This quarterly
Earnings News Release should be read in conjunction with the Bank's
unaudited second quarter 2019 Report to Shareholders for the three
and six months ended April 30, 2019, 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 May 22, 2019. 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.
|
SECOND QUARTER FINANCIAL HIGHLIGHTS, compared with the second
quarter last year:
- Reported diluted earnings per share were $1.70, compared with $1.54.
- Adjusted diluted earnings per share were $1.75, compared with $1.62.
- Reported net income was $3,172
million, compared with $2,916
million.
- Adjusted net income was $3,266
million, compared with $3,062
million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, six months ended
April 30, 2019, compared with the
corresponding period last year:
- Reported diluted earnings per share were $2.97, compared with $2.78.
- Adjusted diluted earnings per share were $3.32, compared with $3.18.
- Reported net income was $5,582
million, compared with $5,269
million.
- Adjusted net income was $6,219
million, compared with $6,008
million.
SECOND QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The
second quarter reported earnings figures included the following
items of note:
- Amortization of intangibles of $78
million ($66 million after-tax
or 3 cents per share), compared with
$86 million ($73 million after-tax or 4 cents per share)
in the second quarter last year.
- Charges associated with the acquisition of Greystone of
$30 million ($28 million after-tax or 2
cents per share).
TORONTO, May 23, 2019 /CNW/ - TD Bank Group ("TD" or the
"Bank") today announced its financial results for the second
quarter ended April 30, 2019. Second
quarter reported earnings were $3.2
billion, up 9%, and adjusted earnings were $3.3 billion, up 7%, compared with the same
quarter last year.
"TD achieved record earnings this quarter, reflecting continued
year-over-year revenue growth in our retail businesses in
Canada and the U.S., and stronger
quarter-over-quarter results in our wholesale business," said
Bharat Masrani, Group President and Chief Executive Officer, TD
Bank Group. "We made strong progress in the quarter, adding new
capabilities, strengthening our business, and advancing our
strategic priorities as we continue to build the bank of the
future."
Canadian Retail
Canadian Retail reported net income of
$1,849 million and adjusted net
income of $1,877 million, an increase
of 1% and 2%, respectively, compared with the same quarter last
year. Revenue grew by 8% reflecting increased volumes, higher
margins, and more assets under management in its wealth businesses.
Canadian Retail is already showing results from its "Future Ready"
strategy and received the "Highest in Customer Satisfaction among
the Big Five Retail Banks", according to the J.D. Power 2019 Canada
Retail Banking Satisfaction Study1.
U.S. Retail
U.S. Retail reported and adjusted net
income was $1,263 million
(US$948 million), an increase of 29%
(23% in U.S. dollars) on a reported basis and 20% (15% in U.S.
dollars) on an adjusted basis, compared with the same quarter last
year. TD Ameritrade contributed $258
million (US$195 million) in
reported and adjusted earnings to the segment, an increase of 93%
(82% in U.S. dollars) and 32% (27% in U.S. dollars), respectively,
in the same quarter last year.
The U.S. Retail Bank, which excludes the Bank's investment in TD
Ameritrade, reported net income of $1,005
million (US$753 million), up
19% (14% in U.S. dollars) on a reported basis and up 17% (12%
in U.S. dollars) on an adjusted basis, from the same period last
year. Earnings growth reflects higher deposit margins and increased
loan and deposit volumes. U.S. Retail continued to invest in its
digital platform and deliver industry-leading customer experiences,
receiving the "Highest in Customer Satisfaction with Retail Banking
in Southeast", according to the J.D. Power 2019 U.S. Retail Banking
Satisfaction Study2.
Wholesale
Wholesale Banking saw a strong improvement
over the first quarter of 2019, with net income of $221 million this quarter, reflecting higher
trading-related revenue, advisory and underwriting fees from
improved market conditions and increased client activity compared
to the prior quarter. Compared to the second quarter last year, net
income was $46 million lower,
reflecting higher non-interest expenses, partially offset by lower
provision for credit losses. The Wholesale Bank continues to invest
in the global expansion of its U.S. dollar strategy.
_________________________________
|
1 TD
Canada Trust received the highest score among the big five banks in
the J.D. Power 2019 Canada Retail Banking Satisfaction Study of
customers' satisfaction with their primary bank. Visit
jdpower.com/awards.
|
2 TD
Bank, America's Most Convenient Bank®, received the
highest score in the Southeast region of the J.D. Power 2019 U.S.
Retail Banking Satisfaction Study of customers' satisfaction with
their own retail bank. Visit jdpower.com.
|
Capital
TD's Common Equity Tier 1 Capital ratio on a
Basel III fully phased-in basis was 12.0%.
Innovation
"We continue to enhance our omni
capabilities and deliver new experiences to meet the evolving needs
of our customers," added Masrani. "In recent months, we
successfully converted our U.S. small business customers to our new
digital platform, and participated in the launch of Verified.Me,
which offers new options and added convenience to millions of
Canadians."
Conclusion
"I want to thank our more than 85,000
colleagues across the globe for their significant contributions to
the Bank's performance this quarter. I also want to congratulate
them for our recent J.D. Power wins, which are testaments to their
hard work and dedication to our customers," 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,
the Management's Discussion and Analysis ("2018 MD&A") in the
Bank's 2018 Annual Report under the heading "Economic Summary and
Outlook", for the Canadian Retail, U.S. Retail, and Wholesale
Banking segments under headings "Business Outlook and Focus for
2019", and for the Corporate segment, "Focus for 2019", and in
other statements regarding the Bank's objectives and priorities for
2019 and beyond and strategies to achieve them, the regulatory
environment in which the Bank operates, and the Bank's anticipated
financial performance. 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: credit,
market (including equity, commodity, foreign exchange, interest
rate, and credit spreads), liquidity, operational (including
technology and infrastructure), 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 the
successful completion of acquisitions and dispositions, business
retention plans, 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, 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; exposure related to
significant litigation and regulatory matters; increased
competition, including through internet and mobile banking and
non-traditional competitors; 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;
critical accounting estimates and changes to accounting standards,
policies, and methods used by the Bank; existing and potential
international debt crises; 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 2018
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 headings "Significant
Events" and "Significant and Subsequent Events in 2019" 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 2018
MD&A under the headings "Economic Summary and Outlook", for the
Canadian Retail, U.S. Retail, and Wholesale Banking segments,
"Business Outlook and Focus for 2019", and for the Corporate
segment, "Focus for 2019", 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
HIGHLIGHTS1
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
As at or for the
three months ended
|
As at or for the
six months ended
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
|
Results of
operations
|
|
|
|
|
|
|
|
|
Total revenue
|
$
|
10,228
|
|
$
|
9,998
|
|
$
|
9,482
|
|
$
|
20,226
|
|
$
|
18,857
|
|
Provision for credit
losses
|
|
633
|
|
850
|
|
556
|
|
1,483
|
|
1,249
|
|
Insurance claims and
related expenses
|
|
668
|
|
702
|
|
558
|
|
1,370
|
|
1,133
|
|
Non-interest expenses
– reported
|
|
5,248
|
|
5,855
|
|
4,837
|
|
11,103
|
|
9,698
|
|
Non-interest expenses
– adjusted2
|
|
5,163
|
|
5,161
|
|
4,759
|
|
10,324
|
|
9,552
|
|
Net income –
reported
|
|
3,172
|
|
2,410
|
|
2,916
|
|
5,582
|
|
5,269
|
|
Net income –
adjusted2
|
|
3,266
|
|
2,953
|
|
3,062
|
|
6,219
|
|
6,008
|
|
Financial
position (billions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Total loans net of
allowance for loan losses
|
$
|
663.6
|
|
$
|
648.5
|
|
$
|
622.0
|
|
$
|
663.6
|
|
$
|
622.0
|
|
Total
assets
|
|
1,356.6
|
|
1,322.5
|
|
1,283.8
|
|
1,356.6
|
|
1,283.8
|
|
Total
deposits
|
|
875.3
|
|
849.3
|
|
829.8
|
|
875.3
|
|
829.8
|
|
Total
equity
|
|
84.9
|
|
81.7
|
|
76.7
|
|
84.9
|
|
76.7
|
|
Total Common Equity
Tier 1 Capital risk-weighted assets3
|
|
452.3
|
|
439.3
|
|
417.8
|
|
452.3
|
|
417.8
|
|
Financial
ratios
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity – reported
|
|
16.5
|
%
|
|
12.2
|
%
|
|
16.8
|
%
|
|
14.3
|
%
|
|
14.9
|
%
|
Return on common
equity – adjusted4
|
|
17.0
|
|
15.0
|
|
17.6
|
|
16.0
|
|
17.1
|
|
Return on tangible
common equity4
|
|
23.4
|
|
17.5
|
|
24.4
|
|
20.4
|
|
21.8
|
|
Return on tangible
common equity – adjusted4
|
|
23.6
|
|
21.0
|
|
25.0
|
|
22.3
|
|
24.3
|
|
Efficiency ratio –
reported
|
|
51.3
|
|
58.6
|
|
51.0
|
|
54.9
|
|
51.4
|
|
Efficiency ratio –
adjusted2
|
|
50.5
|
|
51.6
|
|
50.2
|
|
51.0
|
|
50.4
|
|
Provision for credit
losses as a % of net average loans
|
|
|
|
|
|
|
|
|
|
|
|
and
acceptances5
|
|
0.39
|
|
0.50
|
|
0.36
|
|
0.45
|
|
0.41
|
|
Common share
information – reported (Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.70
|
|
$
|
1.27
|
|
$
|
1.54
|
|
$
|
2.97
|
|
$
|
2.78
|
|
Diluted
|
|
1.70
|
|
1.27
|
|
1.54
|
|
2.97
|
|
2.78
|
|
Dividends per
share
|
|
0.74
|
|
0.67
|
|
0.67
|
|
1.41
|
|
1.27
|
|
Book value per
share
|
|
43.51
|
|
41.69
|
|
38.26
|
|
43.51
|
|
38.26
|
|
Closing share
price6
|
|
76.42
|
|
74.00
|
|
72.11
|
|
76.42
|
|
72.11
|
|
Shares outstanding
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
1,826.6
|
|
1,833.1
|
|
1,843.6
|
|
1,829.9
|
|
1,842.6
|
|
Average
diluted
|
|
1,830.0
|
|
1,836.2
|
|
1,847.5
|
|
1,833.2
|
|
1,846.8
|
|
End of
period
|
|
1,828.4
|
|
1,830.8
|
|
1,844.6
|
|
1,828.4
|
|
1,844.6
|
|
Market capitalization
(billions of Canadian dollars)
|
$
|
139.7
|
|
$
|
135.5
|
|
$
|
133.0
|
|
$
|
139.7
|
|
$
|
133.0
|
|
Dividend
yield7
|
|
3.9
|
%
|
|
3.8
|
%
|
|
3.7
|
%
|
|
3.9
|
%
|
|
3.5
|
%
|
Dividend payout
ratio
|
|
43.4
|
|
52.6
|
|
43.5
|
|
47.4
|
|
45.6
|
|
Price-earnings
ratio
|
|
12.3
|
|
12.3
|
|
12.7
|
|
12.3
|
|
12.7
|
|
Total shareholder
return (1 year)8
|
|
10.0
|
|
2.6
|
|
16.3
|
|
10.0
|
|
16.3
|
|
Common share
information – adjusted (Canadian
dollars)2
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.75
|
|
$
|
1.57
|
|
$
|
1.62
|
|
$
|
3.32
|
|
$
|
3.18
|
|
Diluted
|
|
1.75
|
|
1.57
|
|
1.62
|
|
3.32
|
|
3.18
|
|
Dividend payout
ratio
|
|
42.1
|
%
|
|
42.7
|
%
|
|
41.4
|
%
|
|
42.4
|
%
|
|
39.9
|
%
|
Price-earnings
ratio
|
|
11.6
|
|
11.4
|
|
11.9
|
|
11.6
|
|
11.9
|
|
Capital
ratios
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital ratio3
|
|
12.0
|
%
|
|
12.0
|
%
|
|
11.8
|
%
|
|
12.0
|
%
|
|
11.8
|
%
|
Tier 1 Capital
ratio3
|
|
13.5
|
|
13.5
|
|
13.5
|
|
13.5
|
|
13.5
|
|
Total Capital
ratio3
|
|
15.8
|
|
15.9
|
|
15.8
|
|
15.8
|
|
15.8
|
|
Leverage
ratio
|
|
4.2
|
|
4.1
|
|
4.1
|
|
4.2
|
|
4.1
|
|
1
|
Certain comparative
amounts have been recast to conform with the presentation adopted
in the current period.
|
2
|
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.
|
3
|
Each capital ratio
has its own risk-weighted assets (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 fiscal 2019, the scalars for inclusion of CVA for Common
Equity Tier 1 (CET1), Tier 1, and Total Capital RWA are all 100%.
For fiscal 2018, the scalars for inclusion were 80%, 83%, and 86%,
respectively.
|
4
|
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.
|
5
|
Excludes acquired
credit-impaired (ACI) loans.
|
6
|
Toronto Stock
Exchange (TSX) closing market price.
|
7
|
Dividend yield is
calculated as the annualized dividend per common share paid divided
by daily average closing stock price in the relevant period.
Dividend per common share is derived as follows: a) for the quarter
– by annualizing the dividend per common share paid during the
quarter; and b) for the year-to-date – by annualizing the
year-to-date dividend per common share paid.
|
8
|
Total shareholder
return is calculated based on share price movement and dividends
reinvested over a trailing one-year period.
|
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 referred to as "adjusted" results to assess each
of its businesses and to measure the Bank's overall 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 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 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 their U.S.
customers. Under the terms of the individual agreements, the Bank
and the retailers share in the profits generated by the relevant
portfolios after credit losses. Under IFRS, TD is required to
present the gross amount of revenue and provisions for credit
losses related to these portfolios in the Bank's Interim
Consolidated Statement of Income. At the segment level, the
retailer program partners' share of revenues and credit losses is
presented in the Corporate segment, with an offsetting amount
(representing the partners' net share) recorded in Non-interest
expenses, resulting in no impact to Corporate reported Net income
(loss). The Net income (loss) included in the U.S. Retail segment
includes only the portion of revenue and credit losses attributable
to TD under the agreements.
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 six months
ended
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
Net interest
income
|
$
|
5,872
|
$
|
5,860
|
$
|
5,398
|
$
|
11,732
|
$
|
10,828
|
Non-interest
income
|
|
4,356
|
|
4,138
|
|
4,084
|
|
8,494
|
|
8,029
|
Total
revenue
|
|
10,228
|
|
9,998
|
|
9,482
|
|
20,226
|
|
18,857
|
Provision for credit
losses
|
|
633
|
|
850
|
|
556
|
|
1,483
|
|
1,249
|
Insurance claims and
related expenses
|
|
668
|
|
702
|
|
558
|
|
1,370
|
|
1,133
|
Non-interest expenses
|
|
5,248
|
|
5,855
|
|
4,837
|
|
11,103
|
|
9,698
|
Income before
income taxes and equity in net income of an
|
|
|
|
|
|
|
|
|
|
|
investment in TD
Ameritrade
|
|
3,679
|
|
2,591
|
|
3,531
|
|
6,270
|
|
6,777
|
Provision for income
taxes
|
|
773
|
|
503
|
|
746
|
|
1,276
|
|
1,786
|
Equity in net income
of an investment in TD Ameritrade
|
|
266
|
|
322
|
|
131
|
|
588
|
|
278
|
Net income –
reported
|
|
3,172
|
|
2,410
|
|
2,916
|
|
5,582
|
|
5,269
|
Preferred
dividends
|
|
62
|
|
60
|
|
52
|
|
122
|
|
104
|
Net income
available to common shareholders and
non-controlling
|
|
|
|
|
|
|
|
|
|
|
interests in
subsidiaries
|
$
|
3,110
|
$
|
2,350
|
$
|
2,864
|
$
|
5,460
|
$
|
5,165
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
Common
shareholders
|
$
|
3,110
|
$
|
2,332
|
$
|
2,846
|
$
|
5,442
|
$
|
5,129
|
Non-controlling
interests
|
|
–
|
|
18
|
|
18
|
|
18
|
|
36
|
1
|
Certain comparative
amounts have been recast 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 six months
ended
|
|
April
30
|
January
31
|
April
30
|
April
30
|
April
30
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
Operating results
– adjusted
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
5,872
|
$
|
5,860
|
$
|
5,398
|
$
|
11,732
|
$
|
10,828
|
Non-interest
income2
|
|
4,356
|
|
4,138
|
|
4,084
|
|
8,494
|
|
8,118
|
Total
revenue
|
|
10,228
|
|
9,998
|
|
9,482
|
|
20,226
|
|
18,946
|
Provision for credit
losses
|
|
633
|
|
850
|
|
556
|
|
1,483
|
|
1,249
|
Insurance claims and
related expenses
|
|
668
|
|
702
|
|
558
|
|
1,370
|
|
1,133
|
Non-interest
expenses3
|
|
5,163
|
|
5,161
|
|
4,759
|
|
10,324
|
|
9,552
|
Income before income
taxes and equity in net income of an
|
|
|
|
|
|
|
|
|
|
|
investment in TD
Ameritrade
|
|
3,764
|
|
3,285
|
|
3,609
|
|
7,049
|
|
7,012
|
Provision for income
taxes
|
|
787
|
|
678
|
|
763
|
|
1,465
|
|
1,416
|
Equity in net income
of an investment in TD Ameritrade4
|
|
289
|
|
346
|
|
216
|
|
635
|
|
412
|
Net income –
adjusted
|
|
3,266
|
|
2,953
|
|
3,062
|
|
6,219
|
|
6,008
|
Preferred
dividends
|
|
62
|
|
60
|
|
52
|
|
122
|
|
104
|
Net income
available to common shareholders and
non-controlling
|
|
|
|
|
|
|
|
|
|
|
interests in
subsidiaries – adjusted
|
|
3,204
|
|
2,893
|
|
3,010
|
|
6,097
|
|
5,904
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests in subsidiaries, net of income taxes
|
|
–
|
|
18
|
|
18
|
|
18
|
|
36
|
Net income
available to common shareholders –
adjusted
|
|
3,204
|
|
2,875
|
|
2,992
|
|
6,079
|
|
5,868
|
Pre-tax
adjustments of items of note
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles5
|
|
(78)
|
|
(80)
|
|
(86)
|
|
(158)
|
|
(171)
|
Charges related to
the long-term loyalty agreement with Air
Canada6
|
|
–
|
|
(607)
|
|
–
|
|
(607)
|
|
–
|
Charges associated
with the acquisition of Greystone7
|
|
(30)
|
|
(31)
|
|
–
|
|
(61)
|
|
–
|
Charges associated
with the Scottrade transaction8
|
|
–
|
|
–
|
|
(77)
|
|
–
|
|
(150)
|
Impact from U.S. tax
reform9
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(48)
|
Provision for
(recovery of) income taxes for items of
note
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles10
|
|
(12)
|
|
(13)
|
|
(13)
|
|
(25)
|
|
(30)
|
Charges related to
the long-term loyalty agreement with Air Canada
|
|
–
|
|
(161)
|
|
–
|
|
(161)
|
|
–
|
Charges associated
with the acquisition of Greystone
|
|
(2)
|
|
(1)
|
|
–
|
|
(3)
|
|
–
|
Charges associated
with the Scottrade transaction
|
|
–
|
|
–
|
|
(4)
|
|
–
|
|
(5)
|
Impact from U.S. tax
reform9
|
|
–
|
|
–
|
|
–
|
|
–
|
|
405
|
Total adjustments
for items of note
|
|
(94)
|
|
(543)
|
|
(146)
|
|
(637)
|
|
(739)
|
Net income
available to common shareholders –
reported
|
$
|
3,110
|
$
|
2,332
|
$
|
2,846
|
$
|
5,442
|
$
|
5,129
|
1
|
Certain comparative
amounts have been recast to conform with the presentation adopted
in the current period.
|
2
|
Adjusted Non-interest
income excludes the following item of note: Adjustment to the
carrying balances of certain tax credit-related investments, as
explained in footnote 9 – first quarter 2018 – $(89) million.
This amount was reported in the Corporate segment.
|
3
|
Adjusted Non-interest
expenses exclude the following items of note: Amortization of
intangibles, as explained in footnote 5 – second quarter 2019 –
$55 million, first quarter 2019 – $56 million, second
quarter 2018 – $62 million, first quarter 2018 –
$63 million; these amounts were reported in the Corporate
segment. Charges related to the long-term loyalty agreement with
Air Canada, as explained in footnote 6 – first quarter 2019 – $607
million; this amount was reported in the Canadian Retail segment.
Charges associated with the acquisition of Greystone, as explained
in footnote 7 – second quarter 2019 – $30 million, first quarter
2019 – $31 million; this amount was reported in the Canadian Retail
segment. Charges associated with Scottrade transaction, as
explained in footnote 8 – second quarter 2018 – $16 million and
first quarter 2018 – $5 million; these amounts were reported in the
U.S. Retail segment.
|
4
|
Adjusted Equity in
net income of an investment in TD Ameritrade excludes the following
items of note: Amortization of intangibles, as explained in
footnote 5 – second quarter 2019 – $23 million,
first quarter 2019 – $24 million, second quarter 2018 –
$24 million, first quarter 2018 – $22 million; and the
Bank's share of TD Ameritrade's deferred tax balances adjustment,
as explained in footnote 9 – first quarter 2018 – $(41) million.
The earnings impact of both of these items was reported in the
Corporate segment. The Bank's share of charges associated with TD
Ameritrade's acquisition of Scottrade Financial Services Inc.
("Scottrade"), as explained in footnote 8 – second quarter 2018 –
$61 million, and first quarter 2018 – $68 million. This
item was reported in the U.S. Retail segment.
|
5
|
Amortization of
intangibles relates to intangibles acquired as a result of asset
acquisitions and business combinations, including the after-tax
amounts for amortization of intangibles relating to the Equity in
net income of the investment in TD Ameritrade. 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
|
On January 10, 2019,
the Bank's long-term loyalty program agreement with Air Canada
became effective in conjunction with Air Canada completing its
acquisition of Aimia Canada Inc., which operates the Aeroplan
loyalty business (the "Transaction"). In connection with the
Transaction, the Bank recognized an expense of $607 million ($446
million after-tax) in the Canadian Retail segment during the first
quarter of 2019.
|
7
|
On November 1, 2018,
the Bank acquired Greystone Capital Management Inc., the parent
company of Greystone Managed Investments Inc. ("Greystone"). The
Bank incurred acquisition-related charges including compensation to
employee shareholders issued in common shares in respect of the
purchase price, direct transaction costs, and certain other
acquisition-related costs. These amounts have been recorded as an
adjustment to net income and were reported in the Canadian Retail
segment.
|
8
|
On September 18,
2017, the Bank acquired Scottrade Bank and TD Ameritrade acquired
Scottrade, together with the Bank's purchase of TD Ameritrade
shares issued in connection with TD Ameritrade's acquisition of
Scottrade (the "Scottrade transaction"). Scottrade Bank merged with
TD Bank, N.A. The Bank and TD Ameritrade incurred acquisition
related charges including employee severance, contract termination
fees, direct transaction costs, and other one-time charges. These
amounts have been recorded as an adjustment to net income and
include charges associated with the Bank's acquisition of Scottrade
Bank and the after-tax amounts for the Bank's share of charges
associated with TD Ameritrade's acquisition of Scottrade. These
amounts were reported in the U.S. Retail segment.
|
9
|
In the first quarter
of 2018, the reduction of the U.S. federal corporate tax rate
enacted by the Tax Cuts and Jobs Act (the "U.S. Tax Act")
resulted in a net charge to earnings of $453 million,
comprising a net $48 million pre-tax charge related to the
write-down of certain tax credit-related investments, partially
offset by the favourable impact of the Bank's share of
TD Ameritrade's remeasurement of its deferred income tax
balances, and a net $405 million income tax expense resulting
from the remeasurement of the Bank's deferred tax assets and
liabilities to the lower base rate of 21% and other related tax
adjustments. The earnings impact was reported in the Corporate
segment.
|
10
|
The amount
reported for the six months ended April 30, 2018, excludes $31
million relating to the one-time adjustment of associated deferred
tax liability balances as a result of the U.S. Tax Act. The impact
of this adjustment is included in the Impact from U.S. tax reform
item of note.
|
|
|
|
|
|
TABLE 4:
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE
(EPS)1
|
|
|
(Canadian dollars)
|
|
For the three
months ended
|
For the six months
ended
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
Basic earnings per
share – reported
|
$
|
1.70
|
$
|
1.27
|
$
|
1.54
|
$
|
2.97
|
$
|
2.78
|
Adjustments for items
of note2
|
|
0.05
|
|
0.30
|
|
0.08
|
|
0.35
|
|
0.40
|
Basic earnings per
share – adjusted
|
$
|
1.75
|
$
|
1.57
|
$
|
1.62
|
$
|
3.32
|
$
|
3.18
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share – reported
|
$
|
1.70
|
$
|
1.27
|
$
|
1.54
|
$
|
2.97
|
$
|
2.78
|
Adjustments for items
of note2
|
|
0.05
|
|
0.30
|
|
0.08
|
|
0.35
|
|
0.40
|
Diluted earnings
per share – adjusted
|
$
|
1.75
|
$
|
1.57
|
$
|
1.62
|
$
|
3.32
|
$
|
3.18
|
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, 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 Bank's methodology for
allocating capital to its business segments is aligned with the
common equity capital requirements under Basel III. For fiscal
2019, the capital allocated to the business segments is based on
10% CET1 Capital. Capital allocated to the business segments was
based on 9% for fiscal 2018.
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 5: RETURN ON
COMMON EQUITY
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
For the six months
ended
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
|
Average common
equity
|
$
|
77,369
|
|
$
|
75,873
|
|
$
|
69,579
|
|
$
|
76,663
|
|
$
|
69,332
|
|
Net income
available to common shareholders –
reported
|
|
3,110
|
|
2,332
|
|
2,846
|
|
5,442
|
|
5,129
|
|
Items of note, net of
income taxes1
|
|
94
|
|
543
|
|
146
|
|
637
|
|
739
|
|
Net income
available to common shareholders –
adjusted
|
$
|
3,204
|
|
$
|
2,875
|
|
$
|
2,992
|
|
$
|
6,079
|
|
$
|
5,868
|
|
Return on common
equity – reported
|
|
16.5
|
%
|
|
12.2
|
%
|
|
16.8
|
%
|
|
14.3
|
%
|
|
14.9
|
%
|
Return on common
equity – adjusted
|
|
17.0
|
|
15.0
|
|
17.6
|
|
16.0
|
|
17.1
|
|
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 an investment in TD
Ameritrade and other acquired intangible assets, net of related
deferred tax liabilities. Return on tangible common equity (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
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 or not 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 six months
ended
|
|
|
April
30
|
January
31
|
April
30
|
April
30
|
April
30
|
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
|
Average common
equity
|
$
|
77,369
|
|
$
|
75,873
|
|
$
|
69,579
|
|
$
|
76,663
|
|
$
|
69,332
|
|
Average
goodwill
|
|
17,083
|
|
17,021
|
|
16,031
|
|
17,067
|
|
16,024
|
|
Average imputed
goodwill and intangibles on an
|
|
|
|
|
|
|
|
|
|
|
|
investment in TD
Ameritrade
|
|
4,136
|
|
4,170
|
|
4,060
|
|
4,160
|
|
4,090
|
|
Average other
acquired intangibles1
|
|
717
|
|
676
|
|
696
|
|
690
|
|
728
|
|
Average related
deferred tax liabilities
|
|
(269)
|
|
(238)
|
|
(222)
|
|
(254)
|
|
(257)
|
|
Average tangible
common equity
|
|
55,702
|
|
54,244
|
|
49,014
|
|
55,000
|
|
48,747
|
|
Net income
available to common shareholders –
reported
|
|
3,110
|
|
2,332
|
|
2,846
|
|
5,442
|
|
5,129
|
|
Amortization of
acquired intangibles, net of income
taxes2
|
|
66
|
|
67
|
|
73
|
|
133
|
|
141
|
|
Net income
available to common shareholders after
|
|
|
|
|
|
|
|
|
|
|
|
adjusting for
after-tax amortization of acquired
intangibles
|
|
3,176
|
|
2,399
|
|
2,919
|
|
5,575
|
|
5,270
|
|
Other items of note,
net of income taxes2
|
|
28
|
|
476
|
|
73
|
|
504
|
|
598
|
|
Net income
available to common shareholders –
adjusted
|
$
|
3,204
|
|
$
|
2,875
|
|
$
|
2,992
|
|
$
|
6,079
|
|
$
|
5,868
|
|
Return on tangible
common equity
|
|
23.4
|
%
|
|
17.5
|
%
|
|
24.4
|
%
|
|
20.4
|
%
|
|
21.8
|
%
|
Return on tangible
common equity – adjusted
|
|
23.6
|
|
21.0
|
|
25.0
|
|
22.3
|
|
24.3
|
|
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.
|
SIGNIFICANT AND SUBSEQUENT EVENTS IN 2019
Agreement for Air Canada Credit Card Loyalty
Program
On January 10, 2019,
the Bank's long-term loyalty program agreement (the "Loyalty
Agreement") with Air Canada became effective in conjunction with
Air Canada completing its acquisition of Aimia Canada Inc., which
operates the Aeroplan loyalty business (the "Transaction"). Under
the terms of the Loyalty Agreement, the Bank will become the
primary credit card issuer for Air Canada's new loyalty program
when it launches in 2020 through to 2030. TD Aeroplan cardholders
will become members of Air Canada's new loyalty program and their
miles will be transitioned when Air Canada's new loyalty program
launches in 2020.
In connection with the Transaction, the Bank paid $622 million plus applicable sales tax to Air
Canada, of which $547 million
($446 million after sales and income
taxes) was recognized in non-interest expenses – other in the
Canadian Retail segment during the first quarter of 2019, and
$75 million was recognized as an
intangible asset which will be amortized over the Loyalty Agreement
term. In addition, the Bank prepaid $308
million plus applicable sales tax for the future purchase of
loyalty points over a ten-year period. The Bank also expects to
incur additional pre-tax costs of approximately $100 million over two years to build the
functionality required to facilitate the new program. The
Transaction reduced the Bank's CET1 ratio by approximately 13 basis
points (bps).
Acquisition of Greystone
On November 1, 2018, the Bank acquired 100% of the
outstanding equity of Greystone for consideration of $817 million, of which $475 million was paid in cash and $342 million was paid in the Bank's common
shares. The value of 4.7 million common shares issued as
consideration was based on the volume weighted average market price
of the Bank's common shares over the 10 trading day period
immediately preceding the fifth business day prior to the
acquisition date and was recorded based on market price at close.
Common shares of $167 million issued to employee shareholders
in respect of the purchase price will be held in escrow for two
years post-acquisition, subject to their continued employment, and
will be recorded as a compensation expense over the two-year escrow
period.
The acquisition was accounted for as a business combination
under the purchase method. As at November 1,
2018, the acquisition contributed $169 million of assets and $55 million of liabilities. The excess of
accounting consideration over the fair value of the identifiable
net assets has been allocated to customer relationship intangibles
of $140 million, deferred tax
liability of $37 million, and
goodwill of $433 million. Goodwill is
not deductible for tax purposes. The results of the acquisition
have been consolidated from the acquisition date and reported in
the Canadian Retail segment. The purchase price allocation is
subject to refinement and may be adjusted to reflect new
information about facts and circumstances that existed at the
acquisition date during the measurement period.
Normal Course Issuer Bid
As approved by the Board on
May 22, 2019, the Bank announced its
intention to initiate a normal course issuer bid (NCIB) for up to
20 million of its common shares, subject to the approval of
OSFI and the TSX. The timing and amount of any purchases under the
program are subject to regulatory approvals and to management
discretion based on factors such as market conditions and capital
adequacy.
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,
wealth, and insurance businesses; U.S. Retail, which includes the
results of the U.S. personal and business banking operations,
wealth management services, and the Bank's investment in TD
Ameritrade; 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 the Bank Reports"
section of this document, the "Business Focus" section in the
Bank's 2018 MD&A, and Note 29 Segmented Information of the
Bank's Consolidated Financial Statements for the year ended
October 31, 2018. For information
concerning the Bank's measure of ROE, which is a non-GAAP financial
measure, refer to the "How We Performed" section of this
document.
Provision for credit losses (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 $33 million,
compared with $21 million in the
prior quarter and $17 million in the second quarter last
year.
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 7: CANADIAN
RETAIL
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
For the six months
ended
|
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
|
Net interest
income
|
$
|
3,010
|
|
$
|
3,044
|
|
$
|
2,781
|
|
$
|
6,054
|
|
$
|
5,606
|
|
Non-interest
income
|
|
2,949
|
|
2,944
|
|
2,731
|
|
5,893
|
|
5,456
|
|
Total
revenue
|
|
5,959
|
|
5,988
|
|
5,512
|
|
11,947
|
|
11,062
|
|
Provision for credit
losses – impaired
|
|
256
|
|
264
|
|
219
|
|
520
|
|
456
|
|
Provision for credit
losses – performing
|
|
24
|
|
46
|
|
–
|
|
70
|
|
33
|
|
Total provision for
credit losses
|
|
280
|
|
310
|
|
219
|
|
590
|
|
489
|
|
Insurance claims and
related expenses
|
|
668
|
|
702
|
|
558
|
|
1,370
|
|
1,133
|
|
Non-interest expenses
– reported
|
|
2,481
|
|
3,084
|
|
2,232
|
|
5,565
|
|
4,543
|
|
Non-interest expenses
– adjusted1
|
|
2,451
|
|
2,446
|
|
2,232
|
|
4,897
|
|
4,543
|
|
Provision for
(recovery of) income taxes – reported
|
|
681
|
|
513
|
|
670
|
|
1,194
|
|
1,307
|
|
Provision for
(recovery of) income taxes – adjusted1
|
|
683
|
|
675
|
|
670
|
|
1,358
|
|
1,307
|
|
Net income –
reported
|
|
1,849
|
|
1,379
|
|
1,833
|
|
3,228
|
|
3,590
|
|
Net income –
adjusted1
|
$
|
1,877
|
|
$
|
1,855
|
|
$
|
1,833
|
|
$
|
3,732
|
|
$
|
3,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity – reported2
|
|
43.2
|
%
|
|
31.6
|
%
|
|
50.6
|
%
|
|
37.4
|
%
|
|
48.9
|
%
|
Return on common
equity – adjusted1,2
|
|
43.9
|
|
42.5
|
|
50.6
|
|
43.2
|
|
48.9
|
|
Net interest margin
(including on securitized assets)
|
|
2.99
|
|
2.94
|
|
2.91
|
|
2.97
|
|
2.89
|
|
Efficiency ratio –
reported
|
|
41.6
|
|
51.5
|
|
40.5
|
|
46.6
|
|
41.1
|
|
Efficiency ratio –
adjusted
|
|
41.1
|
|
40.8
|
|
40.5
|
|
41.0
|
|
41.1
|
|
Assets under
administration (billions of Canadian dollars)
|
$
|
421
|
|
$
|
396
|
|
$
|
392
|
|
$
|
421
|
|
$
|
392
|
|
Assets under
management (billions of Canadian dollars)
|
|
349
|
|
332
|
|
289
|
|
349
|
|
289
|
|
Number of Canadian
retail branches
|
|
1,100
|
|
1,099
|
|
1,121
|
|
1,100
|
|
1,121
|
|
Average number of
full-time equivalent staff
|
|
40,498
|
|
39,997
|
|
38,051
|
|
40,243
|
|
38,050
|
|
1
|
Adjusted non-interest
expenses exclude the following items of note: Charges related to
the long-term loyalty agreement with Air Canada in the first
quarter 2019 – $607 million ($446 million after-tax); and
charges associated with the acquisition of Greystone in the second
quarter 2019 – $30 million ($28 million after-tax) and the
first quarter 2019 – $31 million ($30 million after-tax). 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 based on 10% CET1 Capital in fiscal 2019
and 9% in fiscal 2018.
|
Quarterly comparison – Q2 2019 vs. Q2 2018
Canadian Retail reported net income for the quarter was
$1,849 million, an increase of
$16 million, or 1%, compared with the
second quarter last year, reflecting higher revenue, partially
offset by charges related to the acquisition of Greystone, higher
other non-interest expenses, insurance claims, and PCL. On an
adjusted basis, net income for the quarter was $1,877 million, an increase of $44 million, or 2%. The reported and adjusted
annualized ROE for the quarter was 43.2% and 43.9%, respectively,
compared with 50.6% in the second quarter last year.
Canadian Retail revenue is derived from Canadian personal and
commercial banking, wealth, and insurance businesses. Revenue for
the quarter was $5,959 million,
an increase of $447 million, or 8%,
compared with the second quarter last year.
Net interest income was $3,010
million, an increase of $229
million, or 8%, reflecting volume growth and higher margins.
Average loan volumes increased $22 billion, or 5%, reflecting
5% growth in personal loans, and 9% growth in business loans.
Average deposit volumes increased $9
billion, or 3%, reflecting 4% growth in personal deposits,
2% growth in wealth deposits, and 1% growth in business deposits.
Net interest margin was 2.99%, an increase of 8 bps, reflecting
rising interest rates, partially offset by competitive pricing in
loans.
Non-interest income was $2,949
million, an increase of $218
million, or 8%, reflecting higher revenues from the
insurance business, higher fee-based revenue in the banking
businesses, and the acquisition of Greystone. The increase in
non-interest income also included $76
million related to the higher fair value of investments
supporting claims liabilities, which resulted in a similar increase
to insurance claims.
Assets under administration (AUA) were $421 billion as at April
30, 2019, an increase of $29
billion, or 7%, compared with the second quarter last year,
reflecting new asset growth and increases in market value. Assets
under management (AUM) were $349
billion as at April 30, 2019,
an increase of $60 billion, or 21%,
compared with the second quarter last year, reflecting the
acquisition of Greystone, increases in market value and new asset
growth.
PCL was $280 million, an increase
of $61 million, or 28%, compared with
the second quarter last year. PCL – impaired for the quarter was
$256 million, an increase of
$37 million, or 17%, reflecting low
prior period provisions driven by strong credit performance in
personal lending and business banking, and volume growth. PCL –
performing was $24 million, an
increase of $24 million, reflecting
current quarter provisions in the credit card and other personal
portfolios. Total PCL as an annualized percentage of credit volume
was 0.27%, or an increase of 4 bps.
Insurance claims and related expenses for the quarter were
$668 million, an increase of
$110 million, or 20%, compared with
the second quarter last year, reflecting changes in the fair value
of investments supporting claims liabilities, less favourable prior
years' claims development, and higher current year claims,
partially offset by decreases in reinsurance claims assumed and
less severe weather-related events.
Reported non-interest expenses for the quarter were $2,481 million, an increase of $249 million, or 11%, compared with the second
quarter last year, reflecting higher spend supporting business
growth including employee-related costs, charges related to the
acquisition of Greystone, and increased spend on strategic
initiatives. On an adjusted basis, non-interest expenses were
$2,451 million, an increase of
$219 million, or 10%.
The reported and adjusted efficiency ratio for the quarter was
41.6% and 41.1%, respectively, compared with 40.5% in the second
quarter last year.
Quarterly comparison – Q2 2019 vs. Q1 2019
Canadian Retail reported net income for the quarter increased
$470 million, or 34%, compared with
the prior quarter. The increase in earnings reflects charges
related to the agreement with Air Canada in the prior quarter,
lower insurance claims and PCL, partially offset by lower revenue.
On an adjusted basis, net income increased $22 million, or 1%. The reported and adjusted
annualized ROE for the quarter was 43.2% and 43.9%, respectively,
compared with 31.6% and 42.5%, respectively, in the prior
quarter.
Revenue decreased $29 million
compared with the prior quarter. Net interest income decreased
$34 million, or 1%, reflecting the
effect of fewer days in the second quarter, partially offset by
higher margins. Average loan volumes were consistent with the prior
quarter. Average deposit volumes increased $1 billion, reflecting 1% growth in personal
deposits and 3% growth in wealth deposits, partially offset by a 2%
decline in business deposits. Net interest margin was 2.99%, an
increase of 5 bps, reflecting a refinement in revenue
recognition assumptions in the auto finance portfolio and increased
spread between the Prime Rate and the Bankers' Acceptance rate.
Non-interest income increased $5
million, reflecting the higher fair value of investments
supporting claims liabilities of $19
million, which resulted in a similar increase to insurance
claims and higher asset levels in the wealth management business,
partially offset by the impact of fewer days in the second
quarter.
AUA increased $25 billion, or 6%,
compared with the prior quarter, reflecting increases in market
value and new asset growth. AUM increased $17 billion, or 5%, compared with the prior
quarter, reflecting increases in market value.
PCL decreased $30 million, or 10%,
compared with the prior quarter. PCL – impaired decreased by
$8 million, or 3%. PCL – performing
decreased by $22 million reflecting lower unfavourable credit
migration in the personal lending and business banking portfolios.
Total PCL as an annualized percentage of credit volume was 0.27%, a
decrease of 2 bps.
Insurance claims and related expenses for the quarter decreased
$34 million, or 5%, compared with the
prior quarter, reflecting more favourable prior years' claims
development and lower current year claims, partially offset by the
impact of changes to actuarial assumptions in the life and health
business in the prior quarter, changes in the fair value of
investments supporting claims liabilities, and more severe
weather-related events.
Reported non-interest expenses decreased $603 million, or 20%, compared with the prior
quarter, reflecting charges related to the agreement with Air
Canada in the prior quarter. On an adjusted basis, non-interest
expenses were relatively flat compared to the prior quarter.
The reported and adjusted efficiency ratio for the quarter was
41.6% and 41.1%, respectively, compared with 51.5% and 40.8%,
respectively, in the prior quarter.
Year-to-date comparison – Q2 2019 vs. Q2 2018
Canadian Retail reported net income for the six months ended
April 30, 2019, was $3,228 million, a decrease of $362 million, or 10%, compared with same period
last year. The decrease in earnings reflects charges related to the
agreement with Air Canada and the acquisition of Greystone, higher
other non-interest expenses, insurance claims, and PCL, partially
offset by revenue growth. On an adjusted basis, net income for the
period was $3,732 million, an
increase of $142 million, or 4%. The reported and adjusted
annualized ROE for the period was 37.4% and 43.2%, respectively,
compared with 48.9% in the same period last year.
Revenue for the period was $11,947
million, an increase of $885
million, or 8%, compared with same period last year. Net
interest income increased $448 million, or 8%, reflecting
volume growth and higher margins. Average loan volumes increased
$23 billion, or 6%, reflecting 5%
growth in personal loan volumes and 9% growth in business loan
volumes. Average deposit volumes increased $9 billion, or 3%, reflecting 3% growth in
personal deposits volume and 2% growth in business deposit volumes.
Net interest margin was 2.97%, an increase of 8 bps, reflecting
rising interest rates, partially offset by competitive pricing in
loans.
Non-interest income increased $437
million, or 8%, reflecting higher revenues from the
insurance business, higher fee-based revenue in the banking
businesses, and the acquisition of Greystone. The increase in
non-interest income also included $136
million related to higher fair value of investments
supporting claims liabilities, which resulted in a similar increase
to insurance claims.
PCL was $590 million, an increase
of $101 million, or 21%, compared
with the same period last year. PCL – impaired was $520 million, an increase of $64 million, or
14%, largely reflecting increased provisions in the personal
lending portfolios, and volume growth. PCL – performing was
$70 million, an increase of
$37 million reflecting credit
migration in the personal lending and business banking portfolios.
Total PCL as an annualized percentage of credit volume was 0.28%,
an increase of 3 bps.
Insurance claims and related expenses were $1,370 million, an increase of $237 million, or 21%, compared with the same
period last year. The increase reflects changes in the fair value
of investments supporting claims liabilities, less favourable prior
years' claims development, and higher current year claims,
partially offset by less severe weather-related events and the
impact of changes to actuarial assumptions in the life and health
business.
Reported non-interest expenses were $5,565 million, an increase of $1,022 million, or 22%, compared with the same
period last year. The increase reflects charges related to the
agreement with Air Canada and the acquisition of Greystone,
additional employees supporting business growth, and increased
investment in strategic technology initiatives, partially offset by
restructuring costs in the prior year. On an adjusted basis,
non-interest expenses were $4,897
million, an increase of $354
million, or 8%.
The reported and adjusted efficiency ratio for the period was
46.6% and 41.0%, respectively, compared with 41.1% for the same
period last year.
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 8: U.S.
RETAIL
|
|
|
|
|
|
|
|
|
|
(millions of dollars,
except as noted)
|
For the three
months ended
|
For the six months
ended
|
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
Canadian
Dollars
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net interest
income
|
$
|
2,231
|
|
$
|
2,247
|
|
$
|
1,977
|
|
$
|
4,478
|
|
$
|
3,917
|
|
Non-interest
income1
|
|
677
|
|
701
|
|
654
|
|
1,378
|
|
1,357
|
|
Total
revenue
|
|
2,908
|
|
2,948
|
|
2,631
|
|
5,856
|
|
5,274
|
|
Provision for credit
losses – impaired
|
|
199
|
|
285
|
|
199
|
|
484
|
|
386
|
|
Provision for credit
losses – performing
|
|
27
|
|
21
|
|
5
|
|
48
|
|
65
|
|
Total provision for
credit losses
|
|
226
|
|
306
|
|
204
|
|
532
|
|
451
|
|
Non-interest expenses
– reported
|
|
1,527
|
|
1,611
|
|
1,488
|
|
3,138
|
|
2,935
|
|
Non-interest expenses
– adjusted2
|
|
1,527
|
|
1,611
|
|
1,472
|
|
3,138
|
|
2,914
|
|
Provision for
(recovery of) income taxes – reported1
|
|
150
|
|
102
|
|
94
|
|
252
|
|
197
|
|
Provision for
(recovery of) income taxes – adjusted1,2
|
|
150
|
|
102
|
|
98
|
|
252
|
|
202
|
|
U.S. Retail Bank
net income – reported
|
|
1,005
|
|
929
|
|
845
|
|
1,934
|
|
1,691
|
|
U.S. Retail Bank
net income – adjusted2
|
|
1,005
|
|
929
|
|
857
|
|
1,934
|
|
1,707
|
|
Equity in net income
of an investment in TD Ameritrade –
reported1,3
|
|
258
|
|
311
|
|
134
|
|
569
|
|
240
|
|
Equity in net income
of an investment in TD Ameritrade –
adjusted1,4
|
|
258
|
|
311
|
|
195
|
|
569
|
|
369
|
|
Net income –
reported
|
|
1,263
|
|
1,240
|
|
979
|
|
2,503
|
|
1,931
|
|
Net income –
adjusted
|
$
|
1,263
|
|
$
|
1,240
|
|
$
|
1,052
|
|
$
|
2,503
|
|
$
|
2,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
1,676
|
|
$
|
1,688
|
|
$
|
1,551
|
|
$
|
3,364
|
|
$
|
3,084
|
|
Non-interest
income1
|
|
507
|
|
528
|
|
513
|
|
1,035
|
|
1,068
|
|
Total revenue –
reported
|
|
2,183
|
|
2,216
|
|
2,064
|
|
4,399
|
|
4,152
|
|
Provision for credit
losses – impaired
|
|
150
|
|
214
|
|
158
|
|
364
|
|
306
|
|
Provision for credit
losses – performing
|
|
20
|
|
16
|
|
3
|
|
36
|
|
50
|
|
Total provision for
credit losses
|
|
170
|
|
230
|
|
161
|
|
400
|
|
356
|
|
Non-interest expenses
– reported
|
|
1,148
|
|
1,209
|
|
1,167
|
|
2,357
|
|
2,311
|
|
Non-interest expenses
– adjusted2
|
|
1,148
|
|
1,209
|
|
1,154
|
|
2,357
|
|
2,294
|
|
Provision for
(recovery of) income taxes – reported1
|
|
112
|
|
77
|
|
73
|
|
189
|
|
153
|
|
Provision for
(recovery of) income taxes – adjusted1,2
|
|
112
|
|
77
|
|
76
|
|
189
|
|
157
|
|
U.S. Retail Bank
net income – reported
|
|
753
|
|
700
|
|
663
|
|
1,453
|
|
1,332
|
|
U.S. Retail Bank
net income – adjusted2
|
|
753
|
|
700
|
|
673
|
|
1,453
|
|
1,345
|
|
Equity in net income
of an investment in TD Ameritrade –
reported1,3
|
|
195
|
|
235
|
|
107
|
|
430
|
|
189
|
|
Equity in net income
of an investment in TD Ameritrade –
adjusted1,4
|
|
195
|
|
235
|
|
154
|
|
430
|
|
291
|
|
Net income –
reported
|
|
948
|
|
935
|
|
770
|
|
1,883
|
|
1,521
|
|
Net income –
adjusted
|
$
|
948
|
|
$
|
935
|
|
$
|
827
|
|
$
|
1,883
|
|
$
|
1,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity – reported5
|
|
13.2
|
%
|
|
12.6
|
%
|
|
11.9
|
%
|
|
12.9
|
%
|
|
11.5
|
%
|
Return on common
equity – adjusted2,4,5
|
|
13.2
|
|
12.6
|
|
12.7
|
|
12.9
|
|
12.4
|
|
Net interest
margin6
|
|
3.38
|
|
3.42
|
|
3.23
|
|
3.40
|
|
3.21
|
|
Efficiency ratio –
reported
|
|
52.6
|
|
54.6
|
|
56.5
|
|
53.6
|
|
55.6
|
|
Efficiency ratio –
adjusted
|
|
52.6
|
|
54.6
|
|
55.9
|
|
53.6
|
|
55.3
|
|
Assets under
administration (billions of U.S. dollars)
|
$
|
20
|
|
$
|
19
|
|
$
|
19
|
|
$
|
20
|
|
$
|
19
|
|
Assets under
management (billions of U.S. dollars)
|
|
47
|
|
46
|
|
59
|
|
47
|
|
59
|
|
Number of U.S. retail
stores
|
|
1,238
|
|
1,240
|
|
1,244
|
|
1,238
|
|
1,244
|
|
Average number of
full-time equivalent staff
|
|
26,735
|
|
26,864
|
|
26,382
|
|
26,800
|
|
26,273
|
|
1
|
In the first quarter
of 2018, the reduction of the U.S. federal corporate tax rate
enacted by the U.S. Tax Act resulted in an adjustment to the Bank's
U.S. deferred tax assets and liabilities to the lower base rate of
21% as well as an adjustment to the Bank's carrying balances of
certain tax credit-related investments and its investment in TD
Ameritrade. The earnings impact was reported in the Corporate
segment. For additional details, 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
|
Adjusted U.S. Retail
Bank net income excludes the following item of note: Charges
associated with the Bank's acquisition of Scottrade Bank in the
second quarter 2018 – $16 million ($12 million after-tax) or
US$13 million (US$10 million after-tax) and first quarter 2018 – $5
million ($4 million after-tax) or US$4 million (US$3 million
after-tax). 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.
|
3
|
The after-tax amounts
for amortization of intangibles relating to the Equity in net
income of the investment in TD Ameritrade is recorded in the
Corporate segment with other acquired intangibles.
|
4
|
Adjusted equity in
net income of an investment in TD Ameritrade in the prior year
excludes the following items of note: The Bank's share of charges
associated with TD Ameritrade's acquisition of Scottrade in the
second quarter 2018 – $61 million or US$47 million after-tax and
first quarter 2018 – $68 million or US$55 million after-tax.
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.
|
5
|
Capital allocated to
the business segment was based on 10% CET1 Capital in fiscal 2019
and 9% in fiscal 2018.
|
6
|
Net interest margin
excludes the impact related to the TD Ameritrade insured deposit
accounts 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 – Q2 2019 vs. Q2 2018
U.S. Retail reported net income for the quarter was $1,263 million (US$948
million), an increase of $284
million (US$178 million), or
29% (23% in U.S. dollars), compared with the second quarter
last year. On an adjusted basis, net income for the quarter was
$1,263 million (US$948 million), an increase of $211 million (US$121
million), or 20% (15% in U.S. dollars). The reported and
adjusted annualized ROE for the quarter was 13.2%, compared with
11.9% and 12.7%, respectively, in the second quarter last year.
U.S. Retail net income includes contributions from the U.S.
Retail Bank and the Bank's investment in TD Ameritrade. Net income
for the quarter from the U.S. Retail Bank and the Bank's investment
in TD Ameritrade were $1,005 million
(US$753 million) and
$258 million (US$195 million),
respectively.
The contribution from TD Ameritrade of US$195 million increased US$88 million, or 82%, compared with the second
quarter last year, primarily due to higher asset-based revenue,
charges associated with the Scottrade transaction in the same
quarter last year, and decreased operating expenses, partially
offset by lower trading volumes. Adjusted contribution from TD
Ameritrade increased US$41 million, or 27%.
U.S. Retail Bank reported net income of US$753 million for the quarter increased
US$90 million, or 14%, primarily due
to higher revenue. U.S. Retail Bank adjusted net income increased
US$80 million, or 12%.
U.S. Retail Bank revenue is derived from personal and business
banking, and wealth management. Revenue for the quarter was
US$2,183 million, an increase of
US$119 million, or 6%, compared with
the second quarter last year. Net interest income increased
US$125 million, or 8%, reflecting
higher deposit margins and growth in loan and deposit volumes. Net
interest margin was 3.38%, an increase of 15 bps, primarily due to
higher deposit margins. Non-interest income decreased US$6 million, or 1%, largely due to net fund
outflows impacting wealth management fees, partially offset by
growth in other fee income.
Average loan volumes increased US$7
billion, or 5%, compared with the second quarter last year
due to growth in personal and business loans of 3% and 6%,
respectively. Average deposit volumes were up US$1 billion, compared with the second quarter
last year, with growth in personal and business deposit volumes,
offset by a decrease in sweep deposit volumes.
AUA were US$20 billion as at
April 30, 2019, relatively flat
compared with the second quarter last year. AUM were US$47 billion as at April 30, 2019, a
decrease of US$12 billion, or 20%,
reflecting net fund outflows including the impact of the strategic
disposition of U.S. money market funds in the first quarter.
PCL for the quarter was US$170
million, an increase of US$9
million, or 6%, compared with the second quarter last year.
PCL – impaired was US$150 million, a decrease of US$8 million, or 5%, primarily reflecting lower
provisions for the commercial portfolio. PCL – performing was
US$20 million, an increase of US$17 million, primarily
reflecting higher volume growth in the commercial portfolio. U.S.
Retail PCL including only the Bank's contractual portion of credit
losses in the U.S. strategic cards portfolio, as an annualized
percentage of credit volume was 0.45%, flat compared with the
second quarter last year.
Reported non-interest expenses for the quarter were US$1,148 million, a decrease of US$19 million, or 2%, compared with the second
quarter last year, reflecting the elimination of the Federal
Deposit Insurance Corporation (FDIC) deposit insurance surcharge,
recovery of a legal provision, and charges associated with the
Scottrade transaction in the same quarter last year, partially
offset by higher investments in business initiatives. On an
adjusted basis, non-interest expenses decreased US$6 million, or 1%, compared with the second
quarter last
year.
The reported and adjusted efficiency ratio for the quarter was
52.6%, compared with 56.5% and 55.9%, respectively, in the second
quarter last year.
Quarterly comparison – Q2 2019 vs. Q1 2019
U.S. Retail net income of $1,263
million (US$948 million)
increased $23 million (US$13 million), or 2% (1% in U.S. dollars),
compared with the prior quarter. The annualized ROE for the quarter
was 13.2%, compared with 12.6% in the prior quarter.
The contribution from TD Ameritrade was US$195 million, a decrease of US$40 million, or 17%, compared with the prior
quarter, primarily due to lower trading volumes, increased
operating expenses, and lower asset-based revenue.
U.S. Retail Bank net income for the quarter was US$753 million, an increase of US$53 million, or 8%, compared with the prior
quarter, due to lower expenses and PCL, more than offsetting the
reduction in revenue.
Revenue for the quarter decreased US$33
million, or 1%, compared with the prior quarter. Net
interest income decreased US$12
million, or 1%, primarily due to the effect of fewer days in
the quarter and lower net interest margin. Net interest margin was
3.38%, a decrease of 4 bps, primarily due to balance sheet
mix. Non-interest income decreased US$21
million, or 4%, primarily reflecting a seasonal decline in
personal banking fees.
Average loan volumes increased US$1
billion, or 1%, compared with the prior quarter, due to
growth in business loans of 2%. Average deposit volumes decreased
US$1 billion, with growth in personal
deposit volumes of 3%, more than offset by a decrease in sweep
deposit volumes of 4%.
AUA and AUM were US$20 billion and
US$47 billion as at April 30, 2019, respectively, relatively flat to
prior quarter.
PCL for the quarter decreased US$60
million, or 26%, compared with the prior
quarter. PCL – impaired was US$150
million, a decrease of US$64
million, or 30%, primarily reflecting lower provisions for
the commercial portfolio, coupled with seasonal trends in the
credit card and auto portfolios. PCL – performing was
US$20 million, an increase of US$4
million, or 25%, primarily reflecting migration from
performing to impaired in the commercial portfolio in the prior
quarter, partially offset by seasonal trends in the credit card
portfolios. U.S. Retail PCL including only the Bank's
contractual portion of credit losses in the U.S. strategic cards
portfolio, as an annualized percentage of credit volume was 0.45%,
a decrease of 14 bps.
Non-interest expenses for the quarter were US$1,148 million, a decrease of US$61 million, or 5%, compared with the prior
quarter, reflecting recovery of a legal provision and fewer days in
the quarter.
The efficiency ratio for the quarter was 52.6%, compared with
54.6% in the prior quarter.
Year-to-date comparison – Q2 2019 vs. Q2 2018
U.S. Retail reported net income for the six months ended
April 30, 2019, was $2,503 million (US$1,883
million), an increase of $572 million
(US$362 million), or 30% (24% in U.S. dollars), compared with
the same period last year. On an adjusted basis, net income for the
period increased $427 million (US$247
million), or 21% (15% in U.S. dollars). The reported and
adjusted annualized ROE for the period was 12.9%, compared with
11.5% and 12.4%, respectively, in the same period last year.
Net income for the period from the U.S. Retail Bank and the
Bank's investment in TD Ameritrade was $1,934 million (US$1,453 million) and $569 million
(US$430 million), respectively.
The reported contribution from TD Ameritrade of US$430 million increased US$241 million, compared with the same period
last year, primarily due to higher asset-based revenue, charges
associated with the Scottrade transaction in the same period last
year, and decreased operating expenses. Adjusted contribution from
TD Ameritrade increased US$139 million, or 48%.
U.S. Retail Bank reported net income for the period was
US$1,453 million, an increase of
US$121 million, or 9%, compared with
the same period last year, primarily due to higher revenue,
partially offset by higher expenses and PCL. U.S. Retail Bank
adjusted net income increased US$108
million, or 8%.
Revenue for the period was US$4,399
million, an increase of US$247
million, or 6%, compared with same period last year. Net
interest income increased US$280
million, or 9%, reflecting higher deposit margins and growth
in loan and deposit volumes. Net interest margin was 3.40%, a 19
bps increase primarily due to higher deposit margins. Non-interest
income decreased US$33 million, or
3%, as lower wealth management fees and investment income were
partially offset by growth in personal banking fees.
Average loan volumes increased US$6
billion, or 4%, compared with the same period last year, due
to growth in personal loans of 3% and business loans of 5%. Average
deposit volumes increased US$3
billion, or 1%, reflecting 4% growth in both personal and
business deposit volumes, offset by a 3% decrease in sweep deposit
volume.
PCL was US$400 million, an
increase of US$44 million, or 12%,
compared with the same period last year. PCL – impaired was
US$364 million, an increase of
US$58 million, or 19%, primarily
reflecting higher provisions for the commercial portfolio, coupled
with volume growth, seasoning, and mix in the credit card
portfolios. PCL – performing was US$36 million, a decrease of
US$14 million, or 28%, primarily
reflecting lower provisions for the auto portfolio and migration
from performing to impaired in the commercial portfolio, partially
offset by higher volume growth in the commercial portfolio.
U.S. Retail PCL including only the Bank's contractual portion
of credit losses in the U.S. strategic cards portfolio, as an
annualized percentage of credit volume, was 0.52%, an increase of 4
bps.
Reported non-interest expenses for the period were US$2,357 million, an increase of US$46 million, or 2%, compared with the same
period last year, reflecting investments in business initiatives,
business volume growth, and higher employee-related costs,
partially offset by productivity savings, the elimination of the
FDIC deposit insurance surcharge, and recovery of a legal
provision. On an adjusted basis, non-interest expenses increased
US$63 million, or 3%.
The reported and adjusted efficiency ratio for the period was
53.6%, compared with 55.6% and 55.3%, respectively, for the same
period last year.
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 9: WHOLESALE
BANKING1
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
For the six months
ended
|
|
|
|
April
30
|
January
31
|
April
30
|
April
30
|
April
30
|
|
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
|
Net interest income
(TEB)
|
$
|
262
|
|
$
|
173
|
|
$
|
272
|
|
$
|
435
|
|
$
|
601
|
|
Non-interest
income
|
|
625
|
|
409
|
|
615
|
|
1,034
|
|
1,176
|
|
Total
revenue
|
|
887
|
|
582
|
|
887
|
|
1,469
|
|
1,777
|
|
Provision for
(recovery of) credit losses – impaired
|
|
–
|
|
–
|
|
(8)
|
|
–
|
|
(8)
|
|
Provision for
(recovery of) credit losses – performing
|
|
(5)
|
|
7
|
|
24
|
|
2
|
|
17
|
|
Total provision for
(recovery of) credit losses
|
|
(5)
|
|
7
|
|
16
|
|
2
|
|
9
|
|
Non-interest
expenses
|
|
597
|
|
602
|
|
516
|
|
1,199
|
|
1,042
|
|
Provision for
(recovery of) income taxes (TEB)2
|
|
74
|
|
(10)
|
|
88
|
|
64
|
|
181
|
|
Net income
(loss)
|
$
|
221
|
|
$
|
(17)
|
|
$
|
267
|
|
$
|
204
|
|
$
|
545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
Trading-related
revenue (TEB)
|
$
|
411
|
|
$
|
251
|
|
$
|
475
|
|
$
|
662
|
|
$
|
990
|
|
Gross drawn (billions
of Canadian dollars)3
|
|
24.5
|
|
23.4
|
|
22.1
|
|
24.5
|
|
22.1
|
|
Return on common
equity4
|
|
12.5
|
%
|
|
(0.9)
|
%
|
|
18.7
|
%
|
|
5.6
|
%
|
|
19.4
|
%
|
Efficiency
ratio
|
|
67.3
|
|
103.4
|
|
58.2
|
|
81.6
|
|
58.6
|
|
Average number of
full-time equivalent staff
|
|
4,502
|
|
4,478
|
|
4,053
|
|
4,490
|
|
4,040
|
|
1
|
Certain comparative
amounts have been recast to conform with the presentation adopted
in the current period.
|
2
|
In the first quarter
of 2018, the reduction of the U.S. federal corporate tax rate
enacted by the U.S. Tax Act resulted in a one-time adjustment to
Wholesale Banking's U.S. deferred tax assets and liabilities to the
lower base rate of 21%. The earnings impact was reported in the
Corporate segment. For additional details, refer to the "Non-GAAP
Financial Measures – Reconciliation of Adjusted to Reported Net
Income" table in the "How We Performed" section of this
document.
|
3
|
Includes gross loans
and bankers' acceptances, excluding letters of credit, cash
collateral, credit default swaps (CDS), and allowance for credit
losses relating to the corporate lending business.
|
4
|
Capital allocated to
the business segment was based on 10% CET1 Capital in fiscal 2019
and 9% in fiscal 2018.
|
Quarterly comparison – Q2 2019 vs. Q2 2018
Wholesale Banking net income for the quarter was $221 million, a decrease of $46 million, or 17%, compared with the second
quarter last year, reflecting higher non-interest expenses,
partially offset by lower PCL.
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 $887
million, flat compared with the second quarter last year,
reflecting higher advisory and underwriting fees, offset by lower
trading-related revenue.
PCL for the quarter was a benefit of $5
million, a decrease of $21
million compared to the second quarter last year. PCL –
impaired was nil in the current quarter compared to a net recovery
of $8 million in the prior year,
reflecting a recovery of provisions in the oil and gas sector. PCL
– performing was a benefit of $5
million, a decrease of $29
million, primarily reflecting prior year credit
migration.
Non-interest expenses were $597
million, an increase of $81
million, or 16%, compared with the second quarter last year
reflecting continued investments supporting the global expansion of
Wholesale Banking's U.S. dollar strategy and the impact of foreign
exchange translation.
Quarterly comparison – Q2 2019 vs. Q1 2019
Wholesale Banking net income for the quarter was $221 million, an increase in net income of
$238 million, compared with a net
loss of $17 million in the prior
quarter, reflecting higher revenue, lower PCL, and lower
non-interest expenses.
Revenue for the quarter increased $305
million, compared with the prior quarter, reflecting higher
trading-related revenue and advisory and underwriting fees as
market conditions improved.
PCL for the quarter decreased by $12
million, compared to the prior quarter. PCL – performing was
a benefit of $5 million, compared to
a charge of $7 million in the prior
quarter.
Non-interest expenses for the quarter decreased $5 million, or 1%, compared with the prior
quarter, reflecting timing of employee-related costs and the impact
of foreign exchange translation.
Year-to-date comparison – Q2 2019 vs. Q2 2018
Wholesale Banking net income for the six months ended April 30, 2019, was $204
million, a decrease of $341
million, compared with net income of $545 million for
the same period last year, reflecting lower revenue and higher
non-interest expenses, partially offset by lower PCL.
Revenue was $1,469 million, a
decrease of $308 million, or 17%,
compared with the same period last year reflecting challenging
market conditions in the first quarter of this year.
PCL was $2 million, a decrease of
$7 million, compared with the same
period last year. PCL – impaired was nil compared to a net recovery
of $8 million last year, reflecting a
recovery of provisions in the oil and gas sector. PCL – performing
decreased by $15 million, primarily
reflecting prior year credit migration.
Non-interest expenses were $1,199
million, an increase of $157
million, or 15%, compared with the same period last year.
This increase reflects the revaluation of certain liabilities for
post-retirement benefits recognized in the prior year, continued
investments supporting the global expansion of Wholesale Banking's
U.S. dollar strategy, and the impact of foreign exchange
translation, partially offset by lower variable compensation.
|
|
|
|
|
|
|
|
|
|
|
TABLE 10:
CORPORATE
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
|
For the three
months ended
|
For the six months
ended
|
|
|
April
30
|
January
31
|
April
30
|
April
30
|
April
30
|
|
|
2019
|
2019
|
2018
|
2019
|
2018
|
Net income (loss)
– reported1
|
$
|
(161)
|
$
|
(192)
|
$
|
(163)
|
$
|
(353)
|
$
|
(797)
|
Pre-tax
adjustments for items of note2
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
|
78
|
|
80
|
|
86
|
|
158
|
|
171
|
Impact from U.S. tax
reform1
|
|
–
|
|
–
|
|
–
|
|
–
|
|
48
|
Total pre-tax
adjustments for items of note
|
|
78
|
|
80
|
|
86
|
|
158
|
|
219
|
Provision for
(recovery of) income taxes for items of
note1
|
|
12
|
|
13
|
|
13
|
|
25
|
|
(375)
|
Net income (loss)
– adjusted
|
$
|
(95)
|
$
|
(125)
|
$
|
(90)
|
$
|
(220)
|
$
|
(203)
|
|
|
|
|
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) – adjusted
|
|
|
|
|
|
|
|
|
|
|
Net corporate
expenses
|
$
|
(176)
|
$
|
(182)
|
$
|
(189)
|
$
|
(358)
|
$
|
(387)
|
Other
|
|
81
|
|
39
|
|
81
|
|
120
|
|
148
|
Non-controlling
interests
|
|
–
|
|
18
|
|
18
|
|
18
|
|
36
|
Net income (loss)
– adjusted
|
$
|
(95)
|
$
|
(125)
|
$
|
(90)
|
$
|
(220)
|
$
|
(203)
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
volumes
|
|
|
|
|
|
|
|
|
|
|
Average number of
full-time equivalent staff
|
|
16,710
|
|
16,229
|
|
14,574
|
|
16,466
|
|
14,454
|
1
|
In the first quarter
of 2018, the reduction of the U.S. federal corporate tax rate
enacted by the U.S. Tax Act resulted in a net charge to earnings of
$453 million, comprising a net $48 million pre-tax charge
related to the write-down of certain tax credit-related
investments, partially offset by the favourable impact of the
Bank's share of TD Ameritrade's remeasurement of its deferred
income tax balances, and a net $405 million income tax expense
resulting from the remeasurement of the Bank's deferred tax assets
and liabilities to the lower base rate of 21% and other related tax
adjustments.
|
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.
|
Quarterly comparison – Q2 2019 vs. Q2 2018
Corporate segment's reported net loss for the quarter was
$161 million, compared with a
reported net loss of $163 million in
the second quarter last year. Reported net loss decreased primarily
reflecting lower net corporate expenses and amortization of
intangibles this quarter, partially offset by lower contribution
from non-controlling interests. Net corporate expenses were lower
largely reflecting lower net pension expenses in the current
quarter. Adjusted net loss was $95
million compared with an adjusted net loss of $90 million in the second quarter last year.
Quarterly comparison – Q2 2019 vs. Q1 2019
Corporate segment's reported net loss for the quarter was
$161 million, compared with a
reported net loss of $192 million in
the prior quarter. Reported net loss decreased primarily reflecting
higher contribution from Other items, partially offset by lower
contribution from non-controlling interests. Other items increased
primarily reflecting higher revenue from treasury and balance sheet
management activities and the positive impact of tax items in
the current quarter. Adjusted net loss was $95 million compared with an adjusted net loss of
$125 million in the prior
quarter.
Year-to-date comparison – Q2 2019 vs. Q2 2018
Corporate segment's reported net loss for the six months ended
April 30, 2019, was $353
million, compared with a reported net loss of $797 million in the same period last year.
The decrease in reported net loss is primarily due to the impact
from U.S. tax reform in the same period last year and lower net
corporate expenses in the current period, partially offset by lower
contribution from Other items and non-controlling interests. Lower
contribution from Other items was partially due to lower revenue
from treasury and balance sheet management activities in the
current period. Net corporate expenses decreased primarily
reflecting lower net pension expenses in the current period.
Adjusted net loss for the six months ended
April 30, 2019, was $220
million, compared with an adjusted net loss of
$203 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
P.O. Box 505000
Louisville, KY 40233,
or
Computershare
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 second
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 May
23, 2019. The call will be audio webcast live through TD's
website at 1:30 p.m. ET. The call and audio webcast will
feature presentations by TD executives on the Bank's financial
results for the second 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_2019.jsp on May
23, 2019, by approximately 12 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/qr_2019.jsp. Replay of the teleconference will
be available from 3:30 p.m. ET on May 23, 2019, until 11:59
p.m. ET on Thursday, June 20, 2019 by calling 905-694-9451
or 1-800-408-3053 (toll free). The passcode is 4990143#.
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 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 TD Ameritrade; and Wholesale Banking,
including TD Securities. TD also ranks among the world's
leading online financial services firms, with 13 million active
online and mobile customers. TD had $1.4 trillion in assets on
April 30, 2019. The Toronto-Dominion Bank trades under
the symbol "TD" on the Toronto and
New York Stock Exchanges.
SOURCE TD Bank Group