
and adjusted results.
Effective the first quarter of 2012, the Insurance business was
transferred from Canadian Personal and Commercial Banking to Wealth
and Insurance (formerly called Wealth Management). The prior period
results have been restated accordingly. |
FOURTH QUARTER FINANCIAL HIGHLIGHTS, compared with the fourth
quarter last year:
- Reported diluted earnings per share were $1.66, compared with $1.68.
- Adjusted diluted earnings per share were $1.83, compared with $1.75.
- Reported net income was $1,597
million, compared with $1,589
million.
- Adjusted net income was $1,757
million, compared with $1,656
million.
FULL YEAR FINANCIAL HIGHLIGHTS, compared with last
year:
- Reported diluted earnings per share were $6.76, compared with $6.43.
- Adjusted diluted earnings per share were $7.42, compared with $6.86.
- Reported net income was $6,471
million, compared with $6,045
million.
- Adjusted net income was $7,075
million, compared with $6,432
million.
FOURTH QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The fourth quarter reported earnings figures included the
following items of note:
- Amortization of intangibles of $60
million after tax (6 cents per
share), compared with $95 million
after tax (10 cents per share) in the
fourth quarter last year.
- A loss of $35 million after
tax (4 cents per share), due to the
change in fair value of derivatives hedging the reclassified
available-for-sale securities portfolio, compared with a gain of
$37 million after tax (4 cents per share) in the fourth quarter last
year.
- Integration charges relating to the Chrysler Financial
acquisition of $3 million after tax,
compared with $19 million after tax
(2 cents per share) in the fourth
quarter last year.
- Integration charges of $25
million after tax (3 cents per
share), relating to the acquisition of the MBNA Canada credit card
portfolio.
- The negative impact of Superstorm Sandy of $37 million after tax (4
cents per share).
TORONTO, Dec. 6, 2012 /PRNewswire/ - TD Bank Group (TD or
the Bank) today announced its financial results for the fourth
quarter ended October 31, 2012.
Overall results for the quarter reflected strong performances from
TD's Canadian and U.S. personal and commercial banking businesses
as well as from Wholesale Banking.
"The fourth quarter earnings contributed to a strong year for
TD," said Ed Clark, Group President
and Chief Executive Officer. "TD's adjusted earnings for the year
were more than $7 billion, with all
businesses posting adjusted earnings growth. We achieved those
results despite a tough operating environment, demonstrating the
strength and resilience of our business model."
Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking posted reported net income
of $806 million in the fourth
quarter. On an adjusted basis, net income was $831 million, up 10% from the same period last
year. Good volume growth in loans and deposits, strong contribution
from MBNA, and stable credit quality helped to drive core earnings
growth.
"Canadian Personal and Commercial Banking had a good fourth
quarter and a strong 2012. We continued to invest in our
industry-leading customer service and convenience platform by
opening 24 new branches, extending hours, and rolling out
innovative new products to meet our customer needs,
" said Tim Hockey, Group Head,
Canadian Banking, Auto Finance, and Credit Cards. "Looking ahead,
we expect a more challenging operating environment in 2013, with
low interest rates and moderating retail volume growth. But, we're
confident that maintaining our focus on our
customers and employees, making strategic investments to grow the
franchise, and increasing productivity will position us well for
the future."
Wealth and Insurance
Wealth and Insurance delivered net income of $293 million in the quarter, down 15% from the
same period last year. In the Wealth business, higher fee-based
revenue from strong growth in client assets was partially offset by
lower transaction revenue due to decreased trading volumes. In the
Insurance business, increased revenue from premium growth and the
inclusion of MBNA was more than offset by unfavourable prior years
claims development in the Ontario
auto market and weather-related events. TD Ameritrade contributed
$51 million in earnings to the
segment, down 6% from the same period last year.
"Our Wealth business performed well in a difficult operating
environment," said Mike Pedersen,
Group Head, Wealth Management, Insurance, and Corporate Shared
Services. "The Insurance business showed strong core fundamentals
and delivered positive earnings growth for the year, but
experienced challenges in the fourth quarter related to prior years
claims development and weather-related events. Looking ahead, we
expect good earnings growth driven by continued momentum in gaining
new client assets in the Wealth business and premiums growth in the
Insurance business."
U.S. Personal and Commercial Banking
U.S. Personal and Commercial Banking generated US$321 million in reported net income for the
quarter. On an adjusted basis, the segment earned US$358 million, up 23% from the fourth quarter
last year, driven by organic loan and deposit growth, partially
offset by the impact of the Durbin Amendment.
"TD Bank, America's Most Convenient Bank delivered a strong
fourth quarter," said Bharat Masrani, Group Head, U.S. Personal and
Commercial Banking. "With more than US$1.4
billion in adjusted earnings and 41 new stores, it was a
strong year for our business. We also supported our customers and
employees through the impact of Superstorm Sandy. As we look ahead,
we remain concerned about the low interest rate environment and
regulatory uncertainty. However, the U.S. economy continues to show
signs of modest recovery and we will continue to leverage our
legendary service and convenience brand for future growth."
Wholesale Banking
Wholesale Banking recorded net income of $309 million for the quarter, an increase of 10%
compared with the same period last year. The increase was primarily
due to higher revenue and reduced expenses in our core businesses,
partially offset by lower securities gains in our investment
portfolio.
"We had a strong quarter in our core businesses," said
Bob Dorrance, Group Head, Wholesale
Banking. "Improved client flows and another solid performance in
investment banking more than offset industry-wide declines in
equity trading and underwriting. While macroeconomic headwinds
remain, our client-centric business model has demonstrated the
ability to deliver solid returns in difficult markets."
Capital
TD's Basel II Tier 1 capital ratio was 12.6% in the quarter. On a
Basel III basis, TD's common
equity Tier 1 ratio was 8.2%, which exceeds the new 7% requirement
on a fully phased-in basis.
Conclusion
"TD had a strong year in 2012. Our success was again based on the
strength of our customer-focused, retail-driven business model. We
are confident in our ability to deliver sustainable earnings growth
in the future, but we remain concerned about the low interest rate
environment as well as a weak global economic recovery and ongoing
regulatory uncertainty," said Clark. "We will continue to
strategically invest in our businesses and manage our expense
growth while continually seeking ways to exceed expectations. As
always, our employees and their dedication to our customers and
clients were the driving force behind our success and I want to
thank them for their tremendous contribution."
The foregoing contains forward-looking statements.
Caution Regarding Forward-Looking Statements
From time to time, the Bank makes written and/or oral
forward-looking statements, including in this earnings news
release, in other filings with Canadian regulators or the U.S.
Securities and Exchange Commission, 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 earnings news release, the Management's
Discussion and Analysis (MD&A) in the Bank's 2012 Annual Report
under the headings "Economic Summary and Outlook" and, for each
business segment, "Business Outlook and Focus for 2013" and in
other statements regarding the Bank's objectives and priorities for
2013 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 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 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 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, all of which are discussed in the 2012
MD&A. Examples of such risk factors include the impact of
recent U.S. legislative developments, as discussed under
"Significant Events in 2012" in this earnings news release; changes
to and new interpretations of capital and liquidity guidelines and
reporting instructions; increased funding costs for credit due to
market illiquidity and competition for funding; the failure of
third parties to comply with their obligations to the Bank or its
affiliates relating to the care and control of information and
disruptions in the Bank's information technology, internet, network
access or other voice or data communications systems or services;
and the overall difficult litigation environment, including in the
United States. We caution 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 2012 MD&A.
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 we caution readers not to place undue reliance on the
Bank's forward-looking statements.
Material economic assumptions underlying the forward-looking
statements contained in this earnings news release are set out in
the 2012 MD&A under the headings "Economic Summary and Outlook"
and, for each business segment, "Business Outlook and Focus for
2013", 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
For the twelve months
ended |
|
|
|
October 31 |
|
July
31 |
|
October 31 |
|
October 31 |
|
October 31 |
|
|
|
|
2012 |
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
|
Results of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
$ |
5,889 |
|
$ |
5,841 |
|
$ |
5,663 |
|
$ |
23,122 |
|
$ |
21,662 |
|
Provision for credit losses |
|
565 |
|
|
438 |
|
|
340 |
|
|
1,795 |
|
|
1,490 |
|
Non-interest expenses |
|
3,606 |
|
|
3,471 |
|
|
3,488 |
|
|
13,998 |
|
|
13,047 |
|
Net income - reported |
|
1,597 |
|
|
1,703 |
|
|
1,589 |
|
|
6,471 |
|
|
6,045 |
|
Net income -
adjusted1 |
|
1,757 |
|
|
1,820 |
|
|
1,656 |
|
|
7,075 |
|
|
6,432 |
|
Economic
profit2,3 |
|
703 |
|
|
787 |
|
|
594 |
|
|
3,037 |
|
|
2,469 |
|
Return on common
equity - reported |
|
14.0 |
% |
|
15.3 |
% |
|
15.8 |
% |
|
14.9 |
% |
|
16.2 |
% |
Return on common
equity - adjusted2,3 |
|
15.5 |
% |
|
16.4 |
% |
|
16.5 |
% |
|
16.3 |
% |
|
17.3 |
% |
Return on invested
capital2,3 |
|
N/A |
|
|
N/A |
|
|
14.4 |
% |
|
N/A |
|
|
15.0 |
% |
Financial
position |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
811,106 |
|
$ |
806,283 |
|
$ |
735,493 |
|
$ |
811,106 |
|
$ |
735,493 |
|
Total equity |
|
49,000 |
|
|
48,067 |
|
|
44,004 |
|
|
49,000 |
|
|
44,004 |
|
Total risk-weighted
assets4 |
|
245,875 |
|
|
246,401 |
|
|
218,779 |
|
|
245,875 |
|
|
218,779 |
|
Financial
ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio -
reported |
|
61.2 |
% |
|
59.4 |
% |
|
61.6 |
% |
|
60.5 |
% |
|
60.2 |
% |
Efficiency ratio -
adjusted1 |
|
59.0 |
% |
|
55.4 |
% |
|
59.4 |
% |
|
56.6 |
% |
|
57.5 |
% |
Tier 1 capital to
risk-weighted assets4 |
|
12.6 |
% |
|
12.2 |
% |
|
13.0 |
% |
|
12.6 |
% |
|
13.0 |
% |
Provision for credit
losses as a % of net average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
loans and
acceptances5 |
|
0.54 |
% |
|
0.42 |
% |
|
0.38 |
% |
|
0.43 |
% |
|
0.39 |
% |
Common share information - reported
(dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.67 |
|
$ |
1.79 |
|
$ |
1.70 |
|
$ |
6.81 |
|
$ |
6.50 |
|
|
Diluted |
|
1.66 |
|
|
1.78 |
|
|
1.68 |
|
|
6.76 |
|
|
6.43 |
|
Dividends per share |
|
0.77 |
|
|
0.72 |
|
|
0.68 |
|
|
2.89 |
|
|
2.61 |
|
Book value per share |
|
48.17 |
|
|
47.37 |
|
|
43.43 |
|
|
48.17 |
|
|
43.43 |
|
Closing share price |
|
81.23 |
|
|
78.92 |
|
|
75.23 |
|
|
81.23 |
|
|
75.23 |
|
Shares outstanding (millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average basic |
|
912.4 |
|
|
908.7 |
|
|
893.8 |
|
|
906.6 |
|
|
885.7 |
|
|
Average
diluted |
|
920.0 |
|
|
916.0 |
|
|
909.0 |
|
|
914.9 |
|
|
902.9 |
|
|
End of period |
|
916.1 |
|
|
911.7 |
|
|
901.0 |
|
|
916.1 |
|
|
901.0 |
|
Market capitalization (billions of
Canadian dollars) |
$ |
74.4 |
|
$ |
71.9 |
|
$ |
67.8 |
|
$ |
74.4 |
|
$ |
67.8 |
|
Dividend yield |
|
3.6 |
% |
|
3.5 |
% |
|
3.5 |
% |
|
3.8 |
% |
|
3.4 |
% |
Dividend payout
ratio |
|
46.1 |
% |
|
40.2 |
% |
|
40.3 |
% |
|
42.5 |
% |
|
40.2 |
% |
Price to earnings ratio |
|
12.0 |
|
|
11.6 |
|
|
11.7 |
|
|
12.0 |
|
|
11.7 |
|
Common share
information - adjusted (dollars)1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.84 |
|
$ |
1.92 |
|
$ |
1.77 |
|
$ |
7.47 |
|
$ |
6.94 |
|
|
Diluted |
|
1.83 |
|
|
1.91 |
|
|
1.75 |
|
|
7.42 |
|
|
6.86 |
|
Dividend payout ratio |
|
41.7 |
% |
|
37.5 |
% |
|
38.6 |
% |
|
38.7 |
% |
|
37.7 |
% |
Price to earnings ratio |
|
10.9 |
|
|
10.8 |
|
|
11.0 |
|
|
10.9 |
|
|
11.0 |
|
1 |
Adjusted measures are non-GAAP measures. Refer to the "How The
Bank Reports" section for an explanation of reported and adjusted
results.
|
2 |
Economic profit and adjusted return on common equity are
non-GAAP financial measures. Refer to the "Economic Profit and
Return on Common Equity" section for an explanation. Return on
invested capital is a non-GAAP financial measure. Refer to the
"Economic Profit and Return on Invested Capital" section in the
Bank's 2011 Annual Report for an explanation.
|
3 |
Effective the first quarter of 2012, economic profit is
calculated based on average common equity on a prospective basis.
Prior to the first quarter 2012, economic profit was calculated
based on average invested capital. Had this change been done on a
retroactive basis, economic profit for the Bank, calculated based
on average common equity, would have been $717 million for the
fourth quarter 2011, $770 million for the third quarter 2011, $712
million for the second quarter 2011 and $758 million for the first
quarter 2011.
|
4 |
For periods ending on or prior to October 31, 2011, amounts are
reported in accordance with Canadian GAAP.
|
5 |
Excludes acquired credit-impaired loans and debt securities
classified as loans. For additional information on acquired
credit-impaired loans, see the "Credit Portfolio Quality" section
of the 2012 MD&A and Note 7 to the Consolidated Financial
Statements. For additional information on debt securities
classified as loans, see "Exposure to Non-agency Collateralized
Mortgage Obligations" discussion and tables in the "Credit
Portfolio Quality" section of the 2012 MD&A and Note 7 to the
Consolidated Financial Statements. |
|
|
HOW WE PERFORMED
How the Bank Reports
The Bank prepares its Consolidated Financial Statements in
accordance with generally accepted accounting principles (GAAP)
under IFRS 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 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 listed in the
table on the following page. 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.
Adoption of IFRS
The Canadian Accounting Standards Board previously announced that
for fiscal years beginning on or after January 1, 2011, all publicly accountable
enterprises will be required to report financial results in
accordance with IFRS. Accordingly, for the Bank, IFRS was effective
for the interim and annual periods beginning in the first quarter
of 2012. The fiscal 2012 Interim and Annual Consolidated Financial
Statements include comparative fiscal 2011 financial results under
IFRS.
The adoption of IFRS did not require significant changes to the
Bank's disclosure controls and procedures.
Information about the IFRS transition impact to the Bank's
reported financial position, equity, and financial performance is
provided in Note 38 of the Bank's Annual Consolidated Financial
Statements for the period ended October 31,
2012, which includes a discussion of the transitional
elections and exemptions under IFRS 1 and detailed reconciliations
of the Bank's Consolidated Financial Statements previously prepared
under Canadian GAAP to those under IFRS.
For details of the Bank's significant accounting policies under
IFRS, see Note 2 of the Bank's Annual Consolidated Financial
Statements for the period ended October 31,
2012.
The following table provides the operating results - reported
for the Bank.
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 2: OPERATING RESULTS -
REPORTED |
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
For the twelve months
ended |
|
|
|
October 31 |
July
31 |
October 31 |
October 31 |
October 31 |
|
|
|
2012 |
2012 |
2011 |
2012 |
2011 |
|
Net interest income |
$ |
3,842 |
$ |
3,817 |
$ |
3,532 |
$ |
15,026 |
$ |
13,661 |
|
Non-interest income |
|
2,047 |
|
2,024 |
|
2,131 |
|
8,096 |
|
8,001 |
|
Total revenue |
|
5,889 |
|
5,841 |
|
5,663 |
|
23,122 |
|
21,662 |
|
Provision for credit losses |
|
565 |
|
438 |
|
340 |
|
1,795 |
|
1,490 |
|
Non-interest expenses |
|
3,606 |
|
3,471 |
|
3,488 |
|
13,998 |
|
13,047 |
|
Income before
income taxes and equity in net income of an |
|
|
|
|
|
|
|
|
|
|
|
|
investment in associate
|
|
1,718 |
|
1,932 |
|
1,835 |
|
7,329 |
|
7,125 |
|
Provision for income taxes |
|
178 |
|
291 |
|
310 |
|
1,092 |
|
1,326 |
|
Equity in net income
of an investment in associate, net of income taxes |
|
57 |
|
62 |
|
64 |
|
234 |
|
246 |
|
Net income - reported |
|
1,597 |
|
1,703 |
|
1,589 |
|
6,471 |
|
6,045 |
|
Preferred dividends |
|
49 |
|
49 |
|
48 |
|
196 |
|
180 |
|
Net income
available to common shareholders and |
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling
interests in subsidiaries |
$ |
1,548 |
$ |
1,654 |
$ |
1,541 |
$ |
6,275 |
$ |
5,865 |
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests |
$ |
26 |
$ |
26 |
$ |
26 |
$ |
104 |
$ |
104 |
|
Common shareholders |
$ |
1,522 |
$ |
1,628 |
$ |
1,515 |
$ |
6,171 |
$ |
5,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 3: NON-GAAP
FINANCIAL MEASURES - RECONCILIATION OF ADJUSTED TO REPORTED NET
INCOME |
|
(millions of Canadian
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
For the twelve months
ended |
|
|
|
October 31 |
July
31 |
October 31 |
October 31 |
October 31 |
|
|
2012 |
2012 |
2011 |
2012 |
2011 |
|
Operating results - adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income1 |
$ |
3,842 |
$ |
3,817 |
$ |
3,532 |
$ |
15,062 |
$ |
13,661 |
|
Non-interest
income2 |
|
2,084 |
|
2,021 |
|
2,094 |
|
8,191 |
|
7,874 |
|
Total revenue |
|
5,926 |
|
5,838 |
|
5,626 |
|
23,253 |
|
21,535 |
|
Provision for credit
losses3 |
|
511 |
|
479 |
|
340 |
|
1,903 |
|
1,490 |
|
Non-interest
expenses4 |
|
3,493 |
|
3,232 |
|
3,344 |
|
13,162 |
|
12,373 |
|
Income before income taxes and equity
in net income of an |
|
|
|
|
|
|
|
|
|
|
|
|
investment in associate |
|
1,922 |
|
2,127 |
|
1,942 |
|
8,188 |
|
7,672 |
|
Provision for income
taxes5 |
|
236 |
|
382 |
|
363 |
|
1,404 |
|
1,545 |
|
Equity in net income of an investment
in associate, net of income taxes6 |
|
71 |
|
75 |
|
77 |
|
291 |
|
305 |
|
Net income - adjusted |
|
1,757 |
|
1,820 |
|
1,656 |
|
7,075 |
|
6,432 |
|
Preferred dividends |
|
49 |
|
49 |
|
48 |
|
196 |
|
180 |
|
Net income available to common
shareholders and |
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling interests in
subsidiaries - adjusted |
|
1,708 |
|
1,771 |
|
1,608 |
|
6,879 |
|
6,252 |
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests in
subsidiaries, net of income taxes |
|
26 |
|
26 |
|
26 |
|
104 |
|
104 |
|
Net income available to common
shareholders - adjusted |
|
1,682 |
|
1,745 |
|
1,582 |
|
6,775 |
|
6,148 |
|
Adjustments for items of note, net
of income taxes |
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles7 |
|
(60) |
|
(59) |
|
(95) |
|
(238) |
|
(391) |
|
Increase (decrease) in fair value of
derivatives hedging the reclassified |
|
|
|
|
|
|
|
|
|
|
|
|
available-for-sale securities
portfolio8 |
|
(35) |
|
- |
|
37 |
|
(89) |
|
128 |
|
Integration charges and direct
transaction costs relating to U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
Personal and Commercial Banking
acquisitions9 |
|
- |
|
- |
|
1 |
|
(9) |
|
(82) |
|
Increase (decrease) in fair value of
credit default swaps hedging the |
|
|
|
|
|
|
|
|
|
|
|
|
corporate loan book, net of
provision for credit losses10 |
|
- |
|
2 |
|
9 |
|
- |
|
13 |
|
Integration charges, direct
transaction costs, and changes in fair value of |
|
|
|
|
|
|
|
|
|
|
|
|
contingent consideration relating
to the Chrysler Financial acquisition11 |
|
(3) |
|
(6) |
|
(19) |
|
(17) |
|
(55) |
|
Integration charges and direct
transaction costs relating to the |
|
|
|
|
|
|
|
|
|
|
|
|
acquisition of the credit card
portfolio of MBNA Canada12 |
|
(25) |
|
(25) |
|
- |
|
(104) |
|
- |
|
Litigation
reserve13 |
|
- |
|
(77) |
|
- |
|
(248) |
|
- |
|
Reduction of allowance for incurred
but not identified credit losses14 |
|
- |
|
30 |
|
- |
|
120 |
|
- |
|
Positive impact due to changes in
statutory income tax rates15 |
|
- |
|
18 |
|
- |
|
18 |
|
- |
|
Impact of Superstorm
Sandy16 |
|
(37) |
|
- |
|
- |
|
(37) |
|
- |
|
Total adjustments for items of note
|
|
(160) |
|
(117) |
|
(67) |
|
(604) |
|
(387) |
|
Net income available to common
shareholders - reported |
$ |
1,522 |
$ |
1,628 |
$ |
1,515 |
$ |
6,171 |
$ |
5,761 |
|
1 |
Adjusted net interest income excludes the following items of
note: second quarter 2012 - $22 million (net of tax, $17
million) of certain charges against revenue related to
promotional-rate card origination activities, as explained in
footnote 12; first quarter 2012 - $14 million (net of tax,
$10 million) of certain charges against revenue related to
promotional-rate card origination activities.
|
2 |
Adjusted non-interest income excludes the following items of
note: fourth quarter 2012 - $1 million loss due to change in
fair value of credit default swaps (CDS) hedging the corporate loan
book, as explained in footnote 10; $33 million loss due to change
in fair value of derivatives hedging the reclassified
available-for-sale (AFS) securities portfolio, as explained in
footnote 8; $2 million loss due to change in fair value of
contingent consideration relating to Chrysler Financial, as
explained in footnote 11, $1 million loss due to the impact of
Superstorm Sandy, as explained in footnote 16; third quarter
2012 - $3 million gain due to change in CDS hedging the
corporate loan book; $2 million gain due to change in fair value of
derivatives hedging the reclassified AFS securities portfolio; $2
million loss due to change in fair value of contingent
consideration relating to Chrysler Financial; second quarter
2012 - $2 million loss due to change in fair value of CDS
hedging the corporate loan book; $5 million loss due to change in
fair value of derivatives hedging the reclassified AFS securities
portfolio; first quarter 2012 - $2 million loss due to
change in fair value of CDS hedging the corporate loan book; $53
million loss due to change in fair value of derivatives hedging the
reclassified AFS securities portfolio; $1 million gain due to
change in fair value of contingent consideration relating to
Chrysler Financial; fourth quarter 2011 - $15 million gain
due to change in fair value of CDS hedging the corporate loan book;
$41 million gain due to change in fair value of derivatives hedging
the reclassified AFS securities portfolio; $19 million loss due to
change in fair value of contingent consideration relating to
Chrysler Financial; third quarter 2011 - $7 million gain due
to change in fair value of CDS hedging the corporate loan book; $1
million gain due to change in fair value of derivatives hedging the
reclassified AFS securities portfolio; second quarter 2011 -
$3 million gain due to change in fair value of CDS hedging the
corporate loan book; $9 million gain due to change in fair value of
derivatives hedging the reclassified AFS securities portfolio;
first quarter 2011 - $6 million loss due to change in fair
value of CDS hedging the corporate loan book; $93 million gain due
to change in fair value of derivatives hedging the reclassified AFS
securities portfolio.
|
3 |
Adjusted provision for credit losses (PCL) excludes the
following items of note: fourth quarter 2012 - $54 million
due to the impact of Superstorm Sandy, as explained in footnote 16;
third quarter 2012 - $41 million in reduction of allowance
for incurred but not identified credit losses in Canadian Personal
and Commercial Banking, as explained in footnote 14; second
quarter 2012 - $80 million in reduction of allowance for
incurred but not identified credit losses in Canadian Personal and
Commercial Banking; first quarter 2012 - $41 million in
reduction of allowance for incurred but not identified credit
losses in Canadian Personal and Commercial Banking.
|
4 |
Adjusted non-interest expenses excludes the following items of
note: fourth quarter 2012 - $69 million amortization of
intangibles, as explained in footnote 7; $4 million of integration
charges and direct transaction costs relating to the Chrysler
Financial acquisition, as explained in footnote 11; $33 million of
integration charges and direct transaction costs relating to the
acquisition of the MBNA Canada credit card portfolio, as explained
in footnote 12; $7 million due to the impact of Superstorm Sandy,
as explained in footnote 16; third quarter 2012 - $69
million amortization of intangibles; $7 million of integration
charges and direct transaction costs relating to the Chrysler
Financial acquisition; $35 million of integration charges and
direct transaction costs relating to the acquisition of the MBNA
Canada credit card portfolio; $128 million of charges related to a
litigation reserve, as explained in footnote 13; second quarter
2012 - $69 million amortization of intangibles; $6 million of
integration charges and direct transaction costs relating to the
Chrysler Financial acquisition; $18 million of integration charges
and direct transaction costs relating to the acquisition of the
MBNA Canada credit card portfolio; first quarter 2012 - $70
million amortization of intangibles; $11 million of integration
charges related to U.S. Personal and Commercial Banking
acquisitions, as explained in footnote 9; $7 million of integration
charges and direct transaction costs relating to the Chrysler
Financial acquisition; $18 million of integration charges and
direct transaction costs relating to the acquisition of the MBNA
Canada credit card portfolio; $285 million of charges related to a
litigation reserve; fourth quarter 2011 - $123 million
amortization of intangibles; $9 million of integration charges
related to U.S. Personal and Commercial Banking acquisitions; $12
million of integration charges related to the Chrysler Financial
acquisition; third quarter 2011 - $135 million amortization
of intangibles; $46 million of integration charges related to U.S.
Personal and Commercial Banking acquisitions; $9 million of
integration charges related to the Chrysler Financial acquisition;
second quarter 2011 - $138 million amortization of
intangibles; $26 million of integration charges related to U.S.
Personal and Commercial Banking acquisitions; $4 million of
integration charges and direct transaction costs relating to the
Chrysler Financial acquisition; first quarter 2011 - $129
million amortization of intangibles; $37 million of integration
charges related to U.S. Personal and Commercial Banking
acquisitions.
|
5 |
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 Bank's Consolidated Financial
Statements.
|
6 |
Adjusted equity in net income of an investment in associate
excludes the following items of note: fourth quarter 2012 -
$14 million amortization of intangibles, as explained in footnote
7; third quarter 2012 - $13 million amortization of
intangibles; second quarter 2012 - $15 million amortization
of intangibles; first quarter 2012 - $15 million
amortization of intangibles; fourth quarter 2011 - $13
million amortization of intangibles; third quarter 2011 -
$13 million amortization of intangibles; second quarter 2011
- $16 million amortization of intangibles; first quarter
2011 - $17 million amortization of intangibles.
|
7 |
Amortization of intangibles primarily relates to the Canada
Trust acquisition in 2000, the TD Banknorth acquisition in 2005 and
its privatization in 2007, the Commerce acquisition in 2008, the
acquisitions by TD Banknorth of Hudson United Bancorp in 2006 and
Interchange Financial Services in 2007, the amortization of
intangibles included in equity in net income of TD Ameritrade, and
the acquisition of the MBNA Canada credit card portfolio in 2012.
Effective 2011, the amortization of software is recorded in
amortization of intangibles; however, amortization of software is
not included for purposes of items of note, which only includes
amortization of intangibles acquired as a result of business
combinations.
|
8 |
During 2008, as a result of deterioration in markets and severe
dislocation in the credit market, the Bank changed its trading
strategy with respect to certain trading debt securities. Since the
Bank no longer intended to actively trade in these debt securities,
the Bank reclassified these debt securities from trading to the AFS
category effective August 1, 2008. As part of the Bank's
trading strategy, these debt securities are economically hedged,
primarily with CDS and interest rate swap contracts. This includes
foreign exchange translation exposure related to the debt
securities portfolio and the derivatives hedging it. These
derivatives are not eligible for reclassification and 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. Commencing in the second quarter
of 2011, 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 |
As a result of U.S. Personal and Commercial Banking
acquisitions, the Bank incurred integration charges and direct
transaction costs. Integration charges consist of costs related to
information technology, employee retention, external professional
consulting charges, marketing (including customer communication and
rebranding), integration-related travel costs, employee severance
costs, the costs of amending certain executive employment and award
agreements, contract termination fees and the write-down of
long-lived assets due to impairment. Direct transaction costs are
expenses directly incurred in effecting a business combination and
consist primarily of finders' fees, advisory fees, and legal fees.
Integration charges in the recent quarters were driven by the South
Financial and FDIC-assisted acquisitions and there were no direct
transaction costs recorded. The first quarter 2012 was the last
quarter U.S. Personal and Commercial Banking included any further
FDIC-assisted and South Financial related integration charges or
direct transaction costs as an item of note.
|
10 |
The Bank purchases CDS to hedge the credit risk in Wholesale
Banking's corporate lending portfolio. These CDS do not qualify for
hedge accounting treatment and are measured at fair value with
changes in fair value recognized in current period's earnings. The
related loans are accounted for at amortized cost. Management
believes that this asymmetry in the accounting treatment between
CDS and loans would result in periodic profit and loss volatility
which is not indicative of the economics of the corporate loan
portfolio or the underlying business performance in Wholesale
Banking. As a result, the CDS are accounted for on an accrual basis
in Wholesale Banking and the gains and losses on the CDS, in excess
of the accrued cost, are reported in the Corporate segment.
Adjusted earnings exclude the gains and losses on the CDS in excess
of the accrued cost. When a credit event occurs in the corporate
loan book that has an associated CDS hedge, the PCL related to the
portion that was hedged via the CDS is netted against this item of
note.
|
11 |
As a result of the Chrysler Financial acquisition in Canada and
U.S., the Bank incurred integration charges and direct transaction
costs. As well, the Bank experienced volatility in earnings as a
result of changes in fair value of contingent consideration.
Integration charges consist of costs related to information
technology, employee retention, external professional consulting
charges, marketing (including customer communication and
rebranding), integration-related travel costs, employee severance
costs, the cost of amending certain executive employment and award
agreements, contract termination fees, and the write-down of
long-lived assets due to impairment. Direct transaction costs are
expenses directly incurred in effecting a business combination and
consist primarily of finders' fees, advisory fees, and legal fees.
Contingent consideration is defined as part of the purchase
agreement, whereby the Bank is required to pay additional cash
consideration in the event that amounts realized on certain assets
exceed a pre-established threshold. Contingent consideration is
recorded at fair value on the date of acquisition. Changes in fair
value subsequent to acquisition are recorded in the Consolidated
Statement of Income. Adjusted earnings exclude the gains and losses
on contingent consideration in excess of the acquisition date fair
value. While integration charges and direct transaction costs
related to this acquisition were incurred for both Canada and the
U.S., the majority of these charges relate to integration
initiatives undertaken for U.S. Personal and Commercial
Banking.
|
12 |
As a result of the acquisition of the MBNA Canada credit card
portfolio, as well as certain other assets and liabilities, the
Bank incurred integration charges and direct transaction costs.
Integration charges consist of costs related to information
technology, employee retention, external professional consulting
charges, marketing (including customer communication, rebranding
and certain charges against revenues related to promotional-rate
card origination activities), integration-related travel costs,
employee severance costs, the cost of amending certain executive
employment and award agreements, contract termination fees, and the
write-down of long lived assets due to impairment. 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. Direct transaction
costs are expenses directly incurred in effecting the business
combination and consist primarily of finders' fees, advisory fees
and legal fees. Integration charges and direct transaction costs
related to this acquisition were incurred by Canadian Personal and
Commercial Banking.
|
13 |
As a result of certain adverse judgments in the U.S. during the
first quarter of 2012, as well as settlements reached following the
quarter, the Bank took prudent steps to reassess its litigation
provisions and, having considered these factors as well as other
related or analogous litigation cases, the Bank determined in
accordance with applicable accounting standards, the litigation
provision of $285 million ($171 million after tax) was required in
the first quarter 2012. Based on the continued evaluation of this
portfolio of cases, the Bank determined in accordance with
applicable accounting standards that an increase to this litigation
provision of $128 million ($77 million after tax) was required in
the third quarter 2012.
|
14 |
Excluding the impact related to the MBNA credit card and other
consumer loan portfolios (which is recorded to the Canadian
Personal and Commercial Banking results), "Reduction of allowance
for incurred but not identified credit losses", formerly known as
"General allowance increase (release) in Canadian Personal and
Commercial Banking and Wholesale Banking" includes $41 million (net
of tax, $30 million) in Q3 2012, $80 million (net of tax, $59
million) in Q2 2012 and $41 million (net of tax, $31 million) in Q1
2012, all of which are attributable to the Wholesale Banking and
non-MBNA related Canadian Personal and Commercial Banking loan
portfolios.
|
15 |
This represents the impact of changes in the income tax
statutory rate on net deferred income tax balances.
|
16 |
The Bank provided $62 million (net of tax, $37 million) for
certain estimated losses resulting from Superstorm Sandy which
primarily relate to an increase in provision for credit losses,
fixed asset impairments and charges against revenue relating to fee
reversals. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 4:
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE
(EPS)1 |
|
|
|
|
|
(Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
For the twelve months
ended |
|
|
October 31 |
July
31 |
October 31 |
October 31 |
October 31 |
|
|
2012 |
2012 |
2011 |
2012 |
2011 |
|
Basic earnings per share - reported |
$ |
1.67 |
$ |
1.79 |
$ |
1.70 |
$ |
6.81 |
$ |
6.50 |
|
Adjustments for items of
note2 |
|
0.17 |
|
0.13 |
|
0.07 |
|
0.66 |
|
0.44 |
|
Basic earnings per share - adjusted |
$ |
1.84 |
$ |
1.92 |
$ |
1.77 |
$ |
7.47 |
$ |
6.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share - reported |
$ |
1.66 |
$ |
1.78 |
$ |
1.68 |
$ |
6.76 |
$ |
6.43 |
|
Adjustments for items of
note2 |
|
0.17 |
|
0.13 |
|
0.07 |
|
0.66 |
|
0.43 |
|
Diluted earnings per share - adjusted |
$ |
1.83 |
$ |
1.91 |
$ |
1.75 |
$ |
7.42 |
$ |
6.86 |
|
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 explanation 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 twelve months
ended |
|
|
|
October 31 |
|
July
31 |
October 31 |
October 31 |
October 31 |
|
|
|
2012 |
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
Provision for income taxes -
reported |
$ |
178 |
|
$ |
291 |
|
$ |
310 |
|
$ |
1,092 |
|
$ |
1,326 |
|
Adjustments for items of
note:1,2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles |
|
23 |
|
|
23 |
|
|
41 |
|
|
96 |
|
|
164 |
|
Fair value of
derivatives hedging the reclassified available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities
portfolio |
|
(2) |
|
|
(2) |
|
|
(4) |
|
|
- |
|
|
(30) |
|
Integration charges and direct
transaction costs relating to U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal and
Commercial Banking acquisitions |
|
- |
|
|
- |
|
|
10 |
|
|
2 |
|
|
59 |
|
Fair value of credit
default swaps hedging the corporate loan book, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of provision
for credit losses |
|
1 |
|
|
(1) |
|
|
(6) |
|
|
2 |
|
|
(6) |
|
Integration charges,
direct transaction costs, and changes in fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value of
contingent consideration relating to the Chrysler |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
acquisition |
|
3 |
|
|
3 |
|
|
12 |
|
|
10 |
|
|
32 |
|
Integration charges
and direct transaction costs relating to the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition of the
credit card portfolio of MBNA Canada |
|
8 |
|
|
10 |
|
|
- |
|
|
36 |
|
|
- |
|
Litigation reserve |
|
- |
|
|
51 |
|
|
- |
|
|
165 |
|
|
- |
|
Reduction of allowance
for incurred but not identified credit losses |
|
- |
|
|
(11) |
|
|
- |
|
|
(42) |
|
|
- |
|
Positive impact due to
changes in statutory income tax rates |
|
- |
|
|
18 |
|
|
- |
|
|
18 |
|
|
- |
|
Impact of Superstorm Sandy |
|
25 |
|
|
- |
|
|
- |
|
|
25 |
|
|
- |
|
Total adjustments for items of note
|
|
58 |
|
|
91 |
|
|
53 |
|
|
312 |
|
|
219 |
|
Provision for
income taxes - adjusted |
$ |
236 |
|
$ |
382 |
|
$ |
363 |
|
$ |
1,404 |
|
$ |
1,545 |
|
Effective income
tax rate - adjusted3 |
|
12.3 |
% |
|
18.0 |
% |
|
18.7 |
% |
|
17.1 |
% |
|
20.1 |
% |
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. |
|
|
ECONOMIC PROFIT AND RETURN ON COMMON EQUITY
Effective the first quarter of 2012, the Bank revised its
methodology for allocating capital to its business segments to
align with the future common equity capital requirements under
Basel III at a 7% Common Equity Tier 1 ratio. The return measures
for business segments now reflect a return on common equity
methodology and not return on invested capital which was reported
previously. These changes have been applied prospectively.
The Bank utilizes economic profit as a tool to measure
shareholder value creation. Economic profit is adjusted net income
available to common shareholders less a charge for average common
equity. The rate used in the charge for average common equity is
the equity cost of capital calculated using the capital asset
pricing model. The charge represents an assumed minimum return
required by common shareholders on the Bank's common equity. The
Bank's goal is to achieve positive and growing economic profit.
Adjusted return on common equity (ROE) is adjusted net income
available to common shareholders as a percentage of average common
equity. ROE is a percentage rate and is a variation of economic
profit which is a dollar measure. When ROE exceeds the equity cost
of capital, economic profit is positive. The Bank's goal is to
maximize economic profit by achieving ROE that exceeds the equity
cost of capital.
Economic profit and adjusted ROE are non-GAAP financial measures
as these are not defined terms 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: ECONOMIC PROFIT AND
RETURN ON COMMON EQUITY |
|
|
|
|
(millions of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
|
For the twelve months
ended |
|
|
|
October 31 |
|
July
31 |
|
October 31 |
|
October 31 |
|
October 31 |
|
|
|
2012 |
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
|
|
Return on |
|
Return on |
|
Return on |
|
Return on |
|
Return on |
|
|
|
common |
|
common |
|
invested |
|
common |
|
invested |
|
|
|
equity |
|
equity |
|
capital |
|
equity |
|
capital |
|
Average common equity |
$ |
43,256 |
|
$ |
42,333 |
|
$ |
38,131 |
|
$ |
41,535 |
|
$ |
35,568 |
|
Average cumulative goodwill and
intangible assets amortized, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income
taxes |
|
N/A |
|
|
N/A |
|
|
5,435 |
|
|
N/A |
|
|
5,309 |
|
Average common equity/Average invested
capital |
$ |
43,256 |
|
$ |
42,333 |
|
$ |
43,566 |
|
$ |
41,535 |
|
$ |
40,877 |
|
Rate charged for
average common equity/Average invested capital |
|
9.0 |
% |
|
9.0 |
% |
|
9.0 |
% |
|
9.0 |
% |
|
9.0 |
% |
Charge for average
common equity/Average invested capital |
$ |
979 |
|
$ |
958 |
|
$ |
988 |
|
$ |
3,738 |
|
$ |
3,679 |
|
Net income available to common
shareholders - reported |
$ |
1,522 |
|
$ |
1,628 |
|
$ |
1,515 |
|
$ |
6,171 |
|
$ |
5,761 |
|
Items of note impacting income, net of
income taxes1 |
|
160 |
|
|
117 |
|
|
67 |
|
|
604 |
|
|
387 |
|
Net income
available to common shareholders - adjusted |
$ |
1,682 |
|
$ |
1,745 |
|
$ |
1,582 |
|
$ |
6,775 |
|
$ |
6,148 |
|
Economic
profit2 |
$ |
703 |
|
$ |
787 |
|
$ |
594 |
|
$ |
3,037 |
|
$ |
2,469 |
|
Return on common
equity - adjusted/Return on invested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
capital |
|
15.5 |
% |
|
16.4 |
% |
|
14.4 |
% |
|
16.3 |
% |
|
15.0 |
% |
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 the first quarter of 2012, economic profit is
calculated based on average common equity on a prospective basis.
Prior to the first quarter of 2012, economic profit was calculated
based on average invested capital. Had this change been done on a
retroactive basis, economic profit for the Bank, calculated based
on average common equity, would have been $717 million for the
fourth quarter of 2011, $770 million for the third quarter of 2011,
$712 million for the second quarter of 2011 and $758 million for
the first quarter of 2011. |
|
|
Significant Events in 2012
Acquisition of Credit Card Portfolio of MBNA
Canada
On December 1, 2011, the Bank
acquired substantially all of the credit card portfolio of MBNA
Canada (MBNA), a wholly-owned subsidiary of Bank of America
Corporation, as well as certain other assets and liabilities for
cash consideration of $6,839 million.
The acquisition was accounted for by the purchase method. The
results of the acquisition from the acquisition date to
October 31, 2012 have been
consolidated with the Bank's results and are reported primarily in
the Canadian Personal and Commercial Banking and Wealth and
Insurance segments. As at December 1,
2011, the acquisition contributed $7,361 million of loans, $275 million of other assets, and $1,348 million of liabilities. The estimated fair
value of loans reflects the expected credit losses at the
acquisition date. The excess of consideration over the fair value
of the acquired net assets of approximately $551 million has been allocated to $458 million of intangible assets and
$93 million of goodwill.
Acquisition of Target's U.S. Credit Card
Portfolio
On October 23, 2012, the Bank
announced that it entered into an agreement with Target Corporation
(Target) under which the Bank will acquire Target's existing U.S.
Visa and private label credit card portfolio, which totals
approximately US$5.9 billion. TD also
entered into a seven-year program agreement under which it will
become the exclusive issuer of Target-branded Visa and private
label consumer credit cards to Target's U.S. customers. TD will
acquire over 5 million active Visa and private label accounts and
will fund the receivables for existing Target Visa accounts and all
existing and newly issued Target private label accounts in the U.S.
Subject to the receipt of regulatory approvals and satisfaction of
other customary closing conditions, this transaction is expected to
be completed in the first half of fiscal 2013.
Investment in TMX Group Limited
On October 30, 2011, TMX Group Inc.
(TMX) and Maple Group Acquisition Corporation (now TMX Group
Limited) (Maple) announced that they had entered into a support
agreement in respect of Maple's proposed acquisition of all of the
outstanding shares of TMX pursuant to an integrated two-step
transaction valued at approximately $3,800
million.
Maple is a corporation whose investors comprise twelve of
Canada's leading financial
institutions and pension funds, including TD Securities Inc., a
wholly owned subsidiary of the Bank. Maple completed the
acquisition of 80% of the outstanding TMX shares on August 10, 2012, in accordance with the terms and
conditions of the offer. The transaction also provided for the
acquisition of Alpha Trading Systems Inc. and Alpha Trading Systems
Limited Partnership (collectively Alpha) and The Canadian
Depository for Securities Limited (CDSL). Maple completed the
acquisition of Alpha and CDSL on August 1,
2012, with existing CDSL and Alpha shareholders receiving
cash payments in exchange for their equity interests.
Pursuant to a court-approved arrangement, the remainder of the
outstanding TMX shares held by TMX shareholders (other than Maple)
were exchanged for Maple shares on a one-for-one basis with a
closing date of September 14, 2012.
As an investor in Maple, the Bank provided equity funding to Maple
in the amount of approximately $194
million to fund the purchase of TMX, Alpha and CDSL.
U.S. Legislative Developments
On July 21, 2010 the President of
the United States signed into law
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
"Dodd-Frank Act" or "the Act") that provides for widespread changes
to the U.S. financial industry. At over 2,300 pages in length, the
Dodd-Frank Act will ultimately affect every financial institution
operating in the United States,
including the Bank, and, due to certain extraterritorial aspects of
the Act, will impact the Bank's operations outside the United States, including in Canada. The Dodd-Frank Act makes significant
changes in areas such as banking and bank supervision, the
resolution of, and enhanced prudential standards applicable to,
systemically important financial companies, proprietary trading and
certain fund investments, consumer protection, securities,
over-the-counter derivatives, and executive compensation, among
others. The Dodd-Frank Act also calls for the issuance of over 240
regulatory rulemakings as well as numerous studies and ongoing
reports as part of its implementation. Accordingly, while the Act
will have an effect on the business of the Bank, especially its
business operations in the United
States, the full impact on the Bank will not be known until
such time as the implementing regulations are fully released and
finalized.
On November 10, 2011, the
Department of the Treasury, the Board of Governors of the Federal
Reserve System (FRB), the Federal Deposit Insurance Corporation and
the Securities and Exchange Commission jointly released a proposed
rule implementing Section 619 of the Dodd-Frank Act (the "Volcker
Rule" or "the Rule"). The U.S. Commodity Futures Trading Commission
(CFTC) issued a substantially similar proposal on January 13, 2012. The Bank is in the process of
analyzing and planning for the implementation of the proposed
Volcker Rule. The Rule broadly prohibits proprietary trading and
places limitations on other permitted trading activities, limits
investments in and the sponsorship of hedge and private equity
funds and requires robust compliance and reporting regimes
surrounding permitted activities. The Rule is also expected to have
an effect on certain of the funds the Bank sponsors and advises in
its asset management business as well as private equity investments
it currently holds. Under the current proposal, the provisions of
the Rule are applicable to banking entities, including non-U.S.
banks such as the Bank which control insured depository
institutions in the United States
or are treated as bank holding companies by virtue of maintaining a
branch or agency in the U.S. The proposed Rule applies to
affiliates or subsidiaries of the Bank: the terms "affiliate" and
"subsidiary" are defined by the rule to include those entities
controlled by or under common control with the Bank. As currently
proposed, the Rule requires the implementation of a comprehensive
compliance program and monitoring of certain quantitative risk
metrics as well as compliance monitoring and reporting programs. On
April 19, 2012, the FRB, on behalf of
itself and the other agencies, issued guidance stating that full
conformance with the Rule will not be required until July 21, 2014, unless that period is extended by
the FRB. The agencies have not indicated when the final Rule will
be published. While the Rule is expected to have an adverse effect
on certain of the Bank's businesses, the extent of the impact will
not be known until such time as the current proposal is finalized.
At the current time, the impact is not expected to be material to
the Bank.
The Durbin Amendment contained in the Dodd-Frank Act authorizes
the FRB to issue regulations that set interchange fees which are
"reasonable and proportional" to the costs of processing such
transactions. In June 2011, the FRB
issued final rules limiting debit card interchange fees with a
required implementation date of October 1,
2011 and capped the fee at 21
cents per transaction plus small amounts to cover fraud
related expenses. The Durbin Amendment has impacted gross revenue
by approximately US$50 - 60 million
pre-tax per quarter, in line with expectations. For more detail on
the impact of the Durbin Amendment, see the U.S. Personal and
Commercial Banking segment disclosure in the "How Our Businesses
Performed" section of this document.
As a result of the Bank's participation in the U.S. derivatives
markets, the Bank will be required to register as a swap dealer
with the CFTC on or before December 31,
2012. Upon registration, and when the rules come into
effect, swap dealers will become subject to additional
requirements, including, but not limited to, measures that require
clearing and exchange trading of certain derivatives, new capital
and margin requirements for certain market participants, new
reporting requirements and new business conduct requirements for
derivatives under the jurisdiction of CFTC. The ultimate impact of
these regulations, including cross border implications, continues
to remain uncertain but is not expected to be material to the
Bank.
The FRB has proposed for comment a rulemaking that would
implement enhanced prudential standards and early remediation
provisions on systemically important financial institutions in the
U.S. The rule would establish new requirements for risk-based
capital, liquidity and liquidity standards, leverage limits, risk
management and credit exposure reporting. If implemented as
proposed, the rule would apply to the Bank's U.S. bank holding
company but not to the Bank.
The Bank continues to monitor closely these and other
legislative developments and will analyze the impact such
regulatory and legislative changes may have on its businesses.
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank's operations and
activities are organized around four key business segments
operating in a number of locations in key financial centres around
the globe: Canadian Personal and Commercial Banking, Wealth and
Insurance, U.S. Personal and Commercial Banking, and Wholesale
Banking. The Bank's other activities are grouped into the Corporate
segment. Effective December 1, 2011,
results of the acquisition of the MBNA Canada credit card portfolio
are reported primarily in the Canadian Personal and Commercial
Banking and Wealth and Insurance segments. Integration charges and
direct transaction costs relating to the acquisition of the MBNA
Canada credit card portfolio are reported in Canadian Personal and
Commercial Banking. The results of TD Auto Finance Canada are
reported in Canadian Personal and Commercial Banking. The results
of TD Auto Finance U.S. are reported in U.S. Personal and
Commercial Banking. Integration charges, direct transaction costs,
and changes in fair value of contingent consideration related to
the Chrysler Financial acquisition are reported in the Corporate
segment.
Effective the first quarter of 2012, executive responsibilities
for the TD Insurance business were moved from Group Head, Canadian
Banking, Auto Finance, and Credit Cards to the Group Head, Wealth
Management, Insurance, and Corporate Shared Services. The Bank has
updated the corresponding segment reporting results retroactively
for 2011.
Effective November 1, 2011, the
Bank revised its methodology for allocating capital to its business
segments to align with the future common equity capital
requirements under Basel III at a 7% Common Equity Tier 1 ratio.
The return measures for business segments now reflect a return on
common equity methodology and not return on invested capital which
was reported previously. These changes have been applied
prospectively.
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 notes 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, the "Business
Focus" section in the 2012 MD&A, and Note 28 to the 2012
Consolidated Financial Statements. For information concerning the
Bank's measures of economic profit and adjusted return on common
equity, which are non-GAAP financial measures, 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
is reversed in the Corporate segment. The TEB adjustment for the
quarter was $112 million, compared
with $94 million in the fourth
quarter last year, and $71 million in
the prior quarter.
The Bank continues to securitize retail loans and receivables,
however under IFRS, the majority of these loans and receivables
remain on-balance sheet.
|
|
|
|
|
|
|
|
|
|
|
TABLE 7: CANADIAN PERSONAL AND
COMMERCIAL BANKING1 |
|
|
|
|
|
(millions of Canadian dollars, except
as noted) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
|
|
|
October 31 |
|
July
31 |
|
October 31 |
|
|
|
2012 |
|
2012 |
|
2011 |
|
Net interest income |
$ |
2,071 |
|
$ |
2,055 |
|
$ |
1,840 |
|
Non-interest income |
|
678 |
|
|
675 |
|
|
621 |
|
Total revenue |
|
2,749 |
|
|
2,730 |
|
|
2,461 |
|
Provision for credit losses |
|
306 |
|
|
288 |
|
|
212 |
|
Non-interest expenses - reported |
|
1,343 |
|
|
1,259 |
|
|
1,193 |
|
Non-interest expenses - adjusted |
|
1,310 |
|
|
1,224 |
|
|
1,193 |
|
Net income - reported |
|
806 |
|
|
864 |
|
|
754 |
|
Adjustments for items of note, net
of income taxes2 |
|
|
|
|
|
|
|
|
|
Integration charges
and direct transaction costs relating to the |
|
|
|
|
|
|
|
|
|
|
acquisition of the
credit card portfolio of MBNA Canada |
|
25 |
|
|
25 |
|
|
- |
|
Net income - adjusted |
$ |
831 |
|
$ |
889 |
|
$ |
754 |
|
Selected volumes and ratios
|
|
|
|
|
|
|
|
|
|
Return on common equity -
reported3 |
|
41.9 |
% |
|
44.1 |
% |
|
36.0 |
% |
Return on common equity -
adjusted3 |
|
43.1 |
% |
|
45.4 |
% |
|
36.0 |
% |
Margin on average
earning assets (including securitized assets) |
|
2.83 |
% |
|
2.86 |
% |
|
2.71 |
% |
Efficiency ratio - reported |
|
48.9 |
% |
|
46.1 |
% |
|
48.4 |
% |
Efficiency ratio - adjusted |
|
47.7 |
% |
|
44.8 |
% |
|
48.4 |
% |
Number of Canadian retail stores |
|
1,168 |
|
|
1,160 |
|
|
1,150 |
|
Average number of full-time equivalent
staff |
|
28,449 |
|
|
31,270 |
|
|
30,065 |
|
1 |
Effective November 1, 2011, the Insurance business was
transferred from Canadian Personal and Commercial Banking to Wealth
and Insurance. The 2011 results have been restated
accordingly. |
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. |
3 |
Effective the first quarter of 2012, the Bank revised its
methodology for allocating capital to its business segments to
align with the future common equity capital requirements under
Basel III at a 7% Common Equity Tier 1 ratio. The return measures
for business segments will now be return on common equity rather
than return on invested capital. These changes have been applied
prospectively. Return on invested capital, which was used as the
return measure in prior periods, has not been restated to return on
common equity. |
|
|
Quarterly comparison - Q4 2012 vs. Q4 2011
Canadian Personal and Commercial Banking reported net income for
the quarter was $806 million, an
increase of $52 million, or 7%,
compared with the fourth quarter last year. Adjusted net income for
the quarter was $831 million, an
increase of $77 million, or 10%,
compared with the fourth quarter last year. The increase in
adjusted earnings was primarily driven by good loan and deposit
volume growth, and the addition of MBNA. The reported annualized
return on common equity for the quarter was 41.9%, while the
adjusted annualized return on common equity was 43.1%.
Canadian Personal and Commercial Banking revenue is derived from
personal and business banking, auto lending and credit cards.
Revenue for the quarter was $2,749
million, an increase of $288
million, or 12%, compared with the fourth quarter last year.
The acquisition of MBNA contributed 10 percentage points to year
over year revenue growth. Net interest income growth was driven by
the inclusion of MBNA and portfolio volume growth, partially offset
by lower margin on average earning assets. Net interest income
included an elevated contribution from MBNA due to better credit
performance on acquired loans. The retail business continued to
generate good, but slowing lending volume growth, while business
lending volume growth remained strong. Personal lending growth was
impacted by a slowing housing market and continuing consumer
deleveraging. Compared with the fourth quarter last year, average
real estate secured lending volume increased $11.4 billion, or 6%. Auto lending average volume
increased $0.4 billion, or 3%, while
all other personal lending average volumes, excluding MBNA,
declined $0.4 billion or 2%. Business
loans and acceptances average volume increased $5.5 billion, or 15%. Average personal deposit
volumes increased $13.2 billion, or
10%, while average business deposit volumes increased $6.4 billion, or 10%. Excluding the impact of
MBNA, margin on average earning assets decreased 11 bps to 2.60%.
The decrease was due to the impact of the low interest rate
environment, competitive pricing and portfolio mix. Non-interest
income growth of 9% was primarily due to volume fee growth and
MBNA.
PCL for the quarter was $306
million, an increase of $94
million, or 44%, compared with the fourth quarter last year.
The increase in PCL was due primarily to the addition of MBNA.
Personal banking PCL was $289
million, or $198 million
excluding MBNA, an increase of $2
million, or 1%. Personal PCL for the quarter was elevated
due to adjustments related to past due accounts. Business banking
PCL was stable at $17 million, an
increase of $1 million, compared with
the fourth quarter last year. Annualized PCL as a percentage of
credit volume was 0.41%, or 0.29% excluding MBNA, a decrease of 1
bp, compared with the fourth quarter last year. Net impaired loans
were $1,000 million, an increase of
$108 million, or 12%, compared with
the fourth quarter last year. Net impaired loans as a percentage of
total loans were 0.33 %, compared with 0.32% as at October 31, 2011.
Reported non-interest expenses for the quarter were $1,343 million, an increase of $150 million, or 13%, compared with the fourth
quarter last year. Adjusted non-interest expenses for the quarter
were $1,310 million, an increase of
$117 million, or 10%, compared with
the fourth quarter last year. Excluding MBNA, expenses increased
$26 million, or 2%, driven by volume
growth and investment in business initiatives.
The average full-time equivalent (FTE) staffing levels decreased
by 1,616, or 5%, compared with the fourth quarter last year, due to
a transfer of FTEs to the Corporate segment, and volume related FTE
productivity gains, partially offset by the addition of MBNA. The
reported efficiency ratio for the quarter worsened to 48.9%, while
the adjusted efficiency ratio improved to 47.7%, compared with
48.4%, on both a reported and adjusted basis, in the fourth quarter
last year.
Quarterly comparison - Q4 2012 vs. Q3 2012
Canadian Personal and Commercial Banking reported net income for
the quarter decreased $58 million, or
7%, compared with the prior quarter. Adjusted net income for the
quarter decreased $58 million, or 7%,
compared with the prior quarter. The decrease in earnings was
primarily due to an increase in non-interest expenses. The reported
annualized return on common equity for the quarter was 41.9%, while
the adjusted annualized return on common equity was 43.1%, compared
with 44.1% and 45.4% respectively, in the prior quarter.
Revenue for the quarter increased $19
million, or 1%, compared with the prior quarter primarily
due to higher net interest income driven by volume growth,
partially offset by lower margins. Compared with the prior quarter,
average real estate secured lending volume increased $3.9 billion, or 2%. Auto lending average volume
increased $0.1 billion, or 1%, while
all other personal lending average volumes declined $0.2 billion, or 1%. Business loans and
acceptances average volumes increased $1.4
billion, or 3%. Average personal deposit volumes increased
$2.8 billion, or 2%, while average
business deposit volumes increased $1.8
billion, or 3%. Margin on average earning assets decreased 3
bps to 2.83%, mainly driven by lower deposit margins. Non-interest
income was relatively flat compared to the prior quarter.
PCL for the quarter increased $18
million, or 6%, compared with the prior quarter. Personal
banking PCL for the quarter increased $17
million, or 6%, compared with the prior quarter due to
adjustments related to past due accounts. Business banking PCL was
stable with an increase of $1
million. Net impaired loans increased $137 million, or 16%, compared with the prior
quarter. Net impaired loans as a percentage of total loans were
0.33%, compared with 0.29% as at July 31,
2012.
Reported non-interest expenses for the quarter increased
$84 million, or 7%, compared with the
prior quarter. Adjusted non-interest expenses for the quarter
increased $86 million, or 7%,
compared with the prior quarter largely due to the timing of
business investments, marketing initiatives, and employee-related
costs.
The average FTE staffing levels decreased by 2,821, or 9%,
compared with the prior quarter primarily due to a transfer of FTEs
to the Corporate segment. The reported efficiency ratio for the
quarter worsened to 48.9%, compared with 46.1% in the prior
quarter, while the adjusted efficiency ratio worsened to 47.7%,
compared with 44.8% in the prior quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 8: WEALTH AND
INSURANCE1 |
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars, except
as noted) |
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
October 31 |
|
July 31 |
|
October 31 |
|
|
|
2012 |
|
2012 |
|
2011 |
|
Net interest income |
$ |
147 |
|
$ |
148 |
|
$ |
136 |
|
Insurance revenue, net of claims and
related expenses2 |
|
232 |
|
|
270 |
|
|
308 |
|
Income from financial instruments
designated at fair value through |
|
|
|
|
|
|
|
|
|
profit or loss |
|
|
(6) |
|
|
18 |
|
|
9 |
|
Non-interest income - other |
|
590 |
|
|
573 |
|
|
586 |
|
Total revenue |
|
963 |
|
|
1,009 |
|
|
1,039 |
|
Non-interest expenses |
|
676 |
|
|
632 |
|
|
669 |
|
Net income |
|
242 |
|
|
304 |
|
|
289 |
|
Wealth |
|
148 |
|
|
154 |
|
|
139 |
|
Insurance |
|
94 |
|
|
150 |
|
|
150 |
|
TD Ameritrade |
|
51 |
|
|
56 |
|
|
54 |
|
Total Wealth and Insurance
|
$ |
293 |
|
$ |
360 |
|
$ |
343 |
|
Selected volumes and
ratios |
|
|
|
|
|
|
|
|
|
Assets under administration - Wealth
(billions of Canadian dollars)3 |
$ |
258 |
|
$ |
249 |
|
$ |
237 |
|
Assets under management - Wealth
(billions of Canadian dollars) |
|
207 |
|
|
204 |
|
|
189 |
|
Gross originated insurance
premiums |
|
943 |
|
|
989 |
|
|
873 |
|
Return on common
equity4 |
|
17.9 |
% |
|
20.9 |
% |
|
25.9 |
% |
Efficiency ratio |
|
70.2 |
% |
|
62.6 |
% |
|
64.4 |
% |
Average number of full-time equivalent
staff |
|
11,839 |
|
|
11,981 |
|
|
11,831 |
|
1 |
Effective November 1, 2011, the Insurance business was
transferred from Canadian Personal and Commercial Banking to Wealth
and Insurance. The 2011 results have been restated
accordingly. |
2 |
Insurance revenue, net of claims and related expenses is
included in the non-interest income line on the Bank's Consolidated
Statement of Income. For the three months ended October 31, 2012,
the claims and related expenses were $688 million (for the three
months ended July 31, 2012 - $645 million; October 31, 2011 - $579
million). |
3 |
The prior period results for Wealth assets under administration
were restated to conform with the presentation adopted in the
current year. |
4 |
Effective the first quarter of 2012, the Bank revised its
methodology for allocating capital to its business segments to
align with the future common equity capital requirements under
Basel III at a 7% Common Equity Tier 1 ratio. The return measures
for business segments will now be return on common equity rather
than return on invested capital. These changes have been applied
prospectively. Return on invested capital, which was used as the
return measure in prior periods, has not been restated to return on
common equity. |
|
|
Quarterly comparison - Q4 2012 vs. Q4 2011
Wealth and Insurance net income for the quarter was $293 million, a decrease of $50 million, or 15%, compared with the fourth
quarter last year. The decrease in earnings was mostly due to
unfavourable prior years claims development, weather-related events
and lower trading volume, partially offset by higher growth in
premiums and client assets and the inclusion of MBNA. Wealth and
Insurance net income excluding TD Ameritrade was $242 million, a decrease of $47 million, or 16%, compared with the fourth
quarter last year. The Bank's reported investment in TD Ameritrade
generated net income for the quarter of $51
million, a decrease of $3
million, or 6%, compared with the fourth quarter last year,
driven by lower TD Ameritrade earnings, partially offset by
increased economic ownership from stock repurchases and a weaker
Canadian dollar. For its fourth quarter ended September 30, 2012, TD Ameritrade reported net
income was US$143 million, a decrease
of US$21 million, or 13%, compared
with the fourth quarter last year, primarily driven by lower
trading revenue, partially offset by lower expenses. The annualized
return on common equity for the quarter was 17.9%.
Wealth and Insurance revenue is derived from direct investing,
advice-based business, asset management services, life and health
insurance, and property and casualty insurance. Revenue for the
quarter was $963 million, a decrease
of $76 million, or 7%, compared to
the fourth quarter last year. In the Insurance business, revenue
decreased from unfavourable prior years claims development in the
Ontario auto market and
weather-related events, partially offset by premium growth and the
inclusion of MBNA. During the latter part of 2012, the business
experienced an increase in prior years claims development in the
Ontario auto insurance market
primarily related to pre-2011 accident years. Frequency and
severity of claims related to these accident years were worse than
anticipated for certain insurance coverage, translating into higher
claims costs. In the Wealth business, higher fee-based revenue from
asset growth in the advice-based and asset management businesses
and higher net interest income driven by improved net interest
margins were partially offset by lower trading revenue in the
direct investing business.
Non-interest expenses for the quarter were $676 million, an increase of $7 million, or 1%, compared with the fourth
quarter last year, primarily due to higher expenses in the
Insurance business to support business growth.
Assets under administration of $258
billion as at October 31,
2012, increased $21 billion,
or 9%, compared with October 31,
2011. Assets under management of $207
billion as at October 31, 2012
increased $18 billion, or 10%,
compared with October 31, 2011. These
increases were mainly driven by net new client assets.
Gross originated insurance premiums were $943 million, an increase of $70 million, or 8%, compared with the fourth
quarter last year. The increase was primarily due to organic
business growth.
The average FTE staffing levels remained relatively flat
compared with the fourth quarter last year. The efficiency ratio
for the current quarter worsened to 70.2%, compared with 64.4% in
the fourth quarter last year, due primarily to higher claims and
related expenses in the Insurance business.
Quarterly comparison - Q4 2012 vs. Q3 2012
Wealth and Insurance net income for the quarter decreased
$67 million, or 19%, compared with
the prior quarter. The decrease in earnings was due to unfavourable
prior years claims development and increased project and
employee-related expenses, partially offset by higher trading
revenue and growth in client assets. Wealth and Insurance net
income excluding TD Ameritrade was $242
million, a decrease of $62
million, or 20%. The Bank's reported investment in TD
Ameritrade reflected a decrease in net income of $5 million, or 9%, compared with the prior
quarter, mainly due to lower earnings at TD Ameritrade. For its
fourth quarter ended September 30,
2012, TD Ameritrade reported net income decreased
US$11 million, or 7%, compared with
the prior quarter, primarily driven by lower trading revenue. The
annualized return on common equity for the quarter was 17.9%,
compared with 20.9% in the prior quarter.
Revenue for the quarter decreased $46
million, or 5%, compared with the prior quarter. In the
Insurance business, revenue decreased from unfavourable prior years
claims development in the Ontario
auto market. During the latter part of 2012, the business
experienced an increase in prior years claims development in the
Ontario auto insurance market
primarily related to pre-2011 accident years. Frequency and
severity of claims related to these accident years were worse than
anticipated for certain insurance coverage, translating into higher
claims costs. In the Wealth business, revenue increased mainly due
to higher fee-based revenue from asset growth in the advice-based
and asset management businesses and higher trading revenue mainly
from new securities issues in the advice-based business.
Non-interest expenses for the quarter increased $44 million, or 7%, compared to the prior
quarter, primarily due to higher project expenses and
employee-related costs.
Assets under administration of $258
billion as at October 31, 2012
increased by $9 billion, or 4%,
compared with July 31, 2012. Assets
under management of $207 billion as
at October 31, 2012 increased
$3 billion, or 1%, compared with
July 31, 2012. The increases were
driven by an increase in market value of assets and net new client
assets.
Gross originated insurance premiums decreased $46 million, or 5%, compared with the prior
quarter due largely to a seasonal decline.
The average FTE staffing levels for the current quarter
decreased by 142, or 1%, compared with prior quarter, primarily
from lower support required due to a decrease in trading volume in
the Wealth direct investing business and the sale of the U.S.
Insurance business. The efficiency ratio for the current quarter
worsened to 70.2 %, compared with 62.6 % in the prior quarter due
to higher expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 9: U.S. PERSONAL AND
COMMERCIAL BANKING |
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars, except as
noted) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
Canadian dollars |
|
|
|
|
|
|
U.S.
dollars |
|
|
|
October 31
2012 |
|
|
July 31
2012 |
|
October 31
2011 |
|
October
31
2012 |
|
|
July 31
2012 |
|
October 31
2011 |
|
Net interest income |
$ |
1,148 |
|
$ |
1,180 |
|
$ |
1,124 |
|
$ |
1,164 |
|
$ |
1,160 |
|
$ |
1,123 |
|
Non-interest income |
|
375 |
|
|
346 |
|
|
339 |
|
|
380 |
|
|
340 |
|
|
335 |
|
Total revenue - reported |
|
1,523 |
|
|
1,526 |
|
|
1,463 |
|
|
1,544 |
|
|
1,500 |
|
|
1,458 |
|
Total revenue - adjusted |
|
1,524 |
|
|
1,526 |
|
|
1,463 |
|
|
1,545 |
|
|
1,500 |
|
|
1,458 |
|
Provision for credit losses -
loans |
|
231 |
|
|
150 |
|
|
143 |
|
|
234 |
|
|
148 |
|
|
143 |
|
Provision for credit
losses - debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
classified as loans |
|
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
Provision for credit
losses - acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
credit-impaired
loans1 |
|
20 |
|
|
22 |
|
|
(16) |
|
|
20 |
|
|
22 |
|
|
(16) |
|
Provision for credit losses -
reported |
|
254 |
|
|
175 |
|
|
130 |
|
|
257 |
|
|
173 |
|
|
130 |
|
Provision for credit losses -
adjusted |
|
200 |
|
|
175 |
|
|
130 |
|
|
202 |
|
|
173 |
|
|
130 |
|
Non-interest expenses - reported |
|
929 |
|
|
1,058 |
|
|
980 |
|
|
941 |
|
|
1,041 |
|
|
978 |
|
Non-interest expenses - adjusted |
|
922 |
|
|
930 |
|
|
970 |
|
|
934 |
|
|
915 |
|
|
968 |
|
Net income - reported |
|
316 |
|
|
284 |
|
|
295 |
|
|
321 |
|
|
279 |
|
|
292 |
|
Adjustments for items of
note2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration charges and direct
transaction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs relating to U.S. Personal
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking acquisitions |
|
- |
|
|
- |
|
|
(1) |
|
|
- |
|
|
- |
|
|
(1) |
|
Litigation reserve |
|
- |
|
|
77 |
|
|
- |
|
|
- |
|
|
76 |
|
|
- |
|
Impact of Superstorm Sandy |
|
37 |
|
|
- |
|
|
- |
|
|
37 |
|
|
- |
|
|
- |
|
Net income - adjusted |
$ |
353 |
|
$ |
361 |
|
$ |
294 |
|
$ |
358 |
|
$ |
355 |
|
$ |
291 |
|
Selected volumes and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common equity -
reported3 |
|
7.2 |
% |
|
6.4 |
% |
|
7.2 |
% |
|
7.2 |
% |
|
6.4 |
% |
|
7.2 |
% |
Return on common equity -
adjusted3 |
|
8.1 |
% |
|
8.1 |
% |
|
7.2 |
% |
|
8.1 |
% |
|
8.1 |
% |
|
7.2 |
% |
Margin on average earning assets
(TEB)4 |
|
3.48 |
% |
|
3.59 |
% |
|
3.60 |
% |
|
3.48 |
% |
|
3.59 |
% |
|
3.60 |
% |
Efficiency ratio - reported |
|
61.0 |
% |
|
69.3 |
% |
|
67.0 |
% |
|
61.0 |
% |
|
69.3 |
% |
|
67.0 |
% |
Efficiency ratio - adjusted |
|
60.5 |
% |
|
60.9 |
% |
|
66.3 |
% |
|
60.5 |
% |
|
60.9 |
% |
|
66.3 |
% |
Number of U.S. retail stores |
|
1,315 |
|
|
1,299 |
|
|
1,281 |
|
|
1,315 |
|
|
1,299 |
|
|
1,281 |
|
Average number of
full-time equivalent staff |
|
25,304 |
|
|
24,972 |
|
|
25,387 |
|
|
25,304 |
|
|
24,972 |
|
|
25,387 |
|
|
|
1 |
Includes all FDIC covered loans and
other acquired credit-impaired loans. |
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. |
3 |
Effective the first quarter of 2012,
the Bank revised its methodology for allocating capital to its
business segments to align with the future common equity capital
requirements under Basel III at a 7% Common Equity Tier 1 ratio.
The return measures for business segments will now be return on
common equity rather than return on invested capital. These changes
have been applied prospectively. Return on invested capital, which
was used as the return measure in prior periods, has not been
restated to return on common equity. |
4 |
Margin on average earning assets
exclude the impact related to the TD Ameritrade insured deposit
accounts (IDA). |
|
|
Quarterly comparison - Q4 2012 vs. Q4 2011
U.S. Personal and Commercial Banking reported net income, in
Canadian dollar terms, for the quarter was $316 million, an increase of $21 million, or 7%, compared with the fourth
quarter last year. Adjusted net income for the quarter was
$353 million, an increase of
$59 million, or 20%, compared with
the fourth quarter last year. In U.S. dollar terms, reported net
income for the quarter was US$321
million, an increase of US$29
million, or 10%, and adjusted net income was US$358 million, an increase of US$67 million, or 23%, compared with the fourth
quarter last year. The increase in adjusted earnings was primarily
due to strong organic growth, a lower effective tax rate and gains
on sales of securities, partially offset by the impact of the
Durbin Amendment. Fourth quarter reported results reflected
estimated losses from Superstorm Sandy of US$62 million (US$37
million after tax) primarily related to an increase in
provision for credit losses on U.S. commercial and retail loans and
impairment of stores and related fixed assets which are included in
items of note. The reported annualized return on common equity for
the quarter was 7.2%, while the adjusted annualized return on
common equity was 8.1%.
U.S. Personal and Commercial Banking revenue is derived from
personal banking, business banking, investments, auto lending and
credit cards. In U.S. dollar terms, the adjusted revenue for the
quarter was US$1,545 million, an
increase of US$87 million, or 6%,
primarily due to strong organic growth and gains on sales of
securities, partially offset by the impact of the Durbin Amendment
and anticipated run-off in legacy Chrysler Financial revenue.
Average loans increased by US$13
billion, or 16%, compared with the fourth quarter last year.
Average personal loans increased US$9
billion, or 25% and average business loans increased
US$4 billion, or 10%. Average
deposits increased US$13 billion, or
8%, compared with the fourth quarter last year, including a
US$6 billion increase in average
deposits of TD Ameritrade IDAs. Excluding the impact of TD
Ameritrade IDAs and Government deposits, average deposit volume
increased by $7 billion, or 7%,
driven by 10% growth in personal deposit volume and 3% growth in
business deposit volume. Margin on average earning assets decreased
by 12 bps to 3.48%, compared with the fourth quarter last year. The
decrease was primarily due to the low interest rate environment and
unfavourable loan mix.
Reported PCL for the quarter was US$257
million, an increase of US$127
million, or 98%, compared with the fourth quarter last year.
Reported PCL for the quarter includes US$54
million related to Superstorm Sandy. Adjusted PCL for the
quarter was US$202 million, an
increase of US$72 million, or 55%,
compared with the fourth quarter last year. The increase in
adjusted PCL was due primarily to the impact of new regulatory
guidance on loans discharged in bankruptcies and timing of the
acquired credit-impaired portfolio PCL. Personal banking PCL,
excluding debt securities classified as loans was US$128 million, an increase of US$85 million, or 198%, from the fourth quarter
last year. Business banking PCL, excluding debt securities
classified as loans was US$71
million, a decrease of US$13
million, or 15%, compared with the fourth quarter last year.
The underlying credit quality of the loan portfolio continues to
improve. The performance of acquired credit-impaired loans (which
includes the loans from South Financial and the FDIC-assisted
acquisitions as well as acquired credit-impaired loans from
Chrysler Financial) continues to be stable and in line with our
expectations. Adjusted PCL on loans excluding acquired
credit-impaired loans and debt securities classified as loans
increased by US$36 million, or 25%,
to $179 million, due primarily to
organic loan growth, partially offset by improved asset quality.
Annualized adjusted PCL as a percentage of credit volume for loans
excluding debt securities classified as loans was 0.88%, an
increase of 23 bps, compared with the fourth quarter last year. Net
impaired loans, excluding acquired credit-impaired loans and debt
securities classified as loans, were US$1,059 million, a decrease of US$84 million, or 7%, compared with the fourth
quarter last year. Net impaired loans, excluding acquired
credit-impaired loans and debt securities classified as loans, as a
percentage of total loans were 1.2%, compared with 1.6% as at
October 31, 2011. Net impaired debt
securities classified as loans were US$1,343
million, a decrease of US$85
million, or 6%, compared with the fourth quarter last
year.
Reported non-interest expenses for the quarter were US$941 million, a decrease of US$37 million, or 4%, compared to the fourth
quarter last year. Adjusted non-interest expenses were US$934 million, a decrease of US$34 million, or 4%, compared with the fourth
quarter last year due to elevated legal expenses in the prior
year.
The average FTE staffing levels decreased by 83 compared with
the fourth quarter last year, due primarily to lower staffing
levels in the store network. The reported efficiency ratio for the
quarter improved to 61.0% on a reported basis, and 60.5% on an
adjusted basis, compared with 67.0% on a reported basis, and 66.3%
on an adjusted basis, in the fourth quarter last year due to strong
core growth and lower expenses.
Quarterly comparison - Q4 2012 vs. Q3 2012
U.S. Personal and Commercial Banking reported net income, in
Canadian dollar terms, for the quarter increased $32 million, or 11%, compared with the prior
quarter. Adjusted net income for the quarter decreased $8 million, or 2%, compared with the prior
quarter. In U.S. dollar terms, reported net income for the quarter
increased US$42 million, or 15%, and
adjusted net income for the quarter increased US$3 million, or 1%, compared with the prior
quarter. The increase in adjusted net income was primarily due to
strong organic growth and gains on sales of securities, partially
offset by lower product margins and higher PCL. The reported
annualized return on common equity for the quarter was 7.2%, while
the adjusted annualized return on common equity was 8.1%, compared
with 6.4% and 8.1% respectively, in the prior quarter.
In U.S. dollar terms, adjusted revenue for the quarter increased
US$45 million, or 3%, compared with
the prior quarter, due primarily to strong organic growth and gains
on sales of securities, partially offset by deposit margin
compression. Average loans increased by US$4
billion, or 4%, compared with the prior quarter with an
increase of US$2 billion, or 6% in
average personal loans and an increase of US$1 billion, or 2% in average business loans.
Average deposits increased US$4
billion, or 2%, compared with the prior quarter, including a
US$2 billion increase in average
deposits of TD Ameritrade. Excluding the impact of TD Ameritrade
IDAs, average deposit volume increased by US$2 billion, or 1%. Margin on average earning
assets decreased by 11 bps to 3.48%, compared with the prior
quarter primarily due to continued margin pressure.
Reported PCL for the quarter increased US$84 million, or 49%, compared with the prior
quarter. The change in total reported PCL included provisions of
US$54 million related to Superstorm
Sandy and US$30 million related to
the impact of new regulatory guidance on loans discharged in
bankruptcies. Adjusted PCL for the quarter increased US$29 million, or 17%, compared with the prior
quarter. Personal banking PCL, excluding debt securities classified
as loans increased US$24 million, or
23%, from the prior quarter. Business banking PCL, excluding debt
securities classified as loans increased US$5 million, or 8%, compared with prior quarter.
Adjusted PCL on loans excluding acquired credit-impaired loans and
debt securities classified as loans increased by US$31 million, or 21%, to US$179 million, due primarily to organic loan
growth, partially offset by improved asset quality. Annualized
adjusted PCL as a percentage of credit volume for loans excluding
debt securities classified as loans was 0.88%, an increase of 10
bps, compared with the prior quarter. Net impaired loans, excluding
acquired credit-impaired loans and debt securities classified as
loans, were US$1,059 million, a
decrease of US$2 million compared
with the prior quarter. Net impaired loans, excluding acquired
credit-impaired and debt securities classified as loans, as a
percentage of total loans were 1.2%, compared with 1.3% as at
July 31, 2012. Net impaired debt
securities classified as loans were US$1,343
million, an increase of US$46
million, or 4%, compared with the prior quarter.
Reported non-interest expenses for the quarter decreased
US$100 million, or 10%, compared with
the prior quarter, due primarily to the litigation reserve taken in
the prior quarter. Adjusted non-interest expenses increased
US$19 million, or 2%, compared with
the prior quarter due primarily to timing of growth initiatives and
new stores.
The average FTE staffing levels increased by 332, or 1%,
compared with the prior quarter due primarily to seasonality. The
reported efficiency ratio for the quarter improved to 61.0%,
compared with 69.3% in the prior quarter, driven by the litigation
reserve taken in the prior quarter, while the adjusted efficiency
ratio improved to 60.5 %, compared with 60.9% in the prior
quarter.
|
|
|
|
|
|
|
|
|
|
TABLE 10: WHOLESALE BANKING |
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars, except as
noted) |
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
October
31
2012 |
|
|
July 31
2012 |
|
|
October 31
2011 |
|
Net interest income (TEB) |
$ |
481 |
|
$ |
447 |
|
$ |
444 |
|
Non-interest income |
|
244 |
|
|
191 |
|
|
282 |
|
Total revenue |
|
725 |
|
|
638 |
|
|
726 |
|
Provision for credit losses |
|
8 |
|
|
21 |
|
|
3 |
|
Non-interest expenses |
|
374 |
|
|
406 |
|
|
395 |
|
Net income |
|
309 |
|
|
180 |
|
|
280 |
|
Selected volumes and ratios |
|
|
|
|
|
|
|
|
|
Trading-related revenue |
|
316 |
|
|
360 |
|
|
283 |
|
Risk-weighted assets (billions of
dollars)1 |
|
43 |
|
|
48 |
|
|
35 |
|
Return on common equity2 |
|
30.3 |
% |
|
16.7 |
% |
|
31.5 |
% |
Efficiency ratio |
|
51.6 |
% |
|
63.6 |
% |
|
54.4 |
% |
Average number of full-time equivalent staff |
|
3,545 |
|
|
3,588 |
|
|
3,626 |
|
|
|
1 |
Prior to Q1 2012, the amounts were calculated based on Canadian
GAAP. |
2 |
Effective the first quarter of 2012, the Bank revised its
methodology for allocating capital to its business segments to
align with the future common equity capital requirements under
Basel III at a 7% Common Equity Tier 1 rate. The return measures
for business segments will now be return on common equity rather
than return on invested capital. These changes have been applied
prospectively. Return on invested capital, which was used as the
return measure in prior periods, has not been restated to return on
common equity. |
|
|
Quarterly comparison - Q4 2012 vs. Q4 2011
Wholesale Banking net income for the quarter was $309 million, an increase of $29 million, or 10%, compared with the fourth
quarter last year. The increase in earnings was due to higher
revenue and reduced expenses in core businesses and a lower
effective tax rate, partially offset by lower securities gains in
the investment portfolio. The annualized return on common equity
for the quarter was 30.3%.
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 $725 million, consistent with the
fourth quarter last year. In the trading businesses, client flows
improved in fixed income and credit trading and asset values
increased due to tightening credit spreads. These increases were
offset by declines in equity trading and equity underwriting due to
industry-wide volume declines, and reduced securities gains in the
investment portfolio. The investment banking business saw strong
results in both quarters.
PCL for the quarter was $8
million, an increase of $5
million, compared to the fourth quarter last year. The
increase in PCL was due to the inclusion of a single name in the
investment portfolio in the current quarter. PCL was limited to the
accrual cost of credit protection in the same period last year. Net
impaired loans were $42 million, an
increase of $10 million, or 31%,
compared with the fourth quarter last year.
Non-interest expenses for the quarter were $374 million, a decrease of $21 million, or 5%, compared with the fourth
quarter last year due to lower infrastructure costs and legal
provisions.
Risk-weighted assets were $43
billion as at October 31,
2012, an increase of $8
billion, or 23%, compared with October 31, 2011. The increase was due to the
implementation of the revised Basel II market risk framework.
The average FTE staffing levels decreased by 81, or 2%, compared
with the fourth quarter last year primarily due to lower support
FTE.
Quarterly comparison - Q4 2012 vs. Q3 2012
Wholesale Banking net income for the quarter increased by
$129 million, or 72%, compared with
the prior quarter. The increase in earnings was due to increased
securities gains, lower non-interest expenses and lower PCL. The
annualized return on common equity for the quarter was 30.3%,
compared with 16.7% in the prior quarter.
Revenue for the quarter increased $87
million, or 14%, compared with the prior quarter, primarily
due to higher securities gains in the investment portfolio and
improved equity underwriting fees. These increases were partially
offset by lower fixed income and credit trading revenue and
decreased mergers and acquisitions (M&A) and advisory fees
reflecting a decline in industry-wide activity as compared with the
prior quarter.
PCL for the quarter decreased $13
million, or 62%, compared with the prior quarter. The
decrease in PCL was primarily due to the inclusion of a single name
in the corporate lending portfolio in the prior quarter. Net
impaired loans decreased $6 million,
or 13%, compared with the prior quarter.
Non-interest expenses for the quarter decreased by $32 million, or 8%, compared with the prior
quarter, due to lower legal provisions.
Risk-weighted assets as at October 31,
2012 decreased by $5 billion,
or 10%, compared with July 31, 2012,
primarily due to reduced exposures.
The average FTE staffing levels decreased by 43, or 1%, compared
with the prior quarter.
|
|
|
|
|
|
|
|
TABLE 11:
CORPORATE |
|
|
|
|
|
|
|
(millions of
Canadian dollars) |
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
October 31
2012 |
|
July 31
2012 |
|
October 31
2011 |
|
Net income (loss) -
reported |
$ |
(127) |
$ |
15 |
$ |
(83) |
|
Adjustments for items of note:
Decrease (increase) in net income1 |
|
|
|
|
|
|
|
Amortization of intangibles |
|
60 |
|
59 |
|
95 |
|
Fair value of
derivatives hedging the reclassified available-for-sale securities
portfolio |
|
35 |
|
- |
|
(37) |
|
Fair value of credit default swaps
hedging the corporate loan book, net of provision for
credit losses |
|
- |
|
(2) |
|
(9) |
|
Integration charges, direct
transaction costs, and changes in fair value of contingent
consideration relating to the Chrysler
Financial acquisition |
|
3 |
|
6 |
|
19 |
|
Reduction of allowance for
incurred but not identified credit losses |
|
- |
|
(30) |
|
- |
|
Positive impact
due to changes in statutory income tax rates |
|
- |
|
(18) |
|
- |
|
Total
adjustments for items of note |
|
98 |
|
15 |
|
68 |
|
Net income
(loss) - adjusted |
$ |
(29) |
$ |
30 |
$ |
(15) |
|
Decomposition
of items included in net gain (loss) - adjusted |
|
|
|
|
|
|
|
Net corporate
expenses |
$ |
(191) |
$ |
(55) |
$ |
(97) |
|
Other |
|
136 |
|
59 |
|
56 |
|
Non-controlling
interests |
|
26 |
|
26 |
|
26 |
|
Net income (loss) -
adjusted |
$ |
(29) |
$ |
30 |
$ |
(15) |
|
|
|
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 - Q4 2012 vs. Q4 2011
Corporate segment's reported net loss for the quarter was
$127 million, compared with a
reported net loss of $83 million in
the fourth quarter last year. Adjusted net loss was $29 million, compared with an adjusted net loss
of $15 million in the fourth quarter
last year. The increased loss was due to higher net corporate
expenses largely offset by the favourable impact of other items.
The increase in expenses was due in part to increases in strategic
and cost reduction initiatives and the timing of charges to the
segments. Other items were favourable largely due to preferred
capital redemption costs and a loss related to Symcor's divestiture
of its U.S. business in the prior year combined with the impact of
more positive tax items this year.
Quarterly comparison - Q4 2012 vs. Q3 2012
Corporate segment's reported net loss for the quarter was
$127 million, compared with a
reported net income of $15 million in
the prior quarter. Adjusted net loss was $29
million, compared with an adjusted net income of
$30 million in the prior quarter. The
increased loss was due to higher net corporate expenses largely
offset by the favourable impact of other items. The increase in
expenses, as anticipated in the prior quarter outlook, was due to
increases in strategic and cost reduction initiatives and the
timing of charges to the segments. Other items were favourable due
to treasury and other hedging activities contributing to more
positive results than anticipated.
|
|
|
|
|
|
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) |
|
|
|
|
|
|
|
INTERIM CONSOLIDATED BALANCE
SHEET(unaudited) |
|
|
|
|
|
|
|
(millions of Canadian dollars,
except as noted) |
As at |
|
|
October 31
2012 |
October 31
2011 |
November 1
2010 |
|
ASSETS |
|
|
|
|
Cash and due from banks |
$ |
3,436 |
$ |
3,096 |
$ |
2,574 |
|
Interest-bearing deposits with banks |
|
21,692 |
|
21,016 |
|
19,136 |
|
|
|
25,128 |
|
24,112 |
|
21,710 |
|
Trading loans, securities, and other |
|
94,531 |
|
73,353 |
|
63,695 |
|
Derivatives |
|
60,919 |
|
59,845 |
|
51,470 |
|
Financial assets designated at fair value through
profit or loss |
|
6,173 |
|
4,236 |
|
2,150 |
|
Available-for-sale securities |
|
98,576 |
|
93,520 |
|
86,687 |
|
|
|
260,199 |
|
230,954 |
|
204,002 |
|
Securities purchased under reverse repurchase
agreements |
|
69,198 |
|
56,981 |
|
50,658 |
|
Loans |
|
|
|
|
|
|
|
Residential mortgages |
|
172,172 |
|
155,471 |
|
136,181 |
|
Consumer instalment and other personal |
|
117,927 |
|
115,389 |
|
107,371 |
|
Credit card |
|
15,358 |
|
8,986 |
|
8,870 |
|
Business and government |
|
101,041 |
|
93,144 |
|
83,205 |
|
Debt securities classified as loans |
|
4,994 |
|
6,511 |
|
7,591 |
|
|
|
411,492 |
|
379,501 |
|
343,218 |
|
Allowance for loan losses |
|
(2,644) |
|
(2,314) |
|
(2,309) |
|
Loans, net of allowance for loan losses |
|
408,848 |
|
377,187 |
|
340,909 |
|
Other |
|
|
|
|
|
|
|
Customers' liability under acceptances |
|
7,223 |
|
7,815 |
|
7,757 |
|
Investment in TD Ameritrade |
|
5,344 |
|
5,159 |
|
5,438 |
|
Goodwill |
|
12,311 |
|
12,257 |
|
12,313 |
|
Other intangibles |
|
2,217 |
|
1,844 |
|
1,804 |
|
Land, buildings, equipment, and other depreciable
assets |
|
4,402 |
|
4,083 |
|
4,249 |
|
Current income tax receivable |
|
439 |
|
288 |
|
623 |
|
Deferred tax assets |
|
883 |
|
1,196 |
|
1,045 |
|
Other assets |
|
14,914 |
|
13,617 |
|
16,901 |
|
|
|
47,733 |
|
46,259 |
|
50,130 |
|
Total assets |
$ |
811,106 |
$ |
735,493 |
$ |
667,409 |
|
LIABILITIES |
|
|
|
|
|
|
|
Trading deposits |
$ |
38,774 |
$ |
29,613 |
$ |
22,991 |
|
Derivatives |
|
64,997 |
|
61,715 |
|
52,552 |
|
Securitization liabilities at fair value |
|
25,324 |
|
27,725 |
|
27,256 |
|
Other financial liabilities designated at fair
value through profit or loss |
|
17 |
|
32 |
|
31 |
|
|
|
129,112 |
|
119,085 |
|
102,830 |
|
Deposits |
|
|
|
|
|
|
|
Personal |
|
291,759 |
|
268,703 |
|
249,251 |
|
Banks |
|
14,957 |
|
11,659 |
|
12,501 |
|
Business and government |
|
181,038 |
|
169,066 |
|
143,121 |
|
|
|
487,754 |
|
449,428 |
|
404,873 |
|
Other |
|
|
|
|
|
|
|
Acceptances |
|
7,223 |
|
7,815 |
|
7,757 |
|
Obligations related to securities sold short |
|
33,435 |
|
23,617 |
|
23,691 |
|
Obligations related to securities sold under
repurchase agreements |
|
38,816 |
|
25,991 |
|
22,191 |
|
Securitization liabilities at amortized cost |
|
26,190 |
|
26,054 |
|
23,078 |
|
Provisions |
|
656 |
|
536 |
|
440 |
|
Current income tax payable |
|
167 |
|
167 |
|
1,041 |
|
Deferred tax liabilities |
|
327 |
|
574 |
|
771 |
|
Other liabilities |
|
24,858 |
|
24,418 |
|
25,690 |
|
|
|
131,672 |
|
109,172 |
|
104,659 |
|
Subordinated notes and debentures |
|
11,318 |
|
11,543 |
|
12,249 |
|
Liability for preferred shares |
|
26 |
|
32 |
|
582 |
|
Liability for capital trust securities |
|
2,224 |
|
2,229 |
|
2,344 |
|
Total liabilities |
|
762,106 |
|
691,489 |
|
627,537 |
|
EQUITY |
|
|
|
|
|
|
|
Common shares (millions of shares
issued and outstanding: Oct. 31, 2012 - 918.2, Oct. 31, 2011
- 902.4, Nov. 1, 2010 - 879.7) |
|
18,691 |
|
17,491 |
|
15,804 |
|
Preferred shares (millions of
shares issued and outstanding: Oct. 31, 2012 - 135.8, Oct.
31, 2011 - 135.8, Nov. 1, 2010 - 135.8) |
|
3,395 |
|
3,395 |
|
3,395 |
|
Treasury shares - common (millions
of shares held: Oct. 31, 2012 - (2.1), Oct. 31, 2011 -
(1.4), Nov. 1, 2010 - (1.2)) |
|
(166) |
|
(116) |
|
(91) |
|
Treasury shares - preferred
(millions of shares held: Oct. 31, 2012 - nil, Oct. 31, 2011
- nil, Nov. 1, 2010 - nil) |
|
(1) |
|
- |
|
(1) |
|
Contributed surplus |
|
196 |
|
212 |
|
235 |
|
Retained earnings |
|
21,763 |
|
18,213 |
|
14,781 |
|
Accumulated other comprehensive income (loss) |
|
3,645 |
|
3,326 |
|
4,256 |
|
|
|
47,523 |
|
42,521 |
|
38,379 |
|
Non-controlling interests in
subsidiaries |
|
1,477 |
|
1,483 |
|
1,493 |
|
Total equity |
|
49,000 |
|
44,004 |
|
39,872 |
|
Total liabilities and equity |
$ |
811,106 |
$ |
735,493 |
$ |
667,409 |
|
|
|
|
|
|
|
Certain comparative amounts have been reclassified to conform
with the presentation adopted in the current year.
INTERIM
CONSOLIDATED STATEMENT OF INCOME (unaudited) |
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted) |
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
|
For the twelve months
ended |
|
|
October 31
2012 |
October 31
2011 |
|
October 31
2012 |
October 31
2011 |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
Loans |
$ |
4,558 |
$ |
4,336 |
|
$ |
17,951 |
$ |
17,010 |
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
786 |
|
709 |
|
|
3,259 |
|
2,720 |
|
|
Dividends |
|
256 |
|
198 |
|
|
940 |
|
810 |
|
Deposits with banks |
|
22 |
|
80 |
|
|
88 |
|
369 |
|
|
|
5,622 |
|
5,323 |
|
|
22,238 |
|
20,909 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
1,163 |
|
1,135 |
|
|
4,670 |
|
4,466 |
|
Securitization liabilities |
|
243 |
|
284 |
|
|
1,026 |
|
1,235 |
|
Subordinated notes and debentures |
|
152 |
|
160 |
|
|
612 |
|
663 |
|
Preferred shares and capital trust
securities |
|
44 |
|
61 |
|
|
174 |
|
208 |
|
Other |
|
178 |
|
151 |
|
|
730 |
|
676 |
|
|
|
1,780 |
|
1,791 |
|
|
7,212 |
|
7,248 |
|
Net interest income |
|
3,842 |
|
3,532 |
|
|
15,026 |
|
13,661 |
|
Non-interest income |
|
|
|
|
|
|
|
|
|
|
Investment and securities
services |
|
660 |
|
635 |
|
|
2,621 |
|
2,624 |
|
Credit fees |
|
185 |
|
176 |
|
|
745 |
|
671 |
|
Net gains (losses) from
available-for-sale securities |
|
178 |
|
201 |
|
|
373 |
|
393 |
|
Trading income (losses) |
|
(66) |
|
(55) |
|
|
(41) |
|
(127) |
|
Service charges |
|
453 |
|
437 |
|
|
1,775 |
|
1,602 |
|
Card services |
|
274 |
|
257 |
|
|
1,039 |
|
959 |
|
Insurance revenue, net of claims and
related expenses |
|
232 |
|
308 |
|
|
1,113 |
|
1,167 |
|
Trust fees |
|
34 |
|
36 |
|
|
149 |
|
154 |
|
Other income (loss) |
|
97 |
|
136 |
|
|
322 |
|
558 |
|
|
|
2,047 |
|
2,131 |
|
|
8,096 |
|
8,001 |
|
Total revenue |
|
5,889 |
|
5,663 |
|
|
23,122 |
|
21,662 |
|
Provision for credit
losses |
|
565 |
|
340 |
|
|
1,795 |
|
1,490 |
|
Non-interest expenses |
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
1,837 |
|
1,742 |
|
|
7,241 |
|
6,729 |
|
Occupancy, including depreciation |
|
355 |
|
341 |
|
|
1,374 |
|
1,285 |
|
Equipment, including depreciation |
|
228 |
|
213 |
|
|
825 |
|
801 |
|
Amortization of other intangibles |
|
133 |
|
177 |
|
|
477 |
|
657 |
|
Marketing and business
development |
|
221 |
|
203 |
|
|
668 |
|
593 |
|
Brokerage-related fees |
|
71 |
|
77 |
|
|
296 |
|
320 |
|
Professional and advisory
services |
|
311 |
|
267 |
|
|
925 |
|
944 |
|
Communications |
|
71 |
|
73 |
|
|
282 |
|
271 |
|
Other |
|
379 |
|
395 |
|
|
1,910 |
|
1,447 |
|
|
|
3,606 |
|
3,488 |
|
|
13,998 |
|
13,047 |
|
Income before
income taxes and equity in net income of an
investment in associate |
|
1,718 |
|
1,835 |
|
|
7,329 |
|
7,125 |
|
Provision for (recovery of) income
taxes |
|
178 |
|
310 |
|
|
1,092 |
|
1,326 |
|
Equity in net
income of an investment in associate, net of income taxes |
|
57 |
|
64 |
|
|
234 |
|
246 |
|
Net income |
|
1,597 |
|
1,589 |
|
|
6,471 |
|
6,045 |
|
Preferred dividends |
|
49 |
|
48 |
|
|
196 |
|
180 |
|
Net income
available to common shareholders and non-controlling
interests in subsidiaries |
$ |
1,548 |
$ |
1,541 |
|
$ |
6,275 |
$ |
5,865 |
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests in subsidiaries |
$ |
26 |
$ |
26 |
|
$ |
104 |
$ |
104 |
|
|
Common shareholders |
|
1,522 |
|
1,515 |
|
|
6,171 |
|
5,761 |
|
Average number of common shares
outstanding (millions) |
|
|
|
|
|
|
|
|
|
|
Basic |
|
912.4 |
|
893.8 |
|
|
906.6 |
|
885.7 |
|
Diluted |
|
920.0 |
|
909.0 |
|
|
914.9 |
|
902.9 |
|
Earnings per share
(dollars) |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.67 |
$ |
1.70 |
|
$ |
6.81 |
$ |
6.50 |
|
Diluted |
|
1.66 |
|
1.68 |
|
|
6.76 |
|
6.43 |
|
Dividends per share
(dollars) |
|
0.77 |
|
0.68 |
|
|
2.89 |
|
2.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTERIM
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
For the twelve months ended |
|
|
|
October 31
2012 |
|
|
October 31
2011 |
|
|
October 31
2012 |
|
|
October 31
2011 |
|
Common shares |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
$ |
18,351 |
|
$ |
16,572 |
|
$ |
17,491 |
|
$ |
15,804 |
|
Proceeds from shares issued on
exercise of stock options |
|
58 |
|
|
41 |
|
|
253 |
|
|
322 |
|
Shares issued as a result of dividend
reinvestment plan |
|
282 |
|
|
174 |
|
|
947 |
|
|
661 |
|
Proceeds from issuance of new
shares |
|
- |
|
|
704 |
|
|
- |
|
|
704 |
|
Balance at end of period |
|
18,691 |
|
|
17,491 |
|
|
18,691 |
|
|
17,491 |
|
Preferred shares |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
3,395 |
|
|
3,395 |
|
|
3,395 |
|
|
3,395 |
|
Balance at end of period |
|
3,395 |
|
|
3,395 |
|
|
3,395 |
|
|
3,395 |
|
Treasury shares - common |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
(178) |
|
|
(104) |
|
|
(116) |
|
|
(91) |
|
Purchase of shares |
|
(1,045) |
|
|
(760) |
|
|
(3,175) |
|
|
(2,164) |
|
Sale of shares |
|
1,057 |
|
|
748 |
|
|
3,125 |
|
|
2,139 |
|
Balance at end of period |
|
(166) |
|
|
(116) |
|
|
(166) |
|
|
(116) |
|
Treasury shares -
preferred |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
(1) |
|
|
- |
|
|
- |
|
|
(1) |
|
Purchase of shares |
|
(16) |
|
|
(8) |
|
|
(77) |
|
|
(59) |
|
Sale of shares |
|
16 |
|
|
8 |
|
|
76 |
|
|
60 |
|
Balance at end of period |
|
(1) |
|
|
- |
|
|
(1) |
|
|
- |
|
Contributed surplus |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
203 |
|
|
211 |
|
|
212 |
|
|
235 |
|
Net premium (discount) on sale of
treasury shares |
|
(1) |
|
|
1 |
|
|
10 |
|
|
11 |
|
Stock options, contributed
surplus |
|
(6) |
|
|
(2) |
|
|
(25) |
|
|
(34) |
|
Other |
|
- |
|
|
2 |
|
|
(1) |
|
|
- |
|
Balance at end of period |
|
196 |
|
|
212 |
|
|
196 |
|
|
212 |
|
Retained earnings |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
20,943 |
|
|
17,322 |
|
|
18,213 |
|
|
14,781 |
|
Net income attributable to
shareholders |
|
1,571 |
|
|
1,563 |
|
|
6,367 |
|
|
5,941 |
|
Common dividends |
|
(702) |
|
|
(611) |
|
|
(2,621) |
|
|
(2,316) |
|
Preferred dividends |
|
(49) |
|
|
(48) |
|
|
(196) |
|
|
(180) |
|
Share issue expenses |
|
- |
|
|
(13) |
|
|
- |
|
|
(13) |
|
Balance at end of period |
|
21,763 |
|
|
18,213 |
|
|
21,763 |
|
|
18,213 |
|
Accumulated other comprehensive
income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gain (loss) on
available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
1,417 |
|
|
1,130 |
|
|
949 |
|
|
1,317 |
|
Other comprehensive income (loss) |
|
58 |
|
|
(181) |
|
|
526 |
|
|
(368) |
|
Balance at end of period |
|
1,475 |
|
|
949 |
|
|
1,475 |
|
|
949 |
|
Net unrealized foreign
currency translation gain (loss) on investments
in foreign operations, net of hedging
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
(346) |
|
|
(1,453) |
|
|
(464) |
|
|
- |
|
Other comprehensive income (loss) |
|
(80) |
|
|
989 |
|
|
38 |
|
|
(464) |
|
Balance at end of period |
|
(426) |
|
|
(464) |
|
|
(426) |
|
|
(464) |
|
Net gain (loss) on derivatives
designated as cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
2,801 |
|
|
2,395 |
|
|
2,841 |
|
|
2,939 |
|
Other comprehensive income (loss) |
|
(205) |
|
|
446 |
|
|
(245) |
|
|
(98) |
|
Balance at end of period |
|
2,596 |
|
|
2,841 |
|
|
2,596 |
|
|
2,841 |
|
Total |
|
3,645 |
|
|
3,326 |
|
|
3,645 |
|
|
3,326 |
|
Non-controlling interests in
subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
1,482 |
|
|
1,452 |
|
|
1,483 |
|
|
1,493 |
|
Net income attributable to
non-controlling interests in subsidiaries |
|
26 |
|
|
26 |
|
|
104 |
|
|
104 |
|
Other |
|
(31) |
|
|
5 |
|
|
(110) |
|
|
(114) |
|
Balance at end of period |
|
1,477 |
|
|
1,483 |
|
|
1,477 |
|
|
1,483 |
|
Total equity |
$ |
49,000 |
|
$ |
44,004 |
|
$ |
49,000 |
|
$ |
44,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTERIM
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
For the twelve months ended |
|
October
31
2012 |
|
October 31
2011 |
|
October 31
2012 |
|
October 31
2011 |
Net income |
$ |
1,597 |
|
$ |
1,589 |
|
$ |
6,471 |
|
$ |
6,045 |
Other comprehensive
income (loss), net of income taxes |
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized
gains (losses) on available-for-sale securities1 |
|
106 |
|
|
(157) |
|
|
689 |
|
|
(246) |
Reclassification to
earnings of net losses (gains) in respect of available-for-sale
securities2 |
|
(48) |
|
|
(24) |
|
|
(163) |
|
|
(122) |
|
|
|
|
|
|
|
|
|
|
|
|
Net change in
unrealized foreign currency translation gains (losses) on
investments in foreign operations |
|
(132) |
|
|
1,620 |
|
|
92 |
|
|
(796) |
Net foreign currency
translation gains (losses) from hedging activities3 |
|
52 |
|
|
(631) |
|
|
(54) |
|
|
332 |
Change in net gains
(losses) on derivatives designated as cash flow
hedges4 |
|
38 |
|
|
1,021 |
|
|
834 |
|
|
640 |
Reclassification to
earnings of net losses (gains) on cash flow hedges5 |
|
(243) |
|
|
(575) |
|
|
(1,079) |
|
|
(738) |
|
|
(227) |
|
|
1,254 |
|
|
319 |
|
|
(930) |
Comprehensive
income (loss) for the period |
$ |
1,370 |
|
$ |
2,843 |
|
$ |
6,790 |
|
$ |
5,115 |
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Preferred
shareholders |
|
49 |
|
|
48 |
|
|
196 |
|
|
180 |
Common
shareholders |
|
1,295 |
|
|
2,769 |
|
|
6,490 |
|
|
4,831 |
Non-controlling interests in
subsidiaries |
|
26 |
|
|
26 |
|
|
104 |
|
|
104 |
1 |
Net of income tax provision of $24
million for the three months ended Oct. 31, 2012 (three months
ended Oct. 31, 2011 - net of income tax recovery of $43 million).
Net of income tax provision of $302 million for the twelve months
ended Oct. 31, 2012 (twelve months ended Oct. 31, 2011 - net of
income tax recovery of $35 million). |
2 |
Net of income tax provision of $16
million for the three months ended Oct. 31, 2012 (three months
ended Oct. 31, 2011 - net of income tax provision of $11 million).
Net of income tax provision of $74 million for the twelve months
ended Oct. 31, 2012 (twelve months ended Oct. 31, 2011 - net of
income tax provision of $31 million). |
3 |
Net of income tax provision of $13
million for the three months ended Oct. 31, 2012 (three months
ended Oct. 31, 2011 - net of income tax recovery of $231 million).
Net of income tax recovery of $22 million for the twelve months
ended Oct. 31, 2012 (twelve months ended Oct. 31, 2011 - net of
income tax provision of $118 million). |
4 |
Net of income tax recovery of $10
million for the three months ended Oct. 31, 2012 (three months
ended Oct. 31, 2011 - net of income tax provision of $521 million).
Net of income tax provision of $381 million for the twelve months
ended Oct. 31, 2012 (twelve months ended Oct. 31, 2011 - net of
income tax provision of $322 million). |
5 |
Net of income tax provision of $104
million for the three months ended Oct. 31, 2012 (three months
ended Oct. 31, 2011 - net of income tax provision of $309 million).
Net of income tax provision of $485 million for the twelve months
ended Oct. 31, 2012 (twelve months ended Oct. 31, 2011 - net of
income tax provision of $304 million). |
All items presented in other comprehensive income will be
reclassified to the Consolidated Statement of Income in subsequent
periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
INTERIM
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
For the twelve months ended |
|
|
|
October
31
2012 |
|
October 31
2011 |
|
|
October 31
2012 |
|
|
October 31
2011 |
|
Cash flows from
(used in) operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income before
income taxes |
$ |
1,775 |
|
$ |
1,899 |
|
$ |
7,563 |
|
$ |
7,371 |
|
Adjustments to
determine net cash flows from (used in) operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit losses |
|
565 |
|
|
340 |
|
|
1,795 |
|
|
1,490 |
|
|
Depreciation |
|
130 |
|
|
126 |
|
|
508 |
|
|
467 |
|
|
Amortization of other
intangibles |
|
133 |
|
|
177 |
|
|
477 |
|
|
657 |
|
|
Net losses (gains)
from available-for-sale securities |
|
(178) |
|
|
(201) |
|
|
(373) |
|
|
(393) |
|
|
Equity in net income
of an investment in associate |
|
(57) |
|
|
(64) |
|
|
(234) |
|
|
(246) |
|
|
Deferred taxes |
|
(43) |
|
|
(91) |
|
|
112 |
|
|
(147) |
|
Changes in operating assets and
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest receivable and payable |
|
203 |
|
|
330 |
|
|
(236) |
|
|
(143) |
|
|
Securities sold short |
|
1,365 |
|
|
(515) |
|
|
9,818 |
|
|
(74) |
|
|
Trading loans and securities |
|
(4,680) |
|
|
(4,195) |
|
|
(21,178) |
|
|
(9,658) |
|
|
Loans |
|
(4,201) |
|
|
(13,039) |
|
|
(26,319) |
|
|
(30,213) |
|
|
Deposits |
|
8,728 |
|
|
22,655 |
|
|
47,487 |
|
|
51,177 |
|
|
Derivatives |
|
1,080 |
|
|
(1,449) |
|
|
2,208 |
|
|
788 |
|
|
Financial assets and
liabilities designated at fair value through profit or loss |
|
(318) |
|
|
(1,434) |
|
|
(1,952) |
|
|
(2,085) |
|
|
Securitization liabilities |
|
874 |
|
|
(952) |
|
|
(2,265) |
|
|
3,445 |
|
|
Other |
|
(2,988) |
|
|
(814) |
|
|
(2,069) |
|
|
(2,647) |
|
Income taxes paid |
|
(272) |
|
|
(474) |
|
|
(1,296) |
|
|
(2,076) |
|
Net cash from (used
in) operating activities |
|
2,116 |
|
|
2,299 |
|
|
14,046 |
|
|
17,713 |
|
Cash flows from
(used in) financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Change in securities sold under
repurchase agreements |
|
4,323 |
|
|
(2,064) |
|
|
12,825 |
|
|
3,800 |
|
Issue of subordinated notes and
debentures |
|
- |
|
|
- |
|
|
- |
|
|
1,000 |
|
Repayment of
subordinated notes and debentures |
|
- |
|
|
(502) |
|
|
(201) |
|
|
(1,694) |
|
Repayment or
redemption of liability for preferred shares and capital trust
securities |
|
6 |
|
|
(529) |
|
|
(11) |
|
|
(665) |
|
Translation adjustment
on subordinated notes and debentures issued in a foreign |
|
|
|
|
|
|
|
|
|
|
|
|
|
currency and other |
|
(23) |
|
|
(34) |
|
|
(24) |
|
|
(12) |
|
Common shares issued |
|
47 |
|
|
726 |
|
|
206 |
|
|
951 |
|
Sale of treasury shares |
|
1,072 |
|
|
757 |
|
|
3,211 |
|
|
2,210 |
|
Purchase of treasury shares |
|
(1,061) |
|
|
(768) |
|
|
(3,252) |
|
|
(2,223) |
|
Dividends paid |
|
(469) |
|
|
(485) |
|
|
(1,870) |
|
|
(1,835) |
|
Distributions to
non-controlling interests in subsidiaries |
|
(26) |
|
|
(26) |
|
|
(104) |
|
|
(104) |
|
Net cash from (used
in) financing activities |
|
3,869 |
|
|
(2,925) |
|
|
10,780 |
|
|
1,428 |
|
Cash flows from (used in) investing
activities |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits with
banks |
|
(4,432) |
|
|
(3,475) |
|
|
(676) |
|
|
(1,880) |
|
Activities in available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases |
|
(15,529) |
|
|
(20,743) |
|
|
(64,861) |
|
|
(63,658) |
|
|
Proceeds from maturities |
|
9,342 |
|
|
5,383 |
|
|
40,223 |
|
|
25,810 |
|
|
Proceeds from sales |
|
4,175 |
|
|
8,579 |
|
|
20,707 |
|
|
30,997 |
|
Net purchases of
premises, equipment, and other depreciable assets |
|
(265) |
|
|
(146) |
|
|
(827) |
|
|
(301) |
|
Securities purchased under reverse
repurchase agreements |
|
1,178 |
|
|
11,174 |
|
|
(12,217) |
|
|
(6,323) |
|
Net cash acquired from (paid for)
acquisitions |
|
- |
|
|
(14) |
|
|
(6,839) |
|
|
(3,226) |
|
Net cash from (used in) investing
activities |
|
(5,531) |
|
|
758 |
|
|
(24,490) |
|
|
(18,581) |
|
Effect of exchange rate changes on
cash and due from banks |
|
(7) |
|
|
65 |
|
|
4 |
|
|
(38) |
|
Net increase (decrease) in cash and
due from banks |
|
447 |
|
|
197 |
|
|
340 |
|
|
522 |
|
Cash and due from
banks at beginning of period |
|
2,989 |
|
|
2,899 |
|
|
3,096 |
|
|
2,574 |
|
Cash and due from banks at end of
period |
$ |
3,436 |
|
$ |
3,096 |
|
$ |
3,436 |
|
$ |
3,096 |
|
Supplementary disclosure of cash
flow information |
|
|
|
|
|
|
|
|
|
|
|
|
Amount of interest paid during the
period |
$ |
1,471 |
|
$ |
1,416 |
|
$ |
7,368 |
|
$ |
7,397 |
|
Amount of interest
received during the period |
|
5,260 |
|
|
5,068 |
|
|
21,218 |
|
|
20,093 |
|
Amount of dividends received during
the period |
|
242 |
|
|
195 |
|
|
925 |
|
|
806 |
|
Certain comparative amounts have been reclassified to conform
with the presentation adopted in the current year.
Appendix A - Segmented Information
The Bank's operations and activities are organized around four
key business segments: Canadian Personal and Commercial Banking,
Wealth and Insurance, U.S. Personal and Commercial Banking, and
Wholesale Banking. The Bank's other activities are reported in the
Corporate segment. Results for these segments for the three and
twelve months ended October 31 are
presented in the following tables:
Results by
Business Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
Canadian Personal
and Commercial
Banking1 |
|
Wealth and
Insurance1 |
|
U.S. Personal
and Commercial
Banking |
|
Wholesale
Banking |
|
Corporate |
|
Total |
|
|
Oct. 31
2012 |
|
Oct.
31
2011 |
|
Oct. 31
2012 |
|
Oct.
31
2011 |
|
Oct. 31
2012 |
|
Oct.
31
2011 |
|
Oct. 31
2012 |
|
Oct. 31
2011 |
|
Oct. 31
2012 |
|
Oct. 31
2011 |
|
Oct. 31
2012 |
|
Oct. 31
2011 |
Net interest income
(loss) |
$ |
2,071 |
|
$ |
1,840 |
|
$ |
147 |
|
$ |
136 |
|
$ |
1,148 |
|
$ |
1,124 |
|
$ |
481 |
|
$ |
444 |
|
$ |
(5) |
|
$ |
(12) |
|
$ |
3,842 |
|
$ |
3,532 |
Non-interest income
(loss) |
|
678 |
|
|
621 |
|
|
816 |
|
|
903 |
|
|
375 |
|
|
339 |
|
|
244 |
|
|
282 |
|
|
(66) |
|
|
(14) |
|
|
2,047 |
|
|
2,131 |
Total revenue |
|
2,749 |
|
|
2,461 |
|
|
963 |
|
|
1,039 |
|
|
1,523 |
|
|
1,463 |
|
|
725 |
|
|
726 |
|
|
(71) |
|
|
(26) |
|
|
5,889 |
|
|
5,663 |
Provision for
(reversal of) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
credit losses |
|
306 |
|
|
212 |
|
|
- |
|
|
- |
|
|
254 |
|
|
130 |
|
|
8 |
|
|
3 |
|
|
(3) |
|
|
(5) |
|
|
565 |
|
|
340 |
Non-interest
expenses |
|
1,343 |
|
|
1,193 |
|
|
676 |
|
|
669 |
|
|
929 |
|
|
980 |
|
|
374 |
|
|
395 |
|
|
284 |
|
|
251 |
|
|
3,606 |
|
|
3,488 |
Income (loss)
before |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes |
|
1,100 |
|
|
1,056 |
|
|
287 |
|
|
370 |
|
|
340 |
|
|
353 |
|
|
343 |
|
|
328 |
|
|
(352) |
|
|
(272) |
|
|
1,718 |
|
|
1,835 |
Provision for
(recovery of) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes |
|
294 |
|
|
302 |
|
|
45 |
|
|
81 |
|
|
24 |
|
|
58 |
|
|
34 |
|
|
48 |
|
|
(219) |
|
|
(179) |
|
|
178 |
|
|
310 |
Equity in net income
of an |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment in
associate, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income
taxes |
|
- |
|
|
- |
|
|
51 |
|
|
54 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
6 |
|
|
10 |
|
|
57 |
|
|
64 |
Net income
(loss) |
$ |
806 |
|
$ |
754 |
|
$ |
293 |
|
$ |
343 |
|
$ |
316 |
|
$ |
295 |
|
$ |
309 |
|
$ |
280 |
|
$ |
(127) |
|
$ |
(83) |
|
$ |
1,597 |
|
$ |
1,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
at |
Total assets
(billions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Canadian
dollars) |
$ |
282.6 |
|
$ |
258.5 |
|
$ |
26.4 |
|
$ |
26.7 |
|
$ |
209.1 |
|
$ |
198.7 |
|
$ |
260.7 |
|
$ |
220.3 |
|
$ |
32.3 |
|
$ |
31.3 |
|
$ |
811.1 |
|
$ |
735.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results by
Business Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the twelve months ended |
|
|
|
Canadian Personal
and Commercial
Banking1 |
|
Wealth and
Insurance1 |
|
U.S. Personal
and Commercial
Banking |
|
Wholesale
Banking |
|
Corporate |
|
Total |
|
|
|
Oct. 31
2012 |
|
Oct.
31
2011 |
|
Oct. 31
2012 |
|
Oct.
31
2011 |
|
Oct. 31
2012 |
Oct.
31
2011 |
|
Oct. 31
2012 |
|
Oct.
31
2011 |
|
Oct. 31
2012 |
|
Oct.
31
2011 |
|
Oct. 31
2012 |
|
Oct. 31
2011 |
Net
interest income (loss) |
|
$ |
8,023 |
|
$ |
7,190 |
|
$ |
583 |
|
$ |
542 |
|
$ |
4,663 |
$ |
4,392 |
|
$ |
1,805 |
|
$ |
1,659 |
|
$ |
(48) |
|
$ |
(122) |
|
$ |
15,026 |
|
$ |
13,661 |
Non-interest income (loss) |
|
|
2,629 |
|
|
2,342 |
|
|
3,436 |
|
|
3,498 |
|
|
1,468 |
|
1,342 |
|
|
849 |
|
|
837 |
|
|
(286) |
|
|
(18) |
|
|
8,096 |
|
|
8,001 |
Total
revenue |
|
|
10,652 |
|
|
9,532 |
|
|
4,019 |
|
|
4,040 |
|
|
6,131 |
|
5,734 |
|
|
2,654 |
|
|
2,496 |
|
|
(334) |
|
|
(140) |
|
|
23,122 |
|
|
21,662 |
Provision for (reversal of) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
credit losses |
|
|
1,151 |
|
|
824 |
|
|
- |
|
|
- |
|
|
779 |
|
687 |
|
|
47 |
|
|
22 |
|
|
(182) |
|
|
(43) |
|
|
1,795 |
|
|
1,490 |
Non-interest expenses |
|
|
4,988 |
|
|
4,433 |
|
|
2,600 |
|
|
2,616 |
|
|
4,125 |
|
3,593 |
|
|
1,570 |
|
|
1,468 |
|
|
715 |
|
|
937 |
|
|
13,998 |
|
|
13,047 |
Income
(loss) before |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes |
|
|
4,513 |
|
|
4,275 |
|
|
1,419 |
|
|
1,424 |
|
|
1,227 |
|
1,454 |
|
|
1,037 |
|
|
1,006 |
|
|
(867) |
|
|
(1,034) |
|
|
7,329 |
|
|
7,125 |
Provision for (recovery of) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes |
|
|
1,209 |
|
|
1,224 |
|
|
261 |
|
|
317 |
|
|
99 |
|
266 |
|
|
157 |
|
|
191 |
|
|
(634) |
|
|
(672) |
|
|
1,092 |
|
|
1,326 |
Equity in net income
of an |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment in
associate, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income taxes |
|
|
- |
|
|
- |
|
|
209 |
|
|
207 |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
25 |
|
|
39 |
|
|
234 |
|
|
246 |
Net
income (loss) |
|
$ |
3,304 |
|
$ |
3,051 |
|
$ |
1,367 |
|
$ |
1,314 |
|
$ |
1,128 |
$ |
1,188 |
|
$ |
880 |
|
$ |
815 |
|
$ |
(208) |
|
$ |
(323) |
|
$ |
6,471 |
|
$ |
6,045 |
1 |
Effective November 1, 2011, the insurance business was
transferred from Canadian Personal and Commercial Banking to Wealth
and Insurance. The 2011 results have been restated
accordingly. |
|
|
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) |
Missing dividends,
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:
CIBC Mellon Trust Company*
P.O. Box 700, Station B
Montreal, Quebec 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
*Canadian Stock Transfer Company Inc. acts as
administrative agent for CIBC Mellon Trust Company |
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 Shareowner Services LLC
P.O. Box 43006
Providence, Rhode Island 02940-3006
or
250 Royall Street
Canton, Massachusetts 02021
1-866-233-4836
TDD for hearing impaired: 1-800-231-5469
Shareholders outside of U.S.: 201-680-6578
TDD shareholders outside of U.S: 201-680-6610
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.
Annual Report on Form 40-F (U.S.)
A copy of the Bank's annual report on Form 40-F for fiscal 2012
will be filed with the Securities and Exchange Commission later
today and will be available at http://www.td.com. You may obtain a
printed copy of the Bank's annual report on Form 40-F for fiscal
2012 free of charge upon request to TD Shareholder Relations at
416-944-6367 or 1-866-756-8936 or e-mail: tdshinfo@td.com.
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
Internet website: http://www.td.com
Internet e-mail: customer.service@td.com
Access to Quarterly Results Materials
Interested investors, the media and others may view this fourth
quarter earnings news release, results slides, supplementary
financial information, and the 2012 Consolidated Financial
Statements and Notes and the 2012 Management's Discussion and
Analysis documents on the TD website at
www.td.com/investor/qr_2012.jsp.
Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference call in Toronto, Ontario on December 6, 2012. The call will be webcast live
via TD's website at 3 p.m. ET. The
call and webcast will feature presentations by TD executives on the
Bank's financial results for the fourth quarter and fiscal 2012,
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_2012.jsp on December
6, 2012, before 12 p.m. ET. A
listen-only telephone line is available at 416-644-3415 or
1-877-974-0445 (toll free).
The webcast and presentations will be archived at
www.td.com/investor/qr_2012.jsp. Replay of the teleconference will
be available from 6 p.m. ET on
December 6, 2012, until January 7, 2013, by calling 416-640-1917 or
1-877-289-8525 (toll free). The passcode is 4574091, followed by
the pound key.
Annual Meeting
Thursday, April 4, 2013
Fairmont Château Laurier
Ottawa, Ontario
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively
known as TD Bank Group (TD). TD is the sixth largest bank in
North America by branches and
serves approximately 22 million customers in four key businesses
operating in a number of locations in key financial centres around
the globe: Canadian Personal and Commercial Banking, including TD
Canada Trust and TD Auto Finance Canada; Wealth and Insurance,
including TD Waterhouse, an investment in TD Ameritrade, and TD
Insurance; U.S. Personal and Commercial Banking, including TD Bank,
America's Most Convenient Bank, and TD Auto Finance U.S.; and
Wholesale Banking, including TD Securities. TD also ranks among the
world's leading online financial services firms, with more than 8.5
million online customers. TD had CDN$811
billion in assets on October 31,
2012. The Toronto-Dominion Bank trades under the symbol "TD"
on the Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group