This quarterly
Earnings News Release should be read in conjunction with the Bank's
unaudited third quarter 2021 Report to Shareholders for the three
and nine months ended July 31, 2021, 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 25, 2021. 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 measures are
non-GAAP measures. Refer to the "How the Bank Reports" section of
the Management's Discussion and Analysis (MD&A) for an
explanation of reported and adjusted results.
|
THIRD QUARTER FINANCIAL HIGHLIGHTS, compared with the third
quarter last year:
- Reported diluted earnings per share were $1.92, compared with $1.21.
- Adjusted diluted earnings per share were $1.96, compared with $1.25.
- Reported net income was $3,545
million, compared with $2,248
million.
- Adjusted net income was $3,628
million, compared with $2,327
million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, nine months ended
July 31, 2021, compared with the
corresponding period last year:
- Reported diluted earnings per share were $5.68, compared with $3.62.
- Adjusted diluted earnings per share were $5.83, compared with $3.76.
- Reported net income was $10,517
million, compared with $6,752
million.
- Adjusted net income was $10,783
million, compared with $6,998
million.
THIRD QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The third
quarter reported earnings figures included the following items of
note:
- Amortization of acquired intangibles of $68 million ($61
million after-tax or 3 cents
per share), compared with $63 million
($54 million after-tax or
3 cents per share) in the
third quarter last year.
- Acquisition and integration charges related to the Schwab
transaction of $24 million
($22 million after-tax or
1 cent per share).
TORONTO, Aug. 26, 2021 /CNW/ - TD Bank Group ("TD" or
the "Bank") today announced its financial results for the third
quarter ended July 31, 2021. Reported earnings were
$3.5 billion, up 58% compared with
the third quarter last year, and adjusted earnings were
$3.6 billion, up 56%.
"TD's strong performance in the third quarter was supported by
solid revenue growth in our Canadian and U.S. Retail businesses as
economic activity and employment levels continued to improve on
both sides of the border," said Bharat Masrani, Group President and
CEO, TD Bank Group. "TD's strategy – anchored in our proven
business model – enabled us once again to deliver for our
shareholders, meet the needs of our customers and clients and
contribute to the economic recovery, while continuing to invest in
our people, technology, and capabilities."
"While businesses and consumers are resuming some of their
normal activities and more people are getting vaccinated, recent
developments and new variants remind us that the global pandemic is
not yet over," added Masrani. "TD will continue to adapt in
this fluid environment, adjust in real-time, and prioritize the
well-being of our people and all those we serve."
Canadian Retail
Canadian Retail reported net income
was $2,125 million, an increase of
68% compared with the third quarter last year. Revenue increased
9%, supported by continued momentum in mortgage originations and
deposits, strong commercial loan growth and mutual fund sales, as
well as record card sales. Reported expenses increased 8%,
reflecting business growth spend including volume-driven and
employee-related expenses and investments in technology and
marketing. Provisions for credit losses (PCL) decreased by
$851 million from the prior year,
reflecting lower impaired PCL and a recovery in performing PCL.
Canadian Retail continued to innovate to serve customers where
and when they want. This includes a new strategic alliance with
Canada Post that will see the Personal Bank provide Canadians –
particularly those in rural, remote and Indigenous communities –
with expanded access to financial services, and the launch of new
TD Insurance tools such as mobile severe weather and safety alerts
and a new digital virtual assistant. In the Commercial Bank, the
acquisition of Wells Fargo's Canadian Direct Equipment Finance
business closed, delivering scaled expertise in equipment leasing
and finance.
U.S. Retail
U.S. Retail net income was $1,295 million (US$1,052
million), an increase of 92% (115% in U.S. dollars) compared
with the third quarter last year. The Bank's investment in The
Charles Schwab Corporation (Schwab) contributed $197 million (US$161
million) in earnings, compared with the contribution of
$317 million (US$230 million) from TD Ameritrade a year
ago.
The U.S. Retail Bank, which excludes the Bank's investment in
Schwab, reported record net income of $1,098
million (US$891 million), an
increase of 208% (243% in U.S. dollars) from the third quarter last
year. In U.S. dollars, revenue increased 5% reflecting higher
non-interest income, partially offset by lower deposit margins. PCL
decreased by US$729 million
($993 million) reflecting lower
impaired and performing PCL. Expenses increased 2% in U.S. dollars,
reflecting higher investment in the business and employee-related
expenses, partially offset by productivity savings. In Canadian
dollars, revenue and expenses declined 6% and 8%, respectively,
primarily as a result of appreciation in the Canadian dollar since
the third quarter last year.
The U.S. Retail Bank continued to support customers by expanding
the tools and advice it provides, generating strong results from
increased customer activity and higher personal and business
deposit volumes. This quarter, TD Bank, America's Most Convenient
Bank® (TD AMCB) introduced TD Essential Banking, a
low-cost, no-overdraft-fee deposit account, and announced overdraft
policy changes as part of its ongoing efforts to meet evolving
customer needs and provide underserved communities with affordable
access to mainstream financial services and products. TD AMCB also
announced the establishment of a US$100 million equity fund in
support of minority-owned small businesses, further demonstrating
its commitment to provide opportunity in underserved communities
and help combat racial inequities. The U.S. Retail Bank continued
to invest in enhancing the customer experience, including the
ability to book in-store appointments online for retail, small
business and wealth services and simplifying how debit or credit
cards are added to digital wallets.
Wholesale
Wholesale Banking reported net income
of $330 million this quarter, a decrease of 25%
compared to the third quarter last year, reflecting lower revenue,
partially offset by lower PCL and lower non-interest expenses.
Revenue for the quarter was $1,083 million, a decrease of 22%
from a year ago, primarily reflecting lower trading-related
revenue, partially offset by higher advisory fees. PCL decreased by
$121 million from the prior year,
reflecting lower impaired and performing PCL.
This quarter, TD Securities was named "Canada's Best Investment Bank" by the 2021
Euromoney Awards and recognized as the 2021 Canadian FX Service
Quality Leader as measured by the Greenwich Quality Index for the
second year in a row. TD Securities was selected as one of two
Structuring Advisors to the Government of Canada's inaugural issuance of green bonds,
reflecting leadership in the Environmental, Social and
Governance (ESG) space. The Wholesale Bank continued to invest in
its client-centric strategy and further extended its global reach
and capabilities with the completion of TD's acquisition of
Headlands Tech Global Markets, LLC.
Capital
TD's Common Equity Tier 1 Capital ratio was
14.5%.
Conclusion
"As we look to the future, we are committed
to delivering on our purpose to enrich the lives of our customers,
colleagues and communities and to contributing to an inclusive
recovery for all. Each day our 90,000 colleagues around the world
help make our customers' financial aspirations a reality and I want
to thank them for their dedication," concluded Masrani.
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 under the heading "How We Performed", including under the
sub-headings "Economic Summary and Outlook" and "The Bank's
Response to COVID-19", and under the heading "Managing Risk", and
statements made in the Management's Discussion and Analysis
("2020 MD&A") in the Bank's 2020 Annual Report under the
headings "Economic Summary and Outlook" and "The Bank's Response to
COVID-19", for the Canadian Retail, U.S. Retail, and Wholesale
Banking segments under headings "Key Priorities for 2021", and for
the Corporate segment, "Focus for 2021", and in other statements
regarding the Bank's objectives and priorities for 2021 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 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 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, 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; environmental and social risk; 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;
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 2020 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 "Significant Acquisitions" 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 2020
MD&A under the headings "Economic Summary and Outlook" and "The
Bank's Response to COVID-19", for the Canadian Retail, U.S. Retail,
and Wholesale Banking segments, "Key Priorities for 2021", and for
the Corporate segment, "Focus for 2021", 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.
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
|
|
|
|
2021
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Results of
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
|
10,712
|
|
$
|
10,228
|
|
$
|
10,665
|
|
$
|
31,752
|
|
$
|
31,802
|
|
Provision for
(recovery of) credit losses
|
|
(37)
|
|
|
(377)
|
|
|
2,188
|
|
|
(101)
|
|
|
6,325
|
|
Insurance claims and
related expenses
|
|
836
|
|
|
441
|
|
|
805
|
|
|
2,057
|
|
|
2,256
|
|
Non-interest expenses
– reported
|
|
5,616
|
|
|
5,729
|
|
|
5,307
|
|
|
17,129
|
|
|
15,895
|
|
Non-interest expenses
– adjusted1
|
|
5,576
|
|
|
5,691
|
|
|
5,244
|
|
|
17,011
|
|
|
15,692
|
|
Net income –
reported
|
|
3,545
|
|
|
3,695
|
|
|
2,248
|
|
|
10,517
|
|
|
6,752
|
|
Net income –
adjusted1
|
|
3,628
|
|
|
3,775
|
|
|
2,327
|
|
|
10,783
|
|
|
6,998
|
|
Financial
position (billions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans net of
allowance for loan losses
|
$
|
719.2
|
|
$
|
708.4
|
|
$
|
721.4
|
|
$
|
719.2
|
|
$
|
721.4
|
|
Total
assets
|
|
1,703.1
|
|
|
1,669.1
|
|
|
1,697.3
|
|
|
1,703.1
|
|
|
1,697.3
|
|
Total
deposits
|
|
1,118.7
|
|
|
1,118.5
|
|
|
1,091.3
|
|
|
1,118.7
|
|
|
1,091.3
|
|
Total
equity
|
|
99.9
|
|
|
94.5
|
|
|
92.5
|
|
|
99.9
|
|
|
92.5
|
|
Total risk-weighted
assets
|
|
465.5
|
|
|
455.0
|
|
|
478.1
|
|
|
465.5
|
|
|
478.1
|
|
Financial
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity (ROE) – reported
|
|
15.3
|
%
|
|
16.7
|
%
|
|
10.0
|
%
|
|
15.4
|
%
|
|
10.3
|
%
|
Return on common
equity – adjusted1,2
|
|
15.6
|
|
|
17.1
|
|
|
10.4
|
|
|
15.8
|
|
|
10.7
|
|
Return on tangible
common equity (ROTCE)2
|
|
20.8
|
|
|
23.0
|
|
|
13.7
|
|
|
21.2
|
|
|
14.3
|
|
Return on tangible
common equity – adjusted1,2
|
|
20.9
|
|
|
23.1
|
|
|
13.9
|
|
|
21.4
|
|
|
14.4
|
|
Efficiency ratio –
reported
|
|
52.4
|
|
|
56.0
|
|
|
49.8
|
|
|
53.9
|
|
|
50.0
|
|
Efficiency ratio –
adjusted1
|
|
52.0
|
|
|
55.6
|
|
|
49.2
|
|
|
53.6
|
|
|
49.3
|
|
Provision for
(recovery of) credit losses as a % of net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average loans and
acceptances3
|
|
(0.02)
|
|
|
(0.21)
|
|
|
1.17
|
|
|
(0.02)
|
|
|
1.16
|
|
Common share
information – reported (Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.92
|
|
$
|
2.00
|
|
$
|
1.21
|
|
$
|
5.69
|
|
$
|
3.63
|
|
|
Diluted
|
|
1.92
|
|
|
1.99
|
|
|
1.21
|
|
|
5.68
|
|
|
3.62
|
|
Dividends per
share
|
|
0.79
|
|
|
0.79
|
|
|
0.79
|
|
|
2.37
|
|
|
2.32
|
|
Book value per
share
|
|
51.21
|
|
|
49.25
|
|
|
47.80
|
|
|
51.21
|
|
|
47.80
|
|
Closing share
price4
|
|
82.95
|
|
|
84.50
|
|
|
59.27
|
|
|
82.95
|
|
|
59.27
|
|
Shares outstanding
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
1,818.8
|
|
|
1,817.4
|
|
|
1,802.3
|
|
|
1,816.8
|
|
|
1,805.4
|
|
|
Average
diluted
|
|
1,821.8
|
|
|
1,819.9
|
|
|
1,803.5
|
|
|
1,819.2
|
|
|
1,807.1
|
|
|
End of
period
|
|
1,820.0
|
|
|
1,818.7
|
|
|
1,813.0
|
|
|
1,820.0
|
|
|
1,813.0
|
|
Market capitalization
(billions of Canadian dollars)
|
$
|
151.0
|
|
$
|
153.7
|
|
$
|
107.5
|
|
$
|
151.0
|
|
$
|
107.5
|
|
Dividend
yield5
|
|
3.7
|
%
|
|
3.9
|
%
|
|
5.3
|
%
|
|
4.0
|
%
|
|
4.7
|
%
|
Dividend payout
ratio
|
|
41.2
|
|
|
39.5
|
|
|
65.3
|
|
|
41.7
|
|
|
63.9
|
|
Price-earnings
ratio6
|
|
9.8
|
|
|
10.9
|
|
|
11.5
|
|
|
9.8
|
|
|
11.5
|
|
Total shareholder
return (1 year)7
|
|
44.4
|
|
|
52.1
|
|
|
(19.5)
|
|
|
44.4
|
|
|
(19.5)
|
|
Common share
information – adjusted (Canadian
dollars)1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.96
|
|
$
|
2.04
|
|
$
|
1.25
|
|
$
|
5.83
|
|
$
|
3.76
|
|
|
Diluted
|
|
1.96
|
|
|
2.04
|
|
|
1.25
|
|
|
5.83
|
|
|
3.76
|
|
Dividend payout
ratio
|
|
40.2
|
%
|
|
38.7
|
%
|
|
63.0
|
%
|
|
40.6
|
%
|
|
61.6
|
%
|
Price-earnings
ratio6
|
|
11.2
|
|
|
12.6
|
|
|
11.1
|
|
|
11.2
|
|
|
11.1
|
|
Capital
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital ratio
|
|
14.5
|
%
|
|
14.2
|
%
|
|
12.5
|
%
|
|
14.5
|
%
|
|
12.5
|
%
|
Tier 1 Capital
ratio
|
|
15.9
|
|
|
15.4
|
|
|
13.8
|
|
|
15.9
|
|
|
13.8
|
|
Total Capital
ratio
|
|
18.5
|
|
|
18.0
|
|
|
16.5
|
|
|
18.5
|
|
|
16.5
|
|
Leverage
ratio
|
|
4.8
|
|
|
4.6
|
|
|
4.4
|
|
|
4.8
|
|
|
4.4
|
|
|
|
1
|
Adjusted measures are
non-GAAP measures. Refer to the "How the Bank Reports" section of
this document for an explanation of reported and adjusted
results.
|
2
|
Metrics are non-GAAP
financial measures. Refer to the "Return on Common Equity" and
"Return on Tangible Common Equity" sections of this document for an
explanation.
|
3
|
Excludes acquired
credit-impaired (ACI) loans.
|
4
|
Toronto Stock
Exchange (TSX) closing market price.
|
5
|
Dividend yield is
calculated as the dividend per common share divided by daily
average closing stock price in the relevant period. Dividend per
common share is derived as follows: a) by annualizing the dividend
per common share for the quarter; and b) by annualizing the
dividend per common share for the year-to-date.
|
6
|
Price-earnings ratio
is calculated based on a trailing four quarters' earnings per share
(EPS).
|
7
|
Total shareholder
return is calculated based on share price movement and dividends
reinvested over a trailing one-year period.
|
HOW WE PERFORMED
ECONOMIC SUMMARY AND OUTLOOK
The global economy picked
up speed in the second calendar quarter of this year as
restrictions on activity were lifted in several countries. Virus
developments are still the main factor driving the outlook, and
disparity in vaccine distribution will continue to lead to
differences in economic outcomes between countries. The more
contagious Delta variant is a particular challenge for emerging
markets (EMs), where vaccine distribution has lagged. As a result,
economic momentum within advanced economies is likely to pull
further ahead of EMs in the second half of this year. However, as
long as the virus is circulating globally, the persistence or
threat of constrained supply chains and pressure on prices is
likely to limit global economic growth.
U.S. economic activity continues to improve. The economy grew by
6.5% (annualized) in the second calendar quarter and is now 0.8%
larger than it was prior to the pandemic. Consumer spending led the
way, up 11.8% annualized, growing at a double-digit pace for the
second straight quarter. In addition to income supports provided in
the American Rescue Plan, easing restrictions in high-contact
service sectors such as transportation, recreation, and
accommodation and food services contributed to the gain.
Business investment was also robust, led by 13% growth in
equipment investment and 10.7% growth in intellectual property
products (including software). The only major component of private
spending to pull back in the quarter was investment in structures –
both residential and non-residential. However, overall economic
growth did not mirror the pace of business investment and household
spending, as it was offset by a significant drawdown in
already-lean inventories in the face of supply constraints and a
rise in imports.
Supply side disruptions continue to restrain the American
economic recovery. Shortages of key inputs have been particularly
evident in the manufacturing sector. The combination of strong
demand and production delays has led to historically low
inventories relative to sales, especially in the auto industry. As
supply constraints are alleviated, production growth is likely to
pick up, in part to satisfy demand, but also to rebuild
inventories.
The labor market continues to respond to demand and support
economic improvement. In July, an estimated 943,000 jobs were added
to payrolls, and the unemployment rate fell to 5.4%. This marks a
significant shift relative to the peak unemployment rate of 14.8%
fourteen months ago. However, there is plenty of room for further
improvement, with the level of employment still 5.7 million (3.7%)
below its pre-crisis level.
The Federal Reserve has maintained its policy interest rate at
0.00% to 0.25% and is continuing its commitment to purchase at
least US$80 billion in Treasuries and
US$40 billion in agency mortgage-back
securities per month. However, it continues to express confidence
that the economic recovery will remain above-trend through 2022. As
such, TD Economics expects the Federal Reserve to signal a gradual
tapering of its asset purchases later this year and to raise the
federal funds rate in the fourth calendar quarter of 2022.
This expectation is contingent on virus developments. The
resurgence in new COVID-19 cases is unlikely to lead to broad
lockdowns or stringent restrictions on business activity given the
progress on vaccination. However, it will continue to create
uncertainty about the outlook, which may be manifested in a variety
of ways, including more cautious consumer behavior, prolonged labor
shortages, and pressure on wage growth. Coupled with pre-existing
supply constraints in production domestically and globally, this is
likely to result in inflation remaining elevated over the remainder
of this year.
Canada's economy significantly
underperformed the U.S. in the second calendar quarter due to
renewed restrictions across the country to curb the spread of
COVID-19. Fortunately, high-frequency economic indicators point to
the recovery picking up in June, as the economy re-opened and made
further headway into July. While new strains of the virus are a
concern, Canada's successful
vaccination campaign should help reduce the risk of a repeat in
major disruptions to economic activity.
Likewise, the job market is rebounding from its April and May
pullback, adding an estimated total of 324,000 positions through
June and July. This lowered the unemployment rate to 7.5% in July.
Canadian jobs are much closer to their pre-recession level than in
the U.S. – just 1.3% below as of July.
The Canadian housing market continues to slow following a strong
performance through the first calendar quarter of this year. Since
March, Canadian home sales have dropped by 25%. Even so, the level
of activity remains elevated relative to its pre-crisis level.
Average home prices also dipped slightly in the second quarter.
However, this is capturing a rebalancing of the market, as buyers
shift away from larger single-family homes back towards
lower-priced units. The housing market remains tight with a
sales-to-new listings ratio still titled heavily in the favour of
sellers. Moving forward, price growth is expected to be positive
but more muted, allowing for some catch-up in income growth.
Inflation in Canada has not
been as elevated as in the United
States. This partly reflects a delayed reopening of business
operations. Price growth is likely to move higher in the months
ahead, as Canadians participate in the economic reopening and
supply chain disruptions linger. As in the U.S., much of the
near-term price pressure is expected to be transitory, with
inflation moving back toward 2% over the course of 2022 as supply
adjusts. However, Canada is
susceptible to the same risks as other advanced economies of
prolonged global supply disruptions and a slower return to economic
normalization.
The Bank of Canada kept its
overnight interest rate at 0.25% in June but further reduced the
pace of its asset purchases from $3
billion to $2 billion per
week. TD Economics expects the Bank of Canada to begin raising the overnight rate in
the fourth calendar quarter of 2022, while the Canadian dollar is
expected to remain in a range of 79-81 U.S. cents over the next two
years.
THE BANK'S RESPONSE TO COVID-19
While economic
conditions in Canada and the U.S.
are steadily improving, the COVID-19 pandemic continues to have an
impact on economies around the world. Significant progress has been
made on vaccination in the Bank's North American footprint,
but rates of vaccination vary considerably across regions, and as
economies proceed with reopening plans, it remains uncertain how
effective vaccines will be against new variants of COVID-19, some
of which may be more contagious or harmful. TD remains actively
engaged with governments, supervisory agencies and public health
authorities in the response to COVID-19, guided by the principles
of supporting the well-being of its customers and colleagues and
maintaining the Bank's operational and financial resilience.
In fiscal 2020, the Bank offered several forms of direct
financial assistance to customers experiencing financial hardship
due to COVID-19, including deferral of loan payments. The bulk of
this assistance has now largely run its course, except for
deferrals of real estate secured loans in the U.S., where the
original program allowed deferrals to be extended for up to 12
months. There have been few other customer requests for extensions.
As of July 31, 2021, gross loan
balances that remained subject to COVID-related deferral programs
were approximately $0.04 billion in
Canada ($0.04 billion as at April
30, 2021), primarily reflecting Small Business Banking and
Commercial Lending portfolios, and US$1.0
billion in the United
States (US$1.1 billion as at
April 30, 2021), primarily in the
Real Estate Secured Lending portfolio. Delinquency rates for
customers that have exited deferral are higher than for the broader
population but remain low in absolute terms, reflecting the
continuation of government support and TD's proactive outreach to
clients. The Bank continues to provide advice and assistance to
customers through its usual channels, TD Helps in Canada and TD Cares in the U.S. Any financial
relief offered through these channels is not included in the
balances disclosed above.
In addition to direct financial assistance, the Bank continues
to support programs for individuals and businesses introduced by
the Canadian and U.S. governments described below.
Canada Emergency Business
Account Program
Under the Canada Emergency
Business Account (CEBA) Program, with funding provided by Her
Majesty in Right of Canada (the
"Government of Canada") and Export Development Canada
(EDC) as the Government of Canada's agent, the Bank provided eligible
business banking customers with an interest-free, partially
forgivable loan of up to $60,000
until December 31, 2022. If the loan
is not repaid by December 31, 2022,
it will be extended for an additional 3-year term bearing an
interest rate of 5% per annum. The application window for new CEBA
loans and expansion requests closed June 30,
2021. As of July 31, 2021, the Bank had provided
approximately 211,000 customers (April 30,
2021 – 206,000) with CEBA loans and had funded approximately
$11.5 billion (April 30, 2021 –
$11.0 billion) in loans under the
program.
U.S. Coronavirus Aid, Relief, and Economic Security Act,
Paycheck Protection Program
Under the Paycheck Protection Program (PPP) implemented by the
Small Business Administration (SBA), the Bank provides loans to
small businesses to assist them in retaining workers, maintaining
payroll, and covering other expenses. PPP loans have a 2-year or
5-year term, bear an interest rate of 1% per annum, and are 100%
guaranteed by the SBA. The full principal amount of the loan and
any accrued interest are eligible for forgiveness if the loan is
used for qualifying expenses. The Bank will be paid by the SBA for
any portion of the loan that is forgiven. As of July 31, 2021, the Bank had approximately 72,500
PPP loans outstanding (April 30, 2021
– 98,000) with a gross carrying amount of approximately
US$6.3 billion (April 30, 2021 – US$9.8 billion). During the three months
ended July 31, 2021, approximately
2,000 new PPP loans (US$0.2 billion)
were originated (three months ended April
30, 2021 – 45,000 new PPP loans, US$3.4 billion) and approximately 27,500 PPP
loans (US$3.7 billion) were forgiven
(three months ended April 30, 2021 – 26,000 PPP loans,
US$1.1 billion). PPP ended on
May 31, 2021.
Other Programs
The Bank continues to work with federal Crown Corporations,
including EDC and the Business Development Bank of Canada (BDC) to deliver various other
guarantee and co-lending programs for the Bank's clients. This
includes the Highly Affected Sectors Credit Availability Program
(HASCAP) Guarantee to provide support to Canadian businesses that
have been highly affected by and are facing economic hardship as a
result of the COVID-19 pandemic which launched in the second fiscal
quarter. In addition, TD is working with Canada's federal government to facilitate
access to the Canada Recovery Benefit and Canada Emergency Wage Subsidy through Canada
Revenue Agency direct deposit.
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. The Bank also utilizes
non-GAAP financial measures referred to as "adjusted" results to
assess each of its businesses and to measure the Bank's overall
performance. The Bank believes that adjusted results provide the
reader with a better understanding of how management views the
Bank's performance. To arrive at adjusted results, the Bank removes
"items of note", from reported results. The items of note relate to
items which management does not believe are indicative of
underlying business performance. The items of note are disclosed in
Table 3. As explained, adjusted results differ 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.
The Bank's U.S. strategic cards portfolio comprises 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 the
retailers' 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 the provision for credit
losses (PCL). 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. The Corporate segment
reflects the retailer program partners' share of revenues and PCL,
with an offsetting amount reflecting the partners' net share
recorded in Non-interest expenses. This results in no impact to the
Corporate segment reported net income (loss). The U.S. Retail
segment reflects only the portion of revenue and PCL attributable
to TD under the agreements in its reported net income.
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"). 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.
SIGNIFICANT ACQUISITIONS
The Bank completed two acquisitions during the third quarter of
fiscal 2021:
Acquisition of Wells Fargo
& Company's Canadian Direct Equipment Finance
Business
On May 1, 2021, the
Bank acquired the Canadian Direct Equipment Finance business of
Wells Fargo & Company. The results of the acquired business
have been consolidated from the acquisition date and included in
the Canadian Retail segment.
Acquisition of Headlands Tech
Global Markets, LLC
On July 1,
2021, the Bank acquired Headlands Tech Global Markets, LLC,
a Chicago based quantitative fixed
income trading company. The results of the acquired business have
been consolidated from the acquisition date and included in the
Wholesale segment.
These acquisitions were accounted for as business combinations
under the purchase method. The excess of accounting consideration
over the fair value of tangible net assets acquired is allocated to
other intangibles and goodwill. The purchase price allocation is
subject to refinement during the measurement period and may be
adjusted to reflect new information about facts and circumstances
that existed at the acquisition date.
The following table provides the operating results on a reported
basis for the Bank.
TABLE 2: OPERATING
RESULTS – Reported1
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
For the nine
months ended
|
|
|
|
July
31
|
|
April 30
|
|
July 31
|
|
July
31
|
|
July 31
|
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net interest
income
|
$
|
6,004
|
$
|
5,835
|
$
|
6,101
|
$
|
17,869
|
$
|
18,470
|
Non-interest
income
|
|
4,708
|
|
4,393
|
|
4,564
|
|
13,883
|
|
13,332
|
Total
revenue
|
|
10,712
|
|
10,228
|
|
10,665
|
|
31,752
|
|
31,802
|
Provision for
(recovery of) credit losses
|
|
(37)
|
|
(377)
|
|
2,188
|
|
(101)
|
|
6,325
|
Insurance claims and
related expenses
|
|
836
|
|
441
|
|
805
|
|
2,057
|
|
2,256
|
Non-interest
expenses
|
|
5,616
|
|
5,729
|
|
5,307
|
|
17,129
|
|
15,895
|
Income before
income taxes and share of net income from
|
|
|
|
|
|
|
|
|
|
|
|
investment in
Schwab and TD Ameritrade
|
|
4,297
|
|
4,435
|
|
2,365
|
|
12,667
|
|
7,326
|
Provision for
(recovery of) income taxes
|
|
922
|
|
962
|
|
445
|
|
2,711
|
|
1,354
|
Share of net income
from investment in Schwab and TD Ameritrade
|
|
170
|
|
222
|
|
328
|
|
561
|
|
780
|
Net income –
reported
|
|
3,545
|
|
3,695
|
|
2,248
|
|
10,517
|
|
6,752
|
Preferred dividends
and distributions on other equity instruments
|
|
56
|
|
65
|
|
68
|
|
186
|
|
203
|
Net income
available to common shareholders
|
$
|
3,489
|
$
|
3,630
|
$
|
2,180
|
$
|
10,331
|
$
|
6,549
|
|
|
1
|
Certain comparative
amounts have been reclassified to conform with the presentation
adopted in the current period.
|
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
Income1
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
For the nine
months ended
|
|
|
July
31
|
April 30
|
July 31
|
July
31
|
July 31
|
|
2021
|
2021
|
2020
|
2021
|
|
2020
|
Operating results
– adjusted
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
6,004
|
$
|
5,835
|
$
|
6,101
|
$
|
17,869
|
$
|
18,470
|
Non-interest
income
|
|
4,708
|
|
4,393
|
|
4,564
|
|
13,883
|
|
13,332
|
Total
revenue
|
|
10,712
|
|
10,228
|
|
10,665
|
|
31,752
|
|
31,802
|
Provision for
(recovery of) credit losses
|
|
(37)
|
|
(377)
|
|
2,188
|
|
(101)
|
|
6,325
|
Insurance claims and
related expenses
|
|
836
|
|
441
|
|
805
|
|
2,057
|
|
2,256
|
Non-interest
expenses2
|
|
5,576
|
|
5,691
|
|
5,244
|
|
17,011
|
|
15,692
|
Income before income
taxes and share of net income from
|
|
|
|
|
|
|
|
|
|
|
|
investment in Schwab
and TD Ameritrade
|
|
4,337
|
|
4,473
|
|
2,428
|
|
12,785
|
|
7,529
|
Provision for income
taxes
|
|
931
|
|
970
|
|
454
|
|
2,737
|
|
1,384
|
Share of net income
from investment in Schwab and TD Ameritrade3
|
|
222
|
|
272
|
|
353
|
|
735
|
|
853
|
Net income –
adjusted
|
|
3,628
|
|
3,775
|
|
2,327
|
|
10,783
|
|
6,998
|
Preferred dividends
and distributions on other equity instruments
|
|
56
|
|
65
|
|
68
|
|
186
|
|
203
|
Net income
available to common shareholders – adjusted
|
|
3,572
|
|
3,710
|
|
2,259
|
|
10,597
|
|
6,795
|
Pre-tax
adjustments for items of note
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles4
|
|
(68)
|
|
(69)
|
|
(63)
|
|
(211)
|
|
(201)
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(24)
|
|
(19)
|
|
–
|
|
(81)
|
|
–
|
Charges associated
with the acquisition of Greystone2
|
|
–
|
|
–
|
|
(25)
|
|
–
|
|
(75)
|
Less: Impact of
income taxes
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles
|
|
(7)
|
|
(7)
|
|
(9)
|
|
(23)
|
|
(29)
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(2)
|
|
(1)
|
|
–
|
|
(3)
|
|
–
|
Charges associated
with the acquisition of Greystone
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(1)
|
Total adjustments
for items of note
|
|
(83)
|
|
(80)
|
|
(79)
|
|
(266)
|
|
(246)
|
Net income
available to common shareholders – reported
|
$
|
3,489
|
$
|
3,630
|
$
|
2,180
|
$
|
10,331
|
$
|
6,549
|
|
|
1
|
Certain comparative
amounts have been reclassified to conform with the presentation
adopted in the current period.
|
|
|
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 2021: $34 million, Q2 2021: $35 million,
Q1 2021: $39 million, Q3 2020: $38 million, Q2 2020:
$44 million, Q1 2020: $46 million. These charges are
reported in the Corporate segment.
|
|
ii.
|
The Bank's own
integration costs related to the Schwab transaction – Q3 2021: $6
million, Q2 2021: $3 million, Q1 2021: $1 million. These costs
are reported in the Corporate segment.
|
|
iii.
|
Charges associated
with the acquisition of Greystone – Q3 2020: $25 million, Q2 2020:
$26 million, Q1 2020: $24 million. These charges were reported
in the Canadian Retail segment.
|
|
|
3
|
Adjusted share of net
income from investment in Schwab and TD Ameritrade 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 and TD Ameritrade-related acquired intangibles – Q3 2021:
$34 million, Q2 2021: $34 million, Q1 2021: $35 million, Q3 2020:
$25 million, Q2 2020: $24 million, Q1 2020: $24 million;
and
|
|
ii.
|
The Bank's share of
acquisition and integration charges associated with Schwab's
acquisition of TD Ameritrade – 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 and TD
Ameritrade, both 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 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.
|
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
|
|
2021
|
2021
|
2020
|
2021
|
2020
|
Basic earnings per
share – reported
|
$
|
1.92
|
$
|
2.00
|
$
|
1.21
|
$
|
5.69
|
$
|
3.63
|
Adjustments for items
of note2
|
|
0.04
|
|
0.04
|
|
0.04
|
|
0.14
|
|
0.13
|
Basic earnings per
share – adjusted
|
$
|
1.96
|
$
|
2.04
|
$
|
1.25
|
$
|
5.83
|
$
|
3.76
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share – reported
|
$
|
1.92
|
$
|
1.99
|
$
|
1.21
|
$
|
5.68
|
$
|
3.62
|
Adjustments for items
of note2
|
|
0.04
|
|
0.04
|
|
0.04
|
|
0.14
|
|
0.14
|
Diluted earnings
per share – adjusted
|
$
|
1.96
|
$
|
2.04
|
$
|
1.25
|
$
|
5.83
|
$
|
3.76
|
|
|
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.
|
2
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
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 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.
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 is based on 9% Common Equity Tier 1 (CET1) Capital in
fiscal 2021. Capital allocated to the business segments was
decreased to 9% CET1 Capital effective the second quarter of 2020
compared with 10.5% in the first quarter of 2020.
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
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Average common
equity
|
$
|
90,626
|
|
$
|
89,069
|
|
$
|
86,794
|
|
$
|
89,627
|
|
$
|
84,677
|
|
Net income
available to common shareholders – reported
|
|
3,489
|
|
|
3,630
|
|
|
2,180
|
|
|
10,331
|
|
|
6,549
|
|
Items of note, net of
income taxes1
|
|
83
|
|
|
80
|
|
|
79
|
|
|
266
|
|
|
246
|
|
Net income
available to common shareholders – adjusted
|
$
|
3,572
|
|
$
|
3,710
|
|
$
|
2,259
|
|
$
|
10,597
|
|
$
|
6,795
|
|
Return on common
equity – reported
|
|
15.3
|
%
|
|
16.7
|
%
|
|
10.0
|
%
|
|
15.4
|
%
|
|
10.3
|
%
|
Return on common
equity – adjusted
|
|
15.6
|
|
|
17.1
|
|
|
10.4
|
|
|
15.8
|
|
|
10.7
|
|
|
|
1
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
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 TD Ameritrade 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. Adjusted ROTCE provides a useful
measure of the performance of the Bank's income producing assets,
independent of whether they were acquired or developed internally.
TCE, ROTCE, and adjusted ROTCE are each non-GAAP financial measures
and are not defined terms under IFRS. Readers are cautioned that
earnings and other measures adjusted to a basis other than IFRS do
not have standardized meanings under IFRS and, therefore, may not
be comparable to similar terms used by other issuers.
TABLE 6: 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
|
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Average common
equity
|
$
|
90,626
|
|
$
|
89,069
|
|
$
|
86,794
|
|
$
|
89,627
|
|
$
|
84,677
|
|
Average
goodwill
|
|
16,056
|
|
|
16,320
|
|
|
17,534
|
|
|
16,395
|
|
|
17,327
|
|
Average imputed
goodwill and intangibles on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investments in Schwab
and TD Ameritrade
|
|
6,485
|
|
|
6,670
|
|
|
4,184
|
|
|
6,695
|
|
|
4,158
|
|
Average other
acquired intangibles1
|
|
419
|
|
|
366
|
|
|
492
|
|
|
404
|
|
|
529
|
|
Average related
deferred tax liabilities
|
|
(171)
|
|
|
(167)
|
|
|
(264)
|
|
|
(171)
|
|
|
(263)
|
|
Average tangible
common equity
|
|
67,837
|
|
|
65,880
|
|
|
64,848
|
|
|
66,304
|
|
|
62,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
to common shareholders – reported
|
|
3,489
|
|
|
3,630
|
|
|
2,180
|
|
|
10,331
|
|
|
6,549
|
|
Amortization of
acquired intangibles, net of income taxes2
|
|
61
|
|
|
62
|
|
|
54
|
|
|
188
|
|
|
172
|
|
Net income
available to common shareholders adjusted for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization of
acquired intangibles, net of income taxes
|
|
3,550
|
|
|
3,692
|
|
|
2,234
|
|
|
10,519
|
|
|
6,721
|
|
Other items of note,
net of income taxes2
|
|
22
|
|
|
18
|
|
|
25
|
|
|
78
|
|
|
74
|
|
Net income
available to common shareholders – adjusted
|
$
|
3,572
|
|
$
|
3,710
|
|
$
|
2,259
|
|
$
|
10,597
|
|
$
|
6,795
|
|
Return on tangible
common equity
|
|
20.8
|
%
|
|
23.0
|
%
|
|
13.7
|
%
|
|
21.2
|
%
|
|
14.3
|
%
|
Return on tangible
common equity – adjusted
|
|
20.9
|
|
|
23.1
|
|
|
13.9
|
|
|
21.4
|
|
|
14.4
|
|
|
|
1
|
Excludes intangibles
relating to software and asset servicing rights.
|
2
|
For explanations of
items of note, refer to 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 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 including the Bank's response to COVID-19,
the "Business Focus" section in the Bank's 2020 MD&A, and Note
29 Segmented Information of the Bank's Consolidated Financial
Statements for the year ended October 31, 2020.
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 $37 million, compared with
$37 million in the prior quarter and $47 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
|
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net interest
income
|
$
|
3,044
|
|
$
|
2,873
|
|
$
|
2,910
|
|
$
|
8,895
|
|
$
|
9,079
|
|
Non-interest
income
|
|
3,535
|
|
|
3,189
|
|
|
3,116
|
|
|
10,091
|
|
|
9,225
|
|
Total
revenue
|
|
6,579
|
|
|
6,062
|
|
|
6,026
|
|
|
18,986
|
|
|
18,304
|
|
Provision for
(recovery of) credit losses – impaired
|
|
154
|
|
|
191
|
|
|
372
|
|
|
512
|
|
|
1,057
|
|
Provision for
(recovery of) credit losses – performing
|
|
(54)
|
|
|
(228)
|
|
|
579
|
|
|
(307)
|
|
|
1,438
|
|
Total provision for
(recovery of) credit losses
|
|
100
|
|
|
(37)
|
|
|
951
|
|
|
205
|
|
|
2,495
|
|
Insurance claims and
related expenses
|
|
836
|
|
|
441
|
|
|
805
|
|
|
2,057
|
|
|
2,256
|
|
Non-interest expenses
– reported
|
|
2,748
|
|
|
2,689
|
|
|
2,533
|
|
|
8,091
|
|
|
7,757
|
|
Non-interest expenses
– adjusted1
|
|
2,748
|
|
|
2,689
|
|
|
2,508
|
|
|
8,091
|
|
|
7,682
|
|
Provision for
(recovery of) income taxes – reported
|
|
770
|
|
|
787
|
|
|
474
|
|
|
2,289
|
|
|
1,572
|
|
Provision for
(recovery of) income taxes – adjusted1
|
|
770
|
|
|
787
|
|
|
474
|
|
|
2,289
|
|
|
1,573
|
|
Net income –
reported
|
|
2,125
|
|
|
2,182
|
|
|
1,263
|
|
|
6,344
|
|
|
4,224
|
|
Net income –
adjusted1
|
$
|
2,125
|
|
$
|
2,182
|
|
$
|
1,288
|
|
$
|
6,344
|
|
$
|
4,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity – reported2
|
|
47.6
|
%
|
|
51.3
|
%
|
|
28.3
|
%
|
|
48.3
|
%
|
|
31.0
|
%
|
Return on common
equity – adjusted1,2
|
|
47.6
|
|
|
51.3
|
|
|
28.8
|
|
|
48.3
|
|
|
31.5
|
|
Net interest margin
(including on securitized assets)
|
|
2.61
|
|
|
2.61
|
|
|
2.68
|
|
|
2.62
|
|
|
2.82
|
|
Efficiency ratio –
reported
|
|
41.8
|
|
|
44.4
|
|
|
42.0
|
|
|
42.6
|
|
|
42.4
|
|
Efficiency ratio –
adjusted1
|
|
41.8
|
|
|
44.4
|
|
|
41.6
|
|
|
42.6
|
|
|
42.0
|
|
Assets under
administration (billions of Canadian dollars)
|
$
|
538
|
|
$
|
514
|
|
$
|
434
|
|
$
|
538
|
|
$
|
434
|
|
Assets under
management (billions of Canadian dollars)
|
|
420
|
|
|
397
|
|
|
366
|
|
|
420
|
|
|
366
|
|
Number of Canadian
retail branches
|
|
1,073
|
|
|
1,085
|
|
|
1,087
|
|
|
1,073
|
|
|
1,087
|
|
Average number of
full-time equivalent staff
|
|
41,763
|
|
|
41,064
|
|
|
40,652
|
|
|
41,181
|
|
|
40,921
|
|
|
|
1
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
2
|
Capital allocated to
the business segment was reduced to 9% CET1 effective the second
quarter of 2020 compared with 10.5% in the first quarter of
2020.
|
Quarterly comparison – Q3 2021 vs. Q3 2020
Canadian Retail reported net income for the quarter was
$2,125 million, an increase of
$862 million, or 68%, compared with
the third quarter last year, reflecting lower PCL and higher
revenue, partially offset by higher non-interest expenses. On an
adjusted basis, net income increased $837
million, or 65%. The reported and adjusted annualized ROE
for the quarter was 47.6%, compared with 28.3% and 28.8%,
respectively, 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 $6,579 million, an
increase of $553 million, or 9%, compared with the third
quarter last year.
Net interest income was $3,044 million, an increase of
$134 million, or 5%, compared with the third quarter last
year, reflecting volume growth, partially offset by lower deposit
margins. Average loan volumes increased $33 billion, or 7%,
reflecting 8% growth in personal loans and 7% growth in business
loans. Average deposit volumes increased $52 billion, or 13%,
reflecting 10% growth in personal deposits, 19% growth in business
deposits, and 15% growth in wealth deposits. Net interest margin
was 2.61%, a decrease of 7 bps, reflecting changes to balance sheet
mix.
Non-interest income was $3,535 million, an increase of
$419 million, or 13%, reflecting higher fee-based revenue in
the banking and wealth businesses, and higher insurance volumes,
partially offset by a decrease in the fair value of investments
supporting claims liabilities which resulted in a similar decrease
in insurance claims.
Assets under administration (AUA) were $538 billion as at July
31, 2021, an increase of $104
billion, or 24%, and Assets under management (AUM) were
$420 billion as at July 31,
2021, an increase of $54
billion, or 15%, compared with the third quarter last year,
both reflecting market appreciation and new asset growth.
PCL was $100 million, a decrease
of $851 million compared with the
third quarter last year. PCL – impaired for the quarter was
$154 million, a decrease of
$218 million, or 59%, across the
consumer and commercial lending portfolios, largely related to the
continued impact of government economic support programs. PCL –
performing was a recovery of $54
million, lower by $633
million, reflecting a performing allowance increase in the
prior year and a release this quarter largely related to improved
credit conditions. Total PCL as an annualized percentage of credit
volume was 0.08%, a decrease of 78 bps compared with the third
quarter last year.
Insurance claims and related expenses for the quarter were
$836 million, an increase of
$31 million, or 4%, compared with the
third quarter last year reflecting higher current year claims from
business growth, partially offset by a decrease in the fair value
of investments supporting claims liabilities which resulted in a
similar decrease in non-interest income.
Reported non-interest expenses for the quarter were $2,748 million, an increase of $215 million, or 8%, compared with the third
quarter last year, reflecting higher spend supporting business
growth, including volume-driven and employee-related expenses, and
technology and marketing costs, partially offset by prior year
charges related to the Greystone acquisition. On an adjusted basis,
non-interest expenses increased $240
million, or 10%, compared with the third quarter last
year.
The reported and adjusted efficiency ratio for the quarter was
41.8%, compared with 42.0% and 41.6%, respectively, in the third
quarter last year.
Quarterly comparison – Q3 2021 vs. Q2 2021
Canadian Retail net income of $2,125
million decreased $57 million,
or 3%, compared with the prior quarter, reflecting higher insurance
claims, PCL and non-interest expenses, partially offset by revenue
growth. The annualized ROE for the quarter was 47.6%, compared with
51.3%, in the prior quarter.
Revenue increased $517 million, or 9%, compared with the
prior quarter. Net interest income increased $171 million, or 6%, largely reflecting volume
growth and the effect of more days in the third quarter. Average
loan volumes increased $13 billion,
or 3%, reflecting 2% growth in personal loans and 5% growth in
business loans. Average deposit volumes increased $11 billion,
or 3%, reflecting 2% growth in personal deposits, 4% growth in
business deposits, and a 2% decrease in wealth deposits. Net
interest margin was 2.61%, flat to the prior quarter.
Non-interest income increased $346 million, or 11%,
reflecting higher fee-based revenue in the wealth and banking
businesses, prior quarter premium rebates for customers in the
insurance business, and an increase in the fair value of
investments supporting claims liabilities which resulted in a
similar increase in insurance claims, partially offset by lower
transaction revenue in the wealth business.
AUA increased $24 billion, or 5%,
and AUM increased $23 billion, or 6%, compared with the prior
quarter, reflecting market appreciation and new asset growth.
PCL was $100 million, compared
with a recovery of $37 million in the
prior quarter. PCL – impaired decreased $37
million, or 19%, primarily reflected in the commercial
lending portfolio. PCL – performing was a recovery of $54 million compared with a recovery of
$228 million in the prior quarter,
reflecting continued improvement in credit conditions. Total PCL as
an annualized percentage of credit volume was 0.08%, an increase of
11 bps.
Insurance claims and related expenses for the quarter increased
$395 million, or 90%, compared with
the prior quarter, reflecting higher current year claims, less
favourable prior years' claims development, an increase in the fair
value of investments supporting claims liabilities which resulted
in a similar increase in non-interest income, and more severe
weather-related events.
Non-interest expenses increased $59
million, or 2%, compared with the prior quarter reflecting
higher volume-driven and employee-related expenses.
The efficiency ratio was 41.8%, compared with 44.4%, in the
prior quarter.
Year-to-date comparison – Q3 2021 vs. Q3 2020
Canadian Retail reported net income for the nine months ended
July 31, 2021 was $6,344 million, an increase of $2,120 million, or 50%, compared with same period
last year, reflecting lower PCL and higher revenue, partially
offset by higher non-interest expenses. On an adjusted basis, net
income increased $2,046 million,
or 48%. The reported and adjusted annualized ROE for the period was
48.3%, compared with 31.0% and 31.5%, respectively, in the same
period last year.
Revenue for the period was $18,986
million, an increase of $682
million, or 4%, compared with same period last year. Net
interest income decreased $184 million, or 2%, reflecting
lower deposit margins, partially offset by volume growth. Average
loan volumes increased $23 billion, or 5%, reflecting 6%
growth in personal loans and 4% growth in business loans. Average
deposit volumes increased $66
billion, or 18%, reflecting 13% growth in personal deposits,
24% growth in business deposits, and 28% growth in wealth deposits.
Net interest margin was 2.62%, a decrease of 20 bps, reflecting
lower rates and changes to balance sheet mix.
Non-interest income increased $866
million, or 9%, reflecting higher transaction and fee-based
revenue in the wealth and banking businesses and higher insurance
volumes, partially offset by a decrease in the fair value of
investments supporting claims liabilities which resulted in a
similar decrease in insurance claims and the impact of premium
rebates for customers in the insurance business.
PCL was $205 million, a decrease
of $2,290 million compared with the
same period last year. PCL – impaired was $512 million, a decrease of $545 million, or 52%, primarily in the consumer
and commercial lending portfolios, largely related to the continued
impact of government economic support programs. PCL – performing
was a recovery of $307 million, lower
by $1,745 million, reflecting a
performing allowance increase in the prior year and an allowance
release this year largely related to an improvement in the economic
outlook. Total PCL as an annualized percentage of credit volume was
0.06%, a decrease of 70 bps.
Insurance claims and related expenses were $2,057 million, a decrease of $199 million, or 9%, compared with the same
period last year, reflecting a decrease in the fair value of
investments supporting claims liabilities which resulted in a
similar decrease in non-interest income, lower current year claims,
more favourable prior years' claims development, and fewer severe
weather-related events.
Reported non-interest expenses were $8,091 million, an increase of $334 million, or 4%, compared with the same
period last year. The increase primarily reflects higher spend
supporting business growth, including volume-driven and
employee-related expenses and technology costs, partially offset by
prior year charges related to the Greystone acquisition. On an
adjusted basis, non-interest expenses increased $409 million
or 5%.
The reported and adjusted efficiency ratios for the period were
42.6%, compared with 42.4% and 42.0%, respectively, 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
|
|
2021
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Net interest
income
|
$
|
1,990
|
|
$
|
1,950
|
|
$
|
2,256
|
|
$
|
5,971
|
|
$
|
6,763
|
|
Non-interest
income
|
|
691
|
|
|
663
|
|
|
595
|
|
|
2,007
|
|
|
1,792
|
|
Total
revenue
|
|
2,681
|
|
|
2,613
|
|
|
2,851
|
|
|
7,978
|
|
|
8,555
|
|
Provision for
(recovery of) credit losses – impaired
|
|
63
|
|
|
117
|
|
|
290
|
|
|
370
|
|
|
850
|
|
Provision for
(recovery of) credit losses – performing
|
|
(159)
|
|
|
(330)
|
|
|
607
|
|
|
(544)
|
|
|
1,503
|
|
Total provision for
(recovery of) credit losses
|
|
(96)
|
|
|
(213)
|
|
|
897
|
|
|
(174)
|
|
|
2,353
|
|
Non-interest
expenses
|
|
1,518
|
|
|
1,594
|
|
|
1,646
|
|
|
4,800
|
|
|
4,919
|
|
Provision for
(recovery of) income taxes
|
|
161
|
|
|
162
|
|
|
(48)
|
|
|
393
|
|
|
(120)
|
|
U.S. Retail Bank
net income
|
|
1,098
|
|
|
1,070
|
|
|
356
|
|
|
2,959
|
|
|
1,403
|
|
Share of net income
from investment in Schwab and TD
Ameritrade1,2
|
|
197
|
|
|
246
|
|
|
317
|
|
|
652
|
|
|
752
|
|
Net
income
|
$
|
1,295
|
|
$
|
1,316
|
|
$
|
673
|
|
$
|
3,611
|
|
$
|
2,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
1,619
|
|
$
|
1,548
|
|
$
|
1,648
|
|
$
|
4,746
|
|
$
|
4,995
|
|
Non-interest
income
|
|
561
|
|
|
528
|
|
|
437
|
|
|
1,596
|
|
|
1,331
|
|
Total
revenue
|
|
2,180
|
|
|
2,076
|
|
|
2,085
|
|
|
6,342
|
|
|
6,326
|
|
Provision for
(recovery of) credit losses – impaired
|
|
53
|
|
|
91
|
|
|
211
|
|
|
291
|
|
|
627
|
|
Provision for
(recovery of) credit losses – performing
|
|
(127)
|
|
|
(264)
|
|
|
444
|
|
|
(435)
|
|
|
1,085
|
|
Total provision for
(recovery of) credit losses
|
|
(74)
|
|
|
(173)
|
|
|
655
|
|
|
(144)
|
|
|
1,712
|
|
Non-interest
expenses
|
|
1,233
|
|
|
1,267
|
|
|
1,205
|
|
|
3,813
|
|
|
3,633
|
|
Provision for
(recovery of) income taxes
|
|
130
|
|
|
129
|
|
|
(35)
|
|
|
314
|
|
|
(83)
|
|
U.S. Retail Bank
net income
|
|
891
|
|
|
853
|
|
|
260
|
|
|
2,359
|
|
|
1,064
|
|
Share of net income
from investment in Schwab and TD
Ameritrade1,2
|
|
161
|
|
|
194
|
|
|
230
|
|
|
516
|
|
|
556
|
|
Net
income
|
$
|
1,052
|
|
$
|
1,047
|
|
$
|
490
|
|
$
|
2,875
|
|
$
|
1,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity3
|
|
13.8
|
%
|
|
13.9
|
%
|
|
6.7
|
%
|
|
12.5
|
%
|
|
7.3
|
%
|
Net interest
margin4
|
|
2.16
|
|
|
2.15
|
|
|
2.50
|
|
|
2.18
|
|
|
2.83
|
|
Efficiency
ratio
|
|
56.6
|
|
|
61.0
|
|
|
57.8
|
|
|
60.1
|
|
|
57.4
|
|
Assets under
administration (billions of U.S. dollars)
|
$
|
29
|
|
$
|
27
|
|
$
|
23
|
|
$
|
29
|
|
$
|
23
|
|
Assets under
management (billions of U.S. dollars)
|
|
41
|
|
|
44
|
|
|
40
|
|
|
41
|
|
|
40
|
|
Number of U.S. retail
stores
|
|
1,142
|
|
|
1,141
|
|
|
1,220
|
|
|
1,142
|
|
|
1,220
|
|
Average number of
full-time equivalent staff
|
|
25,047
|
|
|
25,892
|
|
|
26,408
|
|
|
25,756
|
|
|
26,353
|
|
|
|
1
|
The Bank's share of
Schwab's and TD Ameritrade's earnings is reported with a one-month
lag. Refer to Note 7 of the Interim Consolidated Financial
Statements for further details.
|
2
|
The after-tax amounts
for amortization of acquired intangibles and the Bank's share of
acquisition and integration charges associated with Schwab's
acquisition of TD Ameritrade are recorded in the Corporate
segment.
|
3
|
Capital allocated to
the business segment was reduced to 9% CET1 effective the second
quarter of 2020 compared with 10.5% in the first quarter of
2020.
|
4
|
Net interest margin
excludes the impact related to sweep deposits arrangements and the
impact of intercompany deposits and cash collateral. In addition,
the value of tax-exempt interest income is adjusted to its
equivalent before-tax value.
|
Quarterly comparison – Q3 2021 vs. Q3 2020
U.S. Retail net income for the quarter was $1,295 million (US$1,052
million), an increase of $622
million (US$562 million), or
92% (115% in U.S. dollars) compared with the third quarter last
year. The annualized ROE for the quarter was 13.8%, compared with
6.7%, 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. Net income for the
quarter from the U.S. Retail Bank and the Bank's investment in
Schwab was $1,098 million
(US$891 million) and $197 million (US$161
million), respectively.
The contribution from Schwab of US$161
million decreased US$69
million, or 30%, compared with the contribution from TD
Ameritrade in the third quarter last year.
U.S. Retail Bank net income of US$891
million increased US$631
million, primarily reflecting lower PCL and higher revenue,
partially offset by higher expenses.
U.S. Retail Bank revenue is derived from the personal and
business banking and wealth management businesses. Revenue for the
quarter was US$2,180 million, an
increase of US$95 million, or 5%,
compared with the third quarter last year. Net interest income
decreased US$29 million, or 2%, as
lower deposit margins more than offset growth in deposit volumes
and higher income from PPP loans, including accelerated fee
amortization from loan forgiveness. Net interest margin was 2.16%,
a decrease of 34 bps, reflecting continued deposit margin
compression and balance sheet mix. Non-interest income increased
US$124 million, or 28%, compared with the third quarter last
year, primarily reflecting fee income growth from increased
customer activity, and lower losses on low-income housing
investments.
Average loan volumes decreased US$9
billion, or 5%, compared with the third quarter last year.
Personal loans decreased 1%, primarily reflecting lower home equity
and credit card balances. Business loans decreased 8%, reflecting
paydowns and lower line usage on commercial loans, partially offset
by higher average PPP loan volumes. Average deposit volumes
increased US$35 billion, or 10%,
reflecting an 18% increase in personal deposits, a 13% increase in
business deposits, and a 3% increase in sweep deposits.
AUA were US$29 billion as at
July 31, 2021, an increase of
US$6 billion, or 26%, compared with
the third quarter last year, reflecting net asset growth. AUM were
US$41 billion as at July 31, 2021, an increase of US$1 billion, or 3%, compared with the third
quarter last year, reflecting market appreciation, partially offset
by net asset outflows.
PCL for the quarter was a recovery of US$74 million, lower by US$729 million compared with the third quarter
last year. PCL – impaired was US$53
million,
a decrease of US$158 million, or
75%, primarily reflected in the consumer lending portfolios,
largely related to the continued impact of government economic
support programs. PCL – performing was a recovery of US$127 million, lower by US$571 million, reflecting a performing allowance
increase in the prior year and a release this quarter largely
related to 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 -0.18%, lower by
169 bps, compared with the third quarter last year.
Non-interest expenses for the quarter were US$1,233 million, an increase of US$28 million, or 2%, compared with the third
quarter last year, primarily reflecting higher investment in the
business and employee-related expenses, partially offset by
productivity savings.
The efficiency ratio for the quarter was 56.6%, compared with
57.8%, in the third quarter last year.
Quarterly comparison – Q3 2021 vs. Q2 2021
U.S. Retail net income of $1,295
million (US$1,052 million)
decreased CAD$21 million (increased
US$5 million). The annualized
ROE for the quarter was 13.8%, compared with 13.9% in the prior
quarter.
The contribution from Schwab of US$161
million decreased US$33
million, or 17%, reflecting lower earnings.
U.S. Retail Bank net income of US$891
million increased US$38
million, or 4%, compared with the prior quarter, primarily
reflecting higher revenue and lower expenses, partially offset by a
smaller recovery of credit losses.
Revenue for the quarter increased US$104
million, or 5%, compared with the prior quarter. Net
interest income increased US$71
million, or 5%, reflecting the effect of more days in the
third quarter, higher average deposit volume excluding sweep
deposits, and accelerated fee amortization from PPP loan
forgiveness, partially offset by continued deposit margin
compression. Net interest margin was 2.16%, an increase of 1 bps.
Non-interest income increased US$33
million, or 6%, primarily reflecting higher fee income
growth from increased customer activity, and lower losses on
low-income housing investments.
Average loan volumes decreased US$3
billion, or 1%, compared with the prior quarter. Personal
loans decreased 1%, primarily reflecting lower home equity and
residential mortgage balances. Business loans decreased 2%,
primarily reflecting paydowns, lower line usage on commercial
loans, and a decline in PPP loan volumes from forgiveness. Average
deposit volumes were flat compared with the prior quarter
reflecting a 3% increase in personal and business deposits, offset
by a 5% decrease in sweep deposits.
AUA were US$29 billion as at
July 31, 2021, an increase of
US$2 billion, or 7%, compared with
the prior quarter, reflecting net asset growth. AUM were
US$41 billion as at July 31, 2021, a decrease of
US$3 billion, or 7%, reflecting net
asset outflows, partially offset by market appreciation.
PCL was a recovery of US$74
million compared with a recovery of US$173 million in the prior quarter. PCL –
impaired decreased US$38 million, or
42%, largely related to the continued impact of government economic
support programs. PCL – performing was a recovery of US$127 million, compared with a recovery of
US$264 million in the prior quarter,
reflecting continued improvement in 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
-0.18%, higher by 23 bps.
Non-interest expenses for the quarter were US$1,233 million, a decrease of US$34 million, or 3%, primarily reflecting store
optimization costs in the prior quarter, partially offset by more
days in the quarter.
The efficiency ratio for the quarter was 56.6%, compared with
61.0% in the prior quarter.
Year-to-date comparison – Q3 2021 vs. Q3 2020
U.S. Retail net income for the nine months ended July 31, 2021, was $3,611
million (US$2,875 million), an
increase of $1,456 million
(US$1,255 million), or 68% (77% in
U.S. dollars), compared with the same period last year. The
annualized ROE for the period was 12.5%, compared with 7.3%, in the
same period last year. Net income from the U.S. Retail Bank and the
Bank's investment in Schwab was $2,959
million (US$2,359 million) and $652 million
(US$516 million), respectively.
The contribution from Schwab was US$516
million, a decrease of US$40
million, or 7%, compared with the contribution from TD
Ameritrade for the same period last year.
U.S. Retail Bank net income for the period was US$2,359 million, an increase of US$1,295 million, or 122%, compared with the same
period last year, reflecting lower PCL and higher non-interest
income, partially offset by lower net interest income and higher
expenses.
Revenue for the period was US$6,342
million, an increase of US$16
million compared with same period last year. Net interest
income decreased US$249 million, or
5%, as lower deposit margins more than offset growth in deposit
volume and higher income from PPP loans, including accelerated fee
amortization from loan forgiveness. Net interest margin was
2.18%, a decrease of 65 bps, primarily reflecting deposit margin
compression and balance sheet mix. Non-interest income increased
US$265 million, or 20%, reflecting
fee income growth from increased customer activity, lower losses on
low-income housing investments, higher valuation of certain
investments, and higher gains on the sale of mortgage loans.
Average loan volumes increased US$1
billion compared with the same period last year. Personal
loans decreased 1%, as growth in residential mortgages and auto
loans was offset by historically high payment rates on credit cards
and decline in home equity. Business loans increased 1%, as higher
PPP originations were partially offset by paydowns and lower line
usage on commercial loans, and PPP loan forgiveness. Average
deposit volumes increased US$65
billion, or 21%, reflecting a 26% increase in business
deposit volumes, a 20% increase in personal deposit volumes, and an
18% increase in sweep deposit volumes.
PCL was a recovery of US$144
million, lower by US$1,856
million compared with the same period last year. PCL –
impaired was US$291 million, a
decrease of US$336 million, or 54%,
primarily reflected in the consumer lending portfolios, largely
related to the continued impact of government economic support
programs. PCL – performing was a recovery of US$435 million, lower by US$1,520 million, reflecting a performing
allowance increase in the prior year and a release this period
largely related to an improvement in the economic outlook. 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 -0.10%, a decrease of 150 bps.
Non-interest expenses for the period were US$3,813 million, an increase of US$180 million, or 5%, compared with the same
period last year, reflecting US$125
million in store optimization costs and higher
employee-related expenses, partially offset by lower legal
provisions and productivity savings.
The efficiency ratio for the period was 60.1%, compared with
57.4%, 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
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net interest income
(TEB)
|
$
|
632
|
|
$
|
648
|
|
$
|
531
|
|
$
|
1,941
|
|
$
|
1,381
|
|
Non-interest
income
|
|
451
|
|
|
509
|
|
|
866
|
|
|
1,609
|
|
|
2,323
|
|
Total
revenue
|
|
1,083
|
|
|
1,157
|
|
|
1,397
|
|
|
3,550
|
|
|
3,704
|
|
Provision for
(recovery of) credit losses – impaired
|
|
–
|
|
|
12
|
|
|
52
|
|
|
22
|
|
|
298
|
|
Provision for
(recovery of) credit losses – performing
|
|
2
|
|
|
(75)
|
|
|
71
|
|
|
(63)
|
|
|
216
|
|
Total provision for
(recovery of) credit losses
|
|
2
|
|
|
(63)
|
|
|
123
|
|
|
(41)
|
|
|
514
|
|
Non-interest
expenses
|
|
635
|
|
|
705
|
|
|
669
|
|
|
2,051
|
|
|
1,937
|
|
Provision for
(recovery of) income taxes (TEB)
|
|
116
|
|
|
132
|
|
|
163
|
|
|
390
|
|
|
321
|
|
Net
income
|
$
|
330
|
|
$
|
383
|
|
$
|
442
|
|
$
|
1,150
|
|
$
|
932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading-related
revenue (TEB)
|
$
|
467
|
|
$
|
558
|
|
$
|
942
|
|
$
|
1,769
|
|
$
|
2,179
|
|
Average gross lending
portfolio (billions of Canadian dollars)1
|
|
59.9
|
|
|
60.3
|
|
|
69.4
|
|
|
59.6
|
|
|
63.3
|
|
Return on common
equity2
|
|
15.7
|
%
|
|
20.0
|
%
|
|
19.7
|
%
|
|
19.0
|
%
|
|
14.9
|
%
|
Efficiency
ratio
|
|
58.6
|
|
|
60.9
|
|
|
47.9
|
|
|
57.8
|
|
|
52.3
|
|
Average number of
full-time equivalent staff
|
|
4,839
|
|
|
4,757
|
|
|
4,632
|
|
|
4,758
|
|
|
4,566
|
|
|
|
1
|
Includes gross loans
and bankers' acceptances relating to Wholesale Banking, excluding
letters of credit, cash collateral, credit default swaps (CDS), and
allowance for credit losses.
|
2
|
Capital allocated to
the business segment was reduced to 9% CET1 effective the second
quarter of 2020 compared with 10.5% in the first quarter of
2020.
|
Quarterly comparison – Q3 2021 vs. Q3 2020
Wholesale Banking net income for the quarter was $330 million, a decrease of $112 million, or 25%, compared with the third
quarter last year, reflecting lower revenue, partially offset by
lower PCL and lower non-interest expenses.
Wholesale Banking revenue is derived primarily from capital
markets and corporate and investment banking services provided to
corporate, government, and institutional clients. Wholesale Banking
generates revenue from corporate lending, advisory, underwriting,
sales, trading and research, client securitization, trade finance,
cash management, prime services, and trade execution services.
Revenue for the quarter was $1,083
million, a decrease of $314
million, or 22%, compared with the third quarter last year,
primarily reflecting lower trading-related revenue, partially
offset by higher other revenue and advisory fees.
PCL for the quarter was $2
million, a decrease of $121
million compared with the third quarter last year. PCL –
impaired was nil, a decrease of $52
million reflecting credit migration in the prior year. PCL –
performing was $2 million, a decrease
of $69 million, reflecting a
performing allowance increase in the prior year.
Non-interest expenses were $635
million, a decrease of $34
million, or 5%, compared with the third quarter last year,
primarily reflecting lower variable compensation, partially offset
by higher employee-related costs from continued investment in
Wholesale Banking's U.S. dollar strategy.
Quarterly comparison – Q3 2021 vs. Q2 2021
Wholesale Banking net income for the quarter was $330 million, a decrease of $53 million, or 14%, compared with the prior
quarter, reflecting lower revenue and higher PCL, partially offset
by lower non-interest expenses.
Revenue for the quarter decreased $74
million, or 6%, primarily reflecting lower trading-related
revenue, partially offset by higher advisory fees.
PCL was $2 million, compared with
a recovery of $63 million in the
prior quarter. PCL – impaired was nil, a decrease of $12 million. PCL – performing was
$2 million, compared with a recovery of $75 million in the prior quarter.
Non-interest expenses for the quarter decreased $70 million, or 10%, primarily reflecting lower
variable compensation.
Year-to-date comparison – Q3 2021 vs. Q3 2020
Wholesale Banking net income for the nine months ended July 31, 2021 was $1,150
million, an increase of $218
million, or 23%, compared with the same period last year,
reflecting lower PCL, partially offset by lower revenue and higher
non-interest expenses.
Revenue was $3,550 million, a
decrease of $154 million, or 4%,
compared with the same period last year, reflecting lower
trading-related revenue, partially offset by higher loan, equity
underwriting, and advisory fees.
PCL was a recovery of $41 million,
lower by $555 million compared with
the same period last year. PCL – impaired was $22 million, a decrease of $276 million
primarily reflecting credit migration in the prior year. PCL –
performing was a recovery of $63
million, lower by $279 million
reflecting a performing allowance increase in the prior year, and a
release this year largely related to an improvement in the economic
outlook.
Non-interest expenses were $2,051
million, an increase of $114
million, or 6%, compared with the same period last year,
primarily reflecting higher employee-related costs from continued
investment in Wholesale Banking's U.S. dollar strategy.
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
|
|
2021
|
2021
|
2020
|
2021
|
|
2020
|
Net income (loss)
– reported
|
$
|
(205)
|
$
|
(186)
|
$
|
(130)
|
$
|
(588)
|
$
|
(559)
|
Adjustments for
items of note1
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles before income taxes
|
|
68
|
|
69
|
|
63
|
|
211
|
|
201
|
Acquisition and
integration charges related to the Schwab transaction
|
|
24
|
|
19
|
|
–
|
|
81
|
|
–
|
Less: impact of
income taxes
|
|
9
|
|
8
|
|
9
|
|
26
|
|
29
|
Net income (loss)
– adjusted
|
$
|
(122)
|
$
|
(106)
|
$
|
(76)
|
$
|
(322)
|
$
|
(387)
|
|
|
|
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) – adjusted
|
|
|
|
|
|
|
|
|
|
|
Net corporate
expenses
|
$
|
(169)
|
$
|
(186)
|
$
|
(153)
|
$
|
(537)
|
$
|
(531)
|
Other
|
|
47
|
|
80
|
|
77
|
|
215
|
|
144
|
Net income (loss)
– adjusted
|
$
|
(122)
|
$
|
(106)
|
$
|
(76)
|
$
|
(322)
|
$
|
(387)
|
|
|
|
|
|
|
|
|
|
|
|
Selected
volumes
|
|
|
|
|
|
|
|
|
|
|
Average number of
full-time equivalent staff
|
|
17,657
|
|
17,736
|
|
17,889
|
|
17,704
|
|
17,726
|
|
|
1
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
Quarterly comparison – Q3 2021 vs. Q3 2020
Corporate segment's reported net loss for the quarter was
$205 million, compared with a
reported net loss of $130 million in
the third quarter last year. The year-over-year increase reflects a
lower contribution from other items, acquisition and integration
charges related to the Schwab transaction, and higher net corporate
expenses. The decrease in other items primarily reflects lower
revenue from treasury and balance sheet management activities this
quarter and the impact of tax items in the prior year. Net
corporate expenses increased $16
million compared to the same quarter last year. The adjusted
net loss for the quarter was $122 million, compared with an
adjusted net loss of $76 million in
the third quarter last year.
Quarterly comparison – Q3 2021 vs. Q2 2021
Corporate segment's reported net loss for the quarter was
$205 million, compared with a
reported net loss of $186 million in
the prior quarter. The quarter-over-quarter increase reflects a
lower contribution from other items, partially offset by lower net
corporate expenses. The decrease in other items primarily reflects
lower revenue from treasury and balance sheet management activities
this quarter. Net corporate expenses decreased $17 million compared to the prior quarter. The
adjusted net loss for the quarter was $122
million, compared with an adjusted net loss of $106 million in the prior quarter.
Year-to-date comparison – Q3 2021 vs. Q3 2020
Corporate segment's reported net loss for the nine months ended
July 31, 2021 was $588 million, compared with a reported net loss
of $559 million in the same period
last year. The $29 million increase
primarily reflects acquisition and integration charges related to
the Schwab transaction, partially offset by a higher contribution
from other items. Other items increased $71
million, largely reflecting higher revenue from treasury and
balance sheet management activities in the current period. Net
corporate expenses increased $6
million compared to the same period last year. Adjusted net
loss for the nine months ended July 31,
2021 was $322 million,
compared with an adjusted net loss of $387
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: AST Trust Company
(Canada)
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@astfinancial.com or
www.astfinancial.com/ca-en
|
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.
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 call in Toronto, Ontario on August 26, 2021. 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 the 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 26, 2021 by approximately
1:30 p.m. ET. 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 26,
2021, until 11:59 p.m. ET on
September 10, 2021 by calling
905-694-9451 or 1-800-408-3053 (toll free). The passcode is
7300743#.
Annual Meeting
Thursday, April
14, 2022
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 fifth largest bank in North America by assets and serves more than
26 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$1.7 trillion in
assets on July 31, 2021. The
Toronto-Dominion Bank trades under the symbol "TD" on the
Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group