This quarterly
Earnings News Release should be read in conjunction with the Bank's
unaudited second quarter 2021 Report to Shareholders for the three
and six months ended April 30, 2021, prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB), which is available
on our website at http://www.td.com/investor/. This analysis is
dated May 26, 2021. Unless otherwise indicated, all amounts are
expressed in Canadian dollars, and have been primarily derived from
the Bank's Annual or Interim Consolidated Financial Statements
prepared in accordance with IFRS. Certain comparative amounts have
been revised to conform to the presentation adopted in the current
period. Additional information relating to the Bank is available on
the Bank's website at http://www.td.com, as well as on SEDAR at
http://www.sedar.com and on the U.S. Securities and Exchange
Commission's (SEC) website at http://www.sec.gov (EDGAR filers
section).
Reported results
conform to generally accepted accounting principles (GAAP), in
accordance with IFRS. Adjusted measures are non-GAAP measures.
Refer to the "How the Bank Reports" section of the Management's
Discussion and Analysis (MD&A) for an explanation of reported
and adjusted results.
|
SECOND QUARTER FINANCIAL HIGHLIGHTS, compared with the second
quarter last year:
- Reported diluted earnings per share were $1.99, compared with $0.80.
- Adjusted diluted earnings per share were $2.04, compared with $0.85.
- Reported net income was $3,695
million, compared with $1,515
million.
- Adjusted net income was $3,775
million, compared with $1,599
million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, six months ended
April 30, 2021, compared with the
corresponding period last year:
- Reported diluted earnings per share were $3.76, compared with $2.42.
- Adjusted diluted earnings per share were $3.86, compared with $2.51.
- Reported net income was $6,972
million, compared with $4,504
million.
- Adjusted net income was $7,155
million, compared with $4,671
million.
SECOND QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The
second quarter reported earnings figures included the following
items of note:
- Amortization of acquired intangibles of $69 million ($62
million after-tax or 3 cents
per share), compared with $68 million
($59 million after-tax or
3 cents per share) in the
second quarter last year.
- Acquisition and integration charges related to the Schwab
transaction of $19 million
($18 million after-tax or
1 cent per share).
TORONTO, May 27, 2021 /CNW/ - TD Bank Group ("TD" or the
"Bank") today announced its financial results for the second
quarter ended April 30, 2021. Reported earnings were
$3.7 billion, up 144% compared with
the second quarter last year, and adjusted earnings were
$3.8 billion, up 136%.
"TD reported strong results in the second quarter, reflecting
the underlying strength of our diversified businesses, improving
economic conditions and our prudent approach to managing risk,"
said Bharat Masrani, Group President and CEO, TD Bank
Group. "We continued to invest in our people, capabilities and
technology to position our business for growth as economies re-open
and consumer and business activity recovers."
"While we are encouraged by the progress being made on
vaccinations, COVID-19 continues to be a factor in our lives and
our focus remains on the safety of our people and on supporting the
evolving needs of our customers and clients," added
Masrani. "As we look toward the future, we will continue to
advance our strategy and contribute to a robust and inclusive
recovery, guided by our purpose to enrich the lives of our
customers, colleagues and communities."
Canadian Retail
Canadian Retail reported net income
was $2,182 million, an increase of
86% compared with the second quarter last year, mainly reflecting
lower provisions for credit losses (PCL) and record results in
wealth and insurance. Revenue increased 1%, reflecting growth in
non-interest income and strong loan and deposit volumes, partially
offset by lower margins and premium rebates for customers in the
insurance business. PCL was lower by $1,190
million from the prior year, reflecting lower impaired and
performing PCL. Reported expenses increased 4%, with higher
volume-driven and employee-related expenses, partially offset by
prior year charges related to the Greystone acquisition.
Business momentum accelerated this quarter, with mortgage
originations up strongly, credit card transactions rising, and good
account growth across all of the businesses. TD Insurance continued
to take market share, becoming the third largest home and auto
personal insurance provider in Canada, with strong customer engagement in its
end-to-end digital capabilities. For the fourth year in a row, TD
Auto Finance was ranked Highest in Dealer Satisfaction among
Non-Captive Lenders with Retail Credit by J.D. Power. Canadian
Retail continues to invest in its advice and service capabilities
to help customers navigate change and plan for their financial
future through personalized advice and tools. TD was also
recognized by the Business Intelligence Group for its AI-powered
digital experiences and, as of April
2021, continues to lead in the number of Interac e-Transfer
and Flash transactions.
U.S. Retail
U.S. Retail net income was $1,316 million (US$1,047 million), an increase of 292% compared
with the second quarter last year. The Bank's investment in The
Charles Schwab Corporation ("Schwab") contributed $246 million (US$194
million) in earnings, compared with the contribution of
$234 million (US$174 million) from TD Ameritrade a year
ago.
The U.S. Retail Bank, which excludes the Bank's investment in
Schwab, reported net income of $1,070
million (US$853 million), an
increase of 949% from the second quarter last year, mainly
reflecting lower PCL. In U.S. dollars, revenue increased 2%
reflecting higher non-interest income, partially offset by lower
deposit margins. PCL was lower by US$987
million ($1,350 million)
reflecting lower impaired and performing PCL. Expenses increased
4%, reflecting store optimization costs and higher employee-related
expenses, partly offset by lower legal provisions. In Canadian
dollars, revenue and expenses declined 7% and 5%, respectively,
primarily as a result of appreciation in the Canadian dollar since
the second quarter last year.
The U.S. Retail Bank continued to advance key strategic
initiatives to enhance the customer experience this quarter,
introducing the new Double Up Credit Card with one of the most
valuable cash back offerings in the market. For small business
customers, TD continued to facilitate access to Small Business
Administration (SBA) Paycheck Protection Program (PPP) financing,
ranking seventh nationwide through Round 2 of the program. TD Bank,
America's Most Convenient Bank® was also proud to be
recognized by Forbes as a Best Employer for Diversity 2021 for the
third consecutive year.
Wholesale
Wholesale Banking reported net income
of $383 million this quarter, an increase of 83%
compared to the second quarter last year, reflecting lower PCL,
partially offset by lower revenue and higher non-interest expenses.
Revenue for the quarter was $1,157 million, a decrease of 8%
from a year ago, primarily reflecting lower trading-related
revenue. PCL was lower by $437
million from the prior year, reflecting lower impaired and
performing PCL.
The Wholesale Bank's results benefited from its diversified
business mix and client-focused franchise, which provides trusted
advice and critical access to markets. This quarter, TD announced
an agreement to acquire Headlands Tech Global Markets LLC, a
Chicago-based quantitative fixed
income trading company, to strengthen its electronic bond trading
infrastructure, deliver data-driven innovation and grow its global
platform. The deal is expected to close in the second half of
calendar 2021, subject to receipt of regulatory approvals and
satisfaction of other customary closing conditions.
Capital
TD's Common Equity Tier 1 Capital ratio was
14.2%.
Conclusion
"TD is strong and well-capitalized, and we
continue to adapt and grow through this time of disruption. Our
performance demonstrates the strength of our proven business model,
brought to life through the efforts and resilience of our 90,000
colleagues across the globe who live our purpose and demonstrate a
deep commitment to the Bank, those we serve, and the communities
where we live and work," concluded Masrani.
The foregoing contains forward-looking statements. Please refer
to the "Caution Regarding Forward-Looking Statements".
Caution
Regarding Forward-Looking Statements
From time to time,
the Bank (as defined in this document) makes written and/or oral
forward-looking statements, including in this document, in other
filings with Canadian regulators or the United States (U.S.)
Securities and Exchange Commission (SEC), and in other
communications. In addition, representatives of the Bank may make
forward-looking statements orally to analysts, investors, the media
and others. All such statements are made pursuant to the "safe
harbour" provisions of, and are intended to be forward-looking
statements under, applicable Canadian and U.S. securities
legislation, including the U.S. Private Securities Litigation
Reform Act of 1995. Forward-looking statements include,
but are not limited to, statements made in this document under the
heading "How We Performed", including under the sub-headings
"Economic Summary and Outlook" and "The Bank's Response to
COVID-19", and under the heading "Managing Risk", and statements
made in the Management's Discussion and Analysis
("2020 MD&A") in the Bank's 2020 Annual Report under the
headings "Economic Summary and Outlook" and "The Bank's Response to
COVID-19", for the Canadian Retail, U.S. Retail, and Wholesale
Banking segments under headings "Key Priorities for 2021", and for
the Corporate segment, "Focus for 2021", and in other statements
regarding the Bank's objectives and priorities for 2021 and beyond
and strategies to achieve them, the regulatory environment in which
the Bank operates, the Bank's anticipated financial performance,
and the potential economic, financial and other impacts of the
Coronavirus Disease 2019 (COVID-19). Forward-looking statements are
typically identified by words such as "will", "would", "should",
"believe", "expect", "anticipate", "intend", "estimate", "plan",
"goal", "target", "may", and "could".
By their very nature,
these forward-looking statements require the Bank to make
assumptions and are subject to inherent risks and uncertainties,
general and specific. Especially in light of the uncertainty
related to the physical, financial, economic, political, and
regulatory environments, such risks and uncertainties – many of
which are beyond the Bank's control and the effects of which can be
difficult to predict – may cause actual results to differ
materially from the expectations expressed in the forward-looking
statements. Risk factors that could cause, individually or in the
aggregate, such differences include: strategic, credit, market
(including equity, commodity, foreign exchange, interest rate, and
credit spreads), operational (including technology, cyber security,
and infrastructure), model, insurance, liquidity, capital adequacy,
legal, regulatory compliance and conduct, reputational,
environmental and social, and other risks. Examples of such risk
factors include the economic, financial, and other impacts of the
COVID-19 pandemic; general business and economic conditions in the
regions in which the Bank operates; geopolitical risk; the ability
of the Bank to execute on long-term strategies and shorter-term key
strategic priorities, including the successful completion of
acquisitions and dispositions, business retention plans, and
strategic plans; technology and cyber security risk (including
cyber-attacks or data security breaches) on the Bank's information
technology, internet, network access or other voice or data
communications systems or services; model risk; fraud to which the
Bank is exposed; the failure of third parties to comply with their
obligations to the Bank or its affiliates, including relating to
the care and control of information, and other risks arising from
the Bank's use of third-party service providers; the impact of new
and changes to, or application of, current laws and regulations,
including without limitation tax laws, capital guidelines and
liquidity regulatory guidance and the bank recapitalization
"bail-in" regime; regulatory oversight and compliance risk;
increased competition from incumbents and new entrants (including
Fintechs and big technology competitors); shifts in consumer
attitudes and disruptive technology; environmental and social risk;
exposure related to significant litigation and regulatory matters;
ability of the Bank to attract, develop, and retain key talent;
changes to the Bank's credit ratings; changes in currency and
interest rates (including the possibility of negative interest
rates); increased funding costs and market volatility due to market
illiquidity and competition for funding; Interbank Offered Rate
(IBOR) transition risk; critical accounting estimates and changes
to accounting standards, policies, and methods used by the Bank;
existing and potential international debt crises; environmental and
social risk; and the occurrence of natural and unnatural
catastrophic events and claims resulting from such events. The Bank
cautions that the preceding list is not exhaustive of all possible
risk factors and other factors could also adversely affect the
Bank's results. For more detailed information, please refer to the
"Risk Factors and Management" section of the 2020 MD&A, as may
be updated in subsequently filed quarterly reports to shareholders
and news releases (as applicable) related to any events or
transactions discussed under the heading "Significant and
Subsequent Events, and Pending Acquisitions" in the relevant
MD&A, which applicable releases may be found on www.td.com. All
such factors, as well as other uncertainties and potential events,
and the inherent uncertainty of forward-looking statements, should
be considered carefully when making decisions with respect to the
Bank. The Bank cautions readers not to place undue reliance on the
Bank's forward-looking statements.
Material economic
assumptions underlying the forward-looking statements contained in
this document are set out in the 2020 MD&A under the headings
"Economic Summary and Outlook" and "The Bank's Response to
COVID-19", for the Canadian Retail, U.S. Retail, and Wholesale
Banking segments, "Key Priorities for 2021", and for the Corporate
segment, "Focus for 2021", each as may be updated in subsequently
filed quarterly reports to shareholders.
Any forward-looking
statements contained in this document represent the views of
management only as of the date hereof and are presented for the
purpose of assisting the Bank's shareholders and analysts in
understanding the Bank's financial position, objectives and
priorities and anticipated financial performance as at and for the
periods ended on the dates presented, and may not be appropriate
for other purposes. The Bank does not undertake to update any
forward-looking statements, whether written or oral, that may be
made from time to time by or on its behalf, except as required
under applicable securities legislation.
|
This document was reviewed by the Bank's Audit Committee and
was approved by the Bank's Board of Directors, on the Audit
Committee's recommendation, prior to its release.
TABLE 1: FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
As at or for the
three months ended
|
|
As at or for the
six months ended
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Results of
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
|
10,228
|
|
$
|
10,812
|
|
$
|
10,528
|
|
$
|
21,040
|
|
$
|
21,137
|
|
Provision for
(recovery of) credit losses
|
|
(377)
|
|
|
313
|
|
|
3,218
|
|
|
(64)
|
|
|
4,137
|
|
Insurance claims and
related expenses
|
|
441
|
|
|
780
|
|
|
671
|
|
|
1,221
|
|
|
1,451
|
|
Non-interest expenses
– reported
|
|
5,729
|
|
|
5,784
|
|
|
5,121
|
|
|
11,513
|
|
|
10,588
|
|
Non-interest expenses
– adjusted1
|
|
5,691
|
|
|
5,744
|
|
|
5,051
|
|
|
11,435
|
|
|
10,448
|
|
Net income –
reported
|
|
3,695
|
|
|
3,277
|
|
|
1,515
|
|
|
6,972
|
|
|
4,504
|
|
Net income –
adjusted1
|
|
3,775
|
|
|
3,380
|
|
|
1,599
|
|
|
7,155
|
|
|
4,671
|
|
Financial
position (billions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans net of
allowance for loan losses
|
$
|
708.4
|
|
$
|
706.0
|
|
$
|
747.0
|
|
$
|
708.4
|
|
$
|
747.0
|
|
Total
assets
|
|
1,669.1
|
|
|
1,735.6
|
|
|
1,673.7
|
|
|
1,669.1
|
|
|
1,673.7
|
|
Total
deposits
|
|
1,118.5
|
|
|
1,139.2
|
|
|
1,078.3
|
|
|
1,118.5
|
|
|
1,078.3
|
|
Total
equity
|
|
94.5
|
|
|
95.4
|
|
|
93.3
|
|
|
94.5
|
|
|
93.3
|
|
Total Common Equity
Tier 1 Capital risk-weighted assets
|
|
455.0
|
|
|
467.2
|
|
|
524.0
|
|
|
455.0
|
|
|
524.0
|
|
Financial
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity (ROE) – reported
|
|
16.7
|
%
|
|
14.3
|
%
|
|
6.9
|
%
|
|
15.5
|
%
|
|
10.5
|
%
|
Return on common
equity – adjusted1,2
|
|
17.1
|
|
|
14.7
|
|
|
7.3
|
|
|
15.9
|
|
|
10.9
|
|
Return on tangible
common equity (ROTCE)2
|
|
23.0
|
|
|
19.9
|
|
|
9.6
|
|
|
21.5
|
|
|
14.5
|
|
Return on tangible
common equity – adjusted1,2
|
|
23.1
|
|
|
20.1
|
|
|
9.8
|
|
|
21.6
|
|
|
14.7
|
|
Efficiency ratio –
reported
|
|
56.0
|
|
|
53.5
|
|
|
48.6
|
|
|
54.7
|
|
|
50.1
|
|
Efficiency ratio –
adjusted1
|
|
55.6
|
|
|
53.1
|
|
|
48.0
|
|
|
54.4
|
|
|
49.4
|
|
Provision for
(recovery of) credit losses as a % of net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average loans and
acceptances3
|
|
(0.21)
|
|
|
0.17
|
|
|
1.76
|
|
|
(0.02)
|
|
|
1.15
|
|
Common share
information – reported (Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.00
|
|
$
|
1.77
|
|
$
|
0.80
|
|
$
|
3.77
|
|
$
|
2.42
|
|
Diluted
|
|
1.99
|
|
|
1.77
|
|
|
0.80
|
|
|
3.76
|
|
|
2.42
|
|
Dividends per
share
|
|
0.79
|
|
|
0.79
|
|
|
0.79
|
|
|
1.58
|
|
|
1.53
|
|
Book value per
share
|
|
49.25
|
|
|
49.44
|
|
|
48.54
|
|
|
49.25
|
|
|
48.54
|
|
Closing share
price4
|
|
84.50
|
|
|
72.46
|
|
|
58.16
|
|
|
84.50
|
|
|
58.16
|
|
Shares outstanding
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
1,817.4
|
|
|
1,814.2
|
|
|
1,803.0
|
|
|
1,815.7
|
|
|
1,807.0
|
|
Average
diluted
|
|
1,819.9
|
|
|
1,815.8
|
|
|
1,804.4
|
|
|
1,817.8
|
|
|
1,809.0
|
|
End of
period
|
|
1,818.7
|
|
|
1,816.0
|
|
|
1,803.4
|
|
|
1,818.7
|
|
|
1,803.4
|
|
Market capitalization
(billions of Canadian dollars)
|
$
|
153.7
|
|
$
|
131.6
|
|
$
|
104.9
|
|
$
|
153.7
|
|
$
|
104.9
|
|
Dividend
yield5
|
|
3.9
|
%
|
|
4.5
|
%
|
|
5.0
|
%
|
|
4.2
|
%
|
|
4.4
|
%
|
Dividend payout
ratio
|
|
39.5
|
|
|
44.6
|
|
|
98.2
|
|
|
41.9
|
|
|
63.2
|
|
Price-earnings
ratio6
|
|
10.9
|
|
|
11.0
|
|
|
10.2
|
|
|
10.9
|
|
|
10.2
|
|
Total shareholder
return (1 year)7
|
|
52.1
|
|
|
4.1
|
|
|
(20.6)
|
|
|
52.1
|
|
|
(20.6)
|
|
Common share
information – adjusted (Canadian
dollars)1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.04
|
|
$
|
1.83
|
|
$
|
0.85
|
|
$
|
3.87
|
|
$
|
2.51
|
|
Diluted
|
|
2.04
|
|
|
1.83
|
|
|
0.85
|
|
|
3.86
|
|
|
2.51
|
|
Dividend payout
ratio
|
|
38.7
|
%
|
|
43.2
|
%
|
|
92.8
|
%
|
|
40.8
|
%
|
|
60.8
|
%
|
Price-earnings
ratio6
|
|
12.6
|
|
|
13.1
|
|
|
9.9
|
|
|
12.6
|
|
|
9.9
|
|
Capital
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital ratio2
|
|
14.2
|
%
|
|
13.6
|
%
|
|
11.0
|
%
|
|
14.2
|
%
|
|
11.0
|
%
|
Tier 1 Capital
ratio2
|
|
15.4
|
|
|
14.8
|
|
|
12.3
|
|
|
15.4
|
|
|
12.3
|
|
Total Capital
ratio2
|
|
18.0
|
|
|
17.4
|
|
|
15.3
|
|
|
18.0
|
|
|
15.3
|
|
Leverage
ratio
|
|
4.6
|
|
|
4.5
|
|
|
4.2
|
|
|
4.6
|
|
|
4.2
|
|
1
|
Adjusted measures are
non-GAAP measures. Refer to the "How the Bank Reports" section of
this document for an explanation of reported and adjusted
results.
|
2
|
Metrics are non-GAAP
financial measures. Refer to the "Return on Common Equity" and
"Return on Tangible Common Equity" sections of this document for an
explanation.
|
3
|
Excludes acquired
credit-impaired (ACI) loans.
|
4
|
Toronto Stock
Exchange (TSX) closing market price.
|
5
|
Dividend yield is
calculated as the annualized dividend per common share paid divided
by daily average closing stock price in the relevant period.
Dividend per common share is derived as follows: a) for the quarter
– by annualizing the dividend per common share paid during the
quarter; and b) for the year-to-date – by annualizing the
year-to-date dividend per common share paid.
|
6
|
Price-earnings ratio
is calculated based on a trailing four quarters' earnings per share
(EPS).
|
7
|
Total shareholder
return is calculated based on share price movement and dividends
reinvested over a trailing one-year period.
|
HOW WE PERFORMED
ECONOMIC SUMMARY AND OUTLOOK
The COVID-19 pandemic
continues to have a profound impact on the global economy. A
successful vaccination campaign globally will be key to sustaining
the economic recovery. During this third wave of the pandemic,
advanced economies appear to have adapted to restrictions on
activity, and the economic disruption from subsequent lockdowns has
been less severe than last year. However, until large segments of
the population are immunized, including emerging markets where
vaccination rates have lagged, the spread of more contagious
variants may continue to cause periodic setbacks.
In Europe, a slow start to the
vaccination campaign (outside the United
Kingdom) saw a third wave of the virus take hold in several
countries. It now appears to be subsiding and economic activity in
the region is picking up again. Conditions are less favourable in
emerging markets, many of which continue to struggle with
inadequate vaccine supplies. In China, where progress on vaccination fueled a
strong recovery, GDP growth is now moderating, as authorities
tighten monetary policy to shift the economy back to a more
balanced growth path.
By contrast, the U.S. economy has been a stand-out on the global
stage. The vaccination rollout has outpaced that in many peer
countries, with the benefits evident in resurgent activity. The
economy grew by 6.4% annualized in the first calendar quarter and
looks set to accelerate in the second quarter. Several rounds of
economic stimulus payments have boosted consumer spending, which
grew by 10.7% annualized in the first calendar quarter. Business
investment has also been stronger than expected, led by information
technology equipment and software investment, reflecting rapid
growth in digital adoption. Housing has been another source of
strength, as strong demand and limited supply have pushed home
price growth into double-digit territory across much of the
country.
Fiscal policy is expected to remain supportive. In addition to
the US$1.9 trillion American Rescue
Plan signed into law in March, the Biden administration has
recently proposed additional infrastructure and social spending
plans, which it intends to finance in part through higher taxes on
corporations and high net worth individuals. It remains to be seen
which parts of the plans will pass Congress and when, but the
underlying composition of spending has the potential to add to
economic momentum in the years ahead.
While acknowledging stronger domestic economic growth, the
Federal Reserve has thus far reiterated its commitment to keeping
the federal funds rate at the current range of 0.0% to 0.25%. In
part, this reflects a deliberate strategy to allow a modest
overshoot of the Federal Reserve's long-run 2% inflation target for
a period of time. By the second half of 2022, TD Economics expects
the unemployment rate to have returned to near historic lows and
inflation to have exceeded the 2% threshold for several quarters.
Should this materialize, the Federal Reserve is likely to begin
raising its policy rate in the final calendar quarter of 2022,
bringing it to a range of 0.25% to 0.50%.
Canada's economy also appears
to have started calendar 2021 on a relatively strong footing,
growing at an estimated 5.8% annualized rate. In the months since,
much of Canada has been hit hard
by a third wave of COVID-19. Thanks to more effective treatments
and a vaccination program targeted at more vulnerable groups, death
rates have been much lower than in previous rounds of the pandemic.
Still, to relieve the pressure on healthcare systems, renewed
restrictions on businesses were implemented across much of the
country this spring. This is likely to interrupt the labour market
recovery in the near-term, but the overall economy is expected to
continue growing, as households and businesses have demonstrated
greater adaptability during successive waves of the pandemic.
Vaccination rates increased during the first calendar quarter and
have accelerated since. This should permit some easing in
restrictions during the second calendar quarter and beyond. Growth
will continue to benefit from government supports for workers and
businesses, which were extended until the fall of 2021 in the
spring Federal Budget.
The Canadian housing market has been a pillar of strength, even
through the third wave of the pandemic. Low mortgage rates continue
to spur demand in a tightly supplied market, and an upcoming
tightening of mortgage qualification rules may result in some pull
forward in demand this spring. Eroding affordability is expected to
put some natural limits on demand, but a tight supply of highly
sought after detached homes is likely to maintain a solid floor
under home prices.
Reflecting the resilience of the Canadian economy and housing
market, as well as ongoing support from fiscal policy, the Bank of
Canada upgraded its economic
forecasts. The central bank now expects economic slack to be
absorbed and inflation to be at its 2% goal in the latter half of
2022, versus a previous expectation for 2023. This is consistent
with TD Economics' own forecast. Alongside the Federal Reserve, the
Bank of Canada is expected to
raise its overnight rate in the final calendar quarter of 2022.
With similar policy rates in both countries, TD Economics expects
the Canadian dollar to remain in a range of
79–81 U.S. cents over the next two years.
THE BANK'S RESPONSE TO COVID-19
Although economic
conditions in Canada and the U.S.
are improving, the COVID-19 pandemic continues to have a
significant impact on economies around the world. While the
commencement of vaccination against COVID-19 constitutes an
encouraging development, some uncertainty remains as to the
effectiveness, supply and distribution of vaccines, as well as
their acceptance by the public, and governments' ability to
inoculate a sufficient proportion of the population quickly enough
to enable widespread easing of containment measures and support the
transition to a fully reopened economy. It also remains uncertain
how effective vaccines will be against new variants of COVID-19,
some of which may be more contagious or harmful. TD remains
actively engaged with governments, supervisory agencies and public
health authorities in the response to COVID-19, guided by the
principles of supporting the well-being of its customers and
colleagues and maintaining the Bank's operational and financial
resilience.
In fiscal 2020, the Bank offered several forms of direct
financial assistance to customers experiencing financial hardship
due to COVID-19, including deferral of loan payments. The bulk of
this assistance has now largely run its course, except for
deferrals of real estate secured loans in the U.S., where the
original program allowed deferrals to be extended for up to 12
months. There have been few other customer requests for extensions.
As of April 30, 2021, the gross loan
balances that remained subject to COVID-related deferral programs
was approximately $0.04 billion in
Canada ($0.7 billion as at January
31, 2021), primarily reflecting Small Business Banking and
Commercial Lending portfolios and US$1.1
billion in the United
States (US$1.4 billion as at
January 31, 2021), primarily in the
Real Estate Secured Lending portfolio. Delinquency rates for
customers that have exited deferral are higher than for the broader
population but remain low in absolute terms, reflecting the
continuation of government support and TD's proactive outreach to
clients. The Bank continues to provide advice and assistance to
customers through its usual channels, TD Helps in Canada and TD Cares in the U.S. Any financial
relief offered through these channels is not included in the
balances disclosed above.
In addition to direct financial assistance, the Bank continues
to support programs for individuals and businesses introduced by
the Canadian and U.S. governments described below.
Canada Emergency Business
Account Program
Under the Canada Emergency
Business Account (CEBA) Program, with funding provided by Her
Majesty in Right of Canada (the
"Government of Canada") and Export Development Canada
(EDC) as the Government of Canada's agent, the Bank provides eligible
business banking customers with an interest-free, partially
forgivable loan of up to $60,000
until December 31, 2022. If the loan
is not repaid by December 31, 2022,
it will be extended for an additional 3-year term bearing an
interest rate of 5% per annum. As of April
30, 2021, the Bank had provided approximately 206,000
customers (January 31, 2021 –
194,000) with CEBA loans and had funded approximately $11.0 billion (January 31,
2021 – $9.8 billion) in loans
under the program.
U.S. Coronavirus Aid, Relief, and Economic Security Act,
Paycheck Protection Program
Under the Paycheck Protection Program (PPP) implemented by the
Small Business Administration (SBA), the Bank provides loans to
small businesses to assist them in retaining workers, maintaining
payroll, and covering other expenses. PPP loans have a 2-year or
5-year term, bear an interest rate of 1% per annum, and are 100%
guaranteed by the SBA. The full principal amount of the loan and
any accrued interest are eligible for forgiveness if the loan is
used for qualifying expenses. The Bank will be paid by the SBA for
any portion of the loan that is forgiven. As of April 30, 2021, the Bank had approximately 98,000
PPP loans outstanding (January 31,
2021 – 79,000) with a gross carrying amount of approximately
US$9.8 billion (January 31, 2021 – US$7.5 billion). During the three months
ended April 30, 2021, approximately
45,000 new PPP loans (US$3.4 billion)
were originated (three months ended January
31, 2021 – nil) and approximately 26,000 PPP loans
(US$1.1 billion) were forgiven
(three months ended January 31, 2021 – 6,000 PPP loans,
US$0.7 billion).
Other Programs
The Bank continues to work with federal Crown Corporations,
including EDC and the Business Development Bank of Canada (BDC) to deliver various other
guarantee and co-lending programs for the Bank's clients. This
includes the Highly Affected Sectors Credit Availability Program
(HASCAP) Guarantee to provide support to Canadian businesses that
have been highly affected by and are facing economic hardship as a
result of the COVID-19 pandemic which launched in the second fiscal
quarter. In addition, TD is working with Canada's federal government to facilitate
access to the Canada Recovery Benefit (CRB) and Canada Emergency Wage Subsidy (CEWS) through
Canada Revenue Agency direct deposit.
HOW THE BANK REPORTS
The Bank prepares its Interim Consolidated Financial Statements
in accordance with IFRS and refers to results prepared in
accordance with IFRS as "reported" results. The Bank also utilizes
non-GAAP financial measures referred to as "adjusted" results to
assess each of its businesses and to measure the Bank's overall
performance. The Bank believes that adjusted results provide the
reader with a better understanding of how management views the
Bank's performance. To arrive at adjusted results, the Bank removes
"items of note", from reported results. The items of note relate to
items which management does not believe are indicative of
underlying business performance. The items of note are disclosed in
Table 3. As explained, adjusted results differ from reported
results determined in accordance with IFRS. Adjusted results, items
of note, and related terms used in this document are not defined
terms under IFRS and, therefore, may not be comparable to similar
terms used by other issuers.
The Bank's U.S. strategic cards portfolio comprises agreements
with certain U.S. retailers pursuant to which TD is the U.S. issuer
of private label and co-branded consumer credit cards to the
retailers' U.S. customers. Under the terms of the individual
agreements, the Bank and the retailers share in the profits
generated by the relevant portfolios after the provision for credit
losses (PCL). Under IFRS, TD is required to present the gross
amount of revenue and PCL related to these portfolios in the Bank's
Interim Consolidated Statement of Income. The Corporate segment
reflects the retailer program partners' share of revenues and PCL,
with an offsetting amount reflecting the partners' net share
recorded in Non-interest expenses. This results in no impact to the
Corporate segment reported net income (loss). The U.S. Retail
segment reflects only the portion of revenue and PCL attributable
to TD under the agreements in its reported net income.
On October 6, 2020, the Bank
acquired an approximately 13.5% stake in Schwab following the
completion of Schwab's acquisition of TD Ameritrade ("Schwab
transaction"). The Bank accounts for its investment in Schwab using
the equity method and reports its after-tax share of Schwab's
earnings with a one-month lag. The U.S. Retail segment reflects the
Bank's share of net income from its investment in Schwab. The
Corporate segment net income (loss) includes amounts for
amortization of acquired intangibles and the acquisition and
integration charges related to the Schwab transaction.
The following table provides the operating results on a reported
basis for the Bank.
TABLE 2: OPERATING
RESULTS – Reported1
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
|
|
For the six months
ended
|
|
|
|
April
30
|
January 31
|
April 30
|
|
April
30
|
April 30
|
|
|
|
2021
|
2021
|
2020
|
|
2021
|
2020
|
|
Net interest
income
|
$
|
5,835
|
$
|
6,030
|
$
|
6,200
|
|
$
|
11,865
|
$
|
12,369
|
|
Non-interest
income
|
|
4,393
|
|
4,782
|
|
4,328
|
|
|
9,175
|
|
8,768
|
|
Total
revenue
|
|
10,228
|
|
10,812
|
|
10,528
|
|
|
21,040
|
|
21,137
|
|
Provision for
(recovery of) credit losses
|
|
(377)
|
|
313
|
|
3,218
|
|
|
(64)
|
|
4,137
|
|
Insurance claims and
related expenses
|
|
441
|
|
780
|
|
671
|
|
|
1,221
|
|
1,451
|
|
Non-interest
expenses
|
|
5,729
|
|
5,784
|
|
5,121
|
|
|
11,513
|
|
10,588
|
|
Income before
income taxes and share of net income from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment in
Schwab and TD Ameritrade
|
|
4,435
|
|
3,935
|
|
1,518
|
|
|
8,370
|
|
4,961
|
|
Provision for
(recovery of) income taxes
|
|
962
|
|
827
|
|
250
|
|
|
1,789
|
|
909
|
|
Share of net income
from investment in Schwab and TD Ameritrade
|
|
222
|
|
169
|
|
247
|
|
|
391
|
|
452
|
|
Net income –
reported
|
|
3,695
|
|
3,277
|
|
1,515
|
|
|
6,972
|
|
4,504
|
|
Preferred
dividends
|
|
65
|
|
65
|
|
68
|
|
|
130
|
|
135
|
|
Net income
available to common shareholders and non-controlling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests in
subsidiaries
|
$
|
3,630
|
$
|
3,212
|
$
|
1,447
|
|
$
|
6,842
|
$
|
4,369
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shareholders
|
$
|
3,630
|
$
|
3,212
|
$
|
1,447
|
|
$
|
6,842
|
$
|
4,369
|
|
|
|
1
|
Certain comparative
amounts have been reclassified to conform with the presentation
adopted in the current period.
|
The following table provides a reconciliation between the Bank's
adjusted and reported results.
TABLE 3: NON-GAAP
FINANCIAL MEASURES – Reconciliation of Adjusted to Reported Net
Income1
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
For the six months
ended
|
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
|
2021
|
2021
|
2020
|
2021
|
2020
|
|
Operating results
– adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
5,835
|
$
|
6,030
|
$
|
6,200
|
$
|
11,865
|
$
|
12,369
|
|
Non-interest
income
|
|
4,393
|
|
4,782
|
|
4,328
|
|
9,175
|
|
8,768
|
|
Total
revenue
|
|
10,228
|
|
10,812
|
|
10,528
|
|
21,040
|
|
21,137
|
|
Provision for
(recovery of) credit losses
|
|
(377)
|
|
313
|
|
3,218
|
|
(64)
|
|
4,137
|
|
Insurance claims and
related expenses
|
|
441
|
|
780
|
|
671
|
|
1,221
|
|
1,451
|
|
Non-interest
expenses2
|
|
5,691
|
|
5,744
|
|
5,051
|
|
11,435
|
|
10,448
|
|
Income before income
taxes and share of net income from
|
|
|
|
|
|
|
|
|
|
|
|
|
investment in Schwab
and TD Ameritrade
|
|
4,473
|
|
3,975
|
|
1,588
|
|
8,448
|
|
5,101
|
|
Provision for income
taxes
|
|
970
|
|
836
|
|
260
|
|
1,806
|
|
930
|
|
Share of net income
from investment in Schwab and TD Ameritrade3
|
|
272
|
|
241
|
|
271
|
|
513
|
|
500
|
|
Net income –
adjusted
|
|
3,775
|
|
3,380
|
|
1,599
|
|
7,155
|
|
4,671
|
|
Preferred
dividends
|
|
65
|
|
65
|
|
68
|
|
130
|
|
135
|
|
Net income
available to common shareholders – adjusted
|
|
3,710
|
|
3,315
|
|
1,531
|
|
7,025
|
|
4,536
|
|
Pre-tax
adjustments for items of note
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles4
|
|
(69)
|
|
(74)
|
|
(68)
|
|
(143)
|
|
(138)
|
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(19)
|
|
(38)
|
|
–
|
|
(57)
|
|
–
|
|
Charges associated
with the acquisition of Greystone2
|
|
–
|
|
–
|
|
(26)
|
|
–
|
|
(50)
|
|
Less: Impact of
income taxes
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles
|
|
(7)
|
|
(9)
|
|
(9)
|
|
(16)
|
|
(20)
|
|
Acquisition and
integration charges related to the Schwab
transaction5
|
|
(1)
|
|
–
|
|
–
|
|
(1)
|
|
–
|
|
Charges associated
with the acquisition of Greystone
|
|
–
|
|
–
|
|
(1)
|
|
–
|
|
(1)
|
|
Total adjustments
for items of note
|
|
(80)
|
|
(103)
|
|
(84)
|
|
(183)
|
|
(167)
|
|
Net income
available to common shareholders – reported
|
$
|
3,630
|
$
|
3,212
|
$
|
1,447
|
$
|
6,842
|
$
|
4,369
|
|
|
|
1
|
Certain comparative
amounts have been reclassified to conform with the presentation
adopted in the current period.
|
2
|
Adjusted non-interest
expenses exclude the following items of note related to the Bank's
own asset acquisitions and business combinations:
|
|
i.
|
Amortization of
acquired intangibles – Q2 2021: $35 million, Q1 2021:
$39 million, Q2 2020: $44 million, Q1 2020:
$46 million. These charges are reported in the Corporate
segment.
|
|
ii.
|
The Bank's own
integration costs related to the Schwab transaction – Q2 2021:
$3 million, Q1 2021: $1 million. These costs are reported in
the Corporate segment.
|
|
iii.
|
Charges associated
with the acquisition of Greystone – Q2 2020: $26 million, Q1
2020: $24 million. These charges were reported in the Canadian
Retail segment.
|
3
|
Adjusted share of net
income from investment in Schwab and TD Ameritrade excludes the
following items of note on an after-tax basis. The earnings impact
of both items is reported in the Corporate segment:
|
|
i.
|
Amortization of
Schwab and TD Ameritrade-related acquired intangibles – Q2 2021:
$34 million, Q1 2021: $35 million, Q2 2020: $24 million, Q1 2020:
$24 million; and
|
|
ii.
|
The Bank's share of
acquisition and integration charges associated with Schwab's
acquisition of TD Ameritrade – Q2 2021: $16 million, Q1 2021: $37
million.
|
4
|
Amortization of
acquired intangibles relates to intangibles acquired as a result of
asset acquisitions and business combinations, including the
after-tax amounts for amortization of acquired intangibles relating
to the Share of net income from investment in Schwab and TD
Ameritrade, both reported in the Corporate segment. Refer to
footnotes 2 and 3 for amounts.
|
5
|
Acquisition and
integration charges related to the Schwab transaction include the
Bank's own integration costs, as well as the Bank's share of
acquisition and integration charges associated with Schwab's
acquisition of TD Ameritrade on an after-tax basis, both reported
in the Corporate segment. Refer to footnotes 2 and 3 for
amounts.
|
TABLE 4:
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER
SHARE1
|
|
|
|
|
|
(Canadian
dollars)
|
|
For the three
months ended
|
|
For the six months
ended
|
|
April
30
|
January 31
|
April 30
|
|
April
30
|
April 30
|
|
2021
|
2021
|
2020
|
|
2021
|
2020
|
Basic earnings per
share – reported
|
$
|
2.00
|
$
|
1.77
|
$
|
0.80
|
|
$
|
3.77
|
$
|
2.42
|
Adjustments for items
of note2
|
|
0.04
|
|
0.06
|
|
0.05
|
|
|
0.10
|
|
0.09
|
Basic earnings per
share – adjusted
|
$
|
2.04
|
$
|
1.83
|
$
|
0.85
|
|
$
|
3.87
|
$
|
2.51
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share – reported
|
$
|
1.99
|
$
|
1.77
|
$
|
0.80
|
|
$
|
3.76
|
$
|
2.42
|
Adjustments for items
of note2
|
|
0.04
|
|
0.06
|
|
0.05
|
|
|
0.10
|
|
0.09
|
Diluted earnings
per share – adjusted
|
$
|
2.04
|
$
|
1.83
|
$
|
0.85
|
|
$
|
3.86
|
$
|
2.51
|
|
|
1
|
EPS is computed by
dividing net income available to common shareholders by the
weighted-average number of shares outstanding during the period.
Numbers may not add due to rounding.
|
2
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
Return on Common Equity
The consolidated Bank ROE is
calculated as reported net income available to common shareholders
as a percentage of average common equity. The consolidated Bank
adjusted ROE is calculated as adjusted net income available to
common shareholders as a percentage of average common equity.
Adjusted ROE is a non-GAAP financial measure as it is not a defined
term under IFRS. Readers are cautioned that earnings and other
measures adjusted to a basis other than IFRS do not have
standardized meanings under IFRS and, therefore, may not be
comparable to similar terms used by other issuers.
The Bank's methodology for allocating capital to its business
segments is largely aligned with the common equity capital
requirements under Basel III. Capital allocated to the business
segments is based on 9% Common Equity Tier 1 (CET1) Capital in
fiscal 2021. Capital allocated to the business segments was
decreased to 9% CET1 Capital effective the second quarter of 2020
compared with 10.5% in the first quarter of 2020.
TABLE 5: RETURN ON
COMMON EQUITY
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
|
For the six months
ended
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Average common
equity
|
$
|
89,069
|
|
$
|
89,211
|
|
$
|
85,603
|
|
$
|
89,049
|
|
$
|
83,876
|
|
Net income
available to common shareholders – reported
|
|
3,630
|
|
|
3,212
|
|
|
1,447
|
|
|
6,842
|
|
|
4,369
|
|
Items of note, net of
income taxes1
|
|
80
|
|
|
103
|
|
|
84
|
|
|
183
|
|
|
167
|
|
Net income
available to common shareholders – adjusted
|
$
|
3,710
|
|
$
|
3,315
|
|
$
|
1,531
|
|
$
|
7,025
|
|
$
|
4,536
|
|
Return on common
equity – reported
|
|
16.7
|
%
|
|
14.3
|
%
|
|
6.9
|
%
|
|
15.5
|
%
|
|
10.5
|
%
|
Return on common
equity – adjusted
|
|
17.1
|
|
|
14.7
|
|
|
7.3
|
|
|
15.9
|
|
|
10.9
|
|
|
|
1
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
Return on Tangible Common Equity
Tangible common
equity (TCE) is calculated as common shareholders' equity less
goodwill, imputed goodwill and intangibles on the investments in
Schwab and TD Ameritrade and other acquired intangible assets, net
of related deferred tax liabilities. ROTCE is calculated as
reported net income available to common shareholders after
adjusting for the after–tax amortization of acquired intangibles,
which are treated as an item of note, as a percentage of average
TCE. Adjusted ROTCE is calculated using reported net income
available to common shareholders, adjusted for all items of note,
as a percentage of average TCE. Adjusted ROTCE provides a useful
measure of the performance of the Bank's income producing assets,
independent of whether they were acquired or developed internally.
TCE, ROTCE, and adjusted ROTCE are each non-GAAP financial measures
and are not defined terms under IFRS. Readers are cautioned that
earnings and other measures adjusted to a basis other than IFRS do
not have standardized meanings under IFRS and, therefore, may not
be comparable to similar terms used by other issuers.
TABLE 6: RETURN ON
TANGIBLE COMMON EQUITY
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
|
For the six months
ended
|
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Average common
equity
|
$
|
89,069
|
|
$
|
89,211
|
|
$
|
85,603
|
|
$
|
89,049
|
|
$
|
83,876
|
|
Average
goodwill
|
|
16,320
|
|
|
16,743
|
|
|
17,531
|
|
|
16,530
|
|
|
17,280
|
|
Average imputed
goodwill and intangibles on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investments in Schwab
and TD Ameritrade
|
|
6,670
|
|
|
6,903
|
|
|
4,217
|
|
|
6,786
|
|
|
4,160
|
|
Average other
acquired intangibles1
|
|
366
|
|
|
407
|
|
|
531
|
|
|
387
|
|
|
548
|
|
Average related
deferred tax liabilities
|
|
(167)
|
|
|
(173)
|
|
|
(265)
|
|
|
(170)
|
|
|
(263)
|
|
Average tangible
common equity
|
|
65,880
|
|
|
65,331
|
|
|
63,589
|
|
|
65,516
|
|
|
62,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
to common shareholders – reported
|
|
3,630
|
|
|
3,212
|
|
|
1,447
|
|
|
6,842
|
|
|
4,369
|
|
Amortization of
acquired intangibles, net of income taxes2
|
|
62
|
|
|
65
|
|
|
59
|
|
|
127
|
|
|
118
|
|
Net income
available to common shareholders adjusted for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization of
acquired intangibles, net of income taxes
|
|
3,692
|
|
|
3,277
|
|
|
1,506
|
|
|
6,969
|
|
|
4,487
|
|
Other items of note,
net of income taxes2
|
|
18
|
|
|
38
|
|
|
25
|
|
|
56
|
|
|
49
|
|
Net income
available to common shareholders – adjusted
|
$
|
3,710
|
|
$
|
3,315
|
|
$
|
1,531
|
|
$
|
7,025
|
|
$
|
4,536
|
|
Return on tangible
common equity
|
|
23.0
|
%
|
|
19.9
|
%
|
|
9.6
|
%
|
|
21.5
|
%
|
|
14.5
|
%
|
Return on tangible
common equity – adjusted
|
|
23.1
|
|
|
20.1
|
|
|
9.8
|
|
|
21.6
|
|
|
14.7
|
|
|
|
1
|
Excludes intangibles
relating to software and asset servicing rights.
|
2
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
SIGNIFICANT AND SUBSEQUENT EVENTS, AND PENDING
ACQUISITIONS
Acquisition of Wells Fargo's Canadian Direct Equipment
Finance Business
On May 1,
2021, the Bank acquired the Canadian Direct Equipment
Finance business of Wells Fargo & Company ("Wells Fargo") which
had a net book value of approximately $1.4 billion, for consideration of
approximately $1.5 billion. The
acquisition is accounted for as a business combination under the
purchase method. On finalization of the purchase price allocation,
the excess of accounting consideration over the fair value of the
identifiable net assets acquired will be allocated to goodwill. The
results of the acquired business will be consolidated from the
acquisition date and will be included in the Canadian Retail
segment.
Announced Acquisition of Headlands Tech Global Markets,
LLC
On March 23, 2021, the
Bank and Headlands Tech Holdings, LLC announced a definitive
agreement for the Bank to acquire Headlands Tech Global Markets,
LLC, a Chicago-based quantitative
fixed income trading company. The transaction is expected to close
in the second half of calendar 2021, subject to receipt of
regulatory approvals and satisfaction of other customary closing
conditions. The results of the acquired business will be
consolidated from the acquisition date and will be included in the
Wholesale Banking segment.
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank reports its results
under three key business segments: Canadian Retail, which includes
the results of the personal and commercial banking, wealth, and
insurance businesses; U.S. Retail, which includes the results of
the personal and business banking operations, wealth management
services, and the Bank's investment in Schwab; and Wholesale
Banking. The Bank's other activities are grouped into the Corporate
segment.
Results of each business segment reflect revenue, expenses,
assets, and liabilities generated by the businesses in that
segment. Where applicable, the Bank measures and evaluates the
performance of each segment based on adjusted results and ROE, and
for those segments, the Bank indicates that the measure is
adjusted. For further details, refer to the "How We Performed"
section of this document including the Bank's response to COVID-19,
the "Business Focus" section in the Bank's 2020 MD&A, and Note
29 Segmented Information of the Bank's Consolidated Financial
Statements for the year ended October 31, 2020.
PCL related to performing (Stage 1 and Stage 2) and impaired
(Stage 3) financial assets, loan commitments, and financial
guarantees is recorded within the respective segment.
Net interest income within Wholesale Banking is calculated on a
taxable equivalent basis (TEB), which means that the value of
non-taxable or tax-exempt income, including certain dividends, is
adjusted to its equivalent before-tax value. Using TEB allows the
Bank to measure income from all securities and loans consistently
and makes for a more meaningful comparison of net interest income
with similar institutions. The TEB increase to net interest income
and provision for income taxes reflected in Wholesale Banking's
results are reversed in the Corporate segment. The TEB adjustment
for the quarter was $37 million, compared with
$42 million in the prior quarter and $30 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
RETAIL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
|
For the six months
ended
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net interest
income
|
$
|
2,873
|
|
$
|
2,978
|
|
$
|
3,002
|
|
$
|
5,851
|
|
$
|
6,169
|
|
Non-interest
income
|
|
3,189
|
|
|
3,367
|
|
|
3,021
|
|
|
6,556
|
|
|
6,109
|
|
Total
revenue
|
|
6,062
|
|
|
6,345
|
|
|
6,023
|
|
|
12,407
|
|
|
12,278
|
|
Provision for
(recovery of) credit losses – impaired
|
|
191
|
|
|
167
|
|
|
365
|
|
|
358
|
|
|
685
|
|
Provision for
(recovery of) credit losses – performing
|
|
(228)
|
|
|
(25)
|
|
|
788
|
|
|
(253)
|
|
|
859
|
|
Total provision for
(recovery of) credit losses
|
|
(37)
|
|
|
142
|
|
|
1,153
|
|
|
105
|
|
|
1,544
|
|
Insurance claims and
related expenses
|
|
441
|
|
|
780
|
|
|
671
|
|
|
1,221
|
|
|
1,451
|
|
Non-interest expenses
– reported
|
|
2,689
|
|
|
2,654
|
|
|
2,588
|
|
|
5,343
|
|
|
5,224
|
|
Non-interest expenses
– adjusted1
|
|
2,689
|
|
|
2,654
|
|
|
2,562
|
|
|
5,343
|
|
|
5,174
|
|
Provision for
(recovery of) income taxes – reported
|
|
787
|
|
|
732
|
|
|
439
|
|
|
1,519
|
|
|
1,098
|
|
Provision for
(recovery of) income taxes – adjusted1
|
|
787
|
|
|
732
|
|
|
440
|
|
|
1,519
|
|
|
1,099
|
|
Net income –
reported
|
|
2,182
|
|
|
2,037
|
|
|
1,172
|
|
|
4,219
|
|
|
2,961
|
|
Net income –
adjusted1
|
$
|
2,182
|
|
$
|
2,037
|
|
$
|
1,197
|
|
$
|
4,219
|
|
$
|
3,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity – reported2
|
|
51.3
|
%
|
|
46.0
|
%
|
|
27.2
|
%
|
|
48.6
|
%
|
|
32.4
|
%
|
Return on common
equity – adjusted1,2
|
|
51.3
|
|
|
46.0
|
|
|
27.8
|
|
|
48.6
|
|
|
33.0
|
|
Net interest margin
(including on securitized assets)
|
|
2.61
|
|
|
2.65
|
|
|
2.83
|
|
|
2.63
|
|
|
2.88
|
|
Efficiency ratio –
reported
|
|
44.4
|
|
|
41.8
|
|
|
43.0
|
|
|
43.1
|
|
|
42.5
|
|
Efficiency ratio –
adjusted1
|
|
44.4
|
|
|
41.8
|
|
|
42.5
|
|
|
43.1
|
|
|
42.1
|
|
Assets under
administration (billions of Canadian dollars)
|
$
|
514
|
|
$
|
484
|
|
$
|
406
|
|
$
|
514
|
|
$
|
406
|
|
Assets under
management (billions of Canadian dollars)
|
|
397
|
|
|
380
|
|
|
346
|
|
|
397
|
|
|
346
|
|
Number of Canadian
retail branches
|
|
1,085
|
|
|
1,087
|
|
|
1,087
|
|
|
1,085
|
|
|
1,087
|
|
Average number of
full-time equivalent staff
|
|
41,064
|
|
|
40,714
|
|
|
40,712
|
|
|
40,886
|
|
|
41,056
|
|
|
|
1
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
2
|
Capital allocated to
the business segment was reduced to 9% CET1 effective the second
quarter of 2020 compared with 10.5% in the first quarter of
2020.
|
Quarterly comparison – Q2 2021 vs. Q2 2020
Canadian Retail reported net income for the quarter was
$2,182 million, an increase of
$1,010 million, or 86%, compared
with the second quarter last year, reflecting lower PCL and
insurance claims. On an adjusted basis, net income increased
$985 million, or 82%. The reported
and adjusted annualized ROE for the quarter was 51.3%, compared
with 27.2% and 27.8%, respectively, in the second quarter last
year.
Canadian Retail revenue is derived from the personal and
business banking, wealth, and insurance businesses. Revenue for the
quarter was $6,062 million, an
increase of $39 million, or 1%, compared with the second
quarter last year.
Net interest income was $2,873 million, a decrease of
$129 million, or 4%, compared with the second quarter last
year, reflecting lower deposit margins, partially offset by volume
growth. Average loan volumes increased $20 billion, or 5%,
reflecting 5% growth in personal loans and 2% growth in business
loans. Average deposit volumes increased $72 billion, or 20%,
reflecting 14% growth in personal deposits, 27% growth in business
deposits, and 29% growth in wealth deposits. Net interest margin
was 2.61%, a decrease of 22 basis points (bps), reflecting lower
interest rates.
Non-interest income was $3,189 million, an increase of
$168 million, or 6%, reflecting higher transaction and
fee-based revenue in the wealth and banking businesses and higher
insurance volumes, partially offset by premium rebates for
customers in the insurance business and a decrease in the fair
value of investments supporting claims liabilities which resulted
in a similar decrease in insurance claims.
Assets under administration (AUA) were $514 billion as at April
30, 2021, an increase of $108
billion, or 27%, compared with the second quarter last year,
reflecting market appreciation and new asset growth. Assets under
management (AUM) were $397 billion as
at April 30, 2021, an increase of
$51 billion, or 15%, compared with
the second quarter last year, reflecting market appreciation and
new asset growth.
PCL was a recovery of $37 million,
lower by $1,190 million compared with
the second quarter last year. PCL – impaired for the quarter was
$191 million, a decrease of
$174 million, or 48%, primarily
reflected in the consumer lending portfolios, largely related to
the continued impact of government economic support programs. PCL –
performing was a recovery of $228
million, lower by $1,016
million, reflecting a performing allowance increase in the
prior year, and a release this quarter largely related to an
improvement in the economic outlook. Total PCL as an annualized
percentage of credit volume was -0.03%, or a decrease of
110 bps compared with the second quarter last year.
Insurance claims and related expenses for the quarter were
$441 million, a decrease of
$230 million, or 34%, compared with
the second quarter last year reflecting lower current year claims,
a decrease in the fair value of investments supporting claims
liabilities which resulted in a similar decrease in non-interest
income, and more favourable prior years' claims development.
Reported non-interest expenses for the quarter were $2,689 million, an increase of $101 million, or 4%, compared with the second
quarter last year, reflecting higher volume-driven expenses and
employee-related expenses, partially offset by prior year charges
related to the Greystone acquisition. On an adjusted basis,
non-interest expenses increased $127
million, or 5%, compared with the second quarter last
year.
The reported and adjusted efficiency ratio for the quarter was
44.4%, compared with 43.0% and 42.5%, respectively, in the second
quarter last year.
Quarterly comparison – Q2 2021 vs. Q1 2021
Canadian Retail net income for the quarter increased $145 million, or 7%, compared with the prior
quarter, reflecting lower insurance claims and PCL, partially
offset by lower revenue. The annualized ROE for the quarter was
51.3%, compared with 46.0%, in the prior quarter.
Revenue decreased $283 million, or 4%, compared with the
prior quarter. Net interest income decreased $105 million, or 4%, largely reflecting fewer
days in the second quarter and lower deposit margins, partially
offset by volume growth. Average loan volumes increased
$6 billion, or 1%, reflecting 1%
growth in personal loans and 2% growth in business loans.
Average deposit volumes increased $9 billion, or 2%,
reflecting 1% growth in personal deposits, 3% growth in business
deposits, and 4% growth in wealth deposits. Net interest margin was
2.61%, a decrease of 4 bps, reflecting changes in asset mix
and the ongoing impact of the low interest rate environment.
Non-interest income decreased $178 million, or 5%,
reflecting impact of premium rebates for customers in the
insurance business and a decrease in the fair value of investments
supporting claims liabilities which resulted in a similar decrease
in insurance claims, partially offset by higher transaction revenue
in the wealth business.
AUA increased $30 billion, or 6%,
and AUM increased $17 billion, or 4%, compared with the prior
quarter, reflecting market appreciation and new asset
growth.
PCL was lower by $179 million
compared with the prior quarter. PCL – impaired increased
$24 million, or 14%, primarily
reflected in the commercial lending portfolios. PCL – performing
was a recovery of $228 million, lower
by $203 million, primarily reflecting
an allowance release in the consumer and commercial lending
portfolios this quarter, largely related to an improvement in the
economic outlook. Total PCL as an annualized percentage of credit
volume was -0.03%, or a decrease of 15 bps.
Insurance claims and related expenses for the quarter decreased
$339 million, or 43%, compared with the prior quarter,
reflecting lower current year claims, a decrease in the fair value
of investments supporting claims liabilities which resulted in a
similar decrease in non-interest income, and more favourable prior
years' claims development.
Non-interest expenses increased $35 million, or 1%,
compared with the prior quarter.
The efficiency ratio was 44.4%, compared with 41.8%, in the
prior quarter.
Year-to-date comparison – Q2 2021 vs. Q2 2020
Canadian Retail reported net income for the six months ended
April 30, 2021, was $4,219 million, an increase of $1,258 million, or 42%, compared with same period
last year. The increase in earnings reflects lower PCL and
insurance claims. On an adjusted basis, net income for the period
was $4,219 million, an increase of
$1,209 million, or 40%. The
reported and adjusted annualized ROE for the period was 48.6%,
compared with 32.4% and 33.0%, respectively, in the same period
last year.
Revenue for the period was $12,407
million, an increase of $129
million, or 1%, compared with same period last year. Net
interest income decreased $318 million, or 5%, reflecting
lower deposit margins, partially offset by volume growth. Average
loan volumes increased $19 billion, or 4%, reflecting 5%
growth in personal loans and 3% growth in business loans. Average
deposit volumes increased $73
billion, or 20%, reflecting 15% growth in personal deposits,
26% growth in business deposits, and 36% growth in wealth deposits.
Net interest margin was 2.63%, a decrease of 25 bps, reflecting the
ongoing impact of the low interest rate environment.
Non-interest income increased $447
million, or 7%, reflecting higher transaction and fee-based
revenue in the wealth business and higher insurance volumes,
partially offset by impact of premium rebates for customers in
the insurance business and a decrease in the fair value of
investments supporting claims liabilities which resulted in a
similar decrease in insurance claims.
PCL was $105 million, lower by
$1,439 million, compared with the
same period last year. PCL – impaired was $358 million, a decrease of $327 million, or 48%, primarily reflected in the
consumer lending portfolios, largely related to the continued
impact of government economic support programs. PCL – performing
was a recovery of $253 million, lower
by $1,112 million, reflecting a
performing allowance increase in the prior year, and a release this
period largely related to an improvement in the economic outlook.
Total PCL as an annualized percentage of credit volume was 0.05%,
or a decrease of 66 bps.
Insurance claims and related expenses were $1,221 million, a decrease of $230 million, or 16%, compared with the same
period last year, reflecting a decrease in the fair value of
investments supporting claims liabilities which resulted in a
similar decrease in non-interest income, lower current year
claims, and more favourable prior years' claims
development.
Reported non-interest expenses were $5,343 million, an increase of $119 million, or 2%, compared with the same
period last year. The increase primarily reflects higher
volume-driven expenses and employee-related expenses, partially
offset by prior year charges related to the Greystone acquisition.
On an adjusted basis, non-interest expenses were $5,343 million, an increase of $169 million
or 3%.
The reported and adjusted efficiency ratios for the period were
43.1%, compared with 42.5% and 42.1%, respectively, for the same
period last year.
TABLE 8: U.S.
RETAIL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars,
except as noted)
|
For the three
months ended
|
|
For the six months
ended
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
|
Canadian
Dollars
|
|
2021
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Net interest
income
|
$
|
1,950
|
|
$
|
2,031
|
|
$
|
2,311
|
|
$
|
3,981
|
|
$
|
4,507
|
|
Non-interest
income
|
|
663
|
|
|
653
|
|
|
491
|
|
|
1,316
|
|
|
1,197
|
|
Total
revenue
|
|
2,613
|
|
|
2,684
|
|
|
2,802
|
|
|
5,297
|
|
|
5,704
|
|
Provision for
(recovery of) credit losses – impaired
|
|
117
|
|
|
190
|
|
|
287
|
|
|
307
|
|
|
560
|
|
Provision for
(recovery of) credit losses – performing
|
|
(330)
|
|
|
(55)
|
|
|
850
|
|
|
(385)
|
|
|
896
|
|
Total provision for
(recovery of) credit losses
|
|
(213)
|
|
|
135
|
|
|
1,137
|
|
|
(78)
|
|
|
1,456
|
|
Non-interest
expenses
|
|
1,594
|
|
|
1,688
|
|
|
1,680
|
|
|
3,282
|
|
|
3,273
|
|
Provision for
(recovery of) income taxes
|
|
162
|
|
|
70
|
|
|
(117)
|
|
|
232
|
|
|
(72)
|
|
U.S. Retail Bank
net income
|
|
1,070
|
|
|
791
|
|
|
102
|
|
|
1,861
|
|
|
1,047
|
|
Share of net income
from investment in Schwab and TD
Ameritrade1,2
|
|
246
|
|
|
209
|
|
|
234
|
|
|
455
|
|
|
435
|
|
Net
income
|
$
|
1,316
|
|
$
|
1,000
|
|
$
|
336
|
|
$
|
2,316
|
|
$
|
1,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
1,548
|
|
$
|
1,579
|
|
$
|
1,679
|
|
$
|
3,127
|
|
$
|
3,347
|
|
Non-interest
income
|
|
528
|
|
|
507
|
|
|
358
|
|
|
1,035
|
|
|
894
|
|
Total
revenue
|
|
2,076
|
|
|
2,086
|
|
|
2,037
|
|
|
4,162
|
|
|
4,241
|
|
Provision for
(recovery of) credit losses – impaired
|
|
91
|
|
|
147
|
|
|
208
|
|
|
238
|
|
|
416
|
|
Provision for
(recovery of) credit losses – performing
|
|
(264)
|
|
|
(44)
|
|
|
606
|
|
|
(308)
|
|
|
641
|
|
Total provision for
(recovery of) credit losses
|
|
(173)
|
|
|
103
|
|
|
814
|
|
|
(70)
|
|
|
1,057
|
|
Non-interest
expenses
|
|
1,267
|
|
|
1,313
|
|
|
1,218
|
|
|
2,580
|
|
|
2,428
|
|
Provision for
(recovery of) income taxes
|
|
129
|
|
|
55
|
|
|
(82)
|
|
|
184
|
|
|
(48)
|
|
U.S. Retail Bank
net income
|
|
853
|
|
|
615
|
|
|
87
|
|
|
1,468
|
|
|
804
|
|
Share of net income
from investment in Schwab and TD
Ameritrade1,2
|
|
194
|
|
|
161
|
|
|
174
|
|
|
355
|
|
|
326
|
|
Net
income
|
$
|
1,047
|
|
$
|
776
|
|
$
|
261
|
|
$
|
1,823
|
|
$
|
1,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity3
|
|
13.9
|
%
|
|
9.8
|
%
|
|
3.7
|
%
|
|
11.8
|
%
|
|
7.6
|
%
|
Net interest
margin4
|
|
2.15
|
|
|
2.24
|
|
|
2.93
|
|
|
2.20
|
|
|
3.00
|
|
Efficiency
ratio
|
|
61.0
|
|
|
62.9
|
|
|
59.8
|
|
|
62.0
|
|
|
57.3
|
|
Assets under
administration (billions of U.S. dollars)
|
$
|
27
|
|
$
|
26
|
|
$
|
21
|
|
$
|
27
|
|
$
|
21
|
|
Assets under
management (billions of U.S. dollars)
|
|
44
|
|
|
43
|
|
|
38
|
|
|
44
|
|
|
38
|
|
Number of U.S. retail
stores
|
|
1,141
|
|
|
1,223
|
|
|
1,220
|
|
|
1,141
|
|
|
1,220
|
|
Average number of
full-time equivalent staff
|
|
25,892
|
|
|
26,333
|
|
|
26,389
|
|
|
26,116
|
|
|
26,325
|
|
|
|
1
|
The Bank's share of
Schwab's and TD Ameritrade's earnings is reported with a one-month
lag. Refer to Note 7 of the Interim Consolidated Financial
Statements for further details.
|
2
|
The after-tax amounts
for amortization of acquired intangibles and the Bank's share of
acquisition and integration charges associated with Schwab's
acquisition of TD Ameritrade are recorded in the Corporate
segment.
|
3
|
Capital allocated to
the business segment was reduced to 9% CET1 effective the second
quarter of 2020 compared with 10.5% in the first quarter of
2020.
|
4
|
Net interest margin
excludes the impact related to sweep deposits arrangements and the
impact of intercompany deposits and cash collateral. In addition,
the value of tax-exempt interest income is adjusted to its
equivalent before-tax value.
|
Quarterly comparison – Q2 2021 vs. Q2 2020
U.S. Retail net income for the quarter was $1,316 million (US$1,047
million), an increase of $980
million (US$786 million),
compared with the second quarter last year. The annualized ROE for
the quarter was 13.9%, compared with 3.7%, 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. Net income for the
quarter from the U.S. Retail Bank and the Bank's investment in
Schwab was $1,070 million
(US$853 million) and $246 million (US$194
million), respectively.
The contribution from Schwab of US$194
million increased US$20
million, or 11%, compared with the contribution from TD
Ameritrade in the second quarter last year.
U.S. Retail Bank net income of US$853
million increased US$766
million, primarily reflecting lower PCL and higher revenue,
partially offset by higher expenses.
U.S. Retail Bank revenue is derived from the personal and
business banking and wealth management businesses. Revenue for the
quarter was US$2,076 million, an
increase of US$39 million, or 2%,
compared with the second quarter last year. Net interest income
decreased US$131 million, or 8%, as
lower deposit margins more than offset growth in deposit volumes
and PPP loans. Net interest margin was 2.15%, a decrease of
78 bps, reflecting continued deposit margin compression and
balance sheet mix. Non-interest income increased US$170 million, or 47%, primarily reflecting
higher valuation of certain investments, fee income growth from
increased customer activity, and higher gains on the sale of
mortgage loans.
Average loan volumes increased US$2
billion, or 1%, compared with the second quarter last year.
Personal loans decreased 1%, primarily reflecting lower card
balances. Business loans increased 3%, primarily as a result of PPP
originations. Excluding PPP loans, average business loan volumes
decreased US$5 billion, or 6%,
reflecting paydowns and lower line usage on commercial loans.
Average deposit volumes increased US$72
billion, or 23%, reflecting a 33% increase in business
deposits, a 23% increase in personal deposits, and an 18% increase
in sweep deposits.
AUA were US$27 billion as at
April 30, 2021, an increase of
US$6 billion, or 29%, compared with
the second quarter last year, reflecting net asset growth. AUM were
US$44 billion as at April 30, 2021, an increase of US$6 billion, or 16%, compared with the second
quarter last year, reflecting market appreciation, partially offset
by net asset outflows.
PCL for the quarter was a recovery of US$173 million, lower by US$987 million compared with the second quarter
last year. PCL – impaired was US$91 million, a decrease of
US$117 million, or 56%, primarily
reflected in the consumer lending portfolios, largely related to
the continued impact of government economic support programs. PCL –
performing was a recovery of US$264
million, lower by US$870
million, reflecting a performing allowance increase in the
prior year, and a release this quarter largely related to an
improvement in the economic outlook. U.S. Retail PCL including only
the Bank's share of PCL in the U.S. strategic cards portfolio, as
an annualized percentage of credit volume was -0.41%, a decrease of
244 bps, compared with the second quarter last year.
Non-interest expenses for the quarter were US$1,267 million, an increase of US$49 million, or 4%, compared with the second
quarter last year, primarily reflecting US$49 million in store optimization costs, and
higher employee-related expenses, partially offset by lower legal
provisions.
The efficiency ratio for the quarter was 61.0%, compared with
59.8%, in the second quarter last year.
Quarterly comparison – Q2 2021 vs. Q1 2021
U.S. Retail net income of $1,316
million (US$1,047 million)
increased $316 million (US$271 million), or 32% (35% in U.S. dollars)
compared with the prior quarter. The annualized ROE for the quarter
was 13.9%, compared with 9.8% in the prior quarter.
The contribution from Schwab of US$194
million increased US$33
million, or 20%, primarily reflecting elevated trading
volumes and client asset growth, partially offset by higher
volume-related expenses and net interest margin compression.
U.S. Retail Bank net income of US$853
million increased US$238
million, or 39%, compared with the prior quarter, primarily
reflecting lower PCL.
Revenue for the quarter decreased US$10
million compared with the prior quarter. Net interest income
decreased US$31 million, or 2%,
reflecting fewer days in the second quarter, partially offset by
accelerated fee amortization from PPP loan forgiveness. Net
interest margin was 2.15%, a decrease of 9 bps primarily reflecting
balance sheet mix. Non-interest income increased US$21 million, or 4%, primarily reflecting higher
valuation of certain investments.
Average loan volumes decreased US$2
billion, or 1%, compared with the prior quarter. Personal
loans decreased 3%, primarily reflecting lower credit card balances
and paydowns of residential mortgages. Business loans were flat, as
growth in PPP originations was offset by paydowns and lower line
usage on commercial loans. Average deposit volumes increased
US$10 billion, or 3%, reflecting a 6%
increase in personal deposits, and a 3% increase in business
deposits.
AUA were US$27 billion as at
April 30, 2021, an increase of
US$1 billion, or 4%, compared with
the prior quarter, reflecting net asset growth. AUM were
US$44 billion as at April 30, 2021, an increase of
US$1 billion, or 2%, reflecting
market appreciation, partially offset by net asset outflows.
PCL was lower by US$276 million
compared with the prior quarter. PCL – impaired decreased
US$56 million, primarily reflected in
the consumer lending portfolios. PCL – performing was a recovery of
US$264 million, lower by US$220 million, primarily reflecting an allowance
release in the commercial and consumer lending portfolios this
quarter, largely related to an improvement in the economic outlook.
U.S. Retail PCL including only the Bank's share of PCL in the U.S.
strategic cards portfolio, as an annualized percentage of credit
volume was -0.41%, or a decrease of 66 bps.
Non-interest expenses for the quarter were US$1,267 million, a decrease of US$46 million, or 4%, primarily reflecting lower
store optimization costs.
The efficiency ratio for the quarter was 61.0%, compared with
62.9% in the prior quarter.
Year-to-date comparison – Q2 2021 vs. Q2 2020
U.S. Retail net income for the six months ended April 30, 2021, was $2,316
million (US$1,823 million), an
increase of $834 million
(US$693 million), or 56% (61% in U.S.
dollars), compared with the same period last year. The annualized
ROE for the period was 11.8%, compared with 7.6%, in the same
period last year. Net income from the U.S. Retail Bank and the
Bank's investment in Schwab was $1,861
million (US$1,468 million) and $455 million (US$355
million), respectively.
The contribution from Schwab was US$355
million, an increase of US$29
million, or 9%, compared with the contribution from TD
Ameritrade for the same period last year.
U.S. Retail Bank net income for the period was US$1,468 million, an increase of US$664 million, or 83%, compared with the same
period last year, reflecting lower PCL and higher non-interest
income, partially offset by a decrease in net interest income.
Revenue for the period was US$4,162
million, a decrease of US$79
million, or 2%, compared with same period last year. Net
interest income decreased US$220
million, or 7%, as lower deposit margins more than offset
income from PPP loans and higher deposit volumes. Net interest
margin was 2.20%, a decrease of 80 bps, primarily reflecting
deposit margin compression and balance sheet mix. Non-interest
income increased US$141 million, or 16%, reflecting higher
valuation of certain investments and higher gains on the sale of
mortgage loans.
Average loan volumes increased US$5
billion, or 3%, compared with the same period last year.
Personal loans were flat. Business loans increased 6%, primarily as
a result of PPP originations. Excluding PPP loans, average business
loan volumes decreased 3%, reflecting paydowns and lower line usage
on commercial loans. Average deposit volumes increased US$80 billion, or 27%, reflecting a 35% increase
in business deposit volumes, a 27% increase in sweep deposit
volumes, and a 22% increase in personal deposit volumes.
PCL was a recovery of US$70
million, lower by US$1,127
million compared with the same period last year. PCL –
impaired was US$238 million, a
decrease of US$178 million, or 43%,
primarily reflected in the consumer lending portfolios, largely
related to the continued impact of government economic support
programs. PCL – performing was a recovery of US$308 million, lower by US$949 million, reflecting a performing allowance
increase in the prior year, and a release this period largely
related to an improvement in the economic outlook. U.S. Retail PCL
including only the Bank's share of PCL in the U.S. strategic cards
portfolio, as an annualized percentage of credit volume was -0.11
%, a decrease of 144 bps.
Non-interest expenses for the period were US$2,580 million, an increase of US$152 million, or 6%, compared with the same
period last year, reflecting US$125
million in store optimization costs as well as higher
employee-related expenses, partially offset by lower legal
provisions and productivity savings.
The efficiency ratio for the period was 62.0%, compared with
57.3%, for the same period last year.
TABLE 9: 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
|
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net interest income
(TEB)
|
$
|
648
|
|
$
|
661
|
|
$
|
493
|
|
$
|
1,309
|
|
$
|
850
|
|
Non-interest
income
|
|
509
|
|
|
649
|
|
|
768
|
|
|
1,158
|
|
|
1,457
|
|
Total
revenue
|
|
1,157
|
|
|
1,310
|
|
|
1,261
|
|
|
2,467
|
|
|
2,307
|
|
Provision for
(recovery of) credit losses – impaired
|
|
12
|
|
|
10
|
|
|
194
|
|
|
22
|
|
|
246
|
|
Provision for
(recovery of) credit losses – performing
|
|
(75)
|
|
|
10
|
|
|
180
|
|
|
(65)
|
|
|
145
|
|
Total provision for
(recovery of) credit losses
|
|
(63)
|
|
|
20
|
|
|
374
|
|
|
(43)
|
|
|
391
|
|
Non-interest
expenses
|
|
705
|
|
|
711
|
|
|
616
|
|
|
1,416
|
|
|
1,268
|
|
Provision for
(recovery of) income taxes (TEB)
|
|
132
|
|
|
142
|
|
|
62
|
|
|
274
|
|
|
158
|
|
Net
income
|
$
|
383
|
|
$
|
437
|
|
$
|
209
|
|
$
|
820
|
|
$
|
490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading-related
revenue (TEB)
|
$
|
558
|
|
$
|
744
|
|
$
|
625
|
|
$
|
1,302
|
|
$
|
1,237
|
|
Average gross lending
portfolio (billions of Canadian dollars)1
|
|
60.3
|
|
|
58.7
|
|
|
65.5
|
|
|
59.5
|
|
|
60.3
|
|
Return on common
equity2
|
|
20.0
|
%
|
|
21.3
|
%
|
|
10.4
|
%
|
|
20.7
|
%
|
|
12.2
|
%
|
Efficiency
ratio
|
|
60.9
|
|
|
54.3
|
|
|
48.9
|
|
|
57.4
|
|
|
55.0
|
|
Average number of
full-time equivalent staff
|
|
4,757
|
|
|
4,678
|
|
|
4,549
|
|
|
4,717
|
|
|
4,533
|
|
|
|
1
|
Includes gross loans
and bankers' acceptances relating to Wholesale Banking, excluding
letters of credit, cash collateral, credit default swaps (CDS), and
allowance for credit losses.
|
2
|
Capital allocated to
the business segment was reduced to 9% CET1 effective the second
quarter of 2020 compared with 10.5% in the first quarter of
2020.
|
Quarterly comparison – Q2 2021 vs. Q2 2020
Wholesale Banking net income for the quarter was $383 million, an increase of $174 million, or 83%, compared with the second
quarter last year, reflecting lower PCL, partially offset by lower
revenue and higher non-interest expenses.
Wholesale Banking revenue is derived primarily from capital
markets and corporate and investment banking services provided to
corporate, government, and institutional clients. Wholesale Banking
generates revenue from corporate lending, advisory, underwriting,
sales, trading and research, client securitization, trade finance,
cash management, prime services, and trade execution services.
Revenue for the quarter was $1,157
million, a decrease of $104
million, or 8%, compared with the second quarter last year,
primarily reflecting lower trading-related revenue and lower debt
underwriting, partially offset by higher advisory fees.
PCL for the quarter was a recovery of $63
million, lower by $437 million
compared with the second quarter last year. PCL – impaired was
$12 million, a decrease of
$182 million primarily reflecting
credit migration in the prior year. PCL – performing was a recovery
of $75 million, lower by $255 million, primarily reflecting a performing
allowance increase in the prior year, and a release this quarter
largely related to an improvement in the economic outlook.
Non-interest expenses were $705
million, an increase of $89
million, or 14%, compared with the second quarter last year,
primarily reflecting higher variable compensation.
Quarterly comparison – Q2 2021 vs. Q1 2021
Wholesale Banking net income for the quarter was $383 million, a decrease of $54 million, or 12%, compared with the prior
quarter, reflecting lower revenue, partially offset by lower PCL
and lower non-interest expenses.
Revenue for the quarter decreased $153
million, or 12%, primarily reflecting lower trading-related
revenue, partially offset by higher other revenue.
PCL was lower by $83 million. PCL
– impaired was $12 million, an
increase of $2 million. PCL –
performing was a recovery of $75
million, lower by $85 million
primarily reflecting an allowance release this quarter largely
related to an improvement in the economic outlook.
Non-interest expenses for the quarter decreased $6 million, or 1%.
Year-to-date comparison – Q2 2021 vs. Q2 2020
Wholesale Banking net income for the six months ended April 30, 2021 was $820
million, an increase of $330
million, or 67%, compared with the same period last year,
reflecting higher revenue and lower PCL, partially offset by higher
non-interest expenses.
Revenue was $2,467 million, an
increase of $160 million, or 7%,
compared with the same period last year, reflecting higher
trading-related revenue, higher loan fees, higher equity
underwriting fees, and higher advisory fees, partially offset by
lower other revenue.
PCL was a recovery of $43 million,
lower by $434 million compared with
the same period last year. PCL – impaired was $22 million, lower by $224 million primarily
reflecting credit migration in the prior year. PCL – performing was
a recovery of $65 million, lower by
$210 million primarily reflecting
performing allowance increase in the prior year, and a release this
year largely related to an improvement in the economic outlook.
Non-interest expenses were $1,416
million, an increase of $148
million, or 12%, compared with the same period last year,
reflecting higher variable compensation.
TABLE 10:
CORPORATE
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
For the six months
ended
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
|
|
2021
|
2021
|
2020
|
2021
|
2020
|
|
Net income (loss)
– reported
|
$
|
(186)
|
$
|
(197)
|
$
|
(202)
|
$
|
(383)
|
$
|
(429)
|
|
Adjustments for
items of note1
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles before income taxes
|
|
69
|
|
74
|
|
68
|
|
143
|
|
138
|
|
Acquisition and
integration charges related to the Schwab transaction
|
|
19
|
|
38
|
|
–
|
|
57
|
|
–
|
|
Less: impact of
income taxes
|
|
8
|
|
9
|
|
9
|
|
17
|
|
20
|
|
Net income (loss)
– adjusted
|
$
|
(106)
|
$
|
(94)
|
$
|
(143)
|
$
|
(200)
|
$
|
(311)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) – adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Net corporate
expenses
|
$
|
(186)
|
$
|
(182)
|
$
|
(199)
|
$
|
(368)
|
$
|
(378)
|
|
Other
|
|
80
|
|
88
|
|
56
|
|
168
|
|
67
|
|
Net income (loss)
– adjusted
|
$
|
(106)
|
$
|
(94)
|
$
|
(143)
|
$
|
(200)
|
$
|
(311)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
volumes
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
full-time equivalent staff
|
|
17,736
|
|
17,720
|
|
17,833
|
|
17,728
|
|
17,644
|
|
|
|
1
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
Quarterly comparison – Q2 2021 vs. Q2 2020
Corporate segment's reported net loss for the quarter was
$186 million, compared with a
reported net loss of $202 million in
the second quarter last year. The year-over-year decrease reflects
a higher contribution from other items and lower net corporate
expenses, partially offset by acquisition and integration charges
related to the Schwab transaction. The increase in other items
primarily reflects higher revenue from treasury and balance sheet
management activities this quarter. Net corporate expenses
decreased $13 million compared to the
same quarter last year. The adjusted net loss for the quarter was
$106 million, compared with an
adjusted net loss of $143 million in
the second quarter last year.
Quarterly comparison – Q2 2021 vs. Q1 2021
Corporate segment's reported net loss for the quarter was
$186 million, compared with a
reported net loss of $197 million in
the prior quarter. The quarter-over-quarter decrease reflects lower
acquisition and integration charges related to the Schwab
transaction, partially offset by a smaller contribution from other
items and higher net corporate expenses. The decrease in other
items primarily reflects lower revenue from treasury and balance
sheet management activities this quarter. Net corporate expenses
increased $4 million compared to the
prior quarter. The adjusted net loss for the quarter was
$106 million, compared with an
adjusted net loss of $94 million in
the prior quarter.
Year-to-date comparison – Q2 2021 vs. Q2 2020
Corporate segment's reported net loss for the six months ended
April 30, 2021 was $383 million, compared with a reported net loss
of $429 million in the same period
last year. The $46 million decrease
primarily reflects a higher contribution from other items,
partially offset by acquisition and integration charges related to
the Schwab transaction. Other items increased $101 million, largely reflecting higher revenue
from treasury and balance sheet management activities and an
unfavourable adjustment relating to hedge accounting in the prior
period. Net corporate expenses decreased $10
million compared to the same period last year. Adjusted net
loss for the six months ended April 30,
2021 was $200 million,
compared with an adjusted net loss of $311
million in the same period last year.
SHAREHOLDER AND INVESTOR INFORMATION
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you:
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Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference call in Toronto, Ontario on May
27, 2021. The call will be audio webcast live through TD's
website at 1:30 p.m. ET. The call will feature
presentations by TD executives on the Bank's financial results for
the 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 27, 2021 by
approximately 1:30 p.m. ET. A
listen-only telephone line is available at 416–641–6150 or
1-866-696-5894 (toll free) and the passcode is 2727354#.
The audio webcast and presentations will be archived at
www.td.com/investor. Replay of the teleconference will be available
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2021, until 11:59 p.m. ET on
June 11, 2021 by calling 905-694-9451
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About TD Bank Group
The Toronto-Dominion Bank and its
subsidiaries are collectively known as TD Bank Group ("TD" or the
"Bank"). TD is the fifth largest bank in North America by assets and serves over
26 million customers in three key businesses operating in a
number of locations in financial centres around the globe: Canadian
Retail, including TD Canada Trust, TD Auto Finance Canada, TD
Wealth (Canada), TD Direct
Investing, and TD Insurance; U.S. Retail, including TD Bank,
America's Most Convenient Bank®, TD Auto Finance U.S.,
TD Wealth (U.S.), and an investment in The Charles Schwab
Corporation; and Wholesale Banking, including TD Securities.
TD also ranks among the world's leading online financial services
firms, with more than 15 million active online and mobile
customers. TD had CDN$1.7 trillion in
assets on April 30, 2021. The
Toronto-Dominion Bank trades under the symbol "TD" on the
Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group