This quarterly Earnings
News Release should be read in conjunction with the Bank's
unaudited first quarter 2023 Report to Shareholders for the three
months ended January 31, 2023, 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 March 1, 2023. Unless otherwise indicated, all amounts are
expressed in Canadian dollars, and have been primarily derived from
the Bank's Annual or Interim Consolidated Financial Statements
prepared in accordance with IFRS. Certain comparative amounts have
been revised to conform to the presentation adopted in the current
period. Additional information relating to the Bank is available on
the Bank's website at http://www.td.com, as well as on SEDAR at
http://www.sedar.com and on the U.S. Securities and Exchange
Commission's (SEC) website at http://www.sec.gov (EDGAR filers
section).
Reported results conform to generally accepted accounting
principles (GAAP), in accordance with IFRS. Adjusted results are
non-GAAP financial measures. For additional information about the
Bank's use of non-GAAP financial measures, refer to "Non-GAAP and
Other Financial Measures" in the "How We Performed" section of this
document.
|
FIRST QUARTER FINANCIAL HIGHLIGHTS, compared with the first
quarter last year:
- Reported diluted earnings per share were $0.82, compared with $2.02.
- Adjusted diluted earnings per share were $2.23, compared with $2.08.
- Reported net income was $1,582
million, compared with $3,733
million.
- Adjusted net income was $4,155
million, compared with $3,833
million.
FIRST QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The first
quarter reported earnings figures included the following items of
note:
- Amortization of acquired intangibles of $54 million ($46
million after-tax or 3 cents
per share), compared with $67 million
($59 million after-tax or
3 cents per share) in the
first quarter last year.
- Acquisition and integration charges related to the Schwab
transaction of $34 million
($28 million after-tax or
2 cents per share), compared with
$50 million ($41 million after-tax or 2
cents per share) in the first quarter last year.
- Acquisition and integration-related charges for pending
acquisitions of $127 million
($96 million after-tax or
5 cents per share).
- Mitigation of impact from interest rate volatility to
closing capital on First Horizon acquisition, net loss of
$876 million ($660 million after-tax or 36 cents per share).
- Stanford litigation settlement
of $1,603 million ($1,158 million after-tax or 63 cents per share).
- Canada Recovery Dividend and impact from increase in the
Canadian federal tax rate for fiscal 2022 of $585 million ($585
million after-tax or 32 cents
per share).
TORONTO, March 2,
2023 /CNW/ - TD Bank Group ("TD" or the "Bank") today
announced its financial results for the first quarter January 31, 2023. Reported earnings were
$1.6 billion, down 58% compared with
the first quarter last year, and adjusted earnings were
$4.2 billion, up 8%.
"TD had a strong start to 2023 with Canadian and U.S. retail
businesses delivering robust revenue growth and record earnings,
demonstrating the benefits of our diversified business
mix," said Bharat Masrani, Group President and Chief Executive
Officer, TD Bank Group. "We continued to invest to strengthen our
businesses and deliver the legendary customer experiences our
customers and clients have come to expect from TD."
"Yesterday, we announced the close of the Cowen Inc.
acquisition, an important step forward in the expansion of our
global dealer. TD Securities now has 6,500 colleagues in 40 cities
around the world and is able to serve clients with an even broader
product and services offering," added Masrani.
Canadian Personal and Commercial Banking delivered record
earnings and strong customer activity
Canadian Personal and
Commercial Banking net income was $1,729
million, an increase of 7% compared with the first quarter
last year reflecting higher margins and volume growth. Revenue was
$4,589 million, an increase of 17%,
which represents the fifth consecutive quarter of record
revenue.
Canadian Personal and Commercial Banking started the year with
strong momentum, delivering a record quarter for new chequing
account openings and credit card activations. The Canadian Personal
Bank also had record account openings in the first quarter for New
to Canada customers and announced
an exclusive relationship with CanadaVisa to help newcomers
navigate financial services as they settle in Canada. To further its support of Black
business owners, the Canadian Business Bank launched the Black
Entrepreneur Credit Access Program, which seeks to improve access
to credit, wealth management, and specialized advice.
The U.S. Retail Bank delivered strong earnings backed by
continued momentum
U.S. Retail reported record net income of
$1,589 million (US$1,177 million), an increase of 25% (17% in
U.S. dollars) compared with the first quarter last year. On an
adjusted basis, net income was a record $1,669 million (US$1,236
million), an increase of 31% (23% in U.S. dollars). Reported
net income included acquisition and integration-related charges for
the First Horizon Corporation ("First Horizon") acquisition of
$106 million (US$78 million) or $80
million (US$59 million)
after-tax. The Bank's investment in The Charles Schwab Corporation
("Schwab") contributed $301 million
(US$222 million) in earnings, an
increase of 19% (11% in U.S. dollars) compared with the first
quarter last year.
The U.S. Retail Bank, which excludes the Bank's investment in
Schwab, reported record net income of $1,288
million (US$955 million), an
increase of 26% (18% in U.S. dollars) from the first quarter last
year. On an adjusted basis, net income of $1,368 million (US$1,014
million) was also a record.
The U.S. Retail Bank delivered strong loan growth of 9% (10%
excluding Paycheck Protection Program (PPP) loan volumes)
year-over-year, supported by personal loan growth of 11% and
business loan growth of 6% (9% excluding PPP). Personal deposits
remained flat despite high inflation and the rising interest rate
environment and business deposits declined 4% year-over-year.
TD Bank, America's Most Convenient Bank® (TD AMCB)
enhanced its advice capabilities, by executing on the strategy of
co-locating retail and wealth advisors to deepen customer
relationships. TD AMCB continued to deliver robust growth in
mortgage and home equity originations to minority households and
was recognized as one of America's Best Employers for Veterans by
Forbes for the third consecutive year.
On February 15, 2023, TD AMCB
announced a five-year Community Benefits Plan with an estimated
US$50 billion impact to local
communities across its expanded footprint following the approval
and close of TD's planned acquisition of First Horizon.
The closing of the First Horizon transaction is subject to
customary closing conditions, including U.S. and Canadian
regulatory approvals, which are not expected to be obtained by the
outside date of May 27, 2023.
"TD is fully committed to the transaction and we are in
discussions with First Horizon about a potential further extension
beyond May 27th," said
Masrani. "This is a great transaction that offers scale and new
capabilities for the U.S. bank."
Wealth Management and Insurance delivered solid performance
amid challenging market conditions
Wealth Management and
Insurance net income was $550
million, a decrease of 14% compared with the first quarter
last year amid challenging market conditions. This quarter's
revenue growth of 4% underscored the strength of the segment's
diversified business model as higher insurance revenue and net
interest income largely offset the impact of market volatility and
trading normalization.
TD's investments in customer-centric innovation continued to
drive market momentum and gain recognition, with TD Direct
Investing ranked as the #1 Direct Investing Brokerage in
Canada by the Globe and Mail, and
TD Asset Management was ranked as the #1 Money Manager for Canadian
Pension Assets[1]. TD insurance opened a second Auto Centre in
Nova Scotia, extending its ability
to drive superior experiences to more customers while lowering
claims severity in the face of inflationary pressures.
Wholesale Banking's performance reflects strength of
diversified business model
Wholesale Banking reported net
income for the quarter was $331
million, a decrease of $103
million, or 24%, compared with the first quarter last year,
reflecting higher non-interest expenses and PCL. On an adjusted
basis, net income was $347 million, a
decrease of $87 million, or 20%.
Revenue was flat with lower underwriting and trading revenues
offset by higher global transaction banking and lending
revenues.
TD Securities continued to lead important Environmental, Social,
and Governance (ESG) mandates, including acting as joint bookrunner
on the Government of Canada's
$500 million Ukraine Sovereignty Bond
to assist the Government of Ukraine in providing essential services and
restoring energy infrastructure.
Capital
TD's Common Equity Tier 1 Capital ratio was
15.5%.
Conclusion
"As the economic landscape continues to evolve, we remain
committed to helping our customers and clients navigate change and
achieve their financial goals," said Masrani. "I want to thank
our colleagues around the globe for continuing to live our purpose
and deliver for our customers every day."
The foregoing contains
forward-looking statements. Please refer to the "Caution Regarding
Forward-Looking Statements".
|
|
__________________________
|
1 TD
Asset Management received the highest score in the Benefits Canada
2022 Top 40 Money Managers Report for Canadian Assets Under
Management, Canadian Pension Assets
|
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 ("2022 MD&A") in the
Bank's 2022 Annual Report under the heading "Economic Summary and
Outlook", under the headings "Key Priorities for 2023" and
"Operating Environment and Outlook" for the Canadian Personal and
Commercial Banking, U.S. Retail, Wealth Management and Insurance,
and Wholesale Banking segments, and under the heading "2022
Accomplishments and Focus for 2023" for the Corporate segment, and
in other statements regarding the Bank's objectives and priorities
for 2023 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:
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 general business
and economic conditions in the regions in which the Bank operates;
geopolitical risk; inflation, rising rates and recession; the
economic, financial, and other impacts of pandemics, including the
COVID-19 pandemic; the ability of the Bank to execute on long-term
strategies and shorter-term key strategic priorities, including the
successful completion and integration of acquisitions and
dispositions, business retention plans, and strategic plans;
technology and cyber security risk (including cyber-attacks, data
security breaches or technology failures) on the Bank's information
technology, internet, network access or other voice or data
communications systems or services; model risk; fraud activity; the
failure of third parties to comply with their obligations to the
Bank or its affiliates, including relating to the care and control
of information, and other risks arising from the Bank's use of
third-party service providers; the impact of new and changes to, or
application of, current laws and regulations, including without
limitation tax laws, capital guidelines and liquidity regulatory
guidance; regulatory oversight and compliance risk; increased
competition from incumbents and new entrants (including Fintechs
and big technology competitors); shifts in consumer attitudes and
disruptive technology; exposure related to significant litigation
and regulatory matters; ability of the Bank to attract, develop,
and retain key talent; changes to the Bank's credit ratings;
changes in foreign exchange rates, interest rates, credit spreads
and equity prices; increased funding costs and market volatility
due to market illiquidity and competition for funding; Interbank
Offered Rate (IBOR) transition risk; critical accounting estimates
and changes to accounting standards, policies, and methods used by
the Bank; existing and potential international debt crises;
environmental and social risk (including climate change); and the
occurrence of natural and unnatural catastrophic events and claims
resulting from such events. The Bank cautions that the preceding
list is not exhaustive of all possible risk factors and other
factors could also adversely affect the Bank's results. For more
detailed information, please refer to the "Risk Factors and
Management" section of the 2022 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 2022
MD&A under the heading "Economic Summary and Outlook", under
the headings "Key Priorities for 2023" and "Operating Environment
and Outlook" for the Canadian Personal and Commercial Banking, U.S.
Retail, Wealth Management and Insurance, and Wholesale Banking
segments, and under the heading "2022 Accomplishments and Focus for
2023" for the Corporate segment, each as may be updated in
subsequently filed quarterly reports to shareholders.
Any forward-looking statements contained in this document
represent the views of management only as of the date hereof and
are presented for the purpose of assisting the Bank's shareholders
and analysts in understanding the Bank's financial position,
objectives and priorities and anticipated financial performance as
at and for the periods ended on the dates presented, and may not be
appropriate for other purposes. The Bank does not undertake to
update any forward-looking statements, whether written or oral,
that may be made from time to time by or on its behalf, except as
required under applicable securities legislation.
This document was reviewed by the Bank's Audit Committee and
was approved by the Bank's Board of Directors, on the Audit
Committee's recommendation, prior to its release.
TABLE 1: FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
For the three months
ended
|
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
|
2023
|
|
2022
|
|
2022
|
|
Results of
operations
|
|
|
|
|
|
|
|
|
|
Total revenue –
reported
|
$
|
12,226
|
|
$
|
15,563
|
|
$
|
11,281
|
|
Total revenue –
adjusted1
|
|
13,102
|
|
|
12,247
|
|
|
11,281
|
|
Provision for (recovery
of) credit losses
|
|
690
|
|
|
617
|
|
|
72
|
|
Insurance claims and
related expenses
|
|
976
|
|
|
723
|
|
|
756
|
|
Non-interest expenses –
reported
|
|
8,316
|
|
|
6,545
|
|
|
5,967
|
|
Non-interest expenses –
adjusted1
|
|
6,541
|
|
|
6,430
|
|
|
5,897
|
|
Net income –
reported
|
|
1,582
|
|
|
6,671
|
|
|
3,733
|
|
Net income –
adjusted1
|
|
4,155
|
|
|
4,065
|
|
|
3,833
|
|
Financial
position (billions of Canadian dollars)
|
|
|
|
|
|
|
|
|
Total loans net of
allowance for loan losses
|
$
|
836.7
|
|
$
|
831.0
|
|
$
|
743.6
|
|
Total assets
|
|
1,928.3
|
|
|
1,917.5
|
|
|
1,778.6
|
|
Total
deposits
|
|
1,220.6
|
|
|
1,230.0
|
|
|
1,159.5
|
|
Total equity
|
|
111.8
|
|
|
111.4
|
|
|
102.0
|
|
Total risk-weighted
assets2
|
|
531.6
|
|
|
517.0
|
|
|
470.9
|
|
Financial
ratios
|
|
|
|
|
|
|
|
|
|
Return on common equity
(ROE) – reported3
|
|
5.9
|
%
|
|
26.5
|
%
|
|
15.3
|
%
|
Return on common equity
– adjusted1
|
|
16.1
|
|
|
16.0
|
|
|
15.7
|
|
Return on tangible
common equity (ROTCE)1
|
|
8.0
|
|
|
35.4
|
|
|
20.6
|
|
Return on tangible
common equity – adjusted1
|
|
21.1
|
|
|
21.2
|
|
|
20.8
|
|
Efficiency ratio –
reported3
|
|
68.0
|
|
|
42.1
|
|
|
52.9
|
|
Efficiency ratio –
adjusted1,3
|
|
49.9
|
|
|
52.5
|
|
|
52.3
|
|
Provision for (recovery
of) credit losses as a % of net
|
|
|
|
|
|
|
|
|
|
average loans
and acceptances
|
|
0.32
|
|
|
0.29
|
|
|
0.04
|
|
Common share
information – reported (Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.82
|
|
$
|
3.62
|
|
$
|
2.03
|
|
Diluted
|
|
0.82
|
|
|
3.62
|
|
|
2.02
|
|
Dividends per
share
|
|
0.96
|
|
|
0.89
|
|
|
0.89
|
|
Book value per
share3
|
|
55.01
|
|
|
55.00
|
|
|
53.00
|
|
Closing share
price4
|
|
92.06
|
|
|
87.19
|
|
|
101.81
|
|
Shares outstanding
(millions)
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
1,820.7
|
|
|
1,812.1
|
|
|
1,820.5
|
|
Average diluted
|
|
1,823.1
|
|
|
1,814.4
|
|
|
1,824.1
|
|
End of
period
|
|
1,828.9
|
|
|
1,820.7
|
|
|
1,816.5
|
|
Market capitalization
(billions of Canadian dollars)
|
$
|
168.4
|
|
$
|
158.7
|
|
$
|
184.9
|
|
Dividend
yield3
|
|
4.3
|
%
|
|
4.2
|
%
|
|
3.7
|
%
|
Dividend payout
ratio3
|
|
116.5
|
|
|
24.6
|
|
|
44.0
|
|
Price-earnings
ratio3
|
|
11.1
|
|
|
9.2
|
|
|
12.8
|
|
Total shareholder
return (1 year)3
|
|
(5.7)
|
|
|
0.9
|
|
|
45.8
|
|
Common share
information – adjusted (Canadian
dollars)1,3
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.24
|
|
$
|
2.18
|
|
$
|
2.08
|
|
Diluted
|
|
2.23
|
|
|
2.18
|
|
|
2.08
|
|
Dividend payout
ratio
|
|
42.9
|
%
|
|
40.8
|
%
|
|
42.8
|
%
|
Price-earnings
ratio
|
|
10.8
|
|
|
10.4
|
|
|
12.5
|
|
Capital
ratios2
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital ratio
|
|
15.5
|
%
|
|
16.2
|
%
|
|
15.2
|
%
|
Tier 1 Capital
ratio
|
|
17.5
|
|
|
18.3
|
|
|
16.3
|
|
Total Capital
ratio
|
|
19.9
|
|
|
20.7
|
|
|
19.0
|
|
Leverage
ratio
|
|
4.8
|
|
|
4.9
|
|
|
4.4
|
|
TLAC ratio
|
|
36.6
|
|
|
35.2
|
|
|
28.6
|
|
TLAC Leverage
ratio
|
|
9.9
|
|
|
9.4
|
|
|
7.6
|
|
1
|
The Toronto-Dominion
Bank ("TD" or the "Bank") prepares its unaudited Interim
Consolidated Financial Statements in accordance with IFRS, the
current GAAP, and refers to results prepared in accordance with
IFRS as the "reported" results. The Bank also utilizes non-GAAP
financial measures such as "adjusted" results and non-GAAP ratios
to assess each of its businesses and to measure overall Bank
performance. To arrive at adjusted results, the Bank adjusts for
"items of note", from reported results. Refer to the "How We
Performed" section of this document for further explanation, a list
of the items of note, and a reconciliation of adjusted to reported
results. Non-GAAP financial measures and ratios used in this
document are not defined terms under IFRS and, therefore, may not
be comparable to similar terms used by other issuers.
|
2
|
These measures have
been included in this document in accordance with the Office of the
Superintendent of Financial Institutions Canada's (OSFI's) Capital
Adequacy Requirements, Leverage Requirements, and Total Loss
Absorbing Capacity (TLAC) guidelines. Refer to the "Capital
Position" section in the first quarter of 2023 MD&A for further
details.
|
3
|
For additional
information about this metric, refer to the Glossary in the first
quarter of 2023 MD&A, which is incorporated by
reference.
|
4
|
Toronto Stock Exchange
(TSX) closing market price.
|
SIGNIFICANT AND SUBSEQUENT EVENTS, AND PENDING
ACQUISITIONS
Acquisition of Cowen Inc.
On March 1, 2023, the Bank completed the acquisition
of Cowen Inc. ("Cowen"). The results of the acquired business will
be consolidated by the Bank from the closing date and primarily
reported in the Wholesale Banking segment.
Pending Acquisition of First Horizon Corporation
On
February 28, 2022, the Bank and First
Horizon Corporation (ׅ"First Horizon") announced a definitive
agreement for the Bank to acquire First Horizon in an all-cash
transaction valued at US$13.4
billion, or US$25.00 for each
common share of First Horizon. In connection with this transaction,
the Bank has invested US$494 million
in non-voting First Horizon preferred stock (convertible in certain
circumstances into up to 4.9% of First Horizon's common stock).
First Horizon shareholders will receive, at closing, an additional
US$0.65 per share on an annualized
basis for the period from November 27,
2022 through the day immediately prior to the closing.
On February 9, 2023, the parties
announced they had mutually agreed to extend the outside date to
May 27, 2023, in accordance with the
terms of the merger agreement. The closing of the transaction is
subject to customary closing conditions, including approvals from
U.S. and Canadian regulatory authorities, which now are not
expected to be obtained prior to May 27,
2023. Regulatory approvals are not within the Bank's
control. If the merger does not close by May
27, 2023, then an amendment to the merger agreement would be
required to further extend the outside date. TD and First Horizon
are discussing a potential further extension.
The Bank has implemented a strategy to mitigate the impact of
interest rate volatility to capital on closing of the
acquisition.
The fair value of First Horizon's fixed rate financial assets
and liabilities and certain intangible assets are sensitive to
interest rate changes. The fair value of net assets will determine
the amount of goodwill to be recognized on closing of the
acquisition. Increases in goodwill and intangibles will negatively
impact capital ratios because they are deducted from capital under
OSFI Basel III rules. In order to mitigate this volatility to
closing capital, the Bank de-designated certain interest rate swaps
hedging fixed income investments in fair value hedge accounting
relationships.
Since the de-designation, mark-to-market gains (losses) on these
swaps are recognized in earnings, without any corresponding offset
from the previously hedged investments. Such gains (losses) will
mitigate the capital impact from changes in the amount of goodwill
recognized on closing of the acquisition. The de-designation also
triggered the amortization of the investments' basis adjustment to
net interest income over the remaining expected life of the
investments.
For the three months ended January 31,
2023, the Bank reported ($998)
million in non-interest income related to the mark-to-market
on the swaps, and $122 million in net interest income related
to the basis adjustment amortization. In addition, for the three
months ended January 31, 2023, the Bank reported
$251 million in non-interest income related to the net
interest earned on the swaps.
Based on the estimated financial performance and balance sheets
of the Bank and First Horizon, including transaction-related
impacts, the Bank expects that its Common Equity Tier 1 (CET1)
Capital ratio will be comfortably above 11% upon the closing of the
First Horizon acquisition.
Implementation of the Canada Recovery Dividend and Change in
Corporate Tax Rate
On December 15,
2022, Bill C-32, Fall Economic Statement Implementation
Act, 2022, received Royal Assent. This bill
enacted the Canada Recovery Dividend (CRD) and increased the
Canadian federal tax rate for bank and life insurer groups by
1.5%.
The implementation of the CRD resulted in a provision for income
taxes of $553 million and a
charge to other comprehensive income of $239
million, recognized in the first quarter of 2023.
The increase in the Canadian federal tax rate of 1.5%, prorated
for the first taxation year that ends after April 7, 2022, resulted in a provision for income
taxes of $82 million and a tax
benefit of $75 million in other
comprehensive income related to fiscal 2022, recognized in the
first quarter of 2023. The Bank also remeasured certain Canadian
deferred tax assets and liabilities for the increase in tax rate,
which resulted in an increase in net deferred tax assets of
$50 million, which is recorded in
provision for income taxes.
Stanford Litigation Settlement
On February 24, 2023, the Bank reached a settlement
in principle (the "settlement" or "agreement") relating to
litigation involving the Stanford Financial Group (the
"Stanford litigation"). Once the
settlement is approved by the Court, the Bank will pay US$1.205 billion to the court-appointed receiver
for the Stanford Receivership Estate. Under the terms of the
agreement, TD has settled with the receiver, the Official Stanford
Investors Committee, and other plaintiffs in the litigation and
these parties have agreed to release and dismiss all current or
future claims arising from or related to the Stanford matter. As a result of this agreement, the
Bank recorded a provision of approximately $1.6 billion pre-tax ($1.2
billion after-tax) in the first quarter of 2023.
HOW WE PERFORMED
HOW THE BANK REPORTS
The Bank prepares its Interim
Consolidated Financial Statements in accordance with IFRS and
refers to results prepared in accordance with IFRS as "reported"
results.
Non-GAAP and Other Financial Measures
In addition to
reported results, the Bank also presents certain financial
measures, including non-GAAP financial measures that are
historical, non-GAAP ratios, supplementary financial measures and
capital management measures, to assess its results. Non-GAAP
financial measures, such as "adjusted" results, are utilized to
assess the Bank's businesses and to measure the Bank's overall
performance. To arrive at adjusted results, the Bank adjusts for
"items of note", from reported results. Items of note are items
which management does not believe are indicative of underlying
business performance and are disclosed in Table 3. Non-GAAP ratios
include a non-GAAP financial measure as one or more of its
components. Examples of non-GAAP ratios include adjusted basic and
diluted earnings per share (EPS), adjusted dividend payout ratio,
adjusted efficiency ratio, and adjusted effective income tax rate.
The Bank believes that non-GAAP financial measures and non-GAAP
ratios provide the reader with a better understanding of how
management views the Bank's performance. Non-GAAP financial
measures and non-GAAP ratios used in this document are not defined
terms under IFRS and, therefore, may not be comparable to similar
terms used by other issuers. Supplementary financial measures
depict the Bank's financial performance and position, and capital
management measures depict the Bank's capital position, and both
are explained in this document where they first appear.
U.S. Strategic Cards
The Bank's U.S. strategic cards
portfolio is comprised of agreements with certain U.S. retailers
pursuant to which TD is the U.S. issuer of private label and
co-branded consumer credit cards to their U.S. customers. Under the
terms of the individual agreements, the Bank and the retailers
share in the profits generated by the relevant portfolios after
credit losses. Under IFRS, TD is required to present the gross
amount of revenue and provisions for credit losses (PCL) related to
these portfolios in the Bank's Interim Consolidated Statement of
Income. At the segment level, the retailer program partners' share
of revenues and credit losses is presented in the Corporate
segment, with an offsetting amount (representing the partners' net
share) recorded in Non-interest expenses, resulting in no impact to
Corporate's reported Net income (loss). The Net income (loss)
included in the U.S. Retail segment includes only the portion of
revenue and credit losses attributable to TD under the
agreements.
Investment in The Charles Schwab Corporation
On
October 6, 2020, the Bank acquired an
approximately 13.5% stake in The Charles Schwab Corporation
("Schwab") following the completion of Schwab's acquisition of TD
Ameritrade Holding Corporation ("TD Ameritrade") of which the Bank
was a major shareholder (the "Schwab transaction"). On August 1, 2022, the Bank sold 28.4 million
non-voting common shares of Schwab, which reduced the Bank's
ownership interest in Schwab to approximately 12.0%. The Bank
accounts for its investment in Schwab using the equity method. The
U.S. Retail segment reflects the Bank's share of net income from
its investment in Schwab. The Corporate segment net income (loss)
includes amounts for amortization of acquired intangibles and the
acquisition and integration charges related to the Schwab
transaction. The Bank's share of Schwab's earnings available to
common shareholders is reported with a one-month lag. For further
details, refer to Note 7 of the Bank's first quarter 2023
Interim Consolidated Financial Statements.
On November 25, 2019, the Bank and
Schwab entered into an insured deposit account agreement (the
"Schwab IDA Agreement"), which became effective upon closing of the
Schwab transaction and has an initial expiration date of
July 1, 2031. Pursuant to the Schwab
IDA Agreement, the Bank makes sweep deposit accounts available to
clients of Schwab. Starting July 1,
2021, deposits can be reduced at Schwab's option by up to
US$10 billion in a year (subject to
certain limitations and adjustments), with a floor of US$50 billion. In addition, Schwab has requested
some operational flexibility such that the sweep deposit balances
may fluctuate over time, under certain conditions and subject to
certain limitations. Refer to the "Related Party Transactions"
section in the 2022 MD&A for further details.
The following table provides the operating results on a reported
basis for the Bank.
TABLE 2: OPERATING
RESULTS – Reported
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three months
ended
|
|
|
|
|
January
31
|
October 31
|
January 31
|
|
|
|
|
2023
|
2022
|
2022
|
|
|
Net interest
income
|
$
|
7,733
|
$
|
7,630
|
$
|
6,302
|
|
|
Non-interest
income
|
|
4,493
|
|
7,933
|
|
4,979
|
|
|
Total
revenue
|
|
12,226
|
|
15,563
|
|
11,281
|
|
|
Provision for (recovery
of) credit losses
|
|
690
|
|
617
|
|
72
|
|
|
Insurance claims and
related expenses
|
|
976
|
|
723
|
|
756
|
|
|
Non-interest
expenses
|
|
8,316
|
|
6,545
|
|
5,967
|
|
|
Income before income
taxes and share of net income from
|
|
|
|
|
|
|
|
|
|
investment in
Schwab
|
|
2,244
|
|
7,678
|
|
4,486
|
|
|
Provision for (recovery
of) income taxes
|
|
947
|
|
1,297
|
|
984
|
|
|
Share of net income
from investment in Schwab
|
|
285
|
|
290
|
|
231
|
|
|
Net income –
reported
|
|
1,582
|
|
6,671
|
|
3,733
|
|
|
Preferred dividends and
distributions on other equity instruments
|
|
83
|
|
107
|
|
43
|
|
|
Net income available
to common shareholders
|
$
|
1,499
|
$
|
6,564
|
$
|
3,690
|
|
|
The following table provides a reconciliation between the Bank's
adjusted and reported results.
TABLE 3: NON-GAAP
FINANCIAL MEASURES – Reconciliation of Adjusted to Reported Net
Income
|
|
(millions of Canadian
dollars)
|
For the three months
ended
|
|
|
|
January
31
|
October 31
|
January 31
|
|
|
2023
|
2022
|
2022
|
|
Operating results –
adjusted
|
|
|
|
|
|
|
|
Net interest
income6
|
$
|
7,862
|
$
|
7,627
|
$
|
6,302
|
|
Non-interest
income1,6
|
|
5,240
|
|
4,620
|
|
4,979
|
|
Total
revenue
|
|
13,102
|
|
12,247
|
|
11,281
|
|
Provision for (recovery
of) credit losses
|
|
690
|
|
617
|
|
72
|
|
Insurance claims and
related expenses
|
|
976
|
|
723
|
|
756
|
|
Non-interest
expenses2
|
|
6,541
|
|
6,430
|
|
5,897
|
|
Income before income
taxes and share of net income from investment in Schwab
|
|
4,895
|
|
4,477
|
|
4,556
|
|
Provision for (recovery
of) income taxes
|
|
1,068
|
|
747
|
|
1,001
|
|
Share of net income
from investment in Schwab3
|
|
328
|
|
335
|
|
278
|
|
Net income –
adjusted
|
|
4,155
|
|
4,065
|
|
3,833
|
|
Preferred dividends and
distributions on other equity instruments
|
|
83
|
|
107
|
|
43
|
|
Net income available
to common shareholders – adjusted
|
|
4,072
|
|
3,958
|
|
3,790
|
|
Pre-tax adjustments
for items of note
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles4
|
|
(54)
|
|
(57)
|
|
(67)
|
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(34)
|
|
(18)
|
|
(50)
|
|
Acquisition and
integration-related charges for pending
acquisitions2
|
|
(127)
|
|
(85)
|
|
–
|
|
Mitigation of impact
from interest rate volatility to closing capital on First Horizon
acquisition6
|
|
(876)
|
|
2,319
|
|
–
|
|
Stanford litigation
settlement2
|
|
(1,603)
|
|
–
|
|
–
|
|
Gain on sale of Schwab
shares1
|
|
–
|
|
997
|
|
–
|
|
Less: Impact of
income taxes
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles
|
|
(8)
|
|
(6)
|
|
(8)
|
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(6)
|
|
(2)
|
|
(9)
|
|
Acquisition and
integration-related charges for pending acquisitions
|
|
(31)
|
|
(20)
|
|
–
|
|
Mitigation of impact
from interest rate volatility to closing capital on First Horizon
acquisition
|
|
(216)
|
|
578
|
|
–
|
|
Stanford litigation
settlement
|
|
(445)
|
|
–
|
|
–
|
|
Gain on sale of Schwab
shares
|
|
–
|
|
–
|
|
–
|
|
Canada Recovery
Dividend and impact from increase in the Canadian federal tax rate
for fiscal 20227
|
|
585
|
|
–
|
|
–
|
|
Total adjustments
for items of note
|
|
(2,573)
|
|
2,606
|
|
(100)
|
|
Net income available
to common shareholders – reported
|
$
|
1,499
|
$
|
6,564
|
$
|
3,690
|
|
|
|
|
|
|
|
|
|
|
1
|
Adjusted non-interest
income excludes the following item of note:
|
|
i.
|
The Bank sold 28.4
million non-voting common shares of Schwab and recognized a gain on
the sale – Q4 2022: $997 million. This amount is reported in the
Corporate segment.
|
|
|
|
2
|
Adjusted non-interest
expenses exclude the following items of note related to the Bank's
asset acquisitions and business combinations:
|
|
i.
|
Amortization of
acquired intangibles – Q1 2023: $24 million, Q4 2022: $24 million,
Q1 2022: $33 million. These charges are reported in the Corporate
segment;
|
|
ii.
|
The Bank's own
integration and acquisition costs related to the Schwab transaction
– Q1 2023: $21 million, Q4 2022: $6 million, Q1 2022: $37 million.
These costs are reported in the Corporate segment; and
|
|
iii.
|
Acquisition and
integration-related charges for pending acquisitions – Q1 2023:
$127 million, Q4 2022: $85 million. These charges are primarily
related to professional services and other incremental operating
expenses for various acquisitions, and are reported in the U.S.
Retail and Wholesale Banking segments.
|
|
iv.
|
Stanford litigation
settlement – Q1 2023: $1,603 million. This is reported in the
Corporate segment. Refer to the "Significant and Subsequent Events,
and Pending Acquisitions" section for further details.
|
|
|
|
3
|
Adjusted share of net
income from investment in Schwab excludes the following items of
note on an after-tax basis. The earnings impact of both items is
reported in the Corporate segment:
|
|
i.
|
Amortization of
Schwab-related acquired intangibles – Q1 2023: $30 million, Q4
2022: $33 million, Q1 2022: $34 million; and
|
|
ii.
|
The Bank's share of
acquisition and integration charges associated with Schwab's
acquisition of TD Ameritrade – Q1 2023: $13 million, Q4 2022: $12
million, Q1 2022: $13 million.
|
|
|
|
4
|
Amortization of
acquired intangibles relates to intangibles acquired as a result of
asset acquisitions and business combinations, including the
after-tax amounts for amortization of acquired intangibles relating
to the Share of net income from investment in Schwab, reported in
the Corporate segment. Refer to footnotes 2 and 3 for
amounts.
|
|
|
|
5
|
Acquisition and
integration charges related to the Schwab transaction include the
Bank's own integration and acquisition costs, as well as the Bank's
share of acquisition and integration charges associated with
Schwab's acquisition of TD Ameritrade on an after-tax basis, both
reported in the Corporate segment. Refer to footnotes 2 and 3 for
amounts.
|
|
|
|
6
|
Mitigation of impact
from interest rate volatility to closing capital on First Horizon
acquisition includes the following components, reported in the
Corporate segment: i) mark-to-market gains (losses) on interest
rate swaps recorded in non-interest income – Q1 2023: ($998)
million, Q4 2022: $2,208 million, ii) basis adjustment amortization
related to de-designated fair value hedge accounting relationships,
recorded in net interest income – Q1 2023: $122 million, Q4 2022:
$111 million, and iii) interest income (expense) recognized on the
interest rate swaps, reclassified from non-interest income to net
interest income with no impact to total adjusted net income – Q1
2023: $251 million, Q4 2022: $108 million. Refer to the
"Significant and Subsequent Events, and Pending Acquisitions"
section for further details.
|
|
|
|
7
|
CRD and impact from
increase in the Canadian federal tax rate for fiscal 2022
recognized in the first quarter of 2023, reported in the Corporate
segment. Refer to the "Significant and Subsequent Events, and
Pending Acquisitions" section for further details.
|
TABLE 4:
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER
SHARE1
|
|
(Canadian
dollars)
|
|
For the three months
ended
|
|
|
January
31
|
October 31
|
January 31
|
|
|
2023
|
2022
|
2022
|
|
Basic earnings per
share – reported
|
$
|
0.82
|
$
|
3.62
|
$
|
2.03
|
|
Adjustments for items
of note
|
|
1.41
|
|
(1.44)
|
|
0.05
|
|
Basic earnings per
share – adjusted
|
$
|
2.24
|
$
|
2.18
|
$
|
2.08
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share – reported
|
$
|
0.82
|
$
|
3.62
|
$
|
2.02
|
|
Adjustments for items
of note
|
|
1.41
|
|
(1.44)
|
|
0.05
|
|
Diluted earnings per
share – adjusted
|
$
|
2.23
|
$
|
2.18
|
$
|
2.08
|
|
1 EPS
is computed by dividing net income available to common shareholders
by the weighted-average number of shares outstanding during the
period. Numbers may not add due to rounding.
|
Return on Common Equity
The consolidated Bank ROE is
calculated as reported net income available to common shareholders
as a percentage of average common equity. The consolidated Bank
adjusted ROE is calculated as adjusted net income available to
common shareholders as a percentage of average common equity.
Adjusted ROE is a non-GAAP financial ratio and can be utilized in
assessing the Bank's use of equity.
ROE for the business segments is calculated as the segment net
income attributable to common shareholders as a percentage of
average allocated capital. The Bank's methodology for allocating
capital to its business segments is largely aligned with the common
equity capital requirements under Basel III. Capital allocated to
the business segments was increased to 11% CET1 Capital in the
first quarter of 2023, compared with 10.5% in fiscal 2022.
TABLE 5: RETURN ON
COMMON EQUITY
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three months
ended
|
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
|
2023
|
|
2022
|
|
2022
|
|
Average common
equity
|
$
|
100,337
|
|
$
|
98,199
|
|
$
|
95,829
|
|
Net income available
to common shareholders – reported
|
|
1,499
|
|
|
6,564
|
|
|
3,690
|
|
Items of note, net of
income taxes
|
|
2,573
|
|
|
(2,606)
|
|
|
100
|
|
Net income available
to common shareholders – adjusted
|
$
|
4,072
|
|
$
|
3,958
|
|
$
|
3,790
|
|
Return on common
equity – reported
|
|
5.9
|
%
|
|
26.5
|
%
|
|
15.3
|
%
|
Return on common
equity – adjusted
|
|
16.1
|
|
|
16.0
|
|
|
15.7
|
|
Return on Tangible Common Equity
Tangible common
equity (TCE) is calculated as common shareholders' equity less
goodwill, imputed goodwill and intangibles on the investments in
Schwab and other acquired intangible assets, net of related
deferred tax liabilities. ROTCE is calculated as reported net
income available to common shareholders after adjusting for the
after–tax amortization of acquired intangibles, which are treated
as an item of note, as a percentage of average TCE. Adjusted ROTCE
is calculated using reported net income available to common
shareholders, adjusted for all items of note, as a percentage of
average TCE. TCE, ROTCE, and adjusted ROTCE can be utilized in
assessing the Bank's use of equity. TCE is a non-GAAP financial
measure, and ROTCE and adjusted ROTCE are non-GAAP
ratios.
TABLE 6: RETURN ON
TANGIBLE COMMON EQUITY
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three months
ended
|
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
|
2023
|
|
2022
|
|
2022
|
|
Average common
equity
|
$
|
100,337
|
|
$
|
98,199
|
|
$
|
95,829
|
|
Average
goodwill
|
|
17,486
|
|
|
17,334
|
|
|
16,519
|
|
Average imputed
goodwill and intangibles on investments in Schwab
|
|
6,160
|
|
|
6,374
|
|
|
6,585
|
|
Average other acquired
intangibles1
|
|
442
|
|
|
463
|
|
|
526
|
|
Average related
deferred tax liabilities
|
|
(174)
|
|
|
(172)
|
|
|
(172)
|
|
Average tangible
common equity
|
|
76,423
|
|
|
74,200
|
|
|
72,371
|
|
Net income available
to common shareholders – reported
|
|
1,499
|
|
|
6,564
|
|
|
3,690
|
|
Amortization of
acquired intangibles, net of income taxes
|
|
46
|
|
|
51
|
|
|
59
|
|
Net income available
to common shareholders adjusted for
|
|
|
|
|
|
|
|
|
|
|
amortization of
acquired intangibles, net of income taxes
|
|
1,545
|
|
|
6,615
|
|
|
3,749
|
|
Other items of note,
net of income taxes
|
|
2,527
|
|
|
(2,657)
|
|
|
41
|
|
Net income available
to common shareholders – adjusted
|
$
|
4,072
|
|
$
|
3,958
|
|
$
|
3,790
|
|
Return on tangible
common equity
|
|
8.0
|
%
|
|
35.4
|
%
|
|
20.6
|
%
|
Return on tangible
common equity – adjusted
|
|
21.1
|
|
|
21.2
|
|
|
20.8
|
|
1
Excludes intangibles relating to software and asset servicing
rights.
|
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank's operations and
activities are organized around the following four key business
segments: Canadian Personal and Commercial Banking, U.S. Retail,
Wealth Management and Insurance, and Wholesale Banking. The Bank's
other activities are grouped into the Corporate segment.
Results of each business segment reflect revenue, expenses,
assets, and liabilities generated by the businesses in that
segment. Where applicable, the Bank measures and evaluates the
performance of each segment based on adjusted results and ROE, and
for those segments, the Bank indicates that the measure is
adjusted. For further details, refer to the "How We Performed"
section of this document, the "Business Focus" section in the
Bank's 2022 MD&A, and Note 29 of the Bank's Consolidated
Financial Statements for the year ended October 31, 2022.
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
results is reversed in the Corporate segment. The TEB adjustment
for the quarter was $57 million, compared with
$36 million in the prior quarter and $38 million in the
first 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
PERSONAL AND COMMERCIAL BANKING
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
For the three months
ended
|
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
|
2023
|
|
2022
|
|
2022
|
|
Net interest
income
|
$
|
3,539
|
|
$
|
3,388
|
|
$
|
2,876
|
|
Non-interest
income
|
|
1,050
|
|
|
1,066
|
|
|
1,044
|
|
Total
revenue
|
|
4,589
|
|
|
4,454
|
|
|
3,920
|
|
Provision for (recovery
of) credit losses – impaired
|
|
220
|
|
|
184
|
|
|
150
|
|
Provision for (recovery
of) credit losses – performing
|
|
107
|
|
|
45
|
|
|
(118)
|
|
Total provision for
(recovery of) credit losses
|
|
327
|
|
|
229
|
|
|
32
|
|
Non-interest
expenses
|
|
1,863
|
|
|
1,921
|
|
|
1,689
|
|
Provision for (recovery
of) income taxes
|
|
670
|
|
|
610
|
|
|
581
|
|
Net
income
|
$
|
1,729
|
|
$
|
1,694
|
|
$
|
1,618
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
Return on common
equity1
|
|
39.9
|
%
|
|
41.9
|
%
|
|
43.0
|
%
|
Net interest margin
(including on securitized assets)2
|
|
2.80
|
|
|
2.70
|
|
|
2.44
|
|
Efficiency
ratio
|
|
40.6
|
|
|
43.1
|
|
|
43.1
|
|
Number of Canadian
retail branches
|
|
1,060
|
|
|
1,060
|
|
|
1,062
|
|
Average number of
full-time equivalent staff
|
|
28,803
|
|
|
28,936
|
|
|
27,871
|
|
1
|
Capital allocated to
the business segment was increased to 11% CET1 Capital in the first
quarter of 2023, compared with 10.5% in the prior year.
|
2
|
Net interest margin is
calculated by dividing net interest income by average
interest-earning assets. Average interest-earning assets used in
the calculation of net interest margin is a non-GAAP financial
measure. Refer to "Non-GAAP and Other Financial Measures" in the
"How We Performed" section of this document and the Glossary in the
Bank's first quarter 2023 MD&A for additional information
about these metrics.
|
Quarterly comparison – Q1 2023 vs. Q1 2022
Canadian Personal and Commercial Banking net income for the quarter
was $1,729 million, an increase of
$111 million, or 7%, compared with
the first quarter last year, reflecting higher revenue, partially
offset by higher PCL and non-interest expenses. The annualized ROE
for the quarter was 39.9%, compared with 43.0% in the first quarter
last year.
Revenue for the quarter was $4,589 million, an increase of
$669 million, or 17%, compared with the first quarter last
year.
Net interest income was $3,539 million, an increase of
$663 million, or 23%, compared with the first quarter last
year, reflecting higher margins and volume growth. Average loan
volumes increased $37 billion, or 8%, reflecting 6% growth in
personal loans and 14% growth in business loans. Average deposit
volumes increased $14 billion, or 3%, reflecting 8% growth in
personal deposits, and 5% decline in business deposits. Net
interest margin was 2.80%, an increase of 36 bps, primarily
due to higher margins on deposits reflecting rising interest rates,
partially offset by lower margins on loans.
Non-interest income was $1,050
million, an increase of $6 million, or 1%.
PCL was $327 million, an increase
of $295 million, compared with the
first quarter last year. PCL – impaired for the quarter was
$220 million, an increase of
$70 million, or 47%, reflecting some further normalization of
credit performance. PCL – performing was $107 million, compared with a recovery of
$118 million in the prior year. The
performing build this quarter reflects some further normalization
of credit performance and volume growth. Total PCL as an annualized
percentage of credit volume was 0.25%, an increase of 22 bps
compared with the first quarter last year.
Non-interest expenses for the quarter were $1,863 million, an increase of $174 million, or 10%, compared with the first
quarter last year, reflecting higher spend supporting business
growth, including technology and higher employee-related
expenses.
The efficiency ratio for the quarter was 40.6%, compared with
43.1% in the first quarter last year.
Quarterly comparison – Q1 2023 vs. Q4 2022
Canadian Personal and Commercial Banking net income for the quarter
was $1,729 million, an increase of
$35 million, or 2%, compared with the
prior quarter, reflecting higher revenue and lower non-interest
expenses, partially offset by higher PCL. The annualized ROE
for the quarter was 39.9%, compared with 41.9%, in the prior
quarter.
Revenue increased $135 million, or 3%, compared with the
prior quarter. Net interest income increased $151 million, or 4% reflecting higher margins and
volume growth. Average loan volumes increased $4 billion, or 1%, reflecting relatively flat
personal loans growth and 3% growth in business loans. Average
deposit volumes increased $3 billion,
or 1%, reflecting 1% growth in personal deposits and 1% decline in
business deposits. Net interest margin was 2.80%, an increase of 10
bps, primarily due to higher margins on deposits reflecting rising
interest rates, partially offset by lower margins on loans.
Non-interest income decreased $16 million, or 2% reflecting
lower fee revenue.
PCL increased by $98 million
compared with the prior quarter. PCL – impaired increased by
$36 million, or 20%, reflecting some
further normalization of credit performance. PCL – performing
increased by $62 million. The
performing build this quarter reflects some further normalization
of credit performance and volume growth. Total PCL as an annualized
percentage of credit volume was 0.25%, an increase of 8 bps.
Non-interest expenses decreased $58
million, or 3%, compared with the prior quarter reflecting
lower marketing costs, and lower non-credit provisions, partially
offset by higher technology costs.
The efficiency ratio was 40.6%, compared with 43.1%, in the
prior quarter.
TABLE 8: U.S.
RETAIL
|
|
|
|
|
|
|
|
|
|
(millions of dollars,
except as noted)
|
For the three months
ended
|
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
Canadian
Dollars
|
|
2023
|
|
|
2022
|
|
|
2022
|
|
Net interest
income
|
$
|
3,169
|
|
$
|
2,957
|
|
$
|
2,115
|
|
Non-interest
income
|
|
596
|
|
|
638
|
|
|
671
|
|
Total
revenue
|
|
3,765
|
|
|
3,595
|
|
|
2,786
|
|
Provision for (recovery
of) credit losses – impaired
|
|
212
|
|
|
166
|
|
|
125
|
|
Provision for (recovery
of) credit losses – performing
|
|
(12)
|
|
|
59
|
|
|
(104)
|
|
Total provision for
(recovery of) credit losses
|
|
200
|
|
|
225
|
|
|
21
|
|
Non-interest expenses –
reported
|
|
2,071
|
|
|
1,976
|
|
|
1,597
|
|
Non-interest expenses –
adjusted1,2
|
|
1,965
|
|
|
1,909
|
|
|
1,597
|
|
Provision for (recovery
of) income taxes – reported
|
|
206
|
|
|
165
|
|
|
148
|
|
Provision for (recovery
of) income taxes – adjusted1
|
|
232
|
|
|
181
|
|
|
148
|
|
U.S. Retail Bank net
income – reported
|
|
1,288
|
|
|
1,229
|
|
|
1,020
|
|
U.S. Retail Bank net
income – adjusted1
|
|
1,368
|
|
|
1,280
|
|
|
1,020
|
|
Share of net income
from investment in Schwab3,4
|
|
301
|
|
|
310
|
|
|
252
|
|
Net income –
reported
|
$
|
1,589
|
|
$
|
1,539
|
|
$
|
1,272
|
|
Net income –
adjusted1
|
|
1,669
|
|
|
1,590
|
|
|
1,272
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
2,349
|
|
$
|
2,220
|
|
$
|
1,671
|
|
Non-interest
income
|
|
442
|
|
|
479
|
|
|
530
|
|
Total
revenue
|
|
2,791
|
|
|
2,699
|
|
|
2,201
|
|
Provision for (recovery
of) credit losses – impaired
|
|
158
|
|
|
125
|
|
|
99
|
|
Provision for (recovery
of) credit losses – performing
|
|
(9)
|
|
|
44
|
|
|
(82)
|
|
Total provision for
(recovery of) credit losses
|
|
149
|
|
|
169
|
|
|
17
|
|
Non-interest expenses –
reported
|
|
1,535
|
|
|
1,482
|
|
|
1,261
|
|
Non-interest expenses –
adjusted1,2
|
|
1,457
|
|
|
1,432
|
|
|
1,261
|
|
Provision for (recovery
of) income taxes – reported
|
|
152
|
|
|
122
|
|
|
117
|
|
Provision for (recovery
of) income taxes – adjusted1
|
|
171
|
|
|
135
|
|
|
117
|
|
U.S. Retail Bank net
income – reported
|
|
955
|
|
|
926
|
|
|
806
|
|
U.S. Retail Bank net
income – adjusted1
|
|
1,014
|
|
|
963
|
|
|
806
|
|
Share of net income
from investment in Schwab3,4
|
|
222
|
|
|
237
|
|
|
200
|
|
Net income –
reported
|
$
|
1,177
|
|
$
|
1,163
|
|
$
|
1,006
|
|
Net income –
adjusted1
|
|
1,236
|
|
|
1,200
|
|
|
1,006
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
Return on common equity
– reported5
|
|
15.5
|
%
|
|
15.4
|
%
|
|
12.6
|
%
|
Return on common equity
– adjusted1,5
|
|
16.3
|
|
|
15.8
|
|
|
12.6
|
|
Net interest
margin1,6
|
|
3.29
|
|
|
3.13
|
|
|
2.21
|
|
Efficiency ratio –
reported
|
|
55.0
|
|
|
54.9
|
|
|
57.3
|
|
Efficiency ratio –
adjusted1
|
|
52.2
|
|
|
53.1
|
|
|
57.3
|
|
Assets under
administration (billions of U.S. dollars)7
|
$
|
35
|
|
$
|
34
|
|
$
|
32
|
|
Assets under management
(billions of U.S. dollars)7
|
|
35
|
|
|
33
|
|
|
40
|
|
Number of U.S. retail
stores
|
|
1,161
|
|
|
1,160
|
|
|
1,152
|
|
Average number of
full-time equivalent staff
|
|
27,694
|
|
|
26,710
|
|
|
24,922
|
|
1
|
For additional
information about the Bank's use of non-GAAP financial measures,
refer to "Non-GAAP and Other Financial Measures" in the "How We
Performed" section of this document.
|
2
|
Adjusted non-interest
expenses exclude the acquisition and integration-related charges
for the First Horizon acquisition – Q1 2023: $106 million or US$78
million ($80 million or US$59 million after-tax); Q4 2022: $67
million or US$50 million ($51 million or US$37 million
after-tax).
|
3
|
The Bank's share of
Schwab's earnings is reported with a one-month lag. Refer to Note 7
of the Bank's first quarter 2023 Interim Consolidated Financial
Statements for further details.
|
4
|
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.
|
5
|
Capital allocated to
the business segment was increased to 11% CET1 Capital in the first
quarter of 2023, compared with 10.5% in the prior year.
|
6
|
Net interest margin is
calculated by dividing net interest income by average
interest-earning assets. For U.S. Retail segment, this calculation
excludes the impact related to sweep deposits arrangements and
intercompany deposits and cash collateral. The value of tax-exempt
interest income is adjusted to its equivalent before-tax value. For
investment securities, the adjustment to fair value is included in
the calculation of average interest-earning assets. Management
believes this calculation better reflects segment performance. Net
interest income and average interest-earning assets used in the
calculation are non-GAAP financial measures.
|
7
|
For additional
information about this metric, refer to the Glossary in the Bank's
first quarter 2023 MD&A.
|
Quarterly comparison – Q1 2023 vs. Q1 2022
U.S. Retail reported net income for the quarter was $1,589 million (US$1,177
million), an increase of $317
million (US$171 million), or
25% (17% in U.S. dollars) compared with the first quarter last
year. On an adjusted basis, net income for the quarter was
$1,669 million (US$1,236 million), an increase of $397 million (US$230 million), or 31% (23%
in U.S. dollars). The reported and adjusted annualized ROE for the
quarter were 15.5% and 16.3%, respectively, compared with 12.6% in
the first quarter last year.
U.S. Retail net income includes contributions from the U.S.
Retail Bank and the Bank's investment in Schwab. Reported net
income for the quarter from the Bank's investment in Schwab was
$301 million (US$222 million), an increase of $49 million (US$22
million), or 19% (11% in U.S. dollars), reflecting higher
net interest income, partially offset by higher expenses, lower
asset management fees and lower trading revenue.
U.S. Retail Bank reported net income was $1,288 million (US$955
million), an increase of $268
million (US$149 million), or
26% (18% in U.S. dollars), compared with the first quarter last
year, primarily reflecting higher revenue, partially offset by
higher non-interest expenses including acquisition and
integration-related charges for the First Horizon acquisition and
higher PCL. U.S. Retail Bank adjusted net income was $1,368 million (US$1,014
million), an increase of $348 million (US$208 million), or 34% (26% in U.S. dollars),
compared with the first quarter last year, reflecting higher
revenue, partially offset by higher non-interest expenses and
PCL.
Revenue for the quarter was US$2,791 million, an increase of
US$590 million, or 27%, compared with
the first quarter last year. Net interest income of US$2,349 million, increased US$678 million,
or 41%, driven by the benefit of higher deposit margins from the
rising rate environment and higher loan volumes, partially offset
by lower margin on loans, lower deposit volumes, and lower income
from PPP loan forgiveness. Net interest margin of 3.29%, increased
108 bps, as higher margin on deposits reflecting the rising
interest rate environment was partially offset by lower margin on
loans and lower income from PPP loan forgiveness. Non-interest
income of US$442 million decreased
US$88 million, or 17%, compared with
the first quarter last year, primarily reflecting lower overdraft
fees.
Average loan volumes increased US$14
billion, or 9%, compared with the first quarter last year.
Personal loans increased 11%, reflecting strong originations, lower
prepayments and higher credit card sale volumes. Business loans
increased 6%, reflecting strong originations, new customer growth,
higher commercial line utilization and increased customer activity,
partially offset by PPP loan forgiveness. Excluding PPP loans,
business loans increased 9%. Average deposit volumes decreased
US$26 billion, or 7%, reflecting flat
personal deposit volumes, a 4% decrease in business deposits, and a
15% decrease in sweep deposits.
Assets under administration (AUA) were US$35 billion as at January 31, 2023, an increase of US$3 billion, or 9%, compared with the first
quarter last year, reflecting net asset growth. Assets under
Management (AUM) were US$35 billion
as at January 31, 2023, a decrease of
US$5 billion, or 13%, compared with
the first quarter last year, reflecting market depreciation and net
asset outflows.
PCL for the quarter was US$149
million, an increase of US$132
million compared with the first quarter last year. PCL –
impaired was US$158 million, an
increase of US$59 million, or 60%,
reflecting some further normalization of credit performance. PCL –
performing was a recovery of US$9
million, compared with a recovery of US$82 million in the prior year. The performing
release this quarter was largely reflected in the commercial
lending portfolios. The performing release in the prior year
reflected a more favourable 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 0.34%,
an increase of 30 bps, compared with the first quarter last
year.
Reported non-interest expenses for the quarter were US$1,535 million, an increase of US$274 million, or 22%, compared with the first
quarter last year, reflecting higher employee-related expenses,
acquisition and integration-related charges for the First Horizon
acquisition, credit card growth-related expenses, and other
business investments. On an adjusted basis, excluding acquisition
and integration-related charges for the First Horizon acquisition,
non-interest expenses increased US$196
million, or 16%.
The reported and adjusted efficiency ratios for the quarter were
55.0% and 52.2%, respectively, compared with 57.3%, in the first
quarter last year.
Quarterly comparison – Q1 2023 vs. Q4 2022
U.S. Retail reported net income of $1,589
million (US$1,177 million)
increased $50 million (US$14 million), or 3% (1% in U.S. dollars),
compared with the prior quarter. On an adjusted basis, net income
for the quarter was $1,669 million
(US$1,236 million), an increase of
$79 million (US$36 million), or 5% (3% in U.S. dollars). The
reported and adjusted annualized ROE for the quarter were 15.5% and
16.3%, respectively, compared with 15.4% and 15.8%, respectively,
in the prior quarter.
The contribution from Schwab of $301
million (US$222 million), a
decrease of $9 million (US$15 million), or 3% (6% in U.S. dollars),
reflecting higher expenses, lower bank deposit account fees and
lower trading revenue, partially offset by higher net interest
income.
U.S. Retail Bank reported net income was $1,288 million (US$955
million), an increase of $59
million (US$29 million), or 5%
(3% in U.S. dollars), compared with the prior quarter, reflecting
higher revenue and lower PCL, partially offset by higher
non-interest expenses including acquisition and integration-related
charges for the First Horizon acquisition. U.S. Retail Bank
adjusted net income was $1,368
million (US$1,014 million), an
increase of $88 million (US$51 million), or 7% (5% in U.S. dollars),
reflecting higher revenue and lower PCL, partially offset by higher
non-interest expenses.
Revenue increased US$92 million,
or 3%, compared with the prior quarter. Net interest income of
US$2,349 million increased
US$129 million, or 6%, primarily
reflecting the benefit of higher deposit margins due to the rising
interest rate environment, partially offset by lower deposit
volume. Net interest margin of 3.29% increased 16 bps quarter over
quarter, as higher margin on deposits reflecting the rising
interest rate environment was partially offset by lower margin on
loans and negative balance sheet mix. Non-interest income of
US$442 million decreased US$37 million, or 8%, primarily reflecting lower
overdraft fees.
Average loan volumes increased US$5
billion, or 3%, compared with the prior quarter. Personal
loans increased 3%, reflecting strong originations, lower
prepayments and higher credit card sale volumes. Business loans
increased 3%, reflecting strong originations, new customer growth,
higher commercial line utilization and increased customer activity.
Average deposit volumes decreased US$16
billion, or 4%, compared with the prior quarter, reflecting
a 2% decrease in personal deposits, a 2% decrease in business
deposits, and an 8% decrease in sweep deposits.
AUA were US$35 billion, an
increase of US$1 billion, or 3%,
compared with the prior quarter, reflecting net asset growth. AUM
were US$35 billion, an increase of
US$2 billion, or 6%, reflecting
market appreciation, partially offset by net asset outflows.
PCL was lower by US$20 million
compared with the prior quarter. PCL – impaired increased
US$33 million, or 26%, reflecting
some further normalization of credit performance. PCL – performing
was a recovery of US$9 million,
compared with a build of US$44
million in the prior quarter. The performing release this
quarter was largely reflected in the commercial lending portfolios.
The performing build in the prior quarter reflected some
normalization of credit performance, deterioration of economic
outlook and volume growth. 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 0.34%, lower by 6
bps.
Reported non-interest expenses for the quarter were US$1,535 million, an increase of US$53 million, or 4%, reflecting higher
employee-related expenses, credit card growth-related expenses, and
acquisition and integration-related charges for the First Horizon
acquisition, partially offset by the timing of certain expenses
across quarters. On an adjusted basis, excluding acquisition and
integration-related charges for the First Horizon acquisition,
non-interest expenses increased US$25
million, or 2%.
The reported and adjusted efficiency ratios for the quarter were
55.0% and 52.2%, respectively, compared with 54.9% and 53.1%,
respectively, in the prior quarter.
TABLE 9: WEALTH
MANAGEMENT AND INSURANCE
|
|
|
(millions of Canadian
dollars, except as noted)
|
|
|
For the three months
ended
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
2023
|
|
2022
|
|
2022
|
|
Net interest
income
|
$
|
281
|
|
$
|
272
|
|
$
|
209
|
|
Non-interest
income
|
|
2,621
|
|
|
2,359
|
|
|
2,589
|
|
Total
revenue
|
|
2,902
|
|
|
2,631
|
|
|
2,798
|
|
Provision for (recovery
of) credit losses – impaired
|
|
–
|
|
|
–
|
|
|
–
|
|
Provision for (recovery
of) credit losses – performing
|
|
–
|
|
|
–
|
|
|
1
|
|
Total provision for
(recovery of) credit losses
|
|
–
|
|
|
–
|
|
|
1
|
|
Insurance claims and
related expenses
|
|
976
|
|
|
723
|
|
|
756
|
|
Non-interest
expenses
|
|
1,182
|
|
|
1,208
|
|
|
1,180
|
|
Provision for (recovery
of) income taxes
|
|
194
|
|
|
184
|
|
|
225
|
|
Net
income
|
$
|
550
|
|
$
|
516
|
|
$
|
636
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
Return on common
equity1
|
|
41.3
|
%
|
|
39.5
|
%
|
|
50.2
|
%
|
Efficiency
ratio
|
|
40.7
|
|
|
45.9
|
|
|
42.2
|
|
Assets under
administration (billions of Canadian
dollars)2
|
$
|
541
|
|
$
|
517
|
|
$
|
557
|
|
Assets under management
(billions of Canadian dollars)
|
|
414
|
|
|
397
|
|
|
429
|
|
Average number of
full-time equivalent staff
|
|
16,293
|
|
|
15,952
|
|
|
15,081
|
|
1 Capital
allocated to the business segment was increased to 11% CET1 Capital
in the first quarter of 2023, compared with 10.5% in the prior
year.
|
2 Includes AUA administered by TD
Investor Services, which is part of the Canadian Personal and
Commercial Banking segment.
|
Quarterly comparison – Q1 2023 vs. Q1 2022
Wealth Management and Insurance net income for the quarter was
$550 million, a decrease of $86 million, or 14%, compared
with the first quarter last year, reflecting lower earnings in the
wealth management business, partially offset by higher insurance
earnings. The annualized ROE for the quarter was 41.3%,
compared with 50.2% in the first quarter last year.
Revenue for the quarter was $2,902 million, an increase of $104 million, or 4%, compared with the first
quarter last year. Net interest income was $281 million, an increase of $72 million, or 34%, reflecting higher margins,
partially offset by lower volumes in the wealth management
business. Non-interest income was $2,621 million, an increase of
$32 million, or 1%, reflecting an increase in the fair value
of investments supporting claims liabilities which resulted in a
similar increase in insurance claims, and higher insurance volumes,
partially offset by lower transaction and fee-based revenue in the
wealth management business.
AUA were $541 billion as at
January 31, 2023, a decrease of
$16 billion, or 3%, compared with the
first quarter last year, reflecting market depreciation, partially
offset by net asset growth. AUM were $414
billion as at January 31,
2023, a decrease of $15 billion, or 3%, compared with
the first quarter last year, primarily reflecting market
depreciation.
Insurance claims and related expenses were $976 million, an increase of $220 million, or 29%, compared with the first
quarter last year, reflecting the impact of changes in the discount
rate which resulted in a similar increase in the fair value of
investments supporting claims liabilities reported in non-interest
income, increased driving activity and inflationary costs,
partially offset by fewer severe weather-related events.
Non-interest expenses for the quarter were $1,182 million, an increase of $2 million
compared with the first quarter last year, reflecting higher spend
supporting business growth, including higher employee-related
expenses and technology costs, partially offset by lower variable
compensation.
The efficiency ratio for the quarter was 40.7%, compared with
42.2% in the first quarter last year.
Quarterly comparison – Q1 2023 vs. Q4 2022
Wealth Management and Insurance net income for the quarter
was $550 million, an increase of $34 million, or 7%,
compared with the prior quarter, reflecting higher revenue and
lower non-interest expenses, partially offset by higher claims and
related expenses. The annualized ROE for the quarter was
41.3%, compared with 39.5%, in the prior quarter.
Revenue increased $271 million, or
10%, compared with the prior quarter. Non-interest income increased
$262 million, or 11%, reflecting an
increase in the fair value of investments supporting claims
liabilities which resulted in a similar increase in insurance
claims, and higher insurance volumes. Net interest income increased
$9 million, or 3%, reflecting higher
margins.
AUA increased $24 billion, or
5%, compared with the prior quarter, reflecting market appreciation
and net asset growth. AUM increased $17
billion, or 4%, compared with the prior quarter, primarily
reflecting market appreciation.
Insurance claims and related expenses increased $253 million, or 35%, compared with the prior
quarter, reflecting the impact of changes in the discount rate
which resulted in a similar increase in the fair value of
investments supporting claims liabilities reported in non-interest
income and less favourable prior years' claims development.
Non-interest expenses for the quarter decreased
$26 million, or 2%, compared with the prior quarter,
reflecting lower technology spend.
The efficiency ratio for the quarter was 40.7%, compared with
45.9% in the prior quarter.
TABLE 10: WHOLESALE
BANKING
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three months
ended
|
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
|
2023
|
|
2022
|
|
2022
|
|
Net interest income
(TEB)
|
$
|
525
|
|
$
|
683
|
|
$
|
709
|
|
Non-interest
income
|
|
820
|
|
|
476
|
|
|
637
|
|
Total
revenue
|
|
1,345
|
|
|
1,159
|
|
|
1,346
|
|
Provision for (recovery
of) credit losses – impaired
|
|
1
|
|
|
24
|
|
|
(4)
|
|
Provision for (recovery
of) credit losses – performing
|
|
31
|
|
|
2
|
|
|
(1)
|
|
Total provision for
(recovery of) credit losses
|
|
32
|
|
|
26
|
|
|
(5)
|
|
Non-interest expenses –
reported
|
|
883
|
|
|
802
|
|
|
764
|
|
Non-interest expenses –
adjusted1,2
|
|
862
|
|
|
784
|
|
|
764
|
|
Provision for (recovery
of) income taxes (TEB) – reported
|
|
99
|
|
|
70
|
|
|
153
|
|
Provision for (recovery
of) income taxes (TEB) – adjusted1
|
|
104
|
|
|
74
|
|
|
153
|
|
Net income –
reported
|
$
|
331
|
|
$
|
261
|
|
$
|
434
|
|
Net income –
adjusted1
|
|
347
|
|
|
275
|
|
|
434
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
Trading-related revenue
(TEB)3
|
$
|
662
|
|
$
|
560
|
|
$
|
726
|
|
Average gross lending
portfolio (billions of Canadian dollars)4
|
|
96.9
|
|
|
85.0
|
|
|
59.2
|
|
Return on common equity
– reported5
|
|
9.4
|
%
|
|
8.2
|
%
|
|
16.2
|
%
|
Return on common equity
– adjusted1,5
|
|
9.9
|
|
|
8.6
|
|
|
16.2
|
|
Efficiency ratio –
reported
|
|
65.7
|
|
|
69.2
|
|
|
56.8
|
|
Efficiency ratio –
adjusted1
|
|
64.1
|
|
|
67.6
|
|
|
56.8
|
|
Average number of
full-time equivalent staff
|
|
5,365
|
|
|
5,301
|
|
|
4,932
|
|
1
|
For additional
information about the Bank's use of non-GAAP financial measures,
refer to "Non-GAAP and Other Financial Measures" in the "How We
Performed" section of this document.
|
2
|
Adjusted non-interest
expenses exclude the acquisition and integration-related charges
primarily for the Cowen acquisition – Q1 2023: $21 million ($16
million after-tax), Q4 2022: $18 million ($14 million
after-tax).
|
3
|
Includes net interest
income TEB of $261 million (Q4 2022: $407 million, Q1 2022: $525
million), and trading income (loss) of $401 million (Q4 2022: $153
million, Q1 2022: $201 million). Trading-related revenue (TEB) is a
non-GAAP financial measure. Refer to "Non-GAAP and Other Financial
Measures" in the "How We Performed" section of this document and
the Glossary in the Bank's first quarter of 2023 MD&A for
additional information about this metric.
|
4
|
Includes gross loans
and bankers' acceptances relating to Wholesale Banking, excluding
letters of credit, cash collateral, credit default swaps, and
allowance for credit losses.
|
5
|
Capital allocated to
the business segment was increased to 11% CET1 Capital in the first
quarter of fiscal 2023 compared with 10.5% in the prior
year.
|
Quarterly comparison – Q1 2023 vs. Q1 2022
Wholesale Banking reported net income for the quarter was
$331 million, a decrease of
$103 million, or 24%, compared with
the first quarter last year, reflecting higher non-interest
expenses and PCL. On an adjusted basis, net income was $347 million, a decrease of $87 million, or 20%.
Revenue for the quarter was $1,345
million, largely unchanged from the first quarter last year,
reflecting lower trading-related revenue and underwriting fees,
offset by higher global transaction banking and lending
revenue.
PCL for the quarter was $32
million, compared with a recovery of $5 million in the first quarter last year. PCL –
impaired was $1 million. PCL –
performing was $31 million, largely
reflecting volume growth.
Reported non-interest expenses were $883
million, an increase of $119
million, or 16%, compared with the first quarter last year,
reflecting the continued investments in Wholesale Banking's U.S.
dollar strategy, including the hiring of banking, sales and
trading, and technology professionals, acquisition and
integration-related charges primarily for the Cowen acquisition,
higher severance, and the impact of foreign exchange translation.
On an adjusted basis, non-interest expenses were $862 million, an increase of $98 million or 13%.
Quarterly comparison – Q1 2023 vs. Q4 2022
Wholesale Banking reported net income for the quarter was
$331 million, an increase of
$70 million, or 27%, compared with
the prior quarter, reflecting higher revenue, partially offset by
higher non-interest expenses. On an adjusted basis, net income was
$347 million, an increase of
$72 million, or 26%.
Revenue for the quarter increased $186
million, or 16%, primarily reflecting markdowns in certain
loan underwriting commitments in the prior quarter and higher
trading-related revenue.
PCL for the quarter was $32
million, an increase of $6
million compared with the prior quarter. PCL – impaired was
$1 million. PCL – performing was
$31 million, largely reflecting volume growth.
Reported non-interest expenses for the quarter increased
$81 million, or 10%, primarily
reflecting higher variable compensation commensurate with higher
revenues. On an adjusted basis, non-interest expenses increased
$78 million or 10%.
TABLE 11:
CORPORATE
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three months
ended
|
|
|
January
31
|
October 31
|
January 31
|
|
|
2023
|
2022
|
2022
|
Net income (loss) –
reported
|
$
|
(2,617)
|
$
|
2,661
|
$
|
(227)
|
Adjustments for
items of note
|
|
|
|
|
|
|
Amortization of
acquired intangibles before income taxes
|
|
54
|
|
57
|
|
67
|
Acquisition and
integration charges related to the Schwab transaction
|
|
34
|
|
18
|
|
50
|
Mitigation of impact
from interest rate volatility to closing capital on First Horizon
acquisition
|
|
876
|
|
(2,319)
|
|
–
|
Stanford litigation
settlement
|
|
1,603
|
|
–
|
|
–
|
Gain on sale of Schwab
shares
|
|
–
|
|
(997)
|
|
–
|
Less: impact of
income taxes
|
|
|
|
|
|
|
Canada Recovery
Dividend and impact from increase in the Canadian federal tax rate
for fiscal 2022
|
|
(585)
|
|
–
|
|
–
|
Other items of
note
|
|
675
|
|
(570)
|
|
17
|
Net income (loss) –
adjusted1
|
$
|
(140)
|
$
|
(10)
|
$
|
(127)
|
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) – adjusted
|
|
|
|
|
|
|
Net corporate
expenses2
|
$
|
(191)
|
$
|
(187)
|
$
|
(168)
|
Other
|
|
51
|
|
177
|
|
41
|
Net income (loss) –
adjusted1
|
$
|
(140)
|
$
|
(10)
|
$
|
(127)
|
|
|
|
|
|
|
|
|
Selected
volumes
|
|
|
|
|
|
|
Average number of
full-time equivalent staff
|
|
21,844
|
|
21,373
|
|
18,017
|
1
|
For additional
information about the Bank's use of non-GAAP financial measures,
refer to "Non-GAAP and Other Financial Measures" in the "How We
Performed" section of this document.
|
2
|
For additional
information about this metric, refer to the Glossary in the Bank's
first quarter of 2023 MD&A.
|
Quarterly comparison – Q1 2023 vs. Q1 2022
Corporate segment's reported net loss for the quarter was
$2,617 million, compared with a
reported net loss of $227 million in
the first quarter last year. The year-over-year increase primarily
reflects the Stanford litigation
settlement, a net loss from mitigation of impact from interest rate
volatility to closing capital on First Horizon acquisition, the
recognition of a provision for income taxes in connection with the
CRD and increase in the Canadian federal tax rate for fiscal 2022,
and higher net corporate expenses. The adjusted net loss for the
quarter was $140 million, compared
with an adjusted net loss of $127
million in the first quarter last year.
Quarterly comparison – Q1 2023 vs. Q4 2022
Corporate segment's reported net loss for the quarter was
$2,617 million, compared with a
reported net income of $2,661 million
in the prior quarter. The quarter-over-quarter decrease primarily
reflects a net loss from mitigation of impact from interest rate
volatility to closing capital on First Horizon acquisition compared
with a net gain in the prior quarter, the Stanford litigation settlement, gain on the sale of
Schwab shares in the prior quarter, the recognition of a provision
for income taxes in connection with the CRD and increase in the
Canadian federal tax rate for fiscal 2022, and a lower contribution
from other items. The decrease in other items primarily reflects
the favourable tax impact in the prior quarter of earnings mix and
the recognition of unused tax losses. The adjusted net loss for the
quarter was $140 million, compared with an adjusted net loss
of $10 million in the prior
quarter.
SHAREHOLDER AND INVESTOR INFORMATION
Shareholder Services
If you:
|
And your inquiry
relates to:
|
Please
contact:
|
Are a registered
shareholder (your name appears on your TD share
certificate)
|
Missing dividends, lost
share certificates, estate questions, address changes to the share
register, dividend bank account changes, the dividend reinvestment
plan, eliminating duplicate mailings of shareholder materials or
stopping (or resuming) receiving annual and quarterly
reports
|
Transfer
Agent:
TSX Trust
Company
301-100 Adelaide Street
West
Toronto, ON M5H
4H1
1-800-387-0825 (Canada
and U.S. only)
or
416-682-3860
Facsimile:
1-888-249-6189
shareholderinquiries@tmx.com or www.tsxtrust.com
|
Hold your TD shares
through the
Direct Registration
System
in the United
States
|
Missing dividends, lost
share certificates, estate questions, address changes to the share
register, eliminating duplicate mailings of shareholder materials
or stopping (or resuming) receiving annual and quarterly
reports
|
Co-Transfer Agent and
Registrar:
Computershare Trust
Company, N.A.
P.O. Box 43006
Providence, RI
02940-3006
or
Computershare Trust
Company, N.A.
150 Royall
Street
Canton, MA
02021
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 first
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 March 2, 2023. 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 first 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 March 2, 2023 in advance of the call. A
listen-only telephone line is available at 416–641–6150 or
1-866-696-5894 (toll free) and the passcode is 2727354#.
The audio webcast and presentations will be archived at
www.td.com/investor. Replay of the teleconference will be available
from 5:00 p.m. ET on March 2, 2023, until
11:59 p.m. ET on March 17, 2023 by calling 905-694-9451 or
1-800-408-3053 (toll free). The passcode is 7300743#.
Annual Meeting
Thursday, April
20, 2023
Toronto, Ontario
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively
known as TD Bank Group ("TD" or the "Bank"). TD is the fifth
largest bank in North America by
assets and serves over 27 million customers in four key businesses
operating in a number of locations in financial centres around the
globe: Canadian Personal and Commercial Banking, including TD
Canada Trust and TD Auto Finance Canada; 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; Wealth Management and Insurance, including TD Wealth
(Canada), TD Direct
Investing, and TD Insurance; 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 $1.9
trillion in assets on January 31,
2023. The Toronto-Dominion Bank trades under the symbol "TD"
on the Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group