Earnings News
Release • Three and six months ended
April 30, 2023
This quarterly Earnings
News Release should be read in conjunction with the Bank's
unaudited second quarter 2023 Report to Shareholders for the three
and six months ended April 30, 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 May 24, 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.
|
SECOND QUARTER FINANCIAL HIGHLIGHTS, compared with the second
quarter last year:
- Reported diluted earnings per share were $1.72, compared with $2.07.
- Adjusted diluted earnings per share were $1.94, compared with $2.02.
- Reported net income was $3,351
million, compared with $3,811
million.
- Adjusted net income was $3,752
million, compared with $3,714
million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, six months ended
April 30, 2023, compared with the
corresponding period last year:
- Reported diluted earnings per share were $2.54, compared with $4.09.
- Adjusted diluted earnings per share were $4.17, compared with $4.09.
- Reported net income was $4,933
million, compared with $7,544
million.
- Adjusted net income was $7,907
million, compared with $7,547
million.
SECOND QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The second quarter reported earnings figures included the
following items of note:
- Amortization of acquired intangibles of $79 million ($67
million after-tax or 3 cents
per share), compared with $60 million
($54 million after-tax or
3 cents per share) in the
second quarter last year.
- Acquisition and integration charges related to the Schwab
transaction of $30 million
($26 million after-tax or
1 cent per share), compared with
$20 million ($18 million
after-tax or 1 cent per share) in the
second quarter last year.
- Acquisition and integration-related charges for acquisitions
of $227 million ($179 million after-tax or 10 cents per share).
- Mitigation of impact from interest rate volatility to
closing capital on First Horizon acquisition, net loss of
$134 million ($101 million after-tax or 6 cents per share).
- Foreign exchange loss related to the Stanford litigation settlement of $39 million ($28
million after-tax or 2 cents
per share).
TORONTO, May 25, 2023
/CNW/ - TD Bank Group ("TD" or the "Bank") today announced its
financial results for the second quarter ended April 30, 2023.
Reported earnings were $3.4 billion, down 12% compared with
the second quarter last year, and adjusted earnings were $3.8
billion, up 1%.
"TD's retail businesses in both Canada and the
United States continued to show strong revenue and earnings
growth this quarter, with robust customer originations and loan
volumes," said Bharat Masrani, Group President and CEO, TD Bank
Group. "Investments in differentiated wealth and insurance products
and the close of the Cowen acquisition expanded our offerings and
strengthened the competitive advantages of these businesses."
Canadian Personal and Commercial Banking delivered double
digit revenue growth
Canadian Personal and Commercial
Banking net income was $1,625
million, an increase of 4% compared with the second quarter
last year. Revenue was $4,404 million, an increase of 11%
reflecting higher margins and volume growth. The segment delivered
a seventh consecutive quarter of positive operating leverage.
Canadian Personal and Commercial Banking continued to deliver
growth in the quarter supported by increased customer activity
which included record second quarter New to Canada account openings, continued momentum in
mortgage originations, and strong credit card loan growth. TD
recently launched an exclusive Canadian bank offer with Uber,
adding to TD's list of leading partnerships, including Air Canada,
Amazon, Expedia, and Starbucks. TD was also recognized in the 2023
Canada's Best Awards by MoneySense, receiving the most awards of
any financial institution, including in the best no-fee, flat rate,
and travel credit cards categories.
The U.S. Retail Bank delivered another strong quarter despite
a challenging environment
U.S. Retail reported net income of
$1,412 million, an increase of 3%
(US$1,044 million, a decrease of 3%
in U.S. dollars) compared with the second quarter last year. On an
adjusted basis, net income was $1,528
million, an increase of 28% (US$1,129
million, an increase of 19% in U.S. dollars). Reported net
income included acquisition and integration-related charges for the
First Horizon Corporation ("First Horizon") acquisition of
$154 million or US$113 million ($116 million or US$85 million after–tax). The Bank's investment
in The Charles Schwab Corporation ("Schwab") contributed
$250 million in earnings, an increase
of 12% (US$185 million, an increase of 5% in U.S. dollars)
compared with the second quarter last year.
The U.S. Retail Bank, which excludes the Bank's investment in
Schwab, reported net income of $1,162
million, an increase of 2% (US$859
million, a decrease of 5% in U.S. dollars) from the second
quarter last year. On an adjusted basis, net income was
$1,278 million, an increase of 31%
(US$944 million, an increase of 23%
in U.S. dollars) from the second quarter last year.
The U.S. Retail Bank continued to deliver strong loan growth of
10% year-over-year, supported by personal loan growth of 12% and
business loan growth of 9%. Personal deposits declined 3%
year-over-year but remained flat from last quarter. Business
deposits declined 6% year-over-year; however, business chequing
account growth accelerated this quarter.
TD Bank, America's Most Convenient Bank® (TD AMCB), launched two
innovative new proprietary credit cards, TD Flex Pay and TD Clear.
It also continued to execute on its retail network expansion and
wealth strategy by opening five stores, part of a broader plan to
accelerate the execution of its organic growth strategies by
opening new stores in South
Florida, Atlanta and the
Carolinas. TD AMCB was again recognized as one of America's Best
Employers for Diversity by Forbes in 2023.
As announced on May 4, 2023, the
Bank and First Horizon entered into a mutual agreement to terminate
the previously announced merger, and all acquisition-related
activities are being wound down.
Wealth Management and Insurance delivered solid performance
amid challenging market conditions
Wealth Management and
Insurance net income was $563
million, a decrease of 16% compared with the second quarter
of last year reflecting lower earnings in the wealth management
business. This quarter's revenue growth of 2% underscored the
strength of the segment's diversified business model as higher
insurance revenue and net interest income largely offset the impact
of trading normalization and market volatility.
This quarter, Wealth Management and Insurance continued to focus
on customer-centric innovation with the launch of Small Business
Insurance, delivering a differentiated insurance experience for
small business owners from Canada's #1 direct insurer. TD Direct
Investing continued to maintain its #1 position across all
categories, including Gross New Accounts, Revenue, Trades and
Assets Under Administration, with share of new accounts and trades
both increasing year–over–year.1
________________________________________
|
1 Investor
Economics Retail Brokerage and Distribution Quarterly Update,
Winter 2023
|
Wholesale Banking closed its acquisition of Cowen
Inc.
Wholesale Banking reported net income for the quarter
was $150 million, a decrease of
$209 million, or 58%, compared with
the second quarter last year. This reflects higher non-interest
expenses, which include acquisition and integration costs,
partially offset by higher revenues. On an adjusted basis, net
income was $213 million, a decrease of $146 million, or 41%. Revenue was up 13%,
reflecting the benefit of TD Cowen as well as growth in transaction
banking and lending, partially offset by lower trading-related
revenue reflecting a weaker market environment.
This quarter, TD Securities was recognized as Lead Manager of
the Year, Social Bonds – Sovereign by Environmental Finance's
2023 Bond Awards, demonstrating its continued leadership in
Environmental, Social, and Governance. The Wholesale Bank continued
to invest in its long-term U.S. growth strategy and further
extended its global reach and capabilities with the closing of the
Cowen Inc. acquisition on March 1,
welcoming 1,700 new colleagues to TD Securities.
Capital
TD's Common Equity Tier 1 Capital ratio was
15.3%.
Conclusion
For fiscal 2023, in light of the mutual
termination of the First Horizon merger agreement, and the
deterioration in the macroeconomic environment, the Bank does not
expect to meet its medium-term adjusted EPS growth target range of
7-10%.
"As we enter the second half of 2023, TD's businesses are
strong, and our customer and client relationships continue to
expand. We are successfully operating in an unpredictable operating
environment, supported by robust capital and liquidity and the best
bankers in the industry," added Masrani. "I would like to thank our
colleagues for their tremendous efforts, and for delivering the
legendary experiences that are the hallmark of TD."
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 ("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", "Significant and Subsequent Events, and Pending
Acquisitions" or "Significant and Subsequent Events" 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
|
|
For the six months ended
|
|
|
April 30
|
|
January 31
|
|
April 30
|
|
April 30
|
|
April 30
|
|
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Results of operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue –
reported
|
$
|
12,366
|
|
$
|
12,226
|
|
$
|
11,263
|
|
$
|
24,592
|
|
$
|
22,544
|
|
Total revenue –
adjusted1
|
|
12,539
|
|
|
13,102
|
|
|
11,039
|
|
|
25,641
|
|
|
22,320
|
|
Provision for (recovery
of) credit losses
|
|
599
|
|
|
690
|
|
|
27
|
|
|
1,289
|
|
|
99
|
|
Insurance claims and
related expenses
|
|
804
|
|
|
976
|
|
|
592
|
|
|
1,780
|
|
|
1,348
|
|
Non-interest expenses –
reported
|
|
6,987
|
|
|
8,316
|
|
|
6,033
|
|
|
15,303
|
|
|
12,000
|
|
Non-interest expenses –
adjusted1
|
|
6,693
|
|
|
6,541
|
|
|
5,999
|
|
|
13,234
|
|
|
11,896
|
|
Net income –
reported
|
|
3,351
|
|
|
1,582
|
|
|
3,811
|
|
|
4,933
|
|
|
7,544
|
|
Net income –
adjusted1
|
|
3,752
|
|
|
4,155
|
|
|
3,714
|
|
|
7,907
|
|
|
7,547
|
|
Financial position (billions of Canadian
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans net of
allowance for loan losses
|
|
$
|
849.6
|
|
$
|
836.7
|
|
$
|
765.0
|
|
$
|
849.6
|
|
$
|
765.0
|
|
|
Total assets
|
|
|
1,926.5
|
|
|
1,928.3
|
|
|
1,825.3
|
|
|
1,926.5
|
|
|
1,825.3
|
|
|
Total
deposits
|
|
|
1,189.4
|
|
|
1,220.6
|
|
|
1,183.7
|
|
|
1,189.4
|
|
|
1,183.7
|
|
|
Total equity
|
|
|
116.1
|
|
|
111.8
|
|
|
99.4
|
|
|
116.1
|
|
|
99.4
|
|
|
Total risk-weighted
assets2
|
|
|
549.4
|
|
|
531.6
|
|
|
489.0
|
|
|
549.4
|
|
|
489.0
|
|
|
Financial ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common equity
(ROE) – reported3
|
|
|
12.5
|
%
|
|
5.9
|
%
|
|
16.4
|
%
|
|
9.2
|
%
|
|
15.8
|
%
|
|
Return on common equity
– adjusted1
|
|
|
14.1
|
|
|
16.1
|
|
|
15.9
|
|
|
15.1
|
|
|
15.8
|
|
|
Return on tangible
common equity (ROTCE)1
|
|
|
16.8
|
|
|
8.0
|
|
|
22.1
|
|
|
12.4
|
|
|
21.4
|
|
|
Return on tangible
common equity – adjusted1
|
|
|
18.5
|
|
|
21.1
|
|
|
21.2
|
|
|
19.8
|
|
|
21.1
|
|
|
Efficiency ratio –
reported3
|
|
|
56.5
|
|
|
68.0
|
|
|
53.6
|
|
|
62.2
|
|
|
53.2
|
|
|
Efficiency ratio –
adjusted1,3
|
|
|
53.4
|
|
|
49.9
|
|
|
54.3
|
|
|
51.6
|
|
|
53.3
|
|
|
Provision for (recovery
of) credit losses as a % of net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average loans and acceptances
|
|
0.28
|
|
|
0.32
|
|
|
0.01
|
|
|
0.30
|
|
|
0.03
|
|
Common share information – reported
(Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.72
|
|
$
|
0.82
|
|
$
|
2.08
|
|
$
|
2.54
|
|
$
|
4.10
|
|
Diluted
|
|
1.72
|
|
|
0.82
|
|
|
2.07
|
|
|
2.54
|
|
|
4.09
|
|
Dividends per
share
|
|
0.96
|
|
|
0.96
|
|
|
0.89
|
|
|
1.92
|
|
|
1.78
|
|
Book value per
share3
|
|
57.04
|
|
|
55.01
|
|
|
51.49
|
|
|
57.04
|
|
|
51.49
|
|
Closing share
price4
|
|
82.07
|
|
|
92.06
|
|
|
92.79
|
|
|
82.07
|
|
|
92.79
|
|
Shares outstanding
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average basic
|
|
1,828.3
|
|
|
1,820.7
|
|
|
1,804.7
|
|
|
1,824.4
|
|
|
1,812.8
|
|
Average diluted
|
|
1,830.3
|
|
|
1,823.1
|
|
|
1,808.3
|
|
|
1,826.6
|
|
|
1,816.5
|
|
End of period
|
|
1,838.5
|
|
|
1,828.9
|
|
|
1,803.9
|
|
|
1,838.5
|
|
|
1,803.9
|
|
Market capitalization
(billions of Canadian dollars)
|
$
|
150.9
|
|
$
|
168.4
|
|
$
|
167.4
|
|
$
|
150.9
|
|
$
|
167.4
|
|
Dividend
yield3
|
|
4.5
|
%
|
|
4.3
|
%
|
|
3.6
|
%
|
|
4.4
|
%
|
|
3.6
|
%
|
Dividend payout
ratio3
|
|
55.8
|
|
|
116.5
|
|
|
42.8
|
|
|
75.4
|
|
|
43.8
|
|
Price-earnings
ratio3
|
|
10.4
|
|
|
11.1
|
|
|
11.5
|
|
|
10.4
|
|
|
11.5
|
|
Total shareholder
return (1 year)3
|
|
(7.5)
|
|
|
(5.7)
|
|
|
13.9
|
|
|
(7.5)
|
|
|
13.9
|
|
Common share information – adjusted
(Canadian dollars)1,3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.94
|
|
$
|
2.24
|
|
$
|
2.02
|
|
$
|
4.17
|
|
$
|
4.10
|
|
Diluted
|
|
1.94
|
|
|
2.23
|
|
|
2.02
|
|
|
4.17
|
|
|
4.09
|
|
Dividend payout
ratio
|
|
49.5
|
%
|
|
42.9
|
%
|
|
43.9
|
%
|
|
46.0
|
%
|
|
43.4
|
%
|
Price-earnings
ratio
|
|
9.7
|
|
|
10.8
|
|
|
11.4
|
|
|
9.7
|
|
|
11.4
|
|
Capital ratios2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital ratio
|
|
|
15.3
|
%
|
|
15.5
|
%
|
|
14.7
|
%
|
|
15.3
|
%
|
|
14.7
|
%
|
|
Tier 1 Capital
ratio
|
|
|
17.3
|
|
|
17.5
|
|
|
15.9
|
|
|
17.3
|
|
|
15.9
|
|
|
Total Capital
ratio
|
|
|
19.7
|
|
|
19.9
|
|
|
18.5
|
|
|
19.7
|
|
|
18.5
|
|
|
Leverage
ratio
|
|
|
4.6
|
|
|
4.8
|
|
|
4.3
|
|
|
4.6
|
|
|
4.3
|
|
|
TLAC ratio
|
|
|
34.2
|
|
|
36.6
|
|
|
30.4
|
|
|
34.2
|
|
|
30.4
|
|
|
TLAC Leverage
ratio
|
|
|
9.0
|
|
|
9.9
|
|
|
8.1
|
|
|
9.0
|
|
|
8.1
|
|
|
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
reported results for "items of note". 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 second quarter of 2023 MD&A for
further details.
|
3
|
For additional
information about this metric, refer to the Glossary in the second
quarter of 2023 MD&A, which is incorporated by
reference.
|
4
|
Toronto Stock Exchange
closing market price.
|
SIGNIFICANT AND SUBSEQUENT EVENTS
Acquisition of Cowen Inc.
On March 1, 2023, the Bank completed the acquisition
of Cowen Inc. ("Cowen"). The acquisition advances the Wholesale
Banking segment's long-term growth strategy in the U.S. and adds
complementary products and services to the Bank's existing
businesses. The results of the acquired business have been
consolidated by the Bank from the closing date and primarily
reported in the Wholesale Banking segment. Consideration included
$1,500 million (US$1,100 million) in cash for 100% of
Cowen's common shares outstanding, $253
million (US$186 million) for
the settlement of Cowen's Series A Preferred Stock, and
$205 million (US$151 million)
related to the replacement of share-based payment awards.
The acquisition was accounted for as a business combination
under the purchase method. As at March 1,
2023, the acquisition contributed $10,848 million (US$7,970
million) of assets and $9,900
million (US$7,275 million) of
liabilities. The excess of accounting consideration over the fair
value of the tangible net assets acquired was allocated to other
intangibles assets of $312 million
(US$229 million) net of taxes, and
goodwill of $698 million
(US$513 million). The purchase price
allocation may be adjusted during the measurement period, which
shall not exceed one year from the acquisition date, to reflect new
information obtained about facts and circumstances that existed at
the acquisition date.
Termination of Merger Agreement with First Horizon
Corporation
On May 4, 2023,
the Bank and First Horizon Corporation ("First Horizon") announced
their mutual decision to terminate the previously announced merger
agreement for the Bank to acquire First Horizon. Under the terms of
the termination agreement, the Bank made a US$225 million cash payment to First Horizon on
May 5, 2023. The termination payment
will be reported within the Corporate segment financial results for
the third quarter ending July 31,
2023.
In connection with the transaction, the Bank had invested
US$494 million in non-voting First
Horizon preferred stock. During the current quarter, the Bank
recognized a valuation adjustment loss of $199 million on this investment based on First
Horizon's common share price at the end of the quarter, recorded in
Other Comprehensive Income. In accordance with the preferred shares
purchase agreement and the terms of the preferred stock, subject to
certain conditions, the preferred stock will convert into
approximately 19.7 million common shares of First Horizon in the
third quarter.
Prior to the announcement on May 4,
2023 to terminate the merger agreement, the Bank had
implemented a strategy to mitigate the impact of interest rate
volatility to capital on closing of the acquisition.
The Bank determined that the fair value of First Horizon's fixed
rate financial assets and liabilities and certain intangible assets
would have been sensitive to interest rate changes. The fair value
of net assets would have determined the amount of goodwill to be
recognized on closing of the acquisition. Increases in goodwill and
intangibles would have negatively impacted 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.
As a result of the de-designation, mark-to-market gains (losses)
on these swaps were recognized in earnings, without any
corresponding offset from the previously hedged investments. Such
gains (losses) would have mitigated 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 and six months ended April 30, 2023, the Bank reported ($263) million and ($1,261) million, respectively, in non-interest
income related to the mark-to-market on the swaps, and $129 million and $251
million, respectively, in net interest income related to the
basis adjustment amortization. In addition, for the three months
and six months ended April 30, 2023,
the Bank reported $311 million and
$562 million, respectively, in
non-interest income related to the net interest earned on the
swaps.
Following the announcement on May 4,
2023 to terminate the merger agreement, the Bank
discontinued this strategy and reinstated hedge accounting on the
portfolio of fixed income investments.
The Bank had also implemented a strategy to mitigate FX risk on
the expected USD cash consideration. Following the announcement on
May 4, 2023 to terminate the merger
agreement, the Bank discontinued this strategy. Given the
appreciation of the U.S. dollar during the life of the strategy,
the Bank was in a net gain position on the date of hedge
termination and cumulative net gains were recognized in Accumulated
Other Comprehensive Income.
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
In the US Rotstain
v. Trustmark National Bank, et al. action, 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. The Bank recognized a foreign exchange loss of
$39 million ($28 million after-tax) in the second quarter of
2023, reflecting the impact of the difference between the foreign
exchange rate used for recording the provision (effective
January 31, 2023) and the foreign
exchange rate at the time the settlement was reached.
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 second quarter 2023
Interim Consolidated Financial Statements.
On November 25, 2019, the Bank and
Schwab signed an insured deposit account agreement ("2019 Schwab
IDA Agreement"), with an initial expiration date of July 1, 2031. Pursuant to the 2019 Schwab IDA
Agreement, the Bank made sweep deposit accounts available to
clients of Schwab. Starting July 1,
2021, Schwab had the option to reduce the deposits by up to
US$10 billion per year (subject to
certain limitations and adjustments), with a floor of US$50 billion. In addition, Schwab requested some
further operational flexibility to allow for the sweep deposit
balances to 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.
On May 4, 2023, the Bank and
Schwab entered into an amended insured deposit account agreement
(the "2023 Schwab IDA Agreement"), which replaced the 2019 Schwab
IDA Agreement. In comparison to the 2019 Schwab IDA Agreement, the
2023 Schwab IDA Agreement extends the initial expiration date by
three years to July 1, 2034 and
provides for lower deposit balances in its first six years,
followed by higher balances in the later years. Specifically, until
September 2025, the aggregate amount
of fixed rate obligations will serve as the floor. Thereafter, the
floor will be set at US$60 billion.
In addition, Schwab has the option to buy down up to US$5 billion of fixed rate obligations by paying
the Bank certain fees in accordance with the 2023 Schwab IDA
Agreement, subject to certain limits.
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
|
|
For the six months
ended
|
|
|
|
April
30
|
January 31
|
April 30
|
|
April
30
|
April 30
|
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Net interest
income
|
$
|
7,428
|
$
|
7,733
|
$
|
6,377
|
|
$
|
15,161
|
$
|
12,679
|
|
|
Non-interest
income
|
|
4,938
|
|
4,493
|
|
4,886
|
|
|
9,431
|
|
9,865
|
|
|
Total
revenue
|
|
12,366
|
|
12,226
|
|
11,263
|
|
|
24,592
|
|
22,544
|
|
|
Provision for (recovery
of) credit losses
|
|
599
|
|
690
|
|
27
|
|
|
1,289
|
|
99
|
|
|
Insurance claims and
related expenses
|
|
804
|
|
976
|
|
592
|
|
|
1,780
|
|
1,348
|
|
|
Non-interest
expenses
|
|
6,987
|
|
8,316
|
|
6,033
|
|
|
15,303
|
|
12,000
|
|
|
Income before income
taxes and share of net income from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment in
Schwab
|
|
3,976
|
|
2,244
|
|
4,611
|
|
|
6,220
|
|
9,097
|
|
|
Provision for (recovery
of) income taxes
|
|
866
|
|
947
|
|
1,002
|
|
|
1,813
|
|
1,986
|
|
|
Share of net income
from investment in Schwab
|
|
241
|
|
285
|
|
202
|
|
|
526
|
|
433
|
|
|
Net income –
reported
|
|
3,351
|
|
1,582
|
|
3,811
|
|
|
4,933
|
|
7,544
|
|
|
Preferred dividends and
distributions on other equity instruments
|
|
210
|
|
83
|
|
66
|
|
|
293
|
|
109
|
|
|
Net income available
to common shareholders
|
$
|
3,141
|
$
|
1,499
|
$
|
3,745
|
|
$
|
4,640
|
$
|
7,435
|
|
|
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
|
January 31
|
April 30
|
April
30
|
April 30
|
|
|
2023
|
2023
|
2022
|
2023
|
2022
|
|
Operating results –
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income6
|
$
|
7,610
|
$
|
7,862
|
$
|
6,377
|
$
|
15,472
|
$
|
12,679
|
|
Non-interest
income1,6
|
|
4,929
|
|
5,240
|
|
4,662
|
|
10,169
|
|
9,641
|
|
Total
revenue
|
|
12,539
|
|
13,102
|
|
11,039
|
|
25,641
|
|
22,320
|
|
Provision for (recovery
of) credit losses
|
|
599
|
|
690
|
|
27
|
|
1,289
|
|
99
|
|
Insurance claims and
related expenses
|
|
804
|
|
976
|
|
592
|
|
1,780
|
|
1,348
|
|
Non-interest
expenses2
|
|
6,693
|
|
6,541
|
|
5,999
|
|
13,234
|
|
11,896
|
|
Income before income
taxes and share of net income
|
|
|
|
|
|
|
|
|
|
|
|
|
from investment in
Schwab
|
|
4,443
|
|
4,895
|
|
4,421
|
|
9,338
|
|
8,977
|
|
Provision for (recovery
of) income taxes
|
|
974
|
|
1,068
|
|
955
|
|
2,042
|
|
1,956
|
|
Share of net income
from investment in Schwab3
|
|
283
|
|
328
|
|
248
|
|
611
|
|
526
|
|
Net income –
adjusted
|
|
3,752
|
|
4,155
|
|
3,714
|
|
7,907
|
|
7,547
|
|
Preferred dividends and
distributions on other equity instruments
|
|
210
|
|
83
|
|
66
|
|
293
|
|
109
|
|
Net income available
to common shareholders – adjusted
|
|
3,542
|
|
4,072
|
|
3,648
|
|
7,614
|
|
7,438
|
|
Pre-tax adjustments
for items of note
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles4
|
|
(79)
|
|
(54)
|
|
(60)
|
|
(133)
|
|
(127)
|
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(30)
|
|
(34)
|
|
(20)
|
|
(64)
|
|
(70)
|
|
Acquisition and
integration-related charges for acquisitions2
|
|
(227)
|
|
(127)
|
|
–
|
|
(354)
|
|
–
|
|
Mitigation of impact
from interest rate volatility to closing capital on
|
|
|
|
|
|
|
|
|
|
|
|
|
First Horizon
acquisition6
|
|
(134)
|
|
(876)
|
|
–
|
|
(1,010)
|
|
–
|
|
Stanford litigation
settlement1,2
|
|
(39)
|
|
(1,603)
|
|
–
|
|
(1,642)
|
|
–
|
|
Litigation settlement
recovery1
|
|
–
|
|
–
|
|
224
|
|
–
|
|
224
|
|
Less: Impact of
income taxes
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles
|
|
(12)
|
|
(8)
|
|
(6)
|
|
(20)
|
|
(14)
|
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(4)
|
|
(6)
|
|
(2)
|
|
(10)
|
|
(11)
|
|
Acquisition and
integration-related charges for acquisitions
|
|
(48)
|
|
(31)
|
|
–
|
|
(79)
|
|
–
|
|
Mitigation of impact
from interest rate volatility to closing capital on
|
|
|
|
|
|
|
|
|
|
|
|
|
First Horizon
acquisition
|
|
(33)
|
|
(216)
|
|
–
|
|
(249)
|
|
–
|
|
Stanford litigation
settlement
|
|
(11)
|
|
(445)
|
|
–
|
|
(456)
|
|
–
|
|
Litigation settlement
recovery
|
|
–
|
|
–
|
|
55
|
|
–
|
|
55
|
|
Canada Recovery
Dividend and impact from increase in the Canadian
|
|
|
|
|
|
|
|
|
|
|
|
|
federal tax rate for
fiscal 20227
|
|
–
|
|
585
|
|
–
|
|
585
|
|
–
|
|
Total adjustments
for items of note
|
|
(401)
|
|
(2,573)
|
|
97
|
|
(2,974)
|
|
(3)
|
|
Net income available
to common shareholders – reported
|
$
|
3,141
|
$
|
1,499
|
$
|
3,745
|
$
|
4,640
|
$
|
7,435
|
|
1
|
Adjusted non-interest
income excludes the following item of note:
|
|
i.
|
Stanford litigation
settlement – Q2 2023: $39 million. This reflects the foreign
exchange loss and is reported in the Corporate segment. Refer to
the "Significant and Subsequent Events" section for further
details.
|
|
ii.
|
In Q2 2022, the Bank
reached a settlement in TD Bank, N.A. v. Lloyd's Underwriter et
al., in Canada, pursuant to which the Bank recovered losses of $224
million resulting from the previous resolution by the Bank of
multiple proceedings in the U.S. related to an alleged Ponzi
scheme, perpetrated by, among others, Scott Rothstein. The amount
is reported in the U.S. Retail 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 – Q2 2023: $49 million, Q1 2023: $24 million,
Q2 2022: $26 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
– Q2 2023: $18 million, Q1 2023: $21 million, Q2 2022: $8 million,
Q1 2022: $37 million. These costs are reported in the Corporate
segment; and
|
|
iii.
|
Acquisition and
integration-related charges for acquisitions – Q2 2023: $227
million, Q1 2023: $127 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"
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 – Q2 2023: $30 million, Q1
2023: $30 million, Q2 2022: $34 million, Q1 2022: $34 million;
and
|
|
ii.
|
The Bank's share of
acquisition and integration charges associated with Schwab's
acquisition of TD Ameritrade – Q2 2023: $12 million, Q1 2023: $13
million, Q2 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 – Q2 2023: ($263)
million, Q1 2023: ($998) million ii) basis adjustment amortization
related to de-designated fair value hedge accounting relationships,
recorded in net interest income – Q2 2023: $129 million, Q1 2023:
$122 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 – Q2
2023: $311 million, Q1 2023: $251 million. Refer to the
"Significant and Subsequent Events" 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" section
for further details.
|
TABLE 4:
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER
SHARE1
|
|
(Canadian
dollars)
|
|
For the three months
ended
|
For the six months
ended
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
|
2023
|
2023
|
2022
|
2023
|
2022
|
|
Basic earnings per
share – reported
|
$
|
1.72
|
$
|
0.82
|
$
|
2.08
|
$
|
2.54
|
$
|
4.10
|
|
Adjustments for items
of note
|
|
0.22
|
|
1.41
|
|
(0.05)
|
|
1.63
|
|
–
|
|
Basic earnings per
share – adjusted
|
$
|
1.94
|
$
|
2.24
|
$
|
2.02
|
$
|
4.17
|
$
|
4.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share – reported
|
$
|
1.72
|
$
|
0.82
|
$
|
2.07
|
$
|
2.54
|
$
|
4.09
|
|
Adjustments for items
of note
|
|
0.22
|
|
1.41
|
|
(0.05)
|
|
1.63
|
|
–
|
|
Diluted earnings per
share – adjusted
|
$
|
1.94
|
$
|
2.23
|
$
|
2.02
|
$
|
4.17
|
$
|
4.09
|
|
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 effective
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
|
For the six months
ended
|
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Average common
equity
|
$
|
102,686
|
|
$
|
100,337
|
|
$
|
93,922
|
|
$
|
101,642
|
|
$
|
94,674
|
|
Net income available
to common shareholders – reported
|
|
3,141
|
|
|
1,499
|
|
|
3,745
|
|
|
4,640
|
|
|
7,435
|
|
Items of note, net of
income taxes
|
|
401
|
|
|
2,573
|
|
|
(97)
|
|
|
2,974
|
|
|
3
|
|
Net income available
to common shareholders – adjusted
|
$
|
3,542
|
|
$
|
4,072
|
|
$
|
3,648
|
|
$
|
7,614
|
|
$
|
7,438
|
|
Return on common
equity – reported
|
|
12.5
|
%
|
|
5.9
|
%
|
|
16.4
|
%
|
|
9.2
|
%
|
|
15.8
|
%
|
Return on common
equity – adjusted
|
|
14.1
|
|
|
16.1
|
|
|
15.9
|
|
|
15.1
|
|
|
15.8
|
|
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
|
|
For the six months
ended
|
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Average common
equity
|
$
|
102,686
|
|
$
|
100,337
|
|
$
|
93,922
|
|
$
|
101,642
|
|
$
|
94,674
|
|
Average
goodwill
|
|
17,835
|
|
|
17,486
|
|
|
16,577
|
|
|
17,713
|
|
|
16,539
|
|
Average imputed
goodwill and intangibles on investments in Schwab
|
|
6,142
|
|
|
6,160
|
|
|
6,577
|
|
|
6,163
|
|
|
6,577
|
|
Average other acquired
intangibles1
|
|
583
|
|
|
442
|
|
|
498
|
|
|
525
|
|
|
512
|
|
Average related
deferred tax liabilities
|
|
(210)
|
|
|
(174)
|
|
|
(171)
|
|
|
(195)
|
|
|
(172)
|
|
Average tangible
common equity
|
|
78,336
|
|
|
76,423
|
|
|
70,441
|
|
|
77,436
|
|
|
71,218
|
|
Net income available
to common shareholders – reported
|
|
3,141
|
|
|
1,499
|
|
|
3,745
|
|
|
4,640
|
|
|
7,435
|
|
Amortization of
acquired intangibles, net of income taxes
|
|
67
|
|
|
46
|
|
|
54
|
|
|
113
|
|
|
113
|
|
Net income available
to common shareholders adjusted for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization of
acquired intangibles, net of income taxes
|
|
3,208
|
|
|
1,545
|
|
|
3,799
|
|
|
4,753
|
|
|
7,548
|
|
Other items of note,
net of income taxes
|
|
334
|
|
|
2,527
|
|
|
(151)
|
|
|
2,861
|
|
|
(110)
|
|
Net income available
to common shareholders – adjusted
|
$
|
3,542
|
|
$
|
4,072
|
|
$
|
3,648
|
|
$
|
7,614
|
|
$
|
7,438
|
|
Return on tangible
common equity
|
|
16.8
|
%
|
|
8.0
|
%
|
|
22.1
|
%
|
|
12.4
|
%
|
|
21.4
|
%
|
Return on tangible
common equity – adjusted
|
|
18.5
|
|
|
21.1
|
|
|
21.2
|
|
|
19.8
|
|
|
21.1
|
|
1
Excludes intangibles relating to software and asset servicing
rights.
|
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank's business
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 pre-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 $40 million, compared with $57 million in the
prior quarter and $34 million in the second 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
|
|
For the six months
ended
|
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net interest
income
|
$
|
3,377
|
|
$
|
3,539
|
|
$
|
2,933
|
|
$
|
6,916
|
|
$
|
5,809
|
|
Non-interest
income
|
|
1,027
|
|
|
1,050
|
|
|
1,019
|
|
|
2,077
|
|
|
2,063
|
|
Total
revenue
|
|
4,404
|
|
|
4,589
|
|
|
3,952
|
|
|
8,993
|
|
|
7,872
|
|
Provision for (recovery
of) credit losses – impaired
|
|
234
|
|
|
220
|
|
|
163
|
|
|
454
|
|
|
313
|
|
Provision for (recovery
of) credit losses – performing
|
|
13
|
|
|
107
|
|
|
(103)
|
|
|
120
|
|
|
(221)
|
|
Total provision for
(recovery of) credit losses
|
|
247
|
|
|
327
|
|
|
60
|
|
|
574
|
|
|
92
|
|
Non-interest
expenses
|
|
1,903
|
|
|
1,863
|
|
|
1,759
|
|
|
3,766
|
|
|
3,448
|
|
Provision for (recovery
of) income taxes
|
|
629
|
|
|
670
|
|
|
565
|
|
|
1,299
|
|
|
1,146
|
|
Net
income
|
$
|
1,625
|
|
$
|
1,729
|
|
$
|
1,568
|
|
$
|
3,354
|
|
$
|
3,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity1
|
|
37.4
|
%
|
|
39.9
|
%
|
|
41.8
|
%
|
|
38.6
|
%
|
|
42.4
|
%
|
Net interest margin
(including on securitized assets)2
|
|
2.74
|
|
|
2.80
|
|
|
2.52
|
|
|
2.77
|
|
|
2.48
|
|
Efficiency
ratio
|
|
43.2
|
|
|
40.6
|
|
|
44.5
|
|
|
41.9
|
|
|
43.8
|
|
Number of Canadian
retail branches
|
|
1,060
|
|
|
1,060
|
|
|
1,060
|
|
|
1,060
|
|
|
1,060
|
|
Average number of
full-time equivalent staff
|
|
28,797
|
|
|
28,803
|
|
|
28,150
|
|
|
28,800
|
|
|
28,008
|
|
1
|
Capital allocated to
the business segment was increased to 11% CET1 Capital effective
the first quarter of fiscal 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 second quarter 2023 MD&A for additional information
about these metrics.
|
Quarterly comparison – Q2 2023 vs. Q2 2022
Canadian Personal and Commercial Banking net income for the quarter
was $1,625 million, an increase of
$57 million, or 4%, 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 37.4%, compared with 41.8% in
the second quarter last year.
Revenue for the quarter was $4,404
million, an increase of $452
million, or 11%, compared with the second quarter last
year.
Net interest income was $3,377
million, an increase of $444
million, or 15%, compared with the second quarter last year,
reflecting higher margins and volume growth. Average loan volumes
increased $31 billion, or 6%,
reflecting 5% growth in personal loans and 11% growth in business
loans. Average deposit volumes increased $9
billion, or 2%, reflecting 8% growth in personal deposits,
partially offset by 7% decline in business deposits. Net interest
margin was 2.74%, an increase of 22 basis points (bps), primarily
due to higher margins on deposits reflecting rising interest rates,
partially offset by lower margins on loans.
Non-interest income was $1,027
million, an increase of $8
million, or 1%, compared with the second quarter last
year.
PCL was $247 million, an increase
of $187 million, compared with the
second quarter last year. PCL – impaired for the quarter was
$234 million, an increase of
$71 million, or 44%, reflecting some
normalization of credit performance. PCL – performing was
$13 million, compared with a recovery
of $103 million in the prior
year. Total PCL as an annualized percentage of credit volume
was 0.19%, an increase of 14 bps compared with the second quarter
last year.
Non-interest expenses for the quarter were $1,903 million, an increase of $144 million, or 8%, compared with the second
quarter last year, reflecting higher spend supporting business
growth, including technology and higher employee related expenses,
and higher non-credit provisions.
The efficiency ratio for the quarter was 43.2%, compared with
44.5% in the second quarter last year.
Quarterly comparison – Q2 2023 vs. Q1 2023
Canadian Personal and Commercial Banking net income for the quarter
was $1,625 million, a decrease of
$104 million, or 6%, compared with
the prior quarter, reflecting lower revenue and higher non-interest
expenses, partially offset by lower PCL. The annualized ROE
for the quarter was 37.4%, compared with 39.9%, in the prior
quarter.
Revenue decreased $185 million, or
4%, compared with the prior quarter. Net interest income decreased
$162 million, or 5%, largely
reflecting fewer days in the second quarter and lower margins.
Average loan volumes increased $4
billion, or 1%, reflecting relatively flat personal loans
growth and 2% growth in business loans. Average deposit volumes
were flat compared with the prior quarter, reflecting 1% growth in
personal deposits, offset by a 3% decline in business deposits. Net
interest margin was 2.74%, a decrease of 6 bps, primarily due to
lower margins on deposits.
Non-interest income decreased $23
million, or 2%, compared with the prior quarter, reflecting
seasonally lower credit card
activity.
PCL decreased by $80 million
compared with the prior quarter. PCL – impaired increased by
$14 million, or 6%, reflecting some
further normalization of credit performance. PCL – performing was
$13 million, compared with a build of
$107 million in the prior quarter.
Total PCL as an annualized percentage of credit volume was 0.19%, a
decrease of 6 bps.
Non-interest expenses increased $40
million, or 2%, compared with the prior quarter, reflecting
higher non-credit provisions.
The efficiency ratio was 43.2%, compared with 40.6%, in the
prior quarter.
Year-to-date comparison – Q2 2023 vs. Q2 2022
Canadian Personal and Commercial Banking net income for the six
months ended April 30, 2023, was
$3,354 million, an increase of
$168 million, or 5%, compared with
the same period last year, reflecting higher revenue, partially
offset by higher PCL and higher non-interest expenses. The
annualized ROE for the period was 38.6%, compared with 42.4%, in
the same period last year.
Revenue for the period was $8,993
million, an increase of $1,121
million, or 14%, compared with the same period last year.
Net interest income was $6,916
million, an increase of $1,107
million, or 19% compared with the same period last year,
reflecting higher margins and volume growth. Average loan volumes
increased $34 billion, or 7%,
reflecting 6% growth in personal loans and 12% growth in business
loans. Average deposit volumes increased $11
billion, or 3%, reflecting 8% growth in personal deposits,
partially offset by 6% decline in business deposits. Net interest
margin was 2.77%, an increase of 29 bps, primarily due to higher
margins on deposits reflecting rising interest rates, partially
offset by lower margins on loans.
Non-interest income was $2,077
million, an increase of $14
million, or 1%, compared with the same period last year.
PCL was $574 million, an increase
of $482 million, compared with last
year. PCL – impaired was $454
million, an increase of $141
million, or 45%, reflecting some normalization of credit
performance. PCL – performing was $120
million, compared with a recovery of $221 million in the prior year. The current year
provisions reflect some normalization of credit performance and
volume growth. Total PCL as an annualized percentage of credit
volume was 0.22%, an increase of 18 bps.
Non-interest expenses were $3,766
million, an increase of $318
million, or 9%, compared with the same period last year,
reflecting higher spend supporting business growth, including
technology and higher employee related expenses.
The efficiency ratio was 41.9%, compared with 43.8%, for the
same period last year.
TABLE 8: U.S.
RETAIL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars,
except as noted)
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
Canadian
Dollars
|
|
|
2023
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Net interest
income
|
|
$
|
3,034
|
|
$
|
3,169
|
|
$
|
2,079
|
|
$
|
6,203
|
|
$
|
4,194
|
|
Non-interest income –
reported
|
|
|
558
|
|
|
596
|
|
|
864
|
|
|
1,154
|
|
|
1,535
|
|
Non-interest income –
adjusted1
|
|
|
558
|
|
|
596
|
|
|
640
|
|
|
1,154
|
|
|
1,311
|
|
Total revenue –
reported
|
|
|
3,592
|
|
|
3,765
|
|
|
2,943
|
|
|
7,357
|
|
|
5,729
|
|
Total revenue –
adjusted1
|
|
|
3,592
|
|
|
3,765
|
|
|
2,719
|
|
|
7,357
|
|
|
5,505
|
|
Provision for (recovery
of) credit losses – impaired
|
|
|
186
|
|
|
212
|
|
|
96
|
|
|
398
|
|
|
221
|
|
Provision for (recovery
of) credit losses – performing
|
|
|
4
|
|
|
(12)
|
|
|
(114)
|
|
|
(8)
|
|
|
(218)
|
|
Total provision for
(recovery of) credit losses
|
|
|
190
|
|
|
200
|
|
|
(18)
|
|
|
390
|
|
|
3
|
|
Non-interest expenses –
reported
|
|
|
2,050
|
|
|
2,071
|
|
|
1,632
|
|
|
4,121
|
|
|
3,229
|
|
Non-interest expenses –
adjusted1,2
|
|
|
1,896
|
|
|
1,965
|
|
|
1,632
|
|
|
3,861
|
|
|
3,229
|
|
Provision for (recovery
of) income taxes – reported
|
|
|
190
|
|
|
206
|
|
|
186
|
|
|
396
|
|
|
334
|
|
Provision for (recovery
of) income taxes – adjusted1
|
|
|
228
|
|
|
232
|
|
|
131
|
|
|
460
|
|
|
279
|
|
U.S. Retail Bank net
income – reported
|
|
|
1,162
|
|
|
1,288
|
|
|
1,143
|
|
|
2,450
|
|
|
2,163
|
|
U.S. Retail Bank net
income – adjusted1
|
|
|
1,278
|
|
|
1,368
|
|
|
974
|
|
|
2,646
|
|
|
1,994
|
|
Share of net income
from investment in Schwab3,4
|
|
|
250
|
|
|
301
|
|
|
224
|
|
|
551
|
|
|
476
|
|
Net income –
reported
|
|
$
|
1,412
|
|
$
|
1,589
|
|
$
|
1,367
|
|
$
|
3,001
|
|
$
|
2,639
|
|
Net income –
adjusted1
|
|
|
1,528
|
|
|
1,669
|
|
|
1,198
|
|
|
3,197
|
|
|
2,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
2,241
|
|
$
|
2,349
|
|
$
|
1,641
|
|
$
|
4,590
|
|
$
|
3,312
|
|
Non-interest income –
reported
|
|
|
413
|
|
|
442
|
|
|
682
|
|
|
855
|
|
|
1,212
|
|
Non-interest income –
adjusted1
|
|
|
413
|
|
|
442
|
|
|
505
|
|
|
855
|
|
|
1,035
|
|
Total revenue –
reported
|
|
|
2,654
|
|
|
2,791
|
|
|
2,323
|
|
|
5,445
|
|
|
4,524
|
|
Total revenue –
adjusted1
|
|
|
2,654
|
|
|
2,791
|
|
|
2,146
|
|
|
5,445
|
|
|
4,347
|
|
Provision for (recovery
of) credit losses – impaired
|
|
|
137
|
|
|
158
|
|
|
75
|
|
|
295
|
|
|
174
|
|
Provision for (recovery
of) credit losses – performing
|
|
|
3
|
|
|
(9)
|
|
|
(90)
|
|
|
(6)
|
|
|
(172)
|
|
Total provision for
(recovery of) credit losses
|
|
|
140
|
|
|
149
|
|
|
(15)
|
|
|
289
|
|
|
2
|
|
Non-interest expenses –
reported
|
|
|
1,514
|
|
|
1,535
|
|
|
1,289
|
|
|
3,049
|
|
|
2,550
|
|
Non-interest expenses –
adjusted1,2
|
|
|
1,401
|
|
|
1,457
|
|
|
1,289
|
|
|
2,858
|
|
|
2,550
|
|
Provision for (recovery
of) income taxes – reported
|
|
|
141
|
|
|
152
|
|
|
147
|
|
|
293
|
|
|
264
|
|
Provision for (recovery
of) income taxes – adjusted1
|
|
|
169
|
|
|
171
|
|
|
103
|
|
|
340
|
|
|
220
|
|
U.S. Retail Bank net
income – reported
|
|
|
859
|
|
|
955
|
|
|
902
|
|
|
1,814
|
|
|
1,708
|
|
U.S. Retail Bank net
income – adjusted1
|
|
|
944
|
|
|
1,014
|
|
|
769
|
|
|
1,958
|
|
|
1,575
|
|
Share of net income
from investment in Schwab3,4
|
|
|
185
|
|
|
222
|
|
|
177
|
|
|
407
|
|
|
377
|
|
Net income –
reported
|
|
$
|
1,044
|
|
$
|
1,177
|
|
$
|
1,079
|
|
$
|
2,221
|
|
$
|
2,085
|
|
Net income –
adjusted1
|
|
|
1,129
|
|
|
1,236
|
|
|
946
|
|
|
2,365
|
|
|
1,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common equity
– reported5
|
|
|
14.1
|
%
|
|
15.5
|
%
|
|
14.2
|
%
|
|
14.8
|
%
|
|
13.4
|
%
|
Return on common equity
– adjusted1,5
|
|
|
15.3
|
|
|
16.3
|
|
|
12.5
|
|
|
15.8
|
|
|
12.6
|
|
Net interest
margin1,6
|
|
|
3.25
|
|
|
3.29
|
|
|
2.21
|
|
|
3.27
|
|
|
2.21
|
|
Efficiency ratio –
reported
|
|
|
57.0
|
|
|
55.0
|
|
|
55.5
|
|
|
56.0
|
|
|
56.4
|
|
Efficiency ratio –
adjusted1
|
|
|
52.8
|
|
|
52.2
|
|
|
60.1
|
|
|
52.5
|
|
|
58.7
|
|
Assets under
administration (billions of U.S. dollars)7
|
|
$
|
36
|
|
$
|
35
|
|
$
|
32
|
|
$
|
36
|
|
$
|
32
|
|
Assets under management
(billions of U.S. dollars)7
|
|
|
35
|
|
|
35
|
|
|
37
|
|
|
35
|
|
|
37
|
|
Number of U.S. retail
stores
|
|
|
1,164
|
|
|
1,161
|
|
|
1,156
|
|
|
1,164
|
|
|
1,156
|
|
Average number of
full-time equivalent staff
|
|
|
28,510
|
|
|
27,694
|
|
|
25,366
|
|
|
28,095
|
|
|
25,141
|
|
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 – Q2 2023: $154 million or US$113
million ($116 million or US$85 million after-tax); Q1 2023:
$106 million or US$78 million ($80 million or US$59 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 second 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 effective
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 the 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
second quarter 2023 MD&A.
|
Quarterly comparison – Q2 2023 vs. Q2 2022
U.S. Retail reported net income for the quarter was $1,412 million (US$1,044
million), an increase of $45
million, or 3% (a decrease of US$35
million or 3%), compared with the second quarter last year.
On an adjusted basis, net income for the quarter was $1,528 million (US$1,129
million), an increase of $330
million (US$183 million), or
28% (19% in U.S. dollars). The reported and adjusted annualized ROE
for the quarter were 14.1% and 15.3%, respectively, compared with
14.2% and 12.5%, respectively, in the second quarter last year.
U.S. Retail net income includes contributions from the U.S.
Retail Bank and the Bank's investment in Schwab. Reported net
income for the quarter from the Bank's investment in Schwab was
$250 million (US$185 million), an increase of $26 million (US$8
million), or 12% (5% in U.S. dollars), reflecting higher net
interest income and higher asset management fees, partially offset
by higher expenses, lower bank deposit account fees and lower
trading revenue.
U.S. Retail Bank reported net income was $1,162 million (US$859
million), an increase of $19
million, or 2% (a decrease of US$43
million or 5%), compared with the second 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 $1,278
million (US$944 million), an
increase of $304 million
(US$175 million), or 31% (23% in U.S.
dollars), compared with the second quarter last year, reflecting
higher revenue, partially offset by higher non-interest expenses
and PCL.
Revenue for the quarter was US$2,654
million, an increase of US$331
million, or 14%, compared with the second quarter last year.
Net interest income of US$2,241
million, increased US$600
million, or 37%, driven by the benefit of higher deposit
margins from the rising rate environment and higher loan volumes,
partially offset by lower deposit volumes and lower margin on
loans. Net interest margin of 3.25%, increased 104 bps, as higher
margin on deposits reflecting the rising rate environment was
partially offset by lower margin on loans. Reported non-interest
income of US$413 million decreased
US$269 million, or 39%, compared with
the second quarter last year, primarily reflecting an insurance
recovery related to litigation in the prior year and lower
overdraft fees. On an adjusted basis, non-interest income decreased
US$92 million, or 18%, primarily due
to lower overdraft fees.
Average loan volumes increased US$17
billion, or 10%, compared with the second quarter last year.
Personal loans increased 12%, reflecting good originations and
slower payment rates across portfolios. Business loans increased
9%, reflecting strong originations from new customer growth, higher
commercial line utilization and slower payment rates, partially
offset by PPP loan forgiveness. Excluding PPP loans, business loans
increased 11%. Average deposit volumes decreased US$44 billion, or 11%, reflecting a 3% decrease
in personal deposit volumes, a 6% decrease in business deposits,
and a 23% decrease in sweep deposits.
Assets under administration (AUA) were US$36 billion as at April
30, 2023, an increase of US$4
billion, or 13%, compared with the second quarter last year,
reflecting net asset growth. Assets under Management (AUM) were
US$35 billion as at April 30, 2023, a decrease of US$2 billion, or 5%, compared with the second
quarter last year, reflecting net asset outflows, partially offset
by market appreciation.
PCL for the quarter was US$140
million, compared with a recovery of US$15 million in the second quarter last year.
PCL – impaired was US$137 million, an
increase of US$62 million, or 83%,
reflecting some normalization of credit performance. PCL –
performing was US$3 million, compared
with a recovery of US$90 million in the second quarter last
year. 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 0.33%, an increase of 37 bps, compared with the
second quarter last year.
Reported non-interest expenses for the quarter were US$1,514 million, an increase of US$225 million, or 17%, compared with the second
quarter last year, reflecting higher employee-related expenses,
acquisition and integration-related charges for the First Horizon
acquisition, and higher investments in the business. On an adjusted
basis, excluding acquisition and integration-related charges for
the First Horizon acquisition, non-interest expenses increased
US$112 million, or 9%.
The reported and adjusted efficiency ratios for the quarter were
57.0% and 52.8%, respectively, compared with 55.5% and 60.1%,
respectively, in the second quarter last year.
Quarterly comparison – Q2 2023 vs. Q1 2023
U.S. Retail reported net income of $1,412
million (US$1,044 million),
decreased $177 million (US$133 million), or 11% (11% in U.S. dollars),
compared with the prior quarter. On an adjusted basis, net income
for the quarter was $1,528 million
(US$1,129 million), a decrease of
$141 million (US$107 million), or 8% (9% in U.S. dollars). The
reported and adjusted annualized ROE for the quarter were 14.1% and
15.3%, respectively, compared with 15.5% and 16.3%, respectively,
in the prior quarter.
The contribution from Schwab of $250
million (US$185 million)
decreased $51 million (US$37 million), or 17% (17% in U.S. dollars),
reflecting lower net interest income, lower bank deposit account
fees and higher expenses, partially offset by higher asset
management fees.
U.S. Retail Bank reported net income was $1,162 million (US$859
million), a decrease of $126
million (US$96 million), or
10% (10% in U.S. dollars), compared with the prior quarter,
reflecting lower revenue, partially offset by lower non-interest
expenses and lower PCL. U.S. Retail Bank adjusted net income was
$1,278 million (US$944 million), a decrease of $90 million (US$70
million), or 7% (7% in U.S. dollars), reflecting lower
revenue, partially offset by lower non-interest expenses and lower
PCL.
Revenue decreased US$137 million,
or 5%, compared with the prior quarter. Net interest income of
US$2,241 million decreased
US$108 million, or 5%, primarily
reflecting lower deposit volumes and lower margins on deposits as a
result of higher funding costs and the effect of fewer days in the
quarter. Net interest margin of 3.25% decreased 4 bps quarter over
quarter, due to lower margins on deposits reflecting higher funding
costs. Non-interest income of US$413
million decreased US$29
million, or 7%, primarily reflecting losses from the
disposition of certain investments.
Average loan volumes increased US$4
billion, or 2%, compared with the prior quarter. Personal
loans increased 2%, reflecting good originations and slower payment
rates across portfolios. Business loans increased 2%, reflecting
strong originations from new customer growth, higher commercial
line utilization, and slower payment rates. Average deposit volumes
decreased US$17 billion, or 5%,
compared with the prior quarter, reflecting flat personal deposit
volumes, a 3% decrease in business deposits, and an 11% decrease in
sweep deposits.
AUA were US$36 billion, an
increase of US$1 billion, or 3%,
compared with the prior quarter, reflecting net asset growth. AUM
were US$35 billion, flat compared to
last quarter.
PCL decreased by US$9 million
compared with the prior quarter. PCL – impaired decreased
US$21 million, or 13%, largely in the
consumer lending portfolios. PCL – performing was US$3 million, compared with a recovery of
US$9 million in the prior quarter. 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 0.33%, lower by 1
basis point.
Reported non-interest expenses for the quarter were US$1,514 million, a decrease of US$21 million, or 1%, compared to the prior
quarter, reflecting lower credit card growth-related expenses,
partially offset by higher acquisition and integration-related
charges for the First Horizon acquisition and higher Federal
Deposit Insurance Corporation (FDIC) assessment fees as a result of
an increase to FDIC assessment rates effective January 1, 2023. On an adjusted basis, excluding
acquisition and integration-related charges for the First Horizon
acquisition, non-interest expenses decreased US$56 million, or 4%.
The reported and adjusted efficiency ratios for the quarter were
57.0% and 52.8%, respectively, compared with 55.0% and 52.2%,
respectively, in the prior quarter.
Year-to-date comparison – Q2 2023 vs. Q2 2022
U.S. Retail reported net income for the six months ended
April 30, 2023, was $3,001 million (US$2,221
million), an increase of $362
million (US$136 million), or
14% (7% in U.S. dollars), compared with the same period last year.
On an adjusted basis, net income for the period was $3,197 million (US$2,365
million), an increase of $727
million (US$413 million), or
29% (21% in U.S. dollars). The reported and adjusted annualized ROE
for the period were 14.8% and 15.8%, respectively, compared with
13.4% and 12.6%, respectively, in the same period last year.
The contribution from Schwab of $551
million (US$407 million),
increased $75 million (US$30 million), or 16% (8% in U.S. dollars),
reflecting higher net interest income, partially offset by higher
expenses, lower trading revenue and lower bank deposit account
fees.
U.S. Retail Bank reported net income for the period was
US$1,814 million, an increase of
US$106 million, or 6%, compared with
the same period last year, reflecting higher revenue, partially
offset by higher non-interest expenses and higher PCL. U.S. Retail
Bank adjusted net income was US$1,958
million, an increase of US$383
million, or 24%.
Reported revenue for the period was US$5,445 million, an increase of US$921 million, or 20%, compared with the same
period last year. On an adjusted basis, revenue increased
US$1,098 million, or 25%. Net
interest income increased US$1,278
million, or 39%, largely driven by the benefit of higher
deposit margins from the rising rate environment and higher loan
volumes, partially offset by lower deposit volumes and lower margin
on loans. Net interest margin was 3.27%, an increase of 106 bps, as
higher margin on deposits reflecting the rising rate environment
was partially offset by the impact of lower income from PPP loan
forgiveness and lower margin on loans. Reported non-interest income
decreased US$357 million, or 29%,
primarily reflecting an insurance recovery related to litigation in
the prior year and lower overdraft fees. On an adjusted basis,
non-interest income decreased US$180 million, or 17%,
primarily due to lower overdraft fees.
Average loan volumes increased US$15
billion, or 9%, compared with the same period last year.
Personal loans increased 11%, reflecting good originations and
slower payment rates across portfolios. Business loans increased
8%, reflecting strong originations from new customer growth, higher
commercial line utilization and slower payment rates, partially
offset by PPP loan forgiveness. Excluding PPP loans, business loans
increased 10%. Average deposit volumes decreased
US$35 billion, or 9%, reflecting a 2% decrease in personal
deposit volumes, a 5% decrease in business deposits, and a 19%
decrease in sweep deposits.
PCL was US$289 million, an
increase of US$287 million compared
with the same period last year. PCL – impaired was US$295 million, an increase of
US$121 million, or 70%, reflecting some normalization of
credit performance. PCL – performing was a recovery of US$6 million, compared with a recovery of
US$172 million in the prior year.
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 0.33%, an increase of 33 bps.
Reported non-interest expenses for the period were US$3,049 million, an increase of US$499 million, or 20%, compared with the same
period last year, reflecting higher employee-related expenses,
acquisition and integration-related charges for the First Horizon
acquisition, and higher investments in the business. On an adjusted
basis, excluding acquisition and integration-related charges for
the First Horizon acquisition, non-interest expenses increased
US$308 million, or 12%.
The reported and adjusted efficiency ratios for the quarter were
56.0% and 52.5%, respectively, compared with 56.4% and 58.7%,
respectively, for the same period last year.
TABLE 9: WEALTH
MANAGEMENT AND INSURANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
|
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net interest
income
|
|
$
|
258
|
|
$
|
281
|
|
$
|
215
|
|
$
|
539
|
|
$
|
424
|
|
Non-interest
income
|
|
|
2,477
|
|
|
2,621
|
|
|
2,456
|
|
|
5,098
|
|
|
5,045
|
|
Total
revenue
|
|
|
2,735
|
|
|
2,902
|
|
|
2,671
|
|
|
5,637
|
|
|
5,469
|
|
Provision for (recovery
of) credit losses – impaired
|
|
|
1
|
|
|
–
|
|
|
–
|
|
|
1
|
|
|
–
|
|
Provision for (recovery
of) credit losses – performing
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
1
|
|
Total provision for
(recovery of) credit losses
|
|
|
1
|
|
|
–
|
|
|
–
|
|
|
1
|
|
|
1
|
|
Insurance claims and
related expenses
|
|
|
804
|
|
|
976
|
|
|
592
|
|
|
1,780
|
|
|
1,348
|
|
Non-interest
expenses
|
|
|
1,166
|
|
|
1,182
|
|
|
1,173
|
|
|
2,348
|
|
|
2,353
|
|
Provision for (recovery
of) income taxes
|
|
|
201
|
|
|
194
|
|
|
238
|
|
|
395
|
|
|
463
|
|
Net
income
|
|
$
|
563
|
|
$
|
550
|
|
$
|
668
|
|
$
|
1,113
|
|
$
|
1,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity1
|
|
|
42.6
|
%
|
|
41.3
|
%
|
|
52.9
|
%
|
|
41.9
|
%
|
|
51.6
|
%
|
Efficiency
ratio
|
|
|
42.6
|
|
|
40.7
|
|
|
43.9
|
|
|
41.7
|
|
|
43.0
|
|
Assets under
administration (billions of Canadian
dollars)2
|
|
$
|
549
|
|
$
|
541
|
|
$
|
537
|
|
$
|
549
|
|
$
|
537
|
|
Assets under management
(billions of Canadian dollars)
|
|
|
422
|
|
|
414
|
|
|
411
|
|
|
422
|
|
|
411
|
|
Average number of
full-time equivalent staff
|
|
|
16,345
|
|
|
16,293
|
|
|
15,557
|
|
|
16,318
|
|
|
15,315
|
|
1
Capital allocated to the business segment was increased to 11% CET1
Capital effective the first quarter of fiscal 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 – Q2 2023 vs. Q2 2022
Wealth Management and Insurance net income for the quarter was
$563 million, a decrease of
$105 million, or 16%, compared with the second quarter last
year, reflecting lower earnings in the wealth management business.
The annualized ROE for the quarter was 42.6%, compared with 52.9%
in the second quarter last year.
Revenue for the quarter was $2,735
million, an increase of $64
million, or 2%, compared with the second quarter last year.
Net interest income was $258 million,
an increase of $43 million, or 20%,
compared with the second quarter last year, reflecting higher
investment income in the insurance business. Non-interest income
was $2,477 million, an increase of
$21 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 $549 billion as at
April 30, 2023, an increase of
$12 billion, or 2%, and AUM were
$422 billion as at April 30, 2023, an increase of $11 billion, or 3%, compared with the second
quarter last year, both primarily reflecting net asset growth.
Insurance claims and related expenses for the quarter were
$804 million, an increase of
$212 million, or 36%, compared with
the second 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, more severe weather-related events, increased
driving activity and inflationary costs.
Non-interest expenses for the quarter were $1,166 million, a decrease of $7 million, or 1%, compared with the second
quarter last year, reflecting lower variable compensation,
partially offset by higher spend supporting business growth
including employee-related expenses and technology costs.
The efficiency ratio for the quarter was 42.6%, compared with
43.9% in the second quarter last year.
Quarterly comparison – Q2 2023 vs. Q1 2023
Wealth Management and Insurance net income for the quarter was
$563 million, an increase of
$13 million, or 2%, compared with the
prior quarter, reflecting higher earnings in the insurance
business, partially offset by lower earnings in the wealth
management business. The annualized ROE for the quarter was 42.6%,
compared with 41.3%, in the prior quarter.
Revenue decreased $167 million, or
6%, compared with the prior quarter. Non-interest income decreased
$144 million, or 5%, reflecting a
decrease in the fair value of investments supporting claims
liabilities which resulted in a similar decrease in insurance
claims, and lower transaction and fee-based revenue in the wealth
management business. Net interest income decreased $23 million, or 8%, reflecting lower volumes and
margins in the wealth management business.
AUA increased $8 billion, or 1%,
and AUM increased $8 billion, or 2%,
compared with the prior quarter, both primarily reflecting net
asset growth.
Insurance claims and related expenses for the quarter decreased
$172 million, or 18%, compared with
the prior quarter, reflecting the impact of changes in the discount
rate which resulted in a similar decrease in fair value of
investments supporting claims liabilities reported in non-interest
income, more favourable prior years' claims development and lower
current year claims, partially offset by more severe
weather-related events.
Non-interest expenses decreased $16
million, or 1%, compared with the prior quarter.
The efficiency ratio for the quarter was 42.6%, compared with
40.7% in the prior quarter.
Year-to-date comparison – Q2 2023 vs. Q2 2022
Wealth Management and Insurance net income for the six months ended
April 30, 2023, was $1,113 million, a decrease of $191 million, or 15%, compared with same period
last year, reflecting lower earnings in the wealth management
business, partially offset by higher earnings in the insurance
business. The annualized ROE for the period was 41.9%, compared
with 51.6%, in the same period last year.
Revenue for the period was $5,637
million, an increase of $168
million, or 3%, compared with same period last year. Net
interest income increased $115
million, or 27%, reflecting higher margins, partially offset
by lower volumes in the wealth management business. Non-interest
income increased $53 million, or 1%,
reflecting an increase in the fair value of investments supporting
claims liabilities which resulted in a similar increase in
insurance claims, partially offset by lower fee-based and
transaction revenue in the wealth management business.
Insurance claims and related expenses were $1,780 million, an increase of $432 million, or 32%, compared with the same
period 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, and increased driving activity and inflationary costs.
Non-interest expenses were $2,348
million, a decrease of $5
million, compared with the same period last year, reflecting
lower variable compensation, partially offset by higher spend
supporting business growth including employee-related expenses and
technology costs.
The efficiency ratio for the period was 41.7%, compared with
43.0% for the same period last year.
TABLE 10: WHOLESALE
BANKING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
For the three months
ended
|
|
For the six months
ended
|
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net interest income
(TEB)
|
$
|
498
|
|
$
|
525
|
|
$
|
759
|
|
$
|
1,023
|
|
$
|
1,468
|
|
Non-interest
income
|
|
919
|
|
|
820
|
|
|
491
|
|
|
1,739
|
|
|
1,128
|
|
Total
revenue
|
|
1,417
|
|
|
1,345
|
|
|
1,250
|
|
|
2,762
|
|
|
2,596
|
|
Provision for (recovery
of) credit losses – impaired
|
|
5
|
|
|
1
|
|
|
(1)
|
|
|
6
|
|
|
(5)
|
|
Provision for (recovery
of) credit losses – performing
|
|
7
|
|
|
31
|
|
|
(8)
|
|
|
38
|
|
|
(9)
|
|
Total provision for
(recovery of) credit losses
|
|
12
|
|
|
32
|
|
|
(9)
|
|
|
44
|
|
|
(14)
|
|
Non-interest expenses –
reported
|
|
1,189
|
|
|
883
|
|
|
776
|
|
|
2,072
|
|
|
1,540
|
|
Non-interest expenses –
adjusted1,2
|
|
1,116
|
|
|
862
|
|
|
776
|
|
|
1,978
|
|
|
1,540
|
|
Provision for (recovery
of) income taxes (TEB) – reported
|
|
66
|
|
|
99
|
|
|
124
|
|
|
165
|
|
|
277
|
|
Provision for (recovery
of) income taxes (TEB) – adjusted1
|
|
76
|
|
|
104
|
|
|
124
|
|
|
180
|
|
|
277
|
|
Net income –
reported
|
$
|
150
|
|
$
|
331
|
|
$
|
359
|
|
$
|
481
|
|
$
|
793
|
|
Net income –
adjusted
|
|
213
|
|
|
347
|
|
|
359
|
|
|
560
|
|
|
793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes and
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading-related revenue
(TEB)3
|
$
|
482
|
|
$
|
662
|
|
$
|
680
|
|
$
|
1,144
|
|
$
|
1,406
|
|
Average gross lending
portfolio (billions of Canadian dollars)4
|
|
95.2
|
|
|
96.9
|
|
|
63.7
|
|
|
96.1
|
|
|
61.4
|
|
Return on common equity
– reported5
|
|
4.5
|
%
|
|
9.4
|
%
|
|
13.1
|
%
|
|
7.0
|
%
|
|
14.6
|
%
|
Return on common equity
– adjusted1,5
|
|
6.4
|
|
|
9.9
|
|
|
13.1
|
|
|
8.2
|
|
|
14.6
|
|
Efficiency ratio –
reported
|
|
83.9
|
|
|
65.7
|
|
|
62.1
|
|
|
75.0
|
|
|
59.3
|
|
Efficiency ratio –
adjusted1
|
|
78.8
|
|
|
64.1
|
|
|
62.1
|
|
|
71.6
|
|
|
59.3
|
|
Average number of
full-time equivalent staff
|
|
6,510
|
|
|
5,365
|
|
|
4,950
|
|
|
5,937
|
|
|
4,941
|
|
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 – Q2 2023: $73 million ($63
million after-tax), Q1 2023: $21 million ($16 million
after-tax).
|
3
|
Includes net interest
income TEB of $285 million (Q1 2023: $261 million, Q2 2022: $581
million, Q1 2022: $525 million), and trading income (loss) of $197
million (Q1 2023: $401 million, Q2 2022: $99 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 second 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 effective
the first quarter of fiscal 2023 compared with 10.5% in the prior
year.
|
Quarterly comparison – Q2 2023 vs. Q2 2022
Wholesale Banking reported net income for the quarter was
$150 million, a decrease of
$209 million, or 58%, compared with
the second quarter last year, reflecting higher non-interest
expenses, partially offset by higher revenues. On an adjusted
basis, net income was $213 million, a
decrease of $146 million, or 41%.
Revenue for the quarter, including TD Cowen, was $1,417 million, an increase of $167 million, or 13%, compared with the second
quarter last year. Higher revenue primarily reflects higher
advisory fees, equity commissions, global transaction banking
revenue, and lending revenue, partially offset by lower
trading-related revenue.
PCL for the quarter was $12
million, compared with a recovery of $9 million in the second quarter last year. PCL –
impaired was $5 million. PCL –
performing was $7 million.
Reported non-interest expenses for the quarter were $1,189 million, an increase of $413 million, or 53%, compared with the second
quarter last year, reflecting TD Cowen and the associated
acquisition and integration-related costs. Higher expenses also
reflected continued investments in Wholesale Banking's U.S. dollar
strategy, including the hiring of banking, sales and trading, and
technology professionals, and the impact of foreign exchange
translation. On an adjusted basis, non-interest expenses were
$1,116 million, an increase of
$340 million or 44%.
Quarterly comparison – Q2 2023 vs. Q1 2023
Wholesale Banking reported net income for the quarter was
$150 million, a decrease of $181
million, or 55%, compared with the prior quarter, reflecting
higher non-interest expenses, partially offset by higher revenues.
On an adjusted basis, net income was $213 million, a decrease
of $134 million, or 39%.
Revenue for the quarter, including TD Cowen, increased
$72 million, or 5%, compared with the
prior quarter. Higher revenue primarily reflects higher
advisory fees and equity commissions, partially offset by lower
trading-related revenue.
PCL for the quarter was $12
million, a decrease of $20
million compared with the prior quarter. PCL – impaired was
$5 million. PCL – performing was
$7 million.
Reported non-interest expenses for the quarter increased
$306 million, or 35%, compared with
the prior quarter, reflecting TD Cowen and the associated
acquisition and integration-related costs. On an adjusted basis,
non-interest expenses increased $254
million or 29%.
Year-to-date comparison – Q2 2023 vs. Q2 2022
Wholesale Banking reported net income for the six months ended
April 30, 2023 was $481 million, a decrease of $312 million, or 39%, compared with the same
period last year, reflecting higher non-interest expenses and PCL,
partially offset by higher revenues. On an adjusted basis, net
income was $560 million, a decrease
of $233 million, or 29%.
Revenue including TD Cowen was $2,762
million, an increase of $166
million, or 6%, compared with the same period last year.
Higher revenue primarily reflects higher advisory fees, equity
commissions, global transaction banking revenue, and lending
revenue, partially offset by lower trading-related revenue.
PCL was $44 million, compared with
a recovery of $14 million in the same
period last year. PCL – impaired was $6
million. PCL – performing was $38
million, largely reflecting volume growth and credit
migration.
Reported non-interest expenses were $2,072 million, an increase of $532 million, or 35%, compared with the same
period last year, reflecting TD Cowen and the associated
acquisition and integration-related costs. Higher expenses also
reflected continued investments in Wholesale Banking's U.S. dollar
strategy, including the hiring of banking, sales and trading, and
technology professionals, and the impact of foreign exchange
translation. On an adjusted basis, non-interest expenses were
$1,978 million, an increase of
$438 million or 28%.
TABLE 11:
CORPORATE
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three months
ended
|
For the six months
ended
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
|
2023
|
2023
|
2022
|
2023
|
2022
|
Net income (loss) –
reported
|
$
|
(399)
|
$
|
(2,617)
|
$
|
(151)
|
$
|
(3,016)
|
$
|
(378)
|
Adjustments for
items of note
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles before income taxes
|
|
79
|
|
54
|
|
60
|
|
133
|
|
127
|
Acquisition and
integration charges related to the Schwab transaction
|
|
30
|
|
34
|
|
20
|
|
64
|
|
70
|
Mitigation of impact
from interest rate volatility to closing capital on
|
|
|
|
|
|
|
|
|
|
|
|
First Horizon
acquisition
|
|
134
|
|
876
|
|
–
|
|
1,010
|
|
–
|
Stanford litigation
settlement
|
|
39
|
|
1,603
|
|
–
|
|
1,642
|
|
–
|
Less: impact of
income taxes
|
|
|
|
|
|
|
|
|
|
|
Canada Recovery
Dividend and impact from increase in the Canadian
federal
|
|
|
|
|
|
|
|
|
|
|
|
tax rate for fiscal
2022
|
|
–
|
|
(585)
|
|
–
|
|
(585)
|
|
–
|
Other items of
note
|
|
60
|
|
675
|
|
8
|
|
735
|
|
25
|
Net income (loss) –
adjusted1
|
$
|
(177)
|
$
|
(140)
|
$
|
(79)
|
$
|
(317)
|
$
|
(206)
|
|
|
|
|
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) – adjusted
|
|
|
|
|
|
|
|
|
|
|
Net corporate
expenses2
|
$
|
(191)
|
$
|
(191)
|
$
|
(161)
|
$
|
(382)
|
$
|
(329)
|
Other
|
|
14
|
|
51
|
|
82
|
|
65
|
|
123
|
Net income (loss) –
adjusted1
|
$
|
(177)
|
$
|
(140)
|
$
|
(79)
|
$
|
(317)
|
$
|
(206)
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
volumes
|
|
|
|
|
|
|
|
|
|
|
Average number of
full-time equivalent staff
|
|
22,656
|
|
21,844
|
|
19,180
|
|
22,244
|
|
18,588
|
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 second
quarter of 2023 MD&A, which is incorporated by
reference.
|
Quarterly comparison – Q2 2023 vs. Q2 2022
Corporate segment's reported net loss for the quarter was
$399 million, compared with a
reported net loss of $151 million in
the second quarter last year. The increase primarily reflects lower
revenue from treasury and balance sheet management activities, a
net loss from mitigation of impact from interest rate volatility to
closing capital on First Horizon acquisition and higher net
corporate expenses. The adjusted net loss for the quarter was
$177 million, compared with an
adjusted net loss of $79 million in
the second quarter last year.
Quarterly comparison – Q2 2023 vs. Q1 2023
Corporate segment's reported net loss for the quarter was
$399 million, compared with a
reported net loss of $2,617 million
in the prior quarter. The decrease primarily reflects the impact in
the prior quarter of the Stanford
litigation settlement, a provision for income taxes in connection
with the CRD and increase in the Canadian federal tax rate for
fiscal 2022 and a higher net loss from mitigation of impact from
interest rate volatility to closing capital on First Horizon
acquisition. Other items decreased $37
million, primarily reflecting lower revenue from treasury
and balance sheet management activities. The adjusted net loss for
the quarter was $177 million,
compared with an adjusted net loss of $140
million in the prior quarter.
Year-to-date comparison – Q2 2023 vs. Q2 2022
Corporate segment's reported net loss for the six months ended
April 30, 2023 was $3,016 million, compared with a reported net loss
of $378 million in the same period
last year. The 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 a lower
contribution from other items. Other items decreased $58 million, primarily reflecting lower revenue
from treasury and balance sheet management activities. The adjusted
net loss for the six months ended April 30,
2023 was $317 million, compared with an adjusted net
loss of $206 million in the same
period last year.
SHAREHOLDER AND INVESTOR INFORMATION
Shareholder Services
If you:
|
And your inquiry
relates to:
|
Please
contact:
|
Are a registered
shareholder (your name appears
on your TD share certificate)
|
Missing dividends, lost
share certificates, estate
questions, address changes to the share register,
dividend bank account changes, the dividend
reinvestment plan, eliminating duplicate mailings of
shareholder materials or stopping (or resuming)
receiving annual and quarterly reports
|
Transfer
Agent:
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 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
25, 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
second 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 May 25, 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 May 25, 2023, until
11:59 p.m. ET on June 9, 2023 by calling 905-694-9451 or
1-800-408-3053 (toll free). The passcode is 7300743#.
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 assets and serves over
27.5 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 16 million active online and mobile
customers. TD had $1.9 trillion in
assets on April 30, 2023. The
Toronto-Dominion Bank trades under the symbol "TD" on the
Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group