RE: Analyst concernedTD responds to an expense growth query:
(from transcript of 2006Q2 conference call)
"James Keating - RBC Capital Markets - Analyst
Hello, all. I've got a couple of specifics. I'd like to follow up with Colleen's commentary about expense growth. I don't know if Tim is in the room but I wanted to talk a bit about the P&C side in Canada. I guess 6 or 7% expense growth year-on-year caught me a little bit. I think it's got to do with branches, as Colleen mentioned, and other costs. I wonder if you could talk a little bit about how this plays out. Do we have some discretion around this number I guess is the key issue? If revenue kind of levels off, have you been able to squirrel a bit away? I just wonder how you are managing the expense line.
Tim Hockey - Toronto Dominion Bank - Co-Chair of TD Canada Trust
Okay, you don't squirrel it away, but it is -- I think you hit the key point. We think of this a couple of ways. We talk a lot about our revenue and expense gap, and so the way to think about our expense growth is the expenses that we've actually spent already to drive the revenue growth that you are now seeing at upwards of 10%, and then inside that number, there's also the expenses we are spending now to drive next year's and next quarter's revenue growth. So there's those two elements. So if you call that squirreling it away, we do see there as being opportunities to actually reduce our expense rate if revenue falls off. But remember, our paradigm is pretty clear. It's generating double-digit earnings growth in the long-term, so we were able to do that [handling] this year and we're quite comfortable that we can spend a little bit more inside that earnings growth to make sure we do it next year as well."