This quarterly
earnings news release should be read in conjunction with the Bank's
unaudited fourth quarter 2020 consolidated financial results for
the year ended October 31, 2020, included in this Earnings News
Release and the audited 2020 Consolidated Financial Statements,
prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB), which is available on TD's website at
http://www.td.com/investor/. This analysis is dated December 2,
2020. 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 2020 Management's Discussion and Analysis (MD&A) for an
explanation of reported and adjusted results.
|
FOURTH QUARTER FINANCIAL HIGHLIGHTS, compared with the fourth
quarter last year:
- Reported diluted earnings per share were $2.80, compared with $1.54.
- Adjusted diluted earnings per share were $1.60, compared with $1.59.
- Reported net income was $5,143
million, compared with $2,856
million.
- Adjusted net income was $2,970
million, compared with $2,946
million.
FULL YEAR FINANCIAL HIGHLIGHTS, compared with last
year:
- Reported diluted earnings per share were $6.43, compared with $6.25.
- Adjusted diluted earnings per share were $5.36, compared with $6.69.
- Reported net income was $11,895
million, compared with $11,686
million.
- Adjusted net income was $9,968
million, compared with $12,503
million.
FOURTH QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The fourth quarter reported earnings figures included the
following items of note:
- Amortization of intangibles of $61
million ($53 million after tax
or 3 cents per share), compared with
$74 million ($62 million after tax or 3
cents per share) in the fourth quarter last year.
- Charges associated with the acquisition of Greystone of
$25 million ($24 million after tax or 1
cent per share), compared with $30
million ($28 million after tax
or 2 cents per share) in the
fourth quarter last year.
- Net gain on sale of the investment in TD Ameritrade of
$1,421 million ($2,250 million after tax or $1.24 per share).
TORONTO, Dec. 3, 2020 /CNW/ - TD Bank Group ("TD" or
the "Bank") today announced its financial results for the fourth
quarter ended October 31, 2020. Reported earnings were
$5.1 billion, up 80% compared with
the same quarter last year, and adjusted earnings were $3.0 billion, up 1%.
"TD delivered solid results in the fourth quarter, capping
off a year that demonstrated the strength of our business model and
balance sheet, and the resilience of our people throughout the
unprecedented COVID-19 pandemic," said Bharat Masrani, Group
President and CEO, TD Bank Group. "90,000 TD Bankers from around
the world came together to support our customers and clients
through this time of uncertainty, while we remained focused on our
strategy and strengthened the capabilities needed to serve and grow
in the future. We also became a major shareholder in The Charles
Schwab Corporation, one of the most innovative and highly-regarded
investment firms in the U.S., and recorded a significant gain this
quarter. More recently, the Bank announced an ambitious climate
action plan signaling our intent to support clients as they
transform their businesses to capture the opportunities of the
low-carbon economy."
"While 2020 was not the year we expected it to be, we learned
from the experience and demonstrated the speed and agility of our
organization. We will continue to adapt to the current environment
to deliver for all of our stakeholders and support an inclusive and
sustainable recovery," added Masrani.
Canadian Retail
Canadian Retail reported net income
was $1,802 million and adjusted net
income was $1,826 million, both up 3%
from the fourth quarter last year. This increase primarily reflects
lower PCL and lower insurance claims, partially offset by lower
revenue and higher non-interest expenses. Revenue decreased 2%,
reflecting lower margins, partially offset by increased loan and
deposit volumes and increased client activity in the Wealth
business. Business momentum was strong this quarter with record
auto finance and RESL originations, and higher General Insurance
premiums. Expenses increased 2%, reflecting investments in
technology and volume-driven expenses. PCL decreased
$149 million over last year, largely due to the positive
impact of bank and government assistance programs.
Canadian Retail continued to support customers as they navigated
COVID-19 and planned for their financial future. This quarter,
the segment introduced first-to-market digital capabilities with
the launch of TD GoalAssist, the goals-based investing app from TD
Direct Investing, TD Global Transfer which enables personal banking
customers to transfer money internationally to over 200 countries
and territories from EasyWeb and the TD mobile app, and the
introduction of Amazon Shop with Points, which allows TD Rewards
Cardholders to redeem TD points at check-out on Amazon.ca. The Bank
also continued to enable online access to the latest CEBA program
features.
U.S. Retail
U.S. Retail net income was
$871 million (US$658 million), a decrease of 27% compared
with the same quarter last year. TD Ameritrade contributed
$339 million (US$255 million) in earnings to the segment,
an increase of 16% compared to the same quarter last year,
primarily reflecting higher trading volumes and lower operating
expenses, partially offset by reduced trading commissions and lower
asset-based revenue.
The U.S. Retail Bank, which excludes the Bank's investment in TD
Ameritrade, contributed $532 million (US$403 million),
down 41% from the same quarter last year, primarily reflecting
higher PCL and lower revenue. Revenue declined in the quarter as
lower net interest margins and fee income were partially offset by
growth in loan and deposit volumes. PCL increased $277 million (US$210
million) compared to the fourth quarter last year, mainly on
higher provisions for performing loans offset by lower provisions
on impaired loans.
The U.S. Retail Bank continued to support its customers with
personalized, connected experiences across channels through the
COVID-19 pandemic. Through its store network, TD provided virtual
queue check-in and curbside debit card pickup. Customers also
benefited from the Bank's investments in new digital capabilities,
including TD Auto Finance's self-service portal and Unsecured
Lending's end-to-end digital transformation.
Wholesale
Wholesale Banking reported record net income
of $486 million this quarter, an
increase of $326 million compared to
the same quarter last year, reflecting higher revenue, lower
non-interest expenses, and lower PCL. Revenue for the quarter was
$1,254 million, an increase of 48%
from a year ago, reflecting higher trading-related revenue, higher
loan fees, higher debt underwriting fees, and derivative valuation
charges incurred in the fourth quarter last year. The Wholesale
Bank's performance reflects a strong, diversified business mix and
client-focused franchise, and continued growth in the U.S. dollar
business.
Capital
TD's Common Equity Tier 1 Capital ratio on a
Basel III fully phased-in basis was 13.1%.
Conclusion
"I want to thank our dedicated colleagues
around the world for their tremendous efforts in 2020. They
continue to deliver legendary experiences for our customers in the
face of unprecedented challenges. Despite uncertainties, TD will
address the hurdles ahead, contribute to the recovery, and continue
to invest in our future growth," 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,
statements made in the Bank's 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 headings "Significant Events" in the relevant
MD&A, which applicable releases may be found on www.td.com. All
such factors should be considered carefully, as well as other
uncertainties and potential events, and the inherent uncertainty of
forward-looking statements, when making decisions with respect to
the Bank and the Bank cautions readers not to place undue reliance
on the Bank's forward-looking statements.
Material economic assumptions underlying the forward-looking
statements contained in this document are set out in the 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
twelve months ended
|
|
|
|
|
October
31
|
|
|
July
31
|
|
|
October
31
|
|
|
October
31
|
|
|
October
31
|
|
|
|
2020
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Results of
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues –
reported
|
$
|
11,844
|
|
$
|
10,665
|
|
$
|
10,340
|
|
$
|
43,646
|
|
$
|
41,065
|
|
Total revenues –
adjusted1
|
|
10,423
|
|
|
10,665
|
|
|
10,340
|
|
|
42,225
|
|
|
41,065
|
|
Provision for credit
losses
|
|
917
|
|
|
2,188
|
|
|
891
|
|
|
7,242
|
|
|
3,029
|
|
Insurance claims and
related expenses
|
|
630
|
|
|
805
|
|
|
705
|
|
|
2,886
|
|
|
2,787
|
|
Non-interest expenses
– reported
|
|
5,709
|
|
|
5,307
|
|
|
5,543
|
|
|
21,604
|
|
|
22,020
|
|
Non-interest expenses
– adjusted1
|
|
5,646
|
|
|
5,244
|
|
|
5,463
|
|
|
21,338
|
|
|
21,085
|
|
Net income –
reported
|
|
5,143
|
|
|
2,248
|
|
|
2,856
|
|
|
11,895
|
|
|
11,686
|
|
Net income –
adjusted1
|
|
2,970
|
|
|
2,327
|
|
|
2,946
|
|
|
9,968
|
|
|
12,503
|
|
Financial
position (billions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans net of
allowance for loan losses
|
$
|
717.5
|
|
$
|
721.4
|
|
$
|
684.6
|
|
$
|
717.5
|
|
$
|
684.6
|
|
Total
assets
|
|
1,715.9
|
|
|
1,697.3
|
|
|
1,415.3
|
|
|
1,715.9
|
|
|
1,415.3
|
|
Total
deposits
|
|
1,135.3
|
|
|
1,091.3
|
|
|
887.0
|
|
|
1,135.3
|
|
|
887.0
|
|
Total
equity
|
|
95.5
|
|
|
92.5
|
|
|
87.7
|
|
|
95.5
|
|
|
87.7
|
|
Total Common Equity
Tier 1 Capital risk-weighted assets
|
|
478.9
|
|
|
478.1
|
|
|
456.0
|
|
|
478.9
|
|
|
456.0
|
|
Financial
ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity – reported
|
|
23.3
|
%
|
|
10.0
|
%
|
|
13.6
|
%
|
|
13.6
|
%
|
|
14.5
|
%
|
Return on common
equity – adjusted1,2
|
|
13.3
|
|
|
10.4
|
|
|
14.0
|
|
|
11.4
|
|
|
15.6
|
|
Return on tangible
common equity1,2
|
|
31.5
|
|
|
13.7
|
|
|
18.9
|
|
|
18.7
|
|
|
20.5
|
|
Return on tangible
common equity – adjusted1,2
|
|
17.9
|
|
|
13.9
|
|
|
19.1
|
|
|
15.3
|
|
|
21.5
|
|
Efficiency ratio –
reported
|
|
48.2
|
|
|
49.8
|
|
|
53.6
|
|
|
49.5
|
|
|
53.6
|
|
Efficiency ratio –
adjusted1
|
|
54.2
|
|
|
49.2
|
|
|
52.8
|
|
|
50.5
|
|
|
51.3
|
|
Provision for credit
losses as a % of net average loans and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
acceptances3
|
|
0.49
|
|
|
1.17
|
|
|
0.51
|
|
|
1.00
|
|
|
0.45
|
|
Common share
information – reported (Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.80
|
|
$
|
1.21
|
|
$
|
1.54
|
|
$
|
6.43
|
|
$
|
6.26
|
|
|
Diluted
|
|
2.80
|
|
|
1.21
|
|
|
1.54
|
|
|
6.43
|
|
|
6.25
|
|
Dividends per
share
|
|
0.79
|
|
|
0.79
|
|
|
0.74
|
|
|
3.11
|
|
|
2.89
|
|
Book value per
share
|
|
49.49
|
|
|
47.80
|
|
|
45.20
|
|
|
49.49
|
|
|
45.20
|
|
Closing share
price4
|
|
58.78
|
|
|
59.27
|
|
|
75.21
|
|
|
58.78
|
|
|
75.21
|
|
Shares outstanding
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
1,812.7
|
|
|
1,802.3
|
|
|
1,811.7
|
|
|
1,807.3
|
|
|
1,824.2
|
|
|
Average
diluted
|
|
1,813.9
|
|
|
1,803.5
|
|
|
1,814.5
|
|
|
1,808.8
|
|
|
1,827.3
|
|
|
End of
period
|
|
1,815.6
|
|
|
1,813.0
|
|
|
1,811.9
|
|
|
1,815.6
|
|
|
1,811.9
|
|
Market capitalization
(billions of Canadian dollars)
|
$
|
106.7
|
|
$
|
107.5
|
|
$
|
136.3
|
|
$
|
106.7
|
|
$
|
136.3
|
|
Dividend
yield5
|
|
5.1
|
%
|
|
5.3
|
%
|
|
4.0
|
%
|
|
4.8
|
%
|
|
3.9
|
%
|
Dividend payout
ratio
|
|
28.2
|
|
|
65.3
|
|
|
48.0
|
|
|
48.3
|
|
|
46.1
|
|
Price-earnings
ratio
|
|
9.2
|
|
|
11.5
|
|
|
12.0
|
|
|
9.2
|
|
|
12.0
|
|
Total shareholder
return (1-year)6
|
|
(17.9)
|
|
|
(19.5)
|
|
|
7.1
|
|
|
(17.9)
|
|
|
7.1
|
|
Common share
information – adjusted (Canadian
dollars)1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.60
|
|
$
|
1.25
|
|
$
|
1.59
|
|
$
|
5.37
|
|
$
|
6.71
|
|
|
Diluted
|
|
1.60
|
|
|
1.25
|
|
|
1.59
|
|
|
5.36
|
|
|
6.69
|
|
Dividend payout
ratio
|
|
49.2
|
%
|
|
63.0
|
%
|
|
46.5
|
%
|
|
57.9
|
%
|
|
43.0
|
%
|
Price-earnings
ratio
|
|
11.0
|
|
|
11.1
|
|
|
11.2
|
|
|
11.0
|
|
|
11.2
|
|
Capital
Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital ratio2
|
|
13.1
|
%
|
|
12.5
|
%
|
|
12.1
|
%
|
|
13.1
|
%
|
|
12.1
|
%
|
Tier 1 Capital
ratio2
|
|
14.4
|
|
|
13.8
|
|
|
13.5
|
|
|
14.4
|
|
|
13.5
|
|
Total Capital
ratio2
|
|
16.7
|
|
|
16.5
|
|
|
16.3
|
|
|
16.7
|
|
|
16.3
|
|
Leverage
ratio
|
|
4.5
|
|
|
4.4
|
|
|
4.0
|
|
|
4.5
|
|
|
4.0
|
|
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 loans.
|
4
|
Toronto Stock
Exchange closing market price.
|
5
|
Dividend yield is
calculated as the dividend per common share divided by the 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 for the quarter, and
b) for the full year – dividend per common share for the
year.
|
6
|
Total shareholder
return (TSR) is calculated based on share price movement and
dividends reinvested over a trailing one-year period.
|
HOW WE PERFORMED
HOW THE BANK REPORTS
The Bank prepares its
Consolidated Financial Statements in accordance with IFRS, the
current GAAP, and refers to results prepared in accordance with
IFRS as "reported" results. The Bank also utilizes non-GAAP
financial measures referred to as "adjusted" results to assess each
of its businesses and to measure the Bank's overall performance. To
arrive at adjusted results, the Bank removes "items of note", from
reported results. The items of note relate to items which
management does not believe are indicative of underlying business
performance. The Bank believes that adjusted results provide the
reader with a better understanding of how management views the
Bank's performance. The items of note are disclosed in
Table 3. As explained, adjusted results differ from reported
results determined in accordance with IFRS. Adjusted results, items
of note, and related terms used in this document are not defined
terms under IFRS and, therefore, may not be comparable to similar
terms used by other issuers.
The Bank's U.S. strategic cards portfolio 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 related to these portfolios in the
Bank's 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"). For
further details, refer to "Significant Events" in the "How We
Performed" section of this document. The Bank's share of TD
Ameritrade's earnings is reported with a one-month lag. The same
convention is being followed for Schwab, and the Bank will begin
recording its share of Schwab's earnings on this basis in the first
quarter of fiscal 2021.
In addition, on November 25, 2019,
the Bank and Schwab entered into an insured deposit account
agreement (the "Schwab IDA Agreement"), which became effective upon
closing of the Schwab transaction and has an initial expiration
date of July 1, 2031. The servicing
fee under the Schwab IDA Agreement is set at 15 basis points
(bps) per annum on the aggregate average daily balance in the sweep
accounts. Prior to the Schwab IDA Agreement becoming effective, the
Bank was party to an insured deposit account agreement with TD
Ameritrade (the "TD Ameritrade IDA Agreement") and earned a
servicing fee of 25 bps per annum on the aggregate average daily
balance in the sweep accounts (subject to adjustment based on a
specified formula). Refer to the "Related Party
Transactions" section of the Bank's 2020 MD&A.
U.S. Tax Reform
On December 22, 2017, the
U.S. government enacted comprehensive tax legislation commonly
referred to as the Tax Cuts and Jobs Act (the "U.S. Tax
Act") which made broad and complex changes to the U.S. tax
code.
The reduction of the U.S. federal corporate tax rate enacted by
the U.S. Tax Act resulted in an adjustment during 2018 to the
Bank's U.S. deferred tax assets and liabilities to the lower base
rate of 21% as well as an adjustment to the Bank's carrying
balances of certain tax credit-related investments and its
investment in TD Ameritrade. The Bank finalized its assessment
of the implications of the U.S. Tax Act during 2018 and recorded a
net charge to earnings of $392 million (US$319 million)
for the year ended October 31, 2018.
The lower corporate tax rate had and continues to have a
positive effect on TD's current year and future earnings. The
amount of the benefit may vary due to, among other things, changes
in interpretations and assumptions the Bank has made and guidance
that may be issued by applicable regulatory authorities.
Economic Summary and Outlook
The global economic
recovery has slowed after an initial burst of growth following the
end of lockdowns in the early summer months. A resurgence in
COVID-19 cases across Europe and
North America has prompted renewed
restraints on activity, leaving economic momentum vulnerable in the
fourth calendar quarter of 2020. Until an effective vaccine or
treatment is widely distributed, the global economy is likely to
remain susceptible to such periodic setbacks.
The Bank expects global real GDP to contract by 3.8% in calendar
2020, the largest annual decline in the post-war era. China is the only major economy that is likely
to record growth this year, with early control of the virus,
state-supported investment and rising exports supporting economic
activity.
The global economic outlook for 2021 remains very uncertain and
will depend on the timing and effectiveness of a vaccine. Assuming
a vaccine is widely distributed by the summer, the Bank expects
global real GDP to rebound by 6.2% in calendar 2021. Recent news of
potentially earlier vaccine roll out offers some upside risk to
that estimate. However, non-virus-related negative risks also
exist, including the possibility of no-deal Brexit, escalating
U.S.-China tensions, and continued
geopolitical risks.
U.S. real GDP continues to recover. The economy expanded by
33.1% (annualized) in the third calendar quarter of 2020. Monthly
data on consumer spending shows growth was especially rapid through
May and June, while the unemployment rate has continued to improve.
Since hitting a peak of 14.7% in April, it has fallen to 6.9% as of
October, although this remains well above the 3.5% rate recorded in
February. Likewise, real GDP remains 3.5% below its level in the
fourth calendar quarter of 2019. The recent rise in COVID-19 cases
is expected to slow U.S. growth in the final months of the calendar
year, but not stall it outright. Business restrictions have so far
been less severe and less widespread than what has been observed in
other major economies. However, this also creates a risk that the
intensity of business restrictions may eventually rise should the
medical system become overly burdened.
The Federal Reserve cut its policy interest rate to the 0% to
0.25% range in March and continues to expand its balance sheet by
purchasing U.S. Treasuries and mortgage-backed securities. In late
August, the U.S. central bank announced an update to its long-run
goals and monetary policy strategy, committing to target an
inflation rate that "averages two percent over time." With
inflation currently well under two percent, this revised strategy
suggests interest rates will remain very low for some time. The
Bank expects the federal funds rate to remain at its current
setting until calendar 2024. Historically, low interest rates have
helped drive a rapid rebound in the housing market and this remains
true today. Home sales are already above pre-crisis levels and
price growth has been accelerating. Housing activity is expected to
slow in calendar 2021, but a low homeownership rate and a
favourable starting point for housing affordability suggests that
growth will continue.
In terms of U.S. fiscal policy, the first round of
COVID-19-related economic supports of over US$2.5 trillion helped households and businesses
to maintain spending even as economic activity was curtailed. Many
of these supports have now expired. As of October 31, 2020, there was broad agreement
across party lines on a support package that would reinstate some
enhanced federal unemployment insurance benefits, authorize more
funds for small business loans and increase funding for COVID-19
testing, treatment and vaccine research and distribution.
Uncertainty around the prospect for further assistance has
increased following the November election.
Canada's economy was impacted
more negatively than the U.S. in the first half of calendar 2020
and since then has recovered somewhat faster. The Bank estimates
real GDP grew by 44.2% (annualized) in the third calendar quarter
of the year. Despite this increase, real GDP was approximately 4.5%
below the pre-COVID level in the fourth calendar quarter of 2019.
The recovery in Canada's job market, meanwhile, has outperformed
that of its U.S. counterpart. As of October 2020, almost
four-fifths of the jobs lost during the initial lockdown have been
recovered in Canada, which is a
significantly better performance than in the U.S. The Canadian
unemployment rate has fallen from a peak of 13.7% in May to 8.9% in
October.
The recent surge in COVID-19 cases also presents a downside risk
to the near-term Canadian outlook. In an effort to contain the
spread of the virus, since October, governments in Ontario, Quebec and Manitoba have imposed restrictions on targeted
industries. This is expected to slow the pace of the economic and
labour market recovery in the final months of this calendar
year.
Similar to the Federal Reserve, the Bank of Canada has acted aggressively to support the
economy, bringing interest rates down to 0.25% in March and rapidly
expanding the size of its balance sheet. The Canadian central bank
has explicitly committed to hold its overnight rate steady at its
effective lower bound of 0.25% until at least 2023. In an
environment of stable short-term interest rate differentials
between the U.S. and Canada, the
Bank projects the Canadian dollar will trade in the moderate range
of 76-78 US cents over the next four calendar quarters.
Fueled partly by extraordinarily low interest rates, Canadian
existing home resales and average prices reached new record highs
in September. Demand has been particularly robust for ground-based
housing types and properties located outside denser downtown cores.
The housing market has also become more bifurcated by type, with
evidence of elevated supply in the condominium market, and strong
price pressures for detached homes. The Bank expects deteriorating
affordability to become a growing constraint in the detached home
market. Coupled with flagging demand for condominiums, this is
expected to result in a cooling in activity over the first half of
calendar 2021.
Many of the government supports to households and businesses
implemented in the early stages of the health and economic crisis
have been extended into calendar 2021, putting a floor under
spending and limiting the knock-on impact to insolvencies. In
October, the Canada Emergency
Response Benefit (CERB) transitioned to expanded employment
insurance and the Canada Recovery Benefit. These two programs,
which are temporary in nature, cast a wide net and offer protection
to the incomes of workers who have not been able to find new
employment. Highly supportive fiscal and monetary policy is
expected to keep Canada's economy
on a gradual recovery track in the coming quarters. However, like
the U.S. and the global economy, a more expansive recovery will
require an effective vaccine or treatment in order for business
activity to normalize more broadly.
THE BANK'S RESPONSE TO COVID-19
Efforts to contain the
COVID-19 pandemic have had a profound impact on economies around
the world. In North America, the
banking sector implemented a variety of measures to ease the strain
on consumers and businesses. Governments, together with crown
corporations, central banks and regulators, also introduced
programs to mitigate the fallout of the crisis and support the
effective functioning of financial markets. TD has been actively
engaged in this collective effort, guided by the principles of
supporting the well-being of its customers and colleagues and
maintaining the Bank's operational and financial resilience.
Supporting Customers and Colleagues
Beginning in TD's
fiscal second quarter, the Bank temporarily closed parts of its
branch and store network and limited hours in others. As
jurisdictions across TD's footprint began to ease physical
distancing restrictions in the third quarter, the Bank re-opened a
number of its branches and stores and started restoring hours of
service to meet customer needs, in line with the directives of
government, public health authorities and TD's Chief Medical
Director. Extra precautions were taken in locations that remained
open, including adjusting staff levels, installing protective
equipment, enhancing cleaning, and implementing physical distancing
measures to reduce personal contact. By October 31, 2020,
virtually all Canadian branches and U.S. stores were open, and all
ATMs were operational.
Also beginning in the second quarter, the Bank enabled a
substantial majority of its contact center staff to work from home
to maintain service levels. A number of branch and store colleagues
were given training to respond to customer calls, and new digital
capacity and self-serve capabilities were introduced to provide
customers with ongoing access to financial service and advice. The
Bank expanded its existing customer assistance programs – TD Helps
in Canada and TD Cares in the
U.S. – and redeployed colleagues across the organization to support
these functions. In addition, new online and mobile applications
were launched to facilitate the delivery of direct and
government-introduced financial assistance for households and
businesses. Approximately 60,000 TD colleagues continued to work
from home as at October 31, 2020, and
these arrangements are expected to remain in place for some
time.
In the early months of the pandemic, the Bank offered several
forms of direct financial assistance to customers experiencing
financial hardship due to COVID–19, including deferral of
loan payments and minimum payments on credit card balances,
interest reductions, insurance premium deferrals and premium
reductions. As at October 31, 2020,
the bulk of this assistance had run its course, with deferrals
largely expiring on schedule and customers resuming payments. The
table below summarizes the accounts and corresponding gross loan
balances that remained subject to COVID-related deferral programs
as of October 31, 2020 in the Canadian and
U.S. Retail businesses. Delinquency rates for customers
exiting deferral are higher than for the broader population but
remain low in absolute terms reflecting continued job gains, the
continuation of government support, the Bank's proactive outreach
to clients, and TD's expanding suite of advice offerings.
CANADA
|
Bank-Led
Payment
Deferral Programs
|
As at April 30,
2020
|
As at July 31,
2020
|
As at October 31,
2020
|
Deferral
Term
|
|
Accounts1
|
$ Billion
(CAD)1
|
% of
portfolio2
|
Accounts1
|
$ Billion
(CAD)1
|
% of
portfolio2
|
Accounts1
|
$ Billion
(CAD)1
|
% of
portfolio2
|
|
Real Estate
Secured
Lending3
|
126,000
|
$36.0
|
14.0%
|
107,000
|
$31.4
|
12.0%
|
13,000
|
$3.7
|
1.4%
|
Up to 6-month
payment
deferral
|
Other Consumer
Lending4
|
122,000
|
$3.2
|
3.0%
|
54,000
|
$1.3
|
1.0%
|
17,000
|
$0.3
|
0.3%
|
Up to 4-month
payment
deferral
|
Small Business
Banking
and Commercial Lending
|
12,000
|
$6.5
|
8.0%
|
13,000
|
$7.0
|
8.0%
|
400
|
$0.4
|
0.5%
|
Up to 6-month (up to
4-month
for Small Business Banking
for non-Real Estate Secured
Lending secured debt)
|
1 Reflects approximate number of
accounts and approximate gross loan balance at the time of payment
deferral.
|
2 Reflects gross loan balance at the
time of payment deferral as a percentage of the quarterly average
loan portfolio balance.
|
3 Includes residential mortgages and
amortizing Home Equity Lines of Credit (HELOCs).
|
4 Other Consumer Lending includes
credit cards, other personal lending, and auto. The deferral period
varies by product.
|
UNITED
STATES
|
Bank-Led
Payment
Deferral Programs
|
As at April 30,
2020
|
As at July 31,
2020
|
As at October 31,
2020
|
Deferral
Term
|
|
Accounts1
|
$ Billion
(USD)1
|
% of
portfolio2
|
Accounts1
|
$ Billion
(USD)1
|
% of
portfolio2
|
Accounts1
|
$ Billion
(USD)1
|
% of
portfolio2
|
|
Real Estate Secured
Lending
|
7,000
|
$2.5
|
7.0%
|
7,000
|
$2.4
|
6.0%
|
5,000
|
$1.7
|
4.4%
|
3-month
minimum
forbearance
|
Other Consumer
Lending3
|
226,000
|
$2.9
|
7.0%
|
46,000
|
$0.7
|
2.0%
|
15,000
|
$0.2
|
0.5%
|
Up to 3-month
payment
deferral
|
Small Business
Banking
and Commercial Lending
|
5,000
|
$6.5
|
7.0%
|
4,000
|
$3.0
|
3.0%
|
1,000
|
$0.3
|
0.3%
|
Up to 6-month
payment
deferral (up to 3-month for
Commercial lending)
|
1 Reflects approximate number of
accounts and approximate gross loan balance at the time of payment
deferral.
|
2 Reflects gross loan balance at the
time of payment deferral as a percentage of the quarterly average
loan portfolio balance.
|
3 Other Consumer Lending includes
credit cards, other personal lending, and auto. The deferral period
varies by product.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Bank continues to support programs for individuals and
businesses introduced by the Canadian and U.S. governments.
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 loans to its
eligible business banking customers. Under the CEBA Program,
eligible businesses receive a $40,000
interest-free loan until December 31, 2022. If $30,000 is repaid on or before December 31, 2022, the remaining amount of the
loan is eligible for complete forgiveness. 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. The funding provided to the Bank by the Government
of Canada in respect of the CEBA
Program represents an obligation to pass-through collections on the
CEBA loans and is otherwise non-recourse to the Bank. Accordingly,
the Bank is required to remit all collections of principal and
interest on the CEBA loans to the Government of Canada but is not required to repay amounts
that its customers fail to pay or that have been forgiven. The Bank
receives an administration fee to recover the costs to administer
the program for the Government of Canada. The Bank continues to work with the
Government of Canada and EDC as
further amendments to the CEBA Program are contemplated. Loans
issued under the program are not recognized on the Bank's
Consolidated Balance Sheet, as the Bank transfers substantially all
risks and rewards in respect of the loans to the Government of
Canada. As of October 31, 2020, the Bank had provided
approximately 184,000 customers (July 31, 2020 – 169,000;
April 30, 2020 – 117,000) with CEBA loans and had funded
approximately $7.3 billion
(July 31, 2020 – $6.7 billion; April 30,
2020 – $4.7 billion) in
loans under the program.
U.S. Coronavirus Aid, Relief, and Economic Security Act,
Paycheck Protection Program
Under the Paycheck Protection Program (PPP) established by the U.S.
Coronavirus Aid, Relief, and Economic Security (CARES) Act and
implemented by the Small Business Administration (SBA), the Bank
provided loans up to US$10 million each to small businesses to
assist them in retaining workers, maintaining payroll, and covering
other expenses. PPP loans originated before June 5, 2020 have a 2-year term with an option to
extend to a 5-year term. PPP loans originated on or after
June 5, 2020 have a 5-year term. All
PPP loans 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 October 31, 2020, the Bank had funded
approximately 86,000 PPP loans (July 31,
2020 – 84,000; April 30, 2020
– 28,000). The gross carrying amount of loans originated under the
program was approximately US$8.2 billion (July
31, 2020 – US$8.2 billion; April
30, 2020 – US$6.0 billion).
Other Programs
The Bank has been working with federal Crown Corporations,
including EDC and the Business Development Bank of Canada (BDC), as well as provincial and state
governments and central banks to deliver other guarantee and
co-lending programs for the Bank's clients. In Canada, these programs include the EDC
Business Credit Availability Program (BCAP) for small– and
medium–sized enterprises, which offers eligible businesses with
credit partially guaranteed by EDC, the BDC Co-Lending Program,
which provides loans to small- and medium-sized businesses, and the
Investissement Québec (IQ) Programme d'action concertée temporaire
pour les entreprises (PACTE), which offers eligible businesses in
Quebec with credit partially
guaranteed by IQ. For programs provided specifically to eligible
mid-market businesses, these include the EDC BCAP Large Loan
Program and BDC Junior Financing Program. In addition, TD is
working with Canada's federal
government to facilitate access to the Canada Emergency Response Benefit (CERB) and
Canada Emergency Wage Subsidy
(CEWS) through Canada Revenue Agency direct deposit. In the U.S.,
the Bank is working with the Federal Reserve Bank of Boston to facilitate the Main Street Lending
Program for small- and medium-sized businesses.
Maintaining the Bank's Financial and Operational
Resilience
Early in its second quarter, the Bank invoked its
crisis management protocols as the virus took root in the various
jurisdictions in which TD operates. Business continuity management
plans were activated, and an executive crisis management team was
appointed to lead the response effort. The Bank rapidly implemented
split-site and work from home arrangements and managed a surge in
online and mobile traffic, including double-digit increases in
Canadian and U.S. mobile banking downloads and digital usage, and
up to a three-fold increase in direct investing trading volumes at
the peak of market volatility. The Bank also facilitated the rapid
activation and support of government relief programs and worked
with its third-party suppliers to maintain critical functions and
services throughout the disruption. TD's operations, including the
Bank's technology infrastructure, network capacity, enterprise
cloud capabilities and remote access systems, have remained stable
in the months since, providing ongoing support for work from home
arrangements and a continued high level of online and mobile
customer traffic.
The Bank has been monitoring credit risk as it continues to
support its customers' borrowing needs, incorporating both the
economic outlook, as well as the impact of government relief
programs and regulatory measures. While the outlook remains
uncertain, the Bank considers its coverage levels appropriate
following substantial additions to the allowance for performing
loans in the second and third quarters.
Market risk continued to be well managed in the fourth quarter
against a backdrop of reduced volatility, and the Bank's capital,
liquidity and funding positions remained strong.
The Bank continues to evaluate its preparedness for a more
sustained period of stress, refine its downturn readiness
procedures and develop its medium- and long-term plans, including
for various 'return to the workplace' scenarios.
Response from Regulators and Central Banks
Beginning
in the Bank's fiscal second quarter, in response to the challenges
created by COVID-19 and then current market conditions, OSFI and
the Bank of Canada took a number
of actions designed to build resilience of federally regulated
financial institutions and improve the stability of the Canadian
financial system and economy. For additional information on OSFI's
capital measures, refer to the "OSFI's Capital Requirements under
Basel III" and "Future Regulatory Capital Developments" sections of
the "Capital Position" section of the 2020 MD&A. For additional
information on OSFI's liquidity measures, refer to the "Regulatory
Developments Concerning Liquidity and Funding" section of the
"Managing Risk" section of the 2020 MD&A.
As of the fourth quarter, governments, regulators and central
banks globally continued to keep policy settings at accommodative
levels. In Canada, this included
maintaining adjustments to regulatory requirements to build
resilience of federally regulated financial institutions and
improve the stability of the Canadian financial system and economy,
and continuing to make available asset purchase and lending
programs to support market liquidity.
Impact on Current Quarter Financial Performance
With
the improvement in economic and business conditions this quarter,
provisions for credit losses (PCL) decreased sequentially and
non-interest income in the retail banking businesses stabilized on
a recovery in customer spending and payment activity. The Bank
continued to experience further margin pressure from the low
interest rate environment. Deposit volumes continued to grow,
partly reflecting the impact of government financial assistance
programs, and capital markets and wealth direct investing revenues
remained strong, reflecting high levels of client and market
activity.
Impact on Financial Performance in Future Quarters
TD
expects the Canadian and U.S. economies to continue their gradual
recovery in 2021, but the outlook remains uncertain. There is
promising news about potential vaccines, but much is still unknown
about their efficacy, availability, distribution and public
acceptance. Phased re-openings of the economy and targeted use
of lockdowns have led to an encouraging uptick in activity as
compared to the second and third quarters, but a second wave of
infections is forcing many jurisdictions to impose renewed
restrictions, and the government programs that have supported
households and businesses through the slowdown may be difficult to
sustain.
Overall, TD expects the recovery in earnings to be uneven.
Fiscal 2021 earnings should be supported by lower PCL, reflecting
the ongoing impact of bank and government relief and this year's
allowance build, as well as improving customer activity and
continued expense discipline. At the same time, TD expects further
deposit margin compression given the low interest rate environment;
some volumes may moderate from this year's levels, which were
boosted by government stimulus, credit line draws and a high
customer preference for liquidity; and capital markets activity may
ease from this year's record pace. With its strong capital and
liquidity levels, substantial loan loss reserves, and diversified
and customer-focused franchise, TD considers the Bank to be
well-positioned to manage both upside and downside risks and to
execute on its growth opportunities.
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 twelve
months ended
|
|
|
|
October
31
|
July
31
|
October
31
|
October
31
|
October
31
|
|
|
|
2020
|
2020
|
2019
|
2020
|
2019
|
|
Net interest
income
|
$
|
6,367
|
$
|
6,483
|
$
|
6,175
|
$
|
25,611
|
$
|
23,931
|
|
Non-interest
income
|
|
5,477
|
|
4,182
|
|
4,165
|
|
18,035
|
|
17,134
|
|
Total
revenue
|
|
11,844
|
|
10,665
|
|
10,340
|
|
43,646
|
|
41,065
|
|
Provision for credit
losses
|
|
917
|
|
2,188
|
|
891
|
|
7,242
|
|
3,029
|
|
Insurance claims and
related expenses
|
|
630
|
|
805
|
|
705
|
|
2,886
|
|
2,787
|
|
Non-interest
expenses
|
|
5,709
|
|
5,307
|
|
5,543
|
|
21,604
|
|
22,020
|
|
Income before
income taxes and equity in net income of an
|
|
|
|
|
|
|
|
|
|
|
|
|
investment in TD
Ameritrade
|
|
4,588
|
|
2,365
|
|
3,201
|
|
11,914
|
|
13,229
|
|
Provision for income
taxes
|
|
(202)
|
|
445
|
|
646
|
|
1,152
|
|
2,735
|
|
Equity in net income
of an investment in TD Ameritrade
|
|
353
|
|
328
|
|
301
|
|
1,133
|
|
1,192
|
|
Net income –
reported
|
|
5,143
|
|
2,248
|
|
2,856
|
|
11,895
|
|
11,686
|
|
Preferred
dividends
|
|
64
|
|
68
|
|
68
|
|
267
|
|
252
|
|
Net income
available to common shareholders and
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling
interests in subsidiaries
|
$
|
5,079
|
$
|
2,180
|
$
|
2,788
|
$
|
11,628
|
$
|
11,434
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
|
|
Common
shareholders
|
$
|
5,079
|
$
|
2,180
|
$
|
2,788
|
$
|
11,628
|
$
|
11,416
|
|
Non-controlling
interests
|
|
–
|
|
–
|
|
–
|
|
–
|
|
18
|
|
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 twelve
months ended
|
|
|
|
October
31
|
July
31
|
October
31
|
October
31
|
October
31
|
|
|
2020
|
2020
|
2019
|
2020
|
2019
|
|
Operating results
– adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
6,367
|
$
|
6,483
|
$
|
6,175
|
$
|
25,611
|
$
|
23,931
|
|
Non-interest
income
|
|
4,056
|
|
4,182
|
|
4,165
|
|
16,614
|
|
17,134
|
|
Total
revenue
|
|
10,423
|
|
10,665
|
|
10,340
|
|
42,225
|
|
41,065
|
|
Provision for credit
losses
|
|
917
|
|
2,188
|
|
891
|
|
7,242
|
|
3,029
|
|
Insurance claims and
related expenses
|
|
630
|
|
805
|
|
705
|
|
2,886
|
|
2,787
|
|
Non-interest
expenses1
|
|
5,646
|
|
5,244
|
|
5,463
|
|
21,338
|
|
21,085
|
|
Income before
income taxes and equity in net income of an
|
|
|
|
|
|
|
|
|
|
|
|
|
investment in TD
Ameritrade
|
|
3,230
|
|
2,428
|
|
3,281
|
|
10,759
|
|
14,164
|
|
Provision for income
taxes
|
|
636
|
|
454
|
|
660
|
|
2,020
|
|
2,949
|
|
Equity in net income
of an investment in TD Ameritrade2
|
|
376
|
|
353
|
|
325
|
|
1,229
|
|
1,288
|
|
Net income –
adjusted
|
|
2,970
|
|
2,327
|
|
2,946
|
|
9,968
|
|
12,503
|
|
Preferred
dividends
|
|
64
|
|
68
|
|
68
|
|
267
|
|
252
|
|
Net income
available to common shareholders and
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling
interests in subsidiaries – adjusted
|
|
2,906
|
|
2,259
|
|
2,878
|
|
9,701
|
|
12,251
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests in subsidiaries, net of income taxes
|
|
–
|
|
–
|
|
–
|
|
–
|
|
18
|
|
Net income
available to common shareholders – adjusted
|
|
2,906
|
|
2,259
|
|
2,878
|
|
9,701
|
|
12,233
|
|
Pre-tax
adjustments for items of note
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles3
|
|
(61)
|
|
(63)
|
|
(74)
|
|
(262)
|
|
(307)
|
|
Net gain on sale of
the investment in TD Ameritrade4
|
|
1,421
|
|
–
|
|
–
|
|
1,421
|
|
–
|
|
Charges related to
the long-term loyalty agreement with Air
Canada5
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(607)
|
|
Charges associated
with the acquisition of Greystone6
|
|
(25)
|
|
(25)
|
|
(30)
|
|
(100)
|
|
(117)
|
|
Less: Impact of
income taxes
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles3
|
|
(8)
|
|
(9)
|
|
(12)
|
|
(37)
|
|
(48)
|
|
Net gain on sale of
the investment in TD Ameritrade4
|
|
(829)
|
|
–
|
|
–
|
|
(829)
|
|
–
|
|
Charges related to
the long-term loyalty agreement with Air
Canada5
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(161)
|
|
Charges associated
with the acquisition of Greystone6
|
|
(1)
|
|
–
|
|
(2)
|
|
(2)
|
|
(5)
|
|
Total adjustments
for items of note
|
|
2,173
|
|
(79)
|
|
(90)
|
|
1,927
|
|
(817)
|
|
Net income
available to common shareholders – reported
|
$
|
5,079
|
$
|
2,180
|
$
|
2,788
|
$
|
11,628
|
$
|
11,416
|
|
1
|
Adjusted non-interest
expenses excludes the following items of note: Net gain on sale of
the investment in TD Ameritrade, as explained in footnote 4 –
fourth quarter 2020 – $1,421 million. Amortization of
intangibles, as explained in footnote 3 – fourth quarter 2020 –
$38 million, third quarter 2020 – $38 million, second
quarter 2020 – $44 million, first quarter 2020 –
$46 million, fourth quarter 2019 – $50 million, third
quarter 2019 – $50 million, second quarter 2019 –
$55 million, first quarter 2019 – $56 million, reported
in the Corporate segment. Charges related to the long-term loyalty
agreement with Air Canada, as explained in footnote 5 – first
quarter 2019 – $607 million; this amount was reported in the
Canadian Retail segment. Charges associated with the acquisition of
Greystone, as explained in footnote 6 – fourth quarter 2020 –
$25 million, third quarter 2020 – $25 million, second
quarter 2020 – $26 million, first quarter 2020 –
$24 million, fourth quarter 2019 – $30 million,
third quarter 2019 – $26 million, second quarter 2019 –
$30 million, first quarter 2019 – $31 million; this
amount was reported in the Canadian Retail segment.
|
2
|
Adjusted equity in
net income of an investment in TD Ameritrade excludes the following
items of note: Amortization of intangibles, as explained in
footnote 3 – fourth quarter 2020 –
$23 million, third quarter 2020 –
$25 million, second quarter 2020 – $24 million,
first quarter 2020 – $24 million, fourth quarter 2019 –
$24 million, third quarter 2019 – $25 million, second
quarter 2019 – $23 million, first quarter 2019 –
$24 million. The earnings impact of this item was reported in
the Corporate segment.
|
3
|
Amortization of
intangibles relates to intangibles acquired as a result of asset
acquisitions and business combinations, including the after tax
amounts for amortization of intangibles relating to the Equity in
net income of the investment in TD Ameritrade. Although the
amortization of software and asset servicing rights are recorded in
amortization of intangibles, they are not included for purposes of
the items of note.
|
4
|
On October 6, 2020,
the Bank acquired an approximately 13.5% stake in Schwab following
completion of the Schwab transaction. As a result, the Bank
recognized a net gain on sale of its investment in TD Ameritrade
primarily related to a revaluation gain, the release of cumulative
foreign currency translation gains offset by the release of
designated hedging items and related taxes, and the release of a
deferred tax liability related to the Bank's investment in TD
Ameritrade, net of direct transaction costs. These amounts were
reported in the Corporate segment.
|
5
|
On January 10,
2019, the Bank's long-term loyalty program agreement with Air
Canada became effective in conjunction with Air Canada completing
its acquisition of Aimia Canada Inc., which operates the Aeroplan
loyalty business (the "Transaction"). In connection with the
Transaction, the Bank recognized an expense of $607 million
($446 million after-tax) in the Canadian Retail
segment.
|
6
|
On November 1,
2018, the Bank acquired Greystone Capital Management Inc., the
parent company of Greystone Managed Investments Inc. ("Greystone").
The Bank incurred acquisition-related charges including
compensation to employee shareholders issued in common shares in
respect of the purchase price, direct transaction costs, and
certain other acquisition-related costs. These amounts have been
recorded as an adjustment to net income and were reported in the
Canadian Retail segment.
|
|
TABLE 4:
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE
(EPS)1
|
(Canadian
dollars)
|
|
For the three
months ended
|
For the twelve
months ended
|
|
|
October
31
|
July
31
|
October
31
|
October
31
|
October
31
|
|
|
2020
|
2020
|
2019
|
2020
|
2019
|
|
Basic earnings per
share – reported
|
$
|
2.80
|
$
|
1.21
|
$
|
1.54
|
$
|
6.43
|
$
|
6.26
|
|
Adjustments for items
of note2
|
|
(1.20)
|
|
0.04
|
|
0.05
|
|
(1.06)
|
|
0.45
|
|
Basic earnings per
share – adjusted
|
$
|
1.60
|
$
|
1.25
|
$
|
1.59
|
$
|
5.37
|
$
|
6.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share – reported
|
$
|
2.80
|
$
|
1.21
|
$
|
1.54
|
$
|
6.43
|
$
|
6.25
|
|
Adjustments for items
of note2
|
|
(1.20)
|
|
0.04
|
|
0.05
|
|
(1.07)
|
|
0.44
|
|
Diluted earnings
per share – adjusted
|
$
|
1.60
|
$
|
1.25
|
$
|
1.59
|
$
|
5.36
|
$
|
6.69
|
|
1
|
EPS is computed by
dividing net income available to common shareholders by the
weighted-average number of shares outstanding during the
period.
|
2
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
|
TABLE 5: NON-GAAP
FINANCIAL MEASURES – Reconciliation of Reported to Adjusted
Provision for Income Taxes
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
|
For the twelve
months ended
|
|
|
|
October
31
|
|
July
31
|
|
October
31
|
|
October
31
|
|
October
31
|
|
|
|
2020
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Provision for
income taxes – reported
|
$
|
(202)
|
|
$
|
445
|
|
$
|
646
|
|
$
|
1,152
|
|
$
|
2,735
|
|
Total adjustments
for items of note1
|
|
838
|
|
|
9
|
|
|
14
|
|
|
868
|
|
|
214
|
|
Provision for
income taxes – adjusted
|
$
|
636
|
|
$
|
454
|
|
$
|
660
|
|
$
|
2,020
|
|
$
|
2,949
|
|
Effective income
tax rate – reported
|
|
(4.4)
|
%
|
|
18.8
|
%
|
|
20.2
|
%
|
|
9.7
|
%
|
|
20.7
|
%
|
Effective income
tax rate – adjusted2,3
|
|
19.7
|
|
|
18.7
|
|
|
20.1
|
|
|
18.8
|
|
|
20.8
|
|
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
|
The tax effect for
each item of note is calculated using the statutory income tax rate
of the applicable legal entity.
|
3
|
Adjusted effective
income tax rate is the adjusted provision for income taxes before
other taxes as a percentage of adjusted net income before
taxes.
|
RETURN ON COMMON EQUITY
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 decreased to 9% CET1 Capital
effective the second quarter of 2020 compared with 10.5% in the
first quarter of 2020, and 10% in fiscal 2019.
Adjusted return on common equity (ROE) is adjusted net income
available to common shareholders as a percentage of average common
equity.
Adjusted ROE is a non-GAAP financial measure and is not a
defined term under IFRS. Readers are cautioned that earnings and
other measures adjusted to a basis other than IFRS do not have
standardized meanings under IFRS and, therefore, may not be
comparable to similar terms used by other issuers.
|
TABLE 6: RETURN ON
COMMON EQUITY
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
|
For the twelve
months ended
|
|
|
|
October
31
|
|
July
31
|
|
October
31
|
|
October
31
|
|
October
31
|
|
|
|
2020
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Average common
equity
|
$
|
86,883
|
|
$
|
86,794
|
|
$
|
81,286
|
|
$
|
85,203
|
|
$
|
78,638
|
|
Net income
available to common shareholders – reported
|
|
5,079
|
|
|
2,180
|
|
|
2,788
|
|
|
11,628
|
|
|
11,416
|
|
Items of note, net of
income taxes1
|
|
(2,173)
|
|
|
79
|
|
|
90
|
|
|
(1,927)
|
|
|
817
|
|
Net income
available to common shareholders – adjusted
|
$
|
2,906
|
|
$
|
2,259
|
|
$
|
2,878
|
|
$
|
9,701
|
|
$
|
12,233
|
|
Return on common
equity – reported
|
|
23.3
|
%
|
|
10.0
|
%
|
|
13.6
|
%
|
|
13.6
|
%
|
|
14.5
|
%
|
Return on common
equity – adjusted
|
|
13.3
|
|
|
10.4
|
|
|
14.0
|
|
|
11.4
|
|
|
15.6
|
|
1
|
For explanations of
items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
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. Return on tangible common
equity (ROTCE) is calculated as reported net income available to
common shareholders after adjusting for the after–tax amortization
of acquired intangibles, which are treated as an item of note, as a
percentage of average TCE. Adjusted ROTCE is calculated using
reported net income available to common shareholders, adjusted for
items of note, as a percentage of average TCE. Adjusted ROTCE
provides a useful measure of the performance of the Bank's income
producing assets, independent of whether or not they were acquired
or developed internally. TCE, ROTCE, and adjusted ROTCE are each
non-GAAP financial measures and are not defined terms under IFRS.
Readers are cautioned that earnings and other measures adjusted to
a basis other than IFRS do not have standardized meanings under
IFRS and, therefore, may not be comparable to similar terms used by
other issuers.
|
TABLE 7: RETURN ON
TANGIBLE COMMON EQUITY
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
|
For the twelve
months ended
|
|
|
|
October
31
|
|
July
31
|
|
October
31
|
|
October
31
|
|
October
31
|
|
|
|
2020
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Average common
equity
|
$
|
86,883
|
|
$
|
86,794
|
|
$
|
81,286
|
|
$
|
85,203
|
|
$
|
78,638
|
|
Average
goodwill
|
|
17,087
|
|
|
17,534
|
|
|
17,046
|
|
|
17,261
|
|
|
17,070
|
|
Average imputed
goodwill and intangibles on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investments in
Schwab and TD Ameritrade
|
|
4,826
|
|
|
4,184
|
|
|
4,119
|
|
|
4,369
|
|
|
4,146
|
|
Average other
acquired intangibles1
|
|
449
|
|
|
492
|
|
|
613
|
|
|
509
|
|
|
662
|
|
Average related
deferred tax liabilities
|
|
(237)
|
|
|
(264)
|
|
|
(267)
|
|
|
(255)
|
|
|
(260)
|
|
Average tangible
common equity
|
|
64,758
|
|
|
64,848
|
|
|
59,775
|
|
|
63,319
|
|
|
57,020
|
|
Net income
available to common shareholders – reported
|
|
5,079
|
|
|
2,180
|
|
|
2,788
|
|
|
11,628
|
|
|
11,416
|
|
Amortization of
acquired intangibles, net of income taxes2
|
|
53
|
|
|
54
|
|
|
62
|
|
|
225
|
|
|
259
|
|
Net income
available to common shareholders after
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjusting for
after-tax amortization of acquired intangibles
|
|
5,132
|
|
|
2,234
|
|
|
2,850
|
|
|
11,853
|
|
|
11,675
|
|
Other items of note,
net of income taxes2
|
|
(2,226)
|
|
|
25
|
|
|
28
|
|
|
(2,152)
|
|
|
558
|
|
Net income
available to common shareholders – adjusted
|
$
|
2,906
|
|
$
|
2,259
|
|
$
|
2,878
|
|
$
|
9,701
|
|
$
|
12,233
|
|
Return on tangible
common equity
|
|
31.5
|
%
|
|
13.7
|
%
|
|
18.9
|
%
|
|
18.7
|
%
|
|
20.5
|
%
|
Return on tangible
common equity – adjusted
|
|
17.9
|
|
|
13.9
|
|
|
19.1
|
|
|
15.3
|
|
|
21.5
|
|
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.
|
Impact of Foreign Exchange Rate on U.S. Retail Segment
Translated Earnings
The following table reflects the
estimated impact of foreign currency translation on key U.S. Retail
segment income statement items.
|
TABLE 8: IMPACT OF
FOREIGN EXCHANGE RATE ON U.S. RETAIL SEGMENT TRANSLATED
EARNINGS
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
For the twelve
months ended
|
|
October 31, 2020
vs.
|
October 31, 2020
vs.
|
|
October 31,
2019
|
October 31,
2019
|
|
Increase
(Decrease)
|
Increase
(Decrease)
|
U.S. Retail
Bank
|
|
|
|
|
Total
revenue
|
$
|
(3)
|
$
|
138
|
Non-interest
expenses
|
|
(2)
|
|
83
|
Net income
|
|
(1)
|
|
3
|
Equity in net income
of an investment in TD Ameritrade1
|
|
3
|
|
15
|
U.S. Retail
segment net income – after tax
|
|
2
|
|
18
|
Earnings per
share (Canadian dollars)
|
|
|
|
|
Basic
|
$
|
–
|
$
|
0.01
|
Diluted
|
|
–
|
|
0.01
|
1
Equity in net income of an investment in TD Ameritrade and the
foreign exchange impact are reported with a one-month
lag.
|
|
Average foreign
exchange rate (equivalent of CAD $1.00)
|
For the three
months ended
|
For the twelve
months ended
|
|
October
31
|
October
31
|
October
31
|
October
31
|
|
2020
|
2019
|
2020
|
2019
|
U.S.
dollar
|
0.756
|
0.756
|
0.743
|
0.753
|
|
|
|
|
|
SIGNIFICANT EVENTS
Acquisition of TD Ameritrade Holding Corporation by The
Charles Schwab Corporation
On October
6, 2020, Schwab completed its acquisition of TD Ameritrade,
of which the Bank was a major shareholder. Under the terms of the
Schwab transaction, all TD Ameritrade shareholders, including the
Bank, exchanged each TD Ameritrade share they owned for 1.0837
common shares of Schwab. At closing, in exchange for the Bank's
approximately 43% ownership in TD Ameritrade, the Bank received an
approximately 13.5% stake in Schwab, consisting of 9.9% voting
common shares and the remainder in non-voting common shares,
convertible into voting common shares upon transfer to a third
party. The transaction resulted in a net gain on sale of the Bank's
investment in TD Ameritrade of $2.3
billion after-tax in the fourth quarter of 2020. The
transaction had an approximately neutral impact on CET1 at
closing.
The Bank and Schwab are party to a stockholder agreement (the
"Stockholder Agreement"), which became effective upon closing of
the Schwab transaction. Under the Stockholder Agreement: (i)
subject to meeting certain conditions, the Bank has two seats on
Schwab's Board of Directors, (ii) the Bank is not permitted to own
more than 9.9% voting common shares of Schwab, and (iii) the Bank
is subject to customary standstill and lockup restrictions,
including, subject to certain exceptions, transfer restrictions. In
addition, the Bank and Schwab entered into the Schwab IDA
Agreement, which became effective upon closing and has an initial
expiration date of July 1, 2031.
Starting on July 1, 2021, deposits
under the Schwab IDA Agreement, which were $195 billion (US$146
billion) as at October 31, 2020, can be reduced at
Schwab's option by up to US$10
billion a year (subject to certain adjustments based on the
change in the balance of the sweep deposits between closing and
July 1, 2021), with a floor of
US$50 billion. The servicing fee
under the Schwab IDA Agreement is set at 15 bps per annum on the
aggregate average daily balance in the sweep accounts.
The Bank reports its investment in Schwab using the equity
method of accounting. The Bank's share of Schwab's earnings
available to common shareholders is reported with a one-month lag,
and the Bank will begin recording its share of Schwab's earnings on
this basis in the first quarter of fiscal 2021.
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank reports its results
under three key business segments: Canadian Retail, which includes
the results of the Canadian personal and commercial banking,
wealth, and insurance businesses; U.S. Retail, which includes the
results of the U.S. personal and business banking operations,
wealth management services, and the Bank's investment in TD
Ameritrade (Schwab as of October 6,
2020); and Wholesale Banking. The Bank's other activities
are grouped into the Corporate segment.
Results of each business segment reflect revenue, expenses,
assets, and liabilities generated by the businesses in that
segment. Where applicable, the Bank measures and evaluates the
performance of each segment based on adjusted results and ROE, and
for those segments the Bank indicates that the measure is adjusted.
For further details, refer to the "How the Bank Reports" section of
this document, the "Business Focus" section in the 2020 MD&A,
and Note 29 of the Bank's Consolidated Financial
Statements for the year ended October 31, 2020. For
information concerning the Bank's measure of adjusted return on
average common equity, which is a non-GAAP financial measure, refer
to the "How We Performed" section of this document.
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 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 $44 million, compared with $36 million in the
fourth quarter last year, and $47 million in the prior
quarter.
|
TABLE 9: CANADIAN
RETAIL
|
(millions of Canadian
dollars, except as noted)
|
|
|
For the three
months ended
|
|
|
October
31
|
|
July
31
|
|
October
31
|
|
|
2020
|
|
2020
|
|
2019
|
|
Net interest
income
|
$
|
2,982
|
|
$
|
2,910
|
|
$
|
3,173
|
|
Non-interest
income
|
|
3,047
|
|
|
3,116
|
|
|
2,960
|
|
Total
revenue
|
|
6,029
|
|
|
6,026
|
|
|
6,133
|
|
Provision for credit
losses – impaired
|
|
199
|
|
|
372
|
|
|
324
|
|
Provision for credit
losses – performing
|
|
52
|
|
|
579
|
|
|
76
|
|
Total provision for
credit losses
|
|
251
|
|
|
951
|
|
|
400
|
|
Insurance claims and
related expenses
|
|
630
|
|
|
805
|
|
|
705
|
|
Non-interest expenses
– reported
|
|
2,684
|
|
|
2,533
|
|
|
2,637
|
|
Non-interest expenses
– adjusted1
|
|
2,659
|
|
|
2,508
|
|
|
2,607
|
|
Provision for
(recovery of) income taxes – reported
|
|
662
|
|
|
474
|
|
|
646
|
|
Provision for
(recovery of) income taxes – adjusted1
|
|
663
|
|
|
474
|
|
|
648
|
|
Net income –
reported
|
|
1,802
|
|
|
1,263
|
|
|
1,745
|
|
Net income –
adjusted1
|
$
|
1,826
|
|
$
|
1,288
|
|
$
|
1,773
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
Return on common
equity – reported2
|
|
40.5
|
%
|
|
28.3
|
%
|
|
37.9
|
%
|
Return on common
equity – adjusted1,2
|
|
41.0
|
|
|
28.8
|
|
|
38.5
|
|
Net interest margin
(including on securitized assets)
|
|
2.71
|
|
|
2.68
|
|
|
2.96
|
|
Efficiency ratio –
reported
|
|
44.5
|
|
|
42.0
|
|
|
43.0
|
|
Efficiency ratio –
adjusted1
|
|
44.1
|
|
|
41.6
|
|
|
42.5
|
|
Assets under
administration (billions of Canadian dollars)
|
$
|
433
|
|
$
|
434
|
|
$
|
422
|
|
Assets under
management (billions of Canadian dollars)
|
|
358
|
|
|
366
|
|
|
353
|
|
Number of Canadian
retail branches
|
|
1,085
|
|
|
1,087
|
|
|
1,091
|
|
Average number of
full-time equivalent staff
|
|
40,725
|
|
|
40,652
|
|
|
41,650
|
|
1
|
Adjusted non-interest
expenses exclude the following items of note: Charges associated
with the acquisition of Greystone in the fourth quarter 2020 –
$25 million ($24 million after tax), third quarter 2020 –
$25 million ($25 million after tax), fourth quarter 2019
– $30 million ($28 million after tax). For explanations
of items of note, refer to the "Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income" table in the
"How We Performed" section of this document.
|
2
|
Capital allocated to
the business segment was reduced to 9% CET1 effective the second
quarter of 2020 compared with 10.5% in the first quarter of 2020,
and 10% in fiscal 2019.
|
Quarterly comparison – Q4 2020 vs. Q4 2019
Canadian Retail reported net income for the quarter was
$1,802 million, an increase of
$57 million, or 3%, compared with the fourth quarter last
year. The increase in earnings reflects lower PCL and lower
insurance claims, partially offset by lower revenue and higher
non-interest expenses. On an adjusted basis, net income for the
quarter was $1,826 million, an
increase of $53 million, or 3%. The reported and adjusted
annualized ROE for the quarter was 40.5% and 41.0%, respectively,
compared with 37.9% and 38.5%, respectively, in the fourth quarter
last year.
Canadian Retail revenue is derived from the Canadian personal
and commercial banking, wealth, and insurance businesses. Revenue
for the quarter was $6,029 million, a decrease of
$104 million, or 2%, compared with the fourth quarter last
year.
Net interest income was $2,982
million, a decrease of $191 million, or 6%, reflecting
lower deposit margins, partially offset by deposit and loan volume
growth. Average loan volumes increased $13 billion, or 3%,
reflecting 3% growth in personal loans and 4% growth in business
loans. Average deposit volumes increased $68 billion, or 20%,
reflecting 15% growth in personal deposits, 23% growth in business
deposits, and 42% growth in wealth deposits. Net interest margin
was 2.71%, a decrease of 25 bps, reflecting lower interest
rates.
Non-interest income was $3,047
million, an increase of $87 million, or 3%, reflecting
higher transaction and fee-based revenue in the wealth business,
and higher insurance revenue, partially offset by lower fees in the
banking businesses.
Assets under administration (AUA) were $433 billion as at
October 31, 2020, an increase of $11 billion, or 3%,
compared with the fourth quarter last year, reflecting new asset
growth. Assets under management (AUM) were $358 billion as at
October 31, 2020, an increase of $5 billion, or 1%,
compared with the fourth quarter last year, reflecting market
appreciation.
PCL for the quarter was $251 million, a decrease of
$149 million, or 37%, compared with the fourth quarter last
year. PCL – impaired was $199 million, a decrease of
$125 million, or 39%, primarily reflected in the consumer
lending portfolios, largely reflecting the ongoing impact of bank
and government assistance programs. PCL – performing was
$52 million, a decrease of $24 million, reflecting a
smaller increase to the performing allowance for credit losses this
quarter. Performing provisions in the current quarter were largely
recorded in the commercial lending portfolios. Total PCL as an
annualized percentage of credit volume was 0.22%, or a decrease of
15 bps.
Insurance claims and related expenses for the quarter were
$630 million, a decrease of
$75 million, or 11%, compared with
the fourth quarter last year. The decrease reflects lower current
accident year claims, no severe weather-related events and
favourable prior years' claims development, partially offset by an
increase in certain current year claims reserves, as well as an
increase in the fair value of investments supporting claims
liabilities which resulted in a similar increase to non-interest
income.
Reported non-interest expenses for the quarter were $2,684 million, an increase of
$47 million, or 2%, compared with the fourth quarter last
year, reflecting higher spend supporting business growth including
technology, volume-driven expenses, and marketing, partially offset
by a reduction in project and other discretionary spend. On an
adjusted basis, non-interest expenses were $2,659 million, an increase of
$52 million, or 2%.
The reported and adjusted efficiency ratio for the quarter was
44.5% and 44.1%, respectively, compared with 43.0% and 42.5%,
respectively, in the fourth quarter last year.
Quarterly comparison – Q4 2020 vs. Q3 2020
Canadian Retail reported net income for the quarter increased
$539 million, or 43%, compared with the prior quarter. The
increase in earnings reflects lower PCL and lower insurance claims,
partially offset by higher non-interest expenses. On an adjusted
basis, net income increased $538 million, or 42%. The reported
and adjusted annualized ROE for the quarter was 40.5% and 41.0%,
respectively, compared with 28.3% and 28.8%, respectively, in the
prior quarter.
Revenue increased $3 million compared with the prior
quarter. Net interest income increased $72 million, or 2%,
primarily reflecting volume growth. Average loan volumes increased
$6 billion, or 1%, reflecting 2% growth in personal loans and
1% decrease in business loans. Average deposit volumes increased
$16 billion, or 4%. Net interest margin was 2.71%, an increase
of 3 bps, reflecting improving loan margins.
Non-interest income decreased $69 million, or 2%,
reflecting a $97 million decrease in
the fair value of investments supporting claims liabilities which
resulted in a similar decrease to insurance claims, partially
offset by a recovery in customer activity, including retail sales
and higher fee-based income in our banking business.
AUA decreased $1 billion compared
with the prior quarter reflecting a decrease in market value. AUM
decreased $8 billion, or 2%, reflecting a decrease in net
assets.
PCL for the quarter decreased $700 million, or 74%,
compared with the prior quarter. PCL – impaired decreased by
$173 million, or 47%, reflected in the consumer lending
portfolios, largely reflecting the ongoing impact of bank and
government assistance programs. PCL – performing decreased by
$527 million, reflecting a smaller increase to the performing
allowance for credit losses this quarter in the consumer and
commercial lending portfolios. Total PCL as an annualized
percentage of credit volume was 0.22%, a decrease of 64 bps.
Insurance claims and related expenses for the quarter decreased
$175 million, or 22%, compared with the prior quarter,
reflecting favourable prior years' claims development, no severe
weather-related events and changes in the fair value of investments
supporting claims liabilities which resulted in a similar decrease
to non-interest income, partially offset by higher current year
claims and an increase in certain current year claims reserves.
Reported non-interest expenses increased $151 million, or
6%, compared with the prior quarter, reflecting higher spend
supporting business growth and higher marketing costs. On an
adjusted basis, non-interest expenses increased $151 million,
or 6%.
The reported and adjusted efficiency ratio for the quarter was
44.5% and 44.1%, respectively, compared with 42.0% and 41.6%,
respectively, in the prior quarter.
|
TABLE 10: U.S.
RETAIL
|
(millions of dollars,
except as noted)
|
|
|
|
|
For the three
months ended
|
|
|
October
31
|
|
July
31
|
|
October
31
|
|
Canadian
Dollars
|
|
2020
|
|
|
2020
|
|
|
2019
|
|
Net interest
income
|
$
|
2,071
|
|
$
|
2,256
|
|
$
|
2,232
|
|
Non-interest
income
|
|
646
|
|
|
595
|
|
|
717
|
|
Total revenue –
reported
|
|
2,717
|
|
|
2,851
|
|
|
2,949
|
|
Provision for credit
losses – impaired
|
|
147
|
|
|
290
|
|
|
268
|
|
Provision for credit
losses – performing
|
|
425
|
|
|
607
|
|
|
27
|
|
Total provision for
credit losses
|
|
572
|
|
|
897
|
|
|
295
|
|
Non-interest
expenses
|
|
1,660
|
|
|
1,646
|
|
|
1,669
|
|
Provision for
(recovery of) income taxes
|
|
(47)
|
|
|
(48)
|
|
|
85
|
|
U.S. Retail Bank
net income
|
|
532
|
|
|
356
|
|
|
900
|
|
Equity in net income
of an investment in TD Ameritrade1,2
|
|
339
|
|
|
317
|
|
|
291
|
|
Net
income
|
$
|
871
|
|
$
|
673
|
|
$
|
1,191
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
1,566
|
|
$
|
1,648
|
|
$
|
1,687
|
|
Non-interest
income
|
|
488
|
|
|
437
|
|
|
543
|
|
Total revenue –
reported
|
|
2,054
|
|
|
2,085
|
|
|
2,230
|
|
Provision for credit
losses – impaired
|
|
111
|
|
|
211
|
|
|
203
|
|
Provision for credit
losses – performing
|
|
322
|
|
|
444
|
|
|
20
|
|
Total provision for
credit losses
|
|
433
|
|
|
655
|
|
|
223
|
|
Non-interest
expenses
|
|
1,254
|
|
|
1,205
|
|
|
1,261
|
|
Provision for
(recovery of) income taxes
|
|
(36)
|
|
|
(35)
|
|
|
65
|
|
U.S. Retail Bank
net income
|
|
403
|
|
|
260
|
|
|
681
|
|
Equity in net income
of an investment in TD Ameritrade1,2
|
|
255
|
|
|
230
|
|
|
219
|
|
Net
income
|
$
|
658
|
|
$
|
490
|
|
$
|
900
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
Return on common
equity3
|
|
9.0
|
%
|
|
6.7
|
%
|
|
11.8
|
%
|
Net interest
margin4
|
|
2.27
|
|
|
2.50
|
|
|
3.18
|
|
Efficiency
ratio
|
|
61.1
|
|
|
57.8
|
|
|
56.5
|
|
Assets under
administration (billions of U.S. dollars)
|
$
|
24
|
|
$
|
23
|
|
$
|
21
|
|
Assets under
management (billions of U.S. dollars)
|
|
39
|
|
|
40
|
|
|
44
|
|
Number of U.S. retail
stores
|
|
1,223
|
|
|
1,220
|
|
|
1,241
|
|
Average number of
full-time equivalent staff
|
|
26,460
|
|
|
26,408
|
|
|
26,513
|
|
1
|
The Bank's share of
TD Ameritrade's earnings is reported with a one-month lag. The same
convention is being followed for Schwab, and the Bank will begin
recording its share of Schwab's earnings in the first quarter of
fiscal 2021. Refer to "Significant Events" in the "How We
Performed" section of this document.
|
2
|
The after-tax amounts
for amortization of intangibles relating to the Equity in net
income of the investment in TD Ameritrade is recorded in the
Corporate segment with other acquired intangibles.
|
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,
and 10% in fiscal 2019.
|
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 – Q4 2020 vs. Q4 2019
U.S. Retail net income for the quarter was $871 million (US$658
million), a decrease of $320
million (US$242 million), or
27% (27% in U.S. dollars), compared with the fourth quarter last
year. The reported and adjusted annualized ROE for the quarter was
9.0%, compared with 11.8%, in the fourth quarter last year.
U.S. Retail net income includes contributions from the U.S.
Retail Bank and the Bank's investment in TD Ameritrade. Net income
for the quarter from the U.S. Retail Bank and the Bank's
investment in TD Ameritrade were $532
million (US$403 million) and
$339 million (US$255 million), respectively.
The contribution from TD Ameritrade of US$255 million increased US$36 million, or 16%, compared with the fourth
quarter last year, primarily reflecting higher trading volumes and
lower operating expenses, partially offset by reduced trading
commissions and lower asset-based revenue.
U.S. Retail Bank net income of US$403
million decreased US$278
million, or 41%, primarily reflecting higher PCL and lower
revenue.
U.S. Retail Bank revenue is derived from personal and business
banking, and wealth management. Revenue for the quarter was
US$2,054 million, a decrease of
US$176 million, or 8%, compared with
the fourth quarter last year. Net interest income decreased
US$121 million, or 7%, reflecting
lower deposit margins, partially offset by growth in loan and
deposit volumes. Net interest margin was 2.27%, a decrease of 91
bps, primarily reflecting lower deposit margins and balance sheet
mix. Non-interest income decreased US$55
million, or 10%, primarily reflecting lower deposit
fees.
Average loan volumes increased US$12
billion, or 7%, compared with the fourth quarter last year,
reflecting growth in personal and business loans of 3% and 10%,
respectively, with significant increases in business loans
reflecting originations under the SBA PPP. Average deposit volumes
increased US$81 billion, or 30%,
reflecting a 35% increase in sweep deposit volumes, a 37% increase
in business deposit volumes, and a 17% increase in personal deposit
volumes.
AUA were US$24 billion as at
October 31, 2020, an increase of
US$3 billion, or 16%, compared with
the fourth quarter last year, reflecting loan and deposit growth.
AUM were US$39 billion as at
October 31, 2020, a decrease of
US$5 billion, or 11%, reflecting net
fund outflows.
PCL for the quarter was US$433
million, an increase of US$210
million, compared with the fourth quarter last year. PCL –
impaired was US$111 million, a
decrease of US$92 million, or 45%,
primarily reflected in the consumer lending portfolios, largely
reflecting the ongoing impact of bank and government assistance
programs. PCL – performing was US$322
million, an increase of US$302
million, primarily related to a significant deterioration in
the economic outlook, including the impact of credit migration, and
predominantly reflected in the commercial lending portfolios. U.S.
Retail PCL including only the Bank's contractual portion of credit
losses in the U.S. strategic cards portfolio, as an annualized
percentage of credit volume, was 1.01%, or an increase of 46
bps.
Non-interest expenses for the quarter were US$1,254 million, a decrease of US$7 million, compared with the fourth quarter
last year, primarily reflecting restructuring charges in the prior
year and productivity savings this year, partially offset by costs
to support customers and employees during the COVID-19 pandemic,
higher employee-related costs, and a prior year adjustment to
post-retirement benefit costs.
The efficiency ratio for the quarter was 61.1%, compared with
56.5% in the fourth quarter last year.
Quarterly comparison – Q4 2020 vs. Q3 2020
U.S. Retail net income increased $198
million (US$168 million), or
29% (34% in U.S. dollars), compared with the prior quarter. The
annualized ROE for the quarter was 9.0%, compared to 6.7%, in the
prior quarter.
The contribution from TD Ameritrade was US$255 million, an increase of US$25 million, or 11%, compared with the prior
quarter, primarily reflecting higher asset-based revenue and higher
trading volumes, partially offset by reduced trading
commissions.
U.S. Retail Bank net income for the quarter increased
US$143 million, or 55%, compared with
the prior quarter.
Revenue for the quarter decreased US$31
million, or 1%. Net interest income decreased US$82 million, or 5%, reflecting continued
deposit margin compression, partially offset by deposit volume
growth. Net interest margin was 2.27%, a decrease of 23 bps
reflecting lower deposit margins and balance sheet mix.
Non-interest income increased US$51
million, or 12%, primarily reflecting higher deposit and
credit card fees, partially offset by the valuation of certain
investments in the prior quarter.
Average loan volumes decreased US$2
billion, or 1%, compared with the prior quarter, reflecting
a decline in business loans of 3%, resulting from pay downs on
commercial lines of credit, partially offset by an increase in
personal loans of 1%. Average deposit volumes increased
US$10 billion, or 3%, reflecting a 5%
increase in business deposit volumes, a 3% increase in personal
deposit volumes, and a 1% increase in sweep deposit volumes.
AUA were US$24 billion as at
October 31, 2020, an increase of
US$1 billion, or 6%, compared with
the prior quarter. AUM were US$39
billion as at
October 31, 2020, a decrease of US$1
billion, or 3%, compared with the prior quarter, reflecting
net outflows.
PCL for the quarter decreased US$222
million, compared with the prior quarter. PCL – impaired
decreased by US$100 million,
primarily reflected in the consumer lending portfolios, largely
reflecting the ongoing impact of bank and government assistance
programs. PCL – performing decreased by US$122 million, reflecting a smaller increase to
the performing allowance for credit losses this quarter. Performing
provisions in the current quarter were largely recorded in the
commercial lending portfolios. U.S. Retail PCL including only the
Bank's contractual portion of credit losses in the U.S. strategic
cards portfolio, as an annualized percentage of credit volume was
1.01%, or a decrease of 50 bps.
Non-interest expenses for the quarter increased US$49 million, or 4%, compared with the prior
quarter, reflecting higher employee-related costs, investments in
the business, and marketing.
The efficiency ratio for the quarter was 61.1%, compared with
57.8%, in the prior quarter.
|
TABLE 11:
WHOLESALE BANKING
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
|
|
October
31
|
|
July
31
|
|
October
31
|
|
|
2020
|
|
2020
|
|
2019
|
|
Net interest income
(TEB)
|
$
|
609
|
|
$
|
531
|
|
$
|
278
|
|
Non-interest
income
|
|
645
|
|
|
866
|
|
|
570
|
|
Total
revenue
|
|
1,254
|
|
|
1,397
|
|
|
848
|
|
Provision for
(recovery of) credit losses – impaired
|
|
(19)
|
|
|
52
|
|
|
8
|
|
Provision for
(recovery of) credit losses – performing
|
|
13
|
|
|
71
|
|
|
33
|
|
Total provision for
(recovery of) credit losses
|
|
(6)
|
|
|
123
|
|
|
41
|
|
Non-interest
expenses
|
|
581
|
|
|
669
|
|
|
600
|
|
Provision for
(recovery of) income taxes (TEB)
|
|
193
|
|
|
163
|
|
|
47
|
|
Net
income
|
$
|
486
|
|
$
|
442
|
|
$
|
160
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
Trading-related
revenue (TEB)
|
$
|
761
|
|
$
|
942
|
|
$
|
411
|
|
Average gross lending
portfolio (billions of Canadian dollars)1
|
|
61.0
|
|
|
69.4
|
|
|
52.5
|
|
Return on common
equity2
|
|
23.0
|
%
|
|
19.7
|
%
|
|
8.5
|
%
|
Efficiency
ratio
|
|
46.3
|
|
|
47.9
|
|
|
70.8
|
|
Average number of
full-time equivalent staff
|
|
4,659
|
|
|
4,632
|
|
|
4,570
|
|
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,
and 10% in fiscal 2019.
|
Quarterly comparison – Q4 2020 vs. Q4 2019
Wholesale Banking net income for the quarter was $486 million,
an increase of $326 million compared with the fourth quarter
last year reflecting higher revenue, lower non-interest expenses,
and lower PCL.
Wholesale Banking revenue is derived primarily from capital
markets and corporate and investment banking services provided to
corporate, government, and institutional clients. Wholesale Banking
generates revenue from corporate lending, advisory, underwriting,
sales, trading and research, client securitization, trade finance,
cash management, prime services, and trade execution services.
Revenue for the quarter was $1,254 million, an increase of
$406 million, or 48%, compared with the fourth quarter last
year primarily reflecting higher trading-related revenue, higher
loan fees and higher debt underwriting fees, as well as derivative
valuation charges of $96 million in the prior year.
PCL for the quarter was a benefit of $6 million, compared
with provisions of $41 million in the fourth quarter last
year. PCL – impaired was a recovery of $19 million. PCL –
performing was $13 million.
Non-interest expenses were $581 million, a decrease of
$19 million, or 3%, compared with the fourth quarter last
year. The decrease reflects lower variable compensation.
Quarterly comparison – Q4 2020 vs. Q3 2020
Wholesale Banking net income for the quarter increased
$44 million, or 10%, compared with the prior quarter
reflecting lower PCL and lower non-interest expenses, partially
offset by lower revenue.
Revenue for the quarter decreased $143 million, or 10%,
primarily reflecting lower trading-related revenue and lower
underwriting fees, partially offset by higher other revenue.
PCL for the quarter decreased by $129 million. PCL –
impaired was a recovery of $19 million, a decrease of
$71 million reflecting credit
migration in the prior quarter. PCL – performing was
$13 million, a decrease of $58
million, reflecting a smaller increase to the performing
allowance for credit losses this quarter.
Non-interest expenses for the quarter decreased
$88 million, or 13%, reflecting lower variable compensation,
partially offset by a legal provision and higher technology related
costs.
|
TABLE 12:
CORPORATE
|
(millions of Canadian
dollars)
|
For the three
months ended
|
|
|
October
31
|
July
31
|
October
31
|
|
|
2020
|
2020
|
2019
|
|
Net income (loss)
– reported
|
$
|
1,984
|
$
|
(130)
|
$
|
(240)
|
|
Adjustments for
items of note1
|
|
|
|
|
|
|
|
Amortization of
intangibles before income taxes
|
|
61
|
|
63
|
|
74
|
|
Net gain on sale of
the investment in TD Ameritrade
|
|
(1,421)
|
|
–
|
|
–
|
|
Less: impact of
income taxes
|
|
837
|
|
9
|
|
12
|
|
Net income (loss)
– adjusted
|
$
|
(213)
|
$
|
(76)
|
$
|
(178)
|
|
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) – adjusted
|
|
|
|
|
|
|
|
Net corporate
expenses
|
$
|
(302)
|
$
|
(153)
|
$
|
(201)
|
|
Other
|
|
89
|
|
77
|
|
23
|
|
Net income (loss)
– adjusted
|
$
|
(213)
|
$
|
(76)
|
$
|
(178)
|
|
|
|
|
|
|
|
|
|
Selected
volumes
|
|
|
|
|
|
|
|
Average number of
full-time equivalent staff
|
|
17,849
|
|
17,889
|
|
17,316
|
|
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 – Q4 2020 vs. Q4 2019
Corporate segment's reported net income for the quarter was
$1,984 million, compared with a
reported net loss of $240 million in
the fourth quarter last year. The year-over-year increase was
primarily attributable to a net gain on sale of the Bank's
investment in TD Ameritrade of $1,421
million ($2,250 million
after-tax), as well as higher revenue from treasury and balance
sheet management activities, which are reflected in Other,
partially offset by higher net corporate expenses. Net corporate
expenses increased largely reflecting the impact of corporate real
estate optimization costs of $163
million in the current quarter, partially offset by
restructuring charges of $51 million
in the same quarter last year. The adjusted net loss for the
quarter was $213 million, compared
with an adjusted net loss of $178
million in the fourth quarter last year.
Quarterly comparison – Q4 2020 vs. Q3 2020
Corporate segment's reported net income for the quarter was
$1,984 million, compared with a
reported net loss of $130 million in
the prior quarter. The quarter-over-quarter increase in reported
net income was primarily attributable to a net gain on sale of the
Bank's investment in TD Ameritrade of $1,421
million ($2,250 million
after-tax), as well as higher revenue from treasury and balance
sheet management activities, which are reflected in Other,
partially offset by higher net corporate expenses. Net corporate
expenses increased largely reflecting the impact of corporate real
estate optimization costs of $163
million in the current quarter and lower employee-related
benefits claims in the prior quarter. The adjusted net loss for the
quarter was $213 million, compared
with an adjusted net loss of $76
million in the prior quarter.
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED
BALANCE SHEET1
|
(millions of Canadian
dollars)
|
|
|
|
As
at
|
|
|
October
31
|
October
31
|
|
|
|
2020
|
|
2019
|
ASSETS
|
|
|
Cash and due from
banks
|
$
|
6,445
|
$
|
4,863
|
Interest-bearing
deposits with banks
|
|
164,149
|
|
25,583
|
|
|
|
170,594
|
|
30,446
|
Trading loans,
securities, and other
|
|
148,318
|
|
146,000
|
Non-trading financial
assets at fair value through profit or loss
|
|
8,548
|
|
6,503
|
Derivatives
|
|
54,242
|
|
48,894
|
Financial assets
designated at fair value through profit or loss
|
|
4,739
|
|
4,040
|
Financial assets at
fair value through other comprehensive income
|
|
103,285
|
|
111,104
|
|
|
|
319,132
|
|
316,541
|
Debt securities at
amortized cost, net of allowance for credit losses
|
|
227,679
|
|
130,497
|
Securities
purchased under reverse repurchase agreements
|
|
169,162
|
|
165,935
|
Loans
|
|
|
|
|
Residential
mortgages
|
|
252,219
|
|
235,640
|
Consumer instalment
and other personal
|
|
185,460
|
|
180,334
|
Credit
card
|
|
32,334
|
|
36,564
|
Business and
government
|
|
255,799
|
|
236,517
|
|
|
|
725,812
|
|
689,055
|
Allowance for loan
losses
|
|
(8,289)
|
|
(4,447)
|
Loans, net of
allowance for loan losses
|
|
717,523
|
|
684,608
|
Other
|
|
|
|
|
Customers' liability
under acceptances
|
|
14,941
|
|
13,494
|
Investment in Schwab
and TD Ameritrade
|
|
12,174
|
|
9,316
|
Goodwill
|
|
17,148
|
|
16,976
|
Other
intangibles
|
|
2,125
|
|
2,503
|
Land, buildings,
equipment, and other depreciable assets
|
|
10,136
|
|
5,513
|
Deferred tax
assets
|
|
2,444
|
|
1,799
|
Amounts receivable
from brokers, dealers, and clients
|
|
33,951
|
|
20,575
|
Other
assets
|
|
18,856
|
|
17,087
|
|
|
|
111,775
|
|
87,263
|
Total
assets
|
$
|
1,715,865
|
$
|
1,415,290
|
LIABILITIES
|
|
|
|
|
Trading
deposits
|
$
|
19,177
|
$
|
26,885
|
Derivatives
|
|
53,203
|
|
50,051
|
Securitization
liabilities at fair value
|
|
13,718
|
|
13,058
|
Financial liabilities
designated at fair value through profit or loss
|
|
59,665
|
|
105,131
|
|
|
|
145,763
|
|
195,125
|
Deposits
|
|
|
|
|
Personal
|
|
625,200
|
|
503,430
|
Banks
|
|
28,969
|
|
16,751
|
Business and
government
|
|
481,164
|
|
366,796
|
|
|
|
1,135,333
|
|
886,977
|
Other
|
|
|
|
|
Acceptances
|
|
14,941
|
|
13,494
|
Obligations related
to securities sold short
|
|
34,999
|
|
29,656
|
Obligations related
to securities sold under repurchase agreements
|
|
188,876
|
|
125,856
|
Securitization
liabilities at amortized cost
|
|
15,768
|
|
14,086
|
Amounts payable to
brokers, dealers, and clients
|
|
35,143
|
|
23,746
|
Insurance-related
liabilities
|
|
7,590
|
|
6,920
|
Other
liabilities
|
|
30,476
|
|
21,004
|
|
|
|
327,793
|
|
234,762
|
Subordinated notes
and debentures
|
|
11,477
|
|
10,725
|
Total
liabilities
|
|
1,620,366
|
|
1,327,589
|
EQUITY
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Common
shares
|
|
22,487
|
|
21,713
|
Preferred
shares
|
|
5,650
|
|
5,800
|
Treasury shares –
common
|
|
(37)
|
|
(41)
|
Treasury shares –
preferred
|
|
(4)
|
|
(6)
|
Contributed
surplus
|
|
121
|
|
157
|
Retained
earnings
|
|
53,845
|
|
49,497
|
Accumulated other
comprehensive income (loss)
|
|
13,437
|
|
10,581
|
Total
equity
|
|
95,499
|
|
87,701
|
Total liabilities
and equity
|
$
|
1,715,865
|
$
|
1,415,290
|
1 The
amounts as at October 31, 2020 and October 31, 2019, have
been derived from the audited financial statements.
|
CONSOLIDATED
STATEMENT OF INCOME1
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
For the twelve
months ended
|
|
|
October
31
|
October 31
|
October
31
|
October 31
|
|
2020
|
2019
|
2020
|
2019
|
Interest
income2
|
|
|
|
|
|
|
|
|
Loans
|
$
|
6,278
|
$
|
8,117
|
$
|
28,151
|
$
|
31,925
|
Securities
|
|
|
|
|
|
|
|
|
|
Interest
|
|
1,012
|
|
1,848
|
|
5,432
|
|
7,843
|
|
Dividends
|
|
404
|
|
447
|
|
1,714
|
|
1,548
|
Deposits with
banks
|
|
70
|
|
126
|
|
350
|
|
683
|
|
|
7,764
|
|
10,538
|
|
35,647
|
|
41,999
|
Interest
expense
|
|
|
|
|
|
|
|
|
Deposits
|
|
891
|
|
3,313
|
|
7,163
|
|
13,675
|
Securitization
liabilities
|
|
69
|
|
121
|
|
363
|
|
524
|
Subordinated notes
and debentures
|
|
100
|
|
107
|
|
426
|
|
395
|
Other
|
|
337
|
|
822
|
|
2,084
|
|
3,474
|
|
|
1,397
|
|
4,363
|
|
10,036
|
|
18,068
|
Net interest
income
|
|
6,367
|
|
6,175
|
|
25,611
|
|
23,931
|
Non-interest
income
|
|
|
|
|
|
|
|
|
Investment and
securities services
|
|
1,341
|
|
1,246
|
|
5,341
|
|
4,872
|
Credit
fees
|
|
354
|
|
322
|
|
1,400
|
|
1,289
|
Net securities gain
(loss)
|
|
32
|
|
31
|
|
40
|
|
78
|
Trading income
(loss)
|
|
246
|
|
237
|
|
1,404
|
|
1,047
|
Income (loss) from
non-trading financial instruments at fair value through profit or
loss
|
|
11
|
|
6
|
|
14
|
|
121
|
Income (loss) from
financial instruments designated at fair value through profit or
loss
|
|
(27)
|
|
(89)
|
|
55
|
|
8
|
Service
charges
|
|
633
|
|
743
|
|
2,593
|
|
2,885
|
Card
services
|
|
566
|
|
578
|
|
2,154
|
|
2,465
|
Insurance
revenue
|
|
1,130
|
|
1,124
|
|
4,565
|
|
4,282
|
Other income
(loss)
|
|
1,191
|
|
(33)
|
|
469
|
|
87
|
|
|
5,477
|
|
4,165
|
|
18,035
|
|
17,134
|
Total
revenue
|
|
11,844
|
|
10,340
|
|
43,646
|
|
41,065
|
Provision for
credit losses
|
|
917
|
|
891
|
|
7,242
|
|
3,029
|
Insurance claims
and related expenses
|
|
630
|
|
705
|
|
2,886
|
|
2,787
|
Non-interest
expenses
|
|
|
|
|
|
|
|
|
Salaries and employee
benefits
|
|
2,881
|
|
2,744
|
|
11,891
|
|
11,244
|
Occupancy, including
depreciation
|
|
640
|
|
475
|
|
1,990
|
|
1,835
|
Equipment, including
depreciation
|
|
362
|
|
318
|
|
1,287
|
|
1,165
|
Amortization of other
intangibles
|
|
207
|
|
211
|
|
817
|
|
800
|
Marketing and
business development
|
|
224
|
|
206
|
|
740
|
|
769
|
Restructuring charges
(recovery)
|
|
(8)
|
|
154
|
|
(16)
|
|
175
|
Brokerage-related and
sub-advisory fees
|
|
94
|
|
86
|
|
362
|
|
336
|
Professional and
advisory services
|
|
347
|
|
379
|
|
1,144
|
|
1,322
|
Other
|
|
962
|
|
970
|
|
3,389
|
|
4,374
|
|
|
5,709
|
|
5,543
|
|
21,604
|
|
22,020
|
Income before
income taxes and equity in net income of an investment in TD
Ameritrade
|
|
4,588
|
|
3,201
|
|
11,914
|
|
13,229
|
Provision for
(recovery of) income taxes
|
|
(202)
|
|
646
|
|
1,152
|
|
2,735
|
Equity in net
income of an investment in TD Ameritrade
|
|
353
|
|
301
|
|
1,133
|
|
1,192
|
Net
income
|
|
5,143
|
|
2,856
|
|
11,895
|
|
11,686
|
Preferred
dividends
|
|
64
|
|
68
|
|
267
|
|
252
|
Net income
available to common shareholders and non-controlling
interests
|
|
|
|
|
|
|
|
|
|
in
subsidiaries
|
$
|
5,079
|
$
|
2,788
|
$
|
11,628
|
$
|
11,434
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
Common
shareholders
|
$
|
5,079
|
$
|
2,788
|
$
|
11,628
|
$
|
11,416
|
|
Non-controlling
interests in subsidiaries
|
|
–
|
|
–
|
|
–
|
|
18
|
Earnings per
share (Canadian dollars)
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.80
|
$
|
1.54
|
$
|
6.43
|
$
|
6.26
|
Diluted
|
|
2.80
|
|
1.54
|
|
6.43
|
|
6.25
|
Dividends per
common share (Canadian dollars)
|
|
0.79
|
|
0.74
|
|
3.11
|
|
2.89
|
1
|
The amounts for the
three months ended October 31, 2020, and October 31,
2019, have been derived from unaudited financial statements. The
amounts for the twelve months ended October 31, 2020 and
October 31, 2019, have been derived from the audited financial
statements.
|
2
|
Includes
$8,814 million and $32,524 million, for the three and twelve
months ended October 31, 2020, respectively (three and twelve
months ended October 31, 2019 – $8,751 million and $34,828
million, respectively) which has been calculated based on the
effective interest rate method.
|
CONSOLIDATED
STATEMENT OF COMPREHENSIVE
INCOME1,2
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
For the twelve
months ended
|
|
|
|
October
31
|
October
31
|
October
31
|
October
31
|
|
|
|
2020
|
2019
|
2020
|
2019
|
Net
income
|
$
|
5,143
|
$
|
2,856
|
$
|
11,895
|
$
|
11,686
|
Other
comprehensive income (loss), net of income taxes
|
|
|
|
|
|
|
|
|
Items that will
be subsequently reclassified to net income
|
|
|
|
|
|
|
|
|
|
Net change in
unrealized gains (losses) on financial assets at fair value
through
|
|
|
|
|
|
|
|
|
|
|
other
comprehensive income
|
|
|
|
|
|
|
|
|
|
Change in unrealized
gains (losses) on debt securities at fair value through
other
|
|
|
|
|
|
|
|
|
|
|
comprehensive
income
|
|
66
|
|
(20)
|
|
312
|
|
110
|
|
Reclassification to
earnings of net losses (gains) in respect of debt securities at
fair value
|
|
|
|
|
|
|
|
|
|
|
through other
comprehensive income
|
|
(90)
|
|
(23)
|
|
(94)
|
|
(31)
|
|
Reclassification to
earnings of changes in allowance for credit losses on debt
securities at fair
|
|
|
|
|
|
|
|
|
|
|
value through other
comprehensive income
|
|
1
|
|
1
|
|
2
|
|
(1)
|
|
|
|
|
(23)
|
|
(42)
|
|
220
|
|
78
|
|
Net change in
unrealized foreign currency translation gains (losses)
on
|
|
|
|
|
|
|
|
|
|
|
Investments in
foreign operations, net of hedging activities
|
|
|
|
|
|
|
|
|
|
Unrealized gains
(losses) on investments in foreign operations
|
|
(441)
|
|
(103)
|
|
855
|
|
(165)
|
|
Reclassification to
earnings of net losses (gains) on investment in foreign
operations
|
|
(1,531)
|
|
–
|
|
(1,531)
|
|
–
|
|
Net gains (losses) on
hedges of investments in foreign operations
|
|
140
|
|
(1)
|
|
(291)
|
|
132
|
|
Reclassification to
earnings of net losses (gains) on hedges of investments in foreign
operations
|
|
1,531
|
|
–
|
|
1,531
|
|
–
|
|
|
|
|
(301)
|
|
(104)
|
|
564
|
|
(33)
|
|
Net change in
gains (losses) on derivatives designated as cash flow
hedges
|
|
|
|
|
|
|
|
|
|
Change in gains
(losses) on derivatives designated as cash flow hedges
|
|
(379)
|
|
834
|
|
3,565
|
|
3,459
|
|
Reclassification to
earnings of losses (gains) on cash flow hedges
|
|
(163)
|
|
(47)
|
|
(1,230)
|
|
519
|
|
|
|
|
(542)
|
|
787
|
|
2,335
|
|
3,978
|
Items that will
not be subsequently reclassified to net income
|
|
|
|
|
|
|
|
|
Actuarial gains
(losses) on employee benefit plans
|
|
278
|
|
(233)
|
|
(390)
|
|
(921)
|
Change in net
unrealized gains (losses) on equity securities designated at fair
value through
|
|
|
|
|
|
|
|
|
|
other comprehensive
income
|
|
(22)
|
|
(5)
|
|
(212)
|
|
(95)
|
Gains (losses) from
changes in fair value due to credit risk on financial liabilities
designated
|
|
|
|
|
|
|
|
|
|
at fair value through
profit or loss
|
|
18
|
|
12
|
|
(51)
|
|
14
|
|
|
|
|
274
|
|
(226)
|
|
(653)
|
|
(1,002)
|
Total other
comprehensive income (loss), net of income taxes
|
|
(592)
|
|
415
|
|
2,466
|
|
3,021
|
Total
comprehensive income (loss), net of income taxes
|
$
|
4,551
|
$
|
3,271
|
$
|
14,361
|
$
|
14,707
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
Common
shareholders
|
$
|
4,487
|
$
|
3,203
|
$
|
14,094
|
$
|
14,437
|
|
Preferred
shareholders
|
|
64
|
|
68
|
|
267
|
|
252
|
|
Non-controlling
interests in subsidiaries
|
|
–
|
|
–
|
|
–
|
|
18
|
1
|
The amounts for the
three months ended October 31, 2020, and October 31,
2019, have been derived from unaudited financial statements. The
amounts for the twelve months ended October 31, 2020 and
October 31, 2019, have been derived from the audited financial
statements.
|
2
|
The amounts are net
of income tax provisions (recoveries) presented in the following
table.
|
Income Tax
Provisions (Recoveries) in the Consolidated Statement of
Comprehensive Income
|
(millions of Canadian
dollars)
|
For the three
months ended
|
For the twelve
months ended
|
|
|
October
31
|
October
31
|
October
31
|
October
31
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Change in unrealized
gains (losses) on debt securities at fair value through
|
|
|
|
|
|
|
|
|
|
other comprehensive
income
|
$
|
(6)
|
$
|
(11)
|
$
|
78
|
$
|
21
|
Less:
Reclassification to earnings of net losses (gains) in respect of
debt securities at fair value
|
|
|
|
|
|
|
|
|
|
through other
comprehensive income
|
|
1
|
|
4
|
|
1
|
|
(1)
|
Reclassification to
earnings of changes in allowance for credit losses on debt
securities at
|
|
|
|
|
|
|
|
|
|
fair value through
other comprehensive income
|
|
–
|
|
–
|
|
1
|
|
–
|
Unrealized gains
(losses) on investments in foreign operations
|
|
–
|
|
–
|
|
–
|
|
–
|
Less:
Reclassification to earnings of net losses (gains) on investment in
foreign operations
|
|
–
|
|
–
|
|
–
|
|
–
|
Net gains (losses) on
hedges of investments in foreign operations
|
|
52
|
|
–
|
|
(102)
|
|
48
|
Less:
Reclassification to earnings of net losses (gains) on hedges of
investments in foreign
|
|
|
|
|
|
|
|
|
|
operations
|
|
(545)
|
|
–
|
|
(545)
|
|
–
|
Change in gains
(losses) on derivatives designated as cash flow hedges
|
|
(540)
|
|
305
|
|
947
|
|
1,235
|
Less:
Reclassification to earnings of losses (gains) on cash flow
hedges
|
|
(368)
|
|
36
|
|
121
|
|
(157)
|
Actuarial gains
(losses) on employee benefit plans
|
|
98
|
|
(80)
|
|
(140)
|
|
(324)
|
Change in net
unrealized gains (losses) on equity securities designated at fair
value
|
|
|
|
|
|
|
|
|
|
through other
comprehensive income
|
|
(8)
|
|
(2)
|
|
(78)
|
|
(35)
|
Gains (losses) from
changes in fair value due to credit risk on financial liabilities
designated
|
|
|
|
|
|
|
|
|
|
at fair value through
profit or loss
|
|
7
|
|
4
|
|
(18)
|
|
4
|
Total income
taxes
|
$
|
515
|
$
|
176
|
$
|
1,111
|
$
|
1,107
|
CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY1
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
For the twelve
months ended
|
|
October
31
|
October 31
|
October
31
|
October 31
|
|
2020
|
2019
|
2020
|
2019
|
Common
shares
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
$
|
22,361
|
$
|
21,722
|
$
|
21,713
|
$
|
21,221
|
Proceeds from shares
issued on exercise of stock options
|
|
14
|
|
27
|
|
79
|
|
124
|
Shares issued as a
result of dividend reinvestment plan
|
|
112
|
|
68
|
|
838
|
|
357
|
Shares issued in
connection with acquisitions
|
|
–
|
|
–
|
|
–
|
|
366
|
Purchase of shares
for cancellation and other
|
|
–
|
|
(104)
|
|
(143)
|
|
(355)
|
Balance at end of
period
|
|
22,487
|
|
21,713
|
|
22,487
|
|
21,713
|
Preferred
shares
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
5,800
|
|
5,800
|
|
5,800
|
|
5,000
|
Issue of
shares
|
|
–
|
|
–
|
|
–
|
|
800
|
Redemption of
shares
|
|
(150)
|
|
–
|
|
(150)
|
|
–
|
Balance at end of
period
|
|
5,650
|
|
5,800
|
|
5,650
|
|
5,800
|
Treasury shares –
common
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
(59)
|
|
(44)
|
|
(41)
|
|
(144)
|
Purchase of
shares
|
|
(1,965)
|
|
(2,254)
|
|
(8,752)
|
|
(9,782)
|
Sale of
shares
|
|
1,987
|
|
2,257
|
|
8,756
|
|
9,885
|
Balance at end of
period
|
|
(37)
|
|
(41)
|
|
(37)
|
|
(41)
|
Treasury shares –
preferred
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
(5)
|
|
(4)
|
|
(6)
|
|
(7)
|
Purchase of
shares
|
|
(24)
|
|
(40)
|
|
(122)
|
|
(151)
|
Sale of
shares
|
|
25
|
|
38
|
|
124
|
|
152
|
Balance at end of
period
|
|
(4)
|
|
(6)
|
|
(4)
|
|
(6)
|
Contributed
surplus
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
128
|
|
157
|
|
157
|
|
193
|
Net premium
(discount) on sale of treasury shares
|
|
–
|
|
3
|
|
(31)
|
|
(22)
|
Issuance of stock
options, net of options exercised
|
|
–
|
|
(2)
|
|
–
|
|
(8)
|
Other
|
|
(7)
|
|
(1)
|
|
(5)
|
|
(6)
|
Balance at end of
period
|
|
121
|
|
157
|
|
121
|
|
157
|
Retained
earnings
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
49,934
|
|
48,818
|
|
49,497
|
|
46,145
|
Impact on adoption of
IFRS 16, Leases (IFRS 16)
|
|
n/a2
|
|
n/a
|
|
(553)
|
|
n/a
|
Impact on adoption of
IFRS 15, Revenue from Contracts with Customers (IFRS
15)
|
|
n/a
|
|
n/a
|
|
n/a
|
|
(41)
|
Net income
attributable to shareholders
|
|
5,143
|
|
2,856
|
|
11,895
|
|
11,668
|
Common
dividends
|
|
(1,431)
|
|
(1,338)
|
|
(5,614)
|
|
(5,262)
|
Preferred
dividends
|
|
(64)
|
|
(68)
|
|
(267)
|
|
(252)
|
Share issue expenses
and other
|
|
–
|
|
–
|
|
–
|
|
(9)
|
Net premium on
repurchase of common shares and redemption of preferred shares, and
other
|
|
(6)
|
|
(538)
|
|
(710)
|
|
(1,880)
|
Actuarial gains
(losses) on employee benefit plans
|
|
278
|
|
(233)
|
|
(390)
|
|
(921)
|
Realized gains
(losses) on equity securities designated at fair value through
other comprehensive income
|
|
(9)
|
|
–
|
|
(13)
|
|
49
|
Balance at end of
period
|
|
53,845
|
|
49,497
|
|
53,845
|
|
49,497
|
Accumulated other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
Net unrealized
gain (loss) on debt securities at fair value through other
comprehensive income:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
566
|
|
365
|
|
323
|
|
245
|
Other comprehensive
income (loss)
|
|
(24)
|
|
(43)
|
|
218
|
|
79
|
Allowance for credit
losses
|
|
1
|
|
1
|
|
2
|
|
(1)
|
Balance at end of
period
|
|
543
|
|
323
|
|
543
|
|
323
|
Net unrealized
gain (loss) on equity securities designated at fair value through
other comprehensive income:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
(230)
|
|
(35)
|
|
(40)
|
|
55
|
Other comprehensive
income (loss)
|
|
(31)
|
|
(5)
|
|
(225)
|
|
(46)
|
Reclassification of
loss (gain) to retained earnings
|
|
9
|
|
–
|
|
13
|
|
(49)
|
Balance at end of
period
|
|
(252)
|
|
(40)
|
|
(252)
|
|
(40)
|
Gains (losses)
from changes in fair value due to credit risk on financial
liabilities designated at fair value through
|
|
|
|
|
|
|
|
|
|
profit or
loss:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
(55)
|
|
2
|
|
14
|
|
–
|
Other comprehensive
income (loss)
|
|
18
|
|
12
|
|
(51)
|
|
14
|
Balance at end of
period
|
|
(37)
|
|
14
|
|
(37)
|
|
14
|
Net unrealized
foreign currency translation gain (loss) on investments in foreign
operations, net of hedging activities:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
9,658
|
|
8,897
|
|
8,793
|
|
8,826
|
Other comprehensive
income (loss)
|
|
(301)
|
|
(104)
|
|
564
|
|
(33)
|
Balance at end of
period
|
|
9,357
|
|
8,793
|
|
9,357
|
|
8,793
|
Net gain (loss) on
derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
4,368
|
|
704
|
|
1,491
|
|
(2,487)
|
Other comprehensive
income (loss)
|
|
(542)
|
|
787
|
|
2,335
|
|
3,978
|
Balance at end of
period
|
|
3,826
|
|
1,491
|
|
3,826
|
|
1,491
|
Total accumulated
other comprehensive income
|
|
13,437
|
|
10,581
|
|
13,437
|
|
10,581
|
Total
shareholders' equity
|
|
95,499
|
|
87,701
|
|
95,499
|
|
87,701
|
Non-controlling
interests in subsidiaries
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
–
|
|
–
|
|
–
|
|
993
|
Net income
attributable to non-controlling interests in
subsidiaries
|
|
–
|
|
–
|
|
–
|
|
18
|
Redemption of
non-controlling interests in subsidiaries
|
|
–
|
|
–
|
|
–
|
|
(1,000)
|
Other
|
|
–
|
|
–
|
|
–
|
|
(11)
|
Balance at end of
period
|
|
–
|
|
–
|
|
–
|
|
–
|
Total
equity
|
$
|
95,499
|
$
|
87,701
|
$
|
95,499
|
$
|
87,701
|
|
|
|
|
|
|
|
|
|
1
|
The amounts for the
three months ended October 31, 2020, and October 31,
2019, have been derived from unaudited financial statements. The
amounts for the twelve months ended October 31, 2020 and
October 31, 2019, have been derived from the audited financial
statements.
|
2
|
Not
applicable.
|
CONSOLIDATED
STATEMENT OF CASH FLOWS1
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
For the twelve
months ended
|
|
|
October
31
|
October 31
|
October
31
|
October 31
|
|
|
2020
|
2019
|
2020
|
2019
|
Cash flows from
(used in) operating activities
|
|
|
|
|
|
|
|
|
Net income before
income taxes, including equity in net income of an investment in TD
Ameritrade
|
$
|
4,941
|
$
|
3,502
|
$
|
13,047
|
$
|
14,421
|
Adjustments to
determine net cash flows from (used in) operating
activities
|
|
|
|
|
|
|
|
|
|
Provision for credit
losses
|
|
917
|
|
891
|
|
7,242
|
|
3,029
|
|
Depreciation
|
|
429
|
|
166
|
|
1,324
|
|
605
|
|
Amortization of other
intangibles
|
|
207
|
|
211
|
|
817
|
|
800
|
|
Net securities losses
(gains)
|
|
(32)
|
|
(31)
|
|
(40)
|
|
(78)
|
|
Equity in net income
of an investment in TD Ameritrade
|
|
(353)
|
|
(301)
|
|
(1,133)
|
|
(1,192)
|
|
Net gain on sale of
the investment in TD Ameritrade
|
|
(1,491)
|
|
–
|
|
(1,491)
|
|
–
|
|
Deferred
taxes
|
|
(435)
|
|
(80)
|
|
(1,065)
|
|
(33)
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
|
|
Interest receivable
and payable
|
|
27
|
|
33
|
|
(108)
|
|
(26)
|
|
Securities sold under
repurchase agreements
|
|
16,995
|
|
2,648
|
|
63,020
|
|
32,467
|
|
Securities purchased
under reverse repurchase agreements
|
|
(9,490)
|
|
(3,291)
|
|
(3,227)
|
|
(38,556)
|
|
Securities sold
short
|
|
1,216
|
|
(5,643)
|
|
5,343
|
|
(9,822)
|
|
Trading loans and
securities
|
|
(3,547)
|
|
(3,839)
|
|
(2,318)
|
|
(18,103)
|
|
Loans net of
securitization and sales
|
|
3,012
|
|
(10,069)
|
|
(39,641)
|
|
(41,693)
|
|
Deposits
|
|
41,114
|
|
5,740
|
|
240,648
|
|
(52,281)
|
|
Derivatives
|
|
(4,404)
|
|
143
|
|
(2,196)
|
|
9,883
|
|
Non-trading financial
assets at fair value through profit or loss
|
|
2,127
|
|
(470)
|
|
(2,045)
|
|
(2,397)
|
|
Financial assets and
liabilities designated at fair value through profit or
loss
|
|
(39,028)
|
|
9,335
|
|
(46,165)
|
|
104,693
|
|
Securitization
liabilities
|
|
991
|
|
216
|
|
2,342
|
|
(157)
|
|
Current
taxes
|
|
82
|
|
(83)
|
|
280
|
|
(771)
|
|
Brokers, dealers and
clients amounts receivable and payable
|
|
3,745
|
|
2,474
|
|
(1,979)
|
|
1,726
|
|
Other
|
|
5,778
|
|
(755)
|
|
(869)
|
|
(2,244)
|
Net cash from (used
in) operating activities
|
|
22,801
|
|
797
|
|
231,786
|
|
271
|
Cash flows from
(used in) financing activities
|
|
|
|
|
|
|
|
|
Issuance of
subordinated notes and debentures
|
|
–
|
|
–
|
|
3,000
|
|
1,749
|
Redemption or
repurchase of subordinated notes and debentures
|
|
(968)
|
|
106
|
|
(2,530)
|
|
24
|
Common shares
issued
|
|
12
|
|
23
|
|
68
|
|
105
|
Preferred shares
issued
|
|
–
|
|
–
|
|
–
|
|
791
|
Repurchase of common
shares
|
|
–
|
|
(642)
|
|
(847)
|
|
(2,235)
|
Redemption of
preferred shares
|
|
(156)
|
|
–
|
|
(156)
|
|
–
|
Redemption of
non-controlling interests in subsidiaries
|
|
–
|
|
–
|
|
–
|
|
(1,000)
|
Sale of treasury
shares
|
|
2,012
|
|
2,298
|
|
8,849
|
|
10,015
|
Purchase of treasury
shares
|
|
(1,989)
|
|
(2,294)
|
|
(8,874)
|
|
(9,933)
|
Dividends
paid
|
|
(1,383)
|
|
(1,338)
|
|
(5,043)
|
|
(5,157)
|
Distributions to
non-controlling interests in subsidiaries
|
|
–
|
|
–
|
|
–
|
|
(11)
|
Repayment of lease
liabilities2
|
|
(155)
|
|
n/a
|
|
(596)
|
|
n/a
|
Net cash from (used
in) financing activities
|
|
(2,627)
|
|
(1,847)
|
|
(6,129)
|
|
(5,652)
|
Cash flows from
(used in) investing activities
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits with banks
|
|
(2,630)
|
|
9,114
|
|
(138,566)
|
|
5,137
|
Activities in
financial assets at fair value through other comprehensive
income
|
|
|
|
|
|
|
|
|
|
Purchases
|
|
(4,927)
|
|
(7,606)
|
|
(50,569)
|
|
(24,898)
|
|
Proceeds from
maturities
|
|
16,165
|
|
9,623
|
|
49,684
|
|
37,835
|
|
Proceeds from
sales
|
|
2,252
|
|
3,805
|
|
11,005
|
|
10,158
|
Activities in debt
securities at amortized cost
|
|
|
|
|
|
|
|
|
|
Purchases
|
|
(53,552)
|
|
(23,811)
|
|
(146,703)
|
|
(51,202)
|
|
Proceeds from
maturities
|
|
23,530
|
|
9,712
|
|
51,400
|
|
28,392
|
|
Proceeds from
sales
|
|
981
|
|
285
|
|
1,391
|
|
1,418
|
Net purchases of
land, buildings, equipment, and other depreciable assets
|
|
(940)
|
|
(216)
|
|
(1,757)
|
|
(794)
|
Net cash acquired
from (paid for) divestitures and acquisitions
|
|
–
|
|
–
|
|
–
|
|
(540)
|
Net cash from (used
in) investing activities
|
|
(19,121)
|
|
906
|
|
(224,115)
|
|
5,506
|
Effect of exchange
rate changes on cash and due from banks
|
|
(18)
|
|
(5)
|
|
40
|
|
3
|
Net increase
(decrease) in cash and due from banks
|
|
1,035
|
|
(149)
|
|
1,582
|
|
128
|
Cash and due from
banks at beginning of period
|
|
5,410
|
|
5,012
|
|
4,863
|
|
4,735
|
Cash and due from
banks at end of period
|
$
|
6,445
|
$
|
4,863
|
$
|
6,445
|
$
|
4,863
|
Supplementary
disclosure of cash flows from operating activities
|
|
|
|
|
|
|
|
|
Amount of income
taxes paid (refunded) during the period
|
$
|
743
|
$
|
791
|
$
|
2,285
|
$
|
3,589
|
Amount of interest
paid during the period
|
|
1,309
|
|
4,314
|
|
10,287
|
|
17,958
|
Amount of interest
received during the period
|
|
7,299
|
|
10,075
|
|
34,076
|
|
40,315
|
Amount of dividends
received during the period
|
|
380
|
|
485
|
|
1,675
|
|
1,584
|
1
|
The amounts for the
three months ended October 31, 2020, and October 31,
2019, have been derived from unaudited financial statements. The
amounts for the twelve months ended October 31, 2020 and
October 31, 2019, have been derived from the audited financial
statements.
|
2
|
Prior to the adoption
of IFRS 16, repayments of finance lease liabilities were included
in "Net cash from (used in) operating activities".
|
Appendix A – Segmented Information
For management
reporting purposes, the Bank reports its results under three key
business segments: Canadian Retail, which includes the results of
the Canadian personal and commercial banking businesses, Canadian
credit cards, TD Auto Finance Canada and Canadian wealth and
insurance businesses; U.S. Retail, which includes the results of
the U.S. personal and commercial banking businesses, U.S. credit
cards, TD Auto Finance U.S., U.S. wealth business, and the Bank's
investment in TD Ameritrade (Schwab as of October 6, 2020); and Wholesale Banking. The
Bank's other activities are grouped into the Corporate segment.
Results for these segments for the three and twelve months ended
October 31, 2020 and October 31,
2019 are presented in the following tables.
Results by
Business Segment1,2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
|
|
|
|
For the three
months ended
|
|
|
Canadian
Retail
|
U.S.
Retail
|
Wholesale
Banking3
|
Corporate3
|
Total
|
|
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net interest income
(loss)
|
$
|
2,982
|
$
|
3,173
|
$
|
2,071
|
$
|
2,232
|
$
|
609
|
$
|
278
|
$
|
705
|
$
|
492
|
$
|
6,367
|
$
|
6,175
|
Non-interest income
(loss)
|
|
3,047
|
|
2,960
|
|
646
|
|
717
|
|
645
|
|
570
|
|
1,139
|
|
(82)
|
|
5,477
|
|
4,165
|
Total
revenue
|
|
6,029
|
|
6,133
|
|
2,717
|
|
2,949
|
|
1,254
|
|
848
|
|
1,844
|
|
410
|
|
11,844
|
|
10,340
|
Provision for
(recovery of) credit losses
|
|
251
|
|
400
|
|
572
|
|
295
|
|
(6)
|
|
41
|
|
100
|
|
155
|
|
917
|
|
891
|
Insurance claims and
related expenses
|
|
630
|
|
705
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
630
|
|
705
|
Non-interest
expenses
|
|
2,684
|
|
2,637
|
|
1,660
|
|
1,669
|
|
581
|
|
600
|
|
784
|
|
637
|
|
5,709
|
|
5,543
|
Income (loss) before
income taxes
|
|
2,464
|
|
2,391
|
|
485
|
|
985
|
|
679
|
|
207
|
|
960
|
|
(382)
|
|
4,588
|
|
3,201
|
Provision for
(recovery of) income taxes
|
|
662
|
|
646
|
|
(47)
|
|
85
|
|
193
|
|
47
|
|
(1,010)
|
|
(132)
|
|
(202)
|
|
646
|
Equity in net income
of an investment in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TD
Ameritrade4
|
|
–
|
|
–
|
|
339
|
|
291
|
|
–
|
|
–
|
|
14
|
|
10
|
|
353
|
|
301
|
Net income
(loss)
|
$
|
1,802
|
$
|
1,745
|
$
|
871
|
$
|
1,191
|
$
|
486
|
$
|
160
|
$
|
1,984
|
$
|
(240)
|
$
|
5,143
|
$
|
2,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the twelve
months ended
|
|
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
Oct.
31
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net interest income
(loss)
|
$
|
12,061
|
$
|
12,349
|
$
|
8,834
|
$
|
8,951
|
$
|
1,990
|
$
|
911
|
$
|
2,726
|
$
|
1,720
|
$
|
25,611
|
$
|
23,931
|
Non-interest income
(loss)
|
|
12,272
|
|
11,877
|
|
2,438
|
|
2,840
|
|
2,968
|
|
2,320
|
|
357
|
|
97
|
|
18,035
|
|
17,134
|
Total
revenue
|
|
24,333
|
|
24,226
|
|
11,272
|
|
11,791
|
|
4,958
|
|
3,231
|
|
3,083
|
|
1,817
|
|
43,646
|
|
41,065
|
Provision for
(recovery of) credit losses
|
|
2,746
|
|
1,306
|
|
2,925
|
|
1,082
|
|
508
|
|
44
|
|
1,063
|
|
597
|
|
7,242
|
|
3,029
|
Insurance claims and
related expenses
|
|
2,886
|
|
2,787
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
2,886
|
|
2,787
|
Non-interest
expenses
|
|
10,441
|
|
10,735
|
|
6,579
|
|
6,411
|
|
2,518
|
|
2,393
|
|
2,066
|
|
2,481
|
|
21,604
|
|
22,020
|
Income (loss) before
income taxes
|
|
8,260
|
|
9,398
|
|
1,768
|
|
4,298
|
|
1,932
|
|
794
|
|
(46)
|
|
(1,261)
|
|
11,914
|
|
13,229
|
Provision for
(recovery of) income taxes
|
|
2,234
|
|
2,535
|
|
(167)
|
|
471
|
|
514
|
|
186
|
|
(1,429)
|
|
(457)
|
|
1,152
|
|
2,735
|
Equity in net income
of an investment in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TD
Ameritrade4
|
|
–
|
|
–
|
|
1,091
|
|
1,154
|
|
–
|
|
–
|
|
42
|
|
38
|
|
1,133
|
|
1,192
|
Net income
(loss)
|
$
|
6,026
|
$
|
6,863
|
$
|
3,026
|
$
|
4,981
|
$
|
1,418
|
$
|
608
|
$
|
1,425
|
$
|
(766)
|
$
|
11,895
|
$
|
11,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
at
|
|
|
|
Oct.
31
|
|
Oct.
31
|
|
Oct.
31
|
|
Oct.
31
|
|
Oct.
31
|
|
Oct.
31
|
|
Oct.
31
|
|
Oct.
31
|
|
Oct.
31
|
|
Oct.
31
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Total
assets5
|
$
|
472,370
|
$
|
452,163
|
$
|
566,629
|
$
|
436,086
|
$
|
512,886
|
$
|
458,420
|
$
|
163,980
|
$
|
68,621
|
$
|
1,715,865
|
$
|
1,415,290
|
1
|
The amounts for the
three months ended October 31, 2020 and October 31, 2019
have been derived from the unaudited financial statements. The
amounts for the twelve months ended October 31, 2020 and
October 31, 2019 have been derived from the audited financial
statements.
|
2
|
The retailer program
partners' share of revenues and credit losses is presented in the
Corporate segment, with an offsetting amount (representing the
partners' net share) recorded in Non-interest expenses, resulting
in no impact to Corporate reported Net income (loss). The Net
income (loss) included in the U.S. Retail segment includes only the
portion of revenue and credit losses attributable to the Bank under
the agreements.
|
3
|
Net interest income
within Wholesale Banking is calculated on a TEB. The TEB adjustment
reflected in Wholesale Banking is reversed in the Corporate
segment.
|
4
|
The Bank's share of
TD Ameritrade's earnings is reported with a one-month lag. The same
convention is being followed for Schwab, and the Bank will begin
recording its share of Schwab's earnings on this basis in the first
quarter of fiscal 2021. Refer to "Significant Events" in the "How
We Performed" section of this document.
|
5
|
Total assets as at
October 31, 2020 and October 31, 2019 have been derived
from the audited financial statements.
|
SHAREHOLDER AND INVESTOR INFORMATION
Shareholder Services
If
you:
|
And your inquiry
relates to:
|
Please
contact:
|
Are a registered
shareholder (your name appears on your TD share
certificate)
|
Missing dividends,
lost share certificates, estate questions, address changes to the
share register, dividend bank account changes, the dividend
reinvestment plan, eliminating duplicate mailings of shareholder
materials, or stopping (or resuming) receiving annual and quarterly
reports
|
Transfer
Agent:
AST Trust Company
(Canada)
P.O. Box 700, Station B
Montréal, Québec H3B
3K3
1-800-387-0825
(Canada and U.S. only)
or
416-682-3860
Facsimile:
1-888-249-6189
inquiries@astfinancial.com or
www.astfinancial.com/ca-en
|
Hold your TD shares
through the
Direct
Registration System
in the United
States
|
Missing dividends,
lost share certificates, estate questions, address changes to the
share register, eliminating duplicate mailings of shareholder
materials or stopping (or resuming) receiving annual and quarterly
reports
|
Co-Transfer Agent
and Registrar:
Computershare
P.O. Box 505000
Louisville, KY
40233
or
Computershare
462 South
4th Street, Suite 1600
Louisville, KY
40202
1-866-233-4836
TDD for hearing
impaired: 1-800-231-5469
Shareholders outside
of U.S.: 201-680-6578
TDD shareholders
outside of U.S.: 201-680-6610
www.computershare.com/investor
|
Beneficially
own TD shares that are held in the name of an intermediary,
such as a bank, a trust company, a securities broker, or other
nominee
|
Your TD shares,
including questions regarding the dividend reinvestment plan and
mailings of shareholder materials
|
Your
intermediary
|
For all other shareholder inquiries, please contact TD
Shareholder Relations at 416-944-6367 or 1-866-756-8936 or email
tdshinfo@td.com.
Please note that by leaving us an e-mail or voicemail message,
you are providing your consent for us to forward your inquiry to
the appropriate party for response.
Annual Report on Form 40-F (U.S.)
A copy of the Bank's
Annual Report on Form 40-F for fiscal 2020 will be filed with the
Securities and Exchange Commission later today and will be
available at http://www.td.com. You may obtain a printed copy of
the Bank's Annual Report on Form 40-F for fiscal 2020 free of
charge upon request to TD Shareholder Relations at
416-944-6367 or 1-866-756-8936 or e-mail tdshinfo@td.com.
Access to Quarterly Results Materials
Interested investors, the media, and others may view this fourth
quarter earnings news release, results slides, supplementary
financial information, supplemental regulatory disclosure, and the
2020 Consolidated Financial Statements and MD&A documents on
the TD website at www.td.com/investor/.
General Information
Products and services: Contact TD Canada Trust, 24 hours a day,
seven days a week: 1-866-567-8888 French: 1-866-233-2323
Cantonese/Mandarin: 1-800-328-3698
Telephone device for the hearing impaired (TTY): 1-800-361-1180
Website: www.td.com
Email: customer.service@td.com
Media contacts: https://newsroom.td.com/media-contacts
Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference call in Toronto, Ontario on December 3, 2020. The
call will be available live via TD's website at
1:30 p.m. ET. The call and audio webcast will feature
presentations by TD executives on the Bank's financial results for
the fourth quarter, 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
December 3, 2020, by approximately 12
p.m. ET. A listen-only telephone line is available at
416-641-6150 or 1-866-696-5894 (toll free) and the passcode is
2727354#.
The audio webcast and presentations will be archived at
www.td.com/investor. Replay of the teleconference will be available
from 5:00 p.m. ET on
December 3, 2020, until 11:59 p.m.
ET on December 11, 2020 by
calling 905-694-9451 or 1-800-408-3053 (toll free). The passcode is
7300743#.
Annual Meeting
Thursday, April 1, 2021
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively
known as TD Bank Group ("TD" or the "Bank"). TD is the sixth
largest bank in North America by
branches and serves 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 14 million active online and mobile customers. TD had
CDN$1.7 trillion in assets on
October 31, 2020. The
Toronto-Dominion Bank trades under the symbol "TD" on the
Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group