This quarterly Earnings
News Release should be read in conjunction with the Bank's
unaudited third quarter 2022 Report to Shareholders for the three
months ended July 31, 2022, prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB), which is available
on our website at http://www.td.com/investor/. This analysis is
dated August 24, 2022. Unless otherwise indicated, all amounts are
expressed in Canadian dollars, and have been primarily derived from
the Bank's Annual or Interim Consolidated Financial Statements
prepared in accordance with IFRS. Certain comparative amounts have
been revised to conform to the presentation adopted in the current
period. Additional information relating to the Bank is available on
the Bank's website at http://www.td.com, as well as on SEDAR at
http://www.sedar.com and on the U.S. Securities and Exchange
Commission's (SEC) website at http://www.sec.gov (EDGAR filers
section).
Reported results conform to generally accepted accounting
principles (GAAP), in accordance with IFRS. Adjusted results are
non-GAAP financial measures. For additional information about the
Bank's use of non-GAAP financial measures, refer to "Non-GAAP and
Other Financial Measures" in the "How We Performed" section of this
document.
|
THIRD QUARTER FINANCIAL HIGHLIGHTS, compared with the third quarter
last year:
- Reported diluted earnings per share were $1.75, compared with $1.92.
- Adjusted diluted earnings per share were $2.09, compared with $1.96.
- Reported net income was $3,214
million, compared with $3,545
million.
- Adjusted net income was $3,813
million, compared with $3,628
million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, nine months ended
July 31, 2022, compared with the
corresponding period last year:
- Reported diluted earnings per share were $5.85, compared with $5.68.
- Adjusted diluted earnings per share were $6.18, compared with $5.83.
- Reported net income was $10,758
million, compared with $10,517
million.
- Adjusted net income was $11,360
million, compared with $10,783
million.
THIRD QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The third
quarter reported earnings figures included the following items of
note:
- Amortization of acquired intangibles of $58 million ($52
million after-tax or 3 cents
per share), compared with $68 million
($61 million after-tax or
3 cents per share) in the
third quarter last year.
- Acquisition and integration charges related to the Schwab
transaction of $23 million
($20 million after-tax or
1 cent per share), compared with
$24 million ($22 million after-tax or 1
cent per share) in the third quarter last year.
- Acquisition and integration-related charges for the First
Horizon acquisition of $29 million
($22 million after-tax or
1 cent per share).
- Mitigation of interest rate volatility to closing capital on
First Horizon acquisition, net loss of $678
million ($505 million
after-tax or 28 cents per
share).
TORONTO, Aug. 25,
2022 /CNW/ - TD Bank Group ("TD" or the "Bank") today
announced its financial results for the third quarter ended
July 31, 2022. Reported earnings were
$3.2 billion, down 9.3% compared with
the third quarter last year, and adjusted earnings were
$3.8 billion, up 5.1%.
"Continued business momentum, increased customer activity and
the benefits of our deposit rich franchise contributed to TD's
strong performance in the third quarter," said Bharat Masrani,
Group President and CEO, TD Bank Group. "Investments in talent and
innovation, combined with our focus on prudent risk and financial
management, strengthened our business and extended our competitive
advantage."
Canadian Retail delivered another strong quarter with record
revenue
Canadian Retail net income was $2,253
million, an increase of 6% compared with the third quarter
last year. Revenue was $7,020
million, an increase of 7%, supported by continued momentum
in banking and insurance volumes, rising interest rates, and growth
in customer activity, including record credit card sales, partially
offset by lower wealth revenue due to market conditions. Expenses
increased 8%, reflecting higher spend supporting business growth,
including investments in technology and employee-related expenses.
Provision for credit losses (PCL) increased by $70 million from the prior year, reflecting
higher provisions for performing loans, partially offset by lower
impaired PCL.
Canadian Retail continued to build on its momentum delivering
record revenue for the quarter and welcoming more customers, which
included record new account openings for new Canadians. The Bank
continued to support forward-focused investments, such as the
addition of the 24th state-of-the-art TD Insurance Auto Centre,
further extending its geographic reach and ability to offer
superior experiences to more customers. TD Direct Investing was
ranked #1 best online broker in Canada in 2022 by MoneySense and the Bank was
recognized as a market leader in Digital Customer Engagement by
Industry Banking Reports.
The U.S. Retail Bank delivered strong results, fueled by
momentum in the consumer and commercial businesses
U.S. Retail reported net income for the quarter was $1,442 million (US$1,122
million), an increase of 11% (7% in U.S. dollars) compared
with the third quarter last year. Reported net income included
acquisition and integration-related charges for the First Horizon
acquisition of $29 million
(US$22 million) or $22 million (US$17 million) after-tax. On an
adjusted basis, net income for the quarter was $1,464 million (US$1,139
million), an increase of 13% (8% in U.S. dollars). The
Bank's investment in The Charles Schwab Corporation (Schwab)
contributed $289 million
(US$226 million) in earnings, an
increase of 47% (40% in U.S. dollars) compared with the third
quarter last year.
The U.S. Retail Bank, which excludes the Bank's investment in
Schwab, reported net income of $1,153
million (US$896 million), an
increase of 5% (1% in U.S. dollars) from the third quarter last
year, primarily reflecting higher revenue, partially offset by
higher PCL and higher non-interest expenses. On an adjusted basis,
net income was a record $1,175
million (US$913 million), an
increase of 7% (2% in U.S. dollars), reflecting higher deposit
margins and volumes, partially offset by higher PCL, lower income
from the Paycheck Protection Program (PPP), and higher
employee-related expenses.
U.S. Retail accelerated its business momentum in the third
quarter. The U.S. Retail Bank delivered personal loan and deposit
growth of 8% each year-over-year. In addition, improving commercial
loan growth in middle market and specialty lending helped fuel 2.6%
loan growth over the prior quarter. Combined with this growth, the
significant wind-down in PPP volumes resulted in only a small
decline in average loan volumes overall from the same quarter last
year. The business momentum this quarter reflected a combination of
strong originations and new customer growth, along with higher
commercial line utilization and increased customer activity.
Last week's public meeting before the joint Office of the
Comptroller of the Currency and the Federal Reserve Board was
another important milestone in TD's ongoing work with community
groups and regulators to advance the approval process for the First
Horizon transaction. TD continues to expect the transaction to
close in the first quarter of fiscal 2023 and looks forward to
welcoming First Horizon customers and associates to the Bank.
To further enhance the colleague and customer experience, U.S.
Retail launched TD Workshop this quarter – the Bank's first retail
innovation lab, which combines a fully-functioning store with space
to innovate, design and test new products, and engage with
customers and the broader community. For the third consecutive
year, TD Auto Finance was proud to be ranked "Highest in Dealer
Satisfaction among Non-Captive Lenders with Prime Credit" in the
J.D. Power 2022 U.S. Dealer Financing Satisfaction
Study.1 This quarter, TD Bank, America's Most Convenient
Bank®, was recognized by Forbes as one of America's Best
Employers for Women.
Solid Wholesale Banking performance in Q3
Wholesale Banking net income for the quarter was $271 million, a decrease of 18% compared to the
third quarter last year reflecting higher non-interest expenses and
PCL. In spite of market volatility and a weaker underwriting
environment, revenue was down only 1% year-over-year, with the
decreased activity partially offset by other parts of the business,
reflecting the strength of Wholesale Banking's diversified business
model.
TD's proposed acquisition of Cowen Inc., announced on
August 2, 2022, will accelerate the
Wholesale Bank's U.S. dollar growth strategy by expanding its
product and service offering, increasing depth in key business
lines, and adding scale and high-quality talent. The transaction is
expected to close in the first calendar quarter of 2023.
Additionally, TD Securities was named the Canadian FX Service
Quality Leader for Corporates in 2022 by Coalition Greenwich Study
for the third consecutive year, continuing to demonstrate the
Wholesale Bank's leadership position in the Canadian market.
Capital
TD's Common Equity Tier 1 Capital ratio was 14.9%.
Conclusion
"We enter the final quarter of fiscal 2022 with growing
businesses, a powerful brand and a proven ability to drive
consistent execution across the Bank," added Masrani. "In a complex
macroeconomic environment, we are well-positioned to continue
investing in our business and create long-term value for our
shareholders."
The foregoing contains forward-looking statements. Please refer
to the "Caution Regarding Forward-Looking Statements".
Caution Regarding
Forward-Looking Statements From time to time, the Bank
(as defined in this document) makes written and/or oral
forward-looking statements, including in this document, in other
filings with Canadian regulators or the United States (U.S.)
Securities and Exchange Commission (SEC), and in other
communications. In addition, representatives of the Bank may make
forward-looking statements orally to analysts, investors, the media
and others. All such statements are made pursuant to the "safe
harbour" provisions of, and are intended to be forward-looking
statements under, applicable Canadian and U.S. securities
legislation, including the U.S. Private Securities Litigation
Reform Act of 1995. Forward-looking statements include, but are
not limited to, statements made in this document, the Management's
Discussion and Analysis ("2021 MD&A") in the Bank's 2021 Annual
Report under the headings "Economic Summary and Outlook" and "The
Bank's Response to COVID-19", under the headings "Key Priorities
for 2022" and "Operating Environment and Outlook" for the Canadian
Retail, U.S. Retail, and Wholesale Banking segments, and under the
heading "Focus for 2022" for the Corporate segment, and in other
statements regarding the Bank's objectives and priorities for 2022
and beyond and strategies to achieve them, the regulatory
environment in which the Bank operates, the Bank's anticipated
financial performance, and the potential economic, financial and
other impacts of the Coronavirus Disease 2019 (COVID-19).
Forward-looking statements are typically identified by words such
as "will", "would", "should", "believe", "expect", "anticipate",
"intend", "estimate", "plan", "goal", "target", "may", and
"could".
By their very nature, these forward-looking statements require the
Bank to make assumptions and are subject to inherent risks and
uncertainties, general and specific. Especially in light of the
uncertainty related to the physical, financial, economic,
political, and regulatory environments, such risks and
uncertainties – many of which are beyond the Bank's control and the
effects of which can be difficult to predict – may cause actual
results to differ materially from the expectations expressed in the
forward-looking statements. Risk factors that could cause,
individually or in the aggregate, such differences include:
strategic, credit, market (including equity, commodity, foreign
exchange, interest rate, and credit spreads), operational
(including technology, cyber security, and infrastructure), model,
insurance, liquidity, capital adequacy, legal, regulatory
compliance and conduct, reputational, environmental and social, and
other risks. Examples of such risk factors include the economic,
financial, and other impacts of pandemics, including the COVID-19
pandemic; general business and economic conditions in the regions
in which the Bank operates; geopolitical risk; the ability of the
Bank to execute on long-term strategies and shorter-term key
strategic priorities, including the successful completion of
acquisitions and dispositions, business retention plans, and
strategic plans; technology and cyber security risk (including
cyber-attacks or data security breaches) on the Bank's information
technology, internet, network access or other voice or data
communications systems or services; model risk; fraud activity; the
failure of third parties to comply with their obligations to the
Bank or its affiliates, including relating to the care and control
of information, and other risks arising from the Bank's use of
third-party service providers; the impact of new and changes to, or
application of, current laws and regulations, including without
limitation tax laws, capital guidelines and liquidity regulatory
guidance and the bank recapitalization "bail-in" regime; regulatory
oversight and compliance risk; increased competition from
incumbents and new entrants (including Fintechs and big technology
competitors); shifts in consumer attitudes and disruptive
technology; exposure related to significant litigation and
regulatory matters; ability of the Bank to attract, develop, and
retain key talent; changes to the Bank's credit ratings; changes in
currency and interest rates (including the possibility of negative
interest rates); increased funding costs and market volatility due
to market illiquidity and competition for funding; Interbank
Offered Rate (IBOR) transition risk; critical accounting estimates
and changes to accounting standards, policies, and methods used by
the Bank; existing and potential international debt crises;
environmental and social risk (including climate change); and the
occurrence of natural and unnatural catastrophic events and claims
resulting from such events. The Bank cautions that the preceding
list is not exhaustive of all possible risk factors and other
factors could also adversely affect the Bank's results. For more
detailed information, please refer to the "Risk Factors and
Management" section of the 2021 MD&A, as may be updated in
subsequently filed quarterly reports to shareholders and news
releases (as applicable) related to any events or transactions
discussed under the heading "Pending Acquisition" or "Significant
and Subsequent Events and Pending Acquisitions" in the relevant
MD&A, which applicable releases may be found on www.td.com. All
such factors, as well as other uncertainties and potential events,
and the inherent uncertainty of forward-looking statements, should
be considered carefully when making decisions with respect to the
Bank. The Bank cautions readers not to place undue reliance on the
Bank's forward-looking statements.
Material economic assumptions underlying the forward-looking
statements contained in this document are set out in the 2021
MD&A under the headings "Economic Summary and Outlook" and "The
Bank's Response to COVID-19", under the headings "Key Priorities
for 2022" and "Operating Environment and Outlook" for the Canadian
Retail, U.S. Retail, and Wholesale Banking segments, and under
the heading "Focus for 2022" for the Corporate segment, each as may
be 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.
_________________________
|
1
|
TD Auto Finance
received the highest score in the non-captive national – prime
segment (between 214,000 and 542,000 transactions) in the J.D.
Power 2020-2022 U.S. Dealer Financing Satisfaction Studies of
dealers' satisfaction with automotive finance providers. Visit
jdpower.com/awards for more details.
|
TABLE 1: FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
July
31
|
|
April 30
|
|
July 31
|
|
July
31
|
|
July 31
|
|
|
2022
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Results of
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue –
reported
|
$
|
10,925
|
|
$
|
11,263
|
|
$
|
10,712
|
|
$
|
33,469
|
|
$
|
31,752
|
|
Total revenue –
adjusted1
|
|
11,603
|
|
|
11,039
|
|
|
10,712
|
|
|
33,923
|
|
|
31,752
|
|
Provision for (recovery
of) credit losses
|
|
351
|
|
|
27
|
|
|
(37)
|
|
|
450
|
|
|
(101)
|
|
Insurance claims and
related expenses
|
|
829
|
|
|
592
|
|
|
836
|
|
|
2,177
|
|
|
2,057
|
|
Non-interest expenses –
reported
|
|
6,096
|
|
|
6,033
|
|
|
5,616
|
|
|
18,096
|
|
|
17,129
|
|
Non-interest expenses –
adjusted1
|
|
6,033
|
|
|
5,999
|
|
|
5,576
|
|
|
17,929
|
|
|
17,011
|
|
Net income –
reported
|
|
3,214
|
|
|
3,811
|
|
|
3,545
|
|
|
10,758
|
|
|
10,517
|
|
Net income –
adjusted1
|
|
3,813
|
|
|
3,714
|
|
|
3,628
|
|
|
11,360
|
|
|
10,783
|
|
Financial
position (billions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans net of
allowance for loan losses
|
$
|
790.8
|
|
$
|
765.0
|
|
$
|
719.2
|
|
$
|
790.8
|
|
$
|
719.2
|
|
Total assets
|
|
1,840.8
|
|
|
1,825.3
|
|
|
1,703.1
|
|
|
1,840.8
|
|
|
1,703.1
|
|
Total
deposits
|
|
1,201.7
|
|
|
1,183.7
|
|
|
1,118.7
|
|
|
1,201.7
|
|
|
1,118.7
|
|
Total equity
|
|
102.6
|
|
|
99.4
|
|
|
99.9
|
|
|
102.6
|
|
|
99.9
|
|
Total risk-weighted
assets2
|
|
495.7
|
|
|
489.0
|
|
|
465.5
|
|
|
495.7
|
|
|
465.5
|
|
Financial
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common equity
(ROE) – reported3
|
|
13.5
|
%
|
|
16.4
|
%
|
|
15.3
|
%
|
|
15.1
|
%
|
|
15.4
|
%
|
Return on common equity
– adjusted1
|
|
16.1
|
|
|
15.9
|
|
|
15.6
|
|
|
15.9
|
|
|
15.8
|
|
Return on tangible
common equity (ROTCE)1
|
|
18.4
|
|
|
22.1
|
|
|
20.8
|
|
|
20.4
|
|
|
21.2
|
|
Return on tangible
common equity – adjusted1
|
|
21.6
|
|
|
21.2
|
|
|
20.9
|
|
|
21.2
|
|
|
21.4
|
|
Efficiency ratio –
reported3
|
|
55.8
|
|
|
53.6
|
|
|
52.4
|
|
|
54.1
|
|
|
53.9
|
|
Efficiency ratio –
adjusted1,3
|
|
52.0
|
|
|
54.3
|
|
|
52.0
|
|
|
52.9
|
|
|
53.6
|
|
Provision for (recovery
of) credit losses as a % of net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average
loans and acceptances
|
|
0.17
|
|
|
0.01
|
|
|
(0.02)
|
|
|
0.08
|
|
|
(0.02)
|
|
Common share
information – reported (Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.76
|
|
$
|
2.08
|
|
$
|
1.92
|
|
$
|
5.86
|
|
$
|
5.69
|
|
Diluted
|
|
1.75
|
|
|
2.07
|
|
|
1.92
|
|
|
5.85
|
|
|
5.68
|
|
Dividends per
share
|
|
0.89
|
|
|
0.89
|
|
|
0.79
|
|
|
2.67
|
|
|
2.37
|
|
Book value per
share3
|
|
52.54
|
|
|
51.49
|
|
|
51.21
|
|
|
52.54
|
|
|
51.21
|
|
Closing share
price4
|
|
83.18
|
|
|
92.79
|
|
|
82.95
|
|
|
83.18
|
|
|
82.95
|
|
Shares outstanding
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
1,804.5
|
|
|
1,804.7
|
|
|
1,818.8
|
|
|
1,810.0
|
|
|
1,816.8
|
|
Average
diluted
|
|
1,807.1
|
|
|
1,808.3
|
|
|
1,821.8
|
|
|
1,813.3
|
|
|
1,819.2
|
|
End of
period
|
|
1,813.1
|
|
|
1,803.9
|
|
|
1,820.0
|
|
|
1,813.1
|
|
|
1,820.0
|
|
Market capitalization
(billions of Canadian dollars)
|
$
|
150.8
|
|
$
|
167.4
|
|
$
|
151.0
|
|
$
|
150.8
|
|
$
|
151.0
|
|
Dividend
yield3
|
|
4.0
|
%
|
|
3.6
|
%
|
|
3.7
|
%
|
|
3.8
|
%
|
|
4.0
|
%
|
Dividend payout
ratio3
|
|
50.6
|
|
|
42.8
|
|
|
41.2
|
|
|
45.5
|
|
|
41.7
|
|
Price-earnings
ratio3
|
|
10.6
|
|
|
11.5
|
|
|
9.8
|
|
|
10.6
|
|
|
9.8
|
|
Total shareholder
return (1 year)3
|
|
4.2
|
|
|
13.9
|
|
|
44.4
|
|
|
4.2
|
|
|
44.4
|
|
Common share
information – adjusted (Canadian
dollars)1,3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.09
|
|
$
|
2.02
|
|
$
|
1.96
|
|
$
|
6.19
|
|
$
|
5.83
|
|
Diluted
|
|
2.09
|
|
|
2.02
|
|
|
1.96
|
|
|
6.18
|
|
|
5.83
|
|
Dividend payout
ratio
|
|
42.5
|
%
|
|
43.9
|
%
|
|
40.2
|
%
|
|
43.1
|
%
|
|
40.6
|
%
|
Price-earnings
ratio
|
|
10.0
|
|
|
11.4
|
|
|
11.2
|
|
|
10.0
|
|
|
11.2
|
|
Capital
ratios2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital ratio
|
|
14.9
|
%
|
|
14.7
|
%
|
|
14.5
|
%
|
|
14.9
|
%
|
|
14.5
|
%
|
Tier 1 Capital
ratio
|
|
16.3
|
|
|
15.9
|
|
|
15.9
|
|
|
16.3
|
|
|
15.9
|
|
Total Capital
ratio
|
|
18.8
|
|
|
18.5
|
|
|
18.5
|
|
|
18.8
|
|
|
18.5
|
|
Leverage
ratio
|
|
4.3
|
|
|
4.3
|
|
|
4.8
|
|
|
4.3
|
|
|
4.8
|
|
TLAC ratio
|
|
32.0
|
|
|
30.4
|
|
|
26.3
|
|
|
32.0
|
|
|
26.3
|
|
TLAC Leverage
ratio
|
|
8.5
|
|
|
8.1
|
|
|
7.9
|
|
|
8.5
|
|
|
7.9
|
|
1
|
The Toronto-Dominion
Bank ("TD" or the "Bank") prepares its unaudited Interim
Consolidated Financial Statements in accordance with IFRS, the
current GAAP, and refers to results prepared in accordance with
IFRS as the "reported" results. The Bank also utilizes non-GAAP
financial measures such as "adjusted" results and non-GAAP ratios
to assess each of its businesses and to measure overall Bank
performance. To arrive at adjusted results, the Bank adjusts
reported results for "items of note". Refer to the "How We
Performed" section of this document for further explanation, a list
of the items of note, and a reconciliation of adjusted to reported
results. Non-GAAP financial measures and ratios used in this
document are not defined terms under IFRS and, therefore, may not
be comparable to similar terms used by other issuers.
|
2
|
These measures have
been included in this document in accordance with the Office of the
Superintendent of Financial Institutions Canada's (OSFI's) Capital
Adequacy Requirements (CAR), Leverage Requirements, and Total Loss
Absorbing Capacity (TLAC) guidelines. Refer to the "Capital
Position" section in the third quarter of 2022 MD&A for further
details.
|
3
|
For additional
information about this metric, refer to the Glossary in the third
quarter of 2022 MD&A, which is incorporated by
reference.
|
4
|
Toronto Stock Exchange
closing market price.
|
SIGNIFICANT AND SUBSEQUENT EVENTS, AND PENDING ACQUISITIONS
Acquisition of Cowen Inc.
On August 2, 2022, the Bank and Cowen Inc. ("Cowen")
announced a definitive agreement for TD to acquire Cowen in an
all-cash transaction valued at US$1.3 billion, or US$39.00 for each share of Cowen common stock.
The transaction is expected to close in the first calendar quarter
of 2023, subject to customary closing conditions, including
approvals from Cowen's stockholders and certain U.S., Canadian, and
foreign regulatory authorities. The results of the acquired
business will be consolidated by the Bank from the closing date and
reported in the Wholesale Banking segment. Based on the
estimated financial performance and balance sheets of the Bank and
Cowen, including transaction-related impacts, the Bank expects that
its Common Equity Tier 1 (CET1) Capital ratio will be comfortably
above 11% upon the closing of the Cowen acquisition, pro forma for
the closing of the Bank's acquisition of First Horizon Corporation
("First Horizon").
Sale of Schwab Common Shares
On August 1, 2022, in order to provide the capital
required for the acquisition of Cowen, the Bank sold 28.4 million
non-voting common shares of Schwab at a price of US$66.53 per share for proceeds of approximately
$2.4 billion (US$1.9 billion). Approximately 15 million shares
were sold to Schwab pursuant to a repurchase agreement at a price
equal to the price obtained in the sale of 13.4 million shares sold
to a broker dealer pursuant to Rule 144 of the Securities Act of
1933. All shares sold automatically converted into shares of
Schwab voting common stock and the shares acquired by Schwab are no
longer outstanding. The sales reduced the Bank's ownership interest
in Schwab from approximately 13.4% to 12.0%. The Bank is expected
to recognize approximately $1 billion
(US$770 million) as other income (net of $370 million (US$290
million) loss from accumulated other comprehensive income
(AOCI) reclassified to earnings), in the fourth quarter of fiscal
2022.
Acquisition of First Horizon Corporation
On
February 28, 2022, the Bank and First
Horizon announced a definitive agreement for the Bank to acquire
First Horizon in an all-cash transaction valued at US$13.4 billion, or US$25.00 for each common share of First Horizon.
In connection with this transaction, the Bank has invested
US$494 million in non-voting First
Horizon preferred stock (convertible in certain circumstances into
up to 4.9% of First Horizon's common stock). The transaction is
expected to close in the first quarter of fiscal 2023, and is
subject to customary closing conditions, including approvals from
First Horizon's shareholders and U.S. and Canadian regulatory
authorities. The results of the acquired business will be
consolidated by the Bank from the closing date and reported in the
U.S. Retail segment.
If the transaction does not close prior to November 27, 2022, First Horizon shareholders
will receive, at closing, an additional US$0.65 per share on an annualized basis for the
period from November 27, 2022 through
the day immediately prior to the closing. Either party will have
the right to terminate the agreement if the transaction has not
closed by February 27, 2023 (the
"outside date"), subject to the right of either party (under
certain conditions) to extend the outside date to May 27, 2023.
During the quarter, the Bank implemented a strategy to mitigate
interest rate volatility to capital on closing of the
acquisition.
The fair value of First Horizon's fixed rate financial assets
and liabilities and certain intangible assets are sensitive to
interest rate changes. The fair value of net assets will determine
the amount of goodwill to be recognized on closing of the
acquisition. Increases in goodwill and intangibles will negatively
impact capital ratios because they are deducted from capital under
OSFI Basel III rules. In order to mitigate this volatility to
closing capital, the Bank de-designated certain interest rate swaps
hedging fixed income investments in fair value hedge accounting
relationships.
After the de-designation, mark-to-market gains (losses) on these
swaps are being recognized in earnings, without any corresponding
offset from the previously hedged investments, which will mitigate
the capital impact from changes in the amount of goodwill
recognized on closing of the acquisition. The de-designation also
triggered the amortization of the investments' basis adjustment to
net interest income over the remaining expected life of the
investments.
For the three and nine months ended July
31, 2022, the Bank recognized $(721)
million in non-interest income related to the mark‑to‑market
on the swaps, and $43 million in net
interest income related to the basis adjustment amortization.
HOW WE PERFORMED
HOW THE BANK REPORTS
The Bank prepares its Interim Consolidated Financial Statements
in accordance with IFRS and refers to results prepared in
accordance with IFRS as "reported" results.
Non-GAAP and Other Financial Measures
In addition to
reported results, the Bank also presents certain financial
measures, including non-GAAP financial measures that are
historical, non-GAAP ratios, supplementary financial measures and
capital management measures, to assess its results. Non-GAAP
financial measures, such as "adjusted" results, are utilized to
assess the Bank's businesses and to measure the Bank's overall
performance. To arrive at adjusted results, the Bank adjusts
reported results for "items of note". Items of note are items which
management does not believe are indicative of underlying business
performance and are disclosed in Table 3. Non-GAAP ratios include a
non-GAAP financial measure as one or more of its components.
Examples of non-GAAP ratios include adjusted basic and diluted
earnings per share (EPS), adjusted dividend payout ratio, adjusted
efficiency ratio, and adjusted effective income tax rate. The Bank
believes that non-GAAP financial measures and non-GAAP ratios
provide the reader with a better understanding of how management
views the Bank's performance. Non-GAAP financial measures and
non-GAAP ratios used in this document are not defined terms under
IFRS and, therefore, may not be comparable to similar terms used by
other issuers. Supplementary financial measures depict the Bank's
financial performance and position, and capital management measures
depict the Bank's capital position, and both are explained in this
document where they first appear.
U.S. Strategic Cards
The Bank's U.S. strategic cards
portfolio is comprised of agreements with certain U.S. retailers
pursuant to which TD is the U.S. issuer of private label and
co-branded consumer credit cards to their U.S. customers. Under the
terms of the individual agreements, the Bank and the retailers
share in the profits generated by the relevant portfolios after
credit losses. Under IFRS, TD is required to present the gross
amount of revenue and PCL related to these portfolios in the Bank's
Interim Consolidated Statement of Income. At the segment level, the
retailer program partners' share of revenues and credit losses is
presented in the Corporate segment, with an offsetting amount
(representing the partners' net share) recorded in Non-interest
expenses, resulting in no impact to Corporate's reported Net income
(loss). The Net income (loss) included in the U.S. Retail segment
includes only the portion of revenue and credit losses attributable
to TD under the agreements.
Investment in The Charles Schwab Corporation
On
October 6, 2020, the Bank acquired an
approximately 13.5% stake in Schwab following the completion of
Schwab's acquisition of TD Ameritrade ("Schwab transaction"). For
further details, refer to Note 7 of the third quarter of 2022
Interim Consolidated Financial Statements. The Bank accounts for
its investment in Schwab using the equity method and reports its
after-tax share of Schwab's earnings with a one-month lag. The U.S.
Retail segment reflects the Bank's share of net income from its
investment in Schwab. The Corporate segment net income (loss)
includes amounts for amortization of acquired intangibles and the
acquisition and integration charges related to the Schwab
transaction.
The following table provides the operating results on a reported
basis for the Bank.
TABLE 2: OPERATING
RESULTS – Reported
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
|
July
31
|
April 30
|
July 31
|
|
July
31
|
July 31
|
|
|
|
|
2022
|
2022
|
2021
|
|
2022
|
2021
|
|
|
Net interest
income
|
$
|
7,044
|
$
|
6,377
|
$
|
6,004
|
|
$
|
19,723
|
$
|
17,869
|
|
|
Non-interest
income
|
|
3,881
|
|
4,886
|
|
4,708
|
|
|
13,746
|
|
13,883
|
|
|
Total
revenue
|
|
10,925
|
|
11,263
|
|
10,712
|
|
|
33,469
|
|
31,752
|
|
|
Provision for (recovery
of) credit losses
|
|
351
|
|
27
|
|
(37)
|
|
|
450
|
|
(101)
|
|
|
Insurance claims and
related expenses
|
|
829
|
|
592
|
|
836
|
|
|
2,177
|
|
2,057
|
|
|
Non-interest
expenses
|
|
6,096
|
|
6,033
|
|
5,616
|
|
|
18,096
|
|
17,129
|
|
|
Income before income
taxes and share of net income from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment in
Schwab
|
|
3,649
|
|
4,611
|
|
4,297
|
|
|
12,746
|
|
12,667
|
|
|
Provision for (recovery
of) income taxes
|
|
703
|
|
1,002
|
|
922
|
|
|
2,689
|
|
2,711
|
|
|
Share of net income
from investment in Schwab
|
|
268
|
|
202
|
|
170
|
|
|
701
|
|
561
|
|
|
Net income –
reported
|
|
3,214
|
|
3,811
|
|
3,545
|
|
|
10,758
|
|
10,517
|
|
|
Preferred dividends and
distributions on other equity instruments
|
|
43
|
|
66
|
|
56
|
|
|
152
|
|
186
|
|
|
Net income available
to common shareholders
|
$
|
3,171
|
$
|
3,745
|
$
|
3,489
|
|
$
|
10,606
|
$
|
10,331
|
|
|
The following table provides a reconciliation between the Bank's
adjusted and reported results.
TABLE 3: NON-GAAP
FINANCIAL MEASURES – Reconciliation of Adjusted to Reported Net
Income
|
|
(millions of Canadian
dollars)
|
For the three months
ended
|
For the nine months
ended
|
|
|
|
July
31
|
April 30
|
July 31
|
July
31
|
July 31
|
|
|
2022
|
2022
|
2021
|
2022
|
2021
|
|
Operating results –
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income6
|
$
|
7,001
|
$
|
6,377
|
$
|
6,004
|
$
|
19,680
|
$
|
17,869
|
|
Non-interest
income1,6
|
|
4,602
|
|
4,662
|
|
4,708
|
|
14,243
|
|
13,883
|
|
Total
revenue
|
|
11,603
|
|
11,039
|
|
10,712
|
|
33,923
|
|
31,752
|
|
Provision for (recovery
of) credit losses
|
|
351
|
|
27
|
|
(37)
|
|
450
|
|
(101)
|
|
Insurance claims and
related expenses
|
|
829
|
|
592
|
|
836
|
|
2,177
|
|
2,057
|
|
Non-interest
expenses2
|
|
6,033
|
|
5,999
|
|
5,576
|
|
17,929
|
|
17,011
|
|
Income before income
taxes and share of net income
|
|
|
|
|
|
|
|
|
|
|
|
|
from investment in
Schwab
|
|
4,390
|
|
4,421
|
|
4,337
|
|
13,367
|
|
12,785
|
|
Provision for (recovery
of) income taxes
|
|
892
|
|
955
|
|
931
|
|
2,848
|
|
2,737
|
|
Share of net income
from investment in Schwab3
|
|
315
|
|
248
|
|
222
|
|
841
|
|
735
|
|
Net income –
adjusted
|
|
3,813
|
|
3,714
|
|
3,628
|
|
11,360
|
|
10,783
|
|
Preferred dividends and
distributions on other equity instruments
|
|
43
|
|
66
|
|
56
|
|
152
|
|
186
|
|
Net income available
to common shareholders – adjusted
|
|
3,770
|
|
3,648
|
|
3,572
|
|
11,208
|
|
10,597
|
|
Pre-tax adjustments
for items of note
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles4
|
|
(58)
|
|
(60)
|
|
(68)
|
|
(185)
|
|
(211)
|
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(23)
|
|
(20)
|
|
(24)
|
|
(93)
|
|
(81)
|
|
Acquisition and
integration-related charges for the First Horizon
acquisition2
|
|
(29)
|
|
–
|
|
–
|
|
(29)
|
|
–
|
|
Mitigation of interest
rate volatility to closing capital on
|
|
|
|
|
|
|
|
|
|
|
|
|
First Horizon
acquisition6
|
|
(678)
|
|
–
|
|
–
|
|
(678)
|
|
–
|
|
Litigation settlement
recovery1
|
|
–
|
|
224
|
|
–
|
|
224
|
|
–
|
|
Less: Impact of
income taxes
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles
|
|
(6)
|
|
(6)
|
|
(7)
|
|
(20)
|
|
(23)
|
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(3)
|
|
(2)
|
|
(2)
|
|
(14)
|
|
(3)
|
|
Acquisition and
integration-related charges for the First Horizon
acquisition
|
|
(7)
|
|
–
|
|
–
|
|
(7)
|
|
–
|
|
Mitigation of interest
rate volatility to closing capital on
|
|
|
|
|
|
|
|
|
|
|
|
|
First Horizon
acquisition
|
|
(173)
|
|
–
|
|
–
|
|
(173)
|
|
–
|
|
Litigation settlement
recovery
|
|
–
|
|
55
|
|
–
|
|
55
|
|
–
|
|
Total adjustments
for items of note
|
|
(599)
|
|
97
|
|
(83)
|
|
(602)
|
|
(266)
|
|
Net income available
to common shareholders – reported
|
$
|
3,171
|
$
|
3,745
|
$
|
3,489
|
$
|
10,606
|
$
|
10,331
|
|
1
|
Adjusted non-interest
income excludes the following item of note:
|
|
i.
|
The Bank reached a
settlement in TD Bank, N.A. v. Lloyd's Underwriter et al.,
in Canada, pursuant to which the Bank recovered losses resulting
from the previous resolution by the Bank of multiple proceedings in
the U.S. related to an alleged Ponzi scheme, perpetrated by, among
others, Scott Rothstein – Q2 2022: $224 million. This amount is
reported in the U.S. Retail segment.
|
|
|
|
2
|
Adjusted non-interest
expenses exclude the following items of note related to the Bank's
own asset acquisitions and business combinations:
|
|
i.
|
Amortization of
acquired intangibles – Q3 2022: $23 million, Q2 2022: $26 million,
Q1 2022: $33 million, Q3 2021: $34 million, Q2 2021: $35 million,
Q1 2021: $39 million. These amounts are reported in the Corporate
segment;
|
|
ii.
|
The Bank's own
integration and acquisition costs related to the Schwab transaction
– Q3 2022: $11 million, Q2 2022: $8 million, Q1 2022: $37 million,
Q3 2021: $6 million, Q2 2021: $3 million, Q1 2021: $1
million. These amounts are reported in the Corporate segment;
and
|
|
iii.
|
Acquisition and
integration-related charges for the First Horizon acquisition – Q3
2022: $29 million. These charges are primarily related to
professional services and other incremental operating expenses and
reported in the U.S. Retail segment.
|
|
|
|
3
|
Adjusted share of net
income from investment in Schwab excludes the following items of
note on an after-tax basis. The earnings impact of both items is
reported in the Corporate segment:
|
|
i.
|
Amortization of
Schwab-related acquired intangibles – Q3 2022: $35 million, Q2
2022: $34 million, Q1 2022: $34 million, Q3 2021: $34 million, Q2
2021: $34 million, Q1 2021: $35 million; and
|
|
ii.
|
The Bank's share of
acquisition and integration charges associated with Schwab's
acquisition of TD Ameritrade – Q3 2022: $12 million, Q2 2022: $12
million, Q1 2022: $13 million, Q3 2021: $18 million, Q2 2021:
$16 million, Q1 2021: $37 million.
|
|
|
|
4
|
Amortization of
acquired intangibles relates to intangibles acquired as a result of
asset acquisitions and business combinations, including the
after-tax amounts for amortization of acquired intangibles relating
to the Share of net income from investment in Schwab, reported in
the Corporate segment. Refer to footnotes 2 and 3 for
amounts.
|
|
|
|
5
|
Acquisition and
integration charges related to the Schwab transaction include the
Bank's own integration and acquisition costs, as well as the Bank's
share of acquisition and integration charges associated with
Schwab's acquisition of TD Ameritrade on an after-tax basis, both
reported in the Corporate segment. Refer to footnotes 2 and 3 for
amounts.
|
|
|
|
6
|
Mitigation of interest
rate volatility to closing capital on First Horizon acquisition
includes i) mark-to-market gains (losses) on interest rate swaps
recorded in non-interest income – Q3 2022: $(721) million, and
ii) basis adjustment amortization related to de-designated fair
value hedge accounting relationships, recorded in net interest
income – Q3 2022: $43 million. Both the mark-to-market gains
(losses) on the swaps and the basis adjustment amortization are
reported in the Corporate segment. Refer to the "Significant and
Subsequent Events, and Pending Acquisitions" section for further
details.
|
TABLE 4:
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER
SHARE1
|
|
(Canadian
dollars)
|
|
For the three months
ended
|
For the nine months
ended
|
|
|
July
31
|
April 30
|
July 31
|
July
31
|
July 31
|
|
|
2022
|
2022
|
2021
|
2022
|
2021
|
|
Basic earnings per
share – reported
|
$
|
1.76
|
$
|
2.08
|
$
|
1.92
|
$
|
5.86
|
$
|
5.69
|
|
Adjustments for items
of note
|
|
0.33
|
|
(0.05)
|
|
0.04
|
|
0.33
|
|
0.14
|
|
Basic earnings per
share – adjusted
|
$
|
2.09
|
$
|
2.02
|
$
|
1.96
|
$
|
6.19
|
$
|
5.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share – reported
|
$
|
1.75
|
$
|
2.07
|
$
|
1.92
|
$
|
5.85
|
$
|
5.68
|
|
Adjustments for items
of note
|
|
0.33
|
|
(0.05)
|
|
0.04
|
|
0.33
|
|
0.14
|
|
Diluted earnings per
share – adjusted
|
$
|
2.09
|
$
|
2.02
|
$
|
1.96
|
$
|
6.18
|
$
|
5.83
|
|
1
|
EPS is computed by
dividing net income available to common shareholders by the
weighted-average number of shares outstanding during the period.
Numbers may not add due to rounding.
|
Return on Common Equity
The consolidated Bank ROE is
calculated as reported net income available to common shareholders
as a percentage of average common equity. The consolidated Bank
adjusted ROE is calculated as adjusted net income available to
common shareholders as a percentage of average common equity.
Adjusted ROE is a non-GAAP financial ratio and can be utilized in
assessing the Bank's use of equity.
ROE for the business segments is calculated as the segment net
income attributable to common shareholders as a percentage of
average allocated capital. The Bank's methodology for allocating
capital to its business segments is largely aligned with the common
equity capital requirements under Basel III. Capital allocated to
the business segments increased to 10.5% CET1 Capital in the first
quarter of 2022, compared with 9% in fiscal 2021.
TABLE 5: RETURN ON
COMMON EQUITY
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three months
ended
|
For the nine months
ended
|
|
|
July
31
|
|
April 30
|
|
July 31
|
|
July
31
|
|
July 31
|
|
|
2022
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Average common
equity
|
$
|
92,963
|
|
$
|
93,922
|
|
$
|
90,626
|
|
$
|
94,170
|
|
$
|
89,627
|
|
Net income available
to common shareholders – reported
|
|
3,171
|
|
|
3,745
|
|
|
3,489
|
|
|
10,606
|
|
|
10,331
|
|
Items of note, net of
income taxes
|
|
599
|
|
|
(97)
|
|
|
83
|
|
|
602
|
|
|
266
|
|
Net income available
to common shareholders – adjusted
|
$
|
3,770
|
|
$
|
3,648
|
|
$
|
3,572
|
|
$
|
11,208
|
|
$
|
10,597
|
|
Return on common
equity – reported
|
|
13.5
|
%
|
|
16.4
|
%
|
|
15.3
|
%
|
|
15.1
|
%
|
|
15.4
|
%
|
Return on common
equity – adjusted
|
|
16.1
|
|
|
15.9
|
|
|
15.6
|
|
|
15.9
|
|
|
15.8
|
|
Return on Tangible Common Equity
Tangible common equity
(TCE) is calculated as common shareholders' equity less goodwill,
imputed goodwill and intangibles on the investments in Schwab and
other acquired intangible assets, net of related deferred tax
liabilities. ROTCE is calculated as reported net income available
to common shareholders after adjusting for the after‑tax
amortization of acquired intangibles, which are treated as an item
of note, as a percentage of average TCE. Adjusted ROTCE is
calculated using reported net income available to common
shareholders, adjusted for all items of note, as a percentage of
average TCE. TCE, ROTCE, and adjusted ROTCE can be utilized in
assessing the Bank's use of equity. TCE is a non-GAAP financial
measure, and ROTCE and adjusted ROTCE are non-GAAP ratios.
TABLE 6: RETURN ON
TANGIBLE COMMON EQUITY
|
|
(millions of Canadian
dollars, except as noted)
|
|
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
|
July
31
|
|
April 30
|
|
July 31
|
|
July
31
|
|
July 31
|
|
|
|
2022
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Average common
equity
|
$
|
92,963
|
|
$
|
93,922
|
|
$
|
90,626
|
|
$
|
94,170
|
|
$
|
89,627
|
|
Average
goodwill
|
|
16,704
|
|
|
16,577
|
|
|
16,056
|
|
|
16,583
|
|
|
16,395
|
|
Average imputed
goodwill and intangibles on investments in Schwab
|
|
6,600
|
|
|
6,577
|
|
|
6,485
|
|
|
6,580
|
|
|
6,695
|
|
Average other acquired
intangibles1
|
|
476
|
|
|
498
|
|
|
419
|
|
|
500
|
|
|
404
|
|
Average related
deferred tax liabilities
|
|
(172)
|
|
|
(171)
|
|
|
(171)
|
|
|
(171)
|
|
|
(171)
|
|
Average tangible
common equity
|
|
69,355
|
|
|
70,441
|
|
|
67,837
|
|
|
70,678
|
|
|
66,304
|
|
Net income available
to common shareholders – reported
|
|
3,171
|
|
|
3,745
|
|
|
3,489
|
|
|
10,606
|
|
|
10,331
|
|
Amortization of
acquired intangibles, net of income taxes
|
|
52
|
|
|
54
|
|
|
61
|
|
|
165
|
|
|
188
|
|
Net income available
to common shareholders adjusted for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization of
acquired intangibles, net of income taxes
|
|
3,223
|
|
|
3,799
|
|
|
3,550
|
|
|
10,771
|
|
|
10,519
|
|
Other items of note,
net of income taxes
|
|
547
|
|
|
(151)
|
|
|
22
|
|
|
437
|
|
|
78
|
|
Net income available
to common shareholders – adjusted
|
$
|
3,770
|
|
$
|
3,648
|
|
$
|
3,572
|
|
$
|
11,208
|
|
$
|
10,597
|
|
Return on tangible
common equity
|
|
18.4
|
%
|
|
22.1
|
%
|
|
20.8
|
%
|
|
20.4
|
%
|
|
21.2
|
%
|
Return on tangible
common equity – adjusted
|
|
21.6
|
|
|
21.2
|
|
|
20.9
|
|
|
21.2
|
|
|
21.4
|
|
1
|
Excludes intangibles
relating to software and asset servicing rights.
|
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank reports its results
under three key business segments: Canadian Retail, which includes
the results of the personal and commercial banking, wealth, and
insurance businesses; U.S. Retail, which includes the results of
the personal and business banking operations, wealth management
services, and the Bank's investment in Schwab; and Wholesale
Banking. The Bank's other activities are grouped into the Corporate
segment.
Results of each business segment reflect revenue, expenses,
assets, and liabilities generated by the businesses in that
segment. Where applicable, the Bank measures and evaluates the
performance of each segment based on adjusted results and ROE, and
for those segments, the Bank indicates that the measure is
adjusted. For further details, refer to the "How We Performed"
section of this document, the "Business Focus" section in the
Bank's 2021 MD&A, and Note 29 of the Bank's Consolidated
Financial Statements for the year ended October 31, 2021.
PCL related to performing (Stage 1 and Stage 2) and impaired
(Stage 3) financial assets, loan commitments, and financial
guarantees is recorded within the respective segment.
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 certain 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's
results are reversed in the Corporate segment. The TEB adjustment
for the quarter was $41 million, compared with
$34 million in the prior quarter and $37 million in the
third quarter last year.
Share of net income from investment in Schwab is reported in the
U.S. Retail segment. Amounts for amortization of acquired
intangibles and the acquisition and integration charges related to
the Schwab transaction are recorded in the Corporate segment.
TABLE 7: CANADIAN
RETAIL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
|
|
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
July
31
|
|
April 30
|
|
July 31
|
|
July
31
|
|
July 31
|
|
|
2022
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net interest
income
|
$
|
3,448
|
|
$
|
3,148
|
|
$
|
3,044
|
|
$
|
9,681
|
|
$
|
8,895
|
|
Non-interest
income
|
|
3,572
|
|
|
3,475
|
|
|
3,535
|
|
|
10,680
|
|
|
10,091
|
|
Total
revenue
|
|
7,020
|
|
|
6,623
|
|
|
6,579
|
|
|
20,361
|
|
|
18,986
|
|
Provision for (recovery
of) credit losses – impaired
|
|
142
|
|
|
163
|
|
|
154
|
|
|
455
|
|
|
512
|
|
Provision for (recovery
of) credit losses – performing
|
|
28
|
|
|
(103)
|
|
|
(54)
|
|
|
(192)
|
|
|
(307)
|
|
Total provision for
(recovery of) credit losses
|
|
170
|
|
|
60
|
|
|
100
|
|
|
263
|
|
|
205
|
|
Insurance claims and
related expenses
|
|
829
|
|
|
592
|
|
|
836
|
|
|
2,177
|
|
|
2,057
|
|
Non-interest
expenses
|
|
2,957
|
|
|
2,932
|
|
|
2,748
|
|
|
8,758
|
|
|
8,091
|
|
Provision for (recovery
of) income taxes
|
|
811
|
|
|
803
|
|
|
770
|
|
|
2,420
|
|
|
2,289
|
|
Net
income
|
$
|
2,253
|
|
$
|
2,236
|
|
$
|
2,125
|
|
$
|
6,743
|
|
$
|
6,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity1
|
|
42.9
|
%
|
|
44.6
|
%
|
|
47.6
|
%
|
|
44.1
|
%
|
|
48.3
|
%
|
Net interest margin
(including on securitized assets)2
|
|
2.70
|
|
|
2.62
|
|
|
2.61
|
|
|
2.62
|
|
|
2.62
|
|
Efficiency
ratio
|
|
42.1
|
|
|
44.3
|
|
|
41.8
|
|
|
43.0
|
|
|
42.6
|
|
Assets under
administration (billions of Canadian
dollars)3
|
$
|
526
|
|
$
|
537
|
|
$
|
538
|
|
$
|
526
|
|
$
|
538
|
|
Assets under management
(billions of Canadian dollars)3
|
|
408
|
|
|
411
|
|
|
420
|
|
|
408
|
|
|
420
|
|
Number of Canadian
retail branches
|
|
1,060
|
|
|
1,060
|
|
|
1,073
|
|
|
1,060
|
|
|
1,073
|
|
Average number of
full-time equivalent staff
|
|
45,036
|
|
|
43,707
|
|
|
41,763
|
|
|
43,900
|
|
|
41,181
|
|
1
|
Capital allocated to
the business segment was increased to 10.5% CET1 Capital effective
the first quarter of fiscal 2022 compared with 9% in the prior
year.
|
2
|
Net interest margin is
calculated by dividing net interest income by average
interest-earning assets. Average interest-earning assets used in
the calculation of net interest margin is a non-GAAP financial
measure. Refer to "Non-GAAP and Other Financial Measures" in the
"How We Performed" section of this document and the Glossary in the
third quarter of 2022 MD&A, which is incorporated by reference,
for additional information about these metrics.
|
3
|
For additional
information about this metric, refer to the Glossary in the third
quarter of 2022 MD&A, which is incorporated by
reference.
|
Quarterly comparison – Q3 2022 vs. Q3 2021
Canadian Retail net income for the quarter was $2,253 million, an increase of $128 million,
or 6%, compared with the third quarter last year, reflecting higher
revenue, partially offset by higher non-interest expenses and PCL.
The annualized ROE for the quarter was 42.9%, compared with 47.6%
in the third quarter last year.
Canadian Retail revenue is derived from the personal and
business banking, wealth, and insurance businesses. Revenue for the
quarter was $7,020 million, an
increase of $441 million, or 7%, compared with the third
quarter last year.
Net interest income was $3,448 million, an increase of
$404 million, or 13%, compared with the third quarter last
year, reflecting volume growth and higher margins. Average loan
volumes increased $45 billion, or 9%, reflecting 8% growth in
personal loans and 15% growth in business loans. Average deposit
volumes increased $29 billion, or 7%,
reflecting 8% growth in personal deposits, 4% growth in business
deposits, and 8% growth in wealth deposits. Net interest margin was
2.70%, an increase of 9 bps, primarily due to higher margins on
deposits reflecting the rising interest rate environment, partially
offset by lower margin on loans and lower mortgage prepayment
revenue.
Non-interest income was $3,572 million, an increase of
$37 million, or 1%, reflecting higher fee-based revenue in the
banking business and higher insurance volumes, partially offset by
lower transaction and fee-based revenue in the wealth business and
a decrease in the fair value of investments supporting claim
liabilities which resulted in a similar decrease in insurance
claims.
Assets under administration (AUA) were $526 billion as at July
31, 2022, a decrease of $12
billion, or 2%, and assets under management (AUM) were
$408 billion as at July 31,
2022, a decrease of $12
billion, or 3%, compared with the third quarter last year,
both reflecting market depreciation, partially offset by net asset
growth.
PCL was $170 million, an increase
of $70 million compared with the
third quarter last year. PCL – impaired for the quarter was
$142 million, a decrease of
$12 million, or 8%. PCL – performing was $28 million, compared with a recovery of
$54 million in the prior year. The
current quarter provision was largely reflected in the consumer
lending portfolios. Total PCL as an annualized percentage of credit
volume was 0.13%, an increase of 5 bps compared with the third
quarter last year.
Insurance claims and related expenses for the quarter were
$829 million, a decrease of
$7 million, or 1%, compared with the
third quarter last year reflecting favourable prior years' claims
development and the impact of a higher discount rate which resulted
in a similar decrease in fair value of investments supporting
claims liabilities reported in non-interest income, partially
offset by higher current year claims.
Non-interest expenses for the quarter were $2,957 million, an increase of $209 million, or 8%, compared with the third
quarter last year, reflecting higher spend supporting business
growth, including technology and employee-related expenses.
The efficiency ratio for the quarter was 42.1%, compared with
41.8% in the third quarter last year.
Quarterly comparison – Q3 2022 vs. Q2 2022
Canadian Retail net income for the quarter was $2,253 million, an increase of $17 million, or 1%, compared with the prior
quarter, reflecting revenue growth, partially offset by higher
insurance claims, PCL and non-interest expenses. The annualized ROE
for the quarter was 42.9%, compared with 44.6%, in the prior
quarter.
Revenue increased $397 million, or 6%, compared with the
prior quarter. Net interest income increased $300 million, or 10%, reflecting higher
margins, the effect of more days in the third quarter and volume
growth. Average loan volumes increased $15
billion, or 3%, reflecting 3% growth in personal
loans and 4% growth in business loans. Average deposit volumes
increased $4 billion, or 1%, reflecting 3% growth in personal
deposits, partially offset by decreases in wealth deposits of 4%
and business deposits of 1%. Net interest margin was 2.70%, an
increase of 8 bps, primarily due to higher margins on deposits
reflecting the rising interest rate environment, partially offset
by lower margin on loans.
Non-interest income increased $97 million, or 3%,
reflecting an increase in the fair value of investments supporting
claim liabilities, higher insurance volume, and higher fee-based
revenue in the banking business, partially offset by lower
transaction and fee-based revenue in the wealth business.
AUA decreased $11 billion, or 2%
reflecting market depreciation, partially offset by net asset
growth. AUM decreased $3 billion, or
1% compared with the prior quarter reflecting market
deprecation.
PCL was $170 million, an increase
of $110 million compared with the
prior quarter. PCL – impaired decreased $21
million, or 13%. PCL – performing was $28 million
compared with a recovery of $103
million in the prior quarter. The current quarter provision
was largely reflected in the consumer lending portfolios. Total PCL
as an annualized percentage of credit volume was 0.13%, an increase
of 8 bps.
Insurance claims and related expenses for the quarter increased
$237 million, or 40%, compared with
the prior quarter, reflecting the impact of changes in the discount
rate which resulted in a similar increase in fair value of
investments supporting claims liabilities reported in non-interest
income, higher current year claims, and more severe weather-related
events.
Non-interest expenses increased $25
million, or 1%, compared with the prior quarter reflecting
higher spend supporting business growth, including employee-related
and technology expenses, partially offset by lower variable
compensation.
The efficiency ratio for the quarter was 42.1%, compared with
44.3% in the prior quarter.
Year-to-date comparison – Q3 2022 vs. Q3 2021
Canadian Retail net income for the nine months ended July 31, 2022, was $6,743
million, an increase of $399
million, or 6%, compared with same period last year. The
increase in earnings reflects higher revenue, partially offset by
higher non-interest expenses, insurance claims and PCL. The
annualized ROE for the period was 44.1%, compared with 48.3%, in
the same period last year.
Revenue for the period was $20,361
million, an increase of $1,375
million, or 7%, compared with same period last year. Net
interest income increased $786 million, or 9%, reflecting
volume growth and higher margins. Average loan volumes increased
$43 billion, or 9%, reflecting 8% growth in personal
loans and 15% growth in business loans. Average deposit volumes
increased $35 billion, or 8%,
reflecting 7% growth in personal deposits, 9% growth in
business deposits, and 9% growth in wealth deposits. Net interest
margin was 2.62%, flat to the same period last year, primarily due
to higher margins on deposits reflecting the rising interest rate
environment, partially offset by lower margin on loans, and lower
mortgage prepayment revenue.
Non-interest income increased $589
million, or 6%, reflecting higher fee-based revenue in the
banking and wealth businesses, higher insurance volumes and prior
year insurance premium rebates for customers, partially offset by
lower transaction revenue in the wealth business, and a decrease in
the fair value of investments supporting claims liabilities which
resulted in a similar decrease in insurance claims.
PCL was $263 million, an increase
of $58 million compared with the same
period last year. PCL – impaired was $455
million, a decrease of $57
million, or 11%, largely related to improved credit
conditions. PCL – performing was a recovery of $192 million, compared with a recovery of
$307 million in the same period last
year. The current year performing release reflects improved credit
conditions. Total PCL as an annualized percentage of credit volume
was 0.07%, an increase of 1 basis point.
Insurance claims and related expenses were $2,177 million, an increase of $120 million, or 6%, compared with the same
period last year, reflecting higher current year claims and more
severe weather-related events, partially offset by the impact of a
higher discount rate which resulted in a similar decrease in fair
value of investments supporting claims liabilities reported in
non-interest income, and more favourable prior years' claims
development.
Non-interest expenses were $8,758
million, an increase of $667
million, or 8%, compared with the same period last year,
reflecting higher spend supporting business growth, including
technology, employee-related expenses, and marketing
costs.
The efficiency ratio for the period was 43.0%, compared with
42.6% for the same period last year.
TABLE 8: U.S.
RETAIL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars,
except as noted)
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
July
31
|
|
April 30
|
|
July 31
|
|
July
31
|
|
July 31
|
|
Canadian
Dollars
|
|
2022
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net interest
income
|
$
|
2,453
|
|
$
|
2,079
|
|
$
|
1,990
|
|
$
|
6,647
|
|
$
|
5,971
|
|
Non-interest income –
reported
|
|
648
|
|
|
864
|
|
|
691
|
|
|
2,183
|
|
|
2,007
|
|
Non-interest income –
adjusted1
|
|
648
|
|
|
640
|
|
|
691
|
|
|
1,959
|
|
|
2,007
|
|
Total revenue –
reported
|
|
3,101
|
|
|
2,943
|
|
|
2,681
|
|
|
8,830
|
|
|
7,978
|
|
Total revenue –
adjusted1
|
|
3,101
|
|
|
2,719
|
|
|
2,681
|
|
|
8,606
|
|
|
7,978
|
|
Provision for (recovery
of) credit losses – impaired
|
|
135
|
|
|
96
|
|
|
63
|
|
|
356
|
|
|
370
|
|
Provision for (recovery
of) credit losses – performing
|
|
(28)
|
|
|
(114)
|
|
|
(159)
|
|
|
(246)
|
|
|
(544)
|
|
Total provision for
(recovery of) credit losses
|
|
107
|
|
|
(18)
|
|
|
(96)
|
|
|
110
|
|
|
(174)
|
|
Non-interest expenses –
reported
|
|
1,715
|
|
|
1,632
|
|
|
1,518
|
|
|
4,944
|
|
|
4,800
|
|
Non-interest expenses –
adjusted1
|
|
1,686
|
|
|
1,632
|
|
|
1,518
|
|
|
4,915
|
|
|
4,800
|
|
Provision for (recovery
of) income taxes – reported
|
|
126
|
|
|
186
|
|
|
161
|
|
|
460
|
|
|
393
|
|
Provision for (recovery
of) income taxes – adjusted1
|
|
133
|
|
|
131
|
|
|
161
|
|
|
412
|
|
|
393
|
|
U.S. Retail Bank net
income – reported
|
|
1,153
|
|
|
1,143
|
|
|
1,098
|
|
|
3,316
|
|
|
2,959
|
|
U.S. Retail Bank net
income – adjusted1
|
|
1,175
|
|
|
974
|
|
|
1,098
|
|
|
3,169
|
|
|
2,959
|
|
Share of net income
from investment in Schwab2,3
|
|
289
|
|
|
224
|
|
|
197
|
|
|
765
|
|
|
652
|
|
Net income –
reported
|
$
|
1,442
|
|
$
|
1,367
|
|
$
|
1,295
|
|
$
|
4,081
|
|
$
|
3,611
|
|
Net income –
adjusted1
|
|
1,464
|
|
|
1,198
|
|
|
1,295
|
|
|
3,934
|
|
|
3,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
1,905
|
|
$
|
1,641
|
|
$
|
1,619
|
|
$
|
5,217
|
|
$
|
4,746
|
|
Non-interest income –
reported
|
|
504
|
|
|
682
|
|
|
561
|
|
|
1,716
|
|
|
1,596
|
|
Non-interest income –
adjusted1
|
|
504
|
|
|
505
|
|
|
561
|
|
|
1,539
|
|
|
1,596
|
|
Total revenue –
reported
|
|
2,409
|
|
|
2,323
|
|
|
2,180
|
|
|
6,933
|
|
|
6,342
|
|
Total revenue –
adjusted1
|
|
2,409
|
|
|
2,146
|
|
|
2,180
|
|
|
6,756
|
|
|
6,342
|
|
Provision for (recovery
of) credit losses – impaired
|
|
105
|
|
|
75
|
|
|
53
|
|
|
279
|
|
|
291
|
|
Provision for (recovery
of) credit losses – performing
|
|
(22)
|
|
|
(90)
|
|
|
(127)
|
|
|
(194)
|
|
|
(435)
|
|
Total provision for
(recovery of) credit losses
|
|
83
|
|
|
(15)
|
|
|
(74)
|
|
|
85
|
|
|
(144)
|
|
Non-interest expenses –
reported
|
|
1,332
|
|
|
1,289
|
|
|
1,233
|
|
|
3,882
|
|
|
3,813
|
|
Non-interest expenses –
adjusted1
|
|
1,310
|
|
|
1,289
|
|
|
1,233
|
|
|
3,860
|
|
|
3,813
|
|
Provision for (recovery
of) income taxes – reported
|
|
98
|
|
|
147
|
|
|
130
|
|
|
362
|
|
|
314
|
|
Provision for (recovery
of) income taxes – adjusted1
|
|
103
|
|
|
103
|
|
|
130
|
|
|
323
|
|
|
314
|
|
U.S. Retail Bank net
income – reported
|
|
896
|
|
|
902
|
|
|
891
|
|
|
2,604
|
|
|
2,359
|
|
U.S. Retail Bank net
income – adjusted1
|
|
913
|
|
|
769
|
|
|
891
|
|
|
2,488
|
|
|
2,359
|
|
Share of net income
from investment in Schwab2,3
|
|
226
|
|
|
177
|
|
|
161
|
|
|
603
|
|
|
516
|
|
Net income –
reported
|
$
|
1,122
|
|
$
|
1,079
|
|
$
|
1,052
|
|
$
|
3,207
|
|
$
|
2,875
|
|
Net income –
adjusted1
|
|
1,139
|
|
|
946
|
|
|
1,052
|
|
|
3,091
|
|
|
2,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common equity
– reported4
|
|
14.8
|
%
|
|
14.2
|
%
|
|
13.8
|
%
|
|
13.9
|
%
|
|
12.5
|
%
|
Return on common equity
– adjusted1
|
|
15.0
|
|
|
12.5
|
|
|
13.8
|
|
|
13.4
|
|
|
12.5
|
|
Net interest
margin1,5
|
|
2.62
|
|
|
2.21
|
|
|
2.16
|
|
|
2.35
|
|
|
2.18
|
|
Efficiency ratio –
reported
|
|
55.3
|
|
|
55.5
|
|
|
56.6
|
|
|
56.0
|
|
|
60.1
|
|
Efficiency ratio –
adjusted1
|
|
54.4
|
|
|
60.1
|
|
|
56.6
|
|
|
57.1
|
|
|
60.1
|
|
Assets under
administration (billions of U.S. dollars)
|
$
|
32
|
|
$
|
32
|
|
$
|
29
|
|
$
|
32
|
|
$
|
29
|
|
Assets under management
(billions of U.S. dollars)
|
|
36
|
|
|
37
|
|
|
41
|
|
|
36
|
|
|
41
|
|
Number of U.S. retail
stores
|
|
1,158
|
|
|
1,156
|
|
|
1,142
|
|
|
1,158
|
|
|
1,142
|
|
Average number of
full-time equivalent staff
|
|
25,968
|
|
|
25,366
|
|
|
25,047
|
|
|
25,419
|
|
|
25,756
|
|
1
|
For additional
information about the Bank's use of non-GAAP financial measures,
refer to "Non-GAAP and Other Financial Measures" in the "How We
Performed" section of this document.
|
2
|
The Bank's share of
Schwab's earnings is reported with a one-month lag. Refer to Note 7
of the Bank's third quarter 2022 Interim Consolidated Financial
Statements for further details.
|
3
|
The after-tax amounts
for amortization of acquired intangibles and the Bank's share of
acquisition and integration charges associated with Schwab's
acquisition are recorded in the Corporate segment.
|
4
|
Capital allocated to
the business segment was increased to 10.5% CET1 Capital effective
the first quarter of fiscal 2022 compared with 9% in the prior
year.
|
5
|
Net interest margin is
calculated by dividing U.S. Retail segment's net interest income by
average interest-earning assets excluding the impact related to
sweep deposits arrangements and the impact of intercompany deposits
and cash collateral, which management believes better reflects
segment performance. In addition, the value of tax-exempt interest
income is adjusted to its equivalent before-tax value. Net interest
income and average interest-earning assets used in the calculation
are non-GAAP financial measures.
|
Quarterly comparison – Q3 2022 vs. Q3 2021
U.S. Retail reported net income for the quarter was $1,442 million (US$1,122
million), an increase of $147
million (US$70 million), or
11% (7% in U.S. dollars) compared with the third quarter last year.
On an adjusted basis, net income for the quarter was $1,464 million (US$1,139
million), an increase of $169
million (US$87 million), or
13% (8% in U.S. dollars). The reported and adjusted annualized ROE
for the quarter were 14.8% and 15.0%, respectively, compared with
13.8% in the third quarter last year.
U.S. Retail net income includes contributions from the U.S.
Retail Bank and the Bank's investment in Schwab. Reported net
income for the quarter from the U.S. Retail Bank and the Bank's
investment in Schwab was $1,153
million (US$896 million) and
$289 million (US$226 million), respectively. On an adjusted
basis for the quarter, the U.S. Retail Bank's net income was
$1,175 million (US$913 million).
The contribution from Schwab of US$226
million increased US$65
million, or 40%, primarily reflecting higher net interest
income, partially offset by lower trading revenue.
U.S. Retail Bank reported net income was US$896 million, an increase of US$5 million, or 1%, primarily reflecting higher
revenue, partially offset by higher PCL and non-interest expenses
including acquisition and integration-related charges for the First
Horizon acquisition. U.S. Retail Bank adjusted net income was
US$913 million, an increase of
US$22 million, or 2%, primarily
reflecting higher revenue, partially offset by higher PCL and
non-interest expenses.
U.S. Retail Bank revenue is derived from the personal and
business banking and wealth management businesses. Revenue for the
quarter was US$2,409 million, an
increase of US$229 million, or 11%,
compared with the third quarter last year. Net interest income of
US$1,905 million, increased
US$286 million, or 18%, largely driven by the benefit of
higher deposit margins from the rising rate environment and higher
business and personal deposit volumes, partially offset by lower
income from PPP loan forgiveness and lower margin on loans. Net
interest margin of 2.62%, increased 46 bps, as higher margin on
deposits reflecting the rising interest rate environment and
positive balance sheet mix was partially offset by lower income
from PPP loan forgiveness and lower margin on loans. Non-interest
income of US$504 million decreased
US$57 million, or 10%, compared with
the third quarter last year, primarily reflecting higher valuation
of certain investments in the prior year.
Average loan volumes decreased US$1
billion, relatively flat, compared with the third quarter
last year. Personal loans increased 8%, primarily reflecting higher
residential mortgage and auto originations, and higher credit card
volumes, partially offset by a decline in home equity. Business
loans decreased 7%, or increased 2% excluding PPP loans, primarily
reflecting strong originations and new customer growth, higher
commercial line utilization and increased customer activity, offset
by PPP loan forgiveness. Average deposit volumes increased
US$10 billion, or 3%, reflecting an
8% increase in personal deposits and a 2% increase in business
deposits, partially offset by a 2% decrease in sweep deposits.
AUA were US$32 billion as at
July 31, 2022, an increase of
US$3 billion, or 10%, compared with
the third quarter last year, reflecting net asset growth. AUM were
US$36 billion as at July 31, 2022, a decrease of US$5 billion, or 12%, compared with the third
quarter last year, reflecting market depreciation and net asset
outflows.
PCL for the quarter was US$83
million, compared with a recovery of US$74 million in the third quarter last year. PCL
– impaired was US$105 million, an
increase of US$52 million, or 98%,
reflecting some normalization of credit performance. PCL –
performing was a recovery of US$22
million, compared with a recovery of US$127 million in the prior year. The performing
release this quarter was largely reflected in the commercial
lending portfolios. U.S. Retail PCL including only the Bank's share
of PCL in the U.S. strategic cards portfolio, as an annualized
percentage of credit volume was 0.20%, an increase of 38 bps,
compared with the third quarter last year.
Reported non-interest expenses for the quarter were US$1,332 million, an increase of US$99 million, or 8%, compared with the third
quarter last year, primarily reflecting higher employee-related
expenses, higher investments in the business, and acquisition and
integration-related charges for the First Horizon acquisition,
partially offset by productivity savings. On an adjusted basis,
non-interest expenses increased US$77
million, or 6%.
The reported and adjusted efficiency ratios for the quarter were
55.3% and 54.4%, respectively, compared with 56.6%, in the third
quarter last year.
Quarterly comparison – Q3 2022 vs. Q2 2022
U.S. Retail reported net income of $1,442
million (US$1,122 million)
increased $75 million (US$43 million), or 5% (4% in U.S. dollars). On an
adjusted basis, net income for the quarter was $1,464 million (US$1,139
million), an increase of $266
million (US$193 million), or
22% (20% in U.S. dollars). The reported and adjusted annualized ROE
for the quarter were 14.8% and 15.0%, respectively, compared with
14.2% and 12.5%, respectively, in the prior quarter.
The contribution from Schwab of US$226
million increased US$49
million, or 28%, primarily reflecting higher net interest
income and lower operating expenses, partially offset by lower
trading revenue.
U.S. Retail Bank reported net income was US$896 million, a decrease of US$6 million, or 1%, compared with the prior
quarter, primarily reflecting a prior quarter insurance recovery
related to litigation and higher PCL this quarter, partially offset
by higher net interest income. U.S. Retail Bank adjusted net income
was US$913 million, an increase of
US$144 million, or 19%, primarily
reflecting higher revenue, partially offset by higher PCL.
Reported revenue for the quarter increased US$86 million, or 4%, compared with the prior
quarter. Adjusted revenue for the quarter increased US$263 million, or 12%. Net interest income of
US$1,905 million increased
US$264 million, or 16%, primarily
reflecting the benefit of higher deposit margins due to the rising
interest rate environment and the effect of more days in the third
quarter, partially offset by lower margin on loans. Net interest
margin of 2.62% increased 41 bps quarter over quarter, as higher
margin on deposits reflecting the rising interest rate environment
and positive balance sheet mix was partially offset by lower PPP
loan forgiveness and lower margin on loans. Reported non-interest
income decreased US$178 million, or
26%, primarily reflecting a prior quarter insurance recovery
related to litigation. Adjusted non-interest income of US$504 million was relatively flat compared with
the prior quarter, reflecting fee income growth from increased
customer activity, largely offset by lower valuation of certain
investments.
Average loan volumes increased US$4
billion, or 3%, compared with the prior quarter. Personal
loans increased 3%, primarily reflecting growth in residential
mortgage and auto originations, and higher credit card volumes.
Business loans increased 2%, or 3% excluding PPP loans, primarily
reflecting strong originations and new customer growth, higher
commercial line utilization and increased customer activity.
Average deposit volumes decreased US$1
billion, relatively flat, compared with the prior quarter
reflecting flat personal deposits and a 1% increase in sweep
deposits, offset by a 2% decrease in business deposits.
AUA were US$32 billion as at
July 31, 2022, flat compared with the
prior quarter. AUM were US$36 billion
as at July 31, 2022, a decrease of
US$1 billion, or 3%, reflecting net
asset outflows and market depreciation.
PCL was higher by US$98 million
compared with the prior quarter. PCL – impaired increased
US$30 million, or 40%, reflecting
some normalization of credit performance. PCL – performing was a
recovery of US$22 million, compared
with a recovery of US$90 million in
the prior quarter. The performing release this quarter was largely
reflected in the commercial lending portfolios. U.S. Retail PCL
including only the Bank's share of PCL in the U.S. strategic cards
portfolio, as an annualized percentage of credit volume was 0.20%,
an increase of 24 bps from prior quarter.
Reported non-interest expenses for the quarter were US$1,332 million, an increase of US$43 million, or 3%, primarily reflecting higher
employee-related expenses and acquisition and integration-related
charges for the First Horizon acquisition. On an adjusted basis,
non-interest expenses increased US$21
million, or 2%.
The reported and adjusted efficiency ratios for the quarter were
55.3% and 54.4%, respectively, compared with 55.5% and 60.1%,
respectively, in the prior quarter.
Year-to-date comparison – Q3 2022 vs. Q3 2021
U.S. Retail reported net income for the nine months ended
July 31, 2022, was $4,081 million (US$3,207
million), an increase of $470
million (US$332 million), or
13% (12% in U.S. dollars), compared with the same period last year.
On an adjusted basis, net income for the period was $3,934 million (US$3,091
million), an increase of $323
million (US$216 million), or
9% (8% in U.S. dollars). The reported and adjusted annualized ROE
for the period were 13.9% and 13.4%, respectively, compared with
12.5% in the same period last year.
Reported net income from the U.S. Retail Bank and the Bank's
investment in Schwab was $3,316
million (US$2,604 million) and
$765 million (US$603 million), respectively. On an adjusted
basis for the period, the U.S. Retail Bank's net income was
$3,169 million (US$2,488 million).
The contribution from Schwab was US$603
million, an increase of US$87
million, or 17%, primarily reflecting higher net interest
revenue.
U.S. Retail Bank reported net income for the period was
US$2,604 million, an increase of
US$245 million, or 10%, compared with
the same period last year, reflecting higher revenue, partially
offset by higher PCL. U.S. Retail Bank adjusted net income was
US$2,488 million, an increase of
US$129 million, or 5%.
Reported revenue for the period was US$6,933 million, an increase of US$591 million, or 9%, compared with the same
period last year. On an adjusted basis, revenue increased
US$414 million, or 7%. Net interest
income increased US$471 million, or
10%, largely driven by the benefit of higher business and personal
deposit margins and volumes combined with increased earnings on the
investment portfolio, partially offset by lower income from PPP
loan forgiveness and lower margin on loans. Net interest margin was
2.35%, an increase of 17 bps, as higher margin on deposits
reflecting the rising interest rate environment was partially
offset by negative balance sheet mix, the impact of lower income
from PPP loan forgiveness and lower margin on loans. Reported
non-interest income increased US$120
million, or 8%, primarily reflecting an insurance recovery
related to litigation, partially offset by higher valuation of
certain investments in the prior year. On an adjusted basis,
non-interest income decreased US$57
million, or 4%, primarily due to higher valuation of certain
investments in the prior year.
Average loan volumes decreased US$6
billion, or 4%, compared with the same period last year.
Personal loans increased 4%, driven by higher residential mortgage
and auto originations, and higher credit card volumes, partially
offset by a decline in home equity. Business loans decreased 10%,
or 2% excluding PPP loans, primarily reflecting paydowns of
commercial loans and PPP loan forgiveness, partially offset by
strong originations and new customer growth, along with higher
commercial line utilization and increased customer activity.
Average deposit volumes increased US$14
billion, or 4%, reflecting a 12% increase in personal
deposits and a 7% increase in business deposits, partially offset
by a 5% decrease in sweep deposits.
PCL was US$85 million compared
with a recovery of US$144 million in
the same period last year. PCL – impaired was US$279 million, a decrease of US$12 million,
or 4%. PCL – performing was a recovery of US$194 million, compared with a recovery of
US$435 million in the prior year. The
current year performing release reflects improved credit
conditions. U.S. Retail PCL including only the Bank's share of PCL
in the U.S. strategic cards portfolio, as an annualized percentage
of credit volume was 0.07%, an increase of 17 bps.
Reported non-interest expenses for the period were US$3,882 million, an increase of US$69 million, or 2%, compared with the same
period last year, reflecting higher employee-related expenses,
higher investments in the business and acquisition and
integration-related charges for the First Horizon acquisition,
partially offset by US$125 million in
prior year store optimization costs, lower COVID-19 related
expenses and productivity savings in the current year. On an
adjusted basis, non-interest expenses increased US$47 million, or 1%.
The reported and adjusted efficiency ratios for the quarter were
56.0% and 57.1%, respectively, compared with 60.1%, for the same
period last year.
TABLE 9: WHOLESALE
BANKING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
July
31
|
|
April 30
|
|
July 31
|
|
July
31
|
|
July 31
|
|
|
2022
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net interest income
(TEB)
|
$
|
786
|
|
$
|
759
|
|
$
|
632
|
|
$
|
2,254
|
|
$
|
1,941
|
|
Non-interest
income
|
|
290
|
|
|
491
|
|
|
451
|
|
|
1,418
|
|
|
1,609
|
|
Total
revenue
|
|
1,076
|
|
|
1,250
|
|
|
1,083
|
|
|
3,672
|
|
|
3,550
|
|
Provision for (recovery
of) credit losses – impaired
|
|
–
|
|
|
(1)
|
|
|
–
|
|
|
(5)
|
|
|
22
|
|
Provision for (recovery
of) credit losses – performing
|
|
25
|
|
|
(8)
|
|
|
2
|
|
|
16
|
|
|
(63)
|
|
Total provision for
(recovery of) credit losses
|
|
25
|
|
|
(9)
|
|
|
2
|
|
|
11
|
|
|
(41)
|
|
Non-interest
expenses
|
|
691
|
|
|
776
|
|
|
635
|
|
|
2,231
|
|
|
2,051
|
|
Provision for (recovery
of) income taxes (TEB)
|
|
89
|
|
|
124
|
|
|
116
|
|
|
366
|
|
|
390
|
|
Net
income
|
$
|
271
|
|
$
|
359
|
|
$
|
330
|
|
$
|
1,064
|
|
$
|
1,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading-related revenue
(TEB)1
|
$
|
547
|
|
$
|
680
|
|
$
|
467
|
|
$
|
1,953
|
|
$
|
1,769
|
|
Average gross lending
portfolio (billions of Canadian dollars)2
|
|
72.2
|
|
|
63.7
|
|
|
59.9
|
|
|
65.1
|
|
|
59.6
|
|
Return on common
equity3
|
|
8.9
|
%
|
|
13.1
|
%
|
|
15.7
|
%
|
|
12.6
|
%
|
|
19.0
|
%
|
Efficiency
ratio
|
|
64.2
|
|
|
62.1
|
|
|
58.6
|
|
|
60.8
|
|
|
57.8
|
|
Average number of
full-time equivalent staff
|
|
5,163
|
|
|
4,950
|
|
|
4,839
|
|
|
5,016
|
|
|
4,758
|
|
1
|
Includes net interest
income TEB of $567 million (April 2022 – $581 million, January 2022
– $525 million, July 2021 – $488 million, April 2021 – $508
million, January 2021 – $504 million), and trading income (loss) of
($20) million (April 2022 – $99 million, January 2022 – $201
million, July 2021 – ($21) million, April 2021 – $50 million,
January 2021 – $240 million). Trading-related revenue (TEB) is a
non-GAAP financial measure. Refer to "Non-GAAP and Other Financial
Measures" in the "How We Performed" section of this document and
the Glossary in the third quarter of 2022 MD&A, which is
incorporated by reference, for additional information about this
metric.
|
2
|
Includes gross loans
and bankers' acceptances relating to Wholesale Banking, excluding
letters of credit, cash collateral, credit default swaps, and
allowance for credit losses.
|
3
|
Capital allocated to
the business segment was increased to 10.5% CET1 Capital effective
the first quarter of fiscal 2022 compared with 9% in the prior
year.
|
Quarterly comparison – Q3 2022 vs. Q3 2021
Wholesale Banking net income for the quarter was $271 million, a decrease of $59 million, or 18%, compared with the third
quarter last year, reflecting higher non-interest expenses and
PCL.
Revenue for the quarter was $1,076
million, a decrease of $7
million, or 1%, compared with the third quarter last year,
reflecting lower underwriting fees and markdowns in certain loan
underwriting commitments from widening credit spreads, partially
offset by higher trading-related and global transaction banking
revenue.
PCL for the quarter was $25
million, an increase of $23
million compared with the third quarter last year. PCL –
impaired was nil. PCL – performing was $25 million, an
increase of $23 million, largely
reflecting credit migration.
Non-interest expenses were $691
million, an increase of $56
million, or 9%, compared with the third quarter last year,
primarily reflecting the continued investments in Wholesale
Banking's U.S. dollar strategy, including the hiring of banking,
sales and trading, and technology professionals, partially offset
by lower variable compensation.
Quarterly comparison – Q3 2022 vs. Q2 2022
Wholesale Banking net income for the quarter was $271 million, a decrease of $88 million, or 25%, compared with the prior
quarter, reflecting lower revenue and higher PCL, partially offset
by lower non-interest expenses.
Revenue for the quarter decreased $174
million, or 14%, primarily reflecting lower trading-related
revenue and markdowns in certain loan underwriting commitments from
widening credit spreads, partially offset by higher global
transaction banking revenue.
PCL for the quarter was $25
million, compared with a recovery of $9 million in the prior quarter. PCL – impaired
was nil. PCL – performing was $25
million compared with a recovery of $8 million in the prior quarter. Provisions this
quarter largely reflect credit migration.
Non-interest expenses for the quarter decreased $85 million, or 11%, primarily reflecting lower
variable compensation.
Year-to-date comparison – Q3 2022 vs. Q3 2021
Wholesale Banking net income for the nine months ended July 31, 2022 was $1,064
million, a decrease of $86
million, or 7%, compared with the same period last year,
reflecting higher non-interest expenses and PCL, partially offset
by higher revenues.
Revenue was $3,672 million, an
increase of $122 million, or 3%,
compared with the same period last year, reflecting higher
trading-related and global transaction banking revenue, partially
offset by lower underwriting fees and markdowns in certain loan
underwriting commitments from widening credit spreads.
PCL was a $11 million, compared
with a recovery of $41 million in the
same period last year. PCL – impaired was a recovery of
$5 million, lower by $27 million. PCL – performing was $16 million, compared with a recovery of
$63 million in the same period last
year.
Non-interest expenses were $2,231
million, an increase of $180
million, or 9%, compared with the same period last year,
primarily reflecting the continued investments in Wholesale
Banking's U.S. dollar strategy, including the hiring of banking,
sales and trading, and technology professionals, and the
acquisition of TD Securities Automated Trading (previously
Headlands Tech Global Markets, LLC).
TABLE 10:
CORPORATE
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three months
ended
|
For the nine months
ended
|
|
July
31
|
April 30
|
July 31
|
July
31
|
July 31
|
|
2022
|
2022
|
2021
|
2022
|
2021
|
Net income (loss) –
reported
|
$
|
(752)
|
$
|
(151)
|
$
|
(205)
|
$
|
(1,130)
|
$
|
(588)
|
Adjustments for
items of note
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles before income taxes
|
|
58
|
|
60
|
|
68
|
|
185
|
|
211
|
Acquisition and
integration charges related to the Schwab transaction
|
|
23
|
|
20
|
|
24
|
|
93
|
|
81
|
Mitigation of interest
rate volatility to closing capital on First Horizon
acquisition
|
|
678
|
|
–
|
|
–
|
|
678
|
|
–
|
Less: impact of income
taxes
|
|
182
|
|
8
|
|
9
|
|
207
|
|
26
|
Net income (loss) –
adjusted1
|
$
|
(175)
|
$
|
(79)
|
$
|
(122)
|
$
|
(381)
|
$
|
(322)
|
|
|
|
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) – adjusted
|
|
|
|
|
|
|
|
|
|
|
Net corporate
expenses2
|
$
|
(196)
|
$
|
(161)
|
$
|
(169)
|
$
|
(525)
|
$
|
(537)
|
Other
|
|
21
|
|
82
|
|
47
|
|
144
|
|
215
|
Net income (loss) –
adjusted1
|
$
|
(175)
|
$
|
(79)
|
$
|
(122)
|
$
|
(381)
|
$
|
(322)
|
|
|
|
|
|
|
|
|
|
|
|
Selected
volumes
|
|
|
|
|
|
|
|
|
|
|
Average number of
full-time equivalent staff
|
|
20,950
|
|
19,180
|
|
17,657
|
|
19,385
|
|
17,704
|
1
|
For additional
information about the Bank's use of non-GAAP financial measures,
refer to "Non-GAAP and Other Financial Measures" in the "How We
Performed" section of this document.
|
2
|
For additional
information about this metric, refer to the Glossary in the third
quarter of 2022 MD&A, which is incorporated by
reference.
|
Quarterly comparison – Q3 2022 vs. Q3 2021
Corporate segment's reported net loss for the quarter was
$752 million, compared with a
reported net loss of $205 million in
the third quarter last year. The year-over-year increase primarily
reflects the net loss from mitigation of interest rate volatility
to closing capital on First Horizon acquisition, higher net
corporate expenses and a lower contribution from other items. The
decrease in other items primarily reflects lower revenue from
treasury and balance sheet management activities. Net corporate
expenses increased $27 million
compared to the same quarter last year. The adjusted net loss for
the quarter was $175 million,
compared with an adjusted net loss of $122
million in the third quarter last year.
Quarterly comparison – Q3 2022 vs. Q2 2022
Corporate segment's reported net loss for the quarter was
$752 million, compared with a
reported net loss of $151 million in
the prior quarter. The quarter-over-quarter increase primarily
reflects the net loss from mitigation of interest rate volatility
to closing capital on First Horizon acquisition, a lower
contribution from other items, and higher net corporate expenses.
The decrease in other items primarily reflects lower revenue from
treasury and balance sheet management activities. Net corporate
expenses increased $35 million
compared to the prior quarter. The adjusted net loss for the
quarter was $175 million, compared
with an adjusted net loss of $79
million in the prior quarter.
Year-to-date comparison – Q3 2022 vs. Q3 2021
Corporate segment's reported net loss for the nine months ended
July 31, 2022 was $1,130 million, compared with a reported net loss
of $588 million in the same period
last year. The $542 million increase
primarily reflects the net loss from mitigation of interest rate
volatility to closing capital on First Horizon acquisition and a
lower contribution from other items, partially offset by lower net
corporate expenses. Other items decreased $71 million, largely reflecting lower revenue
from treasury and balance sheet management activities. Net
corporate expenses decreased $12
million compared to the same period last year. Adjusted net
loss for the nine months ended July 31, 2022 was $381 million, compared with an adjusted net loss
of $322 million in the same period
last year.
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 (or resuming) receiving annual and quarterly
reports
|
Transfer
Agent:
TSX Trust
Company
P.O. Box 700, Station
B
Montréal, Québec H3B
3K3
1-800-387-0825 (Canada
and U.S. only)
or
416-682-3860
Facsimile:
1-888-249-6189
shareholderinquiries@tmx.com or www.tsxtrust.com
|
Hold your TD shares
through the Direct
Registration System in the
United States
|
Missing dividends, lost
share certificates, estate questions, address changes to the share
register, eliminating duplicate mailings of shareholder materials
or stopping (or resuming) receiving annual and quarterly
reports
|
Co-Transfer Agent and
Registrar:
Computershare Trust
Company, N.A.
P.O. Box
505000
Louisville, KY 40233,
or
Computershare Trust
Company, N.A.
462 South 4th Street,
Suite 1600
Louisville, KY
40202
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/investor
|
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.
Normal Course Issuer Bid
On January 7, 2022, the Bank
announced that the Toronto Stock Exchange (TSX) and OSFI had
approved the Bank's Normal Course Issuer Bid (NCIB) to repurchase
for cancellation up to 50 million of the Bank's common shares.
Pursuant to the Notice of Intention filed with the TSX, the NCIB
ends on January 10, 2023, such earlier date as the Bank
may determine, or such earlier date as the Bank may complete its
purchases. A copy of the Notice may be obtained without charge by
contacting TD Shareholder Relations by phone at 416-944-6367 or
1-866-756-8936 or by e-mail at tdshinfo@td.com.
Access to Quarterly Results Materials
Interested investors, the media and others may view the third
quarter earnings news release, results slides, supplementary
financial information, and the Report to Shareholders on the TD
Investor Relations website at www.td.com/investor/.
Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference on Thursday, August 25, 2022. The call will be audio
webcast live through TD's website at 1:30 p.m. ET. The
call will feature presentations by TD executives on the Bank's
financial results for third quarter and discussions of related
disclosures, 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 on
August 25, 2022 in advance of the
call. A listen-only telephone line is available at 416‑641‑6150 or
1-866-696-5894 (toll free) and the passcode is 2727354#.
The audio webcast and presentations will be archived at
www.td.com/investor. Replay of the teleconference will be available
from 5:00 p.m. ET on August 25, 2022, until
11:59 p.m. ET on September 9, 2022 by calling 905-694-9451 or
1-800-408-3053 (toll free). The passcode is 7300743#.
Annual Meeting
Thursday, April
20, 2023
Toronto, Ontario
About TD Bank Group
The Toronto-Dominion Bank and its
subsidiaries are collectively known as TD Bank Group ("TD" or the
"Bank"). TD is the sixth largest bank in North America by assets and serves more than
27 million customers in three key businesses operating in a number
of locations in financial centres around the globe: Canadian
Retail, including TD Canada Trust, TD Auto Finance Canada, TD
Wealth (Canada), TD Direct
Investing, and TD Insurance; U.S. Retail, including TD Bank,
America's Most Convenient Bank®, TD Auto Finance U.S.,
TD Wealth (U.S.), and an investment in The Charles Schwab
Corporation; and Wholesale Banking, including TD Securities. TD
also ranks among the world's leading online financial services
firms, with more than 15 million active online and mobile
customers. TD had CDN$1.8 trillion in
assets on July 31, 2022. The
Toronto-Dominion Bank trades under the symbol "TD" on the
Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group