This quarterly
earnings news release should be read in conjunction with the Bank's
unaudited second quarter 2018 Report to Shareholders for the three
and six months ended April 30, 2018, 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 23, 2018. Unless otherwise indicated, all amounts are
expressed in Canadian dollars, and have been primarily derived from
the Bank's Annual or Interim Consolidated Financial Statements
prepared in accordance with IFRS. Certain comparative amounts have
been reclassified to conform to the presentation adopted in the
current period. Additional information relating to the Bank is
available on the Bank's website at http://www.td.com, as well as on
SEDAR at http://www.sedar.com and on the U.S. Securities and
Exchange Commission's (SEC) website at http://www.sec.gov (EDGAR
filers section).
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 $1.54, compared with $1.31.
- Adjusted diluted earnings per share were $1.62, compared with $1.34.
- Reported net income was $2,916
million, compared with $2,503
million.
- Adjusted net income was $3,062
million, compared with $2,561
million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, six months ended
April 30, 2018, compared with the
corresponding period last year:
- Reported diluted earnings per share were $2.78, compared with $2.63.
- Adjusted diluted earnings per share were $3.18, compared with $2.67.
- Reported net income was $5,269
million, compared with $5,036
million.
- Adjusted net income was $6,008
million, compared with $5,119
million.
SECOND QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The
second quarter reported earnings figures included the following
items of note:
- Amortization of intangibles of $86
million ($73 million after tax
or 4 cents per share), compared with
$78 million ($58 million after tax or 3
cents per share) in the second quarter last
year.
- Charges associated with the Scottrade transaction of
$77 million ($73 million after tax or 4
cents per share).
TORONTO, May 24, 2018 /CNW/ - TD Bank Group ("TD" or
the "Bank") today announced its financial results for the second
quarter ended April 30, 2018. Second
quarter reported earnings were $2.9
billion, up 17% and adjusted earnings were $3.1 billion, up 20% compared with the same
quarter last year.
"We delivered exceptional earnings performance across the Bank
in the second quarter, by continuing to attract customers and
deepen our relationship with them," said Bharat Masrani, Group
President and Chief Executive Officer. "At the half-year mark, we
are extremely pleased with the earnings growth in all of our
business segments, on both sides of the border."
Canadian Retail
Canadian Retail net income was
$1,833 million, an increase of 17%
compared with the same quarter last year. This performance reflects
higher margins, good volume growth, and strong credit performance,
as well as increased trading volumes and assets under management in
our wealth businesses. We continued to transform the customer
experience this quarter with the launch of a digital pre-approval
tool for mortgages which, combined with the mortgage affordability
and pre-qualification tools, help customers feel more confident
about their home buying decision and deliver a more seamless and
personalized experience across multiple channels.
U.S. Retail
U.S. Retail reported net income was
$979 million (US$770 million) and adjusted net income was
$1,052 million (US$827 million), an increase of 16% (21% in U.S.
dollars) on a reported basis and 24% (30% in U.S. dollars) on an
adjusted basis, compared with the second quarter last year.
The U.S. Retail Bank, which excludes the Bank's investment in TD
Ameritrade, reported net income of $845
million (US$663 million) and
adjusted net income of $857 million
(US$673 million). This represents an
increase of 15% (20% in U.S. dollars) on a reported basis and 16%
(21% in U.S. dollars) on an adjusted basis, compared with the
second quarter last year. Earnings reflect peer-leading growth in
loan and deposit volumes, higher margins, and a lower corporate
income tax rate. We continue to focus on delivering legendary
customer service and earned the "Highest Customer Satisfaction with
Retail Banking in Florida",
according to the J.D. Power 2018 U.S. Retail Banking
study1.
TD Ameritrade contributed $134
million (US$107 million) in
reported earnings to the segment and $195
million (US$154 million) in
adjusted earnings.
Wholesale Banking
Wholesale Banking net income was
$267 million, an increase of 8%
compared with the second quarter last year, reflecting stronger
revenue growth, partially offset by a higher provision for credit
losses and continued investments in support of the global expansion
of Wholesale Banking's U.S. dollar strategy.
Capital
TD's Common Equity Tier 1 Capital ratio on a
Basel III fully phased-in basis was 11.8%.
________________________________
|
1
|
TD Bank, America's
Most Convenient Bank® received the highest score in Florida in the
J.D. Power 2018 U.S. Retail Banking Satisfaction Studies of
customers' satisfaction with their own retail bank. Visit
www.jdpower.com/awards.
|
Innovation
"TD is a leader in digital with 12 million
active online and mobile customers. Our growing suite of technology
patent filings and our recent acquisition of Layer 6 demonstrate
how we are innovating with purpose and building the bank of the
future," said Masrani. "We're proud to deliver innovative
personalized and connected experiences that allow our customers to
engage with us in truly differentiated ways, when and how they
prefer."
Conclusion
"We continue to invest in future growth
and we're very pleased with these results," said Masrani. "This
quarter, TD was proud to launch The Ready Commitment, to help
individuals and communities prosper in a changing world, opening
doors to a more inclusive tomorrow. As we look ahead to the second
half of the year, TD will remain focused on capitalizing on our
scale and delivering for our customers and colleagues."
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 ("2017 MD&A") in the Bank's 2017 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 2018", and for the
Corporate segment, "Focus for 2018", and in other statements
regarding the Bank's objectives and priorities for 2018 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 2017
MD&A, as may be updated in subsequently filed quarterly reports
to shareholders and news releases (as applicable) related to any
transactions or events discussed under the heading "Significant
Events" in the relevant MD&A, which applicable releases may be
found on www.td.com. All such factors should be considered
carefully, as well as other uncertainties and potential events, and
the inherent uncertainty of forward-looking statements, when making
decisions with respect to the Bank and the Bank cautions readers
not to place undue reliance on the Bank's forward-looking
statements.
Material economic assumptions underlying the forward-looking
statements contained in this document are set out in the 2017
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 2018", and for the Corporate
segment, "Focus for 2018", 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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TABLE 1: FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
2018
|
|
January 31
2018
|
|
April 30
2017
|
|
April
30
2018
|
|
April 30
2017
|
|
|
|
|
|
|
Results of
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
$
|
9,467
|
|
$
|
9,360
|
|
$
|
8,473
|
|
$
|
18,827
|
|
$
|
17,593
|
|
Provision for credit
losses1
|
|
556
|
|
|
693
|
|
|
500
|
|
|
1,249
|
|
|
1,133
|
|
Insurance claims and
related expenses
|
|
558
|
|
|
575
|
|
|
538
|
|
|
1,133
|
|
|
1,112
|
|
Non-interest expenses
|
|
4,822
|
|
|
4,846
|
|
|
4,786
|
|
|
9,668
|
|
|
9,683
|
|
Net income –
reported
|
|
2,916
|
|
|
2,353
|
|
|
2,503
|
|
|
5,269
|
|
|
5,036
|
|
Net income –
adjusted2
|
|
3,062
|
|
|
2,946
|
|
|
2,561
|
|
|
6,008
|
|
|
5,119
|
|
Financial
position (billions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans net of
allowance for loan losses
|
$
|
622.0
|
|
$
|
607.1
|
|
$
|
598.5
|
|
$
|
622.0
|
|
$
|
598.5
|
|
Total
assets
|
|
1,283.8
|
|
|
1,261.3
|
|
|
1,251.9
|
|
|
1,283.8
|
|
|
1,251.9
|
|
Total
deposits
|
|
829.8
|
|
|
813.4
|
|
|
807.1
|
|
|
829.8
|
|
|
807.1
|
|
Total
equity
|
|
76.7
|
|
|
73.2
|
|
|
76.2
|
|
|
76.7
|
|
|
76.2
|
|
Total Common Equity
Tier 1 Capital risk-weighted assets3
|
|
417.8
|
|
|
441.3
|
|
|
420.1
|
|
|
417.8
|
|
|
420.1
|
|
Financial
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity – reported
|
|
16.8
|
%
|
|
13.2
|
%
|
|
14.4
|
%
|
|
14.9
|
%
|
|
14.4
|
%
|
Return on common
equity – adjusted4
|
|
17.6
|
|
|
16.6
|
|
|
14.8
|
|
|
17.1
|
|
|
14.6
|
|
Efficiency ratio –
reported
|
|
50.9
|
|
|
51.8
|
|
|
56.5
|
|
|
51.4
|
|
|
55.0
|
|
Efficiency ratio –
adjusted2
|
|
50.1
|
|
|
50.6
|
|
|
55.8
|
|
|
50.3
|
|
|
54.4
|
|
Provision for loan
losses as a % of net average loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
acceptances5
|
|
0.36
|
|
|
0.45
|
|
|
0.35
|
|
|
0.40
|
|
|
0.39
|
|
Common share
information – reported (dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.54
|
|
$
|
1.24
|
|
$
|
1.31
|
|
$
|
2.78
|
|
$
|
2.63
|
|
|
Diluted
|
|
1.54
|
|
|
1.24
|
|
|
1.31
|
|
|
2.78
|
|
|
2.63
|
|
Dividends per
share
|
|
0.67
|
|
|
0.60
|
|
|
0.60
|
|
|
1.27
|
|
|
1.15
|
|
Book value per
share
|
|
38.26
|
|
|
36.58
|
|
|
38.08
|
|
|
38.26
|
|
|
38.08
|
|
Closing share
price6
|
|
72.11
|
|
|
74.82
|
|
|
64.23
|
|
|
72.11
|
|
|
64.23
|
|
Shares outstanding
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
1,843.6
|
|
|
1,841.7
|
|
|
1,854.4
|
|
|
1,842.6
|
|
|
1,855.1
|
|
|
Average
diluted
|
|
1,847.5
|
|
|
1,846.2
|
|
|
1,858.7
|
|
|
1,846.8
|
|
|
1,859.5
|
|
|
End of
period
|
|
1,844.6
|
|
|
1,843.7
|
|
|
1,843.4
|
|
|
1,844.6
|
|
|
1,843.4
|
|
Market capitalization
(billions of Canadian dollars)
|
$
|
133.0
|
|
$
|
137.9
|
|
$
|
118.4
|
|
$
|
133.0
|
|
$
|
118.4
|
|
Dividend
yield7,8
|
|
3.7
|
%
|
|
3.3
|
%
|
|
3.6
|
%
|
|
3.5
|
%
|
|
3.5
|
%
|
Dividend payout
ratio
|
|
43.5
|
|
|
48.3
|
|
|
45.9
|
|
|
45.6
|
|
|
43.7
|
|
Price-earnings
ratio
|
|
12.7
|
|
|
13.8
|
|
|
12.7
|
|
|
12.7
|
|
|
12.7
|
|
Total shareholder
return (1 year)9
|
|
16.3
|
|
|
14.9
|
|
|
19.3
|
|
|
16.3
|
|
|
19.3
|
|
Common share
information – adjusted (dollars)2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.62
|
|
$
|
1.56
|
|
$
|
1.34
|
|
$
|
3.18
|
|
$
|
2.68
|
|
|
Diluted
|
|
1.62
|
|
|
1.56
|
|
|
1.34
|
|
|
3.18
|
|
|
2.67
|
|
Dividend payout
ratio
|
|
41.4
|
%
|
|
38.3
|
%
|
|
44.8
|
%
|
|
39.9
|
%
|
|
43.0
|
%
|
Price-earnings
ratio
|
|
11.9
|
|
|
13.0
|
|
|
12.4
|
|
|
11.9
|
|
|
12.4
|
|
Capital
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital ratio3
|
|
11.8
|
%
|
|
10.6
|
%
|
|
10.8
|
%
|
|
11.8
|
%
|
|
10.8
|
%
|
Tier 1 Capital
ratio3
|
|
13.5
|
|
|
12.1
|
|
|
12.5
|
|
|
13.5
|
|
|
12.5
|
|
Total Capital
ratio3
|
|
15.8
|
|
|
14.2
|
|
|
14.9
|
|
|
15.8
|
|
|
14.9
|
|
Leverage
ratio
|
|
4.1
|
|
|
4.0
|
|
|
3.9
|
|
|
4.1
|
|
|
3.9
|
|
1
|
Effective November 1,
2017, amounts were prepared in accordance with IFRS 9, Financial
Instruments (IFRS 9). Prior period comparatives were prepared
in accordance with IAS 39, Financial Instruments: Recognition
and Measurement (IAS 39) and have not been restated. Refer to
"How the Bank Reports" section of this document and Note 2 and Note
6 of the Interim Consolidated Financial Statements for further
details.
|
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 2017, the scalars for inclusion of CVA for Common
Equity Tier 1 (CET1), Tier 1, and Total Capital RWA were 72%, 77%,
and 81%, respectively. For fiscal 2018, the scalars are 80%, 83%,
and 86%. Prior to the second quarter of 2018, as the Bank was
constrained by the Basel I regulatory floor, the RWA as it relates
to the regulatory floor was calculated based on the Basel I risk
weights which are the same for all capital ratios.
|
4
|
Adjusted return on
common equity is a non-GAAP financial measure. Refer to the "Return
on Common Equity" section of this document for an
explanation.
|
5
|
Excludes acquired
credit-impaired (ACI) loans and prior to November 1, 2017, certain
Debt securities classified as loans (DSCL). DSCL are now
reclassified as Debt securities at amortized cost (DSAC) under IFRS
9.
|
6
|
Toronto Stock
Exchange (TSX) closing market price.
|
7
|
Certain comparative
amounts have been recast to conform with the presentation adopted
in the current period.
|
8
|
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.
|
9
|
Total shareholder
return (TSR) 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.
Effective November 1, 2017, the
Bank adopted IFRS 9, which replaces the guidance in IAS 39. Refer
to Note 2 of the Interim Consolidated Financial Statements for a
summary of the Bank's accounting policies as it relates to IFRS 9.
Under IFRS 9, the current period provision for credit losses (PCL)
for performing (Stage 1 and Stage 2) and impaired (Stage 3)
financial assets, loan commitments, and financial guarantees is
recorded within the respective segment. Under IAS 39 and prior
to November 1, 2017, the PCL related
to the collectively assessed allowance for incurred but not
identified credit losses that related to the Canadian Retail and
Wholesale Banking segments was recorded in the Corporate segment.
Prior period results have not been restated. PCL on impaired
financial assets includes Stage 3 PCL under IFRS 9 and
counterparty-specific and individually insignificant PCL under IAS
39. PCL on performing financial assets, loan commitments, and
financial guarantees include Stage 1 and Stage 2 PCL under IFRS 9
and incurred but not identified losses under IAS 39.
IFRS 9 does not require restatement of comparative period
financial statements except in limited circumstances related to
aspects of hedge accounting. Entities are permitted to restate
comparatives as long as hindsight is not applied. The Bank has made
the decision not to restate comparative period financial
information and has recognized any measurement differences between
the previous carrying amount and the new carrying amount on
November 1, 2017 through an
adjustment to opening retained earnings. As such, fiscal 2018
results reflect the adoption of IFRS 9, while prior periods reflect
results under IAS 39.
U.S. Tax Reform
On December 22, 2017, the U.S. government enacted
comprehensive tax legislation commonly referred to as the Tax Cuts
and Jobs Act (the "U.S. Tax Act") which makes broad and complex
changes to the U.S. tax code.
The reduction of the U.S. federal corporate tax rate enacted by
the U.S. Tax Act resulted in a one-time adjustment during the first
quarter of 2018 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. Based on the
Bank's current assessment of the implications of the U.S. Tax Act,
the Bank recorded a one-time net charge to earnings for the three
months ended January 31, 2018, and
the six months ended April 30, 2018,
of $453 million (US$365 million).
The lower corporate tax rate had and will have a positive effect
on TD's current and future earnings. The amount of the benefit
may vary due to, among other things, changes in interpretations and
assumptions the Bank has made, guidance that may be issued by
applicable regulatory authorities, and actions the Bank may take to
reinvest some of the savings in its operations.
|
|
|
|
|
|
|
|
|
|
|
TABLE 2: OPERATING
RESULTS – Reported
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
|
For the six months
ended
|
|
|
April
30
2018
|
January
31
2018
|
April
30
2017
|
April
30
2018
|
April
30
2017
|
Net interest
income
|
$
|
5,398
|
$
|
5,430
|
$
|
5,109
|
$
|
10,828
|
$
|
10,250
|
Non-interest
income
|
|
4,069
|
|
3,930
|
|
3,364
|
|
7,999
|
|
7,343
|
Total
revenue
|
|
9,467
|
|
9,360
|
|
8,473
|
|
18,827
|
|
17,593
|
Provision for credit
losses
|
|
556
|
|
693
|
|
500
|
|
1,249
|
|
1,133
|
Insurance claims and
related expenses
|
|
558
|
|
575
|
|
538
|
|
1,133
|
|
1,112
|
Non-interest expenses
|
|
4,822
|
|
4,846
|
|
4,786
|
|
9,668
|
|
9,683
|
Income before
income taxes and equity in net income of an
|
|
|
|
|
|
|
|
|
|
|
|
investment in TD
Ameritrade
|
|
3,531
|
|
3,246
|
|
2,649
|
|
6,777
|
|
5,665
|
Provision for income
taxes
|
|
746
|
|
1,040
|
|
257
|
|
1,786
|
|
853
|
Equity in net income
of an investment in TD Ameritrade
|
|
131
|
|
147
|
|
111
|
|
278
|
|
224
|
Net income –
reported
|
|
2,916
|
|
2,353
|
|
2,503
|
|
5,269
|
|
5,036
|
Preferred
dividends
|
|
52
|
|
52
|
|
48
|
|
104
|
|
96
|
Net income
available to common shareholders and
non-controlling
|
|
|
|
|
|
|
|
|
|
|
|
interests in
subsidiaries
|
$
|
2,864
|
$
|
2,301
|
$
|
2,455
|
$
|
5,165
|
$
|
4,940
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
Common
shareholders
|
$
|
2,846
|
$
|
2,283
|
$
|
2,427
|
$
|
5,129
|
$
|
4,883
|
Non-controlling
interests
|
|
18
|
|
18
|
|
28
|
|
36
|
|
57
|
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
|
For the six months
ended
|
|
April
30
2018
|
January 31
2018
|
April 30
2017
|
April
30
2018
|
April 30
2017
|
Operating results
– adjusted
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
5,398
|
$
|
5,430
|
$
|
5,109
|
$
|
10,828
|
$
|
10,250
|
Non-interest
income1
|
|
4,069
|
|
4,019
|
|
3,364
|
|
8,088
|
|
7,302
|
Total
revenue
|
|
9,467
|
|
9,449
|
|
8,473
|
|
18,916
|
|
17,552
|
Provision for credit
losses
|
|
556
|
|
693
|
|
500
|
|
1,249
|
|
1,133
|
Insurance claims and
related expenses
|
|
558
|
|
575
|
|
538
|
|
1,133
|
|
1,112
|
Non-interest
expenses2
|
|
4,744
|
|
4,778
|
|
4,723
|
|
9,522
|
|
9,556
|
Income before income
taxes and equity in net income of an
|
|
|
|
|
|
|
|
|
|
|
|
investment in TD
Ameritrade
|
|
3,609
|
|
3,403
|
|
2,712
|
|
7,012
|
|
5,751
|
Provision for income
taxes
|
|
763
|
|
653
|
|
277
|
|
1,416
|
|
887
|
Equity in net income
of an investment in TD Ameritrade3
|
|
216
|
|
196
|
|
126
|
|
412
|
|
255
|
Net income –
adjusted
|
|
3,062
|
|
2,946
|
|
2,561
|
|
6,008
|
|
5,119
|
Preferred
dividends
|
|
52
|
|
52
|
|
48
|
|
104
|
|
96
|
Net income
available to common shareholders and
non-controlling
|
|
|
|
|
|
|
|
|
|
|
|
interests in
subsidiaries –
adjusted
|
|
3,010
|
|
2,894
|
|
2,513
|
|
5,904
|
|
5,023
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests in subsidiaries, net of income taxes
|
|
18
|
|
18
|
|
28
|
|
36
|
|
57
|
Net income
available to common shareholders – adjusted
|
|
2,992
|
|
2,876
|
|
2,485
|
|
5,868
|
|
4,966
|
Pre-tax
adjustments of items of note
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles4
|
|
(86)
|
|
(85)
|
|
(78)
|
|
(171)
|
|
(158)
|
Charges associated
with the Scottrade transaction5
|
|
(77)
|
|
(73)
|
|
–
|
|
(150)
|
|
–
|
Impact from U.S. tax
reform6
|
|
–
|
|
(48)
|
|
–
|
|
(48)
|
|
–
|
Fair value of
derivatives hedging the reclassified
available-for-sale
|
|
|
|
|
|
|
|
|
|
|
|
securities
portfolio7
|
|
–
|
|
–
|
|
–
|
|
–
|
|
41
|
Provision for
(recovery of) income taxes for items of note
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles8
|
|
(13)
|
|
(17)
|
|
(20)
|
|
(30)
|
|
(41)
|
Charges associated
with the Scottrade transaction
|
|
(4)
|
|
(1)
|
|
–
|
|
(5)
|
|
–
|
Impact from U.S. tax
reform
|
|
–
|
|
405
|
|
–
|
|
405
|
|
–
|
Fair value of
derivatives hedging the reclassified
available-for-sale
|
|
|
|
|
|
|
|
|
|
|
|
securities
portfolio
|
|
–
|
|
–
|
|
–
|
|
–
|
|
7
|
Total adjustments
for items of note
|
|
(146)
|
|
(593)
|
|
(58)
|
|
(739)
|
|
(83)
|
Net income
available to common shareholders – reported
|
$
|
2,846
|
$
|
2,283
|
$
|
2,427
|
$
|
5,129
|
$
|
4,883
|
1
|
Adjusted Non-interest
income excludes the following items of note: Adjustment to the
carrying balances of certain tax credit-related investments, as
explained in footnote 6 – first quarter 2018 – $(89) million. Gain
on fair value of derivatives hedging the reclassified
available‑for‑sale (AFS) securities portfolio, as explained in
footnote 7 – first quarter 2017 – $41 million. These amounts
were reported in the Corporate segment.
|
2
|
Adjusted Non-interest
expenses excludes the following items of note: Amortization of
intangibles, as explained in footnote 4 – second quarter 2018 –
$62 million, first quarter 2018 – $63 million, second
quarter 2017 – $63 million, and first quarter 2017 –
$64 million; these amounts were reported in the Corporate
segment. Charges associated with Scottrade transaction, as
explained in footnote 5 – second quarter 2018 – $16 million and
first quarter 2018 – $5 million; these amounts were reported in the
U.S. Retail segment.
|
3
|
Adjusted Equity in
net income of an investment in TD Ameritrade excludes the following
items of note: Amortization of intangibles, as explained in
footnote 4 – second quarter 2018 – $24 million,
first quarter 2018 – $22 million, second quarter 2017
– $15 million, and first quarter 2017 –
$16 million; and the Bank's share of TD Ameritrade's deferred
tax balances adjustment, as explained in footnote 6 – 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 5 – second
quarter 2018 – $61 million and first quarter 2018 – $68
million. This item was reported in the U.S. Retail
segment.
|
4
|
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.
|
5
|
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 are reported in the U.S. Retail segment.
|
6
|
The reduction of the
U.S. federal corporate tax rate enacted by the U.S. Tax Act
resulted in a one-time net charge to earnings during the first
quarter of 2018 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 $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.
|
7
|
The Bank changed its
trading strategy with respect to certain trading debt securities
and reclassified these securities from trading to
available-for-sale under IAS 39 (classified as fair value through
other comprehensive income (FVOCI) under IFRS 9) effective
August 1, 2008. These debt securities are economically
hedged, primarily with credit default swap (CDS) and interest rate
swap contracts which are recorded on a fair value basis with
changes in fair value recorded in the period's earnings. As a
result the derivatives were accounted for on an accrual basis in
Wholesale Banking and the gains and losses related to the
derivatives in excess of the accrued amounts were reported in the
Corporate segment. Adjusted results of the Bank in prior periods
exclude the gains and losses of the derivatives in excess of the
accrued amount. Effective February 1, 2017, the total gains and
losses as a result of changes in fair value of these derivatives
are recorded in Wholesale Banking.
|
8
|
The amounts reported
for the three months ended January 31, 2018, and the six months
ended April 30, 2018, exclude $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
2018
|
January
31
2018
|
April
30
2017
|
April
30
2018
|
April
30
2017
|
Basic earnings per
share – reported
|
$
|
1.54
|
$
|
1.24
|
$
|
1.31
|
$
|
2.78
|
$
|
2.63
|
Adjustments for items
of note2
|
|
0.08
|
|
0.32
|
|
0.03
|
|
0.40
|
|
0.05
|
Basic earnings per
share – adjusted
|
$
|
1.62
|
$
|
1.56
|
$
|
1.34
|
$
|
3.18
|
$
|
2.68
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share – reported
|
$
|
1.54
|
$
|
1.24
|
$
|
1.31
|
$
|
2.78
|
$
|
2.63
|
Adjustments for items
of note2
|
|
0.08
|
|
0.32
|
|
0.03
|
|
0.40
|
|
0.04
|
Diluted earnings
per share – adjusted
|
$
|
1.62
|
$
|
1.56
|
$
|
1.34
|
$
|
3.18
|
$
|
2.67
|
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. The capital allocated to the business segments is
based on 9% CET1 Capital.
Adjusted return on common equity (ROE) is adjusted net income
available to common shareholders as a percentage of average common
equity.
Adjusted ROE is a non-GAAP financial measure as it is not a
defined term under IFRS. Readers are cautioned that earnings and
other measures adjusted to a basis other than IFRS do not have
standardized meanings under IFRS and, therefore, may not be
comparable to similar terms used by other issuers.
|
TABLE 5: RETURN ON
COMMON EQUITY
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
|
For the six months
ended
|
|
April
30
2018
|
|
January 31
2018
|
|
April 30
2017
|
|
April
30
2018
|
|
April 30
2017
|
|
|
|
|
|
|
Average common
equity
|
$
|
69,579
|
|
$
|
68,614
|
|
$
|
68,956
|
|
$
|
69,332
|
|
$
|
68,475
|
|
Net income
available to common shareholders – reported
|
|
2,846
|
|
|
2,283
|
|
|
2,427
|
|
|
5,129
|
|
|
4,883
|
|
Items of note, net of
income taxes1
|
|
146
|
|
|
593
|
|
|
58
|
|
|
739
|
|
|
83
|
|
Net income
available to common shareholders – adjusted
|
|
2,992
|
|
|
2,876
|
|
|
2,485
|
|
|
5,868
|
|
|
4,966
|
|
Return on common
equity – reported
|
|
16.8
|
%
|
|
13.2
|
%
|
|
14.4
|
%
|
|
14.9
|
%
|
|
14.4
|
%
|
Return on common
equity – adjusted
|
|
17.6
|
|
|
16.6
|
|
|
14.8
|
|
|
17.1
|
|
|
14.6
|
|
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.
|
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 2017
MD&A, and Note 29 Segmented Information of the Bank's
Consolidated Financial Statements for the year ended October 31, 2017. 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.
Upon adoption of IFRS 9, the current period 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. Under IAS 39 and prior to
November 1, 2017, the PCL related to
the collectively assessed allowance for incurred but not identified
credit losses that related to Canadian Retail and Wholesale Banking
segments was recorded in the Corporate segment. Prior period
results have not been restated. PCL on impaired financial assets
includes Stage 3 PCL under IFRS 9 and counterparty-specific and
individually insignificant PCL under IAS 39. PCL on performing
financial assets, loan commitments, and financial guarantees
include Stage 1 and Stage 2 PCL under IFRS 9 and incurred but not
identified credit losses under IAS 39.
The reduction of the U.S. federal corporate tax rate enacted by
the U.S. Tax Act resulted in a one-time adjustment during the first
quarter of 2018 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 of the one-time adjustment was reported in the Corporate
segment. The lower corporate tax rate had and will have a positive
effect on TD's current and future earnings, which are and will be
reflected in the results of the affected segments. The amount of
the benefit may vary due to, among other things, changes in
interpretations and assumptions the Bank has made, guidance that
may be issued by applicable regulatory authorities, and actions the
Bank may take to reinvest some of the savings in its operations.
The effective tax rate for the U.S. Retail Bank declined in
proportion to the reduction in the federal rate and is expected to
remain near this level for the balance of 2018. For additional
details, refer to "How the Bank Reports" and "Non-GAAP Financial
Measures – Reconciliation of Adjusted to Reported Net Income" table
in the "How We Performed" section of this document.
Net interest income within Wholesale Banking is calculated on a
taxable equivalent basis (TEB), which means that the value of
non-taxable or tax-exempt income, including 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 $17 million,
compared with $457 million in the second quarter last year and
$105 million in the prior
quarter.
|
TABLE 6: CANADIAN
RETAIL
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
|
For the six months
ended
|
|
|
April
30
2018
|
|
January
31
2018
|
|
April
30
2017
|
|
April
30
2018
|
|
April 30
2017
|
|
Net interest
income
|
$
|
2,781
|
|
$
|
2,825
|
|
$
|
2,533
|
|
$
|
5,606
|
|
$
|
5,146
|
|
Non-interest
income
|
|
2,731
|
|
|
2,725
|
|
|
2,599
|
|
|
5,456
|
|
|
5,189
|
|
Total
revenue
|
|
5,512
|
|
|
5,550
|
|
|
5,132
|
|
|
11,062
|
|
|
10,335
|
|
Provision for credit
losses – impaired1
|
|
219
|
|
|
237
|
|
|
235
|
|
|
456
|
|
|
504
|
|
Provision for credit
losses – performing2
|
|
–
|
|
|
33
|
|
|
–
|
|
|
33
|
|
|
–
|
|
Total provision for
credit losses3
|
|
219
|
|
|
270
|
|
|
235
|
|
|
489
|
|
|
504
|
|
Insurance claims and
related expenses
|
|
558
|
|
|
575
|
|
|
538
|
|
|
1,133
|
|
|
1,112
|
|
Non-interest
expenses
|
|
2,232
|
|
|
2,311
|
|
|
2,218
|
|
|
4,543
|
|
|
4,443
|
|
Provision for
(recovery of) income taxes
|
|
670
|
|
|
637
|
|
|
571
|
|
|
1,307
|
|
|
1,140
|
|
Net
income
|
$
|
1,833
|
|
$
|
1,757
|
|
$
|
1,570
|
|
$
|
3,590
|
|
$
|
3,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity
|
|
50.6
|
%
|
|
47.2
|
%
|
|
45.0
|
%
|
|
48.9
|
%
|
|
44.0
|
%
|
Net interest margin
(including on securitized assets)
|
|
2.91
|
|
|
2.88
|
|
|
2.81
|
|
|
2.89
|
|
|
2.81
|
|
Efficiency
ratio
|
|
40.5
|
|
|
41.6
|
|
|
43.2
|
|
|
41.1
|
|
|
43.0
|
|
Assets under
administration (billions of Canadian dollars)
|
$
|
392
|
|
$
|
397
|
|
$
|
404
|
|
$
|
392
|
|
$
|
404
|
|
Assets under
management (billions of Canadian dollars)
|
|
289
|
|
|
289
|
|
|
279
|
|
|
289
|
|
|
279
|
|
Number of Canadian
retail branches
|
|
1,121
|
|
|
1,129
|
|
|
1,153
|
|
|
1,121
|
|
|
1,153
|
|
Average number of
full-time equivalent staff
|
|
38,051
|
|
|
38,050
|
|
|
39,227
|
|
|
38,050
|
|
|
39,288
|
|
1
|
PCL − impaired
represents Stage 3 PCL under IFRS 9 and counterparty-specific and
individually insignificant PCL under IAS 39 on financial
assets.
|
2
|
PCL − performing
represents Stage 1 and Stage 2 PCL under IFRS 9 and incurred but
not identified PCL under IAS 39 on financial assets, loan
commitments, and financial guarantees.
|
3
|
Effective November 1,
2017, the PCL related to the allowances for credit losses for all
three stages are recorded within the respective segment. Under IAS
39 and prior to November 1, 2017, the PCL related to the
incurred but not identified allowance for credit losses related to
products in the Canadian Retail segment was recorded in the
Corporate segment.
|
Quarterly comparison – Q2 2018 vs. Q2 2017
Canadian Retail net income for the quarter was $1,833 million, an increase of $263 million,
or 17%, compared with the second quarter last year. The increase in
earnings reflects revenue growth and lower PCL, partially offset by
higher insurance claims and non-interest expenses. The annualized
ROE for the quarter was 50.6%, compared with 45.0% 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 $5,512 million,
an increase of $380 million, or 7%, compared with the second
quarter last year.
Net interest income increased $248 million, or 10%,
reflecting volume growth and higher margins. Average loan volumes
increased $23 billion, or 6%, reflecting 5% growth in personal
loan volumes and 10% growth in business loan volumes. Average
deposit volumes increased $18 billion, or 6%, reflecting 11%
growth in business deposit volumes and 4% growth in personal
deposit volumes. Net interest margin was 2.91%, an increase of 10
basis points (bps), reflecting rising interest rates, partially
offset by competitive pricing of loans.
Non-interest income increased $132
million, or 5%, reflecting higher reinsurance premiums
assumed, wealth asset growth, higher fee-based revenue in the
banking businesses, and higher insurance premiums, partially offset
by changes in the fair value of investments supporting claims
liabilities which resulted in a similar decrease to insurance
claims.
Assets under administration (AUA) were $392 billion as at April 30, 2018, a
decrease of $12 billion, or 3%, compared with the second
quarter last year, reflecting the impact of the sale of the Direct
Investing business in Europe in
the third quarter last year, partially offset by new asset growth.
Assets under management (AUM) were $289 billion as at April
30, 2018, an increase of $10 billion, or 4%, compared
with the second quarter last year, reflecting new asset growth.
PCL was $219 million, a decrease
of $16 million, or 7%, compared with
the second quarter last year. PCL – impaired for the quarter was
$219 million, a decrease of
$16 million, or 7%, reflecting strong
credit performance in personal and business banking. PCL –
performing (recorded in the Corporate segment in the second quarter
last year as incurred but not identified credit losses under IAS
39) was nil reflecting volume growth offset by generally favourable
risk migration in personal banking. Total PCL as an annualized
percentage of credit volume was 0.23%, or a decrease of 3 bps,
remaining at cyclical lows. Net impaired loans decreased
$147 million, or 22%. Net impaired
loans as a percentage of total loans was 0.13%, compared with
0.18%, in the second quarter last year.
Insurance claims and related expenses for the quarter were
$558 million, an increase of $20 million, or 4%, compared
with the second quarter last year, reflecting an increase in
reinsurance claims assumed, higher current year claims, and more
severe weather-related events. This increase was partially offset
by more favourable prior years' claims development and changes in
the fair value of investments supporting claims liabilities which
resulted in a similar decrease to non-interest income.
Non-interest expenses for the quarter were $2,232 million, an increase of
$14 million, or 1%, compared with the second quarter last
year.
The efficiency ratio for the quarter was 40.5%, compared with
43.2% in the second quarter last year.
Quarterly comparison – Q2 2018 vs. Q1 2018
Canadian Retail net income for the quarter increased
$76 million, or 4%, compared with the prior quarter. The
increase in earnings reflects lower non-interest expenses, PCL, and
insurance claims, partially offset by lower revenue due to the
effects of fewer days in the second quarter. The annualized ROE for
the quarter was 50.6%, compared with 47.2% in the prior
quarter.
Revenue decreased $38 million, or 1%, compared with the
prior quarter. Net interest income decreased $44 million, or
2%, reflecting the effects of fewer days in the second quarter,
partially offset by higher margins. Average loan volumes increased
$4 billion, or 1%, reflecting 3% growth in business loan
volumes. Average deposit volumes were relatively flat. Net interest
margin was 2.91%, or an increase of 3 bps, reflecting rising
interest rates.
Non-interest income increased $6 million, reflecting higher
reinsurance premiums assumed and higher insurance premiums,
partially offset by the effects of fewer days in the second
quarter, lower fee-based revenue in the personal banking business,
and lower trading volumes in the direct investing business.
AUA decreased $5 billion, or 1%, compared with the prior
quarter, reflecting decreases in market value, partially offset by
new asset growth. AUM remained relatively flat.
PCL decreased by $51 million, or
19%, compared with the prior quarter. PCL – impaired decreased
by $18 million, or 8%, reflecting
strong credit performance in personal and business
banking. PCL – performing was nil, a decrease of $33 million, reflecting the impact of forward
looking macroeconomic assumptions in the prior quarter and
favourable risk migration, partially offset by volume growth. Total
PCL as an annualized percentage of credit volume was 0.23%, or a
decrease of 4 bps, remaining at cyclical lows. Net impaired
loans decreased $47 million, or 8%.
Net impaired loans as a percentage of total loans was 0.13%,
compared with 0.14%, in the prior quarter.
Insurance claims and related expenses for the quarter decreased
$17 million, or 3%, compared with the prior quarter. The
decrease reflects more favourable prior years' claims development
and seasonality of claims, partially offset by an increase in
reinsurance claims assumed and more severe weather-related
events.
Non-interest expenses decreased $79 million, or 3%,
compared with the prior quarter, reflecting restructuring costs
across a number of businesses in the prior quarter and lower
employee-related expenses.
The efficiency ratio for the quarter was 40.5%, compared with
41.6% in the prior quarter.
Year-to-date comparison – Q2 2018 vs. Q2 2017
Canadian Retail net income for the six months ended April 30, 2018, was $3,590
million, an increase of $454 million, or 14%, compared
with same period last year. The increase in earnings reflects
revenue growth and lower PCL, partially offset by higher
non-interest expenses and insurance claims. The annualized ROE for
the period was 48.9%, compared with 44.0% in the same period last
year.
Revenue for the period was $11,062 million, an increase of
$727 million, or 7%, compared with same period last year. Net
interest income increased $460 million, or 9%, reflecting
volume growth and higher margins. Average loan volumes increased
$22 billion, or 6%, reflecting 5%
growth in personal loan volumes and 9% growth in business loan
volumes. Average deposit volumes increased $19 billion, or 6%, reflecting 10% growth in
business deposit volumes and 5% growth in personal deposit volume.
Net interest margin was 2.89%, an increase of 8 bps,
reflecting rising interest rates, partially offset by competitive
pricing of loans.
Non-interest income increased $267 million, or 5%,
reflecting wealth asset growth, higher reinsurance premiums
assumed, higher fee-based revenue in the personal banking business,
and higher trading volumes in the direct investing business.
PCL was $489 million, a decrease
of $15 million, or 3%, compared with
the same period last year. PCL – impaired was $456 million, a decrease of $48 million, or
10%. PCL – performing was $33
million, reflecting the impact of forward-looking
macroeconomic assumptions under the expected credit loss
methodology and volume growth. Total PCL as an annualized
percentage of credit volume was 0.25%, or a decrease of 2 bps.
Insurance claims and related expenses were $1,133 million, an increase of
$21 million, or 2%, compared with the same period last year.
The increase reflects higher current year claims, an increase in
reinsurance claims assumed, and more severe weather-related events,
partially offset by more favourable prior years' claims
development.
Non-interest expenses were $4,543 million, an increase of
$100 million, or 2%, compared with the same period last year.
The increase reflects restructuring costs across a number of
businesses, higher employee-related expenses including
revenue-based variable expenses in the wealth business, and higher
investment in strategic technology initiatives, partially offset by
the impact of the sale of the Direct Investing business in
Europe in the third quarter last
year.
The efficiency ratio for the period was 41.1%, compared with
43.0% for the same period last year.
|
TABLE 7: U.S.
RETAIL
|
(millions of dollars,
except as noted)
|
For the three
months ended
|
|
For the six months
ended
|
|
Canadian
Dollars
|
April
30 2018
|
|
January
31 2018
|
|
April
30 2017
|
|
April
30 2018
|
|
April 30
2017
|
|
Net interest
income
|
$
|
1,977
|
|
$
|
1,940
|
|
$
|
1,851
|
|
$
|
3,917
|
|
$
|
3,690
|
|
Non-interest
income1
|
|
654
|
|
|
703
|
|
|
664
|
|
|
1,357
|
|
|
1,351
|
|
Total
revenue
|
|
2,631
|
|
|
2,643
|
|
|
2,515
|
|
|
5,274
|
|
|
5,041
|
|
Provision for credit
losses – impaired2
|
|
199
|
|
|
187
|
|
|
118
|
|
|
386
|
|
|
273
|
|
Provision for credit
losses – performing3
|
|
5
|
|
|
60
|
|
|
34
|
|
|
65
|
|
|
136
|
|
Total provision for
credit losses
|
|
204
|
|
|
247
|
|
|
152
|
|
|
451
|
|
|
409
|
|
Non-interest expenses
– reported
|
|
1,488
|
|
|
1,447
|
|
|
1,449
|
|
|
2,935
|
|
|
2,883
|
|
Non-interest expenses
– adjusted
|
|
1,472
|
|
|
1,442
|
|
|
1,449
|
|
|
2,914
|
|
|
2,883
|
|
Provision for
(recovery of) income taxes – reported1
|
|
94
|
|
|
103
|
|
|
177
|
|
|
197
|
|
|
323
|
|
Provision for
(recovery of) income taxes – adjusted1
|
|
98
|
|
|
104
|
|
|
177
|
|
|
202
|
|
|
323
|
|
U.S. Retail Bank
net income – reported
|
|
845
|
|
|
846
|
|
|
737
|
|
|
1,691
|
|
|
1,426
|
|
U.S. Retail Bank
net income – adjusted4
|
|
857
|
|
|
850
|
|
|
737
|
|
|
1,707
|
|
|
1,426
|
|
Equity in net income
of an investment in TD Ameritrade –
reported1
|
|
134
|
|
|
106
|
|
|
108
|
|
|
240
|
|
|
219
|
|
Equity in net income
of an investment in TD Ameritrade –
adjusted1,5
|
|
195
|
|
|
174
|
|
|
108
|
|
|
369
|
|
|
219
|
|
Net income –
reported
|
$
|
979
|
|
$
|
952
|
|
$
|
845
|
|
$
|
1,931
|
|
$
|
1,645
|
|
Net income –
adjusted
|
|
1,052
|
|
|
1,024
|
|
|
845
|
|
|
2,076
|
|
|
1,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
1,551
|
|
$
|
1,533
|
|
$
|
1,391
|
|
$
|
3,084
|
|
$
|
2,772
|
|
Non-interest
income1
|
|
513
|
|
|
555
|
|
|
498
|
|
|
1,068
|
|
|
1,015
|
|
Total revenue –
reported
|
|
2,064
|
|
|
2,088
|
|
|
1,889
|
|
|
4,152
|
|
|
3,787
|
|
Provision for credit
losses – impaired2
|
|
158
|
|
|
148
|
|
|
88
|
|
|
306
|
|
|
204
|
|
Provision for credit
losses – performing3
|
|
3
|
|
|
47
|
|
|
26
|
|
|
50
|
|
|
103
|
|
Total provision for
credit losses
|
|
161
|
|
|
195
|
|
|
114
|
|
|
356
|
|
|
307
|
|
Non-interest expenses
– reported
|
|
1,167
|
|
|
1,144
|
|
|
1,088
|
|
|
2,311
|
|
|
2,165
|
|
Non-interest expenses
– adjusted
|
|
1,154
|
|
|
1,140
|
|
|
1,088
|
|
|
2,294
|
|
|
2,165
|
|
Provision for
(recovery of) income taxes – reported1
|
|
73
|
|
|
80
|
|
|
133
|
|
|
153
|
|
|
243
|
|
Provision for
(recovery of) income taxes – adjusted1
|
|
76
|
|
|
81
|
|
|
133
|
|
|
157
|
|
|
243
|
|
U.S. Retail Bank
net income – reported
|
|
663
|
|
|
669
|
|
|
554
|
|
|
1,332
|
|
|
1,072
|
|
U.S. Retail Bank
net income – adjusted4
|
|
673
|
|
|
672
|
|
|
554
|
|
|
1,345
|
|
|
1,072
|
|
Equity in net income
of an investment in TD Ameritrade –
reported1
|
|
107
|
|
|
82
|
|
|
82
|
|
|
189
|
|
|
165
|
|
Equity in net income
of an investment in TD Ameritrade –
adjusted1,5
|
|
154
|
|
|
137
|
|
|
82
|
|
|
291
|
|
|
165
|
|
Net income –
reported
|
$
|
770
|
|
$
|
751
|
|
$
|
636
|
|
$
|
1,521
|
|
$
|
1,237
|
|
Net income –
adjusted
|
|
827
|
|
|
809
|
|
|
636
|
|
|
1,636
|
|
|
1,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity – reported
|
|
11.9
|
%
|
|
11.2
|
%
|
|
10.0
|
%
|
|
11.5
|
%
|
|
9.6
|
%
|
Return on common
equity – adjusted
|
|
12.7
|
|
|
12.0
|
|
|
10.0
|
|
|
12.4
|
|
|
9.6
|
|
Net interest
margin6
|
|
3.23
|
|
|
3.19
|
|
|
3.05
|
|
|
3.21
|
|
|
3.04
|
|
Efficiency ratio –
reported
|
|
56.5
|
|
|
54.8
|
|
|
57.6
|
|
|
55.6
|
|
|
57.2
|
|
Efficiency ratio –
adjusted
|
|
55.9
|
|
|
54.6
|
|
|
57.6
|
|
|
55.3
|
|
|
57.2
|
|
Assets under
administration (billions of dollars)
|
$
|
19
|
|
$
|
19
|
|
$
|
18
|
|
$
|
19
|
|
$
|
18
|
|
Assets under
management (billions of dollars)
|
|
59
|
|
|
65
|
|
|
60
|
|
|
59
|
|
|
60
|
|
Number of U.S. retail
stores
|
|
1,244
|
|
|
1,244
|
|
|
1,260
|
|
|
1,244
|
|
|
1,260
|
|
Average number of
full-time equivalent staff
|
|
26,382
|
|
|
26,168
|
|
|
25,745
|
|
|
26,273
|
|
|
25,893
|
|
1
|
The reduction of the
U.S. federal corporate tax rate enacted by the U.S. Tax Act
resulted in a one-time adjustment during the first quarter of 2018
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
|
PCL − impaired
represents Stage 3 PCL under IFRS 9 and counterparty-specific and
individually insignificant PCL under IAS 39 on financial
assets.
|
3
|
PCL − performing
represents Stage 1 and Stage 2 PCL under IFRS 9 and incurred but
not identified PCL under IAS 39 on financial assets, loan
commitments, and financial guarantees.
|
4
|
Adjusted U.S. Retail
Bank net income excludes the following items 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.
|
5
|
Adjusted Equity in
net income of an investment in TD Ameritrade 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.
|
6
|
Net interest margin
excludes the impact related to the TD Ameritrade insured deposit
accounts (IDA) 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 2018 vs. Q2 2017
U.S. Retail reported net income for the quarter was $979 million (US$770
million), an increase of $134
million (US$134 million), or
16% (21% in U.S. dollars), compared with the second quarter
last year. On an adjusted basis, net income for the quarter was
$1,052 million (US$827 million), an increase of $207 million (US$191
million), or 24% (30% in U.S. dollars). The reported and
adjusted annualized ROE for the quarter was 11.9% and 12.7%
respectively, compared with 10.0% 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. Reported
net income for the quarter from the U.S. Retail Bank and the Bank's
investment in TD Ameritrade was $845
million (US$663 million) and
$134 million (US$107 million), respectively. On an adjusted
basis for the quarter, the U.S. Retail Bank and the Bank's
investment in TD Ameritrade contributed net income of
$857 million (US$673 million)
and $195 million (US$154 million), respectively.
The reported contribution from TD Ameritrade of US$107 million increased US$25 million, or 30%, compared with the second
quarter last year, primarily due to the Scottrade transaction,
higher interest rates, and higher client trading activity,
partially offset by charges associated with the Scottrade
transaction and higher operating expenses. Adjusted contribution
from TD Ameritrade was US$154
million, an increase of US$72
million, or 88%.
U.S. Retail Bank reported net income of US$663 million for the quarter increased
US$109 million, or 20%, due to higher
loan and deposit volumes, higher deposit margins, fee income
growth, the benefit of the Scottrade transaction, and a lower
corporate tax rate, partially offset by higher expenses and PCL.
U.S. Retail Bank adjusted net income of US$673 million increased US$119 million, or 21%.
U.S. Retail Bank revenue is derived from personal and business
banking, and wealth management. Revenue for the quarter was
US$2,064 million, an increase of
US$175 million, or 9%, compared with
the second quarter last year. Net interest income increased
US$160 million, or 12%, due to higher
deposit margins, growth in loan and deposit volumes, and the
benefit of the Scottrade transaction. Net interest margin was
3.23%, an increase of 18 bps, primarily due to higher deposit
margins. Non-interest income increased US$15
million, or 3%, reflecting fee income growth in personal and
commercial banking, and wealth management, partially offset by
additional losses on certain tax credit-related investments.
Average loan volumes increased US$7
billion, or 5%, compared with the second quarter last year
due to growth in business and personal loans of 3% and 7%,
respectively. Average deposit volumes increased US$20 billion, or 8%, reflecting 4% growth in
personal deposit volumes, 1% growth in business deposit volumes,
and a 17% increase in sweep deposit volume reflecting the Scottrade
transaction.
AUA were US$19 billion as at
April 30, 2018, relatively flat
compared with the second quarter last year. AUM were US$59 billion as at April
30, 2018, a decrease of 1%, compared with the second quarter
last year reflecting net fund outflows, offset by market
appreciation.
PCL for the quarter was US$161
million, an increase of US$47
million, or 41%, compared with the second quarter last year.
PCL – impaired was US$158 million, an
increase of US$70 million, or 80%,
primarily reflecting volume growth, seasoning, and mix in the
credit card and auto portfolios, coupled with favourable parameter
changes to the retail portfolio in the prior year. PCL – performing
was US$3 million, a decrease of US$23
million, or 88%, primarily reflecting lower volume growth in
the U.S. commercial 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% or an increase of 12 bps. Net impaired loans, excluding ACI
loans, were US$1.4 billion, a
decrease of US$32 million, or 2%.
Excluding ACI loans, net impaired loans as a percentage of total
loans were 1% as at April 30,
2018.
Reported non-interest expenses for the quarter were US$1,167 million, an increase of US$79 million, or 7%, compared with the second
quarter last year, reflecting higher investments in business
initiatives, business volume growth, higher employee related costs,
and charges associated with the Scottrade transaction, partially
offset by productivity savings. On an adjusted basis, non-interest
expenses increased US$66 million, or
6%.
The reported and adjusted efficiency ratios for the quarter were
56.5% and 55.9% respectively, compared with 57.6%, in the second
quarter last year.
Quarterly comparison – Q2 2018 vs. Q1 2018
U.S. Retail reported net income of $979
million (US$770 million)
increased $27 million (US$19 million), or 3% (3% in U.S. dollars),
compared with the prior quarter, while adjusted net income of
$1,052 million (US$827 million) increased $28 million (US$18
million), or 3% (2% in U.S. dollars). The reported and
adjusted annualized ROE for the quarter was 11.9% and 12.7%
respectively, compared to 11.2% and 12.0% in the prior quarter.
The reported contribution from TD Ameritrade of US$107 million increased US$25 million, or 30%, compared with the prior
quarter, primarily due to higher trading volumes and asset-based
revenue, partially offset by higher operating expenses. Adjusted
contribution from TD Ameritrade was US$154
million, an increase of US$17
million, or 12%.
U.S. Retail Bank reported net income of US$663 million for the quarter decreased
US$6 million, or 1%, compared with
the prior quarter. U.S. Retail Bank adjusted net income of
US$673 million for the quarter
increased US$1 million.
Revenue for the quarter decreased US$24
million, or 1%, compared with the prior quarter. Net
interest income increased US$18
million, or 1%, due to higher deposit margins, partially
offset by the effect of fewer days in the quarter. Net interest
margin was 3.23%, an increase of 4 bps, primarily due to
higher deposit margins, partially offset by balance sheet mix.
Non-interest income decreased US$42
million, or 8%, primarily reflecting a seasonal decline in
personal banking fees and additional losses on certain tax
credit-related investments.
Average loan volumes decreased US$1
billion, or 1%, compared with the prior quarter, due to
decline in personal loans. Average deposit volumes increased
US$4 billion, or 1%, reflecting 2%
growth in personal deposit volumes, 2% growth in business deposit
volumes, and a 1% increase in sweep deposit volume.
AUA were US$19 billion as at
April 30, 2018, relatively flat
compared with the prior quarter. AUM were US$59 billion as at April
30, 2018, a decrease of 9%, reflecting market declines and
net fund outflows in the current quarter.
PCL for the quarter decreased US$34
million, or 17%, compared with the prior quarter. PCL –
impaired was US$158 million, an
increase of US$10 million, or 7%. PCL
– performing was US$3 million, a
decrease of US$44 million, primarily
reflecting seasonal trends in the credit card and auto portfolios,
coupled with lower volume growth in the U.S. commercial 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% or a decrease of
7 bps. Net impaired loans, excluding ACI loans, were US$1.4 billion, a decrease of US$51 million,
or 4%. Excluding ACI loans, net impaired loans as a percentage of
total loans were 1% as at April 30,
2018.
Reported non-interest expenses for the quarter increased
US$23 million, or 2%, compared with
the prior quarter, reflecting higher investments in business
initiatives, higher employee related costs, and charges associated
with the Scottrade transaction, partially offset by the effect of
fewer days in the quarter. On an adjusted basis, non-interest
expenses increased US$14 million, or
1%.
The reported and adjusted efficiency ratios for the quarter were
56.5% and 55.9% respectively, compared with 54.8% and 54.6% in the
prior quarter.
Year-to-date comparison – Q2 2018 vs. Q2 2017
U.S. Retail reported net income for the six months ended
April 30, 2018, was $1,931 million (US$1,521
million), an increase of $286 million
(US$284 million), or 17% (23% in U.S. dollars), compared with
the same period last year. On an adjusted basis, net income for the
period, was $2,076 million
(US$1,636 million), an increase of
$431 million (US$399 million), or 26% (32% in U.S. dollars).
The reported and adjusted annualized ROE for the period was 11.5%
and 12.4%, respectively, compared with 9.6% in the same period last
year.
Reported net income for the period from the U.S. Retail Bank and
the Bank's investment in TD Ameritrade was $1,691 million (US$1,332
million) and $240 million
(US$189 million), respectively. On an
adjusted basis for the period, the U.S. Retail Bank and the Bank's
investment in TD Ameritrade contributed net income of $1,707 million (US$1,345 million) and $369
million (US$291 million),
respectively.
The reported contribution from TD Ameritrade of US$189 million increased US$24 million, or 15%, compared with the same
period last year, primarily due to the Scottrade transaction,
higher interest rates, and higher client trading activity,
partially offset by charges associated with the Scottrade
transaction and higher operating expenses. Adjusted contribution
from TD Ameritrade was US$291
million, an increase of US$126 million, or 76%.
U.S. Retail Bank reported net income for the period was
US$1,332 million, an increase of
US$260 million, or 24%, compared with
the same period last year, primarily due to higher loan and deposit
volumes, higher deposit margins, fee income growth, the benefit of
the Scottrade transaction, and a lower corporate tax rate,
partially offset by higher expenses and PCL. U.S. Retail Bank
adjusted net income of US$1,345
million increased US$273
million, or 25%.
Revenue for the period was US$4,152
million, an increase of US$365
million, or 10%, compared with same period last year. Net
interest income increased US$312
million, or 11%, primarily due to higher deposit margins,
growth in loan and deposit volumes, and the benefit of the
Scottrade transaction. Net interest margin was 3.21%, a 17 bps
increase primarily due to higher deposit margins. Non-interest
income increased US$53 million, or
5%, reflecting fee income growth in personal and commercial
banking, and wealth management, partially offset by additional
losses on certain tax credit-related investments.
Average loan volumes increased US$7
billion, or 5%, compared with the same period last year, due
to growth in personal loans of 7% and business loans of 3%. Average
deposit volumes increased US$19
billion, or 8%, reflecting 5% growth in personal deposit
volumes, and a 16% increase in sweep deposit volume primarily
reflecting the Scottrade transaction.
PCL was US$356 million, an
increase of US$49 million, or 16%,
compared with the same period last year. PCL – impaired was
US$306 million, an increase of
US$102 million, or 50%, primarily
reflecting volume growth, seasoning, and mix in the credit card and
auto portfolios, coupled with favourable parameter changes to the
retail portfolio in the prior year. PCL – performing was
US$50 million, a decrease of
US$53 million, or 51%, primarily
reflecting lower volume growth in the U.S. commercial 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 0.48%, an increase of 4
bps.
Reported non-interest expenses for the period were US$2,311 million, an increase of US$146 million, or 7%, compared with same period
last year, reflecting higher investments in business initiatives,
business and volume growth, higher employee related costs, and
charges associated with the Scottrade transaction, partially offset
by productivity savings. On an adjusted basis, non-interest
expenses increased US$129 million, or
6%.
The reported and adjusted efficiency ratios for the period were
55.6% and 55.3% respectively, compared with 57.2%, for the same
period last year.
|
TABLE 8: WHOLESALE
BANKING
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
|
For the six months
ended
|
|
|
April
30
2018
|
|
January 31
2018
|
|
April 30
2017
|
|
April
30
2018
|
|
April 30
2017
|
|
|
|
|
|
|
Net interest income
(TEB)
|
$
|
272
|
|
$
|
329
|
|
$
|
805
|
|
$
|
601
|
|
$
|
1,198
|
|
Non-interest
income1,2
|
|
600
|
|
|
546
|
|
|
13
|
|
|
1,146
|
|
|
477
|
|
Total
revenue
|
|
872
|
|
|
875
|
|
|
818
|
|
|
1,747
|
|
|
1,675
|
|
Provision for
(recovery of) credit losses – impaired2,3
|
|
(8)
|
|
|
–
|
|
|
(4)
|
|
|
(8)
|
|
|
(28)
|
|
Provision for
(recovery of) credit losses –
performing4
|
|
24
|
|
|
(7)
|
|
|
–
|
|
|
17
|
|
|
–
|
|
Total provision for
(recovery of) credit losses5
|
|
16
|
|
|
(7)
|
|
|
(4)
|
|
|
9
|
|
|
(28)
|
|
Non-interest
expenses
|
|
501
|
|
|
511
|
|
|
481
|
|
|
1,012
|
|
|
1,005
|
|
Provision for
(recovery of) income taxes (TEB)6
|
|
88
|
|
|
93
|
|
|
93
|
|
|
181
|
|
|
183
|
|
Net
income
|
$
|
267
|
|
$
|
278
|
|
$
|
248
|
|
$
|
545
|
|
$
|
515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading-related
revenue (TEB)
|
$
|
475
|
|
$
|
515
|
|
$
|
425
|
|
$
|
990
|
|
$
|
940
|
|
Gross drawn (billions
of Canadian dollars)7
|
|
22.1
|
|
|
19.5
|
|
|
20.2
|
|
|
22.1
|
|
|
20.2
|
|
Return on common
equity
|
|
18.7
|
%
|
|
20.1
|
%
|
|
16.4
|
%
|
|
19.4
|
%
|
|
16.9
|
%
|
Efficiency
ratio
|
|
57.5
|
|
|
58.4
|
|
|
58.8
|
|
|
57.9
|
|
|
60.0
|
|
Average number of
full-time equivalent staff
|
|
4,053
|
|
|
4,027
|
|
|
3,969
|
|
|
4,040
|
|
|
3,949
|
|
1
|
Effective February 1,
2017, the total gains and losses on derivatives hedging the
reclassified securities portfolio (classified as FVOCI under IFRS 9
and available-for-sale under IAS 39) are recorded in Wholesale
Banking, previously reported in the Corporate segment and treated
as an item 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
|
Effective November 1,
2017, the accrual costs related to CDS used to manage Wholesale
Banking's corporate lending exposure are recorded in non-interest
income, previously reported as a component of PCL. The change in
market value of the CDS, in excess of the accrual cost, continues
to be reported in the Corporate segment.
|
3
|
PCL − impaired
represents Stage 3 PCL under IFRS 9 and counterparty-specific and
individually insignificant PCL under IAS 39 on financial
assets.
|
4
|
PCL − performing
represents Stage 1 and Stage 2 PCL under IFRS 9 and incurred but
not identified PCL under IAS 39 on financial assets, loan
commitments, and financial guarantees.
|
5
|
Effective November 1,
2017, the PCL related to the allowances for credit losses for all
three stages are recorded within the respective segment. Under IAS
39 and prior to November 1, 2017, the PCL related to the
incurred but not identified allowance for credit losses related to
products in Wholesale Banking was recorded in the Corporate
segment.
|
6
|
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%
in the first quarter of 2018. 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.
|
7
|
Includes gross loans
and bankers' acceptances, excluding letters of credit, cash
collateral, CDS, and allowance for credit losses relating to the
corporate lending business.
|
Quarterly comparison – Q2 2018 vs. Q2 2017
Wholesale Banking net income for the quarter was $267 million, an increase of $19 million, or 8%, compared with the second
quarter last year reflecting higher revenue, partially offset by
higher PCL and higher non-interest expenses. The annualized ROE for
the quarter was 18.7%, compared with 16.4% in the second quarter
last year.
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 $872
million, an increase of $54
million, or 7%, compared with the second quarter last year
reflecting higher trading-related revenue. Changes in net interest
income (TEB) and non-interest income were impacted by business mix
due to increased client activity in equity trading in the second
quarter last year.
PCL for the quarter was $16
million as compared with a net recovery of $4 million in the second quarter last year. PCL –
impaired was a net recovery of $8 million, an increase of
$4 million, compared with the second
quarter last year reflecting a higher recovery of provisions in the
oil and gas sector. PCL – performing (recorded in the Corporate
segment in the second quarter last year as incurred but not
identified credit losses under IAS 39) for the quarter was
$24 million primarily reflecting credit migration.
Non-interest expenses were $501
million, an increase of $20
million, or 4%, compared with the second quarter last year
reflecting continued investments in client facing employees
supporting the global expansion of Wholesale Banking's U.S. dollar
strategy.
Quarterly comparison – Q2 2018 vs. Q1 2018
Wholesale Banking net income for the quarter decreased $11 million, or 4%, compared with the prior
quarter reflecting higher PCL, partially offset by lower
non-interest expenses. The annualized ROE for the quarter was
18.7%, compared with 20.1% in the prior quarter.
Revenue for the quarter decreased $3
million compared with the prior quarter primarily reflecting
lower trading-related revenue, partially offset by higher corporate
lending.
PCL for the quarter increased $23
million compared with the prior quarter. PCL – impaired for
the quarter was a net recovery of $8
million reflecting the recovery of provisions in the oil and
gas sector. PCL – performing was $24
million, an increase of $31
million, compared with the prior quarter primarily
reflecting credit migration and a release of provisions in the
prior quarter.
Non-interest expenses for the quarter decreased $10 million, or 2%, compared with the prior
quarter reflecting lower variable compensation, partially offset by
the revaluation of certain liabilities for post-retirement benefits
in the prior quarter.
Year-to-date comparison – Q2 2018 vs. Q2 2017
Wholesale Banking net income for the six months ended April 30, 2018, was $545
million, an increase of $30
million, or 6%, compared with the same period last year
reflecting higher revenue, partially offset by higher PCL and
higher non-interest expenses. The annualized ROE was 19.4%,
compared with 16.9% in the same period last year.
Revenue was $1,747 million, an
increase of $72 million, or 4%,
compared with the same period last year reflecting higher corporate
lending and higher trading-related revenue, partially offset by
lower equity underwriting. Changes in net interest income (TEB) and
non-interest income were impacted by business mix due to increased
client activity in equity trading in the same period last year.
PCL was $9 million as compared
with a net recovery of $28 million in
the same period last year. PCL – impaired was a net recovery of
$8 million, a decrease of
$20 million, compared with the same
period last year reflecting a lower recovery of provisions in the
oil and gas sector. PCL – performing (recorded in the Corporate
segment in the same period last year as incurred but not identified
credit losses under IAS 39) for the period was $17 million primarily reflecting credit
migration.
Non-interest expenses were $1,012
million, an increase of $7
million, or 1%, compared with the same period last year
reflecting higher variable compensation and continued investments
in client facing employees supporting the global expansion of
Wholesale Banking's U.S. dollar strategy, partially offset by the
revaluation of certain liabilities for post-retirement
benefits.
|
TABLE 9:
CORPORATE
|
(millions of Canadian
dollars)
|
For the three
months ended
|
For the six months
ended
|
|
April
30
2018
|
January 31
2018
|
April 30
2017
|
April
30
2018
|
April 30
2017
|
Net income (loss)
– reported1,2,3
|
$
|
(163)
|
$
|
(634)
|
$
|
(160)
|
$
|
(797)
|
$
|
(260)
|
Pre-tax
adjustments for items of note4
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
|
86
|
|
85
|
|
78
|
|
171
|
|
158
|
Impact from U.S. tax
reform3
|
|
–
|
|
48
|
|
–
|
|
48
|
|
–
|
Fair value of
derivatives hedging the reclassified available-for-sale
securities
|
|
|
|
|
|
|
|
|
|
|
|
portfolio1
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(41)
|
Total pre-tax
adjustments for items of note
|
|
86
|
|
133
|
|
78
|
|
219
|
|
117
|
Provision for
(recovery of) income taxes for items of
note3
|
|
13
|
|
(388)
|
|
20
|
|
(375)
|
|
34
|
Net income (loss)
– adjusted
|
$
|
(90)
|
$
|
(113)
|
$
|
(102)
|
$
|
(203)
|
$
|
(177)
|
|
|
|
|
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) – adjusted
|
|
|
|
|
|
|
|
|
|
|
Net corporate
expenses
|
$
|
(189)
|
$
|
(198)
|
$
|
(186)
|
$
|
(387)
|
$
|
(419)
|
Other
|
|
81
|
|
67
|
|
56
|
|
148
|
|
185
|
Non-controlling
interests
|
|
18
|
|
18
|
|
28
|
|
36
|
|
57
|
Net income (loss)
– adjusted
|
$
|
(90)
|
$
|
(113)
|
$
|
(102)
|
$
|
(203)
|
$
|
(177)
|
|
|
|
|
|
|
|
|
|
|
|
Selected
volumes
|
|
|
|
|
|
|
|
|
|
|
Average number of
full-time equivalent staff
|
|
14,574
|
|
14,336
|
|
14,540
|
|
14,454
|
|
14,364
|
1
|
Effective February 1,
2017, the total gains and losses on derivatives hedging the
reclassified securities portfolio (classified as FVOCI under IFRS 9
and available-for-sale under IAS 39) are recorded in Wholesale
Banking, previously reported in the Corporate segment and treated
as an item 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
|
Effective November 1,
2017, the PCL related to the allowances for credit losses for all
three stages are recorded within the respective segment. Under IAS
39 and prior to November 1, 2017, the PCL related to the
incurred but not identified allowance for credit losses related to
products in the Canadian Retail and Wholesale Banking segments were
recorded in the Corporate segment.
|
3
|
The reduction of the
U.S. federal corporate tax rate enacted by the U.S. Tax Act
resulted in a one-time net charge to earnings during the first
quarter of 2018 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 $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.
|
4
|
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 2018 vs. Q2 2017
Corporate segment's reported net loss for the quarter was
$163 million, compared with a
reported net loss of $160 million in
the second quarter last year. Reported net loss increased primarily
due to higher amortization of intangibles and lower non-controlling
interests in the current quarter, partially offset by higher Other
items in the current quarter. The higher contribution from Other
items was largely due to higher revenue from treasury and balance
sheet management activities in the current quarter. Adjusted net
loss was $90 million, compared with an adjusted net loss of
$102 million in the second quarter
last year.
Quarterly comparison – Q2 2018 vs. Q1 2018
Corporate segment's reported net loss for the quarter was
$163 million, compared with a
reported net loss of $634 million in
the prior quarter. Reported net loss decreased primarily due to the
impact from U.S. tax reform in the previous quarter, and higher
Other items and lower net corporate expenses in the current
quarter. Higher contribution from Other items was primarily due to
higher revenue from treasury and balance sheet management
activities this quarter. Net corporate expenses decreased largely
due to higher regulatory fees in the prior quarter. Adjusted net
loss was $90 million, compared with
an adjusted net loss of $113 million in the prior quarter.
Year-to-date comparison – Q2 2018 vs. Q2 2017
Corporate segment's reported net loss for the six months ended
April 30, 2018, was $797
million, compared with a reported net loss of $260 million in the same period last year. The
increase in reported net loss is primarily due to the impact from
U.S. tax reform in the current period, gains on change in fair
value of derivatives hedging the reclassified available-for-sale
securities portfolio in the same period last year, and lower
contribution from Other items and non-controlling interests,
partially offset by lower net corporate expenses in the current
period. Lower contribution from Other items was primarily due to
lower revenue from treasury and balance sheet management activities
in the current period. Net corporate expenses decreased primarily
due to lower investments in enterprise and regulatory projects in
the current period. Adjusted net loss for the six months ended
April 30, 2018, was $203 million, compared with an
adjusted net loss of $177 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 (and 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 (and 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.
Normal Course Issuer Bid
On April 19, 2018, the Bank announced that the TSX
and OSFI approved the Bank's previously announced NCIB to
repurchase for cancellation up to 20 million of the Bank's
common shares. Pursuant to the Notice of Intention filed with the
TSX, the NCIB ends on April 12, 2019,
such earlier date as the Bank may determine or such earlier date as
the Bank may complete its purchases. A copy of the Notice may be
obtained without charge by contacting TD Shareholder Relations by
phone at 416-944-6367 or 1-866-756-8936 or by e-mail at
tdshinfo@td.com.
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
24, 2018. 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
https://www.td.com/investor-relations/ir-homepage/financial-reports/quarterly-results/qr-2018.jsp
on May 24, 2018, by approximately
12 p.m. ET. A listen-only telephone
line is available at 647-484-0475 or 1-800-394-8218 (toll free) and
the passcode is 3186851.
The audio webcast and presentations will be archived at
https://www.td.com/investor-relations/ir-homepage/financial-reports/quarterly-results/qr-2018.jsp.
Replay of the teleconference will be available from 6 p.m. ET on May 24,
2018, until 6 p.m. ET on
June 29, 2018, by calling
647-436-0148 or 1-888-203-1112 (toll free). The passcode is
3186851.
About TD Bank Group
The Toronto-Dominion Bank and its
subsidiaries are collectively known as TD Bank Group ("TD" or the
"Bank"). TD is the sixth largest bank in North America by branches and serves more than
25 million customers in three key businesses operating in a number
of locations in financial centres around the globe: Canadian
Retail, including TD Canada Trust, TD Auto Finance Canada, TD
Wealth (Canada), TD Direct
Investing, and TD Insurance; U.S. Retail, including TD Bank,
America's Most Convenient Bank®, TD Auto Finance U.S.,
TD Wealth (U.S.), and an investment in TD Ameritrade; and Wholesale
Banking, including TD Securities. TD also ranks among the world's
leading online financial services firms, with approximately 12
million active online and mobile customers. TD had $1.3 trillion in assets on April 30, 2018. The Toronto-Dominion Bank trades
under the symbol "TD" on the Toronto and New York Stock Exchanges.
SOURCE TD Bank Group