This quarterly earnings news release should be read in conjunction with
the Bank's unaudited First Quarter 2015 Report to Shareholders for the
three months ended January 31, 2015, prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB), which is available on
our website at http://www.td.com/investor/. This analysis is dated February 25, 2015. Unless otherwise indicated,
all amounts are expressed in Canadian dollars, and have been primarily
derived from the Bank's Annual or Interim Consolidated Financial
Statements prepared in accordance with IFRS. Certain comparative
amounts have been reclassified to conform to the presentation adopted
in the current period. Additional information relating to the Bank is
available on the Bank's website at http://www.td.com, as well as on SEDAR at http://www.sedar.com and on the U.S. Securities and Exchange Commission's SEC website at http://www.sec.gov (EDGAR filers section).
The Bank implemented new and amended standards under IFRS, which
required retrospective application, effective the first quarter of
fiscal 2015 (2015 IFRS Standards and Amendments). As a result, certain
comparative amounts have been restated where applicable. For more
information refer to Note 2 of the first quarter 2015 Interim
Consolidated Financial Statements. The 2015 IFRS Standards and
Amendments were not incorporated into the regulatory capital
disclosures presented prior to the first quarter of 2015.
Reported results conform to generally accepted accounting principles
(GAAP), in accordance with IFRS. Adjusted measures are non-GAAP
measures. Refer to the "How the Bank Reports" section of the First
Quarter 2015 Management's Discussion and Analysis (MD&A) for an
explanation of reported and adjusted results.
|
FIRST QUARTER FINANCIAL HIGHLIGHTS, compared with the first quarter a
year ago:
-
Reported diluted earnings per share were $1.09, compared with $1.07.
-
Adjusted diluted earnings per share were $1.12, compared with $1.06.
-
Reported net income was $2,060 million, compared with $2,042 million.
-
Adjusted net income was $2,123 million, compared with $2,024 million.
FIRST QUARTER ADJUSTMENT (ITEMS OF NOTE)
The first quarter reported earnings figures included the following items
of note, compared with the first quarter a year ago:
-
Amortization of intangibles of $63 million after tax (3 cents per
share), compared with $61 million after tax (3 cents per share).
TORONTO, Feb. 26, 2015 /CNW/ - TD Bank Group ("TD" or the "Bank") today
announced its financial results for the first quarter ended January 31,
2015. Results for the quarter reflect good contributions from the
Canadian and U.S. Retail segments and a solid contribution from the
Wholesale segment.
"We are pleased with our start to 2015, with adjusted earnings of $2.1
billion, up 5% from the same quarter last year," said Bharat Masrani,
Group President and Chief Executive Officer. "Our results reflect
strong retail earnings on both sides of the border and strong
fundamentals."
Canadian Retail
Canadian Retail delivered net income of $1.4 billion in the first
quarter of 2015, an increase of 8% over the same quarter last year on
an adjusted basis. Increased earnings were attributable to good loan
and deposit growth, good credit management, the full quarter impact
from Aeroplan, and higher insurance earnings.
"Canadian Retail had a good first quarter with all of our businesses
contributing," said Tim Hockey, Group Head, Canadian Banking, Auto
Finance and Wealth Management. "While the operating environment remains
challenging, the Canadian Retail businesses have good momentum on key
business drivers and remain focused on delivering legendary comfort and
convenience to customers across all our channels."
U.S. Retail
U.S. Retail generated net income of US$536 million. Excluding the Bank's
investment in TD Ameritrade, the segment generated net income of US$457
million, a 15% increase over the same quarter last year, primarily the
result of good credit quality and volumes, and lower non-interest
expenses.
TD Ameritrade contributed US$79 million in earnings to the segment, an
increase of 22% compared with the first quarter last year.
"U.S. Retail delivered strong results in the first quarter," said Mike
Pedersen, Group Head, U.S. Banking. "Our organic growth has been driven
by customer acquisition, strong deposit and lending volume, continued
benefit from good asset quality, and active productivity management. We
are making good progress in deepening customer relationships,
strengthening our distribution strategy and improving efficiency."
Wholesale Banking
Wholesale Banking net income for the quarter was $192 million, a
decrease of 17% compared with the first quarter last year. Earnings
this quarter were characterized by solid trading in volatile markets,
offset by lower fee-based revenue on reduced industry-wide volumes.
"Overall it was a good start to the year in a challenging market," said
Bob Dorrance, Group Head, Wholesale Banking. "While we are cautious of
the uncertain interest rate environment, volatile energy markets, and
the weaker Canadian dollar, our business fundamentals remain strong.
Looking ahead, we are confident that our client-driven franchise and
our emphasis on managing risk and productivity will continue to deliver
solid results."
Capital
TD's Common Equity Tier 1 Capital ratio on a Basel III fully phased-in
basis was 9.5%, compared with 9.4% last quarter. Today, TD announced a
dividend increase of 4 cents per common share, for the dividend payable
in April.
Conclusion
"Our first quarter results showcase the power of our franchise model in
the face of a continuously challenging environment," said Masrani. "The
dividend increase demonstrates TD's ability to grow earnings over the
long term. We will continue taking advantage of growth opportunities,
increasing productivity, investing in the future of our business and
meeting the evolving needs of our customers."
The foregoing contains forward-looking statements. Please see the
"Caution Regarding Forward-Looking Statements" on page 3.
Caution Regarding Forward-Looking Statements
From time to time, the Bank (as defined in this document) makes written
and/or oral forward-looking statements, including in this document, in
other filings with Canadian regulators or the U.S. Securities and
Exchange Commission (SEC), and in other communications. In addition,
representatives of the Bank may make forward-looking statements orally
to analysts, investors, the media and others. All such statements are
made pursuant to the "safe harbour" provisions of, and are intended to
be forward-looking statements under, applicable Canadian and U.S.
securities legislation, including the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements include, but
are not limited to, statements made in this document, the Management's
Discussion and Analysis ("MD&A") in the Bank's 2014 Annual Report under
the heading "Economic Summary and Outlook", for each business segment
under headings "Business Outlook and Focus for 2015", and in other
statements regarding the Bank's objectives and priorities for 2015 and
beyond and strategies to achieve them, and the Bank's anticipated
financial performance. Forward-looking statements are typically
identified by words such as "will", "should", "believe", "expect",
"anticipate", "intend", "estimate", "plan", "may", and "could".
By their very nature, these forward-looking statements require the Bank
to make assumptions and are subject to inherent risks and
uncertainties, general and specific. Especially in light of the
uncertainty related to the physical, financial, economic, political,
and regulatory environments, such risks and uncertainties - many of
which are beyond the Bank's control and the effects of which can be
difficult to predict - may cause actual results to differ materially
from the expectations expressed in the forward-looking statements. Risk
factors that could cause, individually or in the aggregate, such
differences include: credit, market (including equity, commodity,
foreign exchange, and interest rate), liquidity, operational (including
technology), reputational, insurance, strategic, regulatory, legal,
environmental, capital adequacy, and other risks. Examples of such risk
factors include the general business and economic conditions in the
regions in which the Bank operates; the ability of the Bank to execute
on key priorities, including to successfully complete acquisitions and
strategic plans and to attract, develop and retain key executives;
disruptions in or attacks (including cyber attacks) on the Bank's
information technology, internet, network access or other voice or data
communications systems or services; the evolution of various types of
fraud or other criminal behaviour to which the Bank is exposed; the
failure of third parties to comply with their obligations to the Bank
or its affiliates, including relating to the care and control of
information; the impact of new and changes to current laws and
regulations; the overall difficult litigation environment, including in
the U.S.; increased competition, including through internet and mobile
banking; changes to the Bank's credit ratings; changes in currency and
interest rates; increased funding costs for credit due to market
illiquidity and competition for funding; changes to accounting policies
and methods used by the Bank; and the occurrence of natural and
unnatural catastrophic events and claims resulting from such events.
The Bank cautions that the preceding list is not exhaustive of all
possible risk factors and other factors could also adversely affect the
Bank's results. For more detailed information, please see the "Risk
Factors and Management" section of the 2014 MD&A, as may be updated in
subsequently filed quarterly reports to shareholders and news releases
(as applicable) related to any transactions discussed under the heading
"Significant Events" in the relevant MD&A, which applicable releases
may be found on www.td.com. All such factors should be considered carefully, as well as other
uncertainties and potential events, and the inherent uncertainty of
forward-looking statements, when making decisions with respect to the
Bank and the Bank cautions readers not to place undue reliance on the
Bank's forward-looking statements.
Material economic assumptions underlying the forward-looking statements
contained in this document are set out in the 2014 MD&A under the
headings "Economic Summary and Outlook", and for each business segment,
"Business Outlook and Focus for 2015", each as updated in subsequently
filed quarterly reports to shareholders.
Any forward-looking statements contained in this document represent the
views of management only as of the date hereof and are presented for
the purpose of assisting the Bank's shareholders and analysts in
understanding the Bank's financial position, objectives and priorities
and anticipated financial performance as at and for the periods ended
on the dates presented, and may not be appropriate for other purposes.
The Bank does not undertake to update any forward-looking statements,
whether written or oral, that may be made from time to time by or on
its behalf, except as required under applicable securities legislation.
|
This document was reviewed by the Bank's Audit Committee and was
approved by the Bank's Board of Directors, on the Audit Committee's
recommendation, prior to its release.
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 1: FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars, except as noted)
|
For the three months ended
|
|
|
|
|
January 31
|
|
October 31
|
|
January 31
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
|
Results of operations
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
$
|
7,614
|
|
$
|
7,452
|
|
$
|
7,565
|
|
|
Provision for credit losses
|
|
362
|
|
|
371
|
|
|
456
|
|
|
Insurance claims and related expenses
|
|
699
|
|
|
720
|
|
|
683
|
|
|
Non-interest expenses
|
|
4,165
|
|
|
4,331
|
|
|
4,096
|
|
|
Net income - reported
|
|
2,060
|
|
|
1,746
|
|
|
2,042
|
|
|
Net income - adjusted1
|
|
2,123
|
|
|
1,862
|
|
|
2,024
|
|
|
Return on common equity - reported
|
|
14.6
|
%
|
|
13.1
|
%
|
|
16.4
|
%
|
|
Return on common equity - adjusted2
|
|
15.1
|
|
|
14.0
|
|
|
16.2
|
|
|
Financial position
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
1,080,155
|
|
$
|
960,511
|
|
$
|
920,424
|
|
|
Total equity
|
|
62,629
|
|
|
56,231
|
|
|
53,909
|
|
|
Total Common Equity Tier 1 (CET1) Capital risk-weighted assets3,4
|
|
355,597
|
|
|
328,393
|
|
|
312,972
|
|
|
Financial ratios
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio - reported
|
|
54.7
|
%
|
|
58.1
|
%
|
|
54.1
|
%
|
|
Efficiency ratio - adjusted1
|
|
53.8
|
|
|
56.2
|
|
|
52.5
|
|
|
Common Equity Tier 1 Capital ratio3
|
|
9.5
|
|
|
9.4
|
|
|
8.9
|
|
|
Tier 1 Capital ratio3
|
|
11.0
|
|
|
10.9
|
|
|
10.5
|
|
|
Provision for credit losses as a % of net average loans and acceptances5
|
|
0.29
|
|
|
0.33
|
|
|
0.40
|
|
|
Common share information - reported (dollars)
|
|
|
|
|
|
|
|
|
|
|
Per share earnings
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.09
|
|
$
|
0.92
|
|
$
|
1.07
|
|
|
|
Diluted
|
|
1.09
|
|
|
0.91
|
|
|
1.07
|
|
|
Dividends per share
|
|
0.47
|
|
|
0.47
|
|
|
0.43
|
|
|
Book value per share
|
|
31.60
|
|
|
28.45
|
|
|
26.91
|
|
|
Closing share price
|
|
50.60
|
|
|
55.47
|
|
|
48.16
|
|
|
Shares outstanding (millions)
|
|
|
|
|
|
|
|
|
|
|
|
Average basic
|
|
1,844.2
|
|
|
1,842.0
|
|
|
1,835.3
|
|
|
|
Average diluted
|
|
1,849.7
|
|
|
1,848.2
|
|
|
1,841.1
|
|
|
|
End of period
|
|
1,845.5
|
|
|
1,844.6
|
|
|
1,837.7
|
|
|
Market capitalization (billions of Canadian dollars)
|
$
|
93.4
|
|
$
|
102.3
|
|
$
|
88.5
|
|
|
Dividend yield
|
|
3.5
|
%
|
|
3.4
|
%
|
|
3.4
|
%
|
|
Dividend payout ratio
|
|
43.2
|
|
|
51.3
|
|
|
40.1
|
|
|
Price-earnings ratio
|
|
12.2
|
|
|
13.4
|
|
|
13.4
|
|
|
Common share information - adjusted (dollars)1
|
|
|
|
|
|
|
|
|
|
|
Per share earnings
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.12
|
|
$
|
0.98
|
|
$
|
1.06
|
|
|
|
Diluted
|
|
1.12
|
|
|
0.98
|
|
|
1.06
|
|
|
Dividend payout ratio
|
|
41.8
|
%
|
|
48.0
|
%
|
|
40.4
|
%
|
|
Price-earnings ratio
|
|
11.7
|
|
|
13.0
|
|
|
12.7
|
|
|
|
|
|
1
|
Adjusted measures are non-GAAP measures. Refer to the "How the Bank
Reports" section of this document for an explanation of
reported and adjusted results.
|
|
2
|
Adjusted return on common equity is a non-GAAP financial measure. Refer
to the "Return on Common Equity" section of this document for
an explanation.
|
|
3
|
Prior to the first quarter of 2015, amounts have not been adjusted to
reflect the impact of the 2015 IFRS Standards and Amendments.
|
|
4
|
Effective the third quarter of 2014, each capital ratio has its own
risk-weighted asset (RWA) measure due to the Office of the
Superintendent of Financial Institutions Canada (OSFI) prescribed scalar
for inclusion of the Credit Valuation Adjustment (CVA). For
the third and fourth quarter of 2014, the scalars for inclusion of CVA
for CET1, Tier 1, and Total Capital RWA were 57%, 65%, and 77%
respectively. For fiscal 2015, the scalars are 64%, 71%, and 77%
respectively.
|
|
5
|
Excludes acquired credit-impaired loans and debt securities classified
as loans. For additional information on acquired credit-impaired loans,
see the "Credit Portfolio Quality" section of the MD&A and Note 5 to the
Interim Consolidated Financial Statements. For additional information
on debt securities classified as loans, see the "Exposure to Non-Agency
Collateralized Mortgage Obligations" discussion and tables in the
"Credit Portfolio Quality" section of the MD&A and Note 5 to the Interim
Consolidated Financial Statements.
|
HOW WE PERFORMED
How the Bank Reports
The Bank prepares its Interim Consolidated Financial Statements in
accordance with IFRS, the current GAAP, and refers to results prepared
in accordance with IFRS as "reported" results. The Bank also utilizes
non-GAAP financial measures to arrive at "adjusted" results to assess
each of its businesses and to measure the overall Bank performance. To
arrive at adjusted results, the Bank removes "items of note", net of
income taxes, from reported results. The items of note relate to items
which management does not believe are indicative of underlying business
performance. The Bank believes that adjusted results provide the reader
with a better understanding of how management views the Bank's
performance. The items of note are disclosed on Table 3. As explained,
adjusted results are different from reported results determined in
accordance with IFRS. Adjusted results, items of note, and related
terms used in this document are not defined terms under IFRS and,
therefore, may not be comparable to similar terms used by other
issuers.
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 2: OPERATING RESULTS - REPORTED
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars)
|
|
For the three months ended
|
|
|
|
|
|
January 31
|
|
October 31
|
|
January 31
|
|
|
|
|
|
2015
|
|
2014
|
|
|
2014
|
|
|
Net interest income
|
|
$
|
4,560
|
|
$
|
4,457
|
|
$
|
4,301
|
|
|
Non-interest income
|
|
|
3,054
|
|
|
2,995
|
|
|
3,264
|
|
|
Total revenue
|
|
|
7,614
|
|
|
7,452
|
|
|
7,565
|
|
|
Provision for credit losses
|
|
|
362
|
|
|
371
|
|
|
456
|
|
|
Insurance claims and related expenses
|
|
|
699
|
|
|
720
|
|
|
683
|
|
|
Non-interest expenses
|
|
|
4,165
|
|
|
4,331
|
|
|
4,096
|
|
|
Income before income taxes and equity in net income of an investment in
associate
|
|
|
2,388
|
|
|
2,030
|
|
|
2,330
|
|
|
Provision for income taxes
|
|
|
418
|
|
|
370
|
|
|
365
|
|
|
Equity in net income of an investment in associate, net of income taxes
|
|
|
90
|
|
|
86
|
|
|
77
|
|
|
Net income - reported
|
|
|
2,060
|
|
|
1,746
|
|
|
2,042
|
|
|
Preferred dividends
|
|
|
24
|
|
|
32
|
|
|
46
|
|
Net income available to common shareholders and non-controlling
interests in
subsidiaries
|
|
$
|
2,036
|
|
$
|
1,714
|
|
$
|
1,996
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
|
$
|
27
|
|
$
|
27
|
|
$
|
27
|
|
|
Common shareholders
|
|
|
2,009
|
|
|
1,687
|
|
|
1,969
|
|
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
|
|
|
|
|
January 31
|
October 31
|
January 31
|
|
|
|
2015
|
2014
|
2014
|
|
|
Operating results - adjusted
|
|
|
|
|
|
|
|
|
Net interest income
|
$
|
4,560
|
$
|
4,457
|
$
|
4,301
|
|
|
Non-interest income1
|
|
3,054
|
|
2,995
|
|
3,011
|
|
|
Total revenue
|
|
7,614
|
|
7,452
|
|
7,312
|
|
|
Provision for credit losses
|
|
362
|
|
371
|
|
456
|
|
|
Insurance claims and related expenses
|
|
699
|
|
720
|
|
683
|
|
|
Non-interest expenses2
|
|
4,092
|
|
4,188
|
|
3,841
|
|
|
Income before income taxes and equity in net income of an investment in
associate
|
|
2,461
|
|
2,173
|
|
2,332
|
|
|
Provision for income taxes3
|
|
442
|
|
410
|
|
399
|
|
|
Equity in net income of an investment in associate, net of income taxes4
|
|
104
|
|
99
|
|
91
|
|
|
Net income - adjusted
|
|
2,123
|
|
1,862
|
|
2,024
|
|
|
Preferred dividends
|
|
24
|
|
32
|
|
46
|
|
|
Net income available to common shareholders and
|
|
|
|
|
|
|
|
|
|
non-controlling interests in subsidiaries - adjusted
|
|
2,099
|
|
1,830
|
|
1,978
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
Non-controlling interests in subsidiaries, net of income taxes
|
|
27
|
|
27
|
|
27
|
|
|
Net income available to common shareholders - adjusted
|
|
2,072
|
|
1,803
|
|
1,951
|
|
|
Adjustments for items of note, net of income taxes
|
|
|
|
|
|
|
|
|
Amortization of intangibles5
|
|
(63)
|
|
(62)
|
|
(61)
|
|
|
Integration charges relating to the acquisition of the credit card
portfolio of MBNA Canada6
|
|
-
|
|
(54)
|
|
(21)
|
|
|
Fair value of derivatives hedging the reclassified available-for-sale
securities portfolio7
|
|
-
|
|
-
|
|
19
|
|
|
Set-up, conversion and other one-time costs related to affinity
relationship
|
|
|
|
|
|
|
|
|
|
with Aimia and acquisition of Aeroplan Visa credit card accounts8
|
|
-
|
|
-
|
|
(115)
|
|
|
Gain on sale of TD Waterhouse Institutional Services9
|
|
-
|
|
-
|
|
196
|
|
|
Total adjustments for items of note
|
|
(63)
|
|
(116)
|
|
18
|
|
|
Net income available to common shareholders - reported
|
$
|
2,009
|
$
|
1,687
|
$
|
1,969
|
|
|
|
|
|
1
|
Adjusted non-interest income excludes the following items of note: first quarter 2014 - $22 million gain due to change in fair value of
derivatives hedging the reclassified available-for-sale (AFS) securities
portfolio, as explained in footnote 7; $231 million gain due to the
sale of TD Waterhouse Institutional Services, as explained in footnote
9.
|
|
2
|
Adjusted non-interest expenses excludes the following items of note: first quarter 2015 - $73 million amortization of intangibles, as
explained in footnote 5; fourth quarter 2014 - $70 million amortization of intangibles; $73 million of integration
charges relating to the
acquisition of the credit card portfolio of MBNA Canada, as explained in
footnote 6; first quarter 2014 - $71 million amortization of intangibles;
$28 million of integration charges relating to the acquisition of the
credit card portfolio of MBNA Canada; $156 million of costs in relation
to the
affinity relationship with Aimia and acquisition of Aeroplan Visa credit
card accounts, as explained in footnote 8.
|
|
3
|
For reconciliation between reported and adjusted provision for income
taxes, see the "Non-GAAP Financial Measures - Reconciliation of
Reported to Adjusted Provision for Income Taxes" table in the "Income
Taxes" section of the MD&A.
|
|
4
|
Adjusted equity in net income of an investment in associate excludes the
following items of note: first quarter 2015 - $14 million amortization
of intangibles, as explained in footnote 5; fourth quarter 2014 - $13 million amortization of intangibles; first quarter 2014 - $14 million amortization
of intangibles.
|
|
5
|
Amortization of intangibles relate to intangibles acquired as a result
of asset acquisitions and business combinations. Although the
amortization
of software and asset servicing rights are recorded in amortization of
intangibles, they are not included for purposes of the items of note.
|
|
6
|
As a result of the acquisition of the credit card portfolio of MBNA
Canada, as well as certain other assets and liabilities, the Bank
incurred
integration charges. Integration charges consist of costs related to
information technology, employee retention, external professional
consulting
charges, marketing (including customer communication and rebranding),
integration related travel, employee severance costs, consulting, and
training. The Bank's integration charges related to the MBNA acquisition
were higher than what were anticipated when the transaction was first
announced. The elevated spending was primarily due to additional costs
incurred (other than the amounts capitalized) to build out technology
platforms for the business. Integration charges related to this
acquisition were incurred by the Canadian Retail segment. The fourth
quarter of
2014 was the last quarter Canadian Retail included any further
MBNA-related integration charges as an item of note.
|
|
7
|
During 2008, as a result of deterioration in markets and severe
dislocation in the credit market, the Bank changed its trading strategy
with respect
to certain trading debt securities. Since the Bank no longer intended to
actively trade in these debt securities, the Bank reclassified these
debt
securities from trading to the AFS category effective August 1, 2008. As
part of the Bank's trading strategy, these debt securities are
economically
hedged, primarily with credit default swap and interest rate swap
contracts. These derivatives are recorded on a fair value basis with
changes in fair
value recorded in the period's earnings. Management believes that this
asymmetry in the accounting treatment between derivatives and the
reclassified
debt securities results in volatility in earnings from period to period
that is not indicative of the economics of the underlying business
performance in
Wholesale Banking. The Bank may from time to time replace securities
within the portfolio to best utilize the initial, matched fixed term
funding. As a
result, the derivatives are accounted for on an accrual basis in
Wholesale Banking and the gains and losses related to the derivatives
in excess of
the accrued amounts are reported in the Corporate segment. Adjusted
results of the Bank exclude the gains and losses of the derivatives in
excess
of the accrued amount.
|
|
8
|
On December 27, 2013, the Bank acquired approximately 50% of the
existing Aeroplan credit card portfolio from the Canadian Imperial Bank
of
Commerce (CIBC) and on January 1, 2014, the Bank became the primary
issuer of Aeroplan Visa credit cards. The Bank incurred program set-up,
conversion, and other one-time costs related to the acquisition of the
portfolio and related affinity agreement, consisting of information
technology,
external professional consulting, marketing, training, and program
management, as well as a commercial subsidy payment of $127 million
($94 million
after tax) payable to CIBC. These costs were included as an item of note
in the Canadian Retail segment. The third quarter of 2014 was the last
quarter
Canadian Retail included any set-up, conversion, or other one-time costs
related to the acquired Aeroplan credit card portfolio as an item of
note.
|
|
9
|
On November 12, 2013, TD Waterhouse Canada Inc., a subsidiary of the
Bank, completed the sale of the Bank's institutional services business,
known
as TD Waterhouse Institutional Services, to a subsidiary of National
Bank of Canada. The transaction price was $250 million in cash, subject
to certain
price adjustment mechanisms which were settled in the third and fourth
quarters of 2014. On the transaction date, a gain of $196 million after
tax was
recorded in the Corporate segment in other income. The gain is not
considered to be in the normal course of business for the Bank.
|
|
|
|
|
|
|
|
|
|
|
TABLE 4: RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE (EPS)1
|
|
|
(Canadian dollars)
|
For the three months ended
|
|
|
|
January 31
2015
|
October 31
2014
|
January 31
2014
|
|
|
Basic earnings per share - reported
|
$
|
1.09
|
$
|
0.92
|
$
|
1.07
|
|
|
Adjustments for items of note2
|
|
0.03
|
|
0.06
|
|
(0.01)
|
|
|
Basic earnings per share - adjusted
|
$
|
1.12
|
$
|
0.98
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share - reported
|
$
|
1.09
|
$
|
0.91
|
$
|
1.07
|
|
|
Adjustments for items of note2
|
|
0.03
|
|
0.07
|
|
(0.01)
|
|
|
Diluted earnings per share - adjusted
|
$
|
1.12
|
$
|
0.98
|
$
|
1.06
|
|
|
|
|
|
1
|
EPS is computed by dividing net income available to common shareholders
by the weighted-average number of shares outstanding during the period.
|
|
2
|
For explanations of items of note, see the "Non-GAAP Financial Measures
- Reconciliation of Adjusted to Reported Net Income" table in the "How
We Performed" section of this document.
|
|
|
|
|
TABLE 5: NON-GAAP FINANCIAL MEASURES - RECONCILIATION OF REPORTED TO ADJUSTED PROVISION FOR INCOME TAXES
|
|
|
(millions of Canadian dollars, except as noted)
|
For the three months ended
|
|
|
|
|
January 31
2015
|
|
October 31
2014
|
|
January 31
2014
|
|
|
Provision for income taxes - reported
|
$
|
418
|
|
$
|
370
|
|
$
|
365
|
|
|
Adjustments for items of note: Recovery of (provision for) income taxes1,2
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles
|
|
24
|
|
|
21
|
|
|
24
|
|
|
Integration charges relating to the acquisition of the credit card
portfolio of MBNA Canada
|
|
-
|
|
|
19
|
|
|
7
|
|
|
Fair value of derivatives hedging the reclassified available-for-sale
securities portfolio
|
|
-
|
|
|
-
|
|
|
(3)
|
|
|
Set-up, conversion and other one-time costs related to affinity
relationship with Aimia and
|
|
|
|
|
|
|
|
|
|
|
|
acquisition of Aeroplan Visa credit card accounts
|
|
-
|
|
|
-
|
|
|
41
|
|
|
Gain on sale of TD Waterhouse Institutional Services
|
|
-
|
|
|
-
|
|
|
(35)
|
|
|
Total adjustments for items of note
|
|
24
|
|
|
40
|
|
|
34
|
|
|
Provision for income taxes - adjusted
|
$
|
442
|
|
$
|
410
|
|
$
|
399
|
|
|
Effective income tax rate - adjusted3
|
|
18.0
|
%
|
|
18.9
|
%
|
|
17.1
|
%
|
|
|
|
|
1
|
For explanations of items of note, see the "Non-GAAP Financial Measures
- Reconciliation of Adjusted to Reported Net Income" table in the "How
We Performed"
section of this document.
|
|
2
|
The tax effect for each item of note is calculated using the effective
statutory income tax rate of the applicable legal entity.
|
|
3
|
Adjusted effective income tax rate is the adjusted provision for income
taxes before other taxes as a percentage of adjusted net income before
taxes.
|
Return on Common Equity
The Bank's methodology for allocating capital to its business segments
is aligned with the common equity capital requirements under Basel III.
Beginning November 1, 2014, capital allocated to the business segments
is based on 9% Common Equity Tier 1 (CET1) Capital.
Adjusted return on common equity (ROE) is adjusted net income available
to common shareholders as a percentage of average common equity.
Adjusted ROE is a non-GAAP financial measure as it is not a defined term
under IFRS. Readers are cautioned that earnings and other measures
adjusted to a basis other than IFRS do not have standardized meanings
under IFRS and, therefore, may not be comparable to similar terms used
by other issuers.
|
|
|
|
TABLE 6: RETURN ON COMMON EQUITY
|
|
|
(millions of Canadian dollars, except as noted)
|
|
For the three months ended
|
|
|
|
|
January 31
2015
|
|
October 31
2014
|
|
January 31
2014
|
|
|
Average common equity
|
$
|
54,580
|
|
$
|
51,253
|
|
$
|
47,736
|
|
|
Net income available to common shareholders - reported
|
|
2,009
|
|
|
1,687
|
|
|
1,969
|
|
|
Items of note impacting income, net of income taxes1
|
|
63
|
|
|
116
|
|
|
(18)
|
|
|
Net income available to common shareholders - adjusted
|
|
2,072
|
|
|
1,803
|
|
|
1,951
|
|
|
Return on common equity - adjusted
|
|
15.1
|
%
|
|
14.0
|
%
|
|
16.2
|
%
|
|
|
|
|
1
|
For explanations of items of note, see the "Non-GAAP Financial Measures
- Reconciliation of Adjusted to Reported Net Income"
table in the "How We Performed" section of this document.
|
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank reports its results under
three key business segments: Canadian Retail, which includes the
results of the Canadian personal and commercial banking businesses,
Canadian credit cards, TD Auto Finance Canada, and Canadian wealth and
insurance businesses; U.S. Retail, which includes the results of the
U.S. personal and commercial banking businesses, U.S. credit cards, TD
Auto Finance U.S., U.S. wealth business, and the Bank's investment in
TD Ameritrade; and Wholesale Banking. The Bank's other activities are
grouped into the Corporate segment.
Effective December 27, 2013, and January 1, 2014, the results of the
acquired Aeroplan credit card portfolio and the results of the related
affinity relationship with Aimia Inc. (collectively, "Aeroplan") are
reported in the Canadian Retail segment.
Results of each business segment reflect revenue, expenses, assets, and
liabilities generated by the businesses in that segment. The Bank
measures and evaluates the performance of each segment based on
adjusted results where applicable, and for those segments the Bank
indicates that the measure is adjusted. Net income for the operating
business segments is presented before any items of note not attributed
to the operating segments. For further details, see the "How the Bank
Reports" section of this document, the "Business Focus" section in the
2014 MD&A, and Note 31 to the Bank's 2014 Consolidated Financial
Statements for the year ended October 31, 2014. For information
concerning the Bank's measure of adjusted return on average common
equity, which is a non-GAAP financial measure, see the "How We
Performed" section of this document.
Net interest income within Wholesale Banking is calculated on a taxable
equivalent basis (TEB), which means that the value of non-taxable or
tax-exempt income, including dividends, is adjusted to its equivalent
before-tax value. Using TEB allows the Bank to measure income from all
securities and loans consistently and makes for a more meaningful
comparison of net interest income with similar institutions. The TEB
increase to net interest income and provision for income taxes
reflected in Wholesale Banking results are reversed in the Corporate
segment. The TEB adjustment for the quarter was $140 million, compared
with $115 million in the first quarter last year, and $76 million in
the prior quarter.
|
|
|
|
TABLE 7: CANADIAN RETAIL
|
|
|
(millions of Canadian dollars, except as noted)
|
|
|
For the three months ended
|
|
|
|
|
January 31
2015
|
|
October 31
2014
|
|
January 31
2014
|
|
|
Net interest income
|
$
|
2,435
|
|
$
|
2,435
|
|
$
|
2,345
|
|
|
Non-interest income
|
|
2,464
|
|
|
2,485
|
|
|
2,284
|
|
|
Total revenue
|
|
4,899
|
|
|
4,920
|
|
|
4,629
|
|
|
Provision for credit losses
|
|
190
|
|
|
250
|
|
|
230
|
|
|
Insurance claims and related expenses
|
|
699
|
|
|
720
|
|
|
683
|
|
|
Non-interest expenses - reported
|
|
2,085
|
|
|
2,224
|
|
|
2,119
|
|
|
Non-interest expenses - adjusted
|
|
2,085
|
|
|
2,151
|
|
|
1,935
|
|
|
Net income - reported
|
|
1,449
|
|
|
1,304
|
|
|
1,204
|
|
|
Adjustments for items of note, net of income taxes1
|
|
|
|
|
|
|
|
|
|
|
Integration charges relating to the acquisition of the credit card
portfolio of MBNA Canada
|
|
-
|
|
|
54
|
|
|
21
|
|
|
Set-up, conversion and other one-time costs related to affinity
relationship with Aimia
|
|
|
|
|
|
|
|
|
|
|
|
and acquisition of Aeroplan Visa credit card accounts
|
|
-
|
|
|
-
|
|
|
115
|
|
|
Net income - adjusted
|
$
|
1,449
|
|
$
|
1,358
|
|
$
|
1,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and ratios
|
|
|
|
|
|
|
|
|
|
|
Return on common equity - reported2
|
|
41.9
|
%
|
|
40.8
|
%
|
|
39.4
|
%
|
|
Return on common equity - adjusted2
|
|
41.9
|
|
|
42.5
|
|
|
43.9
|
|
|
Margin on average earning assets (including securitized assets)
|
|
2.88
|
|
|
2.92
|
|
|
2.94
|
|
|
Efficiency ratio - reported
|
|
42.6
|
|
|
45.2
|
|
|
45.8
|
|
|
Efficiency ratio - adjusted
|
|
42.6
|
|
|
43.7
|
|
|
41.8
|
|
|
Number of Canadian retail branches
|
|
1,164
|
|
|
1,165
|
|
|
1,178
|
|
|
Average number of full-time equivalent staff
|
|
39,602
|
|
|
39,671
|
|
|
39,276
|
|
|
|
|
|
1
|
For explanations of items of note, see the "Non-GAAP Financial Measures
− Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
|
2
|
Effective November 1, 2014, capital allocated to the business segments
is based on 9% CET1 Capital. These changes have been applied
prospectively.
|
Quarterly comparison - Q1 2015 vs. Q1 2014
Canadian Retail net income for the quarter on a reported basis was
$1,449 million, an increase of $245 million, or 20%, compared with the
first quarter last year. Adjusted net income for the quarter was $1,449
million, an increase of $109 million, or 8%, compared with the first
quarter last year. The increase in adjusted earnings was primarily
driven by good loan and deposit volume growth, good credit management,
the full quarter impact of Aeroplan and higher insurance earnings,
partially offset by higher expenses. The reported and adjusted
annualized return on common equity for the quarter was 41.9%, compared
with 39.4% and 43.9%, respectively, in the first quarter last year.
Canadian Retail revenue is derived from Canadian personal and commercial
banking businesses, including credit cards, auto finance, wealth and
insurance businesses. Revenue for the quarter was $4,899 million, an
increase of $270 million, or 6%, compared with the first quarter last
year. Net interest income increased $90 million or 4% compared with the
first quarter last year driven primarily by good loan and deposit
volume growth and the full quarter impact of Aeroplan, partially offset
by lower margins. Non-interest income increased $180 million or 8%
largely due to the change in fair value of investments supporting
insurance claims, wealth asset growth, insurance premium growth and the
full quarter impact of Aeroplan, partially offset by lower reinsurance
revenue.
The personal banking business generated good average lending volume
growth of $13.2 billion, or 5%. Average real estate secured lending
volume increased $8.4 billion, or 4%. Auto lending average volume
increased $2.2 billion, or 15%, while all other personal lending
average volumes increased $2.6 billion, or 8%, largely driven by the
full quarter impact of Aeroplan. Business loans and acceptances average
volume increased $4.3 billion, or 9%. Average personal deposit volumes
increased $4.9 billion, or 3%, due to strong growth in core chequing
and savings accounts, partially offset by lower term deposit volume.
Average business deposit volumes increased $5.8 billion, or 8%. Margin
on average earning assets was 2.88%, a 6 basis point (bps) decrease
primarily due to the low rate environment and competitive pricing.
Assets under administration increased $38 billion, or 14%, and assets
under management increased $31 billion, or 15% compared with first
quarter of last year, driven primarily by market appreciation and
strong new asset growth.
PCL for the quarter was $190 million, a decrease of $40 million, or 17%,
compared with the first quarter last year. Personal banking PCL was
$190 million, a decrease of $29 million, or 13%, due primarily to a
sale of charged-off accounts and continued favourable credit
performance, partially offset by the full quarter impact of Aeroplan.
Business banking PCL decreased by $11 million primarily due to higher
recoveries and lower provisions. Annualized PCL as a percentage of
credit volume was 0.22%, a decrease of 6 bps, compared with the first
quarter last year. Net impaired loans were $824 million, a decrease of
$104 million, or 11%, compared with the first quarter last year. Net
impaired loans as a percentage of total loans were 0.24%, compared with
0.29% as at January 31, 2014.
Insurance claims and related expenses for the quarter were $699 million,
an increase of $16 million, or 2% compared with the first quarter last
year primarily due to the change in fair value of investments
supporting claims, partially offset by less severe weather conditions.
Reported non-interest expenses for the quarter were $2,085 million, a
decrease of $34 million, or 2%, compared with the first quarter last
year. Adjusted non-interest expenses for the quarter were $2,085
million, an increase of $150 million, or 8%. The increase was driven
primarily by higher employee-related costs including higher
revenue-based variable expenses, timing of initiative spend, business
growth and the full quarter impact of Aeroplan, partially offset by
initiatives to increase productivity.
The reported efficiency ratio for the quarter improved to 42.6%, while
the adjusted efficiency ratio worsened to 42.6%, compared with 45.8%
and 41.8%, respectively, in the first quarter last year.
Quarterly comparison - Q1 2015 vs. Q4 2014
Canadian Retail net income for the quarter on a reported basis increased
$145 million, or 11%, compared with the prior quarter. Adjusted net
income for the quarter increased $91 million, or 7%, compared with the
prior quarter. The increase in earnings was primarily due to lower
expenses and good credit management. The reported and adjusted
annualized return on common equity for the quarter was 41.9%, compared
with 40.8% and 42.5%, respectively, in the prior quarter.
Revenue for the quarter decreased $21 million compared with the prior
quarter. Net interest income was flat compared with prior quarter, as
the increase due to volume growth was offset by margin compression and
a decline in refinancing revenue. Non-interest income decreased $21
million or 1%, as higher fee revenue in credit cards and business
banking and the change in fair value of investments supporting claims,
was more than offset by lower reinsurance revenue. Margin on average
earning assets was 2.88%, a decrease of 4 bps primarily due to
competitive pricing, a decline in refinancing revenue and the low rate
environment.
The personal banking business generated good average lending volume
growth of $2.9 billion, or 1%. Average real estate secured lending
volume increased $2.3 billion, or 1%. Auto lending average volume
increased $0.7 billion or 4%. All other personal lending average
volumes were flat compared with prior quarter. Business loans and
acceptances average volumes increased $0.7 billion, or 1%. Average
personal deposit volumes increased $2 billion, or 1%, while average
business deposit volumes increased $2 billion, or 2%.
Assets under administration increased $9 billion, or 3%, and assets
under management increased $15 billion, or 7% compared with the prior
quarter, due to market appreciation and strong net asset growth.
PCL for the quarter decreased $60 million, or 24%, compared with the
prior quarter. Personal banking PCL for the quarter decreased $41
million, or 18%, due primarily to a sale of charged-off accounts and
favourable credit performance. Business banking PCL decreased $19
million largely due to higher recoveries for the quarter. Annualized
PCL as a percentage of credit volume was 0.22%, a decrease of 7 bps,
compared with the prior quarter. Net impaired loans decreased $10
million, or 1%, compared with the prior quarter. Net impaired loans as
a percentage of total loans were 0.24%, compared with 0.25% as at
October 31, 2014.
Insurance claims and related expenses for the quarter decreased $21
million, or 3%, compared with the prior quarter primarily due to lower
reinsurance claims, partially offset by the change in fair value of
investments supporting claims.
Reported non-interest expenses for the quarter decreased $139 million,
or 6%, compared with the prior quarter. Adjusted non-interest expenses
for the quarter decreased $66 million, or 3%, compared with the prior
quarter largely due to higher business initiative spend and higher
marketing initiatives in the prior quarter.
The reported and adjusted efficiency ratio for the quarter improved to
42.6%, compared with 45.2% and 43.7%, respectively, in the prior
quarter.
Business Outlook
The Canadian retail businesses remain focused on maintaining their
leadership position in providing legendary customer service and
convenience across all channels. Our commitment to invest across our
businesses to enhance our customer value proposition positions us well
for growth over the long term. For the remainder of the year, we expect
earnings growth to moderate as good volume growth will be partially
offset by declines in margin and the annualized impact of the Aeroplan
acquisition. Credit loss rates are expected to remain relatively
stable. We expect to generate insurance premium growth, but insurance
results will also reflect the frequency and severity of weather-related
events. We will continue to focus on productivity, to enhance the
customer and employee experience, simplify processes and manage
expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 8: U.S. RETAIL1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars, except as noted)
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
|
|
|
Canadian dollars
|
|
|
|
|
|
|
U.S. dollars
|
|
|
|
|
January 31
2015
|
|
October 31
2014
|
|
January 31
2014
|
|
January 31
2015
|
|
October 31
2014
|
|
January 31
2014
|
|
|
Net interest income
|
$
|
1,642
|
|
$
|
1,515
|
|
$
|
1,477
|
|
$
|
1,408
|
|
$
|
1,370
|
|
$
|
1,381
|
|
|
Non-interest income
|
|
582
|
|
|
532
|
|
|
592
|
|
|
499
|
|
|
481
|
|
|
554
|
|
|
Total revenue
|
|
2,224
|
|
|
2,047
|
|
|
2,069
|
|
|
1,907
|
|
|
1,851
|
|
|
1,935
|
|
|
Provision for credit losses - loans2
|
|
176
|
|
|
161
|
|
|
236
|
|
|
153
|
|
|
145
|
|
|
221
|
|
|
Provision for (recovery of) credit losses - debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities classified as loans
|
|
1
|
|
|
(22)
|
|
|
2
|
|
|
1
|
|
|
(20)
|
|
|
2
|
|
|
Provision for credit losses
|
|
177
|
|
|
139
|
|
|
238
|
|
|
154
|
|
|
125
|
|
|
223
|
|
|
Non-interest expenses
|
|
1,391
|
|
|
1,381
|
|
|
1,312
|
|
|
1,193
|
|
|
1,249
|
|
|
1,225
|
|
|
U.S. Retail Bank net income3
|
|
535
|
|
|
426
|
|
|
424
|
|
|
457
|
|
|
385
|
|
|
398
|
|
|
Equity in net income of an investment in associate,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income taxes
|
|
90
|
|
|
83
|
|
|
68
|
|
|
79
|
|
|
77
|
|
|
65
|
|
|
Net income
|
$
|
625
|
|
$
|
509
|
|
$
|
492
|
|
$
|
536
|
|
$
|
462
|
|
$
|
463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common equity4
|
|
8.5
|
%
|
|
7.6
|
%
|
|
8.0
|
%
|
|
8.5
|
%
|
|
7.6
|
%
|
|
8.0
|
%
|
|
Margin on average earning assets (TEB)5
|
|
3.71
|
|
|
3.65
|
|
|
3.83
|
|
|
3.71
|
|
|
3.65
|
|
|
3.83
|
|
|
Efficiency ratio
|
|
62.5
|
|
|
67.5
|
|
|
63.4
|
|
|
62.5
|
|
|
67.5
|
|
|
63.4
|
|
|
Number of U.S. retail stores
|
|
1,301
|
|
|
1,318
|
|
|
1,288
|
|
|
1,301
|
|
|
1,318
|
|
|
1,288
|
|
|
Average number of full-time equivalent staff
|
|
26,021
|
|
|
26,162
|
|
|
26,108
|
|
|
26,021
|
|
|
26,162
|
|
|
26,108
|
|
|
|
|
|
1
|
Certain comparative amounts have been restated to conform with the
presentation adopted in the current period.
|
|
2
|
Includes provisions for credit losses on acquired credit-impaired loans
including all Federal Deposit Insurance Corporation (FDIC) covered
loans.
|
|
3
|
Results exclude the impact related to the equity in net income of the
investment in TD Ameritrade.
|
|
4
|
Effective November 1, 2014, capital allocated to the business segments
is based on 9% CET1 Capital. These changes have been applied
prospectively.
|
|
5
|
Margin on average earning assets excludes the impact related to the TD
Ameritrade insured deposit accounts (IDA).
|
Quarterly comparison - Q1 2015 vs. Q1 2014
U.S. Retail net income for the quarter was $625 million (US$536
million), which included net income of $535 million (US$457 million)
from the U.S. Retail Bank and $90 million (US$79 million) from TD's
investment in TD Ameritrade. Canadian dollar earnings growth benefited
from the strengthening of the U.S. dollar. The annualized return on
common equity for the quarter was 8.5%, compared to 8.0% for the first
quarter last year.
U.S. Retail Bank net income of US$457 million increased US$59 million,
or 15%, compared with the first quarter last year primarily due to
lower PCL and lower non-interest expenses, partially offset by a
decrease in other non-interest income. The contribution from TD
Ameritrade of US$79 million was up 22% compared with the first quarter
last year, primarily due to increased transaction-based and asset-based
revenue and the prior year impact of taxes on a special dividend.
U.S. Retail Bank revenue is derived from personal banking, business
banking, investments, auto lending, credit cards, and wealth
management. Revenue for the quarter was US$1,907 million, a decrease of
US$28 million, or 1%, compared with the first quarter last year. The
decrease was due to lower other non-interest income resulting from
lower gains on sales of securities. Net interest income increased
primarily due to strong volume loan and deposit growth, partially
offset by margin compression and lower Target related revenue. Margin
on average earning assets was 3.71%, a 12 bps decrease compared with
the first quarter last year. Average loan volumes increased
US$10 billion, or 9%, compared with the first quarter last year due to
15% growth in business loans and 3% growth in personal loans. Average
deposit volumes increased US$10 billion, or 5%, compared with the first
quarter last year driven by 7% growth in business deposit volume, 6%
growth in personal deposit volume, and 3% growth in TD Ameritrade
deposit volume.
PCL for the quarter was US$154 million, a decrease of US$69 million, or
31%, compared with the first quarter last year primarily due to lower
net charge-offs and improved credit quality. Personal banking PCL was
US$152 million, a decrease of US$81 million, or 35%, compared with the
first quarter last year primarily due to improved credit quality and
lower provisions related to auto loans and residential mortgages.
Business banking PCL was US$1 million compared to a recovery of US$14
million in the first quarter last year as provisions for portfolio
growth were substantially offset by improved credit quality. Net
impaired loans, excluding acquired credit-impaired loans and debt
securities classified as loans, were US$1.3 billion, a decrease of
US$50 million, or 4%, compared with the first quarter last year. Net
impaired loans as a percentage of total loans were 1.1% as at January
31, 2015, compared with 1.2% at January 31, 2014. Net impaired debt
securities classified as loans were US$882 million, a decrease of US$64
million, or 7%, compared with the first quarter last year.
Non-interest expenses for the quarter were US$1,193 million, a decrease
of US$32 million, or 3%, compared with the first quarter last year
primarily due to ongoing expense reduction initiatives, a benefit
resulting from elective early lump sum pension payouts, and lower
revenue-share related expenses, partially offset by higher expenses to
support growth and higher compensation and benefit costs.
Efficiency ratio for the quarter improved to 62.5%, compared with 63.4%
in the first quarter last year.
Quarterly comparison - Q1 2015 vs. Q4 2014
U.S. Retail net income for the quarter increased $116 million (US$74
million) compared with the prior quarter, which included an increase in
net income of $109 million (US$72 million) from the U.S. Retail Bank
and an increase of $7 million (US$2 million) from TD's investment in TD
Ameritrade. Canadian dollar earnings growth benefited from the
strengthening of the U.S. dollar. The annualized return on common
equity for the quarter was 8.5%, compared to 7.6% in the prior quarter.
U.S. Retail Bank net income increased US$72 million, or 19%, primarily
due to lower expenses, higher revenue from strong loan growth, and
improved net interest margins, partially offset by higher provisions
for credit losses. The contribution from TD Ameritrade increased
US$2 million, or 3%, compared with the prior quarter primarily due to
increased transaction-based revenue, partially offset by higher
operating expenses.
Revenue for the quarter increased US$56 million, or 3%, compared with
the prior quarter primarily due to strong volume growth and higher net
interest margins. Margin on average earning assets was 3.71%, a 6 bps
increase compared with the prior quarter. Net interest margins
benefited from higher deposit margins as we locked in the rates on our
2015 maturities, partially offset by loan margin compression. Average
loan volumes increased US$3 billion, or 3%, compared with the prior
quarter due to 4% growth in business loans and 1% growth in personal
loans. Average deposit volumes increased US$3 billion, or 1%, compared
with the prior quarter driven by 2% growth in business deposit volume
and 2% growth in personal deposit volume, while TD Ameritrade deposits
remained relatively flat.
PCL for the quarter increased US$29 million, or 23%, compared with the
prior quarter primarily due to increased provisions for portfolio
growth and lower recovery of provisions related to debt securities
classified as loans, partially offset by lower provisions for auto
loans and improved credit quality in the retail and commercial loan
portfolios. Personal banking PCL was US$152 million, an increase of
US$35 million, or 30%, from the prior quarter primarily due to higher
net charge-offs and higher provisions for portfolio growth in credit
cards, partially offset by improved credit quality and provisions
related to auto loans. Business banking PCL was US$1 million, a
decrease of US$27 million, compared with the prior quarter as
provisions for portfolio growth were more than offset by improvements
in credit quality. Net impaired loans, excluding acquired
credit-impaired loans and debt securities classified as loans, were
US$1.3 billion, which is 1.1% of total loans as at January 31, 2015,
flat compared with prior quarter. Net impaired debt securities
classified as loans decreased US$37 million, or 4%, compared with the
prior quarter.
Non-interest expenses for the quarter decreased US$56 million, or 4%,
compared with the prior quarter primarily due to a benefit resulting
from elective early lump sum pension payouts coupled with lower legal
and revenue-share related expenses.
Efficiency ratio for the quarter improved to 62.5%, compared with 67.5%
in the prior quarter due to the improvement in net interest margins
coupled with lower expenses.
Business Outlook
For 2015, we anticipate continued moderate, but variable, economic
growth and continued low interest rates with the potential for modest
increases in the second half of the calendar year. We expect
competition for loans and deposits to remain intense, credit to remain
benign, and the regulatory environment to be challenging as the
complexity of the regulatory framework continues to evolve and
obligations on banks to comply and adapt increase. We expect some
variability in net interest margins throughout the rest of the year,
but expect the full year margin to be roughly at the same level as the
fourth quarter of 2014 as higher deposit margins offset additional loan
margin compression. Provision for credit losses is expected to begin
normalizing, as the high rate of recoveries is not expected to recur
and the loan portfolio continues to grow. Given these assumptions, we
expect modest growth in earnings. We will continue to focus on
delivering legendary customer service and convenience across all
distribution channels, making the necessary investments to support
future growth and regulatory compliance, while maintaining our focus on
productivity initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 9: WHOLESALE BANKING
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars, except as noted)
|
For the three months ended
|
|
|
|
January 31
2015
|
|
October 31
2014
|
|
January 31
2014
|
|
|
Net interest income (TEB)
|
$
|
597
|
|
$
|
537
|
|
$
|
551
|
|
|
Non-interest income
|
|
114
|
|
|
67
|
|
|
167
|
|
|
Total revenue
|
|
711
|
|
|
604
|
|
|
718
|
|
|
Provision for (recovery of) credit losses
|
|
2
|
|
|
(1)
|
|
|
-
|
|
|
Non-interest expenses
|
|
433
|
|
|
381
|
|
|
411
|
|
|
Net income
|
$
|
192
|
|
$
|
160
|
|
$
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and ratios
|
|
|
|
|
|
|
|
|
|
|
Trading-related revenue1
|
$
|
380
|
|
$
|
296
|
|
$
|
408
|
|
|
Common Equity Tier 1 (CET1) Capital risk-weighted assets (billions of
dollars)2,3
|
|
64
|
|
|
61
|
|
|
56
|
|
|
Return on common equity4
|
|
13.0
|
%
|
|
13.0
|
%
|
|
20.6
|
%
|
|
Efficiency ratio
|
|
60.9
|
|
|
63.1
|
|
|
57.2
|
|
|
Average number of full-time equivalent staff
|
|
3,746
|
|
|
3,727
|
|
|
3,544
|
|
|
|
|
|
1
|
In the fourth quarter of 2014, the Bank implemented a funding valuation
adjustment (FVA) in response to growing evidence
that market implied funding costs and benefits are now considered in the
pricing and fair valuation of uncollateralized derivatives.
See Note 3 of the Interim Consolidated Financial Statements for further
information on FVA.
|
|
2
|
Effective the third quarter of 2014, each capital ratio has its own RWA
measure due to the OSFI prescribed scalar for inclusion
of the Credit Valuation Adjustment (CVA). For the third and fourth
quarter of 2014, the scalars for inclusion of CVA for CET1,
Tier 1, and Total Capital RWA were 57%, 65%, and 77%, respectively. For
fiscal 2015, the scalars are 64%, 71%, and 77%,
respectively.
|
|
3
|
Prior to the first quarter of 2015, the amounts have not been adjusted
to reflect the impact of the 2015 IFRS Standards and
Amendments.
|
|
4
|
Effective November 1, 2014, capital allocated to the business segments
is based on 9% CET1 Capital. These changes have
been applied prospectively.
|
Quarterly comparison - Q1 2015 vs. Q1 2014
Wholesale Banking net income for the quarter was $192 million, a
decrease of $38 million, or 17%, compared with the first quarter last
year. The decrease in earnings was primarily due to lower revenue,
higher non-interest expenses, and a higher effective tax rate. The
annualized return on common equity for the quarter was 13.0%, compared
with 20.6% in the first quarter last year.
Wholesale Banking revenue is derived primarily from capital markets
services and corporate lending. The capital markets businesses generate
revenue from advisory, underwriting, trading, facilitation, and trade
execution services. Revenue for the quarter was $711 million, a
decrease of $7 million, or 1%, compared with the first quarter last
year. The decrease was primarily due to lower interest rate and credit
trading, and lower fee-based revenue on reduced volumes, reflecting an
industry trend. This was partially offset by higher equity and foreign
exchange trading on improved client activity, and higher security gains
in the investment portfolio.
PCL for the quarter was $2 million, representing the accrual cost of
credit protection.
Non-interest expenses for the quarter were $433 million, an increase of
$22 million, or 5%, compared with the first quarter last year. The
increase was primarily due to higher initiative spend and the impact of
foreign exchange translation.
CET1 risk-weighted assets were $64 billion as at January 31, 2015, an
increase of $8 billion, or 14%, compared with January 31, 2014. The
increase was primarily due to growth in corporate banking, the impact
of foreign exchange translation and a higher scalar for the inclusion
of the Credit Valuation Adjustment (CVA) capital charge.
Quarterly comparison - Q1 2015 vs. Q4 2014
Wholesale Banking net income for the quarter increased $32 million, or
20%, compared with the prior quarter. The increase was largely due to
higher revenue, partially offset by higher non-interest expenses. The
annualized return on common equity for the quarter was 13.0%, flat to
the prior quarter.
Revenue for the quarter increased $107 million, or 18%, compared with
the prior quarter. The increase in revenue was primarily due to higher
trading-related revenue and security gains in the investment portfolio.
Trading-related revenue increased due to higher equity and foreign
exchange trading and a lower charge for FVA in the current quarter.
This was partially offset by lower underwriting fees on reduced
volumes, reflecting an industry trend.
PCL for the quarter was $2 million, compared with a net recovery of $1
million in the prior quarter.
Non-interest expenses for the quarter increased $52 million, or 14%,
primarily due to higher variable compensation commensurate with revenue
and the impact of foreign exchange translation.
CET1 risk-weighted assets were $64 billion as at January 31, 2015, an
increase of $3 billion, or 5%, compared with October 31, 2014. The
increase was primarily due to the impact of foreign exchange
translation and a higher scalar for the inclusion of the CVA capital
charge.
Business Outlook
Overall, the global economy continues to show signs of recovery.
However, we remain cautious as a combination of evolving capital and
regulatory changes, uncertainty over the outlook for interest rates,
volatile energy markets and the weaker Canadian dollar will continue to
affect our business. While these factors will likely affect corporate
and investor sentiment in the near term, we believe our diversified,
integrated business model will continue to deliver solid results and
grow our franchise. We remain focused on growing and deepening client
relationships, being a valued counterparty, and managing our risks and
productivity in 2015.
|
|
|
|
|
|
|
|
|
|
TABLE 10: CORPORATE
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars)
|
For the three months ended
|
|
|
|
January 31
2015
|
October 31
2014
|
January 31
2014
|
|
|
Net income (loss) - reported
|
$
|
(206)
|
$
|
(227)
|
$
|
116
|
|
|
Adjustments for items of note1
|
|
|
|
|
|
|
|
|
Amortization of intangibles
|
|
63
|
|
62
|
|
61
|
|
|
Fair value of derivatives hedging the reclassified available-for-sale
securities portfolio
|
|
-
|
|
-
|
|
(19)
|
|
|
Gain on sale of TD Waterhouse Institutional Services
|
|
-
|
|
-
|
|
(196)
|
|
|
Total adjustments for items of note
|
|
63
|
|
62
|
|
(154)
|
|
|
Net income (loss) - adjusted
|
$
|
(143)
|
$
|
(165)
|
$
|
(38)
|
|
|
|
|
|
|
|
|
|
|
|
Decomposition of items included in net income (loss) - adjusted
|
|
|
|
|
|
|
|
|
Net corporate expenses
|
$
|
(172)
|
$
|
(233)
|
$
|
(165)
|
|
|
Other
|
|
2
|
|
41
|
|
100
|
|
|
Non-controlling interests
|
|
27
|
|
27
|
|
27
|
|
|
Net income (loss) - adjusted
|
$
|
(143)
|
$
|
(165)
|
$
|
(38)
|
|
1 For explanations of items of note, see the "Non-GAAP Financial Measures
- Reconciliation of Adjusted to Reported Net Income" table in the "How
We Performed" section of this document.
Quarterly comparison - Q1 2015 vs. Q1 2014
Corporate segment's reported net loss for the quarter was $206 million,
compared with a reported net income of $116 million in the first
quarter last year. Adjusted net loss was $143 million, compared with an
adjusted net loss of $38 million in the first quarter last year.
Adjusted net loss increased primarily due to lower contribution from
Other items. Other items were unfavourable due to the gain on sale of
TD Ameritrade shares of $40 million and positive tax items recognized
in the first quarter of last year and lower net revenue from treasury
related activities in the current quarter including changes in the
Bank's funding mix. Net corporate expenses increased as a result of
ongoing investment in enterprise and regulatory projects and
productivity initiatives.
Quarterly comparison - Q1 2015 vs. Q4 2014
Corporate segment's reported net loss for the quarter was $206 million,
compared with a reported net loss of $227 million in the prior quarter.
Adjusted net loss was $143 million, compared with an adjusted net loss
of $165 million in the prior quarter. The decline in adjusted net loss
was due to lower net corporate expenses partially offset by lower
contribution from Other items. Other items were unfavourable due to the
lower net revenue from treasury activities in the current quarter and
positive tax items recognized in the prior quarter. Net corporate
expenses decreased primarily due to higher investment in enterprise and
regulatory projects and productivity initiatives in the prior quarter.
SHAREHOLDER AND INVESTOR INFORMATION
Shareholder Services
|
If you:
|
And your inquiry relates to:
|
Please contact:
|
Are a registered shareholder (your name
appears on your TD share certificate)
|
Missing dividends, lost share certificates, estate
questions, address changes to the share register,
dividend bank account changes, the dividend
reinvestment plan, eliminating duplicate mailings of
shareholder materials or stopping (and resuming)
receiving annual and quarterly reports
|
Transfer Agent:
CST Trust Company
P.O. Box 700, Station B
Montréal, Québec H3B 3K3
1-800-387-0825 (Canada and U.S. only)
or 416-682-3860
Facsimile: 1-888-249-6189
inquiries@canstockta.com or www.canstockta.com
|
Hold your TD shares through the
Direct Registration System
in the United States
|
Missing dividends, lost share certificates, estate
questions, address changes to the share register,
eliminating duplicate mailings of shareholder materials
or stopping (and resuming) receiving annual and
quarterly reports
|
Co-Transfer Agent and Registrar
Computershare P.O. Box 30170
College Station, TX 77842-3170
or
Computershare
211 Quality Circle, Suite 210
College Station, TX 77845
1-866-233-4836
TDD for hearing impaired: 1-800-231-5469
Shareholders outside of U.S.: 201-680-6578
TDD shareholders outside of U.S: 201-680-6610
www.computershare.com
|
Beneficially own TD shares that are held in
the name of an intermediary, such as a bank,
a trust company, a securities broker or other
nominee
|
Your TD shares, including questions regarding the
dividend reinvestment plan and mailings of shareholder
materials
|
Your intermediary
|
For all other shareholder inquiries, please contact TD Shareholder
Relations at 416-944-6367 or 1-866-756-8936 or email tdshinfo@td.com. Please note that by leaving us an e-mail or voicemail message, you are
providing your consent for us to forward your inquiry to the
appropriate party for response.
General Information
Contact Corporate & Public Affairs: 416-982-8578
Products and services: Contact TD Canada Trust, 24 hours a day, seven
days a week: 1-866-567-8888
French: 1-866-233-2323
Cantonese/Mandarin: 1-800-328-3698
Telephone device for the hearing impaired (TTY): 1-800-361-1180
Internet website: http://www.td.com
Internet e-mail: customer.service@td.com
Access to Quarterly Results Materials
Interested investors, the media and others may view this first quarter
earnings news release, results slides, supplementary financial
information, and the Report to Shareholders on the TD website at www.td.com/investor/.
Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference call in Toronto, Ontario
on February 26, 2015. The call will be webcast live through TD's
website at 3 p.m. ET. The call and webcast will feature presentations
by TD executives on the Bank's financial results for the first quarter,
discussions of related disclosures, and will be followed by a
question-and-answer period with analysts. The presentation material
referenced during the call will be available on the TD website at www.td.com/investor/qr_2015.jsp on February 26, 2015, by approximately 12 p.m. ET. A listen-only
telephone line is available at 416-204-9269 or 1-800-499-4035 (toll
free).
The webcast and presentations will be archived at www.td.com/investor/qr_2015.jsp. Replay of the teleconference will be available from 6 p.m. ET on
February 26, 2015, until March 30, 2015, by calling 647-436-0148 or
1-888-203-1112 (toll free). The passcode is 6570000.
Annual Meeting
Thursday, March 26, 2015
Metro Toronto Convention Centre
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 branches and serves more than 24 million customers in
three key businesses operating in a number of locations in financial
centres around the globe: Canadian Retail, including TD Canada Trust,
TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD
Insurance; U.S. Retail, including TD Bank, America's Most Convenient
Bank, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in TD
Ameritrade; and Wholesale Banking, including TD Securities. TD also
ranks among the world's leading online financial services firms, with
approximately 9.7 million active online and mobile customers. TD had
CDN$1.1 trillion in assets on January 31, 2015. The Toronto-Dominion
Bank trades under the symbol "TD" on the Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group
