6-K
TORONTO DOMINION BANK (TD)
FORM
6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
______________________________
______________________________
REPORT OF FOREIGN PRIVATE
ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May,
2024
.
Commission File Number:
001-14446
______________________________
The Toronto-Dominion Bank
(Translation of registrant's name into English)
______________________________
c/o General Counsel’s Office
P.O. Box 1
,
Toronto Dominion Centre
,
Toronto
,
Ontario
,
M5K 1A2
(Address of principal executive offices)
Indicate by check mark whether the registrant
files or will file annual reports under cover
of Form 20-F or Form 40-F:
Form 20-F
☐
Form 40-F
☑
This Form 6-K, excluding Exhibit 99.4, Exhibit
99.5 and Exhibit 99.6 hereto, is incorporated by
reference into all outstanding Registration Statements
of The Toronto-
Dominion Bank filed with the U.S. Securities
and Exchange Commission.
EXHIBIT INDEX
Exhibit
Description
99.1
Quarter 2024 Report to Shareholders
99.2
99.3
Return on Assets, Dividend Payouts, and Equity to Assets Ratios
99.4
99.5
99.6
101
Interactive Data File (formatted as Inline
XBRL)
104
Cover Page Interactive Data File (formatted
as Inline XBRL and contained in Exhibit
101)
FORM 6-K
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant
has duly caused this report to be signed on
its behalf by the undersigned, thereunto
duly
authorized.
THE TORONTO-DOMINION BANK
DATE:
May 23, 2024
By:
/s/ Caroline Cook
Name:
Caroline Cook
Title:
Associate Vice President, Legal Treasury and
Corporate Securities
ex991
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 1
TD Bank Group Reports Second Quarter 2024 Results
Report to Shareholders
•
Three and six months ended April 30, 2024
The financial information in this document is reported
in Canadian dollars and is based on
the Bank’s unaudited Interim Consolidated
Financial Statements and
related Notes prepared in accordance
with International Financial Reporting Standards
(IFRS) as issued by the International
Accounting Standards Board (IASB),
unless otherwise noted. Certain comparative
amounts have been revised to conform
with the presentation adopted in the current period.
Reported results conform with generally accepted
accounting principles (GAAP), in accordance
with IFRS. Adjusted measures are non-GAAP
financial
measures. For additional information about
the Bank’s use of non-GAAP financial measures,
refer to “Significant Events” and “Non-GAAP
and Other Financial
Measures” in the “How We Performed” section
of this document.
SECOND QUARTER FINANCIAL HIGHLIGHTS,
compared with the second quarter
last year:
●
Reported diluted earnings per share were
$1.35, compared with $1.69.
●
Adjusted diluted earnings per share were
$2.04, compared with $1.91.
●
Reported net income was $2,564 million,
compared with $3,306 million.
●
Adjusted net income was $3,789 million,
compared with $3,707 million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, six months ended April
30, 2024, compared with the corresponding
period last year:
●
Reported diluted earnings per share were
$2.89, compared with $2.52.
●
Adjusted diluted earnings per share were
$4.04, compared with $4.14.
●
Reported net income was $5,388 million,
compared with $4,887 million.
●
Adjusted net income was $7,426 million,
compared with $7,861 million.
SECOND QUARTER ADJUSTMENTS (ITEMS
OF NOTE)
The second quarter reported earnings figures
included the following items of note:
●
Amortization of acquired intangibles
of $72 million ($62 million after-tax or
4 cents per share), compared with $79
million ($67 million after-tax or
3 cents per share) in the second quarter
last year.
●
Acquisition and integration charges related
to the Schwab transaction of $21 million
($16 million after-tax or 1 cent per share),
compared with
$30 million ($26 million after-tax or 1 cent
per share) in the second quarter last year.
●
Restructuring charges of $165 million ($122
million after-tax or 7 cents per share).
●
Acquisition and integration charges related
to the Cowen acquisition of $102 million
($80 million after-tax or 4 cents per share),
compared with
$73 million ($63 million after-tax or 4 cents
per share) in the second quarter last year.
●
Impact from the terminated FHN acquisition-related
capital hedging strategy of $64 million
($48 million after-tax or 3 cents
per share), compared with
$134 million ($101 million after-tax or 6 cents
per share) in the second quarter last year.
●
Civil matter provision/Litigation settlement
of $274 million ($205 million after-tax
or 11 cents per share), compared with $39 million ($28
million after-
tax or 2 cents per share) in the second
quarter last year.
●
FDIC special assessment of $103 million ($77
million after-tax or 4 cents per share).
●
Provision for investigations related to the
Bank’s AML program of $615 million ($615 million
after-tax or 35 cents per share).
TORONTO
, May 23, 2024 – TD Bank Group (“TD”
or the “Bank”) today announced its
financial results for the second quarter ended
April 30, 2024. Reported
earnings were $2.6 billion, down 22% compared
with the second quarter last year, and adjusted earnings
were $3.8 billion, up 2%.
“TD delivered strong second quarter results,
with earnings of $3.8 billion and solid momentum
across our franchise. We delivered significant
positive operating
leverage while continuing to invest in our business,
including our risk and control infrastructure,”
said Bharat Masrani, Group President
and Chief Executive Officer,
TD Bank Group.
Canadian Personal and Commercial
Banking delivered a strong quarter
driven by continued volume growth
and positive operating leverage
Canadian Personal and Commercial
Banking net income was $1,739 million, an
increase of 7% compared to the second quarter
last year. The increase reflects
revenue growth, partially offset by higher provisions
for credit losses and non-interest expenses.
Revenue was $4,839 million, an increase
of 10%, driven by
volume growth and margin expansion.
Canadian Personal and Commercial
Banking continued to build momentum, delivering
another strong quarter for New to Canada
account openings. TD increased
its support for international students with an
agreement with HDFC, India’s leading private
sector bank, to help attract new customers
with a simplified banking
experience. The Bank also established a new
collaboration with ApplyBoard, a Canadian
educational organization that helps international
students prepare their
finances to study in Canada. In addition,
TD Auto Finance was ranked #1 in Dealer Satisfaction
with Non-Prime and Prime Credit Non-Captive Automotive
Financing Lenders, according to the J.D.
Power 2024 Canada Dealer Financing
Satisfaction Study
1
.
The U.S. Retail Bank delivered operating
momentum with sequential earnings
and loan growth in a challenging environment
U.S. Retail reported net income was $580
million (US$433 million), a decrease of 59%
(58% in U.S. dollars) compared
with the second quarter last year. On an
adjusted basis, net income was $1,272
million, a decline of 16% (17% in U.S. dollars).
TD Bank’s investment in The Charles Schwab
Corporation (“Schwab”)
contributed $183 million in earnings, a decrease
of 27% (26% in U.S. dollars) compared
with the second quarter last year.
The U.S. Retail Bank, which excludes the Bank’s
investment in Schwab, reported net income
of $397 million (US$297 million), a decrease
of 66% (65% in U.S.
dollars) from the second quarter last year, primarily reflecting provisions
for investigations related to the Bank’s anti-money
laundering program and the Federal
Deposit Insurance Corporation (FDIC) Special
Assessment, partially offset by acquisition
and integration-related charges for the terminated
First Horizon
1
TD Auto Finance received the highest score in the retail non-captive non-prime segment and the retail non-captive prime segment in the J.D. Power 2024 Canada Dealer Financing Satisfaction Study,
which measure Canadian auto dealers’ satisfaction with their auto finance providers. Visit jdpower.com/awards for more details.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 2
transaction in the second quarter last year. On an adjusted
basis net income was $1,089 million (US$803
million), a decrease of 14% (15% in
U.S. dollars) from
the second quarter last year, primarily reflecting higher
PCL and lower revenue.
The U.S. Retail Bank continued to deliver loan
growth while maintaining its through-the-cycle
underwriting standards, with total average
loan balances up 7%
compared with the second quarter last
year and up 1% from last quarter. Excluding sweep deposits,
total personal and business deposit average
balances were
down 1% year-over-year, reflecting competitive market conditions,
while quarter-over-quarter, personal and business deposit
average balances were flat. Overall,
the U.S. Retail Bank delivered balance sheet
stability in a challenging environment.
During the quarter, TD Bank, America’s Most Convenient Bank®
(TD AMCB) launched TD Complete Checking
and TD Early Pay, offering customers more flexible
banking options, including earlier access
to eligible direct deposits. TD AMCB surpassed
five million active mobile customers while continuing
to deliver new
features and capabilities that enhance
the customer experience. TD AMCB was
ranked 9
th
on Forbes’
list of
America’s Best Employers for Diversity 2024,
leading
its peers as the highest ranked financial institution.
Wealth Management and Insurance results reflect
strong business momentum
Wealth Management and Insurance net income
was $621 million, an increase of 19% compared
with the second quarter last year, as positive top-line momentum
was partially offset by higher insurance service
expenses.
This quarter’s revenue growth of 11% reflects insurance premium
growth, and higher fee-based and
transaction revenue in the Wealth Management business.
Wealth Management and Insurance continued to invest
in client-centric innovation this quarter. TD Direct Investing
completed its migration of most active
traders
to the new TD Active Trader platform and TD Wealth Advice
continued to gain market share as it grows its
advisor network
2
. TD Asset Management launched
seven new actively managed fixed income
ETFs, showcasing the value of its proprietary
independent credit research capabilities, and
offering investors the
potential to earn a high rate of interest income.
In TD Insurance, Small Business Insurance
expanded its national reach to new customer
segments including
business professionals, healthcare, retail, small
manufacturing, and hospitality.
Wholesale Banking delivered record
revenue reflecting broad-based growth
across the business
Wholesale Banking reported net income for
the quarter was $361 million, an increase
of $211 million compared with the second quarter last year, reflecting higher
revenues, partially offset by higher non-interest
expenses. On an adjusted basis, net income
was $441 million, an increase of $228
million, or 107%. Revenue for
the quarter was $1,940 million, an increase
of $523 million, or 37%, compared
with the second quarter last year, reflecting higher trading-related
revenue,
underwriting fees, and lending revenue.
On April 1, TD Securities and TD Cowen
achieved an important milestone
with the implementation of a unified Investment
Banking, Capital Markets and Research
platform, integrating coverage models and streamlining
delivery of capabilities for clients.
Enhancements to TD’s anti-money laundering (AML)
program
The Bank has been cooperating with U.S. regulators
and authorities in good faith for many months
and is working diligently to bring these
investigations to
resolution so that investors can have more
clarity. A comprehensive overhaul of TD's U.S. AML program is
well underway, and will strengthen our program
globally.
Capital
TD’s Common Equity Tier 1 Capital ratio was 13.4%.
Conclusion
“Our businesses in Canada, the United States
and across the globe are well-positioned
to continue to meet the needs of our nearly
28 million customers and
clients. I would like to thank our 95,000 TD
bankers for everything they do to deliver
for all of our stakeholders,”
added Masrani.
The foregoing contains forward-looking statements. Please refer to the “Caution Regarding Forward-Looking Statements”
on page 4.
2
Investor Economics Retail Brokerage and Distribution Quarterly Update, Winter 2023.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 3
ENHANCED DISCLOSURE TASK FORCE
The Enhanced Disclosure Task Force (EDTF) was established by the Financial
Stability
Board in 2012 to identify fundamental
disclosure principles,
recommendations and leading practices to enhance
risk disclosures of banks. The index below
includes the recommendations (as published
by the EDTF) and
lists the location of the related EDTF disclosures
presented in the second quarter 2024 Report
to Shareholders (RTS), Supplemental Financial
Information (SFI),
or Supplemental Regulatory Disclosures (SRD).
Information on TD’s website, SFI, and SRD is
not and should not be considered incorporated
herein by reference
into the second quarter 2024 RTS,
Management’s Discussion and Analysis,
or the Interim Consolidated Financial Statements.
Certain disclosure references have
been made to the Bank’s
2023 Annual Report.
Type of
Risk
Topic
EDTF Disclosure
Page
RTS
Second
Quarter
2024
SFI
Second
Quarter
2024
SRD
Second
Quarter
2024
Annual Report
2023
General
1
Present all related risk information together in any particular report.
Refer to below for location of disclosures
2
The bank’s risk terminology and risk measures and present key parameter
values used.
83-88, 92, 97,
99-101, 112-114
3
Describe and discuss top and emerging risks.
76-82
4
Outline plans to meet each new key regulatory ratio once applicable rules
are finalized.
28, 41
72, 109
Risk
Governance
and Risk
Management
and
Business
Model
5
Summarize the bank’s risk management organization, processes, and key
functions.
84-87
6
Description of the bank’s risk culture and procedures applied to support the
culture.
83-84
7
Description of key risks that arise from the bank’s business models and
activities.
71, 83, 88-116
8
Description of stress testing within the bank’s risk governance and capital
frameworks.
70, 87, 95, 112
Capital
Adequacy
and Risk
Weighted
Assets
9
Pillar 1 capital requirements and the impact for global systemically important
banks.
26-28, 80
1-3, 6
67-69, 73,
219
10
Composition of capital and reconciliation of accounting balance sheet to the
regulatory balance sheet.
1-3, 5
67
11
Flow statement of the movements in regulatory capital.
4
12
Discussion of capital planning within a more general discussion of
management’s strategic planning.
68-70, 112
13
Analysis of how risk-weighted asset (RWA) relate to business activities
and
related risks.
9-13
70-71
14
Analysis of capital requirements for each method used for calculating RWA.
13
89-92, 94-95
15
Tabulate credit risk in the banking book
for Basel asset classes and major
portfolios.
35-52, 60-64
16
Flow statement reconciling the movements of RWA by risk type.
17-18
17
Discussion of Basel III back-testing requirements.
78
91, 95, 99
Liquidity
18
The bank’s management of liquidity needs and liquidity reserves.
33-35, 37-38
101-103,
105-106
Funding
19
Encumbered and unencumbered assets in a table by balance sheet
category.
36
104, 214
20
Tabulate consolidated total assets, liabilities
and off-balance sheet
commitments by remaining contractual maturity at the balance sheet date.
41-43
109-111
21
Discussion of the bank’s funding sources and the bank’s funding strategy.
36-41
106-109
Market Risk
22
Linkage of market risk measures for trading and non-trading portfolio and
balance sheet.
30
93
23
Breakdown of significant trading and non-trading market risk factors.
30, 32
93, 96-97
24
Significant market risk measurement model limitations and validation
procedures.
31
94-97, 99
25
Primary risk management techniques beyond reported risk measures and
parameters.
31
94-97
Credit Risk
26
Provide information that facilitates users’ understanding of the bank’s credit
risk profile, including any significant credit risk concentrations.
23-26, 61-69
21-36
1-5, 13, 17,
19-78
54-66, 88-92,
171-178, 187,
190-191,
217-218
27
Description of the bank’s policies for identifying impaired loans.
69
62, 147-148,
154, 177
28
Reconciliation of the opening and closing balances of impaired loans in the
period and the allowance for loan losses.
24, 64-68
25, 29
60, 174-176
29
Analysis of the bank’s counterparty credit risks that arise from derivative
transactions.
53-54, 66-69
91, 159,
181-183, 187,
190-191
30
Discussion of credit risk mitigation, including collateral held for all sources of
credit risk.
91, 151, 159
Other Risks
31
Description of ‘other risk’ types based on management’s classifications and
discuss how each one is identified, governed, measured, and managed.
97-100, 112-116
32
Discuss publicly known risk events related to other risks.
78
81-82, 212-213,
221
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 4
TABLE OF CONTENTS
MANAGEMENT’S DISCUSSION AND ANALYSIS
4
Caution Regarding Forward-Looking Statements
45
Changes in Internal Control over Financial Reporting
5
Financial Highlights
46
Glossary
6
Significant Events
6
How We Performed
10
Financial Results Overview
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
14
How Our Businesses Performed
49
Interim Consolidated Balance Sheet
21
Quarterly Results
50
Interim Consolidated Statement of Income
22
Balance Sheet Review
51
Interim Consolidated Statement of Comprehensive Income
23
Credit Portfolio Quality
52
Interim Consolidated Statement of Changes in Equity
26
Capital Position
53
Interim Consolidated Statement of Cash Flows
29
Managing Risk
54
Notes to Interim Consolidated Financial Statements
44
Securitization and Off-Balance Sheet Arrangements
44
Accounting Policies and Estimates
81
SHAREHOLDER AND INVESTOR INFORMATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF OPERATING
PERFORMANCE
This MD&A is presented to enable readers
to assess material changes in the financial
condition and operating results of TD Bank
Group (“TD” or the “Bank”) for
the three and six months ended April 30,
2024, compared with the corresponding periods
shown. This MD&A should be read in conjunction
with the Bank’s
unaudited Interim Consolidated Financial Statements
and related Notes included in this Report
to Shareholders and with the 2023 Consolidated
Financial
Statements and related Notes and 2023 MD&A.
This MD&A is dated May 22, 2024. Unless
otherwise indicated, all amounts are expressed
in Canadian dollars
and have been primarily derived from the
Bank’s 2023 Consolidated Financial Statements
and related Notes or Interim Consolidated
Financial Statements and
related Notes, prepared in accordance with
IFRS as issued by the IASB. Note that certain
comparative amounts have been revised
to conform with the
presentation adopted in the current period.
Additional information relating to the Bank, including
the Bank’s 2023 Annual Information Form, is available
on the
Bank’s website at http://www.td.com as well as on SEDAR+
at http://www.sedarplus.ca and on the SEC’s website at http://www.sec.gov (EDGAR
filers section).
Caution Regarding Forward-Looking Statements
From time to time, the Bank (as defined in this document) makes written and/or oral forward-looking statements, including
in this document, in other filings with Canadian regulators or the
United States (U.S.) Securities and Exchange Commission (SEC), and in other communications. In
addition, representatives of the Bank may make forward-looking statements orally to
analysts, investors, the media, and others. All such statements are made pursuant to the “safe harbour” provisions
of, and are intended to be forward-looking statements under,
applicable
Canadian and U.S. securities legislation, including the
U.S. Private Securities Litigation Reform Act of 1995
. Forward-looking statements include, but are not limited to, statements made in
this document, the Management’s Discussion and Analysis (“2023 MD&A”) in the Bank’s
2023 Annual Report under the heading “Economic Summary and Outlook”, under the headings
“Key Priorities for 2024” and “Operating Environment and Outlook” for the Canadian Personal and Commercial Banking,
U.S. Retail, Wealth Management and Insurance, and Wholesale
Banking segments, and under the heading “2023 Accomplishments and Focus for 2024” for the Corporate segment,
and in other statements regarding the Bank’s objectives and priorities
for 2024 and beyond and strategies to achieve them, the regulatory environment in which the Bank operates, and
the Bank’s anticipated financial performance. Forward-looking statements
can be identified by words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “goal”, “intend”, “may”,
“outlook”, “plan”, “possible”, “potential”, “predict”, “project”, “should”,
“target”, “will”, and “would” and similar expressions or variations thereof, or the negative thereof, but these terms
are not the exclusive means of identifying such statements.
By their very nature, these forward-looking statements require the Bank to make assumptions and are subject to
inherent risks and uncertainties, general and specific. Especially in light of
the uncertainty related to the physical, financial, economic, political, and regulatory environments, such risks and
uncertainties – many of which are beyond the Bank’s control and the
effects of which can be difficult to predict – may cause actual results to differ materially
from the expectations expressed in the forward-looking statements. Risk factors that could cause,
individually or in the aggregate, such differences include: strategic, credit, market (including equity,
commodity, foreign exchange, interest rate,
and credit spreads), operational (including
technology, cyber security,
and infrastructure), model, insurance, liquidity,
capital adequacy, legal, regulatory compliance and
conduct, reputational, environmental and social, and other
risks. Examples of such risk factors include general business and economic conditions in the regions in which the Bank operat
es; geopolitical risk; inflation, rising rates and recession;
regulatory oversight and compliance risk;
the ability of the Bank to execute on long-term strategies, shorter-term key strategic priorities, including the successful
completion of acquisitions
and dispositions and integration of acquisitions,
the ability of the Bank to achieve its financial or strategic objectives with respect to its investments, business
retention plans, and other
strategic plans; technology and cyber security risk (including cyber-attacks, data security breaches or technology
failures) on the Bank’s technologies, systems and networks, those of the
Bank’s customers (including their own devices), and third parties providing services to the Bank; model
risk; fraud activity; insider risk; 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 parties; the impact of new and changes
to,
or application of, current laws,
rules and regulations, including without limitation tax laws, capital guidelines and liquidity regulatory
guidance; increased competition from incumbents and
new entrants (including Fintechs and big technology competitors); shifts in consumer attitudes and disruptive technology;
environmental and social risk (including climate change);
exposure related to significant litigation and regulatory matters; ability of the Bank to attract, develop, and retain
key talent; changes to the Bank’s credit ratings; changes in foreign
exchange rates, interest rates, credit spreads and equity prices; the interconnectivity of Financial Institutions including
existing and potential international debt crises; 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; the economic, financial, and other impacts of pandemics; 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 2023 MD&A, as may be
updated in subsequently filed quarterly reports to shareholders and news
releases (as applicable) related to any events or transactions discussed under the heading “Significant Events” in
the relevant MD&A, which applicable releases may be found on
www.td.com. All such factors, as well as other uncertainties and potential events,
and the inherent uncertainty of forward-looking statements, should be considered carefully
when making
decisions with respect to the Bank. The Bank cautions readers not to place undue reliance on the Bank’s
forward-looking statements.
Material economic assumptions underlying the forward-looking statements contained in this document are set out
in the 2023 MD&A under the heading “Economic Summary and Outlook”,
under the headings “Key Priorities for 2024” and “Operating Environment and Outlook” for the Canadian Personal
and Commercial Banking, U.S. Retail, Wealth Management and
Insurance, and Wholesale Banking segments, and under the heading “2023 Accomplishments and Focus for 2024”
for the Corporate segment, each as may be updated in subsequently
filed quarterly reports to shareholders.
Any forward-looking statements contained in this document represent the views of management only as of the
date hereof and are presented for the purpose of assisting the Bank’s
shareholders and analysts in understanding the Bank’s financial position, objectives and priorities and
anticipated financial performance as at and for the periods ended on the dates
presented, and may not be appropriate for other purposes. The Bank does not undertake to update any forward-looking
statements, whether written or oral, that may be made from time to
time by or on its behalf, except as required under applicable law.
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.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 5
TABLE 1: FINANCIAL HIGHLIGHTS
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Results of operations
Total revenue – reported
1
$
13,819
$
13,714
$
12,397
$
27,533
$
24,598
Total revenue – adjusted
1,2
13,883
13,771
12,570
27,654
25,647
Provision for (recovery of) credit losses
1,071
1,001
599
2,072
1,289
Insurance service expenses (ISE)
1
1,248
1,366
1,118
2,614
2,282
Non-interest expenses – reported
1
8,401
8,030
6,756
16,431
14,868
Non-interest expenses – adjusted
1,2
7,084
7,125
6,462
14,209
12,799
Net income – reported
1
2,564
2,824
3,306
5,388
4,887
Net income – adjusted
1,2
3,789
3,637
3,707
7,426
7,861
Financial position
(billions of Canadian dollars)
Total loans net of allowance for loan losses
$
928.1
$
904.3
$
849.6
$
928.1
$
849.6
Total assets
1,966.7
1,910.9
1,924.8
1,966.7
1,924.8
Total deposits
1,203.8
1,181.3
1,189.4
1,203.8
1,189.4
Total equity
112.0
112.4
116.2
112.0
116.2
Total risk-weighted assets
3
602.8
579.4
549.4
602.8
549.4
Financial ratios
Return on common equity (ROE) – reported
1,4
9.5
%
10.9
%
12.4
%
10.2
%
9.1
%
Return on common equity – adjusted
1,2
14.5
14.1
14.0
14.3
15.0
Return on tangible common equity (ROTCE)
1,2,4
13.0
14.9
16.5
13.9
12.3
Return on tangible common equity – adjusted
1,2
19.2
18.7
18.3
18.9
19.7
Efficiency ratio – reported
1,4
60.8
58.6
54.5
59.7
60.4
Efficiency ratio – adjusted, net of ISE
1,2,4,5
56.1
57.4
56.4
56.7
54.8
Provision for (recovery of) credit losses
as a % of net
average loans and acceptances
0.47
0.44
0.28
0.45
0.30
Common share information – reported
(Canadian dollars)
Per share earnings
1
Basic
$
1.35
$
1.55
$
1.69
$
2.90
$
2.52
Diluted
1.35
1.55
1.69
2.89
2.52
Dividends per share
1.02
1.02
0.96
2.04
1.92
Book value per share
4
57.69
57.34
57.08
57.69
57.08
Closing share price
6
81.67
81.67
82.07
81.67
82.07
Shares outstanding (millions)
Average basic
1,762.8
1,776.7
1,828.3
1,769.8
1,824.4
Average diluted
1,764.1
1,778.2
1,830.3
1,771.2
1,826.6
End of period
1,759.3
1,772.1
1,838.5
1,759.3
1,838.5
Market capitalization (billions of Canadian dollars)
$
143.7
$
144.7
$
150.9
$
143.7
$
150.9
Dividend yield
4
5.1
%
4.9
%
4.5
%
5.0
%
4.4
%
Dividend payout ratio
4
75.6
65.7
56.7
70.3
76.2
Price-earnings ratio
1,4
13.8
13.1
10.4
13.8
10.4
Total shareholder return (1 year)
4
4.5
(6.9)
(7.5)
4.5
(7.5)
Common share information – adjusted
(Canadian dollars)
1,2
Per share earnings
1
Basic
$
2.04
$
2.01
$
1.91
$
4.05
$
4.15
Diluted
2.04
2.00
1.91
4.04
4.14
Dividend payout ratio
49.9
%
50.7
%
50.2
%
50.3
%
46.2
%
Price-earnings ratio
1
10.5
10.6
9.8
10.5
9.8
Capital ratios
3
Common Equity Tier 1 Capital ratio
13.4
%
13.9
%
15.3
%
13.4
%
15.3
%
Tier 1 Capital ratio
15.1
15.7
17.3
15.1
17.3
Total Capital ratio
17.1
17.6
19.7
17.1
19.7
Leverage ratio
4.3
4.4
4.6
4.3
4.6
TLAC ratio
30.6
30.8
34.2
30.6
34.2
TLAC Leverage ratio
8.7
8.6
9.0
8.7
9.0
1
For the three and six months ended April
30, 2023, certain amounts have been restated for the adoption of IFRS 17,
Insurance Contracts
(IFRS 17). Refer to Note 2 of the Bank’s second
quarter 2024 Interim Consolidated Financial Statements for further details.
2
The Toronto-Dominion Bank (“TD” or the
“Bank”) prepares its Interim Consolidated Financial Statements in accordance with IFRS, the current GAAP,
and refers to results prepared in
accordance with IFRS as the “reported” results. The Bank also utilizes non-GAAP financial measures
such as “adjusted” results and non-GAAP ratios to assess each of its businesses
and to measure overall Bank performance. To
arrive at adjusted results, the Bank adjusts reported results for “items of note”. Refer to “Significant
Events” and “How We Performed”
sections of this document for further explanation, a list of the items of note, and a reconciliation of adjusted to reported
results. Non-GAAP financial measures and ratios used in this
document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other
issuers.
3
These measures have been included in this document in accordance with the Office of the Superintendent
of Financial Institutions Canada’s (OSFI’s) Capital Adequacy Requirements
(CAR), Leverage Requirements (LR), and Total
Loss Absorbing Capacity (TLAC) guidelines.
Refer to the “Capital Position” section of this document for further details.
4
For additional information about this metric, refer to the Glossary of this document.
5
Efficiency ratio – adjusted, net of ISE is calculated by dividing adjusted non-interest expenses by adjusted
total revenue, net of ISE. Adjusted total revenue, net of ISE –
Q2 2024: $12,635 million, Q1 2024: $12,405 million, Q2 2023: $11,
452 million, 2024 YTD: $25,040 million, 2023 YTD: $23,365 million. Effective the first quarter
of 2024, the composition
of this non-GAAP ratio and the comparative amounts have been revised.
6
Toronto Stock Exchange closing market
price.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 6
SIGNIFICANT EVENTS
a) Provision for Investigations Related to the Bank’s AML Program
In the second quarter of 2024, the Bank recorded
an initial provision of $615 million (US$450
million) in connection with discussions
with one of its U.S. regulators,
related to previously disclosed regulatory and
law enforcement investigations of the
Bank’s U.S.
Bank Secrecy Act
(BSA)/Anti-Money Laundering (AML)
program.
For further details, refer to Note 19 of the Bank’s
second quarter
2024 Interim Consolidated Financial
Statements.
b)
Restructuring Charges
The Bank continued to undertake certain
measures in the second quarter of 2024 to reduce
its cost base and achieve greater efficiency. In connection with these
measures, the Bank incurred $165 million
of restructuring charges which primarily
relate to employee severance and other
personnel-related costs and real estate
optimization. Next quarter, we expect to incur additional restructuring
charges of approximately $50 million, and
to conclude our restructuring program.
c) Federal Deposit Insurance Corporation Special
Assessment
On November 16, 2023, the FDIC announced
a final rule that implements a special assessment
to recover the losses to the Deposit Insurance
Fund arising from
the protection of uninsured depositors during
the U.S. bank failures in the spring of 2023.
The special assessment resulted in the recognition
of $411 million
(US$300 million) pre-tax in non-interest expenses
in the first quarter of the Bank’s fiscal 2024.
On February 23, 2024, the FDIC notified
all institutions subject to the special assessment
that its estimate of total losses has increased
compared to the amount
communicated with the final rule in November
- Accordingly, the Bank recognized an additional expense
for the special assessment of $103 million
(US$75 million)
in the second quarter of the Bank’s
fiscal 2024. The final amount of the Bank’s special
assessment may be further updated as
the FDIC
determines the actual losses to the Deposit
Insurance Fund. The FDIC plans
to provide institutions subject to the special
assessment with an updated estimate
with its first quarter 2024 special assessment
invoice, to be released in June 2024.
HOW WE PERFORMED
CORPORATE OVERVIEW
The Toronto-Dominion Bank and its subsidiaries are collectively known
as TD Bank Group (“TD” or the “Bank”).
TD is the sixth largest bank in North
America by
assets and serves more than 27.5 million customers
in four key businesses operating in a number
of locations in financial centres around
the globe: Canadian
Personal and Commercial Banking, including
TD Canada Trust and TD Auto Finance Canada; U.S.
Retail, including TD Bank, America’s Most Convenient
Bank
®
,
TD Auto Finance U.S., TD Wealth (U.S.), and
an investment in The Charles Schwab
Corporation; Wealth Management and Insurance, including
TD Wealth
(Canada), TD Direct Investing, and TD Insurance;
and Wholesale Banking, including TD Securities
and TD Cowen. TD also ranks among
the world’s leading
online financial services firms, with more
than 17 million active online and mobile customers.
TD had $1.97 trillion in assets on April 30,
- The Toronto-
Dominion Bank trades under the symbol “TD”
on the Toronto and New York Stock Exchanges.
HOW THE BANK REPORTS
The Bank prepares its Interim Consolidated
Financial Statements in accordance
with IFRS and refers to results prepared
in accordance with IFRS as “reported”
results.
Non-GAAP and Other Financial Measures
In addition to reported results, the Bank also
presents certain financial measures, including
non-GAAP financial measures that are
historical, non-GAAP ratios,
supplementary financial measures and capital
management measures, to assess its results.
Non-GAAP financial measures, such as “adjusted”
results, are utilized
to assess the Bank’s businesses and to measure
the Bank’s overall performance. To arrive at adjusted results, the Bank adjusts
for “items of note” from reported
results. Items of note are items which
management does not believe are indicative of
underlying business performance and are disclosed
in Table 3. Non-GAAP
ratios include a non-GAAP financial measure
as one or more of its components. Examples
of non-GAAP ratios include adjusted basic
and diluted earnings per
share (EPS), adjusted dividend payout ratio, adjusted
efficiency ratio, net of ISE, and adjusted effective income
tax rate. The Bank believes that non-GAAP
financial measures and non-GAAP ratios
provide the reader with a better understanding
of how management views the Bank’s performance.
Non-GAAP financial
measures and non-GAAP ratios used in this document
are not defined terms under IFRS and,
therefore, may not be comparable to similar
terms used by other
issuers. Supplementary financial measures
depict the Bank’s financial performance and
position, and capital management
measures depict the Bank’s capital
position, and both are explained in this document
where they first appear.
U.S. Strategic Cards
The Bank’s U.S. strategic cards portfolio is
comprised of agreements with certain
U.S. retailers pursuant to which TD is the U.S. issuer
of private label and co-
branded consumer credit cards to their U.S.
customers. Under the terms of the individual
agreements, the Bank and the retailers
share in the profits generated by
the relevant portfolios after credit losses.
Under IFRS, TD is required to present
the gross amount of revenue and PCL related
to these portfolios in the Bank’s
Interim Consolidated Statement of Income. At
the segment level, the retailer program partners’
share of revenues and credit losses is presented
in the Corporate
segment, with an offsetting amount (representing
the partners’ net share) recorded in Non-interest
expenses, resulting in no impact to Corporate’s
reported net
income (loss). The net income (loss) included
in the U.S. Retail segment includes only
the portion of revenue and credit losses
attributable to TD under the
agreements.
Investment in The Charles Schwab Corporation
and IDA Agreement
On October 6, 2020, the Bank acquired an approximately
13.5% stake in The Charles Schwab Corporation
(“Schwab”) following the completion of
Schwab’s
acquisition of TD Ameritrade Holding Corporation
(“TD Ameritrade”) of which the Bank
was a major shareholder (the “Schwab transaction”).
On August 1, 2022,
the Bank sold 28.4 million non-voting common
shares of Schwab, at a price of US$66.53
per share for proceeds of $2.5 billion (US$1.9
billion), which reduced the
Bank’s ownership interest in Schwab to approximately
12.0%.
The Bank accounts for its investment in
Schwab using the equity method. The U.S.
Retail segment reflects the Bank’s share of
net income from its investment
in Schwab. The Corporate segment net income
(loss) includes amounts for amortization
of acquired intangibles, the acquisition
and integration charges related to
the Schwab transaction, and the Bank’s share of restructuring
and other charges incurred by Schwab.
The Bank’s share of Schwab’s earnings available to
common shareholders is reported with
a one-month lag. For further details, refer
to Note 7 of the Bank’s second quarter 2024 Interim
Consolidated Financial
Statements.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 7
On November 25, 2019, the Bank and Schwab
signed an insured deposit account agreement
(the “2019 Schwab IDA Agreement”), with an
initial expiration
date of July 1, 2031. Under the 2019 Schwab
IDA Agreement, starting July 1, 2021, Schwab
had the option to reduce the deposits by up
to US$10 billion per year
(subject to certain limitations and adjustments),
with a floor of US$50 billion. In addition, Schwab
requested some further operational flexibility
to allow for the
sweep deposit balances to fluctuate over
time, under certain conditions and subject to
certain limitations.
On May 4, 2023, the Bank and Schwab entered
into an amended insured deposit account
agreement (the “2023 Schwab IDA Agreement”),
which replaced the
2019 Schwab IDA Agreement. Pursuant
to the 2023 Schwab IDA Agreement, the Bank
continues to make sweep deposit accounts
available to clients of Schwab.
Schwab designates a portion of the deposits
with the Bank as fixed-rate obligation amounts
(FROA). Remaining deposits over
FROA are designated as floating-
rate obligations. In comparison to the 2019
Schwab IDA Agreement, the 2023 Schwab
IDA Agreement extends the initial expiration
date by three years to
July 1, 2034 and provides for lower deposit balances
in its first six years,
followed by higher balances in the later
years. Specifically, until September 2025, the
aggregate FROA will serve as the floor. Thereafter, the floor will be set at US$60
billion. In addition, Schwab has the option
to buy down up to $6.8 billion
(US$5 billion)
of FROA by paying the Bank certain
fees in accordance with the 2023 Schwab
IDA Agreement, subject to certain limits.
Refer to the “Related Party
Transactions” section in the 2023 MD&A for further details.
During the first quarter of 2024, Schwab exercised
its option to buy down the remaining $0.7
billion (US$0.5 billion) of the US$5 billion
FROA buydown
allowance and paid $32 million (US$23
million) in termination fees to the Bank in accordance
with the 2023 Schwab IDA Agreement. By the
end of the first quarter
of 2024, Schwab had completed its buy down
of the full US$5 billion FROA buydown
allowance and had paid a total of $337
million (US$250 million) in termination
fees to the Bank. The fees were intended to
compensate the Bank for losses incurred
from discontinuing certain hedging relationships
and for lost revenues. The
net impact was recorded in net interest income.
The following table provides the operating results
on a reported basis for the Bank.
TABLE 2: OPERATING RESULTS – Reported
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net interest income
$
7,465
$
7,488
$
7,428
$
14,953
$
15,161
Non-interest income
1
6,354
6,226
4,969
12,580
9,437
Total revenue
1
13,819
13,714
12,397
27,533
24,598
Provision for (recovery of) credit losses
1,071
1,001
599
2,072
1,289
Insurance service expenses
1
1,248
1,366
1,118
2,614
2,282
Non-interest expenses
1
8,401
8,030
6,756
16,431
14,868
Income before income taxes and share
of net income from
investment in Schwab
1
3,099
3,317
3,924
6,416
6,159
Provision for (recovery of) income taxes
1
729
634
859
1,363
1,798
Share of net income from investment in
Schwab
194
141
241
335
526
Net income – reported
1
2,564
2,824
3,306
5,388
4,887
Preferred dividends and distributions on other
equity instruments
190
74
210
264
293
Net income available to common shareholders
1
$
2,374
$
2,750
$
3,096
$
5,124
$
4,594
1
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 8
The following table provides a reconciliation between
the Bank’s adjusted and reported results.
For further details refer to the “Significant
Events” or “How We
Performed”
sections.
TABLE 3: NON-GAAP FINANCIAL MEASURES – Reconciliation
of Adjusted to Reported Net Income
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Operating results – adjusted
Net interest income
1
$
7,529
$
7,545
$
7,610
$
15,074
$
15,472
Non-interest income
1,2,3
6,354
6,226
4,960
12,580
10,175
Total revenue
2
13,883
13,771
12,570
27,654
25,647
Provision for (recovery of) credit losses
1,071
1,001
599
2,072
1,289
Insurance service expenses
2
1,248
1,366
1,118
2,614
2,282
Non-interest expenses
2,4
7,084
7,125
6,462
14,209
12,799
Income before income taxes and share
of net income from
investment in Schwab
4,480
4,279
4,391
8,759
9,277
Provision for income taxes
920
872
967
1,792
2,027
Share of net income from investment in
Schwab
5
229
230
283
459
611
Net income – adjusted
2
3,789
3,637
3,707
7,426
7,861
Preferred dividends and distributions on other
equity instruments
190
74
210
264
293
Net income available to common shareholders
– adjusted
3,599
3,563
3,497
7,162
7,568
Pre-tax adjustments for items of note
Amortization of acquired intangibles
6
(72)
(94)
(79)
(166)
(133)
Acquisition and integration charges related
to the Schwab transaction
4,5
(21)
(32)
(30)
(53)
(64)
Share of restructuring and other charges
from investment in Schwab
5
–
(49)
–
(49)
–
Restructuring charges
4
(165)
(291)
–
(456)
–
Acquisition and integration-related charges
4
(102)
(117)
(73)
(219)
(94)
Charges related to the terminated First
Horizon (FHN) acquisition
4
–
–
(154)
–
(260)
Impact from the terminated FHN acquisition-related
capital hedging strategy
1
(64)
(57)
(134)
(121)
(1,010)
Civil matter provision/Litigation settlement
4
(274)
–
(39)
(274)
(1,642)
FDIC special assessment
4
(103)
(411)
–
(514)
–
Provision for investigations related to the
Bank’s AML program
4
(615)
–
–
(615)
–
Less: Impact of income taxes
Amortization of acquired intangibles
(10)
(15)
(12)
(25)
(20)
Acquisition and integration charges related
to the Schwab transaction
(5)
(6)
(4)
(11)
(10)
Restructuring charges
(43)
(78)
–
(121)
–
Acquisition and integration-related charges
(22)
(24)
(10)
(46)
(15)
Charges related to the terminated FHN acquisition
–
–
(38)
–
(64)
Impact from the terminated FHN acquisition-related
capital hedging strategy
(16)
(14)
(33)
(30)
(249)
Civil matter provision/Litigation settlement
(69)
–
(11)
(69)
(456)
FDIC special assessment
(26)
(101)
–
(127)
–
Canada Recovery Dividend (CRD) and
federal tax rate
increase for fiscal 2022
7
–
–
–
–
585
Total adjustments for items of note
(1,225)
(813)
(401)
(2,038)
(2,974)
Net income available to common shareholders
– reported
$
2,374
$
2,750
$
3,096
$
5,124
$
4,594
1
Prior to May 4, 2023, the impact shown covers periods before the termination of the FHN transaction and includes
the following components, reported in the Corporate segment: i) mark-
to-market gains (losses) on interest rate swaps recorded in non-interest income – Q2 2023: ($263) million,
Q1 2023: ($998) million, ii) basis adjustment amortization related to de-
designated fair value hedge accounting relationships, recorded in net interest income – Q2 2023: $129 million, Q1
2023: $122 million, and iii) interest income (expense) recognized on the
interest rate swaps, reclassified from non-interest income to net interest income with no impact to total adjusted
net income – Q2 2023: $311 million, Q1 2023: $251
million. After the
termination of the merger agreement, the residual impact of the strategy is reversed through net interest income
– Q2 2024: ($64)
million, Q1 2024: ($57) million.
2
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
3
Adjusted non-interest income excludes the following item of note:
i. Stanford litigation settlement – Q2 2023: $39 million. This reflects the foreign exchange
loss and is reported in the Corporate segment.
4
Adjusted non-interest expenses exclude the following items of note:
i.
Amortization of acquired intangibles – Q2 2024: $42 million, Q1 2024: $63 million, Q2 2023: $49 million, Q1 2023:
$24 million, reported in the Corporate segment;
ii. The Bank’s own integration and acquisition costs related to the Schwab
transaction – Q2 2024: $16 million, Q1 2024: $23 million, Q2 2023: $18 million, Q1 2023: $21 million
,
reported
in the Corporate segment;
iii. Restructuring charges – Q2 2024: $165 million,
Q1 2024: $291 million, reported in the Corporate segment;
iv. Acquisition and integration-related
charges – Q2 2024: $102 million, Q1 2024: $117
million, Q2 2023: $73 million, Q1 2023: $21 million, reported in the Wholesale Banking segment;
v. Charges related to the terminated
FHN acquisition – Q2 2023: $154 million, Q1 2023: $106 million, reported in the U.S. Retail
segment;
vi. Civil matter provision/Litigation settlement – Q2 2024: $274 million in respect of a
civil matter, Q1 2023: $1,603 million in respect of the Stanford
litigation settlement, reported in the
Corporate segment;
vii. FDIC special assessment – Q2 2024: $103 million, Q1 2024: $411
million,
reported in the U.S. Retail segment; and
viii. Provision for investigations related to the Bank’s AML program
– Q2 2024: $615 million, reported in the U.S. Retail segment.
5
Adjusted share of net income from investment in Schwab excludes the following items of note on an after-tax basis.
The earnings impact of these items is reported in the Corporate
segment:
i. Amortization of Schwab-related acquired intangibles – Q2 2024: $30 million, Q1
2024: $31 million, Q2 2023: $30 million, Q1 2023: $30 million;
ii. The Bank’s share of acquisition and integration charges associated with
Schwab’s acquisition of TD Ameritrade – Q2 2024: $5 million, Q1 2024: $9 million,
Q2 2023: $12 million,
Q1 2023: $13 million;
iii. The Bank’s share of restructuring charges incurred by Schwab – Q1 2024:
$27 million;
and
iv. The Bank’s share
of the FDIC special assessment charge incurred by Schwab – Q1 2024: $22 million.
6
Amortization of acquired intangibles relates to intangibles acquired as a result of asset acquisitions and business
combinations, including the after-tax amounts for amortization of
acquired intangibles relating to the Share of net income from investment in Schwab, reported in the Corporate segment.
Refer to footnotes 4 and 5 for amounts.
7
CRD and impact from increase in the Canadian federal tax rate for fiscal 2022 recognized in the first quarter of 2023,
reported in the Corporate segment.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 9
TABLE 4: RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE
1
(Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Basic earnings per share – reported
2
$
1.35
$
1.55
$
1.69
$
2.90
$
2.52
Adjustments for items of note
0.69
0.45
0.22
1.15
1.63
Basic earnings per share – adjusted
2
$
2.04
$
2.01
$
1.91
$
4.05
$
4.15
Diluted earnings per share – reported
2
$
1.35
$
1.55
$
1.69
$
2.89
$
2.52
Adjustments for items of note
0.69
0.45
0.22
1.15
1.63
Diluted earnings per share – adjusted
2
$
2.04
$
2.00
$
1.91
$
4.04
$
4.14
1
EPS is computed by dividing net income available to common shareholders by the weighted-average number of
shares outstanding during the period. Numbers may not add due to
rounding.
2
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
TABLE 5: AMORTIZATION OF INTANGIBLES, NET OF INCOME TAXES
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Schwab
1
$
30
$
31
$
30
$
61
$
60
Wholesale Banking related intangibles
27
42
27
69
34
Other
5
6
10
11
19
Included as items of note
62
79
67
141
113
Software and asset servicing rights
104
96
92
200
182
Amortization of intangibles, net of income
taxes
$
166
$
175
$
159
$
341
$
295
1
Included in Share of net income from investment in Schwab.
Return on Common Equity
The consolidated Bank ROE is calculated
as reported net income available to common
shareholders as a percentage of average
common equity. The
consolidated Bank adjusted ROE is calculated
as adjusted net income available to
common shareholders as a percentage of average
common equity. Adjusted
ROE is a non-GAAP financial ratio and
can be utilized in assessing the Bank’s use of equity.
ROE for the business segments is calculated
as the segment net income attributable
to common shareholders as a percentage of average
allocated capital. The
Bank’s methodology for allocating capital to its
business segments is largely aligned
with the common equity capital requirements
under Basel III. Capital allocated
to the business segments was increased
to 11.5% Common Equity Tier 1 (CET1) Capital effective the first quarter of 2024,
compared with 11% in fiscal 2023.
TABLE 6: RETURN ON COMMON EQUITY
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Average common equity
$
101,137
$
100,269
$
102,800
$
100,573
$
101,750
Net income available to common shareholders
– reported
1
2,374
2,750
3,096
5,124
4,594
Items of note, net of income taxes
1,225
813
401
2,038
2,974
Net income available to common shareholders
– adjusted
1
$
3,599
$
3,563
$
3,497
$
7,162
$
7,568
Return on common equity – reported
1
9.5
%
10.9
%
12.4
%
10.2
%
9.1
%
Return on common equity – adjusted
1
14.5
14.1
14.0
14.3
15.0
1
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
Return on Tangible Common Equity
Tangible common equity (TCE) is calculated as common shareholders’ equity
less goodwill, imputed goodwill and intangibles
on the investments in Schwab and
other acquired intangible assets, net of related
deferred tax liabilities. ROTCE is calculated
as reported net income available to common
shareholders after
adjusting for the after-tax amortization of
acquired intangibles, which are treated as an
item of note, as a percentage of average
TCE. Adjusted ROTCE is
calculated using reported net income available
to common shareholders, adjusted for all
items of note, as a percentage of average
TCE. TCE, ROTCE, and
adjusted ROTCE can be utilized in assessing
the Bank’s use of equity. TCE is a non-GAAP financial measure,
and ROTCE and adjusted ROTCE are
non-GAAP
ratios.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 10
TABLE 7: RETURN ON TANGIBLE COMMON EQUITY
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Average common equity
$
101,137
$
100,269
$
102,800
$
100,573
$
101,750
Average goodwill
18,380
18,208
17,835
18,322
17,713
Average imputed goodwill and intangibles on
investments in Schwab
6,051
6,056
6,142
6,062
6,163
Average other acquired intangibles
1
574
615
583
595
525
Average related deferred tax liabilities
(228)
(231)
(210)
(230)
(195)
Average tangible common equity
76,360
75,621
78,450
75,824
77,544
Net income available to common shareholders
– reported
2
2,374
2,750
3,096
5,124
4,594
Amortization of acquired intangibles, net of income
taxes
62
79
67
141
113
Net income available to common shareholders
adjusted for
amortization of acquired intangibles,
net of income taxes
2
2,436
2,829
3,163
5,265
4,707
Other items of note, net of income taxes
1,163
734
334
1,897
2,861
Net income available to common shareholders
– adjusted
2
$
3,599
$
3,563
$
3,497
$
7,162
$
7,568
Return on tangible common equity
2
13.0
%
14.9
%
16.5
%
13.9
%
12.3
%
Return on tangible common equity – adjusted
2
19.2
18.7
18.3
18.9
19.7
1
Excludes intangibles relating to software and asset servicing rights.
2
For the three and six months ended April
30, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to Note 2 of the Bank’s
second quarter 2024 Interim
Consolidated Financial Statements for further details.
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.
The impact is calculated as
the difference in translated earnings using the average
U.S. to Canadian dollars exchange rates in the
periods noted.
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 six months ended
April 30, 2024 vs.
April 30, 2024 vs.
April 30, 2023
April 30, 2023
Increase (Decrease)
Increase (Decrease)
U.S. Retail Bank
Total revenue – reported
$
8
$
17
Total revenue – adjusted
1
8
17
Non-interest expenses – reported
6
12
Non-interest expenses – adjusted
1
4
9
Net income – reported, after-tax
1
3
Net income – adjusted, after-tax
1
2
5
Share of net income from investment in
Schwab
2
1
1
U.S. Retail segment net income – reported,
after-tax
2
4
U.S. Retail segment net income – adjusted,
after-tax
1
3
6
Earnings per share
(Canadian dollars)
Basic – reported
$
–
$
–
Basic – adjusted
1
–
–
Diluted – reported
–
–
Diluted – adjusted
1
–
–
Average foreign exchange rate (equivalent of CAD $1.00)
For the three months ended
For the six months ended
April 30
April 30
April 30
April 30
2024
2023
2024
2023
U.S. dollar
$
0.737
$
0.739
$
0.738
$
0.740
1
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
and Other Financial Measures” in the “How We Performed” section of this
document.
2
Share of net income from investment in Schwab and the foreign exchange impact are reported with a one-month
lag.
FINANCIAL RESULTS
OVERVIEW
Performance Summary
Outlined below is an overview of the Bank’s performance
for the second quarter of 2024. Shareholder
performance indicators help guide and
benchmark the
Bank’s accomplishments. For the purposes of
this analysis, the Bank utilizes adjusted earnings,
which excludes items of note from the reported
results that are
prepared in accordance with IFRS. Reported
and adjusted results and items of note are
explained in “Non-GAAP and Other Financial
Measures” in the “How We
Performed” section of this document.
●
Adjusted diluted EPS for the six months ended
April 30, 2024, decreased 2% from
the same period last year.
●
Adjusted ROTCE for the six months ended
April 30, 2024, was 18.9%.
●
For the twelve months ended April 30, 2024,
the total shareholder return was 4.5%
compared to the Canadian peer
3
average of 7.2%.
Net Income
Quarterly comparison – Q2 2024 vs. Q2 2023
Reported net income for the quarter was $2,564
million, a decrease of $742 million, or 22%, compared
with the second quarter last year, primarily reflecting
the
impact of the provision for investigations related
to the Bank’s AML program, higher non-interest
expenses, higher PCL, impact of a civil
matter provision, and
restructuring charges, partially offset by higher
revenues. On an adjusted basis, net income
for the quarter was $3,789 million, an increase
of $82 million, or 2%.
3
Canadian peers include Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and
The Bank of Nova Scotia.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 11
By segment, the decrease in reported net income
reflects decreases in U.S. Retail of $826
million and in the Corporate segment of $338
million, partially offset
by increases in Wholesale Banking of
$211 million, in Canadian Personal and Commercial Banking
of $114 million, and in Wealth Management and Insurance of
$97 million.
Quarterly comparison – Q2 2024 vs. Q1 2024
Reported net income
for the quarter decreased $260 million, or
9%, compared with the prior quarter, primarily reflecting
the impact of the provision for
investigations related to the Bank’s AML program
and the impact of a civil matter provision,
partially offset by a lower FDIC special assessment,
lower restructuring
charges, lower insurance service expenses and
higher revenues. Adjusted net income
for the quarter increased $152 million, or 4%.
By segment, the decrease in reported net income
reflects decreases in U.S. Retail of $327
million, in the Corporate segment of $109
million, and in Canadian
Personal and Commercial Banking of
$46 million, partially offset by increases in
Wholesale Banking of $156 million and in
Wealth Management and Insurance of
$66 million.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Reported net income of $5,388 million increased
$501 million, or 10%, compared with the
same period last year. The increase reflects higher revenues and
the
prior period impacts of the Stanford litigation
settlement, the terminated FHN acquisition-related
capital hedging strategy and the provision
for income taxes in
connection with the CRD and increase in
the Canadian federal tax rate for fiscal
2022, partially offset by higher non-interest expenses,
the impact of the provision
for investigations related to the Bank’s AML program,
higher PCL, and FDIC special assessment.
Adjusted net income was $7,426 million,
a decrease of
$435 million, or 6%.
By segment, the increase in reported net income
reflects increases in the Corporate segment
of $1,651 million, in Canadian Personal and
Commercial Banking
of $170 million, in Wealth Management and Insurance
of $98 million, and in Wholesale Banking
of $85 million, partially offset by a decrease
in U.S. Retail of
$1,503 million.
Net Interest Income
Quarterly comparison – Q2 2024 vs. Q2 2023
Reported net interest income for the quarter
was $7,465 million, an increase of $37 million
compared with the second quarter last
year, primarily reflecting higher
volumes and margins in Canadian Personal
and Commercial Banking, partially offset
by lower net interest income in Wholesale
Banking. On an adjusted basis,
net interest income was $7,529 million, a
decrease of $81 million, or 1%.
By segment, the increase in reported net interest
income reflects increases in Canadian
Personal and Commercial Banking of
$435 million, in the Corporate
segment of $58 million, and in Wealth Management
and Insurance of $46 million, partially offset
by decreases in Wholesale Banking of $309
million and in
U.S. Retail of $193 million.
Quarterly comparison – Q2 2024 vs. Q1 2024
Reported net interest income for the quarter
decreased $23 million, compared with
the prior quarter, primarily reflecting fewer
days in the second quarter, partially
offset by higher volumes and margins in Canadian
Personal and Commercial Banking. On
an adjusted basis, net interest income decreased
$16 million.
By segment, the decrease in reported net interest
income reflects decreases in U.S. Retail of
$58 million, in Canadian Personal and Commercial
Banking of
$21 million, and in Wholesale Banking of $9 million,
partially offset by increases in the Corporate
segment of $46 million and in Wealth Management
and Insurance
of $19 million.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Reported net interest income was $14,953 million,
a decrease of $208 million, or 1%, compared
with the same period last year, reflecting lower
net interest income
in Wholesale Banking and lower volumes and
margins in U.S. Retail, partially offset by
higher volumes and margins in Canadian
Personal and Commercial
Banking, impact from the terminated
FHN acquisition-related capital hedging
strategy, and higher deposit margins in
Wealth Management. On an adjusted basis,
net interest income was $15,074
million, a decrease of $398 million, or
3%.
By segment, the decrease in reported net interest
income reflects decreases in Wholesale
Banking of $636 million and in U.S. Retail
of $461 million, partially
offset by increases in Canadian Personal
and Commercial Banking of $729 million, in
the Corporate segment of $112 million,
and in Wealth Management and
Insurance of $48 million.
Non-Interest Income
Quarterly comparison – Q2 2024 vs. Q2 2023
Reported non-interest income for the quarter
was $6,354 million, an increase of $1,385
million, or 28%. For both reported and adjusted
non-interest income, the
increase primarily reflected higher trading-related
revenue, underwriting fees, and lending
fees in Wholesale Banking, higher insurance premiums,
higher fee-
based revenue commensurate with market
growth and transaction revenue in
Wealth Management, and higher revenue from
treasury and balance sheet
management activities.
By segment, the increase in reported non-interest
income reflects increases in Wholesale
Banking of $832 million, in Wealth Management
and Insurance of
$267 million, in the Corporate segment
of $203 million, and in U.S. Retail of $83
million. Canadian Personal and Commercial Banking
non-interest income was flat
compared with the second quarter last
year.
Quarterly comparison – Q2 2024 vs. Q1 2024
Non-interest income for the quarter increased
$128 million, or 2%, compared with the prior
quarter, primarily reflecting higher underwriting
and advisory fees, and
the net change in fair value of loan underwriting
commitments in Wholesale Banking.
By segment, the increase in non-interest income
reflects increases in Wholesale Banking
of $169 million, in the Corporate segment
of $21 million, and in U.S.
Retail of $2 million, partially offset by decreases
in Wealth Management and Insurance of
$40 million and in Canadian Personal
and Commercial Banking of
$24 million.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Reported non-interest income was $12,580
million, an increase of $3,143 million, or 33%,
compared with the same period last year, primarily reflecting
higher
trading-related revenue, underwriting fees, lending
fees, and equity commissions in
Wholesale Banking, the prior period impact of
the terminated FHN acquisition-
related capital hedging strategy, higher insurance
premiums, higher fee-based revenue
commensurate with market growth in
Wealth Management, and higher
revenue from treasury and balance sheet management
activities. Adjusted non-interest income
was $12,580 million, an increase of $2,405
million, or 24%.
By segment, the increase in reported non-interest
income reflects increases in Wholesale
Banking of $1,594 million, in the Corporate
segment of $936 million, in
Wealth Management and Insurance of $485 million,
in U.S. Retail of $127 million, and in
Canadian Personal and Commercial Banking
of $1 million.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 12
Provision for Credit Losses
Quarterly comparison – Q2 2024 vs. Q2 2023
PCL for the quarter was $1,071 million, an increase
of $472 million compared with the
second quarter last year. PCL – impaired was $870 million,
an increase of
$319 million, or 58%, reflecting credit migration
in the consumer and commercial lending portfolios.
PCL – performing was $201 million, an increase
of
$153 million. The performing provisions this
quarter largely reflect current credit
conditions including some credit migration,
and volume growth. Total PCL for the
quarter as an annualized percentage of
credit volume was 0.47%.
By segment, PCL was higher by $220
million in Canadian Personal and Commercial
Banking, by $190 million in U.S. Retail, by $43
million in Wholesale
Banking, by $20 million in the Corporate segment,
and lower by $1 million in Wealth Management
and Insurance.
Quarterly comparison – Q2 2024 vs. Q1 2024
PCL for the quarter was $1,071 million, an increase
of $70 million compared with the prior
quarter. PCL – impaired was $870 million, a decrease of
$64 million,
largely reflecting lower provisions in the
U.S. commercial lending portfolios, and seasonal
trends in the U.S. credit card and auto portfolios,
partially offset by credit
migration in the Canadian commercial lending
portfolios. PCL – performing was $201
million, an increase of $134 million. The performing
provisions this quarter
largely reflect current credit conditions including
some credit migration, and volume growth.
Total PCL for the quarter as an annualized percentage of credit volume
was 0.47%.
By segment, PCL was higher by $45 million in
Wholesale Banking,
by $44 million in Canadian Personal and
Commercial Banking, and lower by $14 million
in
the Corporate segment,
and by $5 million in U.S. Retail.
Year-to-date comparison – Q2 2024 vs. Q2 2023
PCL was $2,072 million, an increase
of $783 million compared with the same
period last year. PCL – impaired
was $1,804 million, an increase of
$700 million,
reflecting credit migration in the consumer and
commercial lending portfolios.
PCL – performing was $268 million,
an increase of $83 million. The current
year
performing build reflects volume growth and
credit conditions including some credit migration.
Total PCL as an annualized percentage
of credit volume was 0.45%.
By segment, PCL was higher in U.S. Retail
by $375
million, in Canadian Personal and Commercial
Banking by $316 million, in the Corporate
segment by
$72 million, in Wholesale Banking by $21
million, and lower in Wealth Management and
Insurance by $1 million.
TABLE 9: PROVISION FOR CREDIT LOSSES
1
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Provision for (recovery of) credit losses
– Stage 3 (impaired)
Canadian Personal and Commercial
Banking
$
397
$
364
$
234
$
761
$
454
U.S. Retail
311
377
186
688
398
Wealth Management and Insurance
–
–
1
–
1
Wholesale Banking
(1)
5
5
4
6
Corporate
2
163
188
125
351
245
Total provision for (recovery of) credit losses – Stage 3
870
934
551
1,804
1,104
Provision for (recovery of) credit losses
– Stage 1
and Stage 2 (performing)
Canadian Personal and Commercial
Banking
70
59
13
129
120
U.S. Retail
69
8
4
77
(8)
Wealth Management and Insurance
–
–
–
–
–
Wholesale Banking
56
5
7
61
38
Corporate
2
6
(5)
24
1
35
Total provision for (recovery of) credit losses – Stage 1
and Stage 2
201
67
48
268
185
Total provision for (recovery of) credit losses
$
1,071
$
1,001
$
599
$
2,072
$
1,289
-
1
Includes PCL for off-balance sheet instruments.
2
Includes PCL on the retailer program partners’ share of the U.S. strategic cards portfolio.
Insurance Service Expenses
Quarterly comparison – Q2 2024 vs. Q2 2023
Insurance service expenses for the quarter
were $1,248 million, an increase of $130
million, or 12%, compared with the second quarter
last year, reflecting
business growth, increased claims severity,
and less favourable prior years’ claims
development.
Quarterly comparison – Q2 2024 vs. Q1 2024
Insurance service expenses for the quarter
decreased $118 million, or 9%, compared with the prior quarter, reflecting
seasonally lower claims,
and more
favourable prior years’ claims development.
Yearto-date
comparison – Q2 2024 vs. Q2 2023
Insurance service expenses were $2,614
million, an increase of $332 million, or 15%,
compared with the same period last year, reflecting business
growth,
increased claims severity,
and less favourable prior years’ claims
development.
Non-Interest Expenses and Efficiency
Ratio
Quarterly comparison – Q2 2024 vs. Q2 2023
Reported non-interest expenses were $8,401
million, an increase of $1,645 million, or
24%, compared with the second quarter
last year, primarily reflecting the
impact of the provision for investigations related
to the Bank’s AML program, higher employee-related
expenses, including TD Cowen, the impact
of a civil matter
provision, restructuring charges,
investments in our risk and control
infrastructure, and FDIC special assessment.
On an adjusted basis, non-interest expenses
were $7,084 million, an increase of $622
million, or 10%.
By segment, the increase in reported non-interest
expenses reflects increases in the
Corporate segment of $711 million, in U.S. Retail of $575 million,
in
Wholesale Banking of $241 million, in
Wealth Management and Insurance of $64 million,
and in Canadian Personal and Commercial
Banking of $54 million.
The Bank’s reported efficiency ratio was 60.8%, compared
to 54.5% in the second quarter last year. The Bank’s adjusted efficiency
ratio, net of ISE was 56.1%,
compared with 56.4% in the second quarter
last year.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 13
Quarterly comparison – Q2 2024 vs. Q1 2024
Reported non-interest expenses increased
$371 million, or 5%, compared with the prior
quarter, primarily reflecting the impact of the provision
for investigations
related to the Bank’s AML program, partially offset
by a lower FDIC special assessment.
Adjusted non-interest expenses decreased
$41 million, or 1%.
By segment, the increase in reported non-interest
expenses reflects increases in the
Corporate segment of $301 million and in
U.S. Retail of $187 million,
partially offset by decreases in Wholesale Banking
of $70 million, in Canadian Personal and
Commercial Banking of $27 million, and in
Wealth Management and
Insurance of $20 million.
The Bank’s reported efficiency ratio was 60.8%, compared
with 58.6% in the prior quarter. The Bank’s adjusted efficiency ratio, net of
ISE was 56.1%,
compared with 57.4% in the prior quarter.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Reported non-interest expenses of $16,431
million increased $1,563 million, or 11%, compared with the
same period last year, primarily reflecting higher
employee-related expenses, including
TD Cowen, the impact of the provision for investigations
related to the Bank’s AML program, FDIC
special assessment,
restructuring charges, and investments in our
risk and control infrastructure, partially offset
by the prior period impact of the Stanford
litigation settlement. On an
adjusted basis, non-interest expenses were
$14,209 million, an increase of $1,410
million, or 11%.
By segment, the increase in reported non-interest
expenses reflects increases in U.S.
Retail of $945 million, in Wholesale Banking of
$858 million, in Canadian
Personal and Commercial Banking of
$175 million, and in Wealth Management and Insurance
of $102 million, partially offset by a decrease in
the Corporate
segment of $517 million.
The Bank’s reported efficiency ratio was 59.7%, compared
with 60.4% in the same period last year. The Bank’s adjusted efficiency
ratio, net of ISE was 56.7%,
compared with 54.8%
in the same period last year.
Income Taxes
The Bank’s effective income tax rate on a reported
basis was 23.5% for the current quarter, compared with 21.9%
in the second quarter last year and
19.1% in the
prior quarter. The year-over-year and quarter-over-quarter increases
primarily reflect the non-deductible provision
for the investigations related to the Bank’s AML
program,
partially offset by earnings mix.
To allow for an after-tax calculation of adjusted income, the adjusted provision
for income taxes is calculated by adjusting
the taxes for each item of note using
the statutory income tax rate of the applicable
legal entity. The adjusted effective income tax rate is calculated
as the adjusted provision for income taxes as
a
percentage of adjusted net income before
taxes. The Bank’s adjusted effective income tax rate
was 20.5% for the current quarter, compared with 22.0%
in the
second quarter last year and 20.4% in
the prior quarter. The year-over-year and quarter-over-quarter
changes primarily reflect earnings mix.
TABLE 10: INCOME TAXES – Reconciliation of Reported to Adjusted Provision for
Income Taxes
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Income taxes at Canadian statutory income
tax rate
$
861
27.8
%
$
920
27.7
%
$
1,089
27.8
%
$
1,780
27.8
%
$
1,709
27.8
%
Increase (decrease) resulting from:
Dividends received
(3)
(0.1)
(19)
(0.6)
(26)
(0.7)
(11)
(0.2)
(53)
(0.9)
Rate differentials on international operations
1
(124)
(4.0)
(271)
(8.2)
(217)
(5.5)
(395)
(6.2)
(444)
(7.2)
Other
(5)
(0.2)
4
0.2
13
0.3
(11)
(0.2)
586
9.5
Provision for income taxes and effective
income tax rate – reported
2
$
729
23.5
%
$
634
19.1
%
$
859
21.9
%
$
1,363
21.2
%
$
1,798
29.2
%
Total adjustments for items of note
191
238
108
429
229
Provision for income taxes and effective
income tax rate – adjusted
2
$
920
20.5
%
$
872
20.4
%
$
967
22.0
%
$
1,792
20.5
%
$
2,027
21.8
%
1
These amounts reflect tax credits as well as international earnings mix.
2
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
Canadian Tax Measures
On November 30, 2023, Parliament introduced
Bill C-59, which advances certain tax
measures introduced in the Canadian Federal
budget presented on March
28, 2023. Bill C-59 denies the dividend received
deduction in respect of dividends received
by certain financial institutions on shares
that are mark-to-market
property, subject to a minor carve out for dividends on certain
preferred shares, as well as imposes a 2%
tax on the net value of share repurchases by public
corporations in Canada. The legislation,
which is not yet substantively enacted, proposes
that these measures be effective beginning January
1, 2024.
International Tax Reform – Pillar Two Global Minimum Tax
The Organisation for Economic Co-operation
and Development published Pillar Two model rules as part
of its efforts toward international tax reform.
The Pillar
Two model rules provide for the implementation of a 15%
global minimum tax for large multinational
enterprises, which is to be applied on a jurisdiction-by-
jurisdiction basis. Pillar Two legislation has been enacted
or substantively enacted in certain jurisdictions
in which the Bank operates. On May
2, 2024, the
Government of Canada introduced Bill
C-69, which includes the
Global Minimum Tax Act
addressing the Pillar Two model rules. The rules will be
effective for the
Bank in Canada and other jurisdictions for
the fiscal year beginning on November
1, 2024. The Bank is assessing its potential
exposure to Pillar Two income
taxes.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 14
ECONOMIC SUMMARY AND OUTLOOK
The global economy continued to outperform
expectations to start calendar 2024,
despite geopolitical risks. Inflation has generally
continued to cool across the
G-7, and central banks are expected to
start lowering interest rates soon. However, the pace of
decline is expected to be gradual with central
bankers vigilant on
inflation risks. In addition, the evolution of
geopolitical risks maintains a degree of
uncertainty on both the economic outlook and
the inflation trajectory.
U.S. domestic demand started the year on
a solid path. Real GDP growth downshifted
in the first calendar quarter of 2024
from a very rapid pace in the second
half of 2023, but this was due in large part to
a drag from net exports. Domestic demand
turned in a sturdy performance of 2.8%
growth on a quarter-over-quarter
annualized basis, reflecting both consumer
spending and business investment. Both
advanced by almost 3% in inflation-adjusted
terms. However, government
spending cooled to a greater extent.
Based on the April 2024 data, the U.S. job
market was still tight with the unemployment
rate historically low at 3.9%. Even
so, the labour market is showing
signs of cooling, including a deceleration in job
openings and wage growth. TD Economics
expects this trend to continue. This would
help halt a recent upturn in
inflation that prompted the Federal Reserve
to signal that interest rates will need to remain
higher for longer.
TD Economics expects the U.S. Federal
Reserve will lower interest rates from the
current restrictive level of 5.25-5.50% to 5.00-5.25%
by the end of calendar
- This means that interest rates
are still expected to weigh on demand through
the year.
In contrast, Canada’s economy slowed notably in
calendar 2023, with real GDP growth of only
1.1% in real terms. TD Economics expects
economic growth to
pick up in the first quarter to above 2%, but
that pace is not expected to be sustained
through the remainder of 2024. Job growth has
slowed below labour force
growth, pushing the unemployment rate higher
to 6.1% in April. TD Economics expects
the unemployment rate to continue to rise in
the months ahead,
contributing
to prolonged weakness in consumer spending.
As a result, TD Economics expects that economic
growth is likely to remain modest through
2024.
Canadian inflation has cooled in recent
months, and the Bank of Canada is widely expected
to cut interest rates in June or July of 2024.
Thereafter, TD
Economics expects the Bank of Canada
to lower interest rates gradually. As a result of interest rates declining
more in Canada in comparison to the U.S., there
is
downside risk to the Canadian dollar, which TD Economics
expects will hover in the 70 to 72 U.S. cent
range over the next few quarters.
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank’s business
operations and activities are organized around
the following four key business segments: Canadian
Personal and Commercial Banking, U.S.
Retail, Wealth Management and Insurance, and
Wholesale Banking. The Bank’s other activities are
grouped into the
Corporate segment.
Results of each business segment reflect revenue,
expenses, assets, and liabilities generated
by the businesses in that segment. Where
applicable,
the Bank
measures and evaluates the performance of
each segment based on adjusted results
and ROE, and for those segments,
the Bank indicates that the measure is
adjusted. For further details, refer to the “How
We Performed”
section of this document, the “Business
Focus”
section in the Bank’s 2023 MD&A, and Note 28
of
the Bank’s Consolidated Financial Statements
for the year ended October 31, 2023. Effective
the first quarter of 2024, certain asset
management businesses
which were previously reported in the
U.S. Retail segment are now reported in the
Wealth Management and Insurance segment.
Comparative period information
has been adjusted to reflect the new alignment.
PCL related to performing (Stage 1 and Stage
2) and impaired (Stage 3) financial assets, loan
commitments, and financial guarantees is recorded
within the
respective segment.
Net interest income within Wholesale Banking
is calculated on a taxable equivalent basis
(TEB), which means that the value of non-taxable
or tax-exempt
income, including certain dividends, is adjusted
to its equivalent pre-tax value. Using
TEB allows the Bank to measure income from
all securities and loans
consistently and makes for a more meaningful
comparison of net interest income with similar
institutions. The TEB increase to net interest
income and provision for
income taxes reflected in Wholesale Banking
results is reversed in the Corporate segment.
The TEB adjustment for the quarter was $4
million, compared with
$29 million in the prior quarter and $40 million
in the second quarter last year.
Share of net income from investment in
Schwab is reported in the U.S. Retail
segment. Amounts for amortization of acquired
intangibles,
the acquisition and
integration charges related to the Schwab
transaction,
and the Bank’s share of restructuring and
other charges incurred by Schwab are recorded
in the Corporate
segment.
TABLE 11: CANADIAN PERSONAL AND COMMERCIAL BANKING
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net interest income
$
3,812
$
3,833
$
3,377
$
7,645
$
6,916
Non-interest income
1,027
1,051
1,027
2,078
2,077
Total revenue
4,839
4,884
4,404
9,723
8,993
Provision for (recovery of) credit losses –
impaired
397
364
234
761
454
Provision for (recovery of) credit losses –
performing
70
59
13
129
120
Total provision for (recovery of) credit losses
467
423
247
890
574
Non-interest expenses
1,957
1,984
1,903
3,941
3,766
Provision for (recovery of) income taxes
676
692
629
1,368
1,299
Net income
$
1,739
$
1,785
$
1,625
$
3,524
$
3,354
Selected volumes and ratios
Return on common equity
1
32.9
%
34.6
%
37.4
%
33.8
%
38.6
%
Net interest margin (including on securitized
assets)
2
2.84
2.84
2.74
2.84
2.77
Efficiency ratio
40.4
40.6
43.2
40.5
41.9
Number of Canadian retail branches
1,062
1,062
1,060
1,062
1,060
Average number of full-time equivalent staff
29,053
29,271
28,797
29,163
28,800
1
Capital allocated to the business segment was increased to 11.5% CET1
Capital effective the first quarter of 2024 compared with 11%
in the prior year.
2
Net interest margin is calculated by dividing net interest income by average interest-earning assets. Average
interest-earning assets used in the calculation of net interest margin is a non-
GAAP financial measure. Refer to “Non-GAAP and Other Financial Measures” in the “How We Performed”
section and the Glossary of this document for additional information about
these metrics.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 15
Quarterly comparison – Q2 2024 vs. Q2 2023
Canadian Personal and Commercial
Banking net income for the quarter was
$1,739 million, an increase of $114 million, or 7%, compared
with the second quarter
last year, reflecting higher revenue, partially offset by higher PCL
and non-interest expenses. The annualized
ROE for the quarter was 32.9%, compared
with
37.4% in the second quarter last year.
Revenue for the quarter was $4,839 million, an
increase of $435
million, or 10%, compared with the second quarter
last year. Net interest income was
$3,812 million, an increase of $435 million, or
13%, compared with the second quarter
last year, primarily reflecting volume growth and higher
margins.
Average
loan volumes increased $37 billion, or 7%,
reflecting 7% growth in personal loans
and 7% growth in business loans. Average deposit
volumes increased
$16 billion, or 4%, reflecting 6% growth in
personal deposits, partially offset by 1% decline
in business deposits. Net interest margin
was 2.84%, an increase of
10 basis points (bps), primarily due to higher
margins on deposits, partially offset by lower
margins on loans and changes to balance sheet
mix. Non-interest
income was $1,027 million, flat compared
with the second quarter last year.
PCL for the quarter was $467 million, an increase
of $220 million compared with the second
quarter last year. PCL – impaired was $397 million, an increase
of
$163 million, or 70%, reflecting credit migration
in the consumer and commercial lending
portfolios. PCL – performing was $70
million, an increase of $57 million.
The performing provisions this quarter largely
reflect credit conditions, including credit
migration in the commercial and consumer lending
portfolios, and volume
growth. Total PCL as an annualized percentage of credit volume was 0.34%,
an increase of 15 bps compared with
the second quarter last year.
Non-interest expenses for the quarter were $1,957
million, an increase of $54 million, or
3%, compared with the second quarter
last year, reflecting higher
spend supporting business growth, including
higher employee-related expenses and
technology costs, partially offset by higher non-credit
provisions in the second
quarter last year.
The efficiency ratio for the quarter was 40.4%,
compared with 43.2% in the second quarter
last year.
Quarterly comparison – Q2 2024 vs. Q1 2024
Canadian Personal and Commercial Banking
net income for the quarter was $1,739
million, a decrease of $46 million, or 3%,
compared with the prior quarter,
reflecting lower revenue and higher PCL, partially
offset by lower non-interest expenses. The annualized
ROE for the quarter was 32.9%, compared
with 34.6% in
the prior quarter.
Revenue decreased $45
million, or 1%, compared with the prior quarter. Net interest
income decreased $21 million, or 1%, reflecting
fewer days in the second
quarter, partially offset by volume growth.
Average loan volumes increased $5 billion, or
1%, reflecting 1% growth in personal loans
and 2% growth in business
loans. Average deposit volumes were relatively
flat compared with the prior quarter,
reflecting 1% growth in personal deposits,
offset by 1% decline in business
deposits. Net interest margin was 2.84%,
flat compared with the prior quarter. Non-interest income decreased
$24 million, or 2%, compared with
the prior quarter,
reflecting lower fee revenue.
PCL for the quarter was $467 million, an increase
of $44 million compared with the prior
quarter. PCL – impaired was $397 million, an increase of
$33 million, or
9%, largely reflecting
credit migration in the commercial lending
portfolio. PCL – performing was $70 million,
an increase of $11 million. The performing provisions
this quarter largely reflect credit conditions,
including credit migration in the commercial
and consumer lending portfolios, and
volume growth. Total PCL as an
annualized percentage of credit volume
was 0.34%, an increase of 4 bps compared
with the prior quarter.
Non-interest expenses decreased $27
million, or 1% compared with the prior
quarter, primarily reflecting lower technology costs and employee-related
expenses
.
The efficiency ratio was 40.4%, compared
with 40.6%, in the prior quarter.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Canadian Personal and Commercial
Banking net income for the six months ended
April 30, 2024, was $3,524 million, an increase
of $170 million, or 5%,
compared with the same period last year, reflecting higher
revenue, partially offset by higher PCL and non-interest
expenses. The annualized ROE for the
period
was 33.8%, compared with 38.6%, in
the same period last year.
Revenue for the period was $9,723
million, an increase of $730
million, or 8%, compared with the same period
last year. Net interest income was
$7,645 million, an increase of $729 million, or
11% compared with the same period last year, reflecting volume growth and
higher margins. Average loan volumes
increased $37 billion, or 7%, reflecting 7%
growth in personal loans and 8% growth
in business loans. Average deposit volumes
increased $15 billion, or 3%,
reflecting 6% growth in personal deposits,
partially offset by a 2% decline in business deposits.
Net interest margin was 2.84%, an increase
of 7 bps, primarily due
to higher margins on deposits, partially offset
by lower margins on loans and changes to balance
sheet mix.
Non-interest income was $2,078 million, relatively
flat
compared with the same period last year.
PCL was $890 million, an increase of $316
million compared with the same period last
year. PCL – impaired was $761 million, an increase of $307
million, or
68%, reflecting credit migration in the consumer
and commercial lending portfolios.
PCL – performing was $129 million, an increase
of $9 million. The current year
performing provisions largely reflect
current credit conditions, including credit
migration, and volume growth. Total PCL as an annualized percentage of credit
volume was 0.32%, an increase of 10 bps
compared with the same period last year.
Non-interest expenses were $3,941 million,
an increase of $175
million, or 5%, compared with the same period
last year, reflecting higher spend supporting
business growth, including higher employee-related
expenses and technology costs.
The efficiency ratio was 40.5%, compared
with 41.9%, for the same period last year.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 16
TABLE 12: U.S. RETAIL
(millions of dollars, except as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
Canadian Dollars
2024
2024
2023
2024
2023
Net interest income
$
2,841
$
2,899
$
3,034
$
5,740
$
6,201
Non-interest income
606
604
523
1,210
1,083
Total revenue
3,447
3,503
3,557
6,950
7,284
Provision for (recovery of) credit losses –
impaired
311
377
186
688
398
Provision for (recovery of) credit losses –
performing
69
8
4
77
(8)
Total provision for (recovery of) credit losses
380
385
190
765
390
Non-interest expenses – reported
2,597
2,410
2,022
5,007
4,062
Non-interest expenses – adjusted
1,2
1,879
1,999
1,868
3,878
3,802
Provision for (recovery of) income taxes – reported
73
(5)
189
68
393
Provision for (recovery of) income taxes – adjusted
1
99
96
227
195
457
U.S. Retail Bank net income – reported
397
713
1,156
1,110
2,439
U.S. Retail Bank net income – adjusted
1
1,089
1,023
1,272
2,112
2,635
Share of net income from investment in
Schwab
3,4
183
194
250
377
551
Net income – reported
$
580
$
907
$
1,406
$
1,487
$
2,990
Net income – adjusted
1
1,272
1,217
1,522
2,489
3,186
U.S. Dollars
Net interest income
$
2,094
$
2,141
$
2,241
$
4,235
$
4,589
Non-interest income
446
446
387
892
802
Total revenue
2,540
2,587
2,628
5,127
5,391
Provision for (recovery of) credit losses –
impaired
229
279
137
508
295
Provision for (recovery of) credit losses –
performing
51
6
3
57
(6)
Total provision for (recovery of) credit losses
280
285
140
565
289
Non-interest expenses – reported
1,909
1,779
1,493
3,688
3,005
Non-interest expenses – adjusted
1,2
1,384
1,479
1,380
2,863
2,814
Provision for (recovery of) income taxes – reported
54
(3)
140
51
291
Provision for (recovery of) income taxes – adjusted
1
73
71
168
144
338
U.S. Retail Bank net income – reported
297
526
855
823
1,806
U.S. Retail Bank net income – adjusted
1
803
752
940
1,555
1,950
Share of net income from investment in
Schwab
3,4
136
144
185
280
407
Net income – reported
$
433
$
670
$
1,040
$
1,103
$
2,213
Net income – adjusted
1
939
896
1,125
1,835
2,357
Selected volumes and ratios
Return on common equity – reported
5
5.4
%
8.5
%
14.1
%
6.9
%
14.8
%
Return on common equity – adjusted
1,5
11.7
11.3
15.3
11.5
15.8
Net interest margin
1,6
2.99
3.03
3.25
3.01
3.27
Efficiency ratio – reported
75.2
68.8
56.8
71.9
55.7
Efficiency ratio – adjusted
1
54.5
57.2
52.5
55.8
52.2
Assets under administration (billions of U.S.
dollars)
7
$
40
$
40
$
39
$
40
$
39
Assets under management (billions of U.S.
dollars)
7,8
7
7
7
7
7
Number of U.S. retail stores
1,167
1,176
1,164
1,167
1,164
Average number of full-time equivalent staff
27,957
27,985
28,401
27,971
27,987
1
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
and Other Financial Measures” in the “How We Performed” section of this
document.
2
Adjusted non-interest expenses exclude the following items of note:
i.
Charges related to the terminated First Horizon acquisition – Q2 2023: $154 million or US$113
million ($116 million or US$85 million after-tax),
Q1 2023: $106 million or
US$78 million ($80 million or US$59 million after-tax);
ii.
FDIC special assessment – Q2 2024: $103 million or US$75 million ($77 million or US$56 million after-tax), Q1 202
4: $411 million or US$300 million
($310 million or US$226 million
after-tax); and
iii.
Provision for investigations related to the Bank’s AML program – Q2 2024: $615 million or US$450 million
(before and after tax).
3
The Bank’s share of Schwab’s earnings is reported with a one-month lag. Refer to
Note 7 of the Bank’s second quarter 2024
Interim Consolidated Financial Statements for further details.
4
The after-tax amounts for amortization of acquired intangibles, the Bank’s share of acquisition and integration
charges associated with Schwab’s acquisition of TD Ameritrade, the Bank’s
share of Schwab’s restructuring charges,
and the Bank’s share of Schwab’s FDIC special assessment charge are recorded in
the Corporate segment.
5
Capital allocated to the business segment was increased to 11.5% CET1
Capital effective the first quarter of 2024, compared with 11%
in the prior year.
6
Net interest margin is calculated by dividing U.S. Retail segment’s net interest income by average interest
-earning assets. For the U.S. Retail segment, this calculation excludes the
impact related to sweep deposits arrangements,
intercompany deposits,
and cash collateral.
The value of tax-exempt interest income is adjusted to its equivalent before-tax value. For
investment securities, the adjustment to fair value is included in the calculation of average interest-earning assets.
Management believes this calculation better reflects segment
performance. Net interest income and average interest-earning assets used in the calculation are non-GAAP financial
measures.
7
For additional information about this metric, refer to the Glossary of this document.
8
Refer to “How Our Businesses Performed” section regarding alignment of certain asset management businesses
from the U.S. Retail segment to the Wealth Management and Insurance
segment.
Quarterly comparison – Q2 2024 vs. Q2 2023
U.S. Retail reported net income for the quarter
was $580
million (US$433 million), a decrease of $826
million (US$607 million), or 59% (58% in
U.S. dollars),
compared with the second quarter last
year. On an adjusted basis, net income for the quarter
was $1,272 million (US$939 million), a decrease
of $250 million
(US$186 million), or 16% (17% in U.S. dollars).
The reported and adjusted annualized ROE
for the quarter were 5.4% and 11.7%, respectively, compared with
14.1% and 15.3%, respectively, in the second quarter last year.
U.S. Retail net income includes contributions
from the U.S. Retail Bank and the Bank’s investment
in Schwab. Reported net income
for the quarter from the
Bank’s investment in Schwab was $183 million (US$136
million), a decrease of $67 million (US$49
million), or 27% (26% in U.S. dollars).
U.S. Retail Bank reported net income was
$397 million (US$297 million), a decrease
of $759 million (US$558 million), or 66%
(65% in U.S. dollars), compared
with the second quarter last year, primarily reflecting higher non-interest
expenses, higher PCL, and lower net interest
income. U.S. Retail Bank adjusted net
income was $1,089 million (US$803
million), a decrease of $183 million (US$137
million), or 14% (15% in U.S. dollars),
compared with the second quarter last
year, reflecting higher PCL and lower net interest income.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 17
Revenue for the quarter was US$2,540 million,
a decrease of US$88 million, or 3%,
compared with the second quarter last
year. Net interest income of
US$2,094 million, decreased US$147 million,
or 7%, driven by lower deposit margins
and volumes, partially offset by higher loan volumes.
Net interest margin of
2.99%, decreased 26 bps, due to lower deposit
margins reflecting higher deposit costs
and lower margins on loans. Non-interest
income of US$446 million
increased US$59 million, or 15%, compared
with the second quarter last year, primarily reflecting fee income
growth from increased customer activity and
losses
from the disposition of certain investments
in the prior year.
Average loan volumes increased US$13 billion,
or 7%, compared with the second quarter
last year. Personal loans increased 10%,
reflecting strong mortgage
and auto originations and lower prepayments
in the higher rate environment. Business
loans increased 5%, reflecting good originations
from new customer growth
and slower payment rates. Average deposit volumes
decreased US$21 billion, or 6%, reflecting
an 18% decrease in sweep deposits, a 2%
decrease in business
deposits, partially offset by a 1% increase in personal
deposit volumes. Excluding sweep deposits,
average deposits decreased 1%.
Assets under administration (AUA) were
US$40 billion as at April 30, 2024, an increase
of US$1 billion, or 3%, compared with
the second quarter last year,
reflecting net asset growth. Assets under
Management (AUM) were US$7 billion
as at April 30, 2024, flat compared
with the second quarter last year.
PCL for the quarter was US$280 million,
an increase of US$140 million compared
with the second quarter last year. PCL – impaired was US$229
million, an
increase of US$92 million, or 67%, reflecting
credit migration in the consumer and commercial
lending portfolios. PCL – performing
was US$51 million, an increase
of US$48 million. The performing provisions
this quarter reflect credit conditions and
volume growth, and are largely recorded in
the auto and commercial lending
portfolios. U.S. Retail PCL including only
the Bank’s share of PCL in the U.S. strategic cards
portfolio, as an annualized percentage of
credit volume was 0.60%,
an increase of 27 bps, compared with
the second quarter last year.
Reported non-interest expenses for the quarter
were US$1,909 million, an increase of
US$416 million, or 28%, compared with the
second quarter last year,
reflecting the impact of the provision for investigations
related to the Bank’s AML program,
and FDIC special assessment, partially
offset by acquisition and
integration-related charges for the terminated
First Horizon transaction in the second
quarter last year. On an adjusted basis, non-interest expenses
were relatively
flat, reflecting higher employee-related expenses,
partially offset by productivity initiatives.
The reported and adjusted efficiency ratios for
the quarter were 75.2% and 54.5%, respectively, compared with 56.8%
and 52.5%, respectively, in the second
quarter last year.
Quarterly comparison – Q2 2024 vs. Q1 2024
U.S. Retail reported net income of $580
million (US$433 million), a decrease of
$327 million (US$237 million), or 36% (35%
in U.S. dollars), compared with the
prior quarter. On an adjusted basis, net income for the
quarter was $1,272 million (US$939 million),
an increase of $55 million (US$43 million),
or 5% (5% in
U.S. dollars). The reported and adjusted annualized
ROE for the quarter were 5.4% and 11.7%, respectively, compared with 8.5% and 11.3%, respectively, in the
prior quarter.
The contribution from Schwab of $183
million (US$136 million) decreased $11 million (US$8 million), or
6% (6% in U.S. dollars).
U.S. Retail Bank reported net income
was $397 million (US$297 million), a decrease
of $316 million (US$229 million), or 44%
(44% in U.S. dollars), compared
with the prior quarter, primarily reflecting higher non-interest
expenses and lower net interest income.
U.S. Retail Bank adjusted net income was
$1,089 million
(US$803 million), an increase of $66
million (US$51 million), or 6% (7% in U.S. dollars),
primarily reflecting lower non-interest expenses,
partially offset by lower
net interest income.
Revenue for the quarter was US$2,540 million,
a decrease of US$47 million, or 2%,
compared with the prior quarter. Net interest income of
US$2,094 million
decreased US$47 million, or 2%, primarily reflecting
the effect of fewer days in the quarter, and lower deposit margins
and volumes. Net interest margin of 2.99%
decreased 4 bps quarter-over-quarter due
to balance sheet mix and higher funding
costs. Non-interest income of US$446 million
was flat compared to the prior
quarter.
Average loan volumes increased US$2 billion,
or 1%, compared with the prior quarter. Personal loans
were relatively flat. Business loans increased
1%,
reflecting good originations from new customer
growth and slower payment rates. Average
deposit volumes decreased US$5 billion, or
1%, compared with the
prior quarter, reflecting a 5% decrease in sweep deposits
and a 2% decrease in business deposits,
partially offset by a 2% increase in personal
deposit volume.
AUA were US$40 billion
as at April 30, 2024, flat compared
with the prior quarter. AUM were US$7 billion, flat compared
with the prior quarter.
PCL for the quarter was US$280 million,
a decrease of US$5 million compared
with the prior quarter. PCL – impaired was US$229 million, a
decrease of
US$50 million, or 18%, reflecting lower provisions
in the commercial lending portfolios,
and seasonal trends in credit card and auto
portfolios. PCL – performing
was US$51 million, an increase of US$45
million. The performing provisions this quarter
reflect credit conditions and volume growth,
and are largely recorded in
the auto and commercial lending portfolios.
U.S. Retail PCL including only the Bank’s share
of PCL in the U.S. strategic cards portfolio,
as an annualized
percentage of credit volume was 0.60%, a
decrease of 1 basis point,
compared with the prior quarter.
Reported non-interest expenses for the quarter
were US$1,909 million, an increase of
US$130 million, or 7%, compared to the prior
quarter, primarily reflecting
the impact of the provision for investigations
related to the Bank’s AML program
and additional FDIC special assessment,
partially offset by the initial FDIC special
assessment in the prior quarter, and lower operating expenses.
On an adjusted basis, non-interest expenses
decreased US$95 million, or 6%, due
to seasonality
of expenses and the impact of productivity initiatives.
The reported and adjusted efficiency ratios for
the quarter were 75.2% and 54.5%, respectively, compared with 68.8%
and 57.2%, respectively, in the prior
quarter.
Year-to-date comparison – Q2 2024 vs. Q2 2023
U.S. Retail reported net income for the
six months ended April 30, 2024, was $1,487
million (US$1,103 million), a decrease of
$1,503 million (US$1,110 million), or
50% (50% in U.S. dollars), compared with
the same period last year. On an adjusted basis, net income
for the period was $2,489
million (US$1,835 million), a
decrease of $697 million (US$522 million),
or 22% (22% in U.S. dollars). The reported
and adjusted annualized ROE for the
period were 6.9% and 11.5%,
respectively, compared with 14.8% and 15.8%, respectively, in the same period last
year.
The contribution from Schwab of $377
million (US$280 million), decreased $174 million
(US$127 million), or 32% (31% in
U.S. dollars).
U.S. Retail Bank reported net income
for the period was $1,110
million (US$823 million), a decrease of $1,329
million (US$983 million), or 54% (54%
in U.S.
dollars), compared with the same period
last year, reflecting higher non-interest expenses, higher PCL, and
lower net interest income.
U.S. Retail Bank adjusted
net income was $2,112 million (US$1,555 million), a decrease of
$523 million (US$395 million), or 20%
(20% in U.S. dollars), primarily reflecting higher
PCL,
higher non-interest expenses, and lower net
interest income.
Revenue for the period was US$5,127
million, a decrease of US$264 million, or 5%,
compared with the same period last year. Net interest income
of
US$4,235 million decreased US$354
million, or 8%, primarily reflecting lower deposit
margins and volumes, partially offset by higher
loan volumes.
Net interest
margin of 3.01%, decreased 26 bps, due
to lower deposit margins reflecting higher deposit
costs and lower margins on loans.
Non-interest income of
US$892 million increased US$90 million,
or 11%, primarily reflecting fee income growth from increased
customer activity and higher valuation on
certain
investments in the prior year.
Average loan volumes increased US$15 billion,
or 8%, compared with the same period
last year. Personal loans increased 10%, reflecting good
originations
and slower payment rates across portfolios.
Business loans increased 6%, reflecting
good originations from new customer
growth, and slower payment rates.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 18
Average deposit volumes decreased US$27 billion,
or 8%, reflecting a 20% decrease in sweep
deposits and a 3% decrease in business
deposits. Personal
deposit volumes
were flat. Excluding sweep deposits, average
deposits decreased 1%.
PCL was US$565 million, an increase of
US$276 million compared with the same period
last year. PCL – impaired was US$508 million, an increase
of
US$213 million, or 72%, reflecting credit
migration in the consumer and commercial lending
portfolios. PCL – performing was a build of
US$57 million, compared
with a recovery of US$6 million in the prior
year. The current year performing provisions largely reflect
current conditions, including credit migration,
and volume
growth. U.S. Retail PCL including
only the Bank’s share of PCL in the U.S. strategic
cards portfolio, as an annualized percentage
of credit volume was 0.60%, an
increase of 27 bps,
compared with the same period last
year.
Reported non-interest expenses for the period
were US$3,688 million, an increase of US$683
million, or 23%, compared with the same
period last year,
reflecting the impact of the provision for investigations
related to the Bank’s AML program,
FDIC special assessment, and higher
operating expenses, partially
offset by acquisition and integration-related charges
for the terminated First Horizon transaction
in the same period last year. On an adjusted basis, non-interest
expenses increased US$49 million, or 2%, reflecting
higher employee-related expenses.
The reported and adjusted efficiency ratios for
the quarter were 71.9% and 55.8%, respectively, compared with 55.7%
and 52.2%, respectively, for the same
period last year.
THE CHARLES SCHWAB CORPORATION
Refer to Note 7, Investment in Associates
and Joint Ventures of the Bank’s second quarter 2024
Interim Consolidated Financial Statements
for further information
on Schwab.
TABLE 13: WEALTH MANAGEMENT AND INSURANCE
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net interest income
$
304
$
285
$
258
$
589
$
541
Non-interest income
1
2,810
2,850
2,543
5,660
5,175
Total revenue
3,114
3,135
2,801
6,249
5,716
Provision for (recovery of) credit losses –
impaired
–
–
1
–
1
Provision for (recovery of) credit losses –
performing
–
–
–
–
–
Total provision for (recovery of) credit losses
–
–
1
–
1
Insurance service expenses
1
1,248
1,366
1,118
2,614
2,282
Non-interest expenses
1
1,027
1,047
963
2,074
1,972
Provision for (recovery of) income taxes
218
167
195
385
383
Net income
$
621
$
555
$
524
$
1,176
$
1,078
Selected volumes and ratios
Return on common equity
1,2
40.8
%
37.5
%
38.0
%
39.2
%
38.6
%
Efficiency ratio
1
33.0
33.4
34.4
33.2
34.5
Efficiency ratio, net of ISE
1,3
55.0
59.2
57.2
57.1
57.4
Assets under administration (billions of Canadian
dollars)
4
$
596
$
576
$
549
$
596
$
549
Assets under management (billions of Canadian
dollars)
489
479
460
489
460
Average number of full-time equivalent staff
15,163
15,386
16,454
15,276
16,426
1
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
2
Capital allocated to the business segment was increased to 11.5% CET1
Capital effective the first quarter of 2024, compared with 11%
in the prior year.
3
Efficiency ratio, net of ISE is calculated by dividing non-interest expenses by total revenue, net of ISE.
Total revenue, net of ISE
– Q2 2024: $1,866 million, Q1 2024: $1,769 million,
Q2 2023: $1,683 million, 2024 YTD: $3,635 million, 2023 YTD: $3,434 million. Total
revenue, net of ISE is a non-GAAP financial measure. Refer to “Non-GAAP and Other Financial
Measures” in the “How We Performed” section and the Glossary of this document for additional information about
this metric.
4
Includes AUA administered by TD Investor Services, which is part of the Canadian Personal and Commercial Banking
segment.
Quarterly comparison – Q2 2024 vs. Q2 2023
Wealth Management and Insurance net income
for the quarter was $621 million, an increase
of $97 million, or 19%, compared with
the second quarter last year,
reflecting higher revenue, partially offset by higher
insurance service expenses and non-interest
expenses. The annualized ROE for the quarter
was 40.8%,
compared with 38.0% in the second quarter
last year.
Revenue for the quarter was $3,114 million, an increase of $313
million, or 11%, compared with the second quarter last year. Non-interest income was
$2,810 million, an increase of $267 million, or
10%, reflecting higher insurance
premiums, fee-based revenue commensurate
with market growth and transaction
revenue. Net interest income was $304
million, an increase of $46 million, or 18%,
compared with the second quarter last
year, reflecting higher deposit margins.
AUA were $596 billion as at April 30, 2024, an
increase of $47 billion, or 9%, compared
with the second quarter last year, reflecting market appreciation
and net
asset growth. AUM were $489 billion as at
April 30, 2024, an increase of $29 billion,
or 6%, compared with the second quarter
last year, primarily reflecting market
appreciation.
Insurance service expenses for the quarter
were $1,248 million, an increase of $130
million, or 12%, compared with the second quarter
last year, reflecting
business growth, increased claims severity and
less favourable prior years’ claims development.
Non-interest expenses for the quarter were $1,027
million, an increase of $64 million, or
7%, compared with the second quarter
last year, reflecting higher
variable compensation commensurate
with higher revenues, and technology costs.
The efficiency ratio for the quarter was 33.0%,
compared with 34.4% in the second quarter
last year. The efficiency ratio, net of ISE for the quarter was 55.0%,
compared with 57.2% in the second quarter
last year.
Quarterly comparison – Q2 2024 vs. Q1 2024
Wealth Management and Insurance net income
for the quarter was $621 million, an increase
of $66 million, or 12%, compared with the prior
quarter, primarily
reflecting higher earnings in the wealth management
business. The annualized ROE for the quarter
was 40.8%, compared with 37.5% in the prior
quarter.
Revenue decreased $21 million, or 1%, compared
with the prior quarter. Non-interest income decreased $40 million,
or 1%, reflecting lower revenue in
the
insurance business, partially offset by higher fee-based
and transaction revenue in the wealth
management business.
Net interest income increased $19 million,
or
7%, reflecting higher deposit margins.
AUA increased $20 billion, or 3%, compared
with the prior quarter, reflecting market appreciation and net
asset growth.
AUM increased $10 billion, or 2%,
compared with prior quarter, primarily reflecting market appreciation.
Insurance service expenses for the quarter
decreased $118 million, or 9%, compared with the prior quarter, reflecting
seasonally lower claims and more
favourable prior years’ claims development.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 19
Non-interest expenses decreased $20 million,
or 2%, compared with the prior quarter, reflecting lower
employee-related expenses.
The efficiency ratio for the quarter was 33.0%,
compared with 33.4% in the prior quarter. The efficiency ratio,
net of ISE for the quarter was 55.0%, compared
with 59.2% in the prior quarter.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Wealth Management and Insurance net income
for the six months ended April 30, 2024, was
$1,176 million, an increase of $98 million, or
9%, compared with the
same period last year, reflecting higher revenues, partially
offset by higher insurance service expenses and
non-interest expenses. The annualized ROE
for the
period was 39.2%, compared with 38.6%,
in the same period last year.
Revenue for the period was $6,249 million,
an increase of $533 million, or 9%,
compared with same period last year. Non-interest income increased
$485 million, or 9%, reflecting higher insurance
premiums, and fee-based revenue commensurate
with market growth. Net interest income
increased $48 million,
or 9%, reflecting higher investment income in
the insurance business, and higher deposit
margins, partially offset by lower deposit volumes
in the wealth
management business.
Insurance service expenses were $2,614
million, an increase of $332 million, or 15%,
compared with the same period last year, reflecting business
growth,
increased claims severity and less favourable
prior years’ claims development.
Non-interest expenses were $2,074 million,
an increase of $102 million, or 5%,
compared with the same period last year, reflecting higher variable
compensation commensurate with higher
revenues, and technology costs.
The efficiency ratio for the period was 33.2%, compared
with 34.5% for the same period last
year. The efficiency ratio, net of ISE for the period was 57.1%,
compared with 57.4% in the same period last
year.
TABLE 14: WHOLESALE BANKING
1
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net interest income (TEB)
$
189
$
198
$
498
$
387
$
1,023
Non-interest income
1,751
1,582
919
3,333
1,739
Total revenue
1,940
1,780
1,417
3,720
2,762
Provision for (recovery of) credit losses –
impaired
(1)
5
5
4
6
Provision for (recovery of) credit losses –
performing
56
5
7
61
38
Total provision for (recovery of) credit losses
55
10
12
65
44
Non-interest expenses – reported
1,430
1,500
1,189
2,930
2,072
Non-interest expenses – adjusted
2,3
1,328
1,383
1,116
2,711
1,978
Provision for (recovery of) income taxes
(TEB) – reported
94
65
66
159
165
Provision for (recovery of) income taxes
(TEB) – adjusted
2
116
89
76
205
180
Net income – reported
$
361
$
205
$
150
$
566
$
481
Net income – adjusted
2
441
298
213
739
560
Selected volumes and ratios
Trading-related revenue (TEB)
4
$
693
$
730
$
482
$
1,423
$
1,144
Average gross lending portfolio (billions of Canadian
dollars)
5
96.3
96.2
95.2
96.3
96.1
Return on common equity – reported
6
9.2
%
5.3
%
4.5
%
7.3
%
7.0
%
Return on common equity – adjusted
2,6
11.3
7.6
6.4
9.5
8.2
Efficiency ratio – reported
73.7
84.3
83.9
78.8
75.0
Efficiency ratio – adjusted
2
68.5
77.7
78.8
72.9
71.6
Average number of full-time equivalent staff
7,077
7,100
6,510
7,089
5,937
1
Effective March 1, 2023, Wholesale Banking results include the acquisition of Cowen Inc.
2
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
and Other Financial Measures” in the “How We Performed” section of this
document.
3
Adjusted non-interest expenses exclude the acquisition and integration-related charges primarily for the Cowen acquisition
– Q2 2024: $102 million ($80 million after-tax), Q1 2024:
$117 million ($93 million after-tax), Q2 2023: $73 million ($63 million after
-tax), Q1 2023: $21 million ($16 million after-tax).
4
Includes net interest income (loss) TEB of ($118) million (Q1
2024: $(54) million, Q2 2023: $285 million, Q1 2023: $261 million), and trading income (loss) of
$811 million (Q1 2024:
$784 million, Q2 2023: $197 million, Q1 2023: $401 million). Trading-related revenue
(TEB) is a non-GAAP financial measure. Refer to “Non-GAAP and Other Financial Measures” in the
“How We Performed” section and the Glossary of this document for additional information about this
metric.
5
Includes gross loans and bankers’ acceptances relating to Wholesale Banking, excluding letters of credit, cash
collateral, credit default swaps, and allowance for credit losses.
6
Capital allocated to the business segment was increased to 11.5% CET1
Capital effective the first quarter of 2024 compared with 11%
in the prior year.
Quarterly comparison – Q2 2024 vs. Q2 2023
Wholesale Banking reported net income for
the quarter was $361 million, an increase
of $211 million, compared with the second quarter last year, primarily
reflecting higher revenues, partially offset by higher
non-interest expenses. On an adjusted
basis, net income was $441 million, an increase
of $228
million.
Revenue for the quarter, including TD Cowen, was $1,940
million, an increase of $523 million, or 37%,
compared with the second quarter last
year. Higher
revenue primarily reflects higher trading-related
revenue, underwriting fees, and lending
revenue.
PCL for the quarter was $55 million, an increase
of $43 million compared with the second
quarter last year. PCL – impaired was a recovery of $1 million.
PCL –
performing was $56 million, an increase of
$49 million compared to the prior year, reflecting a higher
build in the current quarter largely related
to credit migration
across various industries.
Reported
non-interest expenses for the quarter, including TD Cowen,
were $1,430 million, an increase of $241
million, or 20%, compared with the second
quarter last year, primarily reflecting higher variable compensation
commensurate with higher revenues,
TD Cowen and the associated acquisition
and integration-
related costs. On an adjusted basis, non-interest
expenses were $1,328 million, an increase
of $212
million, or 19%.
Quarterly comparison – Q2 2024 vs. Q1 2024
Wholesale Banking reported net income for
the quarter was $361 million, an increase
of $156 million, or 76%, compared with
the prior quarter, primarily reflecting
higher revenues, and lower non-interest expenses,
partially offset by higher PCL. On an adjusted
basis, net income was $441 million, an increase
of $143 million,
or 48%.
Revenue for the quarter increased $160 million,
or 9%, compared with the prior quarter. Higher revenue primarily
reflects higher underwriting and
advisory fees,
and the net change in fair value of loan underwriting
commitments.
PCL for the quarter was $55 million, an increase
of $45 million compared with the prior quarter. PCL – impaired
was a recovery of $1 million. PCL – performing
was $56 million, an increase of $51 million
compared to the prior quarter, reflecting a higher build
in the current quarter largely related
to credit migration across
various industries.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 20
Reported non-interest expenses for the quarter
decreased $70 million, or 5%, compared
with the prior quarter, primarily reflecting a provision of $102
million
taken in connection with the U.S. record keeping
matter recorded in the prior period,
partially offset by higher variable compensation
commensurate with higher
revenues. On an adjusted basis, non-interest expenses
decreased $55 million or 4%.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Wholesale Banking reported net income for
the six months ended April 30, 2024
was $566 million, an increase of $85 million,
or 18%, compared with the same
period last year, reflecting higher revenues, partially offset by higher
non-interest expenses. On an adjusted basis, net
income was $739
million, an increase of
$179 million, or 32%.
Revenue,
including TD Cowen,
was $3,720 million, an increase of $958 million,
or 35%, compared with the same period
last year. Higher revenue primarily
reflects higher trading-related revenue,
underwriting fees, lending revenue largely
from syndicated and leveraged finance, and
equity commissions.
PCL was $65 million, an increase of $21
million compared with the same period
last year. PCL – impaired was $4 million. PCL – performing
was $61
million, an
increase of $23 million compared to the prior
year. The current year performing provisions largely reflect
credit migration across various industries.
Reported non-interest expenses were $2,930
million, an increase of $858 million, or 41%,
compared with the same period last year, reflecting TD
Cowen and
the associated acquisition and integration-related
costs, higher variable compensation commensurate
with higher revenues, as well as a provision
taken in
connection with the U.S. record keeping
matter. On an adjusted basis, non-interest expenses were
$2,711 million, an increase of $733
million or 37%.
TABLE 15: CORPORATE
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net income (loss) – reported
$
(737)
$
(628)
$
(399)
$
(1,365)
$
(3,016)
Adjustments for items of note
Amortization of acquired intangibles
72
94
79
166
133
Acquisition and integration charges related
to the Schwab transaction
21
32
30
53
64
Share of restructuring and other charges
from investment in Schwab
–
49
–
49
–
Restructuring charges
165
291
–
456
–
Impact from the terminated FHN acquisition-related
capital hedging strategy
64
57
134
121
1,010
Civil matter provision/Litigation settlement
274
–
39
274
1,642
Less: impact of income taxes
CRD and federal tax rate increase for fiscal
2022
–
–
–
–
(585)
Other items of note
143
113
60
256
735
Net income (loss) – adjusted
1
$
(284)
$
(218)
$
(177)
$
(502)
$
(317)
Decomposition of items included in net
income (loss) – adjusted
Net corporate expenses
2
$
(411)
$
(254)
$
(191)
$
(665)
$
(382)
Other
127
36
14
163
65
Net income (loss) – adjusted
1
$
(284)
$
(218)
$
(177)
$
(502)
$
(317)
Selected volumes
Average number of full-time equivalent staff
23,270
23,437
22,656
23,354
22,244
1
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
and Other Financial Measures” in the “How We Performed” section of this
document.
2
For additional information about this metric, refer to the Glossary of this document.
Quarterly comparison – Q2 2024 vs. Q2 2023
Corporate segment’s reported net loss
for the quarter was $737 million, compared
with a reported net loss of $399 million
in the second quarter last year.
The
higher net loss primarily reflects the impacts
of a civil matter provision, higher risk
and control expenses and restructuring
charges, partially offset by higher
revenue from treasury and balance sheet activities
in the current quarter. Net corporate expenses
increased $220 million compared to
the prior year, primarily
reflecting investments in our risk and control
infrastructure. The adjusted net loss for
the quarter was $284 million, compared
with an adjusted net loss of $177
million in the second quarter last year.
Quarterly comparison – Q2 2024 vs. Q1 2024
Corporate segment’s reported net loss
for the quarter was $737 million, compared
with a reported net loss of $628 million
in the prior quarter. The higher net
loss
reflects higher risk and control expenses
and the impact of a civil matter provision,
partially offset by lower restructuring charges
and higher revenue from treasury
and balance sheet management activities.
Net corporate expenses increased $157
million compared to the prior quarter, primarily reflecting investments
in our risk
and control infrastructure. The adjusted net
loss for the quarter was $284 million,
compared with an adjusted net loss of $218
million in the prior quarter.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Corporate segment’s reported net loss
for the six months ended
April 30, 2024 was $1,365 million, compared
with a reported net loss of $3,016 million in
the same
period last year. The lower net loss primarily
reflects the prior period impacts of
the Stanford litigation settlement, the terminated
FHN acquisition-related capital
hedging strategy and provision for income taxes
in connection with the CRD and increase
in the Canadian federal tax rate for fiscal
2022, partially offset by
restructuring charges and risk and control
expenses in the current period. The adjusted
net loss for the six months ended
April 30, 2024 was $502 million,
compared with an adjusted net loss of $317
million in the same period last year.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 21
QUARTERLY
RESULTS
The following table provides summary information
related to the Bank’s eight most recently
completed quarters.
TABLE 16: QUARTERLY RESULTS
(millions of Canadian dollars, except as noted)
For the three months ended
2024
2023
2022
Apr. 30
Jan. 31
Oct. 31
Jul. 31
Apr. 30
Jan. 31
Oct. 31
Jul. 31
Net interest income
$
7,465
$
7,488
$
7,494
$
7,289
$
7,428
$
7,733
$
7,630
$
7,044
Non-interest income
1
6,354
6,226
5,684
5,625
4,969
4,468
7,933
3,881
Total revenue
1
13,819
13,714
13,178
12,914
12,397
12,201
15,563
10,925
Provision for (recovery of) credit losses
1,071
1,001
878
766
599
690
617
351
Insurance service expenses
1
1,248
1,366
1,346
1,386
1,118
1,164
723
829
Non-interest expenses
1
8,401
8,030
7,628
7,359
6,756
8,112
6,545
6,096
Provision for (recovery of) income taxes
1
729
634
616
704
859
939
1,297
703
Share of net income from investment in Schwab
194
141
156
182
241
285
290
268
Net income – reported
1
2,564
2,824
2,866
2,881
3,306
1,581
6,671
3,214
Pre-tax adjustments for items of note
2
Amortization of acquired intangibles
72
94
92
88
79
54
57
58
Acquisition and integration charges related to the
Schwab transaction
21
32
31
54
30
34
18
23
Share of restructuring and other charges from
investment in Schwab
–
49
35
–
–
–
–
–
Restructuring charges
165
291
363
–
–
–
–
–
Acquisition and integration-related charges
102
117
197
143
73
21
18
–
Charges related to the terminated FHN acquisition
–
–
–
84
154
106
67
29
Payment related to the termination of the
FHN transaction
3
–
–
–
306
–
–
–
–
Impact from the terminated FHN acquisition-related
capital hedging strategy
64
57
64
177
134
876
(2,319)
678
Impact of retroactive tax legislation on payment card
clearing services
4
–
–
–
57
–
–
–
–
Civil matter provision/Litigation settlement
274
–
–
–
39
1,603
–
–
FDIC special assessment
103
411
–
–
–
–
–
–
Provision for investigations related to the
Bank’s AML program
615
–
–
–
–
–
–
–
Gain on sale of Schwab shares
4
–
–
–
–
–
–
(997)
–
Total pre-tax adjustments
for items of note
1,416
1,051
782
909
509
2,694
(3,156)
788
Less: Impact of income taxes
2,5
191
238
163
141
108
121
(550)
189
Net income – adjusted
1,2
3,789
3,637
3,485
3,649
3,707
4,154
4,065
3,813
Preferred dividends and distributions on other
equity instruments
190
74
196
74
210
83
107
43
Net income available to common
shareholders – adjusted
1,2
$
3,599
$
3,563
$
3,289
$
3,575
$
3,497
$
4,071
$
3,958
$
3,770
(Canadian dollars, except as noted)
Basic earnings per share
1
Reported
$
1.35
$
1.55
$
1.48
$
1.53
$
1.69
$
0.82
$
3.62
$
1.76
Adjusted
2
2.04
2.01
1.82
1.95
1.91
2.24
2.18
2.09
Diluted earnings per share
1
Reported
1.35
1.55
1.48
1.53
1.69
0.82
3.62
1.75
Adjusted
2
2.04
2.00
1.82
1.95
1.91
2.23
2.18
2.09
Return on common equity – reported
9.5
%
10.9
%
10.5
%
10.8
%
12.4
%
5.9
%
26.5
%
13.5
%
Return on common equity – adjusted
1,2
14.5
14.1
12.9
13.8
14.0
16.1
16.0
16.1
(billions of Canadian dollars, except as noted)
Average total assets
$
1,938
$
1,934
$
1,910
$
1,898
$
1,944
$
1,931
$
1,893
$
1,811
Average interest-earning assets
6
1,754
1,729
1,715
1,716
1,728
1,715
1,677
1,609
Net interest margin – reported
1.73
%
1.72
%
1.73
%
1.69
%
1.76
%
1.79
%
1.81
%
1.74
%
Net interest margin – adjusted
2
1.75
1.74
1.75
1.70
1.81
1.82
1.80
1.73
1
The Bank adopted IFRS 17 on November 1, 2023. Comparative periods prior to fiscal 2023 have not been restated
and are based on IFRS 4.
2
For explanations of items of note, refer to the “Significant Events”
and “Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income” table in the
“How We
Performed” section of this document as well as footnotes 3 and 4.
3
Adjusted non-interest expenses exclude the payment related to the termination of the FHN transaction, reported in
the Corporate segment.
4
Adjusted non-interest income excludes the following items of note:
i. The Bank sold 28.4 million non-voting common shares of Schwab and recognized
a gain on the sale. The amount is reported in the Corporate segment.
ii. Impact of retroactive tax legislation on payment card clearing services, reported in
the Corporate segment.
5
Includes the CRD and impact from increase in the Canadian federal tax rate for fiscal 2022.
6
Average interest-earning assets used in the calculation of net interest margin is a non-GAAP financial
measure. Refer to “Non-GAAP and Other Financial Measures” in the “How We
Performed” section and the Glossary of this document for additional information about these metrics.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 22
BALANCE SHEET REVIEW
TABLE 17: SELECTED INTERIM CONSOLIDATED BALANCE SHEET ITEMS
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Assets
Cash and Interest-bearing deposits with
banks
$
93,973
$
105,069
Trading loans, securities, and other
166,346
152,090
Non-trading financial assets at fair value through
profit or loss
5,646
7,340
Derivatives
82,190
87,382
Financial assets designated at fair value through
profit or loss
5,925
5,818
Financial assets at fair value through other
comprehensive income
75,246
69,865
Debt securities at amortized cost, net of allowance
for credit losses
293,594
308,016
Securities purchased under reverse repurchase
agreements
205,722
204,333
Loans, net of allowance for loan losses
928,124
895,947
Investment in Schwab
9,866
8,907
Other
1
100,036
110,372
Total assets
1
$
1,966,668
$
1,955,139
Liabilities
Trading deposits
$
31,221
$
30,980
Derivatives
69,742
71,640
Financial liabilities designated at fair value
through profit or loss
188,105
192,130
Deposits
1,203,771
1,198,190
Obligations related to securities sold under
repurchase agreements
192,239
166,854
Subordinated notes and debentures
11,318
9,620
Other
1
158,290
173,654
Total liabilities
1
1,854,686
1,843,068
Total equity
1
111,982
112,071
Total liabilities and equity
1
$
1,966,668
$
1,955,139
1
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 2 of the Bank’s
second quarter 2024 Interim Consolidated Financial Statements for further
details.
Total assets
were $1,967 billion as at April 30, 2024, an increase
of $12 billion, from October 31, 2023. The impact
of foreign exchange translation from the
appreciation in the Canadian dollar decreased
total assets by $7 billion.
The increase in total assets reflects an increase
in loans, net of allowances for loan losses of
$32 billion, trading loans, securities, and
other of $14 billion, financial
assets at fair value through other comprehensive
income (FVOCI) of $5 billion, securities
purchased under reverse repurchase
agreements of $2 billion and
investment in Schwab of $1 billion. The increase
was partially offset by a decrease in debt securities
at amortized cost (DSAC), net of allowance
for credit losses
of $14 billion, cash and interest-bearing deposits
with banks of $11 billion, other assets of $10 billion, derivative assets
of $5 billion and non-trading financial assets
at fair value through profit or loss of $2 billion.
Cash and interest-bearing deposits with
banks
decreased $11 billion primarily reflecting cash management
activities.
Trading loans, securities, and other
increased $14 billion primarily in equity securities
and commodities held for trading, partially
offset by government securities
held for trading and the impact of foreign
exchange translation.
Non-trading financial assets at fair
value through profit or loss
decreased $2 billion reflecting maturities
and sales.
Derivative
assets
decreased $5 billion primarily reflecting
changes in mark-to-market values of foreign
exchange and interest rate contracts.
Financial assets at fair value through other
comprehensive income
increased $5 billion primarily reflecting new
investments, partially offset by maturities
and
sales.
Debt securities at amortized cost, net
of allowance for credit losses
decreased $14 billion primarily reflecting
maturities and sales and the impact of foreign
exchange translation, partially offset by new investments.
Securities purchased under reverse repurchase
agreements
increased $2 billion
primarily
reflecting an increase in volume, partially
offset by the impact of
foreign exchange translation.
Loans, net of allowance for loan losses
increased $32 billion primarily reflecting volume
growth in business and government loans
and residential real estate
secured lending, partially offset by the impact of
foreign exchange translation.
Investment in Schwab
increased $1 billion primarily reflecting
the impact of the Bank’s share of Schwab’s other comprehensive
income.
Other
assets decreased $10 billion primarily
reflecting a volume decrease in customers’ liabilities
under acceptances, partially offset by an increase
in amounts
receivable from brokers, dealers, and
clients due to higher volumes of pending trades.
Total liabilities
were $1,855 billion as at April 30, 2024,
an increase of $12 billion from October 31,
- The impact of foreign exchange
translation from the
appreciation in the Canadian dollar decreased
total liabilities by $7 billion.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 23
The increase in total liabilities reflects an
increase in obligations related to securities
sold under repurchase agreements of $25 billion,
deposits of $6 billion, and
subordinated notes and debentures of $2
billion. The increase was partially offset by a decrease
in other liabilities of $15 billion, financial
liabilities designated at
fair value through profit or loss of $4 billion and
derivative liabilities of $2 billion.
Derivative
liabilities
decreased $2 billion primarily reflecting
changes in mark-to-market values of foreign exchange
and interest rate contracts.
Financial liabilities designated at fair value
through profit or loss
decreased $4 billion reflecting maturities
and the impact of foreign exchange
translation,
partially offset by new issuances.
Deposits
increased $6 billion primarily reflecting
volume increase in business and government
and personal deposits, partially offset by
the impact of foreign
exchange translation.
Obligations related to securities sold
under repurchase agreements
increased $25 billion reflecting an increase
in volume, partially offset by the impact of
foreign exchange translation.
Subordinated notes and debentures
increased $2 billion reflecting a new
issuance.
Other
liabilities decreased $15 billion primarily
reflecting volume decrease in acceptances
and obligations related to securities sold
short, partially offset by a
volume increase in securitization liabilities
at fair value.
Equity
was $112 billion as at April 30, 2024 and October 31, 2023, reflecting
an increase in accumulated other
comprehensive income, offset by lower retained
earnings. The increase in accumulated other
comprehensive income is primarily driven
by gains on cash flow hedges and
the Bank’s share of the other
comprehensive income from investment in
Schwab, partially offset by the impact of
foreign exchange translation. The retained earnings
decreased primarily from
dividends paid and the premium on the repurchase
of common shares, partially offset by net income.
CREDIT PORTFOLIO QUALITY
Quarterly comparison – Q2 2024 vs. Q2 2023
Gross impaired loans excluding acquired
credit-impaired (ACI) loans were $3,895
million as at April 30, 2024, an increase of
$1,236 million, or 46%, compared
with the second quarter last year. Canadian Personal and
Commercial Banking gross impaired loans
increased $541 million, or 47%, compared
with the second
quarter last year, reflecting formations outpacing resolutions
in the commercial and consumer lending
portfolios. U.S. Retail gross impaired loans
increased
$714 million, or 49%, compared with the second
quarter last year, reflecting formations outpacing resolutions
in the commercial and consumer lending
portfolios,
and the impact of foreign exchange. Wholesale
gross impaired loans decreased $19
million, compared with the second quarter
last year, reflecting resolutions
outpacing formations. Net impaired loans
were $2,744 million as at April 30, 2024, an increase
of $941 million, or 52%, compared with the
second quarter last
year.
The allowance for credit losses of $8,550
million as at April 30, 2024 was comprised
of Stage 3 allowance for impaired loans of
$1,162 million, Stage 2
allowance of $4,483 million and Stage 1 allowance
of $2,902 million, and the allowance for debt
securities of $3 million. The Stage 1 and 2
allowances are for
performing loans and off-balance sheet instruments.
The Stage 3 allowance for loan losses increased
$300 million, or 35%, reflective of
credit migration in the Canadian Personal and
Commercial Banking,
U.S. Retail, and Corporate segments,
and the impact of foreign exchange. The
Stage 1 and Stage 2 allowance for loan losses
increased $603 million, or 9%,
reflecting credit conditions, including
credit migration, volume growth, and the impact
of foreign exchange. The allowance change
included an increase of
$77 million attributable to the retailer program
partners’ share of the U.S. strategic
cards portfolio.
The allowance for debt securities was $3 million,
consistent with the second quarter last
year.
Forward-looking information, including
macroeconomic variables deemed to be
predictive of expected credit losses (ECLs)
based on the Bank’s experience, is
used to determine ECL scenarios and associated
probability weights to determine the probability-weighted
ECLs. Each quarter, all base forecast macroeconomic
variables are refreshed, resulting in new upside
and downside macroeconomic scenarios.
The probability weightings assigned
to each ECL scenario are also
reviewed each quarter and updated as required,
as part of the Bank’s ECL governance process.
As a result of periodic reviews and quarterly
updates, the
allowance for credit losses may be revised
to reflect updates in loss estimates based on
the Bank’s recent loss experience and its forward-looking
views. The Bank
periodically reviews the methodology and
has performed certain additional quantitative
and qualitative portfolio and loan level
assessments of significant increase
in credit risk. Refer to Note 3 of the Bank’s second
quarter 2024 Interim Consolidated
Financial Statements for further details on
forward-looking information.
The probability-weighted allowance for
credit losses reflects the Bank’s forward-looking
views. To the extent that certain anticipated effects cannot be fully
incorporated into quantitative models, management
continues to exercise expert credit judgment
in determining the amount of ECLs.
The allowance for credit
losses will be updated in future quarters as
additional information becomes available.
Refer to Note 3 of the Bank’s second quarter 2024 Interim
Consolidated
Financial Statements for additional details.
The Bank calculates allowances for ECLs
on debt securities measured at amortized
cost and FVOCI. The Bank has $365 billion
in such debt securities,
all of
which are performing (Stage 1 and 2) and none
are impaired (Stage 3). The allowance for
credit losses on DSAC and debt securities
at FVOCI was $2 million and
$1 million, respectively.
Quarterly comparison – Q2 2024 vs. Q1 2024
Gross impaired loans increased $186 million,
or 5%, compared with the prior quarter. Impaired loans
net of allowance increased $218 million, or
9%, compared
with the prior quarter.
The allowance for credit losses of $8,550
million as at April 30, 2024 was comprised
of Stage 3 allowance for impaired loans of
$1,162 million, Stage 2
allowance of $4,483 million and Stage 1 allowance
of $2,902 million, and the allowance for debt
securities of $3 million. The Stage 1 and 2 allowances
are for
performing loans and off-balance sheet instruments.
The Stage 3 allowance for loan losses decreased
$25 million, or 2%, compared with the prior
quarter. The
Stage 1 and Stage 2 allowance for loan losses
increased $307 million, compared
with the prior quarter, primarily reflecting current credit conditions,
including
credit migration, the impact of foreign exchange,
and volume growth.
The allowance for debt securities was $3 million,
consistent with the prior quarter.
For further details on loans, impaired loans,
allowance for credit losses,
and on the Bank’s use of forward-looking information
and macroeconomic variables in
determining its allowance for credit losses,
refer to Note 6 of the Bank’s second quarter 2024
Interim Consolidated Financial Statements.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 24
TABLE 18: CHANGES IN GROSS IMPAIRED LOANS AND ACCEPTANCES
1,2,3
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Personal, Business, and Government
Loans
Impaired loans as at beginning of period
$
3,709
$
3,299
$
2,591
$
3,299
$
2,503
Classified as impaired during the period
1,937
2,005
1,259
3,942
2,609
Transferred to performing during the period
(261)
(315)
(204)
(576)
(444)
Net repayments
(465)
(308)
(334)
(773)
(695)
Disposals of loans
–
(10)
–
(10)
–
Amounts written off
(1,080)
(917)
(679)
(1,997)
(1,304)
Exchange and other movements
55
(45)
26
10
(10)
Impaired loans as at end of period
$
3,895
$
3,709
$
2,659
$
3,895
$
2,659
1
Includes customers’ liability under acceptances.
2
Excludes ACI loans.
3
Includes loans that are measured at FVOCI.
TABLE 19: ALLOWANCE FOR CREDIT LOSSES
(millions of Canadian dollars, except
as noted)
As at
April 30
January 31
April 30
2024
2024
2023
Allowance for loan losses for on-balance
sheet loans
Stage 1 allowance for loan losses
$
2,479
$
2,396
$
2,551
Stage 2 allowance for loan losses
3,915
3,686
3,234
Stage 3 allowance for loan losses
1,151
1,183
859
Total allowance for loan losses for on-balance sheet loans
1
7,545
7,265
6,644
Allowance for off-balance sheet instruments
Stage 1 allowance for loan losses
423
424
465
Stage 2 allowance for loan losses
568
572
532
Stage 3 allowance for loan losses
11
4
3
Total allowance for off-balance sheet instruments
1,002
1,000
1,000
Allowance for loan losses
8,547
8,265
7,644
Allowance for debt securities
3
3
3
Allowance for credit losses
$
8,550
$
8,268
$
7,647
Impaired loans, net of allowance
2
$
2,744
$
2,526
$
1,803
Net impaired loans as a percentage of net loans
2
0.29
%
0.28
%
0.21
%
Total allowance for credit losses as a percentage of gross loans and acceptances
0.91
0.89
0.87
Provision for (recovery of) credit losses
as a percentage of net average loans and
acceptances
0.47
0.44
0.28
1
Includes allowance for loan losses related to loans that are measured at FVOCI of nil as at April 30, 2024
(January 31, 2024 – nil, April 30, 2023 – nil).
2
Credit cards are considered impaired when they are 90 days past due and written off at 180 days past
due.
Real Estate Secured Lending
Retail real estate secured lending includes
mortgages and lines of credit to North American
consumers to satisfy financing needs including
home purchases and
refinancing. While the Bank retains first lien
on the majority of properties held as security, there is a small portion
of loans with second liens, but most of
these are
behind a TD mortgage that is in first
position. In Canada, credit policies are designed
so that the combined exposure of all uninsured
facilities on one property does
not exceed 80% of the collateral value at origination.
Lending at a higher loan-to-value ratio
is permitted by legislation but requires
default insurance. This
insurance is contractual coverage for the life
of eligible facilities and protects the
Bank’s real estate secured lending portfolio against
potential losses caused by
borrowers’ default. The Bank may also purchase
default insurance on lower loan-to-value
ratio loans. The insurance is provided
by either government-backed
entities or approved private mortgage insurers.
In the U.S., for residential mortgage originations,
mortgage insurance is usually obtained from either
government-
backed entities or approved private mortgage
insurers when the loan-to-value exceeds
80% of the collateral value at origination.
The Bank regularly performs stress tests
on its real estate lending portfolio as part
of its overall stress testing program. This is
done with a view to determine the
extent to which the portfolio would be vulnerable
to a severe downturn in economic conditions.
The effect of severe changes in house prices,
interest rates, and
unemployment levels are among the factors
considered when assessing the impact
on credit losses and the Bank’s overall profitability. A variety
of portfolio
segments, including dwelling type and geographical
regions, are examined during the exercise
to determine whether specific vulnerabilities
exist.
TABLE 20: CANADIAN REAL ESTATE SECURED LENDING
1,2
(millions of Canadian dollars)
As at
Amortizing
Non-amortizing
Total
Residential
Home equity
Total amortizing real
Home equity
mortgages
lines of credit
estate secured lending
lines of credit
April 30, 2024
Total
$
268,732
$
87,295
$
356,027
$
31,940
$
387,967
October 31, 2023
Total
$
263,733
$
86,943
$
350,676
$
30,675
$
381,351
1
Excludes loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans
designated at FVTPL for which no allowance is recorded.
2
Amortizing includes loans where the fixed contractual payments are no longer sufficient to cover the interest
based on the rates in effect at April 30, 2024 and October 31, 2023.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 25
TABLE 21: REAL ESTATE
SECURED LENDING
1,2
(millions of Canadian dollars, except as noted)
As at
Residential mortgages
Home equity lines of credit
Total
Insured
3
Uninsured
Insured
3
Uninsured
Insured
3
Uninsured
April 30, 2024
Canada
Atlantic provinces
$
2,514
0.9
%
$
4,642
1.7
%
$
170
0.1
%
$
2,039
1.7
%
$
2,684
0.7
%
$
6,681
1.7
%
British Columbia
4
8,532
3.2
47,093
17.6
859
0.7
22,029
18.5
9,391
2.4
69,122
17.8
Ontario
4
22,363
8.4
122,615
45.6
2,938
2.5
65,170
54.6
25,301
6.6
187,785
48.4
Prairies
4
18,312
6.8
21,086
7.8
1,634
1.4
12,031
10.1
19,946
5.1
33,117
8.5
Québec
7,042
2.6
14,533
5.4
550
0.5
11,815
9.9
7,592
2.0
26,348
6.8
Total Canada
58,763
21.9
%
209,969
78.1
%
6,151
5.2
%
113,084
94.8
%
64,914
16.8
%
323,053
83.2
%
United States
1,480
55,820
–
10,818
1,480
66,638
Total
$
60,243
$
265,789
$
6,151
$
123,902
$
66,394
$
389,691
October 31, 2023
Canada
Atlantic provinces
$
2,561
1.0
%
$
4,557
1.7
%
$
181
0.2
%
$
1,938
1.6
%
$
2,742
0.7
%
$
6,495
1.7
%
British Columbia
4
8,642
3.3
46,003
17.4
920
0.8
21,642
18.4
9,562
2.5
67,645
17.7
Ontario
4
22,559
8.6
118,882
45.1
3,126
2.7
64,095
54.4
25,685
6.8
182,977
48.1
Prairies
4
18,621
7.1
20,385
7.7
1,746
1.5
11,956
10.2
20,367
5.3
32,341
8.5
Québec
7,221
2.7
14,302
5.4
590
0.5
11,424
9.7
7,811
2.0
25,726
6.7
Total Canada
59,604
22.7
%
204,129
77.3
%
6,563
5.7
%
111,055
94.3
%
66,167
17.3
%
315,184
82.7
%
United States
1,439
55,169
–
10,591
1,439
65,760
Total
$
61,043
$
259,298
$
6,563
$
121,646
$
67,606
$
380,944
1
Geographic location is based on the address of the property mortgaged.
2
Excludes loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans
designated at FVTPL for which no allowance is recorded.
3
Default insurance is contractual coverage for the life of eligible facilities whereby the Bank’s exposure
to real estate secured lending, all or in part, is protected against potential losses
caused by borrower default. It is provided by either government-backed entities or other approved private mortgage
insurers.
4
The territories are included as follows: Yukon is included in British Columbia; Nunavut
is included in Ontario; and the Northwest Territories
is included in the Prairies region.
The following table provides a summary
of the period over which the Bank’s residential
mortgages would be fully repaid based on the amount
of the most recent
payment received. All figures are calculated
based on current customer payment amounts,
including voluntary payments larger
than the original contractual
amounts and/or other voluntary prepayments.
The most recent customer payment amount
may exceed the original contractual amount
due.
Balances with a remaining amortization longer
than 30 years primarily reflect Canadian
variable rate mortgages where interest
rate increases relative to current
customer payment levels have resulted in
a longer current amortization period.
At renewal, the amortization period for Canadian
mortgages reverts to the
remaining contractual amortization, which
may require increased payments.
TABLE 22: RESIDENTIAL MORTGAGES BY REMAINING AMORTIZATION
1,2,3
As at
<=5
>5 – 10
>10 – 15
>15 – 20
>20 – 25
>25 – 30
>30 – 35
>35
years
years
years
years
years
years
years
years
Total
April 30, 2024
Canada
0.8
%
2.7
%
5.9
%
14.7
%
31.7
%
26.3
%
1.4
%
16.5
%
100.0
%
United States
4.3
1.2
3.4
7.6
11.6
70.6
0.8
0.5
100.0
Total
1.4
%
2.4
%
5.5
%
13.5
%
28.1
%
34.2
%
1.3
%
13.6
%
100.0
%
October 31, 2023
Canada
0.8
%
2.7
%
5.7
%
14.1
%
31.5
%
24.6
%
1.4
%
19.2
%
100.0
%
United States
5.3
1.4
3.8
7.8
10.6
69.5
1.1
0.5
100.0
Total
1.6
%
2.5
%
5.3
%
13.0
%
27.8
%
32.6
%
1.4
%
15.8
%
100.0
%
1
Excludes loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans
designated at FVTPL for which no allowance is recorded.
2
Percentage based on outstanding balance.
3
$30.4 billion or 11% of the mortgage portfolio in Canada (October 31,
2023: $37.4 billion or 14%) relates to mortgages in which the fixed contractual payments are no longer
sufficient to
cover the interest based on the rates in effect at April 30, 2024
and October 31, 2023, respectively.
TABLE 23: UNINSURED AVERAGE LOAN-TO-VALUE – Newly Originated and Newly Acquired
1,2,3
For the three months ended
Residential
Home equity
Residential
Home equity
mortgages
lines of credit
4,5
Total
mortgages
lines of credit
4,5
Total
April 30, 2024
October 31, 2023
Canada
Atlantic provinces
70
%
67
%
69
%
69
%
67
%
68
%
British Columbia
6
67
61
64
65
59
63
Ontario
6
68
61
64
66
60
63
Prairies
6
73
69
71
72
69
71
Québec
69
68
69
69
67
68
Total Canada
68
63
66
67
62
65
United States
72
60
67
75
63
72
Total
69
%
62
%
66
%
68
%
62
%
66
%
1
Geographic location is based on the address of the property mortgaged.
2
Excludes loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans
designated at FVTPL for which no allowance is recorded.
3
Based on house price at origination.
4
Home equity lines of credit (HELOCs) loan-to-value includes first position collateral mortgage if applicable.
5
HELOC fixed rate advantage option is included in loan-to-value calculation.
6
The territories are included as follows: Yukon is included in British Columbia; Nunavut
is included in Ontario; and the Northwest Territories
is included in the Prairies region.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 26
Sovereign Risk
The table below provides a summary of
the Bank’s direct credit exposures
outside of Canada and the U.S. (Europe excludes
United Kingdom).
TABLE 24: Total Net Exposure by Region and Counterparty
(millions of Canadian dollars)
As at
Loans and commitments
1
Derivatives, repos, and securities lending
2
Trading and investment portfolio
3
Total
Corporate
Sovereign
Financial
Total
Corporate
Sovereign
Financial
Total
Corporate
Sovereign
Financial
Total
Exposure
4
April 30, 2024
Region
Europe
$
8,383
$
7
$
5,438
$
13,828
$
3,877
$
1,887
$
8,628
$
14,392
$
1,018
$
24,766
$
2,568
$
28,352
$
56,572
United Kingdom
8,952
2,759
2,485
14,196
3,119
435
13,487
17,041
945
934
267
2,146
33,383
Asia
245
26
2,368
2,639
447
680
2,323
3,450
197
10,749
1,178
12,124
18,213
Other
5
204
–
525
729
221
1,018
3,061
4,300
147
502
3,057
3,706
8,735
Total
$
17,784
$
2,792
$
10,816
$
31,392
$
7,664
$
4,020
$
27,499
$
39,183
$
2,307
$
36,951
$
7,070
$
46,328
$
116,903
October 31, 2023
Region
Europe
$
7,577
$
7
$
5,324
$
12,908
$
3,763
$
1,945
$
6,736
$
12,444
$
777
$
25,015
$
2,001
$
27,793
$
53,145
United Kingdom
8,928
7,965
2,131
19,024
2,759
490
13,431
16,680
491
596
257
1,344
37,048
Asia
254
20
2,167
2,441
262
706
2,640
3,608
325
10,728
830
11,883
17,932
Other
5
233
8
517
758
233
720
2,883
3,836
209
1,205
3,443
4,857
9,451
Total
$
16,992
$
8,000
$
10,139
$
35,131
$
7,017
$
3,861
$
25,690
$
36,568
$
1,802
$
37,544
$
6,531
$
45,877
$
117,576
1
Exposures, including interest-bearing deposits with banks, are presented net of impairment charges where applicable.
2
Exposures are calculated on a fair value basis and presented net of collateral. Derivatives are presented as net
exposures where there is an International Swaps and Derivatives
Association master netting agreement.
3
Trading exposures are net of eligible short positions.
4
In addition to the exposures identified above, the Bank also has $37.6 billion (October 31, 2023 – $40.8 billion)
of exposure to supranational entities.
5
Other regional exposure largely attributable to Australia.
CAPITAL POSITION
REGULATORY CAPITAL
Capital requirements of the Basel Committee
on Banking Supervision (BCBS) are commonly
referred to as Basel III. Under Basel III,
Total Capital consists of three
components, namely CET1, Additional
Tier 1, and Tier 2 Capital. Risk sensitive regulatory capital ratios are
calculated by dividing CET1, Tier 1, and Total Capital
by risk-weighted assets (RWA), inclusive of any minimum requirements
outlined under the regulatory floor. In 2015, Basel III introduced
a non-risk sensitive
leverage ratio to act as a supplementary measure
to the risk-sensitive capital requirements.
The leverage ratio is calculated by dividing
Tier 1 Capital by leverage
exposure which is primarily comprised of
on-balance sheet assets with adjustments
made to derivative and securities financing
transaction exposures, and credit
equivalent amounts of off-balance sheet exposures.
TD manages its regulatory capital in
accordance with OSFI’s implementation of
the Basel III Capital
Framework.
OSFI’s Capital Requirements under Basel III
OSFI’s CAR and LR guidelines detail how
the Basel III capital rules apply to Canadian
banks.
The Domestic Stability Buffer (DSB) level was increased
to 3.5% as of November 1, 2023. The 50 bps
increase from the previous level of 3% reflects
OSFI’s view
of appropriate actions to enhance the resilience
of Canada’s largest banks against vulnerabilities.
The current DSB range is 0 to 4% and the
DSB level may
change in response to developments in Canada’s
financial system and the broader economic environment.
On February 1, 2023, OSFI implemented revised
capital rules that incorporate the Basel III reforms
with adjustments to make them suitable
for domestic
implementation. These revised rules
include revisions to the calculation of credit
risk and operational risk requirements,
and revisions to the LR Guideline to
include a requirement for domestic systemically
important banks
(D-SIBs) to hold a leverage ratio buffer
of 0.50% in addition to the regulatory
minimum
requirement of 3.0%. This buffer will also apply
to the TLAC leverage ratio.
On November 1, 2023, the Bank implemented
OSFI’s Parental Stand-Alone (Solo)
Total Loss Absorbing Capacity
(TLAC) Framework for D-SIBs, which
establishes a risk-based measure intended
to ensure a non-viable D-SIB has
sufficient loss absorbing capacity on a
stand-alone, legal entity basis to support its
resolution. The Bank is compliant with
the requirements set out in this new framework.
The table below summarizes OSFI’s current regulatory
minimum capital targets for the Bank as at
April 30, 2024.
REGULATORY CAPITAL AND TLAC TARGET RATIOS
Capital
Pillar 1
Pillar 1 & 2
Conservation
D-SIB / G-SIB
Regulatory
Regulatory
Minimum
Buffer
Surcharge
1
Target
2
DSB
Target
CET1
4.5
%
2.5
%
1.0
%
8.0
%
3.5
%
11.5
%
Tier 1
6.0
2.5
1.0
9.5
3.5
13.0
Total Capital
8.0
2.5
1.0
11.5
3.5
15.0
Leverage
3.0
n/a
3
0.5
3.5
n/a
3.5
TLAC
18.0
2.5
1.0
21.5
3.5
25.0
TLAC Leverage
6.75
n/a
0.50
7.25
n/a
7.25
1
The higher of the D-SIB and Global Systemically Important Bank (G-SIB) surcharge applies to risk weighted capital.
The D-SIB surcharge is currently equivalent to the Bank’s 1% G-SIB
additional common equity requirement for risk weighted capital. The G-SIB surcharge may increase above 1% if
the Bank’s G-SIB score increases above certain thresholds to a maximum
of 4.5%. OSFI’s Leverage Requirements Guideline includes a requirement for D-SIBs
to hold a leverage ratio buffer set at 50% of a D-SIB’s higher loss absorbency risk
-weighted
requirements, effectively 0.50%. This buffer also applies to the TLAC Leverage ratio.
2
The Bank’s countercyclical
buffer requirement is 0% as of April 30, 2024.
3
Not applicable.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 27
The following table provides details of the
Bank’s regulatory capital position.
TABLE 25: CAPITAL STRUCTURE AND RATIOS – Basel III
(millions of Canadian dollars, except
as noted)
As at
April 30
October 31
April 30
2024
2023
2023
Common Equity Tier 1 Capital
Common shares plus related contributed
surplus
$
25,410
$
25,522
$
25,912
Retained earnings
71,904
73,044
74,849
Accumulated other comprehensive income
4,166
2,750
4,108
Common Equity Tier 1 Capital before regulatory
adjustments
101,480
101,316
104,869
Common Equity Tier 1 Capital regulatory adjustments
Goodwill (net of related tax liability)
(18,470)
(18,424)
(18,016)
Intangibles (net of related tax liability)
(2,759)
(2,606)
(2,496)
Deferred tax assets excluding those arising
from temporary differences
(180)
(207)
(96)
Cash flow hedge reserve
4,878
5,571
3,678
Shortfall of provisions to expected losses
–
–
–
Gains and losses due to changes in own
credit risk on fair valued liabilities
(181)
(379)
(294)
Defined benefit pension fund net assets (net
of related tax liability)
(676)
(908)
(1,129)
Investment in own shares
(8)
(21)
(18)
Non-significant investments in the capital of
banking, financial, and insurance entities,
net of eligible
short positions (amount above 10% threshold)
(3,202)
(1,976)
(2,135)
Significant investments in the common
stock of banking, financial, and insurance entities
that are outside the scope of regulatory
consolidation, net of eligible short positions
(amount above 10% threshold)
–
–
–
Equity investments in funds subject to
the fall-back approach
(51)
(49)
(35)
Other deductions or regulatory adjustments
to CET1 as determined by OSFI
10
–
–
Total regulatory adjustments to Common Equity Tier 1 Capital
(20,639)
(18,999)
(20,541)
Common Equity Tier 1 Capital
80,841
82,317
84,328
Additional Tier 1 Capital instruments
Directly issued qualifying Additional Tier 1 instruments
plus stock surplus
10,502
10,791
11,245
Additional Tier 1 Capital instruments before
regulatory adjustments
10,502
10,791
11,245
Additional Tier 1 Capital instruments regulatory
adjustments
Non-significant investments in the capital of
banking, financial, and insurance entities,
net of eligible
short positions (amount above 10% threshold)
(5)
(6)
(112)
Significant investments in the capital of banking,
financial, and insurance entities that are
outside
the scope of regulatory consolidation, net of
eligible short positions
(350)
(350)
(350)
Total regulatory adjustments to Additional Tier 1 Capital
(355)
(356)
(462)
Additional Tier 1 Capital
10,147
10,435
10,783
Tier 1 Capital
90,988
92,752
95,111
Tier 2 Capital instruments and provisions
Directly issued qualifying Tier 2 instruments plus related
stock surplus
11,120
9,424
11,166
Collective allowances
1,485
1,964
2,143
Tier 2 Capital before regulatory adjustments
12,605
11,388
13,309
Tier 2 regulatory adjustments
Investments in own Tier 2 instruments
–
–
–
Non-significant investments in the capital of
banking, financial, and insurance entities,
net of eligible
short positions (amount above 10% threshold)
1
(316)
(196)
(232)
Non-significant investments in the other
TLAC-eligible instruments issued by
G-SIBs and Canadian
D-SIBs, where the institution does not own
more than 10% of the issued common
share capital
of the entity: amount previously designated
for the 5% threshold but that no longer
meets the
conditions
(144)
(136)
(68)
Significant investments in the capital of banking,
financial, and insurance entities that are
outside
the scope of regulatory consolidation, net of
eligible short positions
(160)
(160)
(160)
Total regulatory adjustments to Tier 2 Capital
(620)
(492)
(460)
Tier 2 Capital
11,985
10,896
12,849
Total Capital
$
102,973
$
103,648
$
107,960
Risk-weighted assets
$
602,825
$
571,161
$
549,398
Capital Ratios and Multiples
Common Equity Tier 1 Capital (as percentage of risk-weighted
assets)
13.4
%
14.4
%
15.3
%
Tier 1 Capital (as percentage of risk-weighted assets)
15.1
16.2
17.3
Total Capital (as percentage of risk-weighted assets)
17.1
18.1
19.7
Leverage ratio
2
4.3
4.4
4.6
1
Includes other TLAC-eligible instruments issued by G-SIBs and Canadian D-SIBs that are outside the scope of
regulatory consolidation, where the institution does not own more than
10% of the issued common share capital of the entity.
2
The Leverage ratio is calculated as Tier 1 Capital divided by leverage exposure, as defined
in the “Regulatory Capital” section of this document.
The impact to CET1 capital upon adoption
of IFRS 17 is immaterial to the Bank.
As at April 30, 2024, the Bank’s CET1, Tier 1, and Total Capital ratios were 13.4%, 15.1%,
and 17.1%, respectively. The decrease in the Bank’s CET1 Capital
ratio
from 14.4% as at October 31, 2023, was primarily
attributable to RWA growth across various segments, common
shares repurchased for cancellation, and
the
impact of the regulatory changes related
to the Fundamental Review of the Trading Book and
Negatively amortizing mortgages. CET1 was
also impacted by the
FDIC special assessment booked in
the fiscal year, items related to the provision for investigations
related to the Bank’s AML program, and
the impact of a civil
matter provision.
The impact of the foregoing items
was partially offset by organic growth, and the issuance
of common shares pursuant to the Bank’s dividend
reinvestment plan.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 28
As at April 30, 2024, the Bank’s leverage ratio
was 4.3%. The decrease in the Bank’s leverage
ratio from 4.4% as at October 31, 2023
was primarily attributable to
exposure increases across various segments,
common shares repurchased for
cancellation, items related to the provision for investigations
related to the Bank’s
AML program, and the impact of a civil
matter provision.
The impact of the foregoing items was partially
offset by organic capital growth and the issuance
of
common shares pursuant to the Bank’s dividend reinvestment
plan.
Future Regulatory Capital Developments
There are no future regulatory capital developments
in addition to those described in the “Future
Regulatory Capital Developments” section
of the Bank’s 2023
Annual Report.
TABLE 26: EQUITY AND OTHER SECURITIES
1
(millions of shares/units and millions of Canadian
dollars, except as noted)
As at
April 30, 2024
October 31, 2023
Number of
Number of
shares/units
Amount
shares/units
Amount
Common shares outstanding
1,759.6
$
25,257
1,791.4
$
25,434
Treasury – common shares
(0.3)
(24)
(0.7)
(64)
Total common shares
1,759.3
$
25,233
1,790.7
$
25,370
Stock options
Vested
6.1
5.1
Non-vested
9.3
9.0
Preferred shares – Class A
Series 1
20.0
$
500
20.0
$
500
Series 3
20.0
500
20.0
500
Series 5
20.0
500
20.0
500
Series 7
14.0
350
14.0
350
Series 9
8.0
200
8.0
200
Series 16
14.0
350
14.0
350
Series 18
14.0
350
14.0
350
Series 22
2
–
–
14.0
350
Series 24
18.0
450
18.0
450
Series 27
0.8
850
0.8
850
Series 28
0.8
800
0.8
800
129.6
$
4,850
143.6
$
5,200
Other equity instruments
Limited Recourse Capital Notes Series
1
3
1.8
1,750
1.8
1,750
Limited Recourse Capital Notes Series
2
3
1.5
1,500
1.5
1,500
Limited Recourse Capital Notes Series
3
3,4
1.7
2,403
1.7
2,403
134.6
$
10,503
148.6
$
10,853
Treasury – preferred shares and other equity instruments
(0.1)
(8)
(0.1)
(65)
Total preferred shares and other equity instruments
134.5
$
10,495
148.5
$
10,788
1
For further details, including the conversion and exchange features, and distributions, refer to Note 20 of the Bank’s 2023 Consolidated Financial Statements.
2
On April 30, 2024, the Bank redeemed all of its 14 million outstanding Non-Cumulative 5-Year Rate Reset Class A First Preferred Shares NVCC, Series 22 (“Series 22 Preferred Shares”), at a
redemption price of $25.00 per Series 22 Preferred Share, for a total redemption cost of $350 million.
3
For Limited Recourse Capital Notes (LRCNs), the number of shares/units represents the number of notes issued.
4
For LRCNs – Series 3, the amount represents the Canadian dollar equivalent of the U.S. dollar notional amount. Refer to the “Preferred Shares and Other Equity Instruments – Significant Terms and
Conditions” table in Note 20 of the Bank’s 2023 Consolidated Financial Statements for further details.
DIVIDENDS
On May 22, 2024, the Board approved a dividend
in an amount of one dollar and two cents
($1.02) per fully paid common share in the
capital stock of the Bank for
the quarter ending July 31, 2024, payable on
and after July 31, 2024, to shareholders
of record at the close of business on July 10,
2024.
DIVIDEND REINVESTMENT PLAN
The Bank offers a dividend reinvestment plan
for its common shareholders. Participation in
the plan is optional and under the terms of the
plan, cash dividends on
common shares are used to purchase additional
common shares. At the option of the Bank,
the common shares may be issued from treasury
at an average
market price based on the last five trading
days before the date of the dividend payment,
with a discount of between 0% to 5% at the Bank’s discretion
or
purchased from the open market at market
price.
During the three and six months ended April 30,
2024, the Bank issued 1.6 million and 3.3
million common shares, respectively, from treasury with no discount.
During the three and six months ended April
30, 2023, the Bank issued 8.9 million and
16.8 million common shares,
respectively, from treasury with a 2% discount.
NORMAL COURSE ISSUER BID
On August 28, 2023,
the Bank announced that the Toronto Stock Exchange and OSFI approved
a normal course issuer bid (NCIB) to
repurchase for cancellation
up to 90 million of its common shares. The
NCIB commenced on August 31, 2023, and
during the three months ended April 30, 2024,
the Bank repurchased
15.2 million common shares under the
NCIB, at an average price of $80.10 per share
for a total amount of $1.2 billion. During
the six months ended April 30, 2024,
the Bank repurchased 36.1 million common
shares under the NCIB, at an average price
of $81.43 per share for a total amount of $2.9
billion. From the
commencement of the NCIB to April
30, 2024, the Bank repurchased 58 million
shares under the program.
NON-VIABILITY CONTINGENT CAPITAL PROVISION
If a non-viability contingent capital (NVCC)
trigger event were to occur, for all series of Class A First
Preferred Shares excluding the preferred
shares issued with
respect to LRCNs, the maximum number of
common shares that could be issued,
assuming there are no declared and unpaid
dividends on the respective series
of preferred shares at the time of conversion,
would be 1.0 billion in aggregate.
The LRCNs, by virtue of the recourse
to the preferred shares held in the Limited
Recourse Trust, include NVCC provisions. For LRCNs, if
an NVCC trigger were
to occur, the maximum number of common shares that
could be issued, assuming there are
no declared and unpaid dividends on the
preferred shares series
issued in connection with such LRCNs,
would be 1.1 billion in aggregate.
For NVCC subordinated notes and debentures,
if an NVCC trigger event were to occur, the maximum number
of common shares that could be issued,
assuming there is no accrued and unpaid
interest on the respective subordinated notes
and debentures, would be 3.4 billion in aggregate.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 29
MANAGING RISK
EXECUTIVE SUMMARY
Growing profitability in financial results based
on balanced revenue, expense and capital
growth services involves selectively
taking and managing risks within the
Bank’s risk appetite. The Bank’s goal is to earn
a stable and sustainable rate of return for
every dollar of risk it takes, while putting
significant emphasis on
investing in its businesses to meet its future
strategic objectives.
The Bank’s businesses and operations are exposed
to a broad number of risks that have been
identified and defined in the Enterprise
Risk Framework. The
Bank’s tolerance to those risks is defined
in the Enterprise Risk Appetite which has
been developed within a comprehensive
framework that takes into
consideration current conditions in which
the Bank operates and the impact that emerging
risks will have on TD’s strategy and risk profile. The
Bank’s risk appetite
states that it takes risks required to build its
business, but only if those risks: (1)
fit the business strategy and can be understood
and managed; (2) do not expose
the enterprise to any significant single loss
events; TD does not ‘bet the bank’
on any single acquisition, business, or
product; and (3) do not risk harming
the TD
brand. Each business is responsible for setting
and aligning its individual risk appetites
with that of the enterprise based on a
thorough examination of the specific
risks to which it is exposed.
The Bank considers it critical to regularly
assess its operating environment
and highlight top and emerging risks. These
are risks with a potential to have a
material effect on the Bank and where the attention
of senior leaders is focused due to the potential
magnitude or immediacy of their impact.
Risks are identified, discussed, and actioned
by senior leaders and reported quarterly
to the Risk Committee. Specific plans
to mitigate top and emerging risks
are prepared, monitored, and adjusted as required.
The Bank’s risk governance structure and risk
management approach have not substantially
changed from that described in the Bank’s 2023
Annual Report.
Additional information on risk factors can
be found in this document and the 2023
MD&A under the heading “Risk Factors and
Management”. For a complete
discussion of the risk governance structure
and the risk management approach, refer
to the “Managing Risk” section in the Bank’s
2023 Annual Report.
The shaded sections of this MD&A represent
a discussion relating to market and liquidity
risks and form an integral part of the Interim
Consolidated Financial
Statements for the period ended April 30, 2024.
CREDIT RISK
Gross credit risk exposure, also referred
to as exposure at default (EAD), is the
total amount the Bank is exposed to at the time
of default of a loan and is
measured before counterparty-specific
provisions or write-offs. Gross credit risk exposure
does not reflect the effects of credit risk
mitigation (CRM) and includes
both on-balance sheet and off-balance sheet exposures.
On-balance sheet exposures consist primarily
of outstanding loans, acceptances, non-trading
securities,
derivatives, and certain other repo-style
transactions. Off-balance sheet exposures consist
primarily of undrawn commitments, guarantees,
and certain other
repo-style transactions.
Gross credit risk exposures for the two approaches
the Bank uses to measure credit risk
are included in the following table.
TABLE 27: GROSS CREDIT RISK EXPOSURE – Standardized
and Internal Ratings-Based (IRB) Approaches
1
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Standardized
IRB
Total
Standardized
IRB
Total
Retail
Residential secured
$
4,469
$
525,100
$
529,569
$
4,815
$
515,152
$
519,967
Qualifying revolving retail
858
170,498
171,356
810
169,183
169,993
Other retail
3,800
101,403
105,203
3,368
99,253
102,621
Total retail
9,127
797,001
806,128
8,993
783,588
792,581
Non-retail
Corporate
2,494
682,411
684,905
3,496
654,369
657,865
Sovereign
65
506,846
506,911
116
527,423
527,539
Bank
4,476
182,464
186,940
5,272
171,180
176,452
Total non-retail
7,035
1,371,721
1,378,756
8,884
1,352,972
1,361,856
Gross credit risk exposures
$
16,162
$
2,168,722
$
2,184,884
$
17,877
$
2,136,560
$
2,154,437
1
Gross credit risk exposures represent EAD and are before the effects of CRM. This table excludes securitization,
equity, and certain other credit RWA.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 30
MARKET RISK
Market risk capital is calculated using the Standardized
Approach.
The Bank continues to use Value-at-Risk (VaR) as an internal management metric to
monitor
and control market risk.
Market Risk Linkage to the Balance Sheet
The following table provides a breakdown of
the Bank’s balance sheet assets and liabilities
exposed to trading and non-trading market
risks. Market risk of assets
and liabilities included in the calculation of VaR and metrics used
for regulatory market risk capital purposes
is classified as trading market risk.
TABLE 28: MARKET RISK LINKAGE TO THE BALANCE SHEET
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Non-trading market
Balance
Trading
Non-trading
Balance
Trading
Non-trading
risk – primary risk
sheet
market risk
market risk
Other
sheet
market risk
market risk
Other
sensitivity
Assets subject to market risk
Interest-bearing deposits with banks
$
87,665
$
886
$
86,779
$
–
$
98,348
$
327
$
98,021
$
–
Interest rate
Trading loans, securities, and other
166,346
164,633
1,713
–
152,090
151,011
1,079
–
Interest rate
Non-trading financial assets at
fair value through profit or loss
5,646
–
5,646
–
7,340
–
7,340
–
Equity,
foreign exchange,
interest rate
Derivatives
82,190
76,141
6,049
–
87,382
81,526
5,856
–
Equity,
foreign exchange,
interest rate
Financial assets designated at
fair value through profit or loss
5,925
–
5,925
–
5,818
–
5,818
–
Interest rate
Financial assets at fair value through
other comprehensive income
75,246
–
75,246
–
69,865
–
69,865
–
Equity,
foreign exchange,
interest rate
Debt securities at amortized cost,
net of allowance for credit losses
293,594
–
293,594
–
308,016
–
308,016
–
Foreign exchange,
interest rate
Securities purchased under
reverse repurchase agreements
205,722
8,920
196,802
–
204,333
9,649
194,684
–
Interest rate
Loans, net of allowance for
loan losses
928,124
–
928,124
–
895,947
–
895,947
–
Interest rate
Customers’ liability under
acceptances
4,183
–
4,183
–
17,569
–
17,569
–
Interest rate
Investment in Schwab
9,866
–
9,866
–
8,907
–
8,907
–
Equity
Other assets
1,2
1,655
–
1,655
–
1,956
–
1,956
–
Interest rate
Assets not exposed to
market risk
100,506
–
–
100,506
97,568
–
–
97,568
Total Assets
$
1,966,668
$
250,580
$
1,615,582
$
100,506
$
1,955,139
$
242,513
$
1,615,058
$
97,568
Liabilities subject to market risk
Trading deposits
$
31,221
$
27,548
$
3,673
$
–
$
30,980
$
27,059
$
3,921
$
–
Equity, interest rate
Derivatives
69,742
68,290
1,452
–
71,640
70,382
1,258
–
Equity,
foreign exchange,
interest rate
Securitization liabilities at fair value
17,653
17,653
–
–
14,422
14,422
–
–
Interest rate
Financial liabilities designated at
fair value through profit or loss
188,105
1
188,104
–
192,130
2
192,128
–
Interest rate
Deposits
1,203,771
–
1,203,771
–
1,198,190
–
1,198,190
–
Interest rate,
foreign exchange
Acceptances
4,183
–
4,183
–
17,569
–
17,569
–
Interest rate
Obligations related to securities
sold short
38,145
37,491
654
–
44,661
43,993
668
–
Interest rate
Obligations related to securities sold
under repurchase agreements
192,239
11,337
180,902
–
166,854
12,641
154,213
–
Interest rate
Securitization liabilities at amortized
cost
12,581
–
12,581
–
12,710
–
12,710
–
Interest rate
Subordinated notes and debentures
11,318
–
11,318
–
9,620
–
9,620
–
Interest rate
Other liabilities
1,2
28,804
–
28,804
–
27,062
–
27,062
–
Equity, interest rate
Liabilities and Equity not
exposed to market risk
168,906
–
–
168,906
169,301
–
–
169,301
Total Liabilities and Equity
$
1,966,668
$
162,320
$
1,635,442
$
168,906
$
1,955,139
$
168,499
$
1,617,339
$
169,301
1
Relates to retirement benefits, insurance, and structured entity liabilities.
2
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 2 of the Bank’s
second quarter 2024 Interim Consolidated Financial Statements for further
details.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 31
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
40
2/1/2024
2/6/2024
2/11/2024
2/16/2024
2/21/2024
2/26/2024
3/2/2024
3/7/2024
3/12/2024
3/17/2024
3/22/2024
3/27/2024
4/1/2024
4/6/2024
4/11/2024
4/16/2024
4/21/2024
4/26/2024
TOTAL VALUE-AT-RISK
AND TRADING NET REVENUE
(millions of Canadian dollars)
Trading net revenue
Value-at-Risk
Calculating VaR
The Bank computes total VaR on a daily basis by combining the General
Market Risk (GMR) and Idiosyncratic Debt
Specific Risk (IDSR) associated with the
Bank’s trading positions.
GMR is determined by creating a distribution
of potential changes in the market value of
the current portfolio using historical simulation.
The Bank values the
current portfolio using the market price and rate
changes of the most recent
259
trading days for equity, interest rate, foreign exchange, credit, and
commodity
products. GMR is computed as the threshold
level that portfolio losses are not expected
to exceed more than
one
out of every
100
trading days. A
one-day
holding
period is used for GMR calculation.
IDSR measures idiosyncratic (single-name) credit
spread risk for credit exposures in the trading
portfolio using Monte Carlo simulation.
The IDSR model is
based on the historical behaviour of five-year idiosyncratic
credit spreads. Similar to GMR, IDSR is
computed as the threshold level that portfolio
losses are not
expected to exceed more than
one
out of every
100
trading days. IDSR is measured for a
ten-day
holding period.
The following graph discloses daily one-day
VaR usage and trading net revenue, reported on a TEB,
within Wholesale Banking. Trading net revenue includes
trading income and net interest income related
to positions within the Bank’s market risk capital
trading books. For the quarter ended April
30, 2024, there was
one day
of trading losses and trading net revenue
was positive for
98
% of the trading days, reflecting normal
trading activity. Losses in the year did not exceed
VaR on any trading day.
VaR is a valuable risk measure but it should be used in the context
of its limitations, for example:
●
VaR uses historical data to estimate future events, which limits
its forecasting abilities;
●
it does not provide information on losses beyond
the selected confidence level; and
●
it assumes that all positions can be liquidated
during the holding period used for VaR calculation.
The Bank continuously improves its VaR methodologies and incorporates
new risk measures in line with market
conventions, industry best practices, and
regulatory requirements.
To mitigate some of the shortcomings of VaR, the Bank uses additional metrics designed for risk
management purposes.
This includes Stress Testing as well
as sensitivities to various market risk factors.
The following table presents the end of quarter, average, high,
and low usage of TD’s VaR metric.
TABLE 29: PORTFOLIO MARKET RISK MEASURES
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
As at
Average
High
Low
Average
Average
Average
Average
Interest rate risk
$
18.3
$
20.8
$
27.7
$
15.6
$
17.8
$
28.6
$
19.3
$
26.3
Credit spread risk
31.1
26.5
33.1
18.9
29.4
31.8
27.9
30.5
Equity risk
9.0
7.5
9.8
5.2
7.2
11.4
7.3
11.0
Foreign exchange risk
5.0
3.1
7.0
1.4
2.4
4.4
2.7
4.6
Commodity risk
3.8
3.9
6.6
2.2
3.7
3.6
3.8
5.9
Idiosyncratic debt specific risk
20.1
18.9
22.8
15.7
20.9
36.0
19.9
37.5
Diversification effect
1
(56.8)
(52.8)
n/m
2
n/m
(51.2)
(65.9)
(51.9)
(64.4)
Total Value-at-Risk (one-day)
30.5
27.9
34.7
24.0
30.2
49.9
29.0
51.4
1
The aggregate VaR is less than the sum of the VaR
of the different risk types due to risk offsets resulting from portfolio diversification.
2
Not meaningful. It is not meaningful to compute a diversification effect because the high and low may
occur on different days for different risk types.
Average VaR decreased year-over-year and quarter-over-quarter due
to changes in fixed income positions
combined with narrower credit spreads.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 32
Validation of VaR Model
The Bank uses a back-testing process
to compare actual profits and losses to VaR to review their consistency
with the statistical results of the VaR model.
Structural (Non-Trading) Interest Rate
Risk
The Bank’s
structural interest rate risk arises from traditional
personal and commercial banking activity
and is generally the result of mismatches between
the
maturities and repricing dates of the Bank’s assets
and liabilities. The measurement of interest
rate risk in the banking book does not
include exposures from TD’s
Wholesale Banking or Insurance businesses.
The primary measures for this risk are Economic
Value of Shareholders’
Equity (EVE) Sensitivity and Net Interest
Income Sensitivity (NIIS).
The EVE Sensitivity measures the impact
of a specified interest rate shock to the
change in the net present value of the Bank’s banking
book assets, liabilities,
and certain off-balance sheet items. It reflects a
measurement of the potential present value impact
on shareholders’ equity without an assumed
term profile for the
management of the Bank’s own equity and excludes
product margins.
The NIIS measures the NII change over
a twelve-month horizon for a specified
change in interest rates for banking book
assets, liabilities, and certain off-
balance sheet items assuming a constant balance
sheet over the period.
The Bank’s Market Risk policy sets overall limits
on the structural interest rate risk measures.
These limits are periodically reviewed and
approved by the Risk
Committee. In addition to the Board policy
limits, book-level risk limits are set
for the Bank’s management of non-trading interest
rate risk by Risk Management.
Exposures against these limits are routinely
monitored and reported, and breaches of the
Board limits, if any, are escalated to both the Asset/Liability and
Capital
Committee (ALCO) and the Risk Committee.
The following table shows the potential before-tax
impact of an immediate and sustained
100 bps increase or decrease in interest rates
on the EVE and NIIS
measures. Interest rate floors are applied
by currency to the decrease in rates such
that they do not exceed expected lower bounds,
with the most material
currencies set to a floor of -25 bps.
TABLE 30: STRUCTURAL INTEREST RATE SENSITIVITY MEASURES
(millions of Canadian dollars)
As at
April 30, 2024
January 31, 2024
April 30, 2023
EVE
NII
EVE
NII
EVE
NII
Sensitivity
Sensitivity
1
Sensitivity
Sensitivity
1
Sensitivity
Sensitivity
1
Canada
U.S.
Total
Canada
U.S.
Total
Total
Total
Total
Total
Before-tax impact of
100 bps increase in rates
$
(502)
$
(1,810)
$
(2,312)
$
457
$
418
$
875
$
(2,136)
$
969
$
(1,682)
$
785
100 bps decrease in rates
385
1,476
1,861
(484)
(569)
(1,053)
1,722
(1,152)
1,106
(910)
1
Represents the twelve-month net interest income (NII) exposure to an immediate and sustained shock in rates.
As at April 30, 2024, an immediate and sustained
100 bps increase in interest rates
would have had a negative impact to the Bank’s EVE
of $
2,312
million, an
increase of $
176
million from last quarter, and a positive impact to the Bank’s NII of
$
875
million, a decrease of $
94
million from last quarter. An immediate and
sustained 100 bps decrease in interest rates
would have had a positive impact to the Bank’s EVE
of $
1,861
million, an increase of $
139
million from last quarter,
and a negative impact to the Bank’s NII of $
1,053
million, a decrease of $
99
million from last quarter. The quarter-over-quarter increase
in EVE Sensitivity is
primarily due to an increase in the interest
rate sensitivity of the Bank’s investment portfolio
in the U.S. Region. The quarter-over-quarter
decrease in NII Sensitivity
is primarily
due to Treasury hedging activity.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 33
Liquidity Risk
Liquidity risk is the risk of having insufficient cash
or collateral to meet financial obligations
and an inability to, in a timely manner, raise funding or
monetize assets
at a non-distressed price. Financial obligations
can arise from deposit withdrawals, debt
maturities, commitments to provide credit or liquidity
support,
or the need
to pledge additional collateral.
TD’S LIQUIDITY RISK APPETITE
The Bank applies an established set of practices
and protocols for managing its potential
exposure to liquidity risk. The Bank
targets a 90-day survival horizon
under a combined bank-specific and market-wide
stress scenario, and a minimum buffer over regulatory
requirements prescribed by the OSFI Liquidity
Adequacy
Requirements (LAR)
guidelines. Under the LAR guidelines,
Canadian banks are required to maintain
a Liquidity Coverage Ratio (LCR) at the
minimum of 100%
other than during periods of financial stress
and to maintain a Net Stable Funding
Ratio (NSFR) at the minimum of 100%. The
Bank’s funding program emphasizes
maximizing deposits as a core source of
funding, and having ready access to wholesale
funding markets across diversified terms,
funding types, and currencies
that is designed to ensure low exposure
to a sudden contraction of wholesale funding
capacity and to minimize structural liquidity
gaps. The Bank also maintains a
contingency funding plan to enhance preparedness
for recovery from potential liquidity stress
events. The Bank’s strategies and actions comprise
an integrated
liquidity risk management program that is designed
to ensure low exposure to liquidity risk and
compliance with regulatory requirements.
LIQUIDITY RISK MANAGEMENT RESPONSIBILITY
The Bank’s ALCO oversees the Bank’s liquidity risk
management program. It ensures there are
effective management structures and practices
in place to properly
measure and manage liquidity risk. The Global
Liquidity & Funding Committee, a subcommittee
of the ALCO comprised of senior management
from Treasury,
Risk Management and Wholesale Banking, identifies
and monitors the Bank’s liquidity risks.
The management of liquidity risk is the responsibility
of the SET
member responsible for Treasury, while oversight and challenge are provided
by the ALCO and independently by Risk
Management. The Risk Committee
regularly reviews the Bank’s liquidity position
and approves the Bank’s Liquidity Risk
Management Framework biennially and
the related policies annually.
The Bank has established TD Group US Holding
LLC (TDGUS)
as TD’s U.S. Intermediate Holding Company
(IHC), as well as a Combined U.S. Operations
(CUSO) reporting unit that consists of
the IHC and TD’s U.S. branch and agency network.
Both TDGUS and CUSO are managed
to the U.S. Enhanced Prudential
Standards liquidity requirements in addition
to the Bank’s liquidity management framework.
The Bank’s liquidity risk appetite and liquidity risk
management approach have not substantially
changed from that described in the Bank’s 2023
Annual Report.
For a complete discussion of liquidity risk,
refer to the “Liquidity Risk”
section in the Bank’s 2023 Annual Report.
Liquid assets
The unencumbered liquid assets the Bank holds
to meet its liquidity requirements must be
high-quality securities that the Bank believes
can be monetized quickly
in stress conditions with minimum loss in
market value. The liquidity value of unencumbered
liquid assets considers estimated market
or trading depths, settlement
timing, and/or other identified impediments
to potential sale or pledging.
Assets held by the Bank to meet liquidity
requirements are summarized in the following
tables. The tables do not include assets held
within the Bank’s
insurance businesses as these are used to
support insurance-specific liabilities and capital
requirements.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 34
TABLE 31: SUMMARY OF LIQUID ASSETS BY TYPE AND CURRENCY
1,2
(millions of Canadian dollars, except as noted)
As at
Securities
received as
collateral from
securities
financing and
Bank-owned
derivative
Total
% of
Encumbered
Unencumbered
liquid assets
transactions
liquid assets
total
liquid assets
liquid assets
April 30, 2024
Cash and central bank reserves
$
25,184
$
–
$
25,184
3
%
$
737
$
24,447
Canadian government obligations
23,108
89,065
112,173
13
51,323
60,850
National Housing Act Mortgage-Backed
Securities (NHA MBS)
41,366
–
41,366
4
1,393
39,973
Obligations of provincial governments, public sector entities
and multilateral development banks
3
41,497
25,839
67,336
8
36,592
30,744
Corporate issuer obligations
21,088
5,672
26,760
3
5,662
21,098
Equities
11,643
2,987
14,630
2
13,637
993
Total Canadian dollar-denominated
163,886
123,563
287,449
33
109,344
178,105
Cash and central bank reserves
58,173
–
58,173
7
255
57,918
U.S. government obligations
73,624
62,310
135,934
16
75,498
60,436
U.S. federal agency obligations, including U.S.
federal agency mortgage-backed obligations
79,327
12,748
92,075
11
27,419
64,656
Obligations of other sovereigns, public sector entities
and multilateral development banks
3
65,458
37,119
102,577
12
38,977
63,600
Corporate issuer obligations
78,482
14,856
93,338
11
26,992
66,346
Equities
52,202
36,828
89,030
10
49,879
39,151
Total non-Canadian dollar-denominated
407,266
163,861
571,127
67
219,020
352,107
Total
$
571,152
$
287,424
$
858,576
100
%
$
328,364
$
530,212
October 31, 2023
Cash and central bank reserves
$
28,548
$
–
$
28,548
3
%
$
506
$
28,042
Canadian government obligations
15,214
94,000
109,214
13
67,457
41,757
NHA MBS
38,760
–
38,760
4
1,043
37,717
Obligations of provincial governments, public sector entities
and multilateral development banks
3
40,697
22,703
63,400
8
31,078
32,322
Corporate issuer obligations
19,507
4,815
24,322
3
4,512
19,810
Equities
10,555
2,288
12,843
1
8,890
3,953
Total Canadian dollar-denominated
153,281
123,806
277,087
32
113,486
163,601
Cash and central bank reserves
66,094
–
66,094
8
180
65,914
U.S. government obligations
72,808
64,449
137,257
16
63,688
73,569
U.S. federal agency obligations, including U.S.
federal agency mortgage-backed obligations
80,047
15,838
95,885
11
29,487
66,398
Obligations of other sovereigns, public sector entities
and multilateral development banks
3
65,996
54,321
120,317
13
56,652
63,665
Corporate issuer obligations
84,853
9,656
94,509
11
15,228
79,281
Equities
38,501
38,388
76,889
9
47,653
29,236
Total non-Canadian dollar-denominated
408,299
182,652
590,951
68
212,888
378,063
Total
$
561,580
$
306,458
$
868,038
100
%
$
326,374
$
541,664
1
Liquid assets include collateral received that can be re-hypothecated or otherwise redeployed.
2
Positions stated include gross asset values pertaining to securities financing transactions.
3
Includes debt obligations issued or guaranteed by these entities.
Unencumbered liquid assets held in The
Toronto-Dominion Bank and multiple domestic and foreign subsidiaries (excluding
insurance subsidiaries) and branches
are summarized in the following table.
TABLE 32: SUMMARY OF UNENCUMBERED LIQUID ASSETS BY
BANK, SUBSIDIARIES, AND BRANCHES
(millions of Canadian dollars)
As at
April 30
October 31
2024
2023
The Toronto-Dominion Bank (Parent)
$
231,560
$
205,408
Bank subsidiaries
280,336
291,915
Foreign branches
18,316
44,341
Total
$
530,212
$
541,664
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 35
The Bank’s
monthly average liquid assets (excluding those
held in insurance subsidiaries) for the quarters
ended April 30, 2024 and January 31,
2024, are
summarized in the following table.
TABLE 33: SUMMARY OF AVERAGE LIQUID ASSETS BY TYPE AND CURRENCY
1,2
(millions of Canadian dollars, except as noted)
Average for the three months ended
Securities
received as
collateral from
securities
financing and
Total
Bank-owned
derivative
liquid
% of
Encumbered
Unencumbered
liquid assets
transactions
assets
Total
liquid assets
liquid assets
April 30, 2024
Cash and central bank reserves
$
21,416
$
–
$
21,416
2
%
$
662
$
20,754
Canadian government obligations
22,788
89,436
112,224
13
54,659
57,565
NHA MBS
41,280
17
41,297
5
1,397
39,900
Obligations of provincial governments, public sector
entities and multilateral development banks
3
42,126
23,814
65,940
8
35,200
30,740
Corporate issuer obligations
20,600
5,514
26,114
3
5,741
20,373
Equities
13,240
3,267
16,507
2
12,554
3,953
Total Canadian dollar-denominated
161,450
122,048
283,498
33
110,213
173,285
Cash and central bank reserves
61,498
–
61,498
7
228
61,270
U.S. government obligations
75,101
63,416
138,517
16
75,230
63,287
U.S. federal agency obligations, including U.S.
federal agency mortgage-backed obligations
79,294
12,670
91,964
10
27,618
64,346
Obligations of other sovereigns, public sector entities and
multilateral development banks
3
65,033
36,777
101,810
12
39,427
62,383
Corporate issuer obligations
79,427
14,078
93,505
11
25,515
67,990
Equities
52,723
38,939
91,662
11
51,440
40,222
Total non-Canadian dollar-denominated
413,076
165,880
578,956
67
219,458
359,498
Total
$
574,526
$
287,928
$
862,454
100
%
$
329,671
$
532,783
January 31, 2024
Cash and central bank reserves
$
25,485
$
–
$
25,485
3
%
$
543
$
24,942
Canadian government obligations
17,377
82,565
99,942
12
54,469
45,473
NHA MBS
40,487
–
40,487
5
1,391
39,096
Obligations of provincial governments, public sector
entities and multilateral development banks
3
43,258
24,036
67,294
8
35,838
31,456
Corporate issuer obligations
19,590
5,056
24,646
3
5,314
19,332
Equities
11,845
2,423
14,268
1
10,393
3,875
Total Canadian dollar-denominated
158,042
114,080
272,122
32
107,948
164,174
Cash and central bank reserves
53,870
–
53,870
6
240
53,630
U.S. government obligations
76,266
64,334
140,600
17
70,162
70,438
U.S. federal agency obligations, including U.S.
federal agency mortgage-backed obligations
78,957
12,071
91,028
11
26,571
64,457
Obligations of other sovereigns, public sector entities and
multilateral development banks
3
66,149
44,439
110,588
13
43,327
67,261
Corporate issuer obligations
78,943
11,043
89,986
11
17,989
71,997
Equities
48,073
36,885
84,958
10
48,537
36,421
Total non-Canadian dollar-denominated
402,258
168,772
571,030
68
206,826
364,204
Total
$
560,300
$
282,852
$
843,152
100
%
$
314,774
$
528,378
1
Liquid assets include collateral received that can be re-hypothecated or otherwise redeployed.
2
Positions stated include gross asset values pertaining to securities financing transactions.
3
Includes debt obligations issued or guaranteed by these entities.
Average unencumbered liquid assets held in
The Toronto-Dominion Bank and multiple domestic and foreign subsidiaries (excluding
insurance subsidiaries) and
branches are summarized in the following
table.
TABLE 34: SUMMARY OF AVERAGE UNENCUMBERED LIQUID ASSETS BY BANK, SUBSIDIARIES,
AND BRANCHES
(millions of Canadian dollars)
Average for the three months ended
April 30
January 31
2024
2024
The Toronto-Dominion Bank (Parent)
$
227,812
$
209,171
Bank subsidiaries
278,667
285,938
Foreign branches
26,304
33,269
Total
$
532,783
$
528,378
ASSET ENCUMBRANCE
In the course of the Bank’s day-to-day operations,
assets are pledged to obtain funding,
support trading and brokerage businesses,
and participate in clearing
and/or settlement systems. A summary
of encumbered and unencumbered assets
(excluding assets held in insurance subsidiaries)
is presented in the following
table to identify assets that are used or available
for potential funding needs.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 36
TABLE 35: ENCUMBERED AND UNENCUMBERED ASSETS
(millions of Canadian dollars)
As at
Total Assets
Encumbered
1
Unencumbered
Securities
received as
collateral from
securities
financing and
Bank-owned
derivative
Total
Pledged as
Available as
assets
transactions
2
Assets
Collateral
3
Other
4
Collateral
5
Other
6
April 30, 2024
Cash and due from banks
$
6,308
$
–
$
6,308
$
–
$
–
$
7
$
6,301
Interest-bearing deposits with
banks
87,665
–
87,665
5,358
–
78,526
3,781
Securities, trading loans, and other
7
546,757
435,351
982,108
412,327
18,123
525,410
26,248
Derivatives
82,190
–
82,190
–
–
–
82,190
Securities purchased under reverse
repurchase agreements
8
205,722
(205,722)
–
–
–
–
–
Loans, net of allowance for loan
losses
9
928,124
(13,496)
914,628
62,284
80,013
60,034
712,297
Customers’ liabilities under
acceptances
4,183
–
4,183
–
–
–
4,183
Other assets
10
105,719
–
105,719
311
–
–
105,408
Total assets
$
1,966,668
$
216,133
$
2,182,801
$
480,280
$
98,136
$
663,977
$
940,408
October 31, 2023
Total assets
$
1,955,139
$
215,318
$
2,170,457
$
460,641
$
84,997
$
678,289
$
946,530
1
Asset encumbrance has been analyzed on an individual asset basis. Where a particular asset has been encumbered
and TD has holdings of the asset both on-balance sheet and off-
balance sheet, for the purpose of this disclosure, the on- and off-balance sheet holdings are encumbered
in alignment with the business practice.
2
Assets received as collateral through off-balance sheet transactions such as reverse repurchase agreements,
securities borrowing, margin loans, and other client activity.
3
Represents assets that have been posted externally to support the Bank’s
day-to-day operations, including securities financing transactions, clearing and payments, and
derivative
transactions. Also includes assets that have been pledged supporting Federal Home Loan Bank (FHLB) activity.
4
Assets supporting TD’s long-term funding activities, assets pledged against securitization liabilities, and
assets held by consolidated securitization vehicles or in pools for covered bond
issuance.
5
Assets that are considered readily available in their current legal form to generate funding or support collateral
needs. This category includes reported FHLB assets that remain unutilized
and DSAC that are available for collateral purposes however not regularly utilized in practice.
6
Assets that cannot be used to support funding or collateral requirements in their current form. This category includes
those assets that are potentially eligible as funding program
collateral or for pledging to central banks (for example, Canada Mortgage and Housing Corporation insured mortgages
that can be securitized into NHA MBS).
7
Includes trading loans, securities, non-trading financial assets at FVTPL and other financial assets designated at
FVTPL, financial assets at FVOCI, and DSAC.
8
Assets reported in the “Bank-owned assets”
column represent the value of the loans extended and not the value of the collateral received. The loan value
from the reverse repurchase
transactions is deducted from the “Securities received as collateral from securities financing and derivative transactions
”
column to avoid double-counting with the on-balance sheet
assets.
9
The loan value from the margin loans/client activity is deducted from the “Securities received as collateral from securities
financing and derivative transactions”
column to avoid double-
counting with the on-balance sheet assets.
10
Other assets include investment in Schwab, goodwill, other intangibles, land, buildings, equipment, and other depreciable
assets, deferred tax assets, amounts receivable from brokers,
dealers, and clients, and other assets on the balance sheet not reported in the above categories.
LIQUIDITY STRESS TESTING AND CONTINGENCY
FUNDING PLANS
In addition to the Severe Combined Stress
Scenario,
the Bank performs liquidity stress testing
on multiple alternate scenarios. These
scenarios are a mix of TD-
specific events and market-wide stress events
designed to test the impact from risk factors
material to the Bank’s risk profile. Liquidity assessments
are also part
of the Bank’s Enterprise-Wide Stress Testing program.
The Bank has liquidity contingency funding
plans (CFP) in place at the overall Bank
level and for certain subsidiaries operating
in foreign jurisdictions (Regional
CFPs). The Bank’s CFP provides a documented
framework for managing unexpected liquidity
situations and thus is an integral component
of the Bank’s overall
liquidity risk management program. It
outlines different contingency levels based on
the severity and duration of the liquidity situation and
identifies recovery
actions appropriate for each level. For each recovery
action, it provides key operational
steps required to execute the action. Regional
CFPs identify recovery
actions to address region-specific stress
events. The actions and governance structure
outlined in the Bank’s CFP are aligned
with the Bank’s Crisis Management
Recovery Plan.
CREDIT RATINGS
Credit ratings impact the Bank’s borrowing costs
and ability to raise funds. Rating downgrades
could potentially result in higher financing costs,
increased
requirements to pledge collateral, reduced
access to capital markets, and could also affect
the Bank’s ability to enter into derivative transactions.
Credit ratings and outlooks provided by rating
agencies reflect their views and are
subject to change from time to time, based on
a number of factors including
the Bank’s financial strength, competitive position,
and liquidity, as well as factors not entirely within the Bank’s control, including
the methodologies used by rating
agencies and conditions affecting the overall financial
services industry.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 37
TABLE 36: CREDIT RATINGS
1
As at
April 30, 2024
Moody’s
S&P
Fitch
DBRS
Deposits/Counterparty
2
Aa1
AA-
AA
AA (high)
Legacy Senior Debt
3
Aa2
AA-
AA
AA (high)
Senior Debt
4
A1
A
AA-
AA
Covered Bonds
Aaa
–
AAA
AAA
Subordinated Debt
A2
A
A
AA (low)
Subordinated Debt – NVCC
A2 (hyb)
A-
A
A
Preferred Shares – NVCC
Baa1 (hyb)
BBB
BBB+
Pfd-2 (high)
Limited Recourse Capital Notes – NVCC
Baa1 (hyb)
BBB
BBB+
A (low)
Short-Term Debt (Deposits)
P-1
A-1+
F1+
R-1 (high)
Outlook
Stable
Stable
Stable
Stable
1
The above ratings are for The Toronto-Dominion
Bank legal entity. Subsidiaries’ ratings are available
on the Bank’s website at http://www.td.com/investor/credit.jsp. Credit
ratings are not
recommendations to purchase, sell, or hold a financial obligation in as much as they do not comment on market
price or suitability for a particular investor. Ratings are subject
to revision
or withdrawal at any time by the rating organization.
2
Represents Moody’s Long-Term
Deposits Ratings and Counterparty Risk Rating, S&P’s Issuer Credit Rating, Fitch’s
Long-Term Deposits Rating and DBRS
’
Long-Term Issuer Rating.
3
Includes (a) Senior debt issued prior to September 23, 2018; and (b) Senior debt issued on or after September
23, 2018 which is excluded from the bank recapitalization “bail-in” regime.
4
Subject to conversion under the bank recapitalization “bail-in”
regime.
The Bank regularly reviews the level
of increased collateral its trading counterparties
would require in the event of a downgrade of
TD’s credit rating. The Bank
holds liquid assets to ensure it is able to provide
additional collateral required by trading
counterparties in the event of a three-notch
downgrade in the Bank’s
senior debt ratings.
The following table presents the additional collateral
that could have been contractually required
to be posted to over-the-counter (OTC)
derivative counterparties as of the reporting
date in the event of one, two, and three-notch
downgrades of the Bank’s credit ratings.
TABLE 37: ADDITIONAL COLLATERAL REQUIREMENTS FOR RATING DOWNGRADES
1
(millions of Canadian dollars)
Average for the three months ended
April 30
January 31
2024
2024
One-notch downgrade
$
166
$
90
Two-notch downgrade
242
150
Three-notch downgrade
934
800
1
The above collateral requirements are based on each OTC trading counterparty’s Credit Support Annex
and the Bank’s credit rating across applicable rating agencies.
LIQUIDITY COVERAGE RATIO
The LCR is a Basel III metric calculated
as the ratio of the stock of unencumbered high-quality
liquid assets (HQLA) over the net
cash outflow requirements in the
next 30 days under a hypothetical liquidity stress
event.
Other than during periods of financial stress,
the Bank must maintain the LCR above
100% in accordance with the OSFI LAR
requirement. The Bank’s LCR is
calculated according to the scenario parameters
in the LAR guideline, including prescribed
HQLA eligibility criteria and haircuts, deposit
run-off rates, and other
outflow and inflow rates. HQLA held by the
Bank that are eligible for the LCR calculation
under the LAR are primarily central bank reserves,
sovereign-issued or
sovereign-guaranteed securities, and high-quality
securities issued by non-financial entities.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 38
The following table summarizes the Bank’s average
daily LCR as of the relevant dates.
TABLE 38: AVERAGE BASEL III LIQUIDITY COVERAGE RATIO
1
(millions of Canadian dollars, except
as noted)
Average for the three months ended
April 30, 2024
Total unweighted
Total weighted
value (average)
2
value (average)
3
High-quality liquid assets
Total high-quality liquid assets
$
n/a
4
$
332,676
Cash outflows
Retail deposits and deposits from small business
customers, of which:
$
480,690
$
30,668
Stable deposits
5
257,719
7,732
Less stable deposits
222,971
22,936
Unsecured wholesale funding, of which:
354,375
178,685
Operational deposits (all counterparties)
and deposits in networks of cooperative banks
6
126,605
30,035
Non-operational deposits (all counterparties)
196,382
117,262
Unsecured debt
31,388
31,388
Secured wholesale funding
n/a
46,341
Additional requirements, of which:
342,989
97,537
Outflows related to derivative exposures and
other collateral requirements
57,259
37,980
Outflows related to loss of funding on debt products
10,282
10,282
Credit and liquidity facilities
275,448
49,275
Other contractual funding obligations
22,108
11,296
Other contingent funding obligations
7
779,005
12,314
Total cash outflows
$
n/a
$
376,841
Cash inflows
Secured lending
$
243,498
$
32,298
Inflows from fully performing exposures
27,613
12,676
Other cash inflows
66,917
66,917
Total cash inflows
$
338,028
$
111,891
Average for the three months ended
April 30, 2024
January 31, 2024
Total adjusted
Total adjusted
value
value
Total high-quality liquid assets
8
$
332,676
$
334,351
Total net cash outflows
9
264,950
251,329
Liquidity coverage ratio
126
%
133
%
1
The LCR for the quarter ended April 30, 2024
is calculated as an average of the 62 daily data points in the quarter.
2
Unweighted inflow and outflow values are outstanding balances maturing or callable within 30 days.
3
Weighted values are calculated after the application of respective HQLA haircuts or inflow and outflow
rates, as prescribed by the OSFI LAR guideline.
4
Not applicable as per the LCR common disclosure template.
5
As defined by the OSFI LAR guideline, stable deposits from retail and small- and medium-sized enterprise (SME)
customers are deposits that are insured and are either held in
transactional accounts or the depositors have an established relationship with the Bank that makes deposit withdrawal
highly unlikely.
6
Operational deposits from non-SME business customers are deposits kept with the Bank in order to facilitate their
access and ability to conduct payment and settlement activities. These
activities include clearing, custody, or cash management
services.
7
Includes uncommitted credit and liquidity facilities, stable value money market mutual funds, outstanding debt securities
with remaining maturity greater than 30 days, and other
contractual cash outflows. With respect to outstanding debt securities with remaining maturity greater than 30 days,
TD has no contractual obligation to buy back these outstanding TD
debt securities, and as a result, a 0% outflow rate is applied under the OSFI LAR guideline.
8
Total HQLA includes both asset haircuts
and applicable caps, as prescribed by the OSFI LAR guideline (HQLA assets after haircuts are capped
at 40% for Level 2 and 15% for Level 2B).
9
Total Net Cash Outflows include both inflow
and outflow rates and applicable caps, as prescribed by the OSFI LAR guideline (inflows are capped at 75%
of outflows).
The Bank’s average LCR of 126%
for the quarter ended April 30, 2024 continues
to meet the regulatory requirements.
The Bank holds a variety of liquid assets
commensurate with the liquidity needs of
the organization. Many of these assets qualify
as HQLA under the OSFI LAR
guideline. The average HQLA of the Bank
for the quarter ended April 30, 2024 was $333
billion (January 31, 2024 – $334 billion),
with Level 1 assets representing
83% (January 31, 2024 – 83%). The Bank’s reported
HQLA excludes excess HQLA from the
U.S. Retail operations, reflecting liquidity
transfer limitations from
U.S. Retail and its affiliates which adheres to OSFI
LAR and Federal Reserve Board guidelines.
As described in the “How TD Manages Liquidity
Risk” section of the Bank’s 2023 Annual Report,
the Bank manages its HQLA and other liquidity
buffers to the
higher of TD’s 90-day surplus requirement and the
target buffers over regulatory requirements
from the LCR, NSFR, and the Net Cumulative
Cash Flow metrics.
As a result, the total stock of HQLA is subject
to ongoing rebalancing against the projected
liquidity requirements.
NET STABLE
FUNDING RATIO
The NSFR is a Basel III metric calculated as
the ratio of total available stable funding
(ASF) over total required stable funding (RSF)
in accordance with OSFI’s
LAR guideline. The Bank must maintain an
NSFR ratio equal to or above 100% in accordance
with the LAR guideline. The Bank’s ASF comprises
the Bank’s
liability and capital instruments (including
deposits and wholesale funding). The assets
that require stable funding are based on
the Bank’s on and off-balance
sheet activities and a function of their liquidity
characteristics and the requirements of OSFI’s
LAR guideline.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 39
TABLE 39: NET STABLE FUNDING RATIO
(millions of Canadian dollars, except
as noted)
As at
April 30, 2024
Unweighted value by residential maturity
6 months to
No
Less than
less than
More than
Weighted
maturity
1
6 months
1 year
1 year
value
2
Available Stable Funding Item
Capital
$
108,390
$
n/a
$
n/a
$
10,879
$
119,270
Regulatory capital
108,390
n/a
n/a
10,879
119,270
Other capital instruments
n/a
n/a
n/a
–
–
Retail deposits and deposits from small business
customers:
439,111
73,242
36,382
31,910
539,930
Stable deposits
3
250,252
27,285
15,288
16,038
294,223
Less stable deposits
188,859
45,957
21,094
15,872
245,707
Wholesale funding:
244,275
390,301
81,070
244,446
441,704
Operational deposits
4
103,112
2,344
–
–
52,728
Other wholesale funding
141,163
387,957
81,070
244,446
388,976
Liabilities with matching interdependent assets
5
–
3,175
2,021
23,122
–
Other liabilities:
50,470
98,179
2,773
NSFR derivative liabilities
n/a
2,815
n/a
All other liabilities and equity not included
in the above categories
50,470
91,462
2,259
1,643
2,773
Total Available Stable Funding
$
1,103,677
Required Stable Funding Item
Total NSFR high-quality liquid assets
$
n/a
$
n/a
$
n/a
$
n/a
$
61,140
Deposits held at other financial institutions for
operational purposes
–
–
–
–
–
Performing loans and securities
106,425
264,865
117,995
669,318
767,215
Performing loans to financial institutions
secured by Level 1 HQLA
–
81,829
11,097
–
12,654
Performing loans to financial institutions
secured by non-Level 1
HQLA and unsecured performing loans to
financial institutions
–
58,692
8,304
10,267
20,905
Performing loans to non-financial corporate
clients, loans to retail
and small business customers, and loans
to sovereigns, central
banks and PSEs, of which:
38,027
68,889
42,237
290,713
339,652
With a risk weight of less than or equal
to 35% under the Basel II
standardized approach for credit risk
n/a
48,678
26,989
–
37,125
Performing residential mortgages, of which:
31,893
47,393
49,950
300,432
297,262
With a risk weight of less than or equal
to 35% under the Basel II
standardized approach for credit risk
6
31,893
47,393
49,950
300,432
297,262
Securities that are not in default and do not
qualify as HQLA,
including exchange-traded equities
36,505
8,062
6,407
67,906
96,742
Assets with matching interdependent liabilities
5
–
2,966
2,292
23,060
–
Other assets:
74,303
146,755
111,919
Physical traded commodities, including gold
11,638
n/a
n/a
n/a
10,076
Assets posted as initial margin for derivative
contracts and
contributions to default funds of CCPs
17,688
15,035
NSFR derivative assets
n/a
9,841
7,026
NSFR derivative liabilities before deduction
of variation margin
posted
n/a
25,144
1,257
All other assets not included in the above
categories
62,665
85,926
2,162
5,994
78,525
Off-balance sheet items
n/a
799,831
28,891
Total Required Stable Funding
$
969,165
Net Stable Funding Ratio
114
%
As at
October 31, 2023
Total Available Stable Funding
$
1,123,816
Total Required Stable Funding
960,590
Net Stable Funding Ratio
117
%
1
Items in the “no maturity” time bucket do not have a stated maturity.
These may include, but are not limited to, items such as capital with perpetual maturity,
non-maturity deposits, short
positions, open maturity positions, non-HQLA equities, and physical traded commodities.
2
Weighted values are calculated after the application of respective NSFR weights, as prescribed by the
OSFI LAR guideline.
3
As defined by the OSFI LAR guideline, stable deposits from retail and SME customers are deposits that are insured
and are either held in transactional accounts or the depositors have
an established relationship with the Bank that makes deposit withdrawals highly unlikely.
4
Operational deposits from non-SME business customers are deposits kept with the Bank in order to facilitate their
access and ability to conduct payment and settlement activities. These
activities include clearing, custody, or cash management
services.
5
Interdependent asset and liability items are deemed by OSFI to be interdependent and have RSF and ASF risk factors
adjusted to zero. Interdependent liabilities cannot fall due while the
asset is still on balance sheet, cannot be used to fund any other assets and principal payments from the asset cannot
be used for anything other than repaying the liability.
As such, the
only interdependent assets and liabilities that qualify for this treatment at the Bank are the liabilities arising from the
Canada Mortgage Bonds Program and their corresponding
encumbered assets.
6
Includes Residential Mortgages and HELOCs.
The Bank’s NSFR for the quarter ended April 30,
2024 is at 114%
(October 31, 2023 – 117%) representing a surplus of $135 billion
and adheres to regulatory
requirements. The NSFR remained relatively
stable to the previous quarter (January 31, 2024
– 114%), as our funding programs continued to meet our needs
in
Q2.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 40
FUNDING
The Bank has access to a variety of unsecured
and secured funding sources. The Bank’s
funding activities are conducted in accordance
with liquidity risk
management policies that require assets be
funded to the appropriate term and to a prudent
diversification profile.
The Bank’s primary approach to managing
funding activities is to maximize the use of
deposits raised through personal and
commercial banking channels.
The
following table illustrates the Bank’s base of personal
and commercial, wealth, and Schwab sweep
deposits (collectively, “P&C deposits”) that make up
approximately
70
% (October 31, 2023 –
70
%) of the Bank’s total funding.
TABLE 40: SUMMARY OF DEPOSIT FUNDING
(millions of Canadian dollars)
As at
April 30
October 31
2024
2023
P&C deposits – Canadian
$
542,967
$
529,078
P&C deposits – U.S.
1
432,778
446,355
Total
$
975,745
$
975,433
1
P&C deposits in U.S. are presented on a Canadian equivalent basis and therefore period-over-period movements
reflect both underlying growth and changes in the foreign exchange
rate.
WHOLESALE FUNDING
The Bank maintains various registered external
wholesale term (greater than 1 year) funding
programs to provide access to diversified
funding sources, including
asset securitization, covered bonds, and
unsecured wholesale debt. The Bank raises
term funding through Senior Notes, NHA
MBS, and notes backed by credit
card receivables (Evergreen Credit Card
Trust) and home equity lines of credit (Genesis Trust II). The Bank’s wholesale
funding is diversified by geography, by
currency, and by funding types. The Bank raises short-term (1
year or less) funding using certificates of deposit,
commercial paper, and bankers’ acceptances.
The following table summarizes the registered
term funding and capital programs by geography, with the related
program size as at April 30,
2024.
Canada
United States
Europe
Capital Securities Program ($20 billion)
Canadian Senior Medium-Term Linked Notes
Program ($5 billion)
HELOC ABS Program (Genesis Trust II) ($7
billion)
U.S. SEC (F-3) Registered Capital and
Debt
Program (US$75 billion)
U.K. Financial Conduct Authority (FCA) Registered
Legislative Covered Bond Program ($80 billion)
FCA Registered Global Medium-Term Note Program
(US$40 billion)
The following table presents a breakdown of
the Bank’s term debt by currency and funding
type. Term funding as at April 30, 2024, was $178.4 billion
(October 31, 2023
– $173.3 billion).
Note that Table 41: Long-Ter
m
Funding and Table 42: Wholesale Funding do not include any funding accessed
via repurchase transactions or securities financing.
TABLE 41: LONG-TERM FUNDING
1
As at
April 30
October 31
Long-term funding by currency
2024
2023
Canadian dollar
27
%
27
%
U.S. dollar
33
35
Euro
28
27
British pound
6
5
Other
6
6
Total
100
%
100
%
Long-term funding by type
Senior unsecured medium-term notes
57
%
61
%
Covered bonds
35
31
Mortgage securitization
2
7
7
Term asset-backed securities
1
1
Total
100
%
100
%
1
The table includes funding issued to external investors
only.
2
Mortgage securitization excludes the residential
mortgage trading business.
The Bank maintains depositor concentration
limits in respect of short-term wholesale
deposits so that it is not overly reliant
on individual depositors for funding.
The Bank further limits short-term wholesale
funding maturity concentration in an effort to
mitigate refinancing risk during a stress event.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 41
The following table represents the remaining
maturity of various sources of funding outstanding
as at April 30,
2024 and October 31, 2023.
TABLE 42: WHOLESALE FUNDING
1
(millions of Canadian dollars)
As at
April 30
October 31
2024
2023
Less than
1 to 3
3 to 6
6 months
Up to 1
Over 1 to
Over
1 month
months
months
to 1 year
year
2 years
2 years
Total
Total
Deposits from banks
2
$
26,389
$
5,815
$
3,660
$
3,321
$
39,185
$
–
$
–
$
39,185
$
42,481
Bearer deposit notes
157
728
539
230
1,654
–
–
1,654
1,804
Certificates of deposit
9,352
28,606
30,402
31,842
100,202
312
–
100,514
113,476
Commercial paper
10,320
15,037
16,436
12,847
54,640
–
–
54,640
40,515
Covered bonds
457
3,488
860
1,720
6,525
19,361
40,197
66,083
56,973
Mortgage securitization
3
–
2,322
1,073
2,738
6,133
3,777
20,325
30,235
27,131
Legacy senior unsecured medium-term
notes
4
–
1,898
–
–
1,898
289
–
2,187
3,162
Senior unsecured medium-term notes
5
–
3,178
5,525
9,455
18,158
19,523
57,308
94,989
97,525
Subordinated notes and debentures
6
–
–
–
–
–
197
11,121
11,318
9,620
Term asset-backed
securitization
–
318
1,035
560
1,913
–
375
2,288
2,204
Other
7
26,502
2,290
9,021
4,205
42,018
965
782
43,765
44,348
Total
$
73,177
$
63,680
$
68,551
$
66,918
$
272,326
$
44,424
$
130,108
$
446,858
$
439,239
Of which:
Secured
$
2,865
$
6,128
$
9,160
$
7,426
$
25,579
$
23,139
$
60,901
$
109,619
$
95,328
Unsecured
70,312
57,552
59,391
59,492
246,747
21,285
69,207
337,239
343,911
Total
$
73,177
$
63,680
$
68,551
$
66,918
$
272,326
$
44,424
$
130,108
$
446,858
$
439,239
1
Excludes bankers’ acceptances, which are disclosed in the Remaining Contractual Maturity table within the “Managing
Risk” section of this document.
2
Includes fixed-term deposits with banks.
3
Includes mortgage-backed securities (MBS) issued to external investors and Wholesale Banking residential mortgage
trading business.
4
Includes a) senior debt issued prior to September 23, 2018; and b) senior debt issued on or after September 23,
2018 which is excluded from the bank recapitalization “bail-in” regime,
including debt with an original term-to-maturity of less than 400 days.
5
Comprised of senior debt subject to conversion under the bank recapitalization “bail-in”
regime. Excludes $6.1 billion of structured notes subject to conversion under the “bail-in”
regime (October 31, 2023 – $5.7 billion).
6
Subordinated notes and debentures are not considered wholesale funding as they may be raised primarily for capital
management purposes.
7
Includes fixed-term deposits from non-bank institutions (unsecured) of $18.0 billion (October 31, 2023 – $22.1
billion) and the remaining are non-term deposits.
Excluding the Wholesale Banking residential
mortgage trading business, the Bank’s total
MBS issued to external investors for the
three months and six months
ended April 30, 2024 was $0.7 billion and $0.8
billion, respectively (three and six months ended
April 30, 2023 – $0.4 billion and $0.8 billion,
respectively) and
other asset-backed securities issued for
the three and six months ended April 30,
2024 was nil (three and six months ended
April 30, 2023
– $0.1 billion and
$0.4 billion, respectively). The Bank also issued
$7.5 billion and $8.1 billion, respectively
of unsecured medium-term notes for the
three and six months ended
April 30, 2024 (three and six months
ended April 30, 2023 – $1.0 billion and $13.9
billion) and $10.2 billion and $14.7 billion,
respectively of covered bonds for the
three and six months ended April 30, 2024 (three
and six months ended April 30, 2023 –
$9.7 billion).
MATURITY ANALYSIS OF ASSETS, LIABILITIES, AND OFF-BALANCE SHEET COMMITMENTS
The following table summarizes on-balance
sheet and off-balance sheet categories by remaining
contractual maturity. Off-balance sheet commitments include
contractual obligations to make future payments
on certain lease-related commitments, certain
purchase obligations, and other liabilities.
The values of credit
instruments reported in the following
table represent the maximum amount of additional
credit that the Bank could be obligated to extend
should such instruments
be fully drawn or utilized. Since a significant
portion of guarantees and commitments
are expected to expire without being
drawn upon, the total of the contractual
amounts is not representative of expected future
liquidity requirements. These contractual
obligations have an impact on the Bank’s
short-term and long-term
liquidity and capital resource needs.
The maturity analysis presented does not depict
the degree of the Bank’s maturity transformation or
the Bank’s exposure to interest rate and liquidity risk.
The
Bank’s objective is to fund its assets appropriately
to protect against borrowing cost volatility
and potential reductions to funding market
availability. The Bank
utilizes stable non-maturity deposits (chequing
and savings accounts) and term deposits
as the primary source of long-term funding
for the Bank’s non-trading
assets including personal and business
term loans and the stable balance of revolving
lines of credit. Additionally, the Bank issues long-term funding
in respect of
such non-trading assets and raises short
term funding primarily to finance trading assets.
The liquidity of trading assets under stressed
market conditions is
considered when determining the appropriate
term of the funding.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 42
TABLE 43: REMAINING CONTRACTUAL MATURITY
(millions of Canadian dollars)
As at
April 30, 2024
No
Less than
1 to 3
3 to 6
6 to 9
9 months
Over 1 to
Over 2 to
Over
specific
1 month
months
months
months
to 1 year
2 years
5 years
5 years
maturity
Total
Assets
Cash and due from banks
$
6,308
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
6,308
Interest-bearing deposits with banks
83,379
348
–
–
–
–
–
129
3,809
87,665
Trading loans, securities, and other
1
4,456
4,716
5,738
2,726
5,461
12,381
28,002
25,313
77,553
166,346
Non-trading financial assets at fair
value through profit or loss
480
451
199
115
272
998
554
952
1,625
5,646
Derivatives
10,945
10,369
5,215
5,060
3,875
10,725
20,347
15,654
–
82,190
Financial assets designated at fair
value through profit or loss
415
630
390
276
302
899
1,739
1,274
–
5,925
Financial assets at fair value through
other comprehensive income
1,009
6,022
2,036
2,228
2,564
6,967
19,643
31,086
3,691
75,246
Debt securities at amortized cost,
net of allowances for credit losses
1,011
15,656
3,433
4,991
4,698
24,556
106,707
132,544
(2)
293,594
Securities purchased under
reverse repurchase agreements
2
134,900
27,558
26,496
8,370
3,737
2,773
474
–
1,414
205,722
Loans
Residential mortgages
1,220
7,143
13,485
14,905
13,109
62,773
133,296
80,101
–
326,032
Consumer instalment and other personal
1,035
1,732
2,408
3,765
5,981
27,519
85,289
35,212
58,256
221,197
Credit card
–
–
–
–
–
–
–
–
39,421
39,421
Business and government
54,592
13,033
15,848
16,652
13,993
44,136
100,095
64,920
25,750
349,019
Total loans
56,847
21,908
31,741
35,322
33,083
134,428
318,680
180,233
123,427
935,669
Allowance for loan losses
–
–
–
–
–
–
–
–
(7,545)
(7,545)
Loans, net of allowance for loan losses
56,847
21,908
31,741
35,322
33,083
134,428
318,680
180,233
115,882
928,124
Customers’ liability under acceptances
2,934
1,249
–
–
–
–
–
–
–
4,183
Investment in Schwab
–
–
–
–
–
–
–
–
9,866
9,866
Goodwill
3
–
–
–
–
–
–
–
–
18,658
18,658
Other intangibles
3
–
–
–
–
–
–
–
–
2,897
2,897
Land, buildings, equipment, and other depreciable
assets, and right-of-use assets
3
–
8
10
16
10
76
619
3,162
5,616
9,517
Deferred tax assets
–
–
–
–
–
–
–
–
4,806
4,806
Amounts receivable from brokers, dealers, and clients
33,537
28
–
–
–
–
–
–
–
33,565
Other assets
4,814
7,254
838
369
287
215
265
140
12,228
26,410
Total assets
$
341,035
$
96,197
$
76,096
$
59,473
$
54,289
$
194,018
$
497,030
$
390,487
$
258,043
$
1,966,668
Liabilities
Trading deposits
$
3,231
$
3,168
$
5,102
$
2,836
$
2,216
$
4,977
$
7,982
$
1,709
$
–
$
31,221
Derivatives
9,733
10,857
3,972
4,654
3,515
7,983
13,414
15,614
–
69,742
Securitization liabilities at fair value
–
1,257
391
852
321
2,282
7,529
5,021
–
17,653
Financial liabilities designated at
fair value through profit or loss
40,812
49,002
50,264
23,720
23,846
313
3
1
144
188,105
Deposits
4,5
Personal
7,520
19,133
28,227
20,828
18,726
19,170
22,250
705
492,424
628,983
Banks
11,333
97
–
6,237
2,408
1
3
1
12,383
32,463
Business and government
22,462
25,086
13,456
12,174
6,940
41,251
78,084
20,190
322,682
542,325
Total deposits
41,315
44,316
41,683
39,239
28,074
60,422
100,337
20,896
827,489
1,203,771
Acceptances
2,934
1,249
–
–
–
–
–
–
–
4,183
Obligations related to securities sold short
1
283
2,956
1,396
888
1,351
5,915
11,994
12,067
1,295
38,145
Obligations related to securities sold under repurchase
agreements
2
168,705
16,980
2,966
557
128
1,346
49
–
1,508
192,239
Securitization liabilities at amortized cost
–
1,065
682
740
825
1,495
4,689
3,085
–
12,581
Amounts payable to brokers, dealers, and clients
31,726
28
–
–
–
–
–
–
–
31,754
Insurance contract liabilities
344
432
440
347
319
934
1,522
650
836
5,824
Other liabilities
11,229
12,719
6,509
2,611
962
687
1,910
4,178
7,345
48,150
Subordinated notes and debentures
–
–
–
–
–
197
–
11,121
–
11,318
Equity
–
–
–
–
–
–
–
–
111,982
111,982
Total liabilities and equity
$
310,312
$
144,029
$
113,405
$
76,444
$
61,557
$
86,551
$
149,429
$
74,342
$
950,599
$
1,966,668
Off-balance sheet commitments
Credit and liquidity commitments
6,7
$
26,026
$
34,061
$
28,274
$
20,780
$
23,491
$
47,618
$
165,624
$
5,495
$
1,891
$
353,260
Other commitments
8
97
141
196
345
235
928
1,418
383
57
3,800
Unconsolidated structured entity commitments
–
110
61
861
46
903
–
–
–
1,981
Total off-balance sheet commitments
$
26,123
$
34,312
$
28,531
$
21,986
$
23,772
$
49,449
$
167,042
$
5,878
$
1,948
$
359,041
1
Amount has been recorded according to the remaining contractual maturity of the underlying security.
2
Certain contracts considered short-term are presented in ‘less than 1 month’ category.
3
Certain non-financial assets have been recorded as having ‘no specific maturity’.
4
As the timing of demand deposits and notice deposits is non-specific and callable by the depositor,
obligations have been included as having ‘no specific maturity’.
5
Includes $
66
billion of covered bonds with remaining contractual maturities of $
1
billion in ‘less than 1 month’, $
3
billion in ‘over 1 to 3 months’, $
1
billion in ‘over 3 to 6 months’, $
2
billion
in ‘over 9 months to 1 year’, $
19
billion in ‘over 1 to 2 years’, $
34
billion in ‘over 2 to 5 years’, and $
6
billion in ‘over 5 years’.
6
Includes $
517
million in commitments to extend credit to private equity investments.
7
Commitments to extend credit exclude personal lines of credit and credit card lines, which are unconditionally cancellable
at the Bank’s discretion at any time.
8
Includes various purchase commitments as well as commitments for leases not yet commenced, and lease-related
payments
.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 43
TABLE 43: REMAINING CONTRACTUAL MATURITY
(continued)
(millions of Canadian dollars)
As at
October 31, 2023
No
Less than
1 to 3
3 to 6
6 to 9
9 months
Over 1 to
Over 2 to
Over
specific
1 month
months
months
months
to 1 year
2 years
5 years
5 years
maturity
Total
Assets
Cash and due from banks
$
6,721
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
6,721
Interest-bearing deposits with banks
91,966
559
–
–
–
–
–
–
5,823
98,348
Trading loans, securities, and other
1
4,328
6,329
5,170
3,008
4,569
13,226
27,298
25,677
62,485
152,090
Non-trading financial assets at fair value through
profit or loss
–
–
354
1,538
199
1,664
828
1,351
1,406
7,340
Derivatives
10,145
10,437
5,246
4,244
3,255
11,724
25,910
16,421
–
87,382
Financial assets designated at fair value through
profit or loss
374
496
375
695
324
838
1,470
1,246
–
5,818
Financial assets at fair value through other comprehensive
income
745
2,190
1,200
5,085
2,223
9,117
15,946
29,845
3,514
69,865
Debt securities at amortized cost, net of allowance
for credit losses
1,221
4,020
4,073
16,218
3,480
22,339
116,165
140,502
(2)
308,016
Securities purchased under reverse repurchase
agreements
2
124,253
33,110
29,068
7,381
7,298
955
506
–
1,762
204,333
Loans
Residential mortgages
1,603
2,616
5,860
10,575
14,181
57,254
168,475
59,733
44
320,341
Consumer instalment and other personal
894
1,580
2,334
3,830
5,974
27,166
85,487
34,183
56,106
217,554
Credit card
–
–
–
–
–
–
–
–
38,660
38,660
Business and government
37,656
10,058
13,850
14,886
16,964
42,460
96,952
67,190
26,512
326,528
Total loans
40,153
14,254
22,044
29,291
37,119
126,880
350,914
161,106
121,322
903,083
Allowance for loan losses
–
–
–
–
–
–
–
–
(7,136)
(7,136)
Loans, net of allowance for loan losses
40,153
14,254
22,044
29,291
37,119
126,880
350,914
161,106
114,186
895,947
Customers’ liability under acceptances
14,804
2,760
5
–
–
–
–
–
–
17,569
Investment in Schwab
–
–
–
–
–
–
–
–
8,907
8,907
Goodwill
3
–
–
–
–
–
–
–
–
18,602
18,602
Other intangibles
3
–
–
–
–
–
–
–
–
2,771
2,771
Land, buildings, equipment, other depreciable
assets, and right-of-use assets
3
–
8
6
8
14
79
573
3,153
5,593
9,434
Deferred tax assets
4
–
–
–
–
–
–
–
–
3,951
3,951
Amounts receivable from brokers, dealers, and clients
30,416
–
–
–
–
–
–
–
–
30,416
Other assets
4
5,267
1,869
5,619
208
194
137
129
82
14,124
27,629
Total assets
4
$
330,393
$
76,032
$
73,160
$
67,676
$
58,675
$
186,959
$
539,739
$
379,383
$
243,122
$
1,955,139
Liabilities
Trading deposits
$
1,272
$
1,684
$
5,278
$
4,029
$
4,153
$
6,510
$
6,712
$
1,342
$
–
$
30,980
Derivatives
9,068
9,236
4,560
3,875
2,559
8,345
16,589
17,408
–
71,640
Securitization liabilities at fair value
2
498
345
1,215
391
1,651
6,945
3,375
–
14,422
Financial liabilities designated at
fair value through profit or loss
48,197
30,477
37,961
42,792
32,473
112
–
–
118
192,130
Deposits
5,6
Personal
6,044
19,095
22,387
14,164
19,525
17,268
20,328
51
507,734
626,596
Banks
19,608
68
29
–
–
–
4
1
11,515
31,225
Business and government
25,663
16,407
24,487
11,819
9,658
33,723
74,300
19,652
324,660
540,369
Total deposits
51,315
35,570
46,903
25,983
29,183
50,991
94,632
19,704
843,909
1,198,190
Acceptances
14,804
2,760
5
–
–
–
–
–
–
17,569
Obligations related to securities sold short
1
135
1,566
1,336
1,603
1,309
5,471
19,991
11,971
1,279
44,661
Obligations related to securities sold under repurchase
agreements
2
146,559
10,059
6,607
457
1,142
150
46
–
1,834
166,854
Securitization liabilities at amortized cost
–
526
355
1,073
703
2,180
4,956
2,917
–
12,710
Amounts payable to brokers, dealers, and clients
30,872
–
–
–
–
–
–
–
–
30,872
Insurance contract liabilities
4
243
305
327
258
253
694
1,131
501
2,134
5,846
Other liabilities
4
11,923
9,808
7,986
1,276
1,198
918
1,979
4,226
8,260
47,574
Subordinated notes and debentures
–
–
–
–
–
196
–
9,424
–
9,620
Equity
4
–
–
–
–
–
–
–
–
112,071
112,071
Total liabilities and equity
4
$
314,390
$
102,489
$
111,663
$
82,561
$
73,364
$
77,218
$
152,981
$
70,868
$
969,605
$
1,955,139
Off-balance sheet commitments
Credit and liquidity commitments
7,8
$
22,242
$
24,178
$
26,399
$
21,450
$
22,088
$
47,826
$
166,891
$
5,265
$
1,487
$
337,826
Other commitments
9
109
279
214
197
204
889
1,364
424
73
3,753
Unconsolidated structured entity commitments
–
836
3
239
95
729
–
–
–
1,902
Total off-balance sheet commitments
$
22,351
$
25,293
$
26,616
$
21,886
$
22,387
$
49,444
$
168,255
$
5,689
$
1,560
$
343,481
1
Amount has been recorded according to the remaining contractual maturity of the underlying security.
2
Certain contracts considered short-term are presented in ‘less than 1 month’ category.
3
Certain non-financial assets have been recorded as having ‘no specific maturity’.
4
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 2 of the Bank’s
second quarter 2024 Interim Consolidated Financial Statements for further
details.
5
As the timing of demand deposits and notice deposits is non-specific and callable by the depositor,
obligations have been included as having ‘no specific maturity’.
6
Includes $
57
billion of covered bonds with remaining contractual maturities of $
6
billion in ‘over 3 months to 6 months’, $
3
billion in ‘over 6 months to 9 months’, $
1
billion in ‘over 9
months to 1 year’, $
12
billion in ‘over 1 to 2 years’, $
31
billion in ‘over 2 to 5 years’, and $
4
billion in ‘over 5 years’.
7
Includes $
573
million in commitments to extend credit to private equity investments.
8
Commitments to extend credit exclude personal lines of credit and credit card lines, which are unconditionally cancellable
at the Bank’s discretion at any time.
9
Includes various purchase commitments as well as commitments
for leases not yet commenced, and lease-related payments.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 44
REGULATORY AND STANDARD SETTER DEVELOPMENTS CONCERNING ENVIRONMENTAL AND SOCIAL (E&S) RISK (INCLUDING
CLIMATE)
On March 7, 2023, OSFI issued Final Guideline
B-15: Climate Risk Management (Guideline
B-15), which sets out OSFI’s expectations
related to the management
and disclosure of climate-related risks and
opportunities. Subsequently, on March 20, 2024, OSFI released
updates to Guideline B-15 which align
disclosure
expectations with the International Sustainability
Standards Board’s final IFRS S2 Climate-related
Disclosures standard. Components of Guideline
B-15 are initially
effective for D-SIBs for fiscal year-end 2024, where
annual disclosures are required to be
made publicly available no later than 180 days
after fiscal year-end. The
Bank has completed its initial assessment of
Guideline B-15 and is working towards
implementing the requirements.
ISSB – IFRS S1 and IFRS S2
On June 26, 2023, the International Sustainability
Standards Board (ISSB) under the IFRS
Foundation, issued its first two sustainability
standards,
IFRS S1,
General Requirements for Disclosures of Sustainability-related
Financial Information
(S1) and IFRS S2,
Climate-related Disclosures
(S2). S1 sets out the
disclosure requirements for financially
material information about sustainability-related
risks and opportunities to meet investor
information needs, and S2
specifically sets the disclosure requirement
for climate-related risks and opportunities.
The effective date for the standards is subject
to Canadian jurisdiction’s
endorsement. The International Organization
of Securities Commissions has endorsed
IFRS S1 and S2 on July 23, 2023,
and is now calling its member
jurisdictions to consider ways they may
adopt or apply the ISSB standards. The Bank
is currently assessing the impact of adopting
these standards.
SECURITIZATION AND
OFF-BALANCE SHEET ARRANGEMENTS
The Bank enters into securitization and off-balance
sheet arrangements in the normal course of
operations. The Bank is involved with
structured entities (SEs) that
it sponsors, as well as entities sponsored
by third parties. Refer to “Securitization and
Off-Balance Sheet Arrangements”
section, Note 9: Transfers of Financial
Assets and Note 10: Structured Entities of
the Bank’s 2023 Annual Report for further details.
There have been no significant changes
to the Bank’s securitization
and off-balance sheet arrangements during the quarter
ended April 30, 2024.
Securitization of Third Party-Originated
Assets
Significant Unconsolidated Special Purpose
Entities
The Bank securitizes third party-originated
assets
through Bank-sponsored SEs, including its Canadian
multi-seller conduits which are not consolidated.
These
Canadian multi-seller conduits securitize
Canadian originated third-party assets.
The Bank administers these multi-seller
conduits and provides liquidity facilities as
well as securities distribution services; it
may also provide credit enhancements.
TD’s total potential exposure to loss through the
provision of liquidity facilities for
multi-seller conduits was $15.9 billion as
at April 30, 2024 (October 31, 2023 – $15.2
billion). As at April 30, 2024, the Bank had
funded exposure of $13.9 billion
under such liquidity facilities relating
to outstanding issuances of asset-backed
commercial paper (October 31, 2023 – $13.3
billion).
ACCOUNTING POLICIES AND ESTIMATES
The Bank’s
unaudited Interim Consolidated Financial
Statements have been prepared in accordance
with IFRS. For details of the Bank’s
accounting policies under
IFRS, refer to Note 2 of the Bank’s second
quarter 2024 Interim Consolidated Financial
Statements and 2023 Annual
Consolidated Financial Statements. For
details of the Bank’s significant accounting
judgments, estimates, and assumptions
under IFRS, refer to Note 3 of the Bank’s
second quarter 2024
Interim
Consolidated Financial Statements and the Bank’s
2023
Annual Consolidated Financial Statements.
CURRENT CHANGES IN ACCOUNTING
POLICIES
The following new standard has been adopted
by the Bank on November 1, 2023.
Insurance Contracts
The IASB issued IFRS 17,
Insurance Contracts
(IFRS 17) which replaced the guidance
in IFRS 4,
Insurance Contracts
(IFRS 4) and became effective for annual
reporting periods beginning on or after
January 1, 2023, which was November 1, 2023
for the Bank. IFRS 17 establishes principles
for recognition, measurement,
presentation and disclosure of insurance
contracts.
Under IFRS 17, insurance contracts are
aggregated into groups which are measured
at the risk-adjusted present value of
cash flows in fulfilling the contracts.
Revenue is recognized as insurance services
are provided over the coverage period.
Losses are recognized immediately if
the contract group is expected to be
onerous. The liabilities presented by insurance
groups are
comprised of the liability for remaining
coverage (LRC) and the liability for incurred
claims (LIC) and are
reported as Insurance contract liabilities
on the Interim Consolidated Balance Sheet.
The LRC is the obligation to investigate and
pay claims that have not yet
occurred and includes the loss component
related to onerous contract groups.
The LIC is the estimate of claims incurred, including
claims that have occurred but
have not been reported, and related insurance
costs.
IFRS 17 introduces two measurement models
that are applicable to the Bank, the premium
allocation approach model (PAA) and the general measurement
model
(GMM). The Bank measures the majority of
its insurance contract groups using
the PAA,
which includes property and casualty contracts
as well as short-term life
and health contracts. The PAA is a simplified model applied to insurance
contracts that are either one year or less
or where the PAA approximates the GMM.
Contracts using the GMM are longer-term life
and health contracts. The LRC for insurance
contract groups using the PAA is measured as unearned premiums
less
deferred acquisition cash flows allocated
to the group. The LRC is adjusted for the
recognition of insurance revenue and amortization
of acquisition cash flows
reported in insurance service expenses
on a straight-line basis over the contractual
terms of the underlying insurance contracts,
usually twelve months. The LRC
for longer term contracts using the GMM
model is measured using estimates and
assumptions that reflect the timing
and uncertainty of insurance cash flows.
When a group of contracts is expected
to be onerous, a loss component (expected
loss related to fulfilling the related insurance
contracts) is established which
increases the LRC and insurance service expenses.
The loss component of the LRC is
subsequently recognized in income over
the contractual term of the
underlying insurance contracts to offset claims
incurred and related expenses.
The Bank measures the LIC at the present
value of current estimates of claims and related
costs for insurable events occurring at or
before the Interim
Consolidated Balance Sheet date. The LIC
includes a risk adjustment, which represents
the compensation the Bank requires for bearing
the uncertainty related to
non-financial risks
in its fulfilment of insurance contracts.
Expenses related to claims incurred
and related costs are reported in insurance
service expenses and
changes related to discounting the liability are
recorded as insurance finance income
or expenses in other income (loss).
Prior to the adoption of IFRS 17, these
expenses were recorded in insurance
claims and related expenses and non-interest
expenses.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 45
Reinsurance contracts held are recognized
and measured using the same principles
as insurance contracts issued. Reinsurance
contract assets are presented in
Other assets in the Interim Consolidated Balance
Sheet and the net results from reinsurance
contracts held are presented in Other income
(loss) in the Interim
Consolidated Statement of Income. Refer to
Note 14 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details
on the results
of insurance and reinsurance contracts.
The Bank initially applied IFRS 17 on
November 1, 2023 and restated the comparative
period. The Bank transitioned by primarily
applying the full retrospective
approach which resulted in the measurement
of insurance contracts as if IFRS 17
had always applied to them. The following
table sets out adjustments to the
Bank’s insurance-related balances reported under
IFRS 4 as at October 31, 2022 used to derive
the insurance contract liabilities and reinsurance
contract assets
recognized by the Bank as at November
1, 2022 under IFRS 17.
(millions of Canadian dollars)
Amount
Insurance-related liabilities
$
7,468
Other liabilities
131
Other assets
(2,361)
Net insurance-related balances as at October
31, 2022
$
5,238
Changes in actuarial assumptions, including
risk adjustment and discount factor
(192)
Recognition of losses on onerous contracts
113
Other adjustments
(93)
Net insurance-related balances as at
November 1, 2022
$
5,066
Insurance contract liabilities
$
5,761
Reinsurance contract assets
(695)
Net insurance-related balances as at
November 1, 2022
$
5,066
On November 1, 2022, IFRS 17 transition
adjustments resulted in a decrease
to the Bank’s deferred tax assets of $60 million
and an after-tax increase to retained
earnings of $112 million.
Upon the initial application of IFRS 17 on
November 1, 2023, the Bank applied transitional
guidance and reclassified certain securities
supporting insurance
operations to minimize accounting mismatches
arising from the application of the new discount
factor under IFRS 17. The transitional guidance
for such securities
is applicable for entities that previously used
IFRS 9,
Financial Instruments
and was applied without a restatement
of comparatives. The reclassification resulted
in
a decrease to retained earnings and an increase
in accumulated other comprehensive income
of $10 million.
ACCOUNTING JUDGMENTS, ESTIMATES,
AND ASSUMPTIONS
The estimates used in the Bank’s accounting
policies are essential to understanding its
results of operations and financial condition.
Some of the Bank’s policies
require subjective, complex judgments and
estimates as they relate to matters
that are inherently uncertain. Changes in these
judgments or estimates and
changes to accounting standards and policies
could have a materially adverse impact
on the Bank’s Interim Consolidated Financial Statements.
The Bank has
established procedures to ensure that accounting
policies are applied consistently and that
the processes for changing methodologies,
determining estimates, and
adopting new accounting standards are well-controlled
and occur in an appropriate and systematic
manner.
Impairment – Expected Credit Loss Model
The ECL model requires the application of estimates
and judgment in the assessment of the
current and forward-looking economic
environment. There remains
elevated economic uncertainty, and management continues to exercise
expert credit judgment in assessing if
an exposure has experienced significant increase
in
credit risk since initial recognition and in determining
the amount of ECLs at each reporting date.
To the extent that certain effects are not fully incorporated into the
model calculations, temporary quantitative and
qualitative adjustments have been applied.
Insurance Contracts
The assumptions used in establishing the Bank’s
insurance claims and policy benefit liabilities
are based on best estimates of possible
outcomes.
For property and casualty insurance
contracts, the ultimate cost of LIC is estimated
using a range of standard actuarial claims
projection techniques in
accordance with Canadian accepted actuarial
practices. Additional qualitative judgment
is used to assess the extent to which past
trends may or may not apply in
the future, in order to arrive at the estimated
ultimate claims cost amounts that present
the most likely outcome taking into account
all the uncertainties involved.
For life and health insurance contracts,
actuarial liabilities consider all future policy
cash flows, including premiums, claims,
and expenses required to administer
the policies. Critical assumptions used in
the measurement of life and health insurance
contract liabilities are determined by the appointed
actuary.
Further information on insurance risk assumptions
is provided in Note 14 of the Bank’s second quarter
2024 Interim Consolidated Financial Statements.
FUTURE CHANGES IN ACCOUNTING
POLICIES
The following standard has been issued, but
is not yet effective on the date of issuance of
the Bank’s Interim Consolidated Financial
Statements.
Presentation and Disclosure in Financial
Statements
In April 2024, the IASB issued IFRS 18,
Presentation and Disclosure in Financial
Statements
(IFRS 18), which replaces the guidance
in IAS 1,
Presentation of
Financial Statements
and sets out requirements for presentation
and disclosure of information, focusing
on providing relevant information to users
of the financial
statements. IFRS 18 focuses on the presentation
of financial performance in the statement of
profit or loss, it will be effective for the Bank’s annual
period
beginning November 1, 2027. Early application
is permitted. The Bank is currently assessing
the impact of adopting this standard.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL
REPORTING
During the most recent interim period, there
have been no changes in the Bank’s policies and
procedures and other processes that
comprise its internal control
over financial reporting, that have materially affected,
or are reasonably likely to materially
affect, the Bank’s internal control over financial
reporting. Refer to
Note 2 and Note 3 of the Bank’s second quarter 2024
Interim Consolidated Financial Statements
for further information regarding the Bank’s changes
to
accounting policies, procedures, and estimates.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 46
GLOSSARY
Financial and Banking Terms
Adjusted Results:
Non-GAAP financial measures
used to assess each of the
Bank’s businesses and to measure the Bank’s overall
performance. To arrive at
adjusted results, the Bank adjusts for “items
of note”, from reported results. The
items of note relate to items which management
does not believe are indicative
of underlying business performance.
Allowance for Credit Losses:
Represent expected credit losses (ECLs)
on
financial assets, including any off-balance sheet
exposures, at
the balance sheet date. Allowance for credit
losses consists of Stage 3
allowance for impaired financial assets and
Stage 2 and Stage 1 allowance for
performing financial assets and off-balance sheet instruments.
The allowance is
increased by the provision for credit losses,
decreased by write-offs net of
recoveries and disposals,
and impacted by foreign exchange.
Amortized Cost:
The amount at which a financial asset or
financial liability is
measured at initial recognition minus principal
repayments, plus or minus the
cumulative amortization, using EIRM, of any
differences between the initial
amount and the maturity amount, and
minus any reduction for impairment.
Assets under Administration (AUA):
Assets that are beneficially owned by
customers where the Bank provides services
of an administrative nature, such
as the collection of investment income and
the placing of trades on behalf of the
clients (where the client has made his or
her own investment selection). The
majority of these assets are not reported on
the Bank’s Consolidated Balance
Sheet.
Assets under Management (AUM):
Assets that are beneficially owned by
customers, managed by the Bank, where
the Bank has discretion to make
investment selections on behalf of the
client (in accordance with an investment
policy). In addition to the TD family of mutual
funds, the Bank manages assets
on behalf of individuals, pension funds, corporations,
institutions, endowments
and foundations. These assets are not reported
on the Bank’s Consolidated
Balance Sheet. Some assets under management
that are also administered by
the Bank are included in assets under administration.
Asset-Backed Commercial Paper (ABCP):
A form of commercial paper that is
collateralized by other financial assets.
Institutional investors usually purchase
such instruments in order to diversify their assets
and generate short-term
gains.
Asset-Backed Securities (ABS):
A security whose value and income
payments are derived from and collateralized
(or “backed”) by a specified pool
of underlying assets.
Average Common Equity:
Average common equity for the business
segments
reflects the average allocated capital. The
Bank’s methodology for allocating
capital to its business segments is largely aligned
with the common equity
capital requirements under Basel III.
Average Interest-Earning Assets:
A non-GAAP financial measure that depicts
the Bank’s financial position, and is calculated
as the average carrying value of
deposits with banks, loans and securities based
on daily balances for the period
ending October 31 in each fiscal year.
Basic Earnings per Share (EPS)
: A performance measure calculated by
dividing net income attributable to common
shareholders by the weighted
average number of common shares outstanding
for the period. Adjusted basic
EPS is calculated in the same manner using
adjusted net income.
Basis Points
(bps):
A unit equal to 1/100 of 1%. Thus, a 1%
change is equal to
100 basis points.
Book Value per Share:
A measure calculated by dividing common
shareholders’
equity by number of common shares at
the end of the period.
Carrying Value:
The value at which an asset or liability
is carried at on the
Consolidated Balance Sheet.
Collateralized Mortgage Obligation (CMO):
They are collateralized debt
obligations consisting of mortgage-backed
securities that are separated and
issued as different classes of mortgage pass-through
securities with different
terms, interest rates, and risks. CMOs by private
issuers are collectively
referred to as non-agency CMOs.
Common Equity Tier 1 (CET1) Capital:
This is a primary Basel III capital
measure comprised mainly of common equity, retained earnings and
qualifying
non-controlling interest in subsidiaries. Regulatory
deductions made to arrive
at the CET1 Capital include goodwill
and intangibles, unconsolidated
investments in banking, financial, and insurance
entities, deferred tax assets,
defined benefit pension fund assets, and
shortfalls in allowances.
Common Equity Tier 1 (CET1) Capital Ratio:
CET1 Capital ratio represents
the predominant measure of capital adequacy
under Basel III
and equals CET1 Capital divided by RWA.
Compound Annual Growth Rate (CAGR):
A measure of growth over multiple
time periods from the initial investment
value to the ending investment value
assuming that the investment has been
compounding over the time period.
Credit Valuation Adjustment (CVA):
CVA represents a capital charge that
measures credit risk due to default of derivative
counterparties. This charge
requires banks to capitalize for the potential
changes in counterparty credit
spread for the derivative portfolios.
Diluted EPS
: A performance measure calculated by
dividing net income
attributable to common shareholders by the
weighted average number of
common shares outstanding adjusting for the
effect of all potentially dilutive
common shares. Adjusted diluted EPS is
calculated in the same manner using
adjusted net income.
Dividend Payout Ratio
: A ratio represents the percentage of
Bank’s earnings
being paid to common shareholders in
the form of dividends and is calculated
by dividing common dividends by net income
available to common
shareholders. Adjusted dividend payout ratio
is calculated in the same manner
using adjusted net income.
Dividend Yield:
A ratio calculated as the dividend per
common share for the
year divided by the daily average closing
stock price during the year.
Effective Income Tax Rate:
A rate and performance indicator calculated
by
dividing the provision for income taxes as a percentage
of net income before
taxes. Adjusted effective income tax rate is calculated
in the same manner
using adjusted results.
Effective Interest Rate (EIR):
The rate that discounts expected future cash
flows for the expected life of the financial instrument
to its carrying value. The
calculation takes into account the contractual
interest rate, along with any fees
or incremental costs that are directly
attributable to the instrument and all other
premiums or discounts.
Effective Interest Rate Method (EIRM):
A technique for calculating the actual
interest rate in a period based on the amount
of a financial instrument’s book
value at the beginning of the accounting period.
Under EIRM, the effective
interest rate, which is a key component of
the calculation, discounts the
expected future cash inflows and outflows expected
over the life of a financial
instrument.
Efficiency Ratio:
The efficiency ratio measures operating efficiency and
is
calculated by taking the non-interest expenses
as a percentage of total
revenue. A lower ratio indicates a more efficient
business operation. Adjusted
efficiency ratio, net of insurance service expenses
(ISE) is calculated by
dividing adjusted non-interest expenses
by adjusted total revenue, net of ISE.
Management believes presenting efficiency ratio
net of ISE is aligned with
industry reporting and allows for better assessment
of operating results.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 47
Enhanced Disclosure Task Force (EDTF):
Established by the Financial
Stability Board in May 2012, comprised of
banks, analysts, investors, and
auditors, with the goal of enhancing the risk
disclosures of banks and other
financial institutions.
Expected Credit Losses (ECLs):
ECLs are the probability-weighted present
value of expected cash shortfalls over
the remaining expected life of the
financial instrument and considers reasonable
and supportable information
about past events, current conditions, and forecasts
of future events and
economic conditions that impact the Bank’s
credit risk assessment.
Fair Value:
The price that would be received to sell an
asset or paid to transfer
a liability in an orderly transaction between
market participants at the
measurement date, under current market
conditions.
Fair value through other comprehensive
income (FVOCI):
Under IFRS 9, if
the asset passes the contractual cash
flows test (named SPPI), the business
model assessment determines how the instrument
is classified. If the instrument
is being held to collect contractual cash flows,
that is, if it is not expected to be
sold, it is measured as amortized cost. If the
business model for the instrument
is to both collect contractual cash flows and
potentially sell the asset, it is
measured at FVOCI.
Fair value through profit or loss (FVTPL):
Under IFRS 9, the classification is
dependent on two tests, a contractual
cash flow test (named SPPI) and a
business model assessment. Unless the
asset meets the requirements of both
tests, it is measured at fair value with all
changes in fair value reported in profit
or loss.
Federal Deposit Insurance Corporation
(FDIC):
A U.S. government
corporation which provides deposit insurance
guaranteeing the safety of a
depositor’s accounts in member banks.
The FDIC also examines and
supervises certain financial institutions for
safety and soundness, performs
certain consumer-protection functions, and
manages banks in receivership
(failed banks).
Forward Contracts:
Over-the-counter contracts between two parties
that oblige
one party to the contract to buy and the other
party to sell an asset for a fixed
price at a future date.
Futures:
Exchange-traded contracts to buy or
sell a security at a predetermined
price on a specified future date.
Hedging:
A risk management technique intended
to mitigate the Bank’s
exposure to fluctuations in interest rates,
foreign currency exchange rates, or
other market factors. The elimination or reduction
of such exposure is
accomplished by engaging in capital markets
activities to establish offsetting
positions.
Impaired Loans:
Loans where, in management’s opinion,
there has been a
deterioration of credit quality to the extent
that the Bank no longer has
reasonable assurance as to the timely collection
of the full amount of principal
and interest.
Loss Given Default (LGD):
It is the amount of the loss the Bank
would likely
incur when a borrower defaults on a loan,
which is expressed as a percentage
of exposure at default.
Mark-to-Market (MTM):
A valuation that reflects current market rates
as at the
balance sheet date for financial instruments
that are carried at fair value.
Master Netting Agreements:
Legal agreements between two parties
that have
multiple derivative contracts with each other
that provide for the net settlement
of all contracts through a single payment, in
a single currency, in the event of
default or termination of any one contract.
Net Corporate Expenses:
Non-interest expenses related to corporate
service
and control groups which are not allocated to a
business segment.
Net Interest Margin:
A non-GAAP ratio calculated as net interest
income as a
percentage of average interest-earning assets
to measure performance. This
metric is an indicator of the profitability of
the Bank’s earning assets less the
cost of funding. Adjusted net interest
margin is calculated in the same manner
using adjusted net interest income.
Non-Viability Contingent Capital (NVCC):
Instruments (preferred shares and
subordinated debt) that contain a feature or
a provision that allows the financial
institution to either permanently convert these
instruments into common shares
or fully write-down the instrument, in the event
that the institution is no longer
viable.
Notional:
A reference amount on which payments
for derivative financial
instruments are based.
Office of the Superintendent of Financial
Institutions Canada (OSFI):
The
regulator of Canadian federally chartered
financial institutions and federally
administered pension plans.
Options:
Contracts in which the writer of the option grants
the buyer the future
right, but not the obligation, to buy or to sell a
security, exchange rate, interest
rate, or other financial instrument or commodity
at a predetermined price at or
by a specified future date.
Price-Earnings Ratio
:
A
ratio calculated by dividing the closing
share price by
EPS based on a trailing four quarters to indicate
market performance. Adjusted
price-earnings ratio is calculated in the
same manner using adjusted EPS.
Probability of Default (PD):
It is the likelihood that a borrower will not
be able
to meet its scheduled repayments.
Provision for Credit Losses (PCL):
Amount added to the allowance for credit
losses to bring it to a level that management
considers adequate to reflect
expected credit-related losses on its
portfolio.
Return on Common Equity (ROE):
The consolidated Bank ROE is calculated
as net income available to common shareholders
as a percentage of average
common shareholders’
equity,
utilized in assessing the Bank’s use of equity.
ROE for the business segments is calculated
as the segment net income
attributable to common shareholders as a percentage
of average allocated
capital. Adjusted ROE is calculated in
the same manner using adjusted net
income.
Return on Risk-weighted Assets:
Net income available to common
shareholders as a percentage of average risk-weighted
assets.
Return on Tangible Common Equity (ROTCE):
A non-GAAP financial
measure 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
Tangible common
equity. Adjusted ROTCE is calculated in the same manner using
adjusted net
income.
Both measures can be utilized in assessing
the Bank’s use of equity.
Risk-Weighted Assets (RWA):
Assets calculated by applying a regulatory
risk-weight factor to on and off-balance sheet
exposures. The risk-weight
factors are established by the OSFI to
convert on and off-balance sheet
exposures to a comparable risk level.
Securitization:
The process by which financial assets,
mainly loans, are
transferred to structures,
which normally issue a series of asset-backed
securities to investors to fund the purchase
of loans.
Solely Payments of Principal and Interest (SPPI):
IFRS 9 requires that the
following criteria be met in order for a financial
instrument to be classified at
amortized cost:
●
The entity’s business model relates to managing
financial assets (such as
bank trading activity), and, as such, an asset
is held with the intention of
collecting its contractual cash flows;
and
●
An asset’s contractual cash flows represent SPPI.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 48
Swaps:
Contracts that involve the exchange of fixed
and floating interest rate
payment obligations and currencies on a notional
principal for a specified period
of time.
Tangible common equity (TCE):
A non-GAAP financial measure calculated
as
common shareholders’ equity less goodwill,
imputed goodwill, and intangibles
on an investment in Schwab and TD
Ameritrade and other acquired intangible
assets, net of related deferred tax liabilities.
It can be utilized in assessing the
Bank’s use of equity.
Taxable Equivalent Basis (TEB):
A calculation method (not defined in GAAP)
that increases revenues and the provision
for income taxes on certain tax-
exempt securities to an equivalent before-tax
basis to facilitate comparison of
net interest income from both taxable and
tax-exempt sources.
Tier 1 Capital Ratio:
Tier 1 Capital represents the more permanent
forms of
capital, consisting primarily of common
shareholders’
equity, retained earnings,
preferred shares and innovative instruments.
Tier 1 Capital ratio is calculated as
Tier 1 Capital divided by RWA.
Total Capital Ratio:
Total Capital is defined as the total of net Tier 1 and Tier 2
Capital. Total Capital ratio is calculated as Total Capital divided by RWA.
Total Shareholder Return (TSR):
The total return earned on an investment
in
TD’s common shares. The return measures the
change in shareholder value,
assuming dividends paid are reinvested in
additional shares.
Trading-Related Revenue:
A non-GAAP financial measure that is
the total of
trading income (loss), net interest income
on trading positions, and income
(loss) from financial instruments designated
at FVTPL that are managed within a
trading portfolio. Trading-related revenue (TEB) in the
Wholesale Banking
segment is also a non-GAAP financial measure
and is calculated in the same
manner, including TEB adjustments. Both are used for
measuring trading
performance.
Value-at-Risk (VaR):
A metric used to monitor and control overall
risk levels
and to calculate the regulatory capital required
for market risk in trading
activities. VaR measures the adverse impact that potential changes
in market
rates and prices could have on the value
of a portfolio over a specified period of
time.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 49
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
INTERIM CONSOLIDATED BALANCE
SHEET
(unaudited)
(As at and in millions of Canadian dollars)
April 30, 2024
October 31, 2023
ASSETS
Cash and due from banks
$
6,308
$
6,721
Interest-bearing deposits with banks
87,665
98,348
93,973
105,069
Trading loans, securities, and other
(Note 4)
166,346
152,090
Non-trading financial assets at fair value through profit or
loss
(Note 4)
5,646
7,340
Derivatives
(Note 4)
82,190
87,382
Financial assets designated at fair value through profit or
loss
(Note 4)
5,925
5,818
Financial assets at fair value through other comprehensive income
(Note 4)
75,246
69,865
335,353
322,495
Debt securities at amortized cost, net of allowance for
credit losses (Notes 4, 5)
293,594
308,016
Securities purchased under reverse repurchase agreements
205,722
204,333
Loans (Notes 4, 6)
Residential mortgages
326,032
320,341
Consumer instalment and other personal
221,197
217,554
Credit card
39,421
38,660
Business and government
349,019
326,528
935,669
903,083
Allowance for loan losses
(Note 6)
(7,545)
(7,136)
Loans, net of allowance for loan losses
928,124
895,947
Other
Customers’ liability under acceptances
(Note 6)
4,183
17,569
Investment in Schwab
(Note 7)
9,866
8,907
Goodwill
18,658
18,602
Other intangibles
2,897
2,771
Land, buildings, equipment, other depreciable assets and
right-of-use assets
9,517
9,434
Deferred tax assets
1
4,806
3,951
Amounts receivable from brokers, dealers, and clients
33,565
30,416
Other assets
1
(Note 9)
26,410
27,629
109,902
119,279
Total assets
1
$
1,966,668
$
1,955,139
LIABILITIES
Trading deposits
(Notes 4, 10)
$
31,221
$
30,980
Derivatives
(Note 4)
69,742
71,640
Securitization liabilities at fair value
(Note 4)
17,653
14,422
Financial liabilities designated at fair value through
profit or loss
(Notes 4, 10)
188,105
192,130
306,721
309,172
Deposits (Notes 4, 10)
Personal
628,983
626,596
Banks
32,463
31,225
Business and government
542,325
540,369
1,203,771
1,198,190
Other
Acceptances
(Note 6)
4,183
17,569
Obligations related to securities sold short
(Note 4)
38,145
44,661
Obligations related to securities sold under repurchase agreements
192,239
166,854
Securitization liabilities at amortized cost
(Note 4)
12,581
12,710
Amounts payable to brokers, dealers, and clients
31,754
30,872
Insurance contract liabilities
1
(Note 14)
5,824
5,846
Other liabilities
1
(Note 11)
48,150
47,574
332,876
326,086
Subordinated notes and debentures (Notes 4, 12)
11,318
9,620
Total liabilities
1
1,854,686
1,843,068
EQUITY
Shareholders’ Equity
Common shares
(Note 13)
25,257
25,434
Preferred shares and other equity instruments
(Note 13)
10,503
10,853
Treasury – common shares
(Note 13)
(24)
(64)
Treasury – preferred shares and other
equity instruments
(Note 13)
(8)
(65)
Contributed surplus
184
155
Retained earnings
1
71,904
73,008
Accumulated other comprehensive income (loss)
4,166
2,750
Total equity
1
111,982
112,071
Total liabilities and equity
1
$
1,966,668
$
1,955,139
1
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17,
Insurance Contracts
(IFRS 17). Refer to Note 2 for details.
The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 50
INTERIM CONSOLIDATED STATEMENT OF INCOME
(unaudited)
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
April 30
April 30
April 30
2024
2023
2024
2023
Interest income
1
(Note 21)
Loans
$
13,154
$
10,539
$
26,149
$
20,537
Reverse repurchase agreements
2,914
2,134
5,852
3,915
Securities
Interest
5,122
4,462
10,398
8,801
Dividends
680
638
1,228
1,150
Deposits with banks
1,126
1,534
2,182
2,960
22,996
19,307
45,809
37,363
Interest expense (Note 21)
Deposits
11,490
9,042
22,974
16,837
Securitization liabilities
259
208
516
430
Subordinated notes and debentures
99
105
193
216
Repurchase agreements and short sales
3,390
2,293
6,595
4,301
Other
293
231
578
418
15,531
11,879
30,856
22,202
Net interest income
7,465
7,428
14,953
15,161
Non-interest income
Investment and securities services
1,872
1,671
3,617
3,076
Credit fees
494
429
1,063
857
Trading income (loss)
744
289
1,669
967
Service charges
2
657
621
1,311
1,249
Card services
703
712
1,465
1,481
Insurance revenue
2
1,665
1,514
3,341
3,056
Other income (loss)
2
219
(267)
114
(1,249)
6,354
4,969
12,580
9,437
Total revenue
2
13,819
12,397
27,533
24,598
Provision for (recovery of) credit losses
(Note 6)
1,071
599
2,072
1,289
Insurance service expenses
2
1,248
1,118
2,614
2,282
Non-interest expenses
Salaries and employee benefits
4,250
3,883
8,564
7,641
Occupancy, including depreciation
474
446
942
879
Technology and equipment, including depreciation
616
561
1,254
1,083
Amortization of other intangibles
168
170
353
312
Communication and marketing
394
386
719
699
Restructuring charges
(Note 19)
165
–
456
–
Brokerage-related and sub-advisory fees
125
111
255
203
Professional, advisory and outside services
655
630
1,220
1,198
Other
2
1,554
569
2,668
2,853
8,401
6,756
16,431
14,868
Income before income taxes and share
of net income from investment
in Schwab
2
3,099
3,924
6,416
6,159
Provision for (recovery of) income taxes
2
729
859
1,363
1,798
Share of net income from investment
in Schwab (Note 7)
194
241
335
526
Net income
2
2,564
3,306
5,388
4,887
Preferred dividends and distributions
on other equity instruments
190
210
264
293
Net income available to common shareholders
2
$
2,374
$
3,096
$
5,124
$
4,594
Earnings per share
(Canadian dollars)
(Note 18)
Basic
2
$
1.35
$
1.69
$
2.90
$
2.52
Diluted
2
1.35
1.69
2.89
2.52
Dividends per common share
(Canadian dollars)
1.02
0.96
2.04
1.92
1
Includes $
20,659
million and $
41,158
million, for the three and six months ended April 30, 2024, respectively (three and six months ended April
30, 2023 – $
17,429
million and
$
33,677
million, respectively), which have been calculated based on the effective interest
rate method (EIRM).
2
Amounts for the three and six months ended April 30, 2023 have been restated for the adoption of IFRS 17. Refer
to Note 2 for details.
The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 51
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
April 30
April 30
April 30
2024
2023
2024
2023
Net income
1
$
2,564
$
3,306
$
5,388
$
4,887
Other comprehensive income (loss)
Items that will be subsequently reclassified
to net income
Net change in unrealized gain/(loss) on
financial assets at fair value
through other comprehensive income
Change in unrealized gain/(loss)
(42)
166
297
410
Reclassification to earnings of net loss/(gain)
(3)
(15)
(9)
(14)
Changes in allowance for credit losses recognized
in earnings
–
–
(1)
(1)
Income taxes relating to:
Change in unrealized gain/(loss)
12
(42)
(73)
(115)
Reclassification to earnings of net loss/(gain)
2
5
5
5
(31)
114
219
285
Net change in unrealized foreign currency
translation gain/(loss) on
investments in foreign operations, net
of hedging activities
Unrealized gain/(loss)
3,058
1,842
(825)
(523)
Reclassification to earnings of net loss/(gain)
–
–
–
(2)
Net gain/(loss) on hedges
(1,966)
(754)
466
88
Reclassification to earnings of net loss/(gain)
on hedges
–
–
–
2
Income taxes relating to:
Net gain/(loss) on hedges
544
208
(132)
(309)
1,636
1,296
(491)
(744)
Net change in gain/(loss) on derivatives
designated as cash flow hedges
Change in gain/(loss)
(517)
1,713
(242)
3,752
Reclassification to earnings of loss/(gain)
(1,246)
(1,069)
1,194
(1,063)
Income taxes relating to:
Change in gain/(loss)
149
(558)
60
(911)
Reclassification to earnings of loss/(gain)
328
289
(330)
322
(1,286)
375
682
2,100
Share of other comprehensive income (loss)
from investment in Schwab
(56)
453
826
700
Items that will not be subsequently reclassified
to net income
Remeasurement gain/(loss) on employee
benefit plans
Gain/(loss)
(30)
(49)
(257)
47
Income taxes
8
14
71
(30)
(22)
(35)
(186)
17
Change in net unrealized gain/(loss)
on equity securities designated at
fair value through other comprehensive income
Change in net unrealized gain/(loss)
45
(170)
245
(157)
Income taxes
(11)
34
(65)
30
34
(136)
180
(127)
Gain/(loss) from changes in fair value due
to own credit risk on
financial liabilities designated at fair value
through profit or loss
Gain/(loss)
54
115
–
(128)
Income taxes
(15)
(32)
–
34
39
83
–
(94)
Total other comprehensive income (loss)
314
2,150
1,230
2,137
Total comprehensive income (loss)
1
$
2,878
$
5,456
$
6,618
$
7,024
Attributable to:
Common shareholders
1
$
2,688
$
5,246
$
6,354
$
6,731
Preferred shareholders and other equity instrument
holders
1
190
210
264
293
1
Amounts for the three and six months ended April 30, 2023 have been restated for the adoption of IFRS 17. Refer
to Note 2 for details.
The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 52
INTERIM CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
(unaudited)
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Common shares (Note 13)
Balance at beginning of period
$
25,318
$
25,094
$
25,434
$
24,363
Proceeds from shares issued on exercise of stock options
24
45
66
71
Shares issued as a result of dividend reinvestment plan
132
713
269
1,418
Purchase of shares for cancellation and other
(217)
–
(512)
–
Balance at end of period
25,257
25,852
25,257
25,852
Preferred shares and other equity instruments (Note 13)
Balance at beginning of period
10,853
11,253
10,853
11,253
Redemption of shares and other equity instruments
(350)
–
(350)
–
Balance at end of period
10,503
11,253
10,503
11,253
Treasury – common shares (Note 13)
Balance at beginning of period
(58)
(103)
(64)
(91)
Purchase of shares
(2,154)
(2,235)
(5,250)
(4,051)
Sale of shares
2,188
2,239
5,290
4,043
Balance at end of period
(24)
(99)
(24)
(99)
Treasury – preferred shares and other equity instruments (Note 13)
Balance at beginning of period
(27)
(9)
(65)
(7)
Purchase of shares and other equity instruments
(153)
(185)
(251)
(326)
Sale of shares and other equity instruments
172
184
308
323
Balance at end of period
(8)
(10)
(8)
(10)
Contributed surplus
Balance at beginning of period
172
185
155
179
Net premium (discount) on sale of treasury instruments
5
(11)
18
(8)
Issuance of stock options, net of options exercised
8
5
13
15
Other
(1)
(18)
(2)
(25)
Balance at end of period
184
161
184
161
Retained earnings
Balance at beginning of period
1
72,347
73,612
73,008
73,698
Impact on adoption of IFRS 17
2
–
–
–
112
Impact of reclassification of securities supporting insurance operations
related to the adoption of IFRS 17
2
–
–
(10)
–
Net income attributable to equity instrument holders
1
2,564
3,306
5,388
4,887
Common dividends
(1,795)
(1,754)
(3,602)
(3,500)
Preferred dividends and distributions on other equity instruments
(190)
(210)
(264)
(293)
Net premium on repurchase of common shares and redemption of preferred shares and other
equity instruments
(Note 13)
(1,002)
–
(2,430)
–
Remeasurement gain/(loss) on employee benefit plans
(22)
(35)
(186)
17
Realized gain/(loss) on equity securities designated at fair value through
other comprehensive income
2
(4)
–
(6)
Balance at end of period
1
71,904
74,915
71,904
74,915
Accumulated other comprehensive income (loss)
Net unrealized gain/(loss) on financial assets at fair value through other comprehensive income:
Balance at beginning of period
(163)
(305)
(413)
(476)
Impact of reclassification of securities supporting insurance operations
related to the adoption of IFRS 17
2
–
–
10
–
Other comprehensive income (loss)
(31)
114
210
286
Allowance for credit losses
–
–
(1)
(1)
Balance at end of period
(194)
(191)
(194)
(191)
Net unrealized gain/(loss) on equity securities designated at fair value through
other comprehensive income:
Balance at beginning of period
19
32
(127)
23
Other comprehensive income (loss)
36
(140)
180
(133)
Reclassification of loss/(gain) to retained earnings
(2)
4
–
6
Balance at end of period
53
(104)
53
(104)
Gain/(loss) from changes in fair value due to own credit risk on financial liabilities
designated at fair value through profit or loss:
Balance at beginning of period
(77)
(99)
(38)
78
Other comprehensive income (loss)
39
83
–
(94)
Balance at end of period
(38)
(16)
(38)
(16)
Net unrealized foreign currency translation gain/(loss) on investments in foreign
operations, net of hedging activities:
Balance at beginning of period
10,550
10,008
12,677
12,048
Other comprehensive income (loss)
1,636
1,296
(491)
(744)
Balance at end of period
12,186
11,304
12,186
11,304
Net gain/(loss) on derivatives designated as cash flow hedges:
Balance at beginning of period
(3,504)
(3,992)
(5,472)
(5,717)
Other comprehensive income (loss)
(1,286)
375
682
2,100
Balance at end of period
(4,790)
(3,617)
(4,790)
(3,617)
Share of accumulated other comprehensive income (loss) from investment in Schwab
(3,051)
(3,268)
(3,051)
(3,268)
Total accumulated other comprehensive income
4,166
4,108
4,166
4,108
Total equity
1
$
111,982
$
116,180
$
111,982
$
116,180
1
Amounts have been restated for the adoption of IFRS 17 as at and for the three and six months ended April 30,
- Refer to Note 2 for details.
2
Refer to Note 2 for details on the adoption of IFRS 17.
The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 53
INTERIM CONSOLIDATED STATEMENT
OF CASH FLOWS
(unaudited)
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
April 30
April 30
April 30
2024
2023
2024
2023
Cash flows from (used in) operating activities
Net income
1
$
2,564
$
3,306
$
5,388
$
4,887
Adjustments to determine net cash flows from (used in) operating
activities
Provision for (recovery of) credit losses
(Note 6)
1,071
599
2,072
1,289
Depreciation
324
309
638
598
Amortization of other intangibles
168
170
353
312
Net securities loss/(gain)
(Note 5)
66
21
60
22
Share of net income from investment in Schwab
(Note 7)
(194)
(241)
(335)
(526)
Deferred taxes
1
(730)
(642)
(797)
(701)
Changes in operating assets and liabilities
Interest receivable and payable
(Notes 9, 11)
206
484
370
512
Securities sold under repurchase agreements
18,110
4,428
25,385
16,937
Securities purchased under reverse repurchase agreements
(6,643)
(25,418)
(1,389)
(35,616)
Securities sold short
(4,730)
208
(6,516)
1,414
Trading loans, securities, and other
(4,826)
(430)
(14,256)
(10,781)
Loans net of securitization and sales
(24,876)
(13,552)
(34,289)
(19,815)
Deposits
23,104
(31,955)
5,822
(40,210)
Derivatives
(5,947)
(3,669)
3,294
1,895
Non-trading financial assets at fair value through profit or
loss
1,339
1,846
1,694
2,685
Financial assets and liabilities designated at fair value through
profit or loss
8,038
15,190
(4,132)
38,077
Securitization liabilities
1,333
835
3,102
(96)
Current taxes
(1,048)
443
520
2,105
Brokers, dealers, and clients amounts receivable and
payable
(1,053)
2,083
(2,267)
(6,837)
Other, including unrealized foreign currency
translation loss/(gain)
1
(995)
(8,092)
452
(5,170)
Net cash from (used in) operating activities
5,281
(54,077)
(14,831)
(49,019)
Cash flows from (used in) financing activities
Issuance of subordinated notes and debentures
(Note 12)
1,750
–
1,750
–
Redemption or repurchase of subordinated notes and
debentures
(18)
(4)
(42)
49
Common shares issued, net
22
40
59
64
Repurchase of common shares
(Note 13)
(1,219)
–
(2,942)
–
Redemption of preferred shares and other equity instruments
(Note 13)
(350)
–
(350)
–
Sale of treasury shares and other equity instruments
(Note 13)
2,365
2,412
5,616
4,358
Purchase of treasury shares and other equity instruments
(Note 13)
(2,307)
(2,420)
(5,501)
(4,377)
Dividends paid on shares and distributions paid on other equity
instruments
(1,853)
–
(3,597)
(1,124)
Repayment of lease liabilities
(158)
(164)
(325)
(320)
Net cash from (used in) financing activities
(1,768)
(136)
(5,332)
(1,350)
Cash flows from (used in) investing activities
Interest-bearing deposits with banks
(10,894)
41,884
10,242
34,860
Activities in financial assets at fair value through other comprehensive
income
Purchases
(6,325)
(7,745)
(13,626)
(15,330)
Proceeds from maturities
5,137
3,742
8,445
9,215
Proceeds from sales
377
2,227
1,115
2,822
Activities in debt securities at amortized cost
Purchases
(2,462)
(7,683)
(5,700)
(18,090)
Proceeds from maturities
8,825
10,605
17,532
24,646
Proceeds from sales
2,108
11,861
2,606
11,870
Net purchases of land, buildings, equipment, other depreciable
assets, and other intangibles
(425)
(373)
(896)
(776)
Net cash acquired from (paid for) divestitures and acquisitions
–
(502)
70
(502)
Net cash from (used in) investing activities
(3,659)
54,016
19,788
48,715
Effect of exchange rate changes on cash and
due from banks
121
83
(38)
(28)
Net increase (decrease) in cash and due from banks
(25)
(114)
(413)
(1,682)
Cash and due from banks at beginning of period
6,333
6,988
6,721
8,556
Cash and due from banks at end of period
$
6,308
$
6,874
$
6,308
$
6,874
Supplementary disclosure of cash flows from operating
activities
Amount of income taxes paid (refunded) during the period
$
1,590
$
878
$
2,172
$
1,368
Amount of interest paid during the period
15,232
11,035
30,410
20,648
Amount of interest received during the period
22,223
18,309
44,505
35,171
Amount of dividends received during the period
683
588
1,359
1,117
1
Amounts for the three and six months ended April 30, 2023 have been restated for the adoption of IFRS 17. Refer
to Note 2 for details.
The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 54
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1: NATURE OF OPERATIONS
CORPORATE INFORMATION
The Toronto-Dominion Bank is a bank chartered under the
Bank Act (Canada)
. The shareholders of a bank are not, as
shareholders, liable for any liability, act, or
default of the bank except as otherwise provided
under the
Bank Act (Canada)
. The Toronto-Dominion Bank and its subsidiaries are collectively known
as
TD Bank Group (“TD” or the “Bank”). The Bank
was formed through the amalgamation on
February 1, 1955,
of The Bank of Toronto (chartered in 1855) and The
Dominion Bank (chartered in 1869). The Bank
is incorporated and domiciled in Canada
with its registered and principal business offices
located at 66 Wellington
Street West, Toronto, Ontario. TD serves customers in four business segments
operating in a number of locations in key
financial centres around the globe:
Canadian Personal and Commercial
Banking, U.S. Retail, Wealth Management and
Insurance, and Wholesale Banking.
BASIS OF PREPARATION
The accompanying Interim Consolidated
Financial Statements and accounting principles
followed by the Bank have been prepared in
accordance with
International Financial Reporting Standards
(IFRS), as issued by the International
Accounting Standards Board (IASB), including
the accounting requirements of
the Office of the Superintendent of Financial Institutions
Canada (OSFI).
The Interim Consolidated Financial Statements
are presented in Canadian dollars, unless
otherwise indicated.
These Interim Consolidated Financial Statements
were prepared on a condensed basis in
accordance with International Accounting Standard
34,
Interim
Financial Reporting
using the accounting policies as described
in Note 2 of the Bank’s 2023 Annual Consolidated
Financial Statements and in Note 2 of this report.
Certain comparative amounts have been
revised to conform with the presentation
adopted in the current period.
The preparation of the Interim Consolidated
Financial Statements requires that management
make judgments, estimates, and assumptions
regarding the
reported amount of assets, liabilities, revenue
and expenses, and disclosure of contingent
assets and liabilities, as further described in
Note 3 of the Bank’s 2023
Annual Consolidated Financial Statements
and in Note 3 of this report. Accordingly, actual results may differ from estimated
amounts as future confirming events
occur.
The Bank’s Interim Consolidated Financial Statements
have been prepared using uniform accounting
policies for like transactions and events in
similar
circumstances. All intercompany transactions,
balances,
and unrealized gains and losses on
transactions are eliminated on consolidation.
The Interim Consolidated Financial Statements
for the three and six months ended April 30,
2024, were approved and authorized
for issue by the Bank’s Board
of Directors, in accordance with a recommendation
of the Audit Committee, on May 22, 2024.
As the Interim Consolidated Financial Statements
do not include all of the disclosures normally
provided in the Annual Consolidated Financial
Statements, they
should be read in conjunction with the Bank’s 2023
Annual Consolidated Financial Statements
and the accompanying Notes, and
the shaded sections of the 2023
Management’s Discussion and Analysis (MD&A).
The risk management policies and procedures
of the Bank are provided in the MD&A.
The shaded sections of
the “Managing Risk” section of the MD&A in
this report,
relating to market, liquidity, and insurance risks, are an integral
part of these Interim Consolidated Financial
Statements, as permitted by IFRS.
NOTE 2: CURRENT AND FUTURE CHANGES
IN ACCOUNTING POLICIES
CURRENT CHANGES IN ACCOUNTING
POLICIES
The following new standard has been adopted
by the Bank on November 1, 2023.
Insurance Contracts
The IASB issued IFRS 17 which replaced
the guidance in IFRS 4,
Insurance Contracts
(IFRS 4) and became effective for annual
reporting periods beginning on or
after January 1, 2023, which was November
1, 2023 for the Bank. IFRS 17 establishes
principles for recognition, measurement,
presentation and disclosure of
insurance contracts.
Under IFRS 17, insurance contracts are
aggregated into groups which are measured
at the risk-adjusted present value of
cash flows in fulfilling the contracts.
Revenue is recognized as insurance services
are provided over the coverage period.
Losses are recognized immediately if
the contract group is expected to be
onerous. The liabilities presented by insurance
groups are
comprised of the liability for remaining
coverage (LRC) and the liability for incurred
claims (LIC) and are
reported as Insurance contract liabilities
on the Interim Consolidated Balance Sheet.
The LRC is the obligation to investigate and
pay claims that have not yet
occurred and includes the loss component related
to onerous contract groups.
The LIC is the estimate of claims incurred, including
claims that have occurred but
have not been reported, and related insurance
costs.
IFRS 17 introduces two measurement models
that are applicable to the Bank, the premium
allocation approach model (PAA) and the general measurement
model
(GMM). The Bank measures the majority of
its insurance contract groups using
the PAA,
which includes property and casualty contracts
as well as short-term life
and health contracts. The PAA is a simplified model applied to insurance
contracts that are either one year or less
or where the PAA approximates the GMM.
Contracts using the GMM are longer-term life
and health contracts. The LRC for insurance
contract groups using the PAA is measured as unearned premiums
less
deferred acquisition cash flows allocated
to the group. The LRC is adjusted for the
recognition of insurance revenue and amortization
of acquisition cash flows
reported in insurance service expenses
on a straight-line basis over the contractual
terms of the underlying insurance contracts,
usually twelve months. The LRC
for longer term contracts using the GMM
model is measured using estimates and
assumptions that reflect the timing
and uncertainty of insurance cash flows.
When a group of contracts is expected
to be onerous, a loss component (expected
loss related to fulfilling the related insurance
contracts) is established which
increases the LRC and insurance service expenses.
The loss component
of the LRC is subsequently recognized in
income over the contractual term of
the
underlying insurance
contracts to offset claims incurred and related
expenses.
The Bank measures the LIC at the present
value of current estimates of claims and related
costs for insurable events occurring at or
before the Interim
Consolidated Balance Sheet date. The LIC
includes a risk adjustment, which represents
the compensation the Bank requires for bearing
the uncertainty related to
non-financial risks
in its fulfilment of insurance contracts.
Expenses related to claims incurred
and related costs are reported in insurance
service expenses and
changes related to discounting the liability are
recorded as insurance finance income
or expenses in other income (loss).
Prior to the adoption of IFRS 17, these
expenses were recorded in insurance
claims and related expenses and non-interest
expenses.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 55
Reinsurance contracts held are recognized
and measured using the same principles as insurance
contracts issued. Reinsurance contract
assets are presented in
Other assets on the Interim Consolidated Balance
Sheet and the net results from reinsurance
contracts held are presented in Other income
(loss) on the Interim
Consolidated Statement of Income. Refer to
Note 14 for further detail on the balances and
results of insurance and reinsurance contracts.
The Bank initially applied IFRS 17 on
November 1, 2023 and restated the comparative
period. The Bank transitioned by primarily
applying the full retrospective
approach which resulted in the measurement
of insurance contracts as if IFRS 17
had always applied to them.
The following table sets out adjustments
to the
Bank’s insurance-related balances reported under
IFRS 4 as at October 31, 2022 used to derive
the insurance contract liabilities and reinsurance
contract assets
recognized by the Bank as at November
1, 2022 under IFRS 17.
(millions of Canadian dollars)
Amount
Insurance-related liabilities
$
7,468
Other liabilities
131
Other assets
(2,361)
Net insurance-related balances as at October
31, 2022
$
5,238
Changes in actuarial assumptions, including
risk adjustment and discount factor
(192)
Recognition of losses on onerous contracts
113
Other adjustments
(93)
Net insurance-related balances as at
November 1, 2022
$
5,066
Insurance contract liabilities
$
5,761
Reinsurance contract assets
(695)
Net insurance-related balances as at
November 1, 2022
$
5,066
On November 1, 2022, IFRS 17 transition
adjustments resulted in a decrease
to the Bank’s deferred tax assets of $
60
million and an after-tax increase to retained
earnings of $
112
million.
Upon the initial application of IFRS 17 on
November 1, 2023, the Bank applied transitional
guidance and reclassified certain securities
supporting insurance
operations to minimize accounting mismatches
arising from the application of the new
discount factor under IFRS 17. The transitional
guidance for such securities
is applicable for entities that previously used
IFRS 9,
Financial Instruments
and was applied without a restatement
of comparatives. The reclassification resulted
in
a decrease to retained earnings and an increase
in accumulated other comprehensive income
(AOCI) of $
10
million.
FUTURE CHANGES IN ACCOUNTING
POLICIES
The following standard has been issued, but
is not yet effective on the date of issuance of
the Bank’s Interim Consolidated Financial
Statements.
Presentation and Disclosure in Financial
Statements
In April 2024, the IASB issued IFRS 18,
Presentation and Disclosure in Financial
Statements
(IFRS 18), which replaces the guidance
in IAS 1,
Presentation of
Financial Statements
and sets out requirements for presentation
and disclosure of information, focusing
on providing relevant information to users
of the financial
statements. IFRS 18 focuses on the presentation
of financial performance in the statement of
profit or loss, it will be effective for the Bank’s annual
period
beginning November 1, 2027. Early application
is permitted. The Bank is currently assessing
the impact of adopting this standard.
NOTE 3: SIGNIFICANT ACCOUNTING
JUDGMENTS, ESTIMATES, AND ASSUMPTIONS
The estimates used in the Bank’s accounting policies
are essential to understanding its results
of operations and financial condition. Some
of the Bank’s policies
require subjective, complex judgments and
estimates as they relate to matters
that are inherently uncertain. Changes in these judgments
or estimates and
changes to accounting standards and policies
could have a material impact on the Bank’s
Interim Consolidated Financial Statements.
The Bank has established
procedures to ensure that accounting policies
are applied consistently and that the processes
for changing methodologies, determining
estimates, and adopting
new accounting standards are well-controlled
and occur in an appropriate and systematic
manner. Refer to Note 3 of the Bank’s 2023 Annual Consolidated
Financial Statements for a description of
significant accounting judgments, estimates,
and assumptions.
Impairment – Expected Credit Loss Model
The expected credit loss (ECL) model requires
the application of judgments, estimates,
and assumptions in the assessment of the
current and forward-looking
economic environment. There remains elevated
economic uncertainty, and management continues to exercise
expert credit judgment in assessing if an
exposure
has experienced significant increase in credit
risk since initial recognition and in determining
the amount of ECLs at each reporting date.
To the extent that certain
effects are not fully incorporated into the model
calculations, temporary quantitative and qualitative
adjustments have been applied.
Insurance Contracts
The assumptions used in establishing the Bank’s
insurance claims and policy benefit liabilities
are based on best estimates of possible
outcomes.
For property and casualty insurance
contracts, the ultimate cost of LIC is estimated
using a range of standard actuarial claims
projection techniques in
accordance with Canadian accepted actuarial
practices. Additional qualitative judgment
is used to assess the extent to which past
trends may or may not apply in
the future, in order to arrive at the estimated
ultimate claims cost amounts that present
the most likely outcome taking into account
all the uncertainties involved.
For life and health insurance contracts,
actuarial liabilities consider all future policy
cash flows, including premiums, claims,
and expenses required to administer
the policies. Critical assumptions used in
the measurement of life and health insurance
contract liabilities are determined by the appointed
actuary.
Further information on insurance risk assumptions
is provided in Note 14.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 56
NOTE 4: FAIR VALUE MEASUREMENTS
There have been no significant changes to
the Bank’s approach and methodologies used
to determine fair value measurements for
the three and six months
ended April 30, 2024.
(a)
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES NOT CARRIED AT FAIR VALUE
The following table reflects the fair value
of the Bank’s financial assets and liabilities not
carried at fair value.
Financial Assets and Liabilities not carried
at Fair Value
1
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Carrying
Fair
Carrying
Fair
value
value
value
value
FINANCIAL ASSETS
Debt securities at amortized cost, net of allowance
for credit losses
Government and government-related
securities
$
222,786
$
216,565
$
232,093
$
222,699
Other debt securities
70,808
68,531
75,923
72,511
Total debt securities at amortized cost, net of allowance for credit losses
293,594
285,096
308,016
295,210
Total loans, net of allowance for loan losses
928,124
917,578
895,947
877,763
Total financial assets not carried at fair value
$
1,221,718
$
1,202,674
$
1,203,963
$
1,172,973
FINANCIAL LIABILITIES
Deposits
$
1,203,771
$
1,197,933
$
1,198,190
$
1,188,585
Securitization liabilities at amortized
cost
12,581
12,107
12,710
12,035
Subordinated notes and debentures
11,318
11,294
9,620
9,389
Total financial liabilities not carried at fair value
$
1,227,670
$
1,221,334
$
1,220,520
$
1,210,009
1
This table excludes financial assets and liabilities where the carrying value approximates their fair value.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 57
(b)
FAIR VALUE HIERARCHY
The following table presents the levels within
the fair value hierarchy for each of the assets
and liabilities measured at fair value on
a recurring basis as at
April 30, 2024 and October 31, 2023.
Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring Basis
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
FINANCIAL ASSETS AND COMMODITIES
Trading loans, securities, and other
1
Government and government-related securities
Canadian government debt
Federal
$
39
$
7,513
$
–
$
7,552
$
72
$
9,073
$
–
$
9,145
Provinces
–
7,482
–
7,482
–
7,445
–
7,445
U.S. federal, state, municipal governments,
and agencies debt
–
22,575
–
22,575
2
24,325
67
24,394
Other OECD
2
government-guaranteed debt
–
9,390
–
9,390
–
8,811
–
8,811
Mortgage-backed securities
–
1,964
–
1,964
–
1,698
–
1,698
Other debt securities
Canadian issuers
–
5,888
4
5,892
–
6,067
5
6,072
Other issuers
–
14,579
25
14,604
–
14,553
60
14,613
Equity securities
65,210
18
9
65,237
54,186
41
10
54,237
Trading loans
–
19,092
–
19,092
–
17,261
–
17,261
Commodities
11,749
807
–
12,556
7,620
791
–
8,411
Retained interests
–
2
–
2
–
3
–
3
76,998
89,310
38
166,346
61,880
90,068
142
152,090
Non-trading financial assets at fair value
through profit or loss
Securities
278
1,555
1,150
2,983
269
2,596
980
3,845
Loans
–
2,663
–
2,663
–
3,495
–
3,495
278
4,218
1,150
5,646
269
6,091
980
7,340
Derivatives
Interest rate contracts
–
21,091
–
21,091
17
22,893
–
22,910
Foreign exchange contracts
47
52,061
5
52,113
26
57,380
7
57,413
Credit contracts
–
81
–
81
–
54
–
54
Equity contracts
58
4,901
–
4,959
58
4,839
–
4,897
Commodity contracts
556
3,375
15
3,946
306
1,787
15
2,108
661
81,509
20
82,190
407
86,953
22
87,382
Financial assets designated at
fair value through profit or loss
Securities
1
–
5,925
–
5,925
–
5,818
–
5,818
–
5,925
–
5,925
–
5,818
–
5,818
Financial assets at fair value through other
comprehensive income
Government and government-related securities
Canadian government debt
Federal
–
18,607
–
18,607
–
18,210
–
18,210
Provinces
–
20,586
–
20,586
–
19,940
–
19,940
U.S. federal, state, municipal governments,
and agencies debt
–
15,624
–
15,624
–
11,002
–
11,002
Other OECD government-guaranteed debt
–
1,683
–
1,683
–
1,498
–
1,498
Mortgage-backed securities
–
2,211
–
2,211
–
2,277
–
2,277
Other debt securities
Asset-backed securities
–
3,458
–
3,458
–
4,114
–
4,114
Corporate and other debt
–
9,161
14
9,175
–
8,863
27
8,890
Equity securities
1,388
1
2,307
3,696
1,133
3
2,377
3,513
Loans
–
206
–
206
–
421
–
421
1,388
71,537
2,321
75,246
1,133
66,328
2,404
69,865
Securities purchased under reverse
repurchase agreements
–
8,920
–
8,920
–
9,649
–
9,649
FINANCIAL LIABILITIES
Trading deposits
–
30,311
910
31,221
–
29,995
985
30,980
Derivatives
Interest rate contracts
1
13,403
148
13,552
16
21,064
126
21,206
Foreign exchange contracts
49
46,370
12
46,431
19
44,841
13
44,873
Credit contracts
–
799
–
799
–
172
–
172
Equity contracts
–
5,207
23
5,230
7
3,251
21
3,279
Commodity contracts
644
3,077
9
3,730
248
1,846
16
2,110
694
68,856
192
69,742
290
71,174
176
71,640
Securitization liabilities at fair value
–
17,653
–
17,653
–
14,422
–
14,422
Financial liabilities designated at fair value
through profit or loss
–
188,031
74
188,105
–
192,108
22
192,130
Obligations related to securities sold short
1
2,117
36,028
–
38,145
1,329
43,332
–
44,661
Obligations related to securities sold
under repurchase agreements
–
11,747
–
11,747
–
12,641
–
12,641
-
1
Balances reflect the reduction of securities owned (long positions) by the amount of identical securities sold but
not yet purchased (short positions).
2
Organisation for Economic Cooperation and Development (OECD).
(c)
TRANSFERS BETWEEN FAIR VALUE HIERARCHY LEVELS FOR ASSETS
AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
The Bank’s policy is to record transfers of assets
and liabilities between the different levels of the
fair value hierarchy using the fair values as
at the end of each
reporting period.
There were no significant transfers between
Level 1 and Level 2 during the three and
six months ended April 30,
2024 and April 30,
2023.
There were no significant transfers between
Level 2 and Level 3 during the three and
six months ended April 30,
2024 and April 30,
2023.
There were no significant changes to the unobservable
inputs and sensitivities for assets and liabilities
classified as Level 3 during the three and
six months ended
April 30, 2024, and April 30, 2023.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 58
(d)
RECONCILIATION OF CHANGES IN FAIR VALUE FOR LEVEL 3 ASSETS AND LIABILITIES
The following tables set out changes in fair
value of all assets and liabilities measured
at fair value using significant Level 3 unobservable
inputs for the three and
six months ended April 30, 2024 and April 30,
2023.
Reconciliation of Changes in Fair Value for Level 3 Assets and Liabilities
(millions of Canadian dollars)
Change in
unrealized
Fair
Total realized and
Fair
gains
value as at
unrealized gains (losses)
Movements
1
Transfers
value as at
(losses) on
February 1
Included
Included
Purchases/
Sales/
Into
Out of
April 30
instruments
2024
in income
2
in OCI
3,4
Issuances
Settlements
Level 3
Level 3
2024
still held
5
FINANCIAL ASSETS
Trading loans, securities,
and other
Government and government-
related securities
$
34
$
–
$
–
$
–
$
(34)
$
–
$
–
$
–
$
–
Other debt securities
61
(2)
–
18
(4)
5
(49)
29
(1)
Equity securities
7
–
–
2
–
–
–
9
(1)
102
(2)
–
20
(38)
5
(49)
38
(2)
Non-trading financial
assets at fair value
through profit or loss
Securities
1,079
49
–
33
(10)
–
(1)
1,150
45
1,079
49
–
33
(10)
–
(1)
1,150
45
Financial assets at fair value
through other
comprehensive income
Other debt securities
26
–
(1)
–
(11)
–
–
14
3
Equity securities
2,142
–
(2)
122
45
–
–
2,307
(13)
$
2,168
$
–
$
(3)
$
122
$
34
$
–
$
–
$
2,321
$
(10)
FINANCIAL LIABILITIES
Trading deposits
6
$
(1,039)
$
34
$
–
$
(18)
$
97
$
–
$
16
$
(910)
$
44
Derivatives
7
Interest rate contracts
(137)
(18)
–
–
7
–
–
(148)
(10)
Foreign exchange contracts
(1)
(1)
–
–
1
(6)
–
(7)
(1)
Equity contracts
(28)
5
–
–
(1)
–
1
(23)
4
Commodity contracts
(10)
(14)
–
–
30
–
–
6
8
(176)
(28)
–
–
37
(6)
1
(172)
1
Financial liabilities designated
at fair value
through profit or loss
(24)
(37)
–
(79)
66
–
–
(74)
(37)
Change in
unrealized
Fair
Total realized and
Fair
gains
value as at
unrealized gains (losses)
Movements
1
Transfers
value as at
(losses) on
November 1
Included
Included
Purchases/
Sales/
Into
Out of
April 30
instruments
2023
in income
2
in OCI
4
Issuances
Settlements
Level 3
Level 3
2024
still held
5
FINANCIAL ASSETS
Trading loans, securities,
and other
Government and government-
related securities
$
67
$
–
$
–
$
–
$
(67)
$
–
$
–
$
–
$
–
Other debt securities
65
1
–
90
(85)
7
(49)
29
(2)
Equity securities
10
(1)
–
2
(2)
–
–
9
–
142
–
–
92
(154)
7
(49)
38
(2)
Non-trading financial
assets at fair value
through profit or loss
Securities
980
62
–
124
(15)
–
(1)
1,150
62
980
62
–
124
(15)
–
(1)
1,150
62
Financial assets at fair value
through other
comprehensive income
Other debt securities
27
–
(4)
3
(12)
–
–
14
–
Equity securities
2,377
–
(12)
128
(186)
–
–
2,307
(11)
$
2,404
$
–
$
(16)
$
131
$
(198)
$
–
$
–
$
2,321
$
(11)
FINANCIAL LIABILITIES
Trading deposits
6
$
(985)
$
10
$
–
$
(74)
$
118
$
–
$
21
$
(910)
$
2
Derivatives
7
Interest rate contracts
(126)
(41)
–
–
19
–
–
(148)
(23)
Foreign exchange contracts
(6)
1
–
–
1
(6)
3
(7)
(2)
Equity contracts
(21)
(1)
–
–
(1)
(1)
1
(23)
(1)
Commodity contracts
(1)
(4)
–
–
11
–
–
6
(5)
(154)
(45)
–
–
30
(7)
4
(172)
(31)
Financial liabilities designated
at fair value through profit
or loss
(22)
1
–
(133)
80
–
–
(74)
–
1
Includes foreign exchange.
2
Gains/losses on financial assets and liabilities are recognized within Non-interest Income on the Interim Consolidated
Statement
of Income.
3
Other comprehensive income.
4
Includes realized gains/losses transferred to retained earnings on disposal of equities designated at fair value through
other comprehensive income (FVOCI). Refer to Note 5 for further
details.
5
Changes in unrealized gains/losses on financial assets at FVOCI are recognized in AOCI.
6
Issuances and repurchases of trading deposits are reported on a gross basis.
7
Consists of derivative assets of $
20
million (January 31, 2024/February 1, 2024 – $
10
million; October 31, 2023/November 1, 2023 – $
22
million) and derivative liabilities of $
192
million
(January 31, 2024/February 1, 2024 – $
186
million; October 31, 2023/November 1, 2023 – $
176
million) which have been netted in this table for presentation purposes only.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 59
Reconciliation of Changes in Fair Value for Level 3 Assets and Liabilities
(millions of Canadian dollars)
Change in
unrealized
Fair
Total realized and
Fair
gains
value as at
unrealized gains (losses)
Movements
1
Transfers
value as at
(losses) on
February 1
Included
Included
Purchases/
Sales/
Into
Out of
April 30
instruments
2023
in income
2
in OCI
3
Issuances
Settlements
Level 3
Level 3
2023
still held
4
FINANCIAL ASSETS
Trading loans, securities,
and other
Government and government-
related securities
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
–
Other debt securities
85
(3)
–
9
(44)
–
(25)
22
(27)
Equity securities
–
(4)
–
39
(5)
–
–
30
(2)
85
(7)
–
48
(49)
–
(25)
52
(29)
Non-trading financial
assets at fair value
through profit or loss
Securities
927
40
–
79
(45)
–
–
1,001
21
927
40
–
79
(45)
–
–
1,001
21
Financial assets at fair value
through other
comprehensive income
Other debt securities
63
–
(15)
21
(8)
–
–
61
–
Equity securities
3,240
–
(189)
1,269
(635)
–
–
3,685
(183)
$
3,303
$
–
$
(204)
$
1,290
$
(643)
$
–
$
–
$
3,746
$
(183)
FINANCIAL LIABILITIES
Trading deposits
5
$
(486)
$
(17)
$
–
$
(89)
$
4
$
(6)
$
2
$
(592)
$
(14)
Derivatives
6
Interest rate contracts
(164)
(6)
–
–
1
–
–
(169)
5
Foreign exchange contracts
2
(1)
–
–
–
–
–
1
–
Equity contracts
(51)
14
–
26
(9)
–
(7)
(27)
16
Commodity contracts
5
11
–
–
(18)
–
–
(2)
(1)
(208)
18
–
26
(26)
–
(7)
(197)
20
Financial liabilities designated
at fair value
through profit or loss
(22)
20
–
(127)
80
–
–
(49)
(21)
Change in
unrealized
Fair
Total realized and
Fair
gains
value as at
unrealized gains (losses)
Movements
1
Transfers
value as at
(losses) on
November 1
Included
Included
Purchases/
Sales/
Into
Out of
April 30
instruments
2022
in income
2
in OCI
3
Issuances
Settlements
Level 3
Level 3
2023
still held
4
FINANCIAL ASSETS
Trading loans, securities,
and other
Government and government-
related securities
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
–
Other debt securities
49
6
–
23
(59)
35
(32)
22
(23)
Equity securities
–
(4)
–
39
(5)
–
–
30
(2)
49
2
–
62
(64)
35
(32)
52
(25)
Non-trading financial
assets at fair value
through profit or loss
Securities
845
83
–
121
(48)
–
–
1,001
56
845
83
–
121
(48)
–
–
1,001
56
Financial assets at fair value
through other
comprehensive income
Other debt securities
60
–
(8)
21
(12)
–
–
61
–
Equity securities
2,477
–
(211)
2,093
(674)
–
–
3,685
(205)
$
2,537
$
–
$
(219)
$
2,114
$
(686)
$
–
$
–
$
3,746
$
(205)
FINANCIAL LIABILITIES
Trading deposits
5
$
(416)
$
(29)
$
–
$
(148)
$
8
$
(9)
$
2
$
(592)
$
(24)
Derivatives
6
Interest rate contracts
(156)
(30)
–
–
17
–
–
(169)
(5)
Foreign exchange contracts
4
(4)
–
–
–
–
1
1
(1)
Equity contracts
(59)
43
–
26
(7)
(2)
(28)
(27)
17
Commodity contracts
27
40
–
–
(69)
–
–
(2)
(4)
(184)
49
–
26
(59)
(2)
(27)
(197)
7
Financial liabilities designated
at fair value
through profit or loss
(44)
70
–
(187)
112
–
–
(49)
72
1
Includes foreign exchange.
2
Gains/losses on financial assets and liabilities are recognized within Non-interest Income on the Interim Consolidated
Statement of Income.
3
Includes realized gains/losses transferred to retained earnings on disposal of equities designated at FVOCI. Refer
to Note 5 for further details.
4
Changes in unrealized gains/losses on financial assets at FVOCI are recognized in AOCI.
5
Issuances and repurchases of trading deposits are reported on a gross basis.
6
Consists of derivative assets of $
20
million (January 31, 2023/ February 1, 2023 – $
31
million; October 31, 2022/November 1, 2022 – $
50
million) and derivative liabilities of $
217
million
(January 31, 2023/ February 1, 2023 – $
239
million; October 31, 2022/November 1, 2022 – $
234
million) which have been netted in this table for presentation purposes only.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 60
NOTE 5: SECURITIES
(a)
UNREALIZED SECURITIES GAINS (LOSSES)
The following table summarizes the unrealized
gains and losses as at April 30, 2024
and October 31, 2023.
Unrealized Gains (Losses) for Securities
at Fair Value Through Other Comprehensive Income
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Cost/
Gross
Gross
Cost/
Gross
Gross
amortized
unrealized
unrealized
Fair
amortized
unrealized
unrealized
Fair
cost
1
gains
(losses)
value
cost
1
gains
(losses)
value
Government and government-related
securities
Canadian government debt
Federal
$
18,693
$
39
$
(125)
$
18,607
$
18,335
$
45
$
(170)
$
18,210
Provinces
20,540
95
(49)
20,586
19,953
105
(118)
19,940
U.S. federal, state, municipal governments, and
agencies debt
15,791
30
(197)
15,624
11,260
17
(275)
11,002
Other OECD government-guaranteed debt
1,698
2
(17)
1,683
1,521
1
(24)
1,498
Mortgage-backed securities
2,234
1
(24)
2,211
2,313
–
(36)
2,277
58,956
167
(412)
58,711
53,382
168
(623)
52,927
Other debt securities
Asset-backed securities
3,473
1
(16)
3,458
4,146
–
(32)
4,114
Corporate and other debt
9,173
59
(57)
9,175
8,946
43
(99)
8,890
12,646
60
(73)
12,633
13,092
43
(131)
13,004
Total debt securities
71,602
227
(485)
71,344
66,474
211
(754)
65,931
Equity securities
Common shares
3,075
237
(88)
3,224
3,191
95
(116)
3,170
Preferred shares
620
20
(168)
472
566
1
(224)
343
3,695
257
(256)
3,696
3,757
96
(340)
3,513
Total securities at fair value through
other comprehensive income
$
75,297
$
484
$
(741)
$
75,040
$
70,231
$
307
$
(1,094)
$
69,444
1
Includes the foreign exchange translation of amortized cost balances at the period-end spot rate.
(b)
EQUITY SECURITIES DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
The Bank designated certain equity securities
at FVOCI.
The following table summarizes the fair
value of equity securities designated at
FVOCI as at
April 30, 2024 and October 31, 2023, and
dividend income recognized on these
securities for the three and six months
ended April 30, 2024 and April 30, 2023.
Equity Securities Designated at Fair Value Through
Other Comprehensive Income
(millions of Canadian dollars)
As at
For the three months ended
For the six months ended
April 30, 2024
October 31, 2023
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Fair value
Dividend income recognized
Dividend income recognized
Common shares
$
3,224
$
3,170
$
48
$
45
$
65
$
62
Preferred shares
472
343
38
33
77
64
Total
$
3,696
$
3,513
$
86
$
78
$
142
$
126
The Bank disposed of certain equity securities
in line with the Bank’s investment strategy
and disposed of Federal Home Loan Bank (FHLB)
stocks in accordance
with FHLB member stockholding requirements,
as follows:
Equity Securities Net Realized Gains
(Losses)
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Equity Securities
Fair value
$
73
$
121
$
115
$
166
Cumulative realized gain/(loss)
(1)
(5)
(1)
(8)
FHLB Stock
Fair value
4
637
163
637
Cumulative realized gain/(loss)
–
–
–
–
(c)
DEBT SECURITIES NET REALIZED GAINS
(LOSSES)
The following table summarizes
the net realized gains and losses for the
three and six months ended April 30, 2024 and
April 30,
2023, which are included in
Other income (loss) on the Interim Consolidated
Statement of Income.
Debt Securities Net Realized Gains (Losses)
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Debt securities at amortized cost
$
(69)
$
(36)
$
(69)
$
(36)
Debt securities at fair value through other
comprehensive income
3
15
9
14
Total
$
(66)
$
(21)
$
(60)
$
(22)
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 61
(d)
CREDIT QUALITY OF DEBT SECURITIES
The Bank evaluates non-retail credit risk
on an individual borrower basis, using both
a borrower risk rating (BRR) and facility
risk rating, as detailed in the shaded
area of the “Managing Risk” section of the 2023
MD&A. This system is used to assess all non-retail
exposures, including debt securities.
The following table provides the gross carrying
amounts of debt securities measured at amortized
cost and debt securities at FVOCI by internal
risk rating for credit
risk management purposes, presenting
separately those debt securities that are
subject to Stage 1, Stage 2, and Stage 3
allowances. Refer to the “Allowance for
Credit Losses” table in Note 6 for details regarding
the allowance and provision for credit losses
on debt securities.
Debt Securities by Risk Rating
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Debt securities
1
Investment grade
$
364,534
$
–
$
n/a
2
$
364,534
$
373,317
$
–
$
n/a
$
373,317
Non-investment grade
259
62
n/a
321
519
–
n/a
519
Watch and classified
n/a
85
n/a
85
n/a
113
n/a
113
Default
n/a
n/a
–
–
n/a
n/a
–
–
Total debt securities
364,793
147
–
364,940
373,836
113
–
373,949
Allowance for credit losses on debt securities
at amortized cost
2
–
–
2
2
–
–
2
Total debt securities, net of
allowance
$
364,791
$
147
$
–
$
364,938
$
373,834
$
113
$
–
$
373,947
1
Includes debt securities backed by government-guaranteed loans of $
142
million (October 31, 2023 – $
104
million), which are reported in Non-investment grade or a lower risk rating
based on the issuer’s credit risk.
2
Not applicable.
As at April 30, 2024, total debt securities, net
of allowance,
in the table above, include debt securities
measured at amortized cost, net of allowance,
of
$
293,594
million (October 31, 2023 – $
308,016
million), and debt securities measured at FVOCI
of $
71,344
million (October 31, 2023 – $
65,931
million). The
difference between probability-weighted ECLs
and base ECLs on debt securities at
FVOCI and at amortized cost as at both
April 30, 2024 and October 31, 2023,
was insignificant.
NOTE 6: LOANS, IMPAIRED LOANS, AND ALLOWANCE FOR CREDIT LOSSES
(a)
LOANS AND ACCEPTANCES
The following table provides details regarding
the Bank’s loans and acceptances as at April
30, 2024 and October 31, 2023.
Loans and Acceptances
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Residential mortgages
$
326,032
$
320,341
Consumer instalment and other personal
221,197
217,554
Credit card
39,421
38,660
Business and government
349,019
326,528
935,669
903,083
Customers’ liability under acceptances
4,183
17,569
Loans at FVOCI
(Note 4)
206
421
Total loans
and acceptances
940,058
921,073
Total allowance for loan losses
7,545
7,136
Total loans
and acceptances, net of allowance
$
932,513
$
913,937
Business and government loans (including
loans at FVOCI) and customers’ liability
under acceptances are grouped together
as reflected below for presentation in
the “Loans and Acceptances by Risk Ratings”
table.
Loans and Acceptances
– Business and Government
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Loans at amortized cost
$
349,019
$
326,528
Customers’ liability under acceptances
4,183
17,569
Loans at FVOCI
(Note 4)
206
421
Loans and acceptances
353,408
344,518
Allowance for loan losses
3,125
2,990
Loans and acceptances, net of allowance
$
350,283
$
341,528
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 62
(b)
CREDIT QUALITY OF LOANS
In the retail portfolio, including individuals and
small businesses, the Bank manages exposures
on a pooled basis, using predictive credit
scoring techniques. For
non-retail exposures, each borrower is assigned
a BRR that reflects the probability of default
(PD)
of the borrower using proprietary industry
and sector specific
risk models and expert judgment. Refer to
the shaded areas of the “Managing Risk”
section of the 2023 MD&A for further
details, including the mapping of PD
ranges to risk levels for retail exposures
as well as the Bank’s 21-point BRR scale
to risk levels and external ratings for non-retail
exposures.
The following table provides the gross carrying
amounts of loans,
acceptances and credit risk exposures
on loan commitments and financial guarantee
contracts
by internal risk ratings for credit risk management
purposes, presenting separately those that
are subject to Stage 1, Stage 2, and Stage
3 allowances.
Loans and Acceptances by Risk Ratings
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Residential mortgages
1,2,3
Low Risk
$
228,023
$
769
$
n/a
$
228,792
$
225,596
$
46
$
n/a
$
225,642
Normal Risk
69,156
13,473
n/a
82,629
70,423
11,324
n/a
81,747
Medium Risk
382
10,446
n/a
10,828
110
9,581
n/a
9,691
High Risk
4
3,096
308
3,408
10
2,573
325
2,908
Default
n/a
n/a
375
375
n/a
n/a
353
353
Total loans
297,565
27,784
683
326,032
296,139
23,524
678
320,341
Allowance for loan losses
129
214
60
403
154
192
57
403
Loans, net of allowance
297,436
27,570
623
325,629
295,985
23,332
621
319,938
Consumer instalment and other personal
4
Low Risk
98,382
2,637
n/a
101,019
100,102
2,278
n/a
102,380
Normal Risk
61,842
12,648
n/a
74,490
60,613
13,410
n/a
74,023
Medium Risk
26,283
6,376
n/a
32,659
24,705
5,816
n/a
30,521
High Risk
4,607
7,533
365
12,505
4,122
5,700
323
10,145
Default
n/a
n/a
524
524
n/a
n/a
485
485
Total loans
191,114
29,194
889
221,197
189,542
27,204
808
217,554
Allowance for loan losses
658
1,091
238
1,987
653
959
197
1,809
Loans, net of allowance
190,456
28,103
651
219,210
188,889
26,245
611
215,745
Credit card
Low Risk
6,320
16
n/a
6,336
6,499
12
n/a
6,511
Normal Risk
11,126
182
n/a
11,308
11,171
134
n/a
11,305
Medium Risk
12,736
1,126
n/a
13,862
12,311
1,163
n/a
13,474
High Risk
2,767
4,605
427
7,799
2,567
4,289
401
7,257
Default
n/a
n/a
116
116
n/a
n/a
113
113
Total loans
32,949
5,929
543
39,421
32,548
5,598
514
38,660
Allowance for loan losses
667
979
384
2,030
709
913
312
1,934
Loans, net of allowance
32,282
4,950
159
37,391
31,839
4,685
202
36,726
Business and government
1,2,3,5
Investment grade or Low/Normal Risk
163,179
112
n/a
163,291
159,477
101
n/a
159,578
Non-investment grade or Medium Risk
162,642
10,685
n/a
173,327
161,651
10,278
n/a
171,929
Watch and classified or High Risk
698
14,312
69
15,079
604
11,017
75
11,696
Default
n/a
n/a
1,711
1,711
n/a
n/a
1,315
1,315
Total loans and acceptances
326,519
25,109
1,780
353,408
321,732
21,396
1,390
344,518
Allowance for loan and acceptances
losses
1,025
1,631
469
3,125
1,157
1,371
462
2,990
Loans and acceptances, net of allowance
325,494
23,478
1,311
350,283
320,575
20,025
928
341,528
Total loans and acceptances
6
848,147
88,016
3,895
940,058
839,961
77,722
3,390
921,073
Total allowance for loan losses
6,7
2,479
3,915
1,151
7,545
2,673
3,435
1,028
7,136
Total loans and acceptances, net of
allowance
6
$
845,668
$
84,101
$
2,744
$
932,513
$
837,288
$
74,287
$
2,362
$
913,937
1
Includes impaired loans with a balance of $
192
million (October 31, 2023 – $
271
million) which did not have a related allowance for loan losses as the realizable value of the collateral
exceeded the loan amount.
2
Excludes trading loans and non-trading loans at fair value through profit or loss (FVTPL) with a fair value of $
19
billion (October 31, 2023 – $
17
billion) and $
3
billion (October 31, 2023 –
$
3
billion), respectively.
3
Includes insured mortgages of $
73
billion (October 31, 2023 – $
74
billion).
4
Includes Canadian government-insured real estate personal loans of $
6
billion (October 31, 2023 – $
7
billion).
5
Includes loans guaranteed by government agencies of $
25
billion (October 31, 2023 – $
26
billion), which are primarily reported in Non-investment grade or a lower risk rating based on
the borrowers’ credit risk.
6
Stage 3 includes acquired credit-impaired (ACI) loans of
nil
(October 31, 2023 – $
91
million) and a related allowance for loan losses of
nil
(October 31, 2023 – $
6
million), which have
been included in the “Default”
risk rating category as they were impaired at acquisition.
7
Includes allowance for loan losses related to loans that are measured at FVOCI of
nil
(October 31, 2023 –
nil
).
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 63
Loans and Acceptances by Risk Ratings
(Continued)
– Off-Balance Sheet Credit Instruments
1
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Retail Exposures
2
Low Risk
$
256,848
$
1,397
$
n/a
$
258,245
$
254,231
$
1,093
$
n/a
$
255,324
Normal Risk
92,179
1,301
n/a
93,480
91,474
1,112
n/a
92,586
Medium Risk
19,866
1,235
n/a
21,101
19,774
1,079
n/a
20,853
High Risk
1,229
1,278
–
2,507
1,209
1,198
–
2,407
Default
n/a
n/a
–
–
n/a
n/a
–
–
Non-Retail Exposures
3
Investment grade
275,384
–
n/a
275,384
264,029
–
n/a
264,029
Non-investment grade
97,750
5,328
n/a
103,078
98,068
4,396
n/a
102,464
Watch and classified
305
4,533
–
4,838
218
4,158
–
4,376
Default
n/a
n/a
204
204
n/a
n/a
107
107
Total off-balance sheet credit
instruments
743,561
15,072
204
758,837
729,003
13,036
107
742,146
Allowance for off-balance sheet credit
instruments
423
568
11
1,002
476
565
8
1,049
Total off-balance sheet credit
instruments, net of allowance
$
743,138
$
14,504
$
193
$
757,835
$
728,527
$
12,471
$
99
$
741,097
1
Excludes mortgage commitments.
2
Includes $
373
billion (October 31, 2023 – $
369
billion) of personal lines of credit and credit card lines, which are unconditionally cancellable at the Bank’s
discretion at any time.
3
Includes $
64
billion (October 31, 2023 – $
62
billion) of the undrawn component of uncommitted credit and liquidity facilities.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 64
(c)
ALLOWANCE FOR CREDIT LOSSES
The following table provides details on
the Bank’s allowance for credit losses as at and
for the three and six months ended April 30,
2024
and April 30,
2023,
including allowance for off-balance sheet instruments
in the applicable categories.
Allowance for Credit Losses
(millions of Canadian dollars)
Foreign
Foreign
exchange,
exchange,
Balance at
Provision
Write-offs,
disposals,
Balance
Balance at
Provision
Write-offs,
disposals,
Balance
beginning
for credit
net of
and other
at end of
beginning
for credit
net of
and other
at end of
of period
losses
recoveries
adjustments
period
of period
losses
recoveries
adjustments
period
For the three months ended
April 30, 2024
April 30, 2023
Residential mortgages
$
410
$
(8)
$
(1)
$
2
$
403
$
330
$
4
$
(3)
$
3
$
334
Consumer instalment and other
personal
1,979
361
(288)
20
2,072
1,753
183
(181)
11
1,766
Credit card
2,577
423
(403)
47
2,644
2,407
327
(283)
29
2,480
Business and government
3,299
296
(207)
40
3,428
2,987
86
(57)
48
3,064
Total allowance for loan losses,
including off-balance sheet
instruments
8,265
1,072
(899)
109
8,547
7,477
600
(524)
91
7,644
Debt securities at amortized cost
2
–
–
–
2
1
–
–
1
2
Debt securities at FVOCI
1
(1)
–
1
1
1
(1)
–
1
1
Total allowance for credit
losses on debt securities
3
(1)
–
1
3
2
(1)
–
2
3
Total allowance for credit losses
$
8,268
$
1,071
$
(899)
$
110
$
8,550
$
7,479
$
599
$
(524)
$
93
$
7,647
Comprising:
Allowance for credit losses on
loans at amortized cost
$
7,265
$
7,545
$
6,492
$
6,644
Allowance for credit losses on
loans at FVOCI
–
–
–
–
Allowance for loan losses
7,265
7,545
6,492
6,644
Allowance for off-balance sheet
instruments
1,000
1,002
985
1,000
Allowance for credit losses on
debt securities
3
3
2
3
For the six months ended
April 30, 2024
April 30, 2023
Residential mortgages
$
403
$
–
$
(3)
$
3
$
403
$
323
$
16
$
(4)
$
(1)
$
334
Consumer instalment and other
personal
1,895
743
(563)
(3)
2,072
1,704
445
(377)
(6)
1,766
Credit card
2,577
853
(772)
(14)
2,644
2,352
664
(528)
(8)
2,480
Business and government
3,310
477
(320)
(39)
3,428
2,984
165
(88)
3
3,064
Total allowance for loan losses,
including off-balance sheet
instruments
8,185
2,073
(1,658)
(53)
8,547
7,363
1,290
(997)
(12)
7,644
Debt securities at amortized cost
2
–
–
–
2
1
–
–
1
2
Debt securities at FVOCI
2
(1)
–
–
1
2
(1)
–
–
1
Total allowance for credit
losses on debt securities
4
(1)
–
–
3
3
(1)
–
1
3
Total allowance for credit losses
$
8,189
$
2,072
$
(1,658)
$
(53)
$
8,550
$
7,366
$
1,289
$
(997)
$
(11)
$
7,647
Comprising:
Allowance for credit losses on
loans at amortized cost
$
7,136
$
7,545
$
6,432
$
6,644
Allowance for credit losses on
loans at FVOCI
–
–
–
–
Allowance for loan losses
7,136
7,545
6,432
6,644
Allowance for off-balance sheet
instruments
1,049
1,002
931
1,000
Allowance for credit losses on
debt securities
4
3
3
3
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 65
(d)
ALLOWANCE FOR LOAN LOSSES BY STAGE
The following table provides details on
the Bank’s allowance for loan losses by stage as
at and for the three months ended April 30,
2024 and April 30, 2023.
Allowance for Loan Losses by Stage
(millions of Canadian dollars)
For the three months ended
April 30, 2024
April 30, 2023
Stage 1
Stage 2
Stage 3
1
Total
Stage 1
Stage 2
Stage 3
1
Total
Residential Mortgages
Balance at beginning of period
$
137
$
212
$
61
$
410
$
129
$
150
$
51
$
330
Provision for credit losses
Transfer to Stage 1
2
32
(32)
–
–
21
(21)
–
–
Transfer to Stage 2
(7)
13
(6)
–
(8)
12
(4)
–
Transfer to Stage 3
–
(8)
8
–
(1)
(3)
4
–
Net remeasurement due to transfers into stage
3
(8)
6
–
(2)
(4)
5
–
1
New originations or purchases
4
7
n/a
n/a
7
8
n/a
n/a
8
Net repayments
5
(1)
–
–
(1)
(1)
(1)
–
(2)
Derecognition of financial assets (excluding
disposals and write-offs)
6
(1)
(7)
(19)
(27)
(1)
(4)
(3)
(8)
Changes to risk, parameters, and models
7
(31)
29
17
15
(28)
30
3
5
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(2)
(2)
–
–
(3)
(3)
Recoveries
–
–
1
1
–
–
–
–
Foreign exchange and other adjustments
1
1
–
2
1
1
1
3
Balance at end of period
$
129
$
214
$
60
$
403
$
116
$
169
$
49
$
334
Consumer Instalment and Other Personal
Balance, including off-balance sheet instruments,
at beginning of period
$
664
$
1,090
$
225
$
1,979
$
675
$
916
$
162
$
1,753
Provision for credit losses
Transfer to Stage 1
2
142
(141)
(1)
–
136
(135)
(1)
–
Transfer to Stage 2
(58)
81
(23)
–
(48)
67
(19)
–
Transfer to Stage 3
(3)
(62)
65
–
(2)
(49)
51
–
Net remeasurement due to transfers into stage
3
(63)
71
2
10
(48)
49
3
4
New originations or purchases
4
87
n/a
n/a
87
99
n/a
n/a
99
Net repayments
5
(18)
(24)
(4)
(46)
(1)
(26)
(3)
(30)
Derecognition of financial assets (excluding
disposals and write-offs)
6
(16)
(26)
(16)
(58)
(17)
(23)
(8)
(48)
Changes to risk, parameters, and models
7
(55)
148
275
368
(124)
117
165
158
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(370)
(370)
–
–
(254)
(254)
Recoveries
–
–
82
82
–
–
73
73
Foreign exchange and other adjustments
8
9
3
20
5
5
1
11
Balance, including off-balance sheet instruments,
at end of period
688
1,146
238
2,072
675
921
170
1,766
Less: Allowance for off-balance sheet instruments
8
30
55
–
85
37
51
–
88
Balance at end of period
$
658
$
1,091
$
238
$
1,987
$
638
$
870
$
170
$
1,678
Credit Card
9
Balance, including off-balance sheet instruments,
at beginning of period
$
880
$
1,325
$
372
$
2,577
$
956
$
1,198
$
253
$
2,407
Provision for credit losses
Transfer to Stage 1
2
263
(255)
(8)
–
270
(264)
(6)
–
Transfer to Stage 2
(81)
101
(20)
–
(76)
90
(14)
–
Transfer to Stage 3
(5)
(239)
244
–
(5)
(179)
184
–
Net remeasurement due to transfers into stage
3
(118)
121
6
9
(127)
121
5
(1)
New originations or purchases
4
40
n/a
n/a
40
46
n/a
n/a
46
Net repayments
5
(8)
1
18
11
34
(6)
15
43
Derecognition of financial assets (excluding
disposals and write-offs)
6
(10)
(18)
(88)
(116)
(10)
(23)
(65)
(98)
Changes to risk, parameters, and models
7
(61)
286
254
479
(135)
284
188
337
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(486)
(486)
–
–
(357)
(357)
Recoveries
–
–
83
83
–
–
74
74
Foreign exchange and other adjustments
15
23
9
47
11
14
4
29
Balance, including off-balance sheet instruments,
at end of period
915
1,345
384
2,644
964
1,235
281
2,480
Less: Allowance for off-balance sheet instruments
8
248
366
–
614
278
361
–
639
Balance at end of period
$
667
$
979
$
384
$
2,030
$
686
$
874
$
281
$
1,841
1
Includes allowance for loan losses related to ACI loans.
2
Transfers represent stage transfer movements prior to ECL remeasurement.
3
Represents the mechanical remeasurement between twelve-month (i.e., Stage 1) and lifetime ECLs (i.e., Stage 2
or 3) due to stage transfers necessitated by credit risk migration, as
described in the “Significant Increase in Credit Risk” section of Note 2 and Note 3 of the Bank’s 2023
Annual Consolidated Financial Statements, holding all other factors impacting the
change in ECLs constant.
4
Represents the increase in the allowance resulting from loans that were newly originated, purchased, or renewed.
5
Represents the changes in the allowance related to cash flow changes associated with new draws or repayments
on loans outstanding.
6
Represents the decrease in the allowance resulting from loans that were fully repaid and excludes the decrease
associated with loans that were disposed or fully written off.
7
Represents the changes in the allowance related to current period changes in risk (e.g.,
PD) caused by changes to macroeconomic factors, level of risk, parameters,
and/or models,
subsequent to stage migration. Refer to the “Measurement of Expected Credit Losses”, “Forward-Looking Information
”
and “Expert Credit Judgment”
sections of Note 2 and Note 3 of the
Bank’s 2023 Annual Consolidated Financial Statements for further details.
8
The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities on the Interim
Consolidated Balance Sheet.
9
Credit cards are considered impaired and migrate to Stage 3 when they are 90 days past due and written off
at 180 days past due. Refer to Note 2 of the Bank’s 2023 Annual
Consolidated Financial Statements for further details.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 66
Allowance for Loan Losses by Stage
(Continued)
(millions of Canadian dollars)
For the three months ended
April 30, 2024
April 30, 2023
Stage 1
Stage 2
Stage 3
1
Total
Stage 1
Stage 2
Stage 3
1
Total
Business and Government
2
Balance, including off-balance sheet instruments,
at beginning of period
$
1,139
$
1,631
$
529
$
3,299
$
1,265
$
1,356
$
366
$
2,987
Provision for credit losses
Transfer to Stage 1
3
52
(52)
–
–
122
(122)
–
–
Transfer to Stage 2
(166)
170
(4)
–
(124)
127
(3)
–
Transfer to Stage 3
(2)
(80)
82
–
(4)
(18)
22
–
Net remeasurement due to transfers into stage
3
(18)
51
1
34
(36)
27
–
(9)
New originations or purchases
3
297
n/a
n/a
297
265
n/a
n/a
265
Net repayments
3
9
(11)
(3)
(5)
28
(18)
(19)
(9)
Derecognition of financial assets (excluding
disposals and write-offs)
3
(161)
(155)
(100)
(416)
(163)
(121)
(106)
(390)
Changes to risk, parameters, and models
3
2
194
190
386
(125)
192
162
229
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(222)
(222)
–
–
(65)
(65)
Recoveries
–
–
15
15
–
–
8
8
Foreign exchange and other adjustments
18
30
(8)
40
33
18
(3)
48
Balance, including off-balance sheet instruments,
at end of period
1,170
1,778
480
3,428
1,261
1,441
362
3,064
Less: Allowance for off-balance sheet instruments
4
145
147
11
303
150
120
3
273
Balance at end of period
1,025
1,631
469
3,125
1,111
1,321
359
2,791
Total Allowance, including
off-balance sheet
instruments, at end of period
2,902
4,483
1,162
8,547
3,016
3,766
862
7,644
Less: Total Allowance for
off-balance sheet
instruments
4
423
568
11
1,002
465
532
3
1,000
Total Allowance for Loan Losses
at end of period
$
2,479
$
3,915
$
1,151
$
7,545
$
2,551
$
3,234
$
859
$
6,644
1
Includes allowance for loan losses related to ACI loans.
2
Includes allowance for loan losses related to customers’ liability under acceptances.
3
For explanations regarding this line item, refer to the “Allowance for Loan Losses by Stage” table on the previous
page in this Note.
4
The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities on the Interim
Consolidated Balance Sheet.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 67
The following table provides details on
the Bank’s allowance for loan losses by stage as
at and for the six months ended April 30,
2024 and April 30, 2023.
Allowance for Loan Losses by Stage
(millions of Canadian dollars)
For the six months ended
April 30, 2024
April 30, 2023
Stage 1
Stage 2
Stage 3
1
Total
Stage 1
Stage 2
Stage 3
1
Total
Residential Mortgages
Balance at beginning of period
$
154
$
192
$
57
$
403
$
127
$
140
$
56
$
323
Provision for credit losses
Transfer to Stage 1
2
68
(65)
(3)
–
56
(55)
(1)
–
Transfer to Stage 2
(17)
28
(11)
–
(14)
23
(9)
–
Transfer to Stage 3
–
(17)
17
–
(1)
(8)
9
–
Net remeasurement due to transfers into stage
3
(14)
13
–
(1)
(11)
11
–
–
New originations or purchases
4
15
n/a
n/a
15
16
n/a
n/a
16
Net repayments
5
(2)
–
–
(2)
(2)
(2)
–
(4)
Derecognition of financial assets (excluding
disposals and write-offs)
6
(3)
(12)
(23)
(38)
(2)
(8)
(6)
(16)
Changes to risk, parameters, and models
7
(71)
74
23
26
(52)
68
4
20
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(4)
(4)
–
–
(5)
(5)
Recoveries
–
–
1
1
–
–
1
1
Foreign exchange and other adjustments
(1)
1
3
3
(1)
–
–
(1)
Balance at end of period
$
129
$
214
$
60
$
403
$
116
$
169
$
49
$
334
Consumer Instalment and Other Personal
Balance, including off-balance sheet instruments,
at beginning of period
$
688
$
1,010
$
197
$
1,895
$
654
$
896
$
154
$
1,704
Provision for credit losses
Transfer to Stage 1
2
273
(271)
(2)
–
306
(303)
(3)
–
Transfer to Stage 2
(130)
172
(42)
–
(100)
137
(37)
–
Transfer to Stage 3
(6)
(122)
128
–
(4)
(95)
99
–
Net remeasurement due to transfers into stage
3
(117)
157
4
44
(101)
103
5
7
New originations or purchases
4
176
n/a
n/a
176
198
n/a
n/a
198
Net repayments
5
(36)
(45)
(7)
(88)
(23)
(44)
(6)
(73)
Derecognition of financial assets (excluding
disposals and write-offs)
6
(33)
(46)
(26)
(105)
(35)
(47)
(17)
(99)
Changes to risk, parameters, and models
7
(126)
294
548
716
(218)
277
353
412
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(717)
(717)
–
–
(520)
(520)
Recoveries
–
–
154
154
–
–
143
143
Foreign exchange and other adjustments
(1)
(3)
1
(3)
(2)
(3)
(1)
(6)
Balance, including off-balance sheet instruments,
at end of period
688
1,146
238
2,072
675
921
170
1,766
Less: Allowance for off-balance sheet instruments
8
30
55
–
85
37
51
–
88
Balance at end of period
$
658
$
1,091
$
238
$
1,987
$
638
$
870
$
170
$
1,678
Credit Card
9
Balance, including off-balance sheet instruments,
at beginning of period
$
988
$
1,277
$
312
$
2,577
$
954
$
1,191
$
207
$
2,352
Provision for credit losses
Transfer to Stage 1
2
509
(494)
(15)
–
569
(558)
(11)
–
Transfer to Stage 2
(176)
212
(36)
–
(162)
188
(26)
–
Transfer to Stage 3
(11)
(462)
473
–
(10)
(343)
353
–
Net remeasurement due to transfers into stage
3
(226)
260
13
47
(266)
248
10
(8)
New originations or purchases
4
79
n/a
n/a
79
97
n/a
n/a
97
Net repayments
5
14
6
35
55
62
1
28
91
Derecognition of financial assets (excluding
disposals and write-offs)
6
(20)
(34)
(172)
(226)
(22)
(41)
(111)
(174)
Changes to risk, parameters, and models
7
(236)
586
548
898
(255)
554
359
658
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(930)
(930)
–
–
(671)
(671)
Recoveries
–
–
158
158
–
–
143
143
Foreign exchange and other adjustments
(6)
(6)
(2)
(14)
(3)
(5)
–
(8)
Balance, including off-balance sheet instruments,
at end of period
915
1,345
384
2,644
964
1,235
281
2,480
Less: Allowance for off-balance sheet instruments
8
248
366
–
614
278
361
–
639
Balance at end of period
$
667
$
979
$
384
$
2,030
$
686
$
874
$
281
$
1,841
1
Includes allowance for loan losses related to ACI loans.
2
Transfers represent stage transfer movements prior to ECL remeasurement.
3
Represents the mechanical remeasurement between twelve-month (i.e., Stage 1) and lifetime ECLs (i.e., Stage 2
or 3) due to stage transfers necessitated by credit risk migration, as
described in the “Significant Increase in Credit Risk” section of Note 2 and Note 3 of the Bank’s 2023
Annual Consolidated Financial Statements, holding all other factors impacting the
change in ECLs constant.
4
Represents the increase in the allowance resulting from loans that were newly originated, purchased, or renewed.
5
Represents the changes in the allowance related to cash flow changes associated with new draws or repayments
on loans outstanding.
6
Represents the decrease in the allowance resulting from loans that were fully repaid and excludes the decrease
associated with loans that were disposed or fully written off.
7
Represents the changes in the allowance related to current period changes in risk (e.g.,
PD) caused by changes to macroeconomic factors, level of risk, parameters,
and/or models,
subsequent to stage migration. Refer to the “Measurement of Expected Credit Losses”, “Forward-Looking Information
”
and “Expert Credit Judgment”
sections of Note 2 and Note 3 of the
Bank’s 2023 Annual Consolidated Financial Statements for further details.
8
The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities on the Interim
Consolidated Balance Sheet.
9
Credit cards are considered impaired and migrate to Stage 3 when they are 90 days past due and written off
at 180 days past due. Refer to Note 2 of the Bank’s 2023 Annual
Consolidated Financial Statements for further details.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 68
Allowance for Loan Losses by Stage
(Continued)
(millions of Canadian dollars)
For the six months ended
April 30, 2024
April 30, 2023
Stage 1
Stage 2
Stage 3
1
Total
Stage 1
Stage 2
Stage 3
1
Total
Business and Government
2
Balance, including off-balance sheet instruments,
at beginning of period
$
1,319
$
1,521
$
470
$
3,310
$
1,220
$
1,417
$
347
$
2,984
Provision for credit losses
Transfer to Stage 1
3
114
(114)
–
–
222
(220)
(2)
–
Transfer to Stage 2
(283)
290
(7)
–
(283)
289
(6)
–
Transfer to Stage 3
(16)
(135)
151
–
(9)
(39)
48
–
Net remeasurement due to transfers into stage
3
(39)
93
5
59
(64)
51
–
(13)
New originations or purchases
3
568
n/a
n/a
568
597
n/a
n/a
597
Net repayments
3
17
(19)
(29)
(31)
32
(39)
(43)
(50)
Derecognition of financial assets (excluding
disposals and write-offs)
3
(333)
(254)
(145)
(732)
(351)
(272)
(239)
(862)
Changes to risk, parameters, and models
3
(160)
396
377
613
(116)
256
353
493
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(346)
(346)
–
–
(108)
(108)
Recoveries
–
–
26
26
–
–
20
20
Foreign exchange and other adjustments
(17)
–
(22)
(39)
13
(2)
(8)
3
Balance, including off-balance sheet instruments,
at end of period
1,170
1,778
480
3,428
1,261
1,441
362
3,064
Less: Allowance for off-balance sheet instruments
4
145
147
11
303
150
120
3
273
Balance at end of period
1,025
1,631
469
3,125
1,111
1,321
359
2,791
Total Allowance, including
off-balance sheet
instruments, at end of period
2,902
4,483
1,162
8,547
3,016
3,766
862
7,644
Less: Total Allowance for
off-balance sheet
instruments
4
423
568
11
1,002
465
532
3
1,000
Total Allowance for Loan Losses
at end of period
$
2,479
$
3,915
$
1,151
$
7,545
$
2,551
$
3,234
$
859
$
6,644
1
Includes allowance for loan losses related to ACI loans.
2
Includes allowance for loan losses related to customers’ liability under acceptances.
3
For explanations regarding this line item, refer to the “Allowance for Loan Losses by Stage” table on the previous
page in this Note.
4
The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities on the Interim
Consolidated Balance Sheet.
The allowance for credit losses on all remaining
financial assets is not significant.
(e)
FORWARD-LOOKING INFORMATION
Relevant macroeconomic factors are incorporated
in risk parameters as appropriate. Additional
risk factors that are industry or segment
specific are also
incorporated, where relevant. The key macroeconomic
variables used in determining ECLs include
regional unemployment rates for all retail exposures
and
regional housing price indices for residential
mortgages and home equity lines of credit.
For business and government loans, the key
macroeconomic variables
include gross domestic product (GDP), unemployment
rates, interest rates, and credit spreads.
Refer to Note 3 of the Bank’s 2023 Annual
Consolidated Financial
Statements for a discussion of how forward-looking
information is generated and considered
in determining whether there has been
a significant increase in credit
risk and in measuring ECLs.
Macroeconomic Variables
Select macroeconomic variables are projected
over the forecast period. The following
table sets out average values of the macroeconomic
variables over the four
calendar quarters starting with the current
quarter, and the remaining 4-year forecast period for the base
forecast and upside and downside scenarios
used in
determining the Bank’s ECLs as at April 30, 2024.
As the forecast period increases, information
about the future becomes less readily
available and projections
are anchored on assumptions around structural
relationships between economic parameters
that are inherently much less certain. Restrictive
monetary policy is
contributing to elevated economic uncertainty, particularly in Canada
where household debt levels remain elevated,
and is likely to continue to weigh on near-term
economic growth and lead to a modest increase
in the unemployment rate.
Macroeconomic Variables
As at
April 30, 2024
Base Forecast
Upside Scenario
Downside Scenario
Average
Remaining
Average
Remaining
Average
Remaining
Q2 2024-
4-year
Q2 2024-
4-year
Q2 2024-
4-year
Q1 2025
1
period
1
Q1 2025
1
period
1
Q1 2025
1
period
1
Unemployment rate
Canada
6.5
%
6.1
%
5.8
%
5.8
%
7.3
%
7.3
%
United States
4.1
4.0
3.8
3.9
5.1
5.3
Real GDP
Canada
1.1
1.9
1.5
1.9
(0.8)
2.2
United States
2.0
1.9
2.6
1.9
–
2.2
Home prices
Canada (average existing price)
2
1.5
2.9
1.9
2.9
(9.6)
3.2
United States (CoreLogic HPI)
3
3.0
2.7
3.5
2.8
(8.2)
4.0
Central bank policy interest rate
Canada
4.25
2.31
4.88
2.44
3.50
1.78
United States
4.94
2.84
5.38
2.94
4.00
2.28
U.S. 10-year treasury yield
3.86
3.21
4.20
3.32
3.67
3.17
U.S. 10-year BBB spread (%-pts)
1.70
1.81
1.49
1.74
2.40
2.09
Exchange rate (U.S. dollar/Canadian dollar)
$
0.74
$
0.80
$
0.77
$
0.81
$
0.71
$
0.74
1
The numbers represent average values for the quoted periods, and average of year-on-year growth for real GDP and home prices.
2
The average home price is the average transacted sale price of homes sold via the Multiple Listing Service; data is collected by the Canadian Real Estate Association.
3
The CoreLogic home price index (HPI) is a repeat-sales index which tracks increases and decreases in the same home’s sales price over time.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 69
(f)
SENSITIVITY OF ALLOWANCE FOR CREDIT LOSSES
ECLs are sensitive to the inputs used in internally
developed models, the macroeconomic
variables in the forward-looking forecasts
and respective probability
weightings in determining the probability-weighted
ECLs, and other factors considered when
applying expert credit judgment. Changes
in these inputs,
assumptions, models, and judgments would
affect the assessment of significant increase
in credit risk and the measurement of ECLs.
The following table presents the base ECL
scenario compared to the probability-weighted
ECLs, with the latter derived from
three ECL scenarios for performing
loans and off-balance sheet instruments. The difference
reflects the impact of deriving multiple
scenarios around the base ECLs and resultant
change in ECLs due
to non-linearity and sensitivity to using
macroeconomic forecasts.
Change from Base to Probability-Weighted
ECLs
(millions of Canadian dollars, except
as noted)
As at
April 30, 2024
October 31, 2023
Probability-weighted ECLs
$
7,385
$
7,149
Base ECLs
6,849
6,658
Difference – in amount
$
536
$
491
Difference – in percentage
7.8
%
7.4
%
ECLs for performing loans and off-balance sheet
instruments consist of an aggregate amount
of Stage 1 and Stage 2 probability-weighted
ECLs which are twelve-
month ECLs and lifetime ECLs, respectively. Transfers from Stage 1 to Stage
2 ECLs result from a significant increase
in credit risk since initial recognition
of the
loan.
The following table shows the estimated
impact of staging on ECLs by presenting
all performing loans and off-balance sheet instruments
calculated using
twelve-month ECLs compared to the current
aggregate probability-weighted ECLs, holding
all risk profiles constant.
Incremental Lifetime ECLs Impact
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
Probability-weighted ECLs
$
7,385
$
7,149
All performing loans and off-balance sheet instruments
using 12-month ECLs
5,403
5,295
Incremental lifetime ECLs impact
$
1,982
$
1,854
(g)
FORECLOSED ASSETS
Foreclosed assets are repossessed non-financial
assets where the Bank gains title, ownership,
or possession of individual properties,
such as real estate
properties, which are managed for sale in an
orderly manner with the proceeds used
to reduce or repay any outstanding debt.
The Bank does not generally occupy
foreclosed properties for its business use.
The Bank predominantly relies on third-party
appraisals to determine the carrying value of
foreclosed assets.
Foreclosed
assets held for sale were $
76
million as at April 30, 2024 (October 31, 2023 – $
59
million) and were recorded in Other assets
on the Interim Consolidated Balance
Sheet.
(h)
LOANS PAST DUE BUT NOT IMPAIRED
A loan is classified as past due when a borrower
has failed to make a payment by the contractual
due date.
The following table summarizes loans that
are past
due but not impaired.
Loans less than 31 days contractually past
due are excluded as they do not generally
reflect a borrower’s ability to meet
their payment
obligations.
Loans Past Due but not Impaired
1
(millions of Canadian dollars)
As at
April 30, 2024
October 31, 2023
31-60
61-89
31-60
61-89
days
days
Total
days
days
Total
Residential mortgages
$
284
$
97
$
381
$
286
$
81
$
367
Consumer instalment and other personal
862
330
1,192
870
287
1,157
Credit card
337
245
582
359
242
601
Business and government
234
121
355
264
103
367
Total
$
1,717
$
793
$
2,510
$
1,779
$
713
$
2,492
1
Includes loans that are measured at FVOCI.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 70
NOTE 7: INVESTMENT IN ASSOCIATES AND JOINT VENTURES
INVESTMENT IN THE CHARLES SCHWAB CORPORATION
The Bank has significant influence over
The Charles Schwab Corporation (“Schwab”)
and the ability to participate in the financial
and operating policy-making
decisions of Schwab through a combination
of the Bank’s ownership, board representation
and the insured deposit account agreement
between the Bank and
Schwab. As such, the Bank accounts for its
investment in Schwab using the equity
method. The Bank’s share of Schwab’s earnings available
to common
shareholders is reported with a one-month
lag. The Bank takes into account changes
in the one-month lag period that would
significantly affect the results.
As at April 30, 2024, the Bank’s reported investment
in Schwab was approximately
12.3
% (October 31, 2023 –
12.4
%), consisting of
9.8
% of the outstanding
voting common shares and the remainder
in non-voting common shares of Schwab
with an aggregate fair value of $
23
billion (US$
17
billion) (October 31, 2023 –
$
16
billion (US$
12
billion)) based on the closing price of US$
73.95
(October 31, 2023 – US$
52.04
) on the New York Stock Exchange.
The Bank and Schwab are party to a stockholder
agreement (the “Stockholder Agreement”)
under which the Bank has the right
to designate two members of
Schwab’s Board of Directors and has representation
on two Board Committees, subject to
the Bank meeting certain conditions. The Bank’s designated
directors
currently are the Bank’s Group President and
Chief Executive Officer and the Bank’s former Chair
of the Board. Under the Stockholder Agreement,
the Bank is not
permitted to own more than
9.9
% voting common shares of Schwab,
and the Bank is subject to customary
standstill restrictions and subject to certain exceptions,
transfer restrictions.
The carrying value of the Bank’s investment in
Schwab of $
9.9
billion as at April 30, 2024 (October 31,
2023 – $
8.9
billion) represents the Bank’s share of
Schwab’s stockholders’ equity, adjusted for goodwill, other intangibles,
and cumulative translation adjustment.
The Bank’s share of net income from its investment
in Schwab of $
194
million and $
335
million during the three and six months ended
April 30, 2024, respectively (three and
six months ended April 30, 2023 –
$
241
million and $
526
million, respectively), reflects net income
after adjustments for amortization of
certain intangibles net of tax.
The following tables represent the gross
amount of Schwab’s total assets, liabilities,
net revenues, net income available to common
stockholders, other
comprehensive income (loss), and comprehensive
income (loss).
Summarized Financial Information
(millions of Canadian dollars)
As at
March 31
September 30
2024
2023
Total assets
$
634,593
$
644,139
Total liabilities
577,180
592,923
(millions of Canadian dollars)
For the three months ended
For the six months ended
March 31
March 31
March 31
March 31
2024
2023
2024
2023
Total net revenues
$
6,393
$
6,915
$
12,466
$
14,380
Total net income available to common stockholders
1,687
2,072
2,948
4,544
Total other comprehensive income (loss)
749
2,610
4,319
3,331
Total comprehensive income (loss)
2,436
4,682
7,267
7,875
Insured Deposit Account (“IDA”) Agreement
On November 25, 2019, the Bank and Schwab
signed an insured deposit account agreement
(the “2019 Schwab IDA Agreement”), with
an initial expiration date of
July 1, 2031. Under the 2019 Schwab IDA Agreement,
starting July 1, 2021, Schwab had the option
to reduce the deposits by up to US$
10
billion per year (subject
to certain limitations and adjustments),
with a floor of US$
50
billion. In addition, Schwab requested some
further operational flexibility to allow for
the sweep
deposit balances to fluctuate over time, under
certain conditions and subject to certain limitations.
On May 4, 2023, the Bank and Schwab entered
into an amended insured deposit account
agreement (the “2023 Schwab IDA Agreement”
or the “Schwab IDA
Agreement”), which replaced the 2019 Schwab
IDA Agreement. Pursuant to the 2023 Schwab
IDA Agreement, the Bank continues to make
sweep deposit
accounts available to clients of Schwab. Schwab
designates a portion of the deposits
with the Bank as fixed-rate obligation amounts
(FROA). Remaining deposits
over FROA are designated as floating-rate
obligations. In comparison to the 2019 Schwab
IDA Agreement, the 2023 Schwab IDA Agreement
extends the initial
expiration date by three years to July 1, 2034
and provides for lower deposit balances
in its first six years, followed by higher balances
in the later years.
Specifically, until September 2025, the aggregate FROA will serve
as the floor. Thereafter, the floor will be set at US$
60
billion. In addition, Schwab has the option
to buy down up to $
6.8
billion (US$
5
billion) of FROA by paying the Bank certain
fees in accordance with the 2023 Schwab IDA
Agreement, subject to certain
limits. Refer to Note 27 of the Bank’s 2023
Annual Consolidated Financial Statements
for further details on the Schwab IDA Agreement.
During the first quarter of 2024, Schwab exercised
its option to buy down the remaining $
0.7
billion (US$
0.5
billion) of the US$
5
billion FROA buydown
allowance and paid $
32
million (US$
23
million) in termination fees to the Bank in accordance
with the 2023 Schwab IDA Agreement. By the
end of the first quarter
of 2024, Schwab had completed its buy down
of the full US$
5
billion FROA buydown allowance and had paid
a total of $
337
million (US$
250
million) in termination
fees to the Bank. The fees were intended to
compensate the Bank for losses incurred
from discontinuing certain hedging relationships
and for lost revenues. The
net impact was recorded in net interest income.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 71
NOTE 8: SIGNIFICANT TRANSACTION
Acquisition of Cowen Inc.
On March 1, 2023, the Bank completed
the acquisition of Cowen Inc. (“Cowen”). The acquisition
advances the Wholesale Banking segment’s long-term
growth
strategy in the U.S. and adds complementary
products and services to the Bank’s existing
businesses. The results of the acquired
business have been
consolidated by the Bank from the closing date
and primarily reported in the Wholesale
Banking segment. Consideration included
$
1,500
million
(US$
1,100
million) in cash for
100
% of Cowen’s common shares outstanding, $
253
million (US$
186
million) for the settlement of Cowen’s Series A Preferred
Stock, and $
205
million (US$
151
million) related to the replacement of
share-based payment awards.
The acquisition was accounted for as a business
combination under the purchase method.
The acquisition contributed $
10,793
million (US$
7,928
million) of
assets and $
10,005
million (US$
7,351
million) of liabilities. The excess of accounting
consideration over the fair value of the
tangible net assets acquired was
allocated to intangible assets of $
298
million (US$
219
million) net of taxes, and goodwill of $
872
million (US$
641
million). Goodwill is not deductible
for tax
purposes.
The Bank plans to dispose of certain non-core
businesses that were acquired in connection
with the Cowen acquisition. These non-core businesses
are
disposal groups which meet the criteria
to be classified as held for sale and are measured
at the lower of their carrying amount and
fair value less costs to sell. The
assets and liabilities of these disposal groups
are recorded in Other assets and Other
liabilities, respectively, on the Interim Consolidated Balance Sheet.
During
the three months ended January 31, 2024,
the Bank disposed of Cowen’s legacy prime brokerage
and outsourced trading business that
was classified as held for
sale. As at April 30, 2024, assets of $
736
million (October 31, 2023 – $
1,958
million) and liabilities of $
320
million (October 31, 2023 – $
1,291
million) were
classified as held for sale.
NOTE 9: OTHER ASSETS
Other Assets
(millions of Canadian dollars)
As at
April 30
October 31
2024
2023
Accounts receivable and other items
1
$
13,309
$
13,893
Accrued interest
5,580
5,504
Current income tax receivable
4,259
4,814
Defined benefit asset
936
1,254
Reinsurance contract assets
719
702
Prepaid expenses
2
1,607
1,462
Total
2
$
26,410
$
27,629
1
Includes assets related to disposal groups classified as held for sale in connection with the Cowen acquisition. Refer
to Note 8 for further details.
2
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 2 for details.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 72
NOTE 10: DEPOSITS
Demand deposits are those for which the Bank does not have the right to require notice prior to withdrawal, which primarily include
business and government
chequing accounts. Notice deposits are those for which the Bank can legally require notice prior to withdrawal,
which include both savings and chequing
accounts. Term
deposits are payable on a given date of maturity and are purchased by customers to earn interest over a fixed period, with terms ranging from
one day to ten years and generally include fixed term deposits, guaranteed investment certificates, senior debt, and similar
instruments. The aggregate amount
of term deposits in denominations of $100,000 or more as at April 30, 2024, was $
518
billion (October 31, 2023 – $
512
billion).
Deposits
(millions of Canadian dollars)
As at
April 30
October 31
By Type
By Country
2024
2023
Demand
Notice
Term
1
Canada
United States
International
Total
Total
Personal
$
16,583
$
475,841
$
136,559
$
331,478
$
297,505
$
–
$
628,983
$
626,596
Banks
11,986
397
20,080
20,385
11,222
856
32,463
31,225
Business and government
2
133,913
188,769
219,643
381,588
157,482
3,255
542,325
540,369
162,482
665,007
376,282
733,451
466,209
4,111
1,203,771
1,198,190
Trading
–
–
31,221
23,623
2,667
4,931
31,221
30,980
Designated at fair value through
profit or loss
3
–
–
187,885
49,127
70,510
68,248
187,885
191,988
Total
$
162,482
$
665,007
$
595,388
$
806,201
$
539,386
$
77,290
$
1,422,877
$
1,421,158
Non-interest-bearing deposits
included above
4
Canada
$
55,617
$
61,581
United States
72,766
76,376
International
–
23
Interest-bearing deposits
included above
4
Canada
750,584
712,283
United States
5
466,620
482,247
International
77,290
88,648
Total
2,6
$
1,422,877
$
1,421,158
1
Includes $
101.1
billion (October 31, 2023 – $
103.3
billion) of senior debt which is subject to the bank recapitalization “bail-in” regime. This regime provides
certain statutory powers to the
Canada Deposit Insurance Corporation, including the ability to convert specified eligible shares and liabilities into
common shares in the event that the Bank becomes non-viable.
2
Includes $
66.1
billion relating to covered bondholders (October 31, 2023 – $
57.0
billion).
3
Financial liabilities designated at FVTPL on the Consolidated Balance Sheet also includes $
219.9
million (October 31, 2023 – $
142.3
million) of loan commitments and financial
guarantees designated at FVTPL.
4
The geographical splits of the deposits are based on the point of origin of the deposits.
5
Includes $
9.6
billion (October 31, 2023 – $
13.9
billion) of U.S. federal funds deposited and $
11.0
billion (October 31, 2023 – $
9.0
billion) of deposits and advances with the FHLB.
6
Includes deposits of $
765.0
billion (October 31, 2023 – $
779.9
billion) denominated in U.S. dollars and $
119.4
billion (October 31, 2023 – $
115.0
billion) denominated in other foreign
currencies.
NOTE 11: OTHER LIABILITIES
Other Liabilities
(millions of Canadian dollars)
As at
April 30
October 31
2024
2023
Accounts payable, accrued expenses, and
other items
1,2
$
7,350
$
8,314
Accrued interest
4,867
4,421
Accrued salaries and employee benefits
4,166
4,993
Cheques and other items in transit
2
1,386
2,245
Current income tax payable
127
162
Deferred tax liabilities
213
204
Defined benefit liability
1,297
1,244
Lease liabilities
5,116
5,050
Liabilities related to structured entities
19,180
17,520
Provisions
(Note 19)
4,448
3,421
Total
2
$
48,150
$
47,574
1
Includes liabilities related to disposal groups classified as held for sale in connection with the Cowen acquisition.
Refer to Note 8 for further details.
2
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 2 for details.
NOTE 12: SUBORDINATED NOTES AND DEBENTURES
Issues
On April 9, 2024, the Bank issued $
1.75
billion of non-viability contingent capital
(NVCC) medium-term notes constituting
subordinated indebtedness of the Bank
(the “Notes”), maturing on April 9, 2034.
The Notes will bear interest at a fixed rate of
5.177
% per annum (paid semi-annually) until
April 9, 2029, and at
Daily
Compounded Canadian Overnight Repo Rate Average
plus
1.53
% thereafter (paid quarterly) until maturity
on April 9, 2034. With the prior approval
of OSFI, the
Bank may, at its option, redeem the Notes on or after April 9, 2029,
in whole or in part, at par plus accrued and unpaid
interest by giving not more than
60
nor less
than
10
days’ notice to holders.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 73
NOTE 13: EQUITY
The following table summarizes the changes
to the shares and other equity instruments
issued and outstanding,
and treasury instruments held as at and
for the
three and six months ended April 30, 2024 and
April 30, 2023.
Shares and Other Equity Instruments
Issued and Outstanding and Treasury Instruments
Held
(millions of shares or other equity instruments
and millions of Canadian dollars)
For the three months ended
For the six months ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Number
Number
Number
Number
of shares
Amount
of shares
Amount
of shares
Amount
of shares
Amount
Common Shares
Balance as at beginning of period
1,772.8
$
25,318
1,830.0
$
25,094
1,791.4
$
25,434
1,821.7
$
24,363
Proceeds from shares issued on exercise
of stock options
0.4
24
0.7
45
1.0
66
1.1
71
Shares issued as a result of dividend
reinvestment plan
1.6
132
8.9
713
3.3
269
16.8
1,418
Purchase of shares for cancellation and other
(15.2)
(217)
–
–
(36.1)
(512)
–
–
Balance as at end of period – common shares
1,759.6
$
25,257
1,839.6
$
25,852
1,759.6
$
25,257
1,839.6
$
25,852
Preferred Shares and Other Equity Instruments
Preferred Shares – Class A
Balance as at beginning of period
143.6
$
5,200
159.6
$
5,600
143.6
$
5,200
159.6
$
5,600
Redemption of shares
1
(14.0)
(350)
–
–
(14.0)
(350)
–
–
Balance as at end of period
129.6
$
4,850
159.6
$
5,600
129.6
$
4,850
159.6
$
5,600
Other Equity Instruments
2
Balance
as at beginning and end of period
5.0
$
5,653
5.0
$
5,653
5.0
$
5,653
5.0
$
5,653
Balance as at end of period – preferred
shares
and other equity instruments
134.6
$
10,503
164.6
$
11,253
134.6
$
10,503
164.6
$
11,253
Treasury – common shares
3
Balance
as at beginning of period
0.7
$
(58)
1.1
$
(103)
0.7
$
(64)
1.0
$
(91)
Purchase of shares
26.7
(2,154)
26.5
(2,235)
64.2
(5,250)
46.9
(4,051)
Sale of shares
(27.1)
2,188
(26.5)
2,239
(64.6)
5,290
(46.8)
4,043
Balance as at end of period – treasury
– common shares
0.3
$
(24)
1.1
$
(99)
0.3
$
(24)
1.1
$
(99)
Treasury – preferred shares and
other equity instruments
3
Balance as at beginning of period
0.1
$
(27)
0.1
$
(9)
0.1
$
(65)
0.1
$
(7)
Purchase of shares and other equity instruments
1.5
(153)
1.0
(185)
3.2
(251)
2.0
(326)
Sale of shares and other equity instruments
(1.5)
172
(1.0)
184
(3.2)
308
(2.0)
323
Balance as at end of period – treasury
– preferred shares and other equity
instruments
0.1
$
(8)
0.1
$
(10)
0.1
$
(8)
0.1
$
(10)
1
On April 30, 2024, the Bank redeemed all of its
14
million outstanding Non-Cumulative 5-Year
Rate Reset Class A First Preferred Shares NVCC, Series 22 (“Series 22 Preferred Shares”),
at a redemption price of $
25.00
per Series 22 Preferred Share, for a total redemption cost of $
350
million.
2
For Limited Recourse Capital Notes, the number of shares represents the number of notes issued.
3
When the Bank purchases its own equity instruments as part of its trading business, they are classified as treasury
instruments and the cost of these instruments is recorded as a
reduction in equity.
DIVIDENDS
On May 22, 2024, the Board approved a dividend
in an amount of one dollar and two cents
($
1.02
) per fully paid common share in the
capital stock of the Bank for
the quarter ending July 31, 2024, payable on
and after July 31, 2024, to shareholders
of record at the close of business on July 10,
2024.
DIVIDEND REINVESTMENT PLAN
The Bank offers a dividend reinvestment plan
for its common shareholders. Participation in
the plan is optional and under the terms of the
plan, cash dividends on
common shares are used to purchase additional
common shares. At the option of the Bank,
the common shares may be issued from treasury
at an average
market price based on the last five trading
days before the date of the dividend payment,
with a discount of between
0
% to
5
% at the Bank’s discretion or
purchased from the open market at market
price.
During the three and six months ended April 30,
2024, the Bank issued
1.6
million and
3.3
million common shares, respectively, from treasury with no discount.
During the three and six months ended April 30,
2023, the Bank issued
8.9
million and
16.8
million common shares, respectively, from treasury with a
2
% discount.
NORMAL COURSE ISSUER BID
On August 28, 2023,
the Bank
announced that the Toronto Stock Exchange and OSFI approved a normal
course issuer bid (NCIB) to repurchase
for cancellation
up to
90
million of its common shares. The NCIB commenced
on August 31, 2023, and during the
three months ended April 30, 2024, the Bank
repurchased
15.2
million common shares under the NCIB, at
an average price of $
80.10
per share for a total amount of $
1.2
billion. During the six months ended April
30, 2024,
the Bank repurchased
36.1
million common shares under the NCIB, at an
average price of $
81.43
per share for a total amount of $
2.9
billion. From the
commencement of the NCIB to April
30, 2024, the Bank repurchased
58
million shares under the program.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 74
NOTE 14: INSURANCE
(a)
INSURANCE SERVICE RESULT
Insurance revenue and expenses are presented
on the Interim Consolidated Statement
of Income under Insurance revenue and Insurance
service expenses,
respectively. Net income or expense from reinsurance is presented
in other income (loss).
The following table presents components of the
insurance service result
presented on the Interim Consolidated Statement
of Income for the Bank which includes
the results of property and casualty insurance,
life and health insurance,
as well as reinsurance issued and held in
Canada and internationally.
Insurance Service Result
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Insurance revenue
$
1,665
$
1,514
$
3,341
$
3,056
Insurance service expenses
1,248
1,118
2,614
2,282
Insurance service result before reinsurance
contracts held
417
396
727
774
Net income (expense) from reinsurance
contracts held
(31)
(38)
(19)
(84)
Insurance service result
$
386
$
358
$
708
$
690
For the three and six months ended April
30, 2024, the Bank recognized insurance
finance expenses of $
58
million and $
180
million, respectively (three and six
months ended April 30, 2023 – $
59
million and $
184
million, respectively), from insurance and
reinsurance contracts in other income
(loss). The Bank’s investment
return on securities supporting insurance
contracts is comprised of interest income reported
in net interest income and fair value changes
reported in other income
(loss). Investment return on securities supporting
insurance contracts was $
35
million and $
163
million, respectively, for the three and six months ended
April 30, 2024 (three and six months ended
April 30, 2023 – $
56
million and $
206
million, respectively).
(b)
INSURANCE CONTRACT LIABILITIES
Insurance contract liabilities are comprised
of amounts related to the LRC, LIC and
other insurance liabilities.
The following table presents LRC and LIC balances
for property and casualty insurance contracts.
Property and casualty insurance contract liabilities by
LRC and LIC
(millions of Canadian dollars)
As at
April 30, 2024
April 30, 2023
Liability for
Liability for
Liability for
Liability for
remaining coverage
incurred claims
Total
remaining coverage
incurred claims
Total
Estimates
Estimates
of the
of the
present
present
Excluding
value of
Excluding
value of
loss
Loss
future
Risk
loss
Loss
future
Risk
component
component
cash flows
adjustment
component
component
cash flows
adjustment
Balance at beginning of period
Insurance contract liabilities
$
630
$
129
$
4,740
$
220
$
5,719
$
623
$
113
$
4,700
$
208
$
5,644
Balance at end of period
Insurance contract liabilities
$
630
$
119
$
4,723
$
220
$
5,692
$
551
$
130
$
4,608
$
206
$
5,495
For property and casualty contracts,
during the three and six months ended April
30, 2024, the Bank recognized insurance
revenue of $
1,305
million and
$
2,631
million, respectively (three and six months
ended April 30, 2023 – $
1,170
million and $
2,358
million, respectively), insurance service expenses
of
$
1,033
million and $
2,204
million, respectively (three and six months ended
April 30, 2023 – $
925
million and $
1,903
million, respectively), and insurance finance
expenses of $
77
million and $
198
million, respectively (three and six months ended
April 30, 2023 – $
79
million and $
200
million, respectively).
Other insurance liabilities were $
132
million as at April 30, 2024 (October 31, 2023 –
$
127
million) and include life and health insurance
contract liabilities of
$
112
million (October 31, 2023 – $
124
million).
(c)
RISK ADJUSTMENT FOR NON-FINANCIAL
RISK AND DISCOUNTING
The risk adjustment reflects an amount that
an insurer would rationally pay to remove
the uncertainty that future cash flows
will exceed the expected value amount.
The Bank has estimated the risk adjustment
for its property and casualty operations’
LIC using statistical techniques in accordance
with Canadian accepted
actuarial principles to develop potential future observations
and a confidence level of 90th percentile.
Insurance contract liabilities are calculated
by discounting expected future cash flows.
The interest rates used to discount the Bank’s
insurance balances over a
duration of
1
to
10 years
range from
5.3
% to
4.9
% as at April 30, 2024 (October 31, 2023 –
5.7
% to
5.5
%).
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 75
NOTE 15: SHARE-BASED COMPENSATION
For the three and six months ended April
30, 2024, the Bank recognized compensation
expense for stock option awards of $
10.4
million and $
20.5
million,
respectively (three and six months ended April
30, 2023 – $
9.6
million and $
22.2
million, respectively). During the three months
ended April 30, 2024 and
April 30, 2023,
nil
stock options were granted by the Bank.
During the six months ended April 30, 2024,
2.5
million (six months ended April 30, 2023 –
2.5
million)
stock options were granted by the Bank at
a weighted-average fair value of $
14.36
per option (April 30, 2023 – $
14.70
per option).
The following table summarizes the assumptions
used for estimating the fair value of options
for the six months ended April 30, 2024 and
April 30, 2023.
Assumptions Used for Estimating the
Fair Value of Options
(in Canadian dollars, except as noted)
For the six months ended
April 30
April 30
2024
2023
Risk-free interest rate
3.41
%
2.87
%
Option contractual life
10 years
10 years
Expected volatility
18.92
%
18.43
%
Expected dividend yield
3.78
%
3.69
%
Exercise price/share price
$
81.78
$
90.55
The risk-free interest rate is based on Government
of Canada benchmark bond yields as
at the grant date. Expected volatility is
calculated based on the historical
average daily volatility and expected dividend
yield is based on dividend payouts in the last
fiscal year. These assumptions are measured over a period
corresponding to the option contractual life.
NOTE 16: EMPLOYEE BENEFITS
The following table summarizes expenses for
the Bank’s principal pension and non-pension
post-retirement defined benefit plans
and the Bank’s other material
defined benefit pension plans, for the
three and six months ended April 30, 2024 and
April 30, 2023. Other employee defined
benefit plans operated by the Bank
and certain of its subsidiaries are not considered
material for disclosure purposes.
Defined Benefit Plan Expenses
(millions of Canadian dollars)
Principal post-retirement
Principal pension plans
benefit plan
Other pension plans
1
For the three months ended
April 30
April 30
April 30
April 30
April 30
April 30
2024
2023
2024
2023
2024
2023
Service cost – benefits earned
$
54
$
62
$
1
$
1
$
4
$
4
Net interest cost (income) on net defined
benefit liability (asset)
(21)
(25)
5
5
6
5
Interest cost on asset limitation and minimum
funding
requirement
3
5
–
–
1
1
Past service cost
2
35
–
–
–
–
–
Defined benefit administrative expenses
2
3
–
–
1
2
Total
$
73
$
45
$
6
$
6
$
12
$
12
For the six months ended
April 30
April 30
April 30
April 30
April 30
April 30
2024
2023
2024
2023
2024
2023
Service cost – benefits earned
$
108
$
124
$
2
$
2
$
8
$
8
Net interest cost (income) on net defined
benefit liability (asset)
(41)
(50)
10
10
12
11
Interest cost on asset limitation and minimum
funding
requirement
6
10
–
–
2
2
Past service cost
2
35
–
–
–
–
–
Defined benefit administrative expenses
4
5
–
–
2
3
Total
$
112
$
89
$
12
$
12
$
24
$
24
1
Includes Canada Trust defined benefit pension plan, TD Banknorth defined benefit pension
plan, TD Auto Finance defined benefit pension plan, TD Insurance defined benefit pension
plan, and supplemental executive defined benefit pension plans.
2
Relates to the Pension Fund Society that was modified during the quarter.
The following table summarizes expenses for
the Bank’s defined contribution plans for the three
and six months ended April 30, 2024 and
April 30, 2023.
Defined Contribution Plan Expenses
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
April 30
April 30
April 30
2024
2023
2024
2023
Defined contribution pension plans
1
$
73
$
62
$
158
$
126
Government pension plans
2
132
121
329
294
Total
$
205
$
183
$
487
$
420
1
Includes defined contribution portion of the TD Pension Plan (Canada) and TD Bank, N.A. defined contribution 401(k)
plan.
2
Includes Canada Pension Plan, Quebec Pension Plan, and Social Security under the U.S.
Federal Insurance Contributions Act
.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 76
The following table summarizes the remeasurements
recognized in OCI for the Bank’s principal pension
and post-retirement defined benefit plans and
certain of
the Bank’s other material defined benefit pension
plans, for the three and six months ended
April 30, 2024 and April
30, 2023.
Amounts Recognized in Other Comprehensive
Income for Remeasurement of Defined
Benefit Plans
1,2,3
(millions of Canadian dollars)
Principal post-retirement
Principal pension plans
benefit plan
Other pension plans
For the three months ended
April 30
April 30
April 30
April 30
April 30
April 30
2024
2023
2024
2023
2024
2023
Remeasurement gain/(loss) – financial
$
439
$
(147)
$
13
$
(3)
$
18
$
–
Remeasurement gain/(loss) – return on plan
assets less
interest income
(524)
38
–
–
–
–
Change in asset limitation and minimum
funding requirement
24
63
–
–
–
–
Total
$
(61)
$
(46)
$
13
$
(3)
$
18
$
–
For the six months ended
April 30
April 30
April 30
April 30
April 30
April 30
2024
2023
2024
2023
2024
2023
Remeasurement gain/(loss) – financial
$
(685)
$
(529)
$
(23)
$
(27)
$
(25)
$
–
Remeasurement gain/(loss) – return on plan
assets less
interest income
276
424
–
–
–
–
Change in asset limitation and minimum
funding requirement
200
179
–
–
–
–
Total
$
(209)
$
74
$
(23)
$
(27)
$
(25)
$
–
1
Excludes the Canada Trust defined benefit pension plan, TD Banknorth defined benefit
pension plan, TD Auto Finance defined benefit pension plan, TD Insurance defined benefit pension
plan, and other employee defined benefit plans operated by the Bank and certain of its subsidiaries not considered
material for disclosure purposes as these plans are not remeasured on
a quarterly basis.
2
Changes in discount rates and return on plan assets are reviewed and updated on a quarterly basis. All other assumptions
are updated annually.
3
Amounts are presented on a pre-tax basis.
NOTE 17: INCOME TAXES
International Tax Reform – Pillar Two Global Minimum Tax
The OECD published Pillar Two model rules as part of its
efforts toward international tax reform. The
Pillar Two model rules provide for the implementation of a
15% global minimum tax for large multinational
enterprises, which is to be applied on a
jurisdiction-by-jurisdiction basis. Pillar
Two legislation has been enacted or
substantively enacted in certain jurisdictions
in which the Bank operates. On May 2, 2024,
the Government of Canada introduced Bill
C-69, which includes the
Global Minimum Tax Act
addressing the Pillar Two model rules. The rules will
be effective for the Bank in Canada and other jurisdictions
for the fiscal year
beginning on November 1, 2024. The Bank
is assessing its potential exposure
to Pillar Two income taxes.
Other Tax Matters
The Canada Revenue Agency (CRA), Revenu
Québec Agency (RQA) and Alberta
Tax and Revenue Administration (ATRA) are denying certain dividend and
interest deductions claimed by the Bank.
During the quarter, the RQA reassessed the Bank for $
1
million of additional tax and interest in respect
of its 2018
taxation year. As at April 30, 2024, the CRA has reassessed
the Bank for $
1,661
million for the years 2011 to 2018, the RQA has reassessed the
Bank for
$
52
million for the years 2011 to 2018, and the ATRA has reassessed the Bank for $
71
million for the years 2011 to 2018. In total, the Bank has been reassessed
for $
1,784
million of income tax and interest. The Bank
expects to continue to be reassessed for open
years. The Bank is of the view that its tax filing
positions
were appropriate and filed a Notice of Appeal
with the Tax Court of Canada on March 21, 2023.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 77
NOTE 18: EARNINGS PER SHARE
Basic earnings per share is calculated by
dividing net income attributable to common
shareholders by the weighted-average number
of common shares
outstanding for the period.
Diluted earnings per share is calculated using
the same method as basic earnings per
share except that certain adjustments are
made to net income
attributable to common shareholders and
the weighted-average number of shares outstanding
for the effects of all dilutive potential common
shares that are
assumed to be issued by the Bank.
The following table presents the Bank’s basic and
diluted earnings per share for the three and
six months ended April 30, 2024 and April 30,
2023.
Basic and Diluted Earnings Per Share
1
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
April 30
April 30
April 30
2024
2023
2024
2023
Basic earnings per share
Net income attributable to common shareholders
$
2,374
$
3,096
$
5,124
$
4,594
Weighted-average number of common shares outstanding
(millions)
1,762.8
1,828.3
1,769.8
1,824.4
Basic earnings per share
(Canadian dollars)
$
1.35
$
1.69
$
2.90
$
2.52
Diluted earnings per share
Net income attributable to common shareholders
$
2,374
$
3,096
$
5,124
$
4,594
Net income available to common shareholders
including impact of dilutive securities
2,374
3,096
5,124
4,594
Weighted-average number of common shares outstanding
(millions)
1,762.8
1,828.3
1,769.8
1,824.4
Effect of dilutive securities
Stock options potentially exercisable (millions)
2
1.3
2.0
1.4
2.2
Weighted-average number of common shares outstanding
– diluted (millions)
1,764.1
1,830.3
1,771.2
1,826.6
Diluted earnings per share
(Canadian dollars)
2
$
1.35
$
1.69
$
2.89
$
2.52
1
Amounts for the three and six months ended April 30, 2023 have been restated for the adoption of IFRS 17. Refer
to Note 2 for details.
2
For the three and six months ended April 30, 2024, the computation of diluted earnings per share excluded average
options outstanding of
7.3
million and
6.7
million, respectively, with a
weighted-average exercise price of $
89.14
and $
89.93
, respectively, as the option price was greater than
the average market price of the Bank’s common shares. For the three and six
months ended April 30, 2023, the computation of diluted earnings per share excluded average options outstanding
of
4.9
million and
4.2
million, respectively, with a weighted-average
exercise price of $
92.89
and $
93.29
, respectively, as the option price was greater
than the average market price of the Bank’s common shares.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 78
NOTE 19: PROVISIONS AND CONTINGENT
LIABILITIES
Other than as described below, there have been no new
significant events or transactions except
as previously identified in Note 26 of
the Bank’s 2023 Annual
Consolidated Financial Statements.
(a)
RESTRUCTURING
The Bank continued to undertake certain
measures in the second quarter of 2024 to reduce
its cost base and achieve greater efficiency. In connection with these
measures, the Bank incurred $
165
million and $
456
million of restructuring charges during
the three and six months ended April 30,
2024, respectively. The
restructuring costs primarily relate to: (i)
employee severance and other personnel-related
costs recorded as provisions and (ii) real estate
optimization mainly
recorded as a reduction to buildings.
(b)
LEGAL AND REGULATORY MATTERS
Other than as described below, there have been no new
significant legal and regulatory matters,
and no significant developments to the
matters previously
identified in Note 26 of the Bank’s 2023 Annual
Consolidated Financial Statements.
In the ordinary course
of business, the Bank and
its subsidiaries are involved
in various legal
and regulatory actions, including
but not limited to civil
claims and
lawsuits, regulatory examinations,
investigations, audits,
and requests for information
by governmental, regulatory and
self-regulatory agencies and law
enforcement authorities in various
jurisdictions, in respect of our businesses
and compliance programs. The
Bank establishes provisions
when it becomes
probable that the Bank
will incur a loss and
the amount can be
reliably estimated. The Bank
also estimates the aggregate
range of reasonably possible
losses
(RPL) in its legal and regulatory
actions (that is, those which
are neither probable nor
remote), in excess of provisions.
As at April 30, 2024, the
Bank’s RPL is
from
zero
to approximately $
1.31
billion (October 31, 2023
– from
zero
to approximately $
1.44
billion). The Bank’s provisions
and RPL represent the
Bank’s best
estimates based upon currently
available information for
actions for which estimates
can be made, but
there are a number of
factors that could cause
the Bank’s
provisions and/or RPL to be
significantly different from its actual
or RPL. For example,
the Bank’s estimates involve
significant judgment due to
the varying stages
of the proceedings, the
existence of multiple defendants
in many proceedings
whose share of liability
has yet to be
determined, the numerous
yet-unresolved
issues in many of the
proceedings, some of
which are beyond the Bank’s
control and/or involve novel legal
theories and interpretations, the attendant
uncertainty
of the various potential outcomes
of such proceedings, and the fact
that the underlying matters will change
from time to time. In addition,
some actions seek very
large or indeterminate damages.
The Bank has been responding to formal and
informal inquiries from regulatory authorities
and law enforcement concerning its
Bank Secrecy Act
/anti-money
laundering compliance program, both generally
and in connection with specific clients,
counterparties, or incidents in the U.S., including
in connection with an
investigation by the United States Department
of Justice. The Bank is cooperating
with such authorities and is pursuing efforts
to enhance its
Bank Secrecy
Act
/anti-money laundering compliance program.
In the second quarter, the Bank recorded an initial provision
of $
615
million (US$
450
million) in connection with
its discussions
with one of its U.S. regulators related to
this matter. The Bank’s regulatory and law enforcement
discussions with three U.S. regulators (including
the regulator
previously referenced) and the U.S.
Department of Justice are ongoing. The Bank
anticipates non-monetary penalties and
additional monetary
penalties. This provision does not reflect
the final aggregate amount of potential
monetary penalties or any non-monetary
penalties, which are unknown and not
reliably estimable at this time.
The Bank and certain of its subsidiaries have
reached a settlement in principle relating
to a civil matter, pursuant to which the Bank has recorded
a provision
of $
274
million in the quarter.
In management’s opinion, based on its
current knowledge and after
consultation with counsel, the
ultimate disposition of these
actions, individually or in the
aggregate, will not have a
material adverse effect on the
consolidated financial condition
or the consolidated cash
flows of the Bank. However, because of
the
factors listed above, as well as
other uncertainties inherent in litigation
and regulatory matters, there is a
possibility that the ultimate
resolution of legal or
regulatory actions may be material to
the Bank’s consolidated results of operations for
any particular reporting period.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 79
NOTE 20: SEGMENTED INFORMATION
For management reporting purposes, the Bank reports
its results from business operations and
activities under four key business segments:
Canadian Personal
and Commercial Banking, U.S. Retail, Wealth
Management and Insurance, and Wholesale
Banking. The Bank’s other activities are grouped
into the Corporate
segment.
Canadian Personal and Commercial
Banking provides financial products and services
to personal, small business and commercial
customers, and includes
TD Auto Finance Canada. U.S. Retail is
comprised of personal and business banking
in the U.S., TD Auto Finance U.S., the
U.S. wealth business,
as well as the
Bank’s equity investment in Schwab. Wealth Management
and Insurance includes the Canadian
wealth business which provides investment products
and services
to institutional and retail investors, and the insurance
business which provides property and
casualty insurance, as well as life and health
insurance products to
customers across Canada. Effective the first quarter
of 2024, certain asset management businesses
which were previously reported in the U.S.
Retail segment are
now reported in the Wealth Management and
Insurance segment. Comparative period information
has been adjusted to reflect the new alignment.
Wholesale
Banking provides a wide range of capital
markets, investment banking, and corporate
banking products and services,
including underwriting and distribution
of new
debt and equity issues, providing advice
on strategic acquisitions and divestitures, and
meeting the daily trading, funding, and investment
needs of the Bank’s
clients. The Corporate segment includes the
effects of certain asset securitization programs,
treasury management, elimination of taxable equivalent
adjustments
and other management reclassifications,
corporate level tax items, and residual
unallocated revenue and expenses.
The following table summarizes the segment
results for the three and six months ended
April 30, 2024 and April 30, 2023.
Results by Business Segment
1,2
(millions of Canadian dollars)
Canadian
Wealth
Personal and
Management
Commercial Banking
U.S. Retail
and Insurance
Wholesale Banking
3
Corporate
3
Total
For the three months ended April 30
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Net interest income (loss)
$
3,812
$
3,377
$
2,841
$
3,034
$
304
$
258
$
189
$
498
$
319
$
261
$
7,465
$
7,428
Non-interest income (loss)
1,027
1,027
606
523
2,810
2,543
1,751
919
160
(43)
6,354
4,969
Total revenue
4,839
4,404
3,447
3,557
3,114
2,801
1,940
1,417
479
218
13,819
12,397
Provision for (recovery of)
credit losses
467
247
380
190
–
1
55
12
169
149
1,071
599
Insurance service expenses
–
–
–
–
1,248
1,118
–
–
–
–
1,248
1,118
Non-interest expenses
1,957
1,903
2,597
2,022
1,027
963
1,430
1,189
1,390
679
8,401
6,756
Income (loss) before income taxes
and share of net income from
investment in Schwab
2,415
2,254
470
1,345
839
719
455
216
(1,080)
(610)
3,099
3,924
Provision for (recovery of)
income taxes
676
629
73
189
218
195
94
66
(332)
(220)
729
859
Share of net income from
investment in Schwab
4,5
–
–
183
250
–
–
–
–
11
(9)
194
241
Net income (loss)
$
1,739
$
1,625
$
580
$
1,406
$
621
$
524
$
361
$
150
$
(737)
$
(399)
$
2,564
$
3,306
For the six months ended April 30
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Net interest income (loss)
$
7,645
$
6,916
$
5,740
$
6,201
$
589
$
541
$
387
$
1,023
$
592
$
480
$
14,953
$
15,161
Non-interest income (loss)
2,078
2,077
1,210
1,083
5,660
5,175
3,333
1,739
299
(637)
12,580
9,437
Total revenue
9,723
8,993
6,950
7,284
6,249
5,716
3,720
2,762
891
(157)
27,533
24,598
Provision for (recovery of)
credit losses
890
574
765
390
–
1
65
44
352
280
2,072
1,289
Insurance service expenses
–
–
–
–
2,614
2,282
–
–
–
–
2,614
2,282
Non-interest expenses
3,941
3,766
5,007
4,062
2,074
1,972
2,930
2,072
2,479
2,996
16,431
14,868
Income (loss) before income taxes
and share of net income from
investment in Schwab
4,892
4,653
1,178
2,832
1,561
1,461
725
646
(1,940)
(3,433)
6,416
6,159
Provision for (recovery of)
income taxes
1,368
1,299
68
393
385
383
159
165
(617)
(442)
1,363
1,798
Share of net income from
investment in Schwab
4,5
–
–
377
551
–
–
–
–
(42)
(25)
335
526
Net income (loss)
$
3,524
$
3,354
$
1,487
$
2,990
$
1,176
$
1,078
$
566
$
481
$
(1,365)
$
(3,016)
$
5,388
$
4,887
1
Amounts for the three and six months ended April 30, 2023 have been restated for the adoption of IFRS 17. Refer
to Note 2 for details.
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 taxable equivalent basis (TEB). The TEB adjustment
reflected in Wholesale Banking is reversed in the Corporate
segment.
4
The after-tax amounts for amortization of acquired intangibles, the Bank’s share of acquisition and integration
charges associated with Schwab’s acquisition of TD Ameritrade, the Bank’s
share of Schwab’s restructuring charges, and the Bank’s share of Schwab’s FDIC
special assessment charge are recorded in the Corporate segment.
5
The Bank’s share of Schwab’s earnings is reported with a one-month lag. Refer to
Note 7 for further details.
Total Assets by Business Segment
1
(millions of Canadian dollars)
Canadian
Wealth
Personal and
Management
Wholesale
Commercial Banking
U.S. Retail
and Insurance
Banking
Corporate
Total
As at April 30, 2024
Total assets
$
572,130
$
563,351
$
22,522
$
670,663
$
138,002
$
1,966,668
As at October 31, 2023
Total assets
$
560,303
$
560,585
$
22,293
$
673,398
$
138,560
$
1,955,139
1
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 2 for details.
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 80
NOTE 21: INTEREST INCOME AND EXPENSE
The following tables present interest income
and interest expense by basis of accounting
measurement.
Interest Income
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Measured at amortized cost
1
$
19,694
$
16,634
$
39,260
$
32,161
Measured at FVOCI – Debt instruments
1
965
795
1,898
1,516
20,659
17,429
41,158
33,677
Measured or designated at FVTPL
2,247
1,797
4,497
3,553
Measured at FVOCI – Equity instruments
90
81
154
133
Total
$
22,996
$
19,307
$
45,809
$
37,363
1
Interest income is calculated using EIRM.
Interest Expense
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Measured at amortized cost
1
$
12,504
$
9,613
$
24,696
$
18,283
Measured or designated at FVTPL
3,027
2,266
6,160
3,919
Total
$
15,531
$
11,879
$
30,856
$
22,202
1
Interest expense is calculated using EIRM.
NOTE 22: REGULATORY CAPITAL
The Bank manages its capital under guidelines
established by OSFI. The regulatory
capital guidelines measure capital in relation
to credit, market, and operational
risks. The Bank has various capital policies,
procedures, and controls which it utilizes
to achieve its goals and objectives. The Bank
is designated as a domestic
systemically important bank (D-SIB) and
a global systemically important bank (G-SIB).
Canadian banks designated as D-SIBs are required
to comply with OSFI’s minimum targets for risk-based
capital and leverage ratios. The minimum
targets
include a D-SIB surcharge and Domestic Stability
Buffer (DSB) for Common Equity Tier 1 (CET1), Tier 1, Total Capital and risk-based Total Loss Absorbing
Capacity (TLAC) ratios. The DSB level
was increased to
3.5
% as of November 1, 2023, which sets these
minimum target ratios at
11.5
%,
13.0
%,
15.0
% and
25.0
%, respectively. The OSFI target includes the greater of the
D-SIB or G-SIB surcharge, both of which
are currently
1
% for the Bank. On February 1, 2023,
OSFI announced revisions to the Leverage
Requirements Guideline to introduce a requirement
for D-SIBs to hold a leverage ratio buffer of
0.50
% in addition to the
existing minimum requirement. This sets
the minimum targets for leverage and TLAC
leverage ratios at
3.5
% and
7.25
%, respectively.
The Bank complied with all minimum risk-based
capital and leverage ratio requirements
set by OSFI in the six months ended April 30,
2024.
The following table summarizes the Bank’s regulatory
capital positions as at April 30, 2024 and
October 31, 2023.
The impact to CET1 capital upon adoption
of IFRS 17 is immaterial to the Bank.
Regulatory Capital Position
(millions of Canadian dollars, except
as noted)
As at
April 30
October 31
2024
2023
Capital
Common Equity Tier 1 Capital
$
80,841
$
82,317
Tier 1 Capital
90,988
92,752
Total Capital
102,973
103,648
Risk-weighted assets used in the calculation
of capital ratios
602,825
571,161
Capital and leverage ratios
Common Equity Tier 1 Capital ratio
13.4
%
14.4
%
Tier 1 Capital ratio
15.1
16.2
Total Capital ratio
17.1
18.1
Leverage ratio
4.3
4.4
TLAC Ratio
30.6
32.7
TLAC Leverage Ratio
8.7
8.9
TD BANK GROUP • SECOND QUARTER 2024
• REPORT TO SHAREHOLDERS
Page 81
SHAREHOLDER AND INVESTOR INFORMATION
Shareholder Services
If you:
And your inquiry relates to:
Please contact:
Are a registered shareholder (your name appears
on your TD share certificate)
Missing dividends, lost share certificates, estate
questions, address changes to the share register,
dividend bank account changes, the dividend
reinvestment plan, eliminating duplicate mailings
of
shareholder materials or stopping (or resuming)
receiving annual and quarterly reports
Transfer Agent:
TSX Trust Company
301-100 Adelaide Street West
Toronto, ON M5H 4H1
1-800-387-0825 (Canada and U.S. only)
or 416-682-3860
Facsimile: 1-888-249-6189
shareholderinquiries@tmx.com or www.tsxtrust.com
Hold your TD shares through the
Direct Registration System
in the United States
Missing dividends, lost share certificates, estate
questions, address changes to the share register,
eliminating duplicate mailings of shareholder
materials or stopping (or resuming) receiving
annual
and quarterly reports
Co-Transfer Agent and Registrar:
Computershare Trust Company, N.A.
P.O. Box 43006
Providence, RI 02940-3006
or
Computershare Trust Company,
N.A.
150 Royall Street
Canton, MA 02021
1-866-233-4836
TDD for hearing impaired: 1-800-231-5469
Shareholders outside of U.S.: 201-680-6578
TDD shareholders outside of U.S.: 201-680-6610
Email inquiries: web.queries@computershare.com
For electronic access to your account visit:
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.
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
Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference
call in Toronto, Ontario on May 23, 2024.
The call will be audio webcast live through
TD’s
website at 8:00 a.m. ET.
The call will feature presentations by
TD executives on the Bank’s financial results
for second quarter and discussions of related
disclosures, followed by a
question-and-answer period with analysts.
The presentation material referenced
during the call will be available on the
TD website at
www.td.com/investor
on
May 23, 2024, in advance of the call.
A listen-only telephone line
is available at 416-641-6150 or 1-866-696-5894
(toll free) and the passcode is 2727354#.
The audio webcast and presentations will be
archived at
www.td.com/investor
. Replay of the teleconference will be available
from 5:00 p.m. ET on May 23, 2024,
until 11:59 p.m. ET on June 7, 2024,
by calling 905-694-9451
or 1-800-408-3053 (toll free). The passcode
is 7300743#.
ex992
THE TORONTO-DOMINION BANK
EARNINGS COVERAGE ON SUBORDINATED
NOTES AND DEBENTURES,
PREFERRED SHARES CLASSIFIED AS EQUITY,
AND LIABILITIES FOR
PREFERRED SHARES AND OTHER EQUITY INSTRUMENTS
AND CAPITAL
TRUST SECURITIES
FOR THE TWELVE
MONTHS ENDED APRIL 30, 2024
TD Bank Group (“TD” or the “Bank”) dividend
requirements on all its outstanding preferred
shares and other equity instruments in respect
of the twelve months
ended April 30, 2024 and adjusted to a before-tax
equivalent using an effective tax rate of 20.5%
for the twelve months ended April 30, 2024,
amounted to
$671.5 million. The Bank’s interest and dividend requirements
on all subordinated notes and debentures,
preferred shares and liabilities for preferred
shares and
other equity instruments and capital trust
securities, after adjustment for new issues and
retirement, amounted to $1,063.9 million
for the twelve months ended
April 30, 2024. The Bank’s reported net income,
before interest on subordinated debt and liabilities
for preferred shares and capital trust securities
and income
taxes was $13,562 million for the twelve
months ended April 30,
2024,
which was 12.7 times the Bank’s aggregate dividend
and interest requirement for this
period.
On an adjusted basis, the Bank’s net income before
interest on subordinated debt and liabilities
for preferred shares and other equity instruments
and capital
trust securities and income taxes for the twelve
months ended April 30, 2024,
was $17,472 million, which was 16.4 times
the Bank’s aggregate dividend and
interest requirement for this period.
The Bank prepares its interim consolidated
financial statements in accordance with International
Financial Reporting Standards (IFRS),
the current generally
accepted accounting principles (GAAP),
and refers to results prepared in accordance
with IFRS as “reported”
results. The Bank also utilizes non-GAAP
financial
measures such as “adjusted”
results (i.e. reports results excluding
“items of note”) and non-GAAP ratios to
assess each of its businesses and measure
overall
Bank performance. The Bank believes that non-GAAP
financial measures and non-GAAP ratios
provide the reader with a better understanding
of how
management views the Bank’s performance.
Non-GAAP financial measures and ratios used
in this presentation are not defined under
IFRS, and, therefore, may
not be comparable to similar terms used by
other issuers. See “How We Performed”
and “Quarterly Results” sections of the
Bank’s second quarter 2024
MD&A
(available at www.td.com/investor and www.sedarplus.ca), which are incorporated
by reference, for further explanation,
reported basis results, a list of the items
of
note, and a reconciliation of adjusted to reported
results.
ex993
RETURN ON ASSETS, DIVIDEND PAYOUTS, AND EQUITY TO ASSETS RATIOS
1
For the three months ended
For the year ended
April 30, 2024
January 31, 2024
October 31, 2023
Return on Assets – reported
2
0.50
%
0.56
%
0.52
%
Return on Assets – adjusted
3
0.76
0.73
0.75
Dividend Payout Ratio – reported
4
75.8
65.8
69.5
Dividend Payout Ratio – adjusted
5
50.0
50.7
48.5
Equity to Asset Ratio
6
5.8
5.7
5.9
1
The Bank prepares its consolidated financial statements in accordance with International Financial Reporting Standards
(IFRS), the current generally accepted accounting principles
(GAAP), and refers to results prepared in accordance with IFRS as the “reported” results. The Bank also
utilizes non-GAAP financial measures such as “adjusted” results (i.e. reported
results excluding “items of note”) and non-GAAP ratios to assess each of its businesses and measure overall Bank
performance. The Bank believes that non-GAAP financial measures
and non-GAAP ratios provide the reader with a better understanding of how management views the Bank’s
performance. Non-GAAP financial measures and ratios used in this
presentation are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other
issuers. See “Significant Events”
and “How We Performed” sections
of the Bank’s second quarter 2024 MD&A (available at www.td.com/investor
and www.sedar.com), which
are incorporated by reference, for further explanation, reported basis results, a
list of the items of note, and a reconciliation of adjusted to reported results.
2
Calculated as reported net income available to common shareholders divided by average total assets.
3
Calculated as adjusted net income available to common shareholders divided by average total assets.
4
Calculated as dividends declared per common share divided by reported basic earnings per share.
5
Calculated as dividends declared per common share divided by adjusted basic earnings per share.
6
Calculated as average total equity divided by average total assets.
ex994
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 1
TD Bank Group Reports Second Quarter 2024 Results
Earnings News Release
•
Three and six months ended April 30, 2024
This quarterly Earnings News Release should
be read in conjunction with the Bank’s
unaudited second quarter 2024
Report to Shareholders for the three and
six
months ended April 30, 2024,
prepared in accordance with International
Financial Reporting Standards (IFRS)
as issued by the International
Accounting Standards
Board (IASB), which is available on our website
at http://www.td.com/investor/.
This analysis is dated May 22, 2024. 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 with 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.sedarplus.ca and on the U.S.
Securities and Exchange Commission’s
(SEC) website at http://www.sec.gov (EDGAR
filers section).
Reported results conform with generally
accepted accounting principles (GAAP),
in accordance with IFRS.
Adjusted results are non-GAAP financial
measures.
For additional information about the Bank’s use
of non-GAAP financial measures, refer
to “Significant Events” and “Non-GAAP
and Other Financial Measures” in
the “How We Performed” section of this document.
SECOND QUARTER FINANCIAL HIGHLIGHTS,
compared with the second quarter
last year:
●
Reported diluted earnings per share were
$1.35, compared with $1.69.
●
Adjusted diluted earnings per share were
$2.04, compared with $1.91.
●
Reported net income was $2,564 million,
compared with $3,306 million.
●
Adjusted net income was $3,789 million,
compared with $3,707 million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, six months ended April
30, 2024, compared with the corresponding
period last year:
●
Reported diluted earnings per share were
$2.89, compared with $2.52.
●
Adjusted
diluted earnings per share were $4.04,
compared with $4.14.
●
Reported net income was $5,388 million,
compared with $4,887 million.
●
Adjusted net income was $7,426 million,
compared with $7,861 million.
SECOND QUARTER ADJUSTMENTS (ITEMS
OF NOTE)
The second quarter reported earnings figures
included the following items of note:
●
Amortization of acquired intangibles
of $72 million ($62 million after-tax
or 4 cents per share), compared with $79
million ($67 million after-tax or
3 cents per share) in the second quarter
last year.
●
Acquisition and integration charges
related to the Schwab transaction of $21
million ($16 million after-tax or 1 cent per
share), compared with
$30 million ($26 million after-tax or 1 cent
per share) in the second quarter last year.
●
Restructuring charges of $165 million ($122
million after-tax or 7 cents per share).
●
Acquisition and integration charges related
to the Cowen acquisition of $102 million
($80 million after-tax or 4 cents per share),
compared with
$73 million ($63 million after-tax or 4 cents
per share) in the second quarter last year.
●
Impact from the terminated FHN acquisition-related
capital hedging strategy of $64 million
($48 million after-tax or 3 cents
per share), compared with
$134 million ($101 million after-tax or 6 cents
per share) in the second quarter last year.
●
Civil matter provision/Litigation settlement
of $274 million ($205 million after-tax
or 11 cents per share), compared with $39 million ($28
million after-
tax or 2 cents per share) in the second
quarter last year.
●
FDIC special assessment of $103 million ($77
million after-tax or 4 cents per share).
●
Provision for investigations related to the
Bank’s AML program of $615 million ($615 million
after-tax or 35 cents per share).
TORONTO
, May 23, 2024 – TD Bank Group (“TD”
or the “Bank”) today announced its
financial results for the second quarter ended
April 30, 2024. Reported
earnings were $2.6 billion, down 22% compared
with the second quarter last year, and adjusted earnings
were $3.8 billion, up 2%.
“TD delivered strong second quarter results,
with earnings of $3.8 billion and solid momentum
across our franchise. We delivered significant
positive operating
leverage while continuing to invest in our business,
including our risk and control infrastructure,”
said Bharat Masrani, Group President
and Chief Executive Officer,
TD Bank Group.
Canadian Personal and Commercial
Banking delivered a strong quarter
driven by continued volume growth and
positive operating leverage
Canadian Personal and Commercial
Banking net income was $1,739 million, an
increase of 7% compared to the second
quarter last year. The increase reflects
revenue growth, partially offset by higher provisions
for credit losses and non-interest expenses.
Revenue was $4,839 million, an increase
of 10%, driven by
volume growth and margin expansion.
Canadian Personal and Commercial
Banking continued to build momentum, delivering
another strong quarter for New to Canada
account openings. TD increased
its support for international students with an
agreement with HDFC, India’s leading private
sector bank, to help attract new customers
with a simplified banking
experience. The Bank also established a new
collaboration with ApplyBoard, a Canadian
educational organization that helps international
students prepare their
finances to study in Canada. In addition,
TD Auto Finance was ranked #1 in Dealer Satisfaction
with Non-Prime and Prime Credit Non-Captive Automotive
Financing Lenders, according to the J.D.
Power 2024 Canada Dealer Financing
Satisfaction Study
1
.
The U.S. Retail Bank delivered operating
momentum with sequential earnings
and loan growth in a challenging environment
U.S. Retail reported net income was $580
million (US$433 million), a decrease of 59%
(58% in U.S. dollars) compared
with the second quarter last year. On an
adjusted basis, net income was $1,272 million,
a decline of 16% (17% in U.S. dollars).
TD Bank’s investment in The Charles Schwab Corporation
(“Schwab”)
contributed $183 million in earnings, a decrease
of 27% (26% in U.S. dollars) compared
with the second quarter last year.
1
TD Auto Finance received the highest score in the retail non-captive non-prime segment and the retail non-captive prime segment in the J.D. Power 2024 Canada Dealer Financing Satisfaction Study,
which measure Canadian auto dealers’ satisfaction with their auto finance providers. Visit jdpower.com/awards for more details.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 2
The U.S. Retail Bank, which excludes the Bank’s
investment in Schwab, reported net income
of $397 million (US$297 million), a decrease
of 66% (65% in U.S.
dollars) from the second quarter last year, primarily reflecting
provisions for investigations related
to the Bank’s anti-money laundering program
and the Federal
Deposit Insurance Corporation (FDIC) Special
Assessment, partially offset by acquisition
and integration-related charges for the terminated
First Horizon
transaction in the second quarter last year. On an adjusted
basis net income was $1,089 million (US$803
million), a decrease of 14% (15% in
U.S. dollars) from
the second quarter last year, primarily reflecting higher
PCL and lower revenue.
The U.S. Retail Bank continued to deliver loan
growth while maintaining its through-the-cycle
underwriting standards, with total average
loan balances up 7%
compared with the second quarter last
year and up 1% from last quarter. Excluding sweep deposits,
total personal and business deposit average
balances were
down 1% year-over-year, reflecting competitive market conditions,
while quarter-over-quarter, personal and business deposit
average balances were flat. Overall,
the U.S. Retail Bank delivered balance sheet
stability in a challenging environment.
During the quarter, TD Bank, America’s Most Convenient Bank®
(TD AMCB) launched TD Complete Checking
and TD Early Pay, offering customers more flexible
banking options, including earlier access
to eligible direct deposits. TD AMCB surpassed
five million active mobile customers while continuing
to deliver new
features and capabilities that enhance
the customer experience. TD AMCB was
ranked 9
th
on Forbes’
list of
America’s Best Employers for Diversity 2024,
leading
its peers as the highest ranked financial institution.
Wealth Management and Insurance results reflect
strong business momentum
Wealth Management and Insurance net income
was $621 million, an increase of 19% compared
with the second quarter last year, as positive top-line momentum
was partially offset by higher insurance service
expenses. This quarter’s revenue growth
of 11% reflects insurance premium growth, and higher fee-based and
transaction revenue in the Wealth Management business.
Wealth Management and Insurance continued to invest
in client-centric innovation this quarter. TD Direct Investing
completed its migration of most active
traders
to the new TD Active Trader platform and TD Wealth Advice
continued to gain market share as it grows its
advisor network
2
. TD Asset Management launched
seven new actively managed fixed income
ETFs, showcasing the value of its proprietary
independent credit research capabilities, and
offering investors the
potential to earn a high rate of interest income.
In TD Insurance, Small Business Insurance
expanded its national reach to new customer
segments including
business professionals, healthcare, retail, small
manufacturing, and hospitality.
Wholesale Banking delivered record
revenue reflecting broad-based growth
across the business
Wholesale Banking reported net income for
the quarter was $361 million, an increase
of $211 million compared with the second quarter last year, reflecting higher
revenues, partially offset by higher non-interest
expenses. On an adjusted basis, net income
was $441 million, an increase of $228
million, or 107%. Revenue for
the quarter was $1,940 million, an increase
of $523 million, or 37%, compared with
the second quarter last year, reflecting higher trading-related
revenue,
underwriting fees, and lending revenue.
On April 1, TD Securities and TD Cowen
achieved an important milestone with
the implementation of a unified Investment
Banking, Capital Markets and Research
platform, integrating coverage models and streamlining
delivery of capabilities for clients.
Enhancements to TD’s anti-money laundering (AML)
program
The Bank has been cooperating with U.S. regulators
and authorities in good faith for many months
and is working diligently to bring these
investigations to
resolution so that investors can have more
clarity. A comprehensive overhaul of TD's U.S. AML program is
well underway, and will strengthen our program
globally.
Capital
TD’s Common Equity Tier 1 Capital ratio was 13.4%.
Conclusion
“Our businesses in Canada, the United States
and across the globe are well-positioned
to continue to meet the needs of our nearly
28 million customers and
clients. I would like to thank our 95,000 TD
bankers for everything they do to deliver
for all of our stakeholders,”
added Masrani.
The foregoing contains forward-looking statements. Please refer to the “Caution Regarding Forward-Looking Statements”
on page 3.
2
Investor Economics Retail Brokerage and Distribution Quarterly Update, Winter 2023.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 3
Caution Regarding Forward-Looking Statements
From time to time, the Bank (as defined in this document) makes written and/or oral forward-looking statements, including
in this document, in other filings with Canadian regulators or the
United States (U.S.) Securities and Exchange Commission (SEC), and in other communications. In addition, representatives
of the Bank may make forward-looking statements orally to
analysts, investors, the media, and others. All such statements are made pursuant to the “safe harbour” provisions
of, and are intended to be forward-looking statements under,
applicable
Canadian and U.S. securities legislation, including the
U.S. Private Securities Litigation Reform Act of 1995
. Forward-looking statements include, but are not limited to, statements made in
this document, the Management’s Discussion and Analysis (“2023 MD&A”) in the Bank’s
2023 Annual Report under the heading “Economic Summary and Outlook”, under the headings
“Key Priorities for 2024” and “Operating Environment and Outlook” for the Canadian Personal and Commercial Banking,
U.S. Retail, Wealth Management and Insurance, and Wholesale
Banking segments, and under the heading “2023 Accomplishments and Focus for 2024” for the Corporate segment,
and in other statements regarding the Bank’s objectives and priorities
for 2024 and beyond and strategies to achieve them, the regulatory environment in which the Bank operates, and
the Bank’s anticipated financial performance. Forward-looking statements
can be identified by words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “goal”, “intend”, “may”,
“outlook”, “plan”, “possible”, “potential”, “predict”, “project”, “should”,
“target”, “will”, and “would” and similar expressions or variations thereof, or the negative thereof, but these terms
are not the exclusive means of identifying such statements.
By their very nature, these forward-looking statements require the Bank to make assumptions and are subject to
inherent risks and uncertainties, general and specific. Especially in light of
the uncertainty related to the physical, financial, economic, political, and regulatory environments, such risks and
uncertainties – many of which are beyond the Bank’s control and the
effects of which can be difficult to predict – may cause actual results to differ materially
from the expectations expressed in the forward-looking statements. Risk factors that could cause,
individually or in the aggregate, such differences include: strategic, credit, market (including equity,
commodity, foreign exchange, interest rate,
and credit spreads), operational (including
technology, cyber security,
and
infrastructure), model, insurance, liquidity, capital
adequacy, legal, regulatory compliance and
conduct, reputational, environmental and social, and other
risks. Examples of such risk factors include general business and economic conditions in the regions in which the Bank operates;
geopolitical risk; inflation, rising rates and recession;
regulatory oversight and compliance risk;
the ability of the Bank to execute on long-term strategies, shorter-term key strategic priorities, including the successful
completion of acquisitions
and dispositions and integration of acquisitions,
the ability of the Bank to achieve its financial or strategic objectives with respect to its investments, business
retention plans, and other
strategic plans; technology and cyber security risk (including cyber-attacks, data security breaches or technology
failures) on the Bank’s technologies, systems and networks, those of the
Bank’s customers (including their own devices), and third parties providing services to the Bank; model
risk; fraud activity; insider risk; 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 parties; the impact of new and changes to,
or application of, current laws,
rules and regulations, including without limitation tax laws, capital guidelines and liquidity regulatory
guidance; increased competition from incumbents and
new entrants (including Fintechs and big technology competitors); shifts in consumer attitudes and disruptive technology;
environmental and social risk (including climate change);
exposure related to significant litigation and regulatory matters; ability of the Bank to attract, develop, and retain
key talent; changes to the Bank’s credit ratings; changes in foreign
exchange rates, interest rates, credit spreads and equity prices; the interconnectivity of Financial Institutions including
existing and potential international debt crises; 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; the economic, financial, and other impacts of pandemics; 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 2023 MD&A, as may be
updated in subsequently filed quarterly reports to shareholders and news
releases (as applicable) related to any events or transactions discussed under the heading “Significant Events” in
the relevant MD&A, which applicable releases may be found on
www.td.com. All such factors, as well as other uncertainties and potential events,
and the inherent uncertainty of forward-looking statements, should be considered carefully
when making
decisions with respect to the Bank. The Bank cautions readers not to place undue reliance on the Bank’s
forward-looking statements.
Material economic assumptions underlying the forward-looking statements contained in this document are set out
in the 2023 MD&A under the heading “Economic Summary and Outlook”,
under the headings “Key Priorities for 2024” and “Operating Environment and Outlook” for the Canadian Personal
and Commercial Banking, U.S. Retail, Wealth Management and
Insurance, and Wholesale Banking segments, and under the heading “2023 Accomplishments and Focus for 2024”
for the Corporate segment, each as may be updated in subsequently
filed quarterly reports to shareholders.
Any forward-looking statements contained in this document represent the views of management only as of the
date hereof and are presented for the purpose of assisting the Bank’s
shareholders and analysts in understanding the Bank’s financial position, objectives and priorities and
anticipated financial performance as at and for the periods ended on the dates
presented, and may not be appropriate for other purposes. The Bank does not undertake to update any forward-looking
statements, whether written or oral, that may be made from time to
time by or on its behalf, except as required under applicable law.
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.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 4
TABLE 1: FINANCIAL HIGHLIGHTS
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Results of operations
Total revenue – reported
1
$
13,819
$
13,714
$
12,397
$
27,533
$
24,598
Total revenue – adjusted
1,2
13,883
13,771
12,570
27,654
25,647
Provision for (recovery of) credit losses
1,071
1,001
599
2,072
1,289
Insurance service expenses (ISE)
1
1,248
1,366
1,118
2,614
2,282
Non-interest expenses – reported
1
8,401
8,030
6,756
16,431
14,868
Non-interest expenses – adjusted
1,2
7,084
7,125
6,462
14,209
12,799
Net income – reported
1
2,564
2,824
3,306
5,388
4,887
Net income – adjusted
1,2
3,789
3,637
3,707
7,426
7,861
Financial position
(billions of Canadian dollars)
Total loans net of allowance for loan losses
$
928.1
$
904.3
$
849.6
$
928.1
$
849.6
Total assets
1,966.7
1,910.9
1,924.8
1,966.7
1,924.8
Total deposits
1,203.8
1,181.3
1,189.4
1,203.8
1,189.4
Total equity
112.0
112.4
116.2
112.0
116.2
Total risk-weighted assets
3
602.8
579.4
549.4
602.8
549.4
Financial ratios
Return on common equity (ROE) – reported
1,4
9.5
%
10.9
%
12.4
%
10.2
%
9.1
%
Return on common equity – adjusted
1,2
14.5
14.1
14.0
14.3
15.0
Return on tangible common equity (ROTCE)
1,2,4
13.0
14.9
16.5
13.9
12.3
Return on tangible common equity – adjusted
1,2
19.2
18.7
18.3
18.9
19.7
Efficiency ratio – reported
1,4
60.8
58.6
54.5
59.7
60.4
Efficiency ratio – adjusted, net of ISE
1,2,4,5
56.1
57.4
56.4
56.7
54.8
Provision for (recovery of) credit losses
as a % of net
average loans and acceptances
0.47
0.44
0.28
0.45
0.30
Common share information – reported
(Canadian dollars)
Per share earnings
1
Basic
$
1.35
$
1.55
$
1.69
$
2.90
$
2.52
Diluted
1.35
1.55
1.69
2.89
2.52
Dividends per share
1.02
1.02
0.96
2.04
1.92
Book value per share
4
57.69
57.34
57.08
57.69
57.08
Closing share price
6
81.67
81.67
82.07
81.67
82.07
Shares outstanding (millions)
Average basic
1,762.8
1,776.7
1,828.3
1,769.8
1,824.4
Average diluted
1,764.1
1,778.2
1,830.3
1,771.2
1,826.6
End of period
1,759.3
1,772.1
1,838.5
1,759.3
1,838.5
Market capitalization (billions of Canadian dollars)
$
143.7
$
144.7
$
150.9
$
143.7
$
150.9
Dividend yield
4
5.1
%
4.9
%
4.5
%
5.0
%
4.4
%
Dividend payout ratio
4
75.6
65.7
56.7
70.3
76.2
Price-earnings ratio
1,4
13.8
13.1
10.4
13.8
10.4
Total shareholder return (1 year)
4
4.5
(6.9)
(7.5)
4.5
(7.5)
Common share information – adjusted
(Canadian dollars)
1,2
Per share earnings
1
Basic
$
2.04
$
2.01
$
1.91
$
4.05
$
4.15
Diluted
2.04
2.00
1.91
4.04
4.14
Dividend payout ratio
49.9
%
50.7
%
50.2
%
50.3
%
46.2
%
Price-earnings ratio
1
10.5
10.6
9.8
10.5
9.8
Capital ratios
3
Common Equity Tier 1 Capital ratio
13.4
%
13.9
%
15.3
%
13.4
%
15.3
%
Tier 1 Capital ratio
15.1
15.7
17.3
15.1
17.3
Total Capital ratio
17.1
17.6
19.7
17.1
19.7
Leverage ratio
4.3
4.4
4.6
4.3
4.6
TLAC ratio
30.6
30.8
34.2
30.6
34.2
TLAC Leverage ratio
8.7
8.6
9.0
8.7
9.0
1
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
17,
Insurance Contracts
(IFRS 17). Refer to Note 2 of the Bank’s second
quarter 2024 Interim Consolidated Financial Statements for further details.
2
The Toronto-Dominion Bank (“TD”
or the “Bank”) prepares its Interim Consolidated Financial Statements in accordance with IFRS, the current
GAAP, and refers to results
prepared in
accordance with IFRS as the “reported” results. The Bank also utilizes non-GAAP financial measures
such as “adjusted” results and non-GAAP ratios to assess each of its businesses
and to measure overall Bank performance. To
arrive at adjusted results,
the Bank adjusts reported results for “items of note”. Refer to “Significant Events” and “How We
Performed”
sections of this document for further explanation, a list of the items of note, and a reconciliation of adjusted to reported
results. Non-GAAP financial measures and ratios used in this
document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other
issuers.
3
These measures have been included in this document in accordance with the Office of the Superintendent
of Financial Institutions Canada’s (OSFI’s) Capital Adequacy
Requirements,
Leverage Requirements, and Total Loss
Absorbing Capacity (TLAC) guidelines. Refer to the “Capital Position” section in the second quarter of
2024 MD&A for further details.
4
For additional information about this metric, refer to the Glossary in the second quarter of 2024 MD&A, which is incorporated
by reference.
5
Efficiency ratio – adjusted, net of ISE is calculated by dividing adjusted non-interest expenses by adjusted
total revenue, net of ISE. Adjusted total revenue, net of ISE –
Q2 2024: $12,635 million, Q1 2024: $12,405 million, Q2 2023: $11,
452 million, 2024 YTD: $25,040 million,
2023 YTD: $23,365 million. Effective the first quarter of 2024, the composition
of this non-GAAP ratio and the comparative amounts have been revised.
6
Toronto Stock Exchange closing market
price.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 5
SIGNIFICANT EVENTS
a) Provision for Investigations Related to the Bank’s AML Program
In the second quarter of 2024, the Bank recorded
an initial provision of $615 million (US$450
million) in connection with discussions
with one of its U.S. regulators,
related to previously disclosed regulatory and
law enforcement investigations of the
Bank’s U.S.
Bank Secrecy Act
(BSA)/Anti-Money Laundering (AML) program.
For further details, refer to Note 19 of the Bank’s
second quarter
2024 Interim Consolidated Financial
Statements.
b)
Restructuring Charges
The Bank continued to undertake certain
measures in the second quarter of 2024 to reduce
its cost base and achieve greater efficiency. In connection with these
measures, the Bank incurred $165 million
of restructuring charges which primarily
relate to employee severance and other
personnel-related costs and real estate
optimization. Next quarter, we expect to incur additional restructuring
charges of approximately $50 million, and
to conclude our restructuring program.
c) Federal Deposit Insurance Corporation Special
Assessment
On November 16, 2023, the FDIC announced
a final rule that implements a special assessment
to recover the losses to the Deposit Insurance
Fund arising from
the protection of uninsured depositors during
the U.S. bank failures in the spring of 2023.
The special assessment resulted in the recognition
of $411 million
(US$300 million) pre-tax in non-interest expenses
in the first quarter of the Bank’s fiscal 2024.
On February 23, 2024, the FDIC notified
all institutions subject to the special assessment
that its estimate of total losses has increased
compared to the amount
communicated with the final rule in November
- Accordingly, the Bank recognized an additional expense
for the special assessment of $103 million
(US$75 million)
in the second quarter of the Bank’s
fiscal 2024. The final amount of the Bank’s special
assessment may be further updated as
the FDIC
determines the actual losses to the Deposit
Insurance Fund. The FDIC plans
to provide institutions subject to the special
assessment with an updated estimate
with its first quarter 2024 special assessment
invoice, to be released in June 2024.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 6
HOW WE PERFORMED
HOW THE BANK REPORTS
The Bank prepares its Interim Consolidated
Financial Statements in accordance
with IFRS and refers to results prepared
in accordance with IFRS as “reported”
results.
Non-GAAP and Other Financial Measures
In addition to reported results, the Bank also
presents certain financial measures, including
non-GAAP financial measures that are
historical, non-GAAP ratios,
supplementary financial measures and capital
management measures, to assess its results.
Non-GAAP financial measures, such as “adjusted”
results, are utilized
to assess the Bank’s businesses and to measure
the Bank’s overall performance. To arrive at adjusted results, the Bank adjusts
for “items of note” from reported
results. Items of note are items which
management does not believe are indicative of
underlying business performance and are
disclosed in Table 3. Non-GAAP
ratios include a non-GAAP financial measure
as one or more of its components. Examples
of non-GAAP ratios include adjusted basic
and diluted earnings per
share (EPS), adjusted dividend payout ratio, adjusted
efficiency ratio, net of ISE, and adjusted effective income
tax rate. The Bank believes that non-GAAP
financial measures and non-GAAP ratios
provide the reader with a better understanding
of how management views the Bank’s performance.
Non-GAAP financial
measures and non-GAAP ratios used in this document
are not defined terms under IFRS and,
therefore, may not be comparable to similar
terms used by other
issuers. Supplementary financial measures
depict the Bank’s financial performance and
position, and capital management
measures depict the Bank’s capital
position, and both are explained in this document
where they first appear.
U.S. Strategic Cards
The Bank’s U.S. strategic cards portfolio is comprised
of agreements with certain U.S. retailers
pursuant to which TD is the U.S. issuer
of private label and co-
branded consumer credit cards to their U.S.
customers. Under the terms of the individual
agreements, the Bank and the retailers
share in the profits generated by
the relevant portfolios after credit losses.
Under IFRS, TD is required to present
the gross amount of revenue and PCL related
to these portfolios in the Bank’s
Interim Consolidated Statement of Income.
At the segment level, the retailer program
partners’ share of revenues and credit
losses is presented in the Corporate
segment, with an offsetting amount (representing
the partners’ net share) recorded in Non-interest
expenses, resulting in no impact to Corporate’s
reported net
income (loss). The net income (loss) included
in the U.S. Retail segment includes only
the portion of revenue and credit losses
attributable to TD under the
agreements.
Investment in The Charles Schwab Corporation
and IDA Agreement
On October 6, 2020, the Bank acquired an approximately
13.5% stake in The Charles Schwab Corporation
(“Schwab”) following the completion of Schwab’s
acquisition of TD Ameritrade Holding Corporation
(“TD Ameritrade”) of which the Bank
was a major shareholder (the “Schwab transaction”).
On August 1, 2022,
the Bank sold 28.4 million non-voting common
shares of Schwab, at a price of US$66.53
per share for proceeds of $2.5 billion (US$1.9
billion), which reduced the
Bank’s ownership interest in Schwab to approximately
12.0%.
The Bank accounts for its investment in
Schwab using the equity method. The U.S.
Retail segment reflects the Bank’s share of
net income from its investment
in Schwab. The Corporate segment net income
(loss) includes amounts for amortization
of acquired intangibles, the acquisition
and integration charges related to
the Schwab transaction, and the Bank’s share of restructuring
and other charges incurred by Schwab.
The Bank’s share of Schwab’s earnings available to
common shareholders is reported with
a one-month lag. For further details, refer
to Note 7 of the Bank’s second quarter 2024 Interim
Consolidated Financial
Statements.
On November 25, 2019, the Bank and Schwab
signed an insured deposit account agreement
(the “2019 Schwab IDA Agreement”), with an
initial expiration
date of July 1, 2031. Under the 2019 Schwab
IDA Agreement, starting July 1, 2021, Schwab
had the option to reduce the deposits by up
to US$10 billion per year
(subject to certain limitations and adjustments),
with a floor of US$50 billion. In addition, Schwab
requested some further operational flexibility
to allow for the
sweep deposit balances to fluctuate over
time, under certain conditions and subject to
certain limitations.
On May 4, 2023, the Bank and Schwab entered
into an amended insured deposit account
agreement (the “2023 Schwab IDA Agreement”),
which replaced the
2019 Schwab IDA Agreement. Pursuant
to the 2023 Schwab IDA Agreement, the Bank
continues to make sweep deposit accounts
available to clients of Schwab.
Schwab designates a portion of the deposits
with the Bank as fixed-rate obligation amounts
(FROA). Remaining deposits over
FROA are designated as floating-
rate obligations. In comparison to the 2019
Schwab IDA Agreement, the 2023 Schwab
IDA Agreement extends the initial expiration
date by three years to
July 1, 2034 and provides for lower deposit balances
in its first six years,
followed by higher balances in the later
years. Specifically, until September 2025, the
aggregate FROA will serve as the floor. Thereafter, the floor will be set at
US$60 billion. In addition, Schwab has the
option to buy down
up to $6.8 billion
(US$5 billion)
of FROA by paying the Bank certain
fees in accordance with the 2023 Schwab
IDA Agreement, subject to certain limits. Refer
to the “Related Party
Transactions” section in the 2023 MD&A for further details.
During the first quarter of 2024, Schwab exercised
its option to buy down the remaining $0.7
billion (US$0.5 billion) of the US$5 billion
FROA buydown
allowance and paid $32 million (US$23
million) in termination fees to the Bank in accordance
with the 2023 Schwab IDA Agreement. By the
end of the first quarter
of 2024, Schwab had completed its buy down
of the full US$5 billion FROA buydown
allowance and had paid a total of $337
million (US$250 million) in termination
fees to the Bank. The fees were intended to
compensate the Bank for losses incurred
from discontinuing certain hedging relationships
and for lost revenues. The
net impact was recorded in net interest income.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 7
The following table provides the operating results
on a reported basis for the Bank.
TABLE 2: OPERATING RESULTS – Reported
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net interest income
$
7,465
$
7,488
$
7,428
$
14,953
$
15,161
Non-interest income
1
6,354
6,226
4,969
12,580
9,437
Total revenue
1
13,819
13,714
12,397
27,533
24,598
Provision for (recovery of) credit losses
1,071
1,001
599
2,072
1,289
Insurance service expenses
1
1,248
1,366
1,118
2,614
2,282
Non-interest expenses
1
8,401
8,030
6,756
16,431
14,868
Income before income taxes and share
of net income from
investment in Schwab
1
3,099
3,317
3,924
6,416
6,159
Provision for (recovery of) income taxes
1
729
634
859
1,363
1,798
Share of net income from investment in
Schwab
194
141
241
335
526
Net income – reported
1
2,564
2,824
3,306
5,388
4,887
Preferred dividends and distributions on other
equity instruments
190
74
210
264
293
Net income available to common shareholders
1
$
2,374
$
2,750
$
3,096
$
5,124
$
4,594
1
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 8
The following table provides a reconciliation between
the Bank’s adjusted and reported results.
For further details refer to the “Significant
Events” section.
TABLE 3: NON-GAAP FINANCIAL MEASURES – Reconciliation
of Adjusted to Reported Net Income
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Operating results – adjusted
Net interest income
1
$
7,529
$
7,545
$
7,610
$
15,074
$
15,472
Non-interest income
1,2,3
6,354
6,226
4,960
12,580
10,175
Total revenue
2
13,883
13,771
12,570
27,654
25,647
Provision for (recovery of) credit losses
1,071
1,001
599
2,072
1,289
Insurance service expenses
2
1,248
1,366
1,118
2,614
2,282
Non-interest expenses
2,4
7,084
7,125
6,462
14,209
12,799
Income before income taxes and share
of net income from
investment in Schwab
4,480
4,279
4,391
8,759
9,277
Provision for income taxes
920
872
967
1,792
2,027
Share of net income from investment in
Schwab
5
229
230
283
459
611
Net income – adjusted
2
3,789
3,637
3,707
7,426
7,861
Preferred dividends and distributions on other
equity instruments
190
74
210
264
293
Net income available to common shareholders
– adjusted
3,599
3,563
3,497
7,162
7,568
Pre-tax adjustments for items of note
Amortization of acquired intangibles
6
(72)
(94)
(79)
(166)
(133)
Acquisition and integration charges related
to the Schwab transaction
4,5
(21)
(32)
(30)
(53)
(64)
Share of restructuring and other charges
from investment in Schwab
5
–
(49)
–
(49)
–
Restructuring charges
4
(165)
(291)
–
(456)
–
Acquisition and integration-related charges
4
(102)
(117)
(73)
(219)
(94)
Charges related to the terminated First
Horizon (FHN) acquisition
4
–
–
(154)
–
(260)
Impact from the terminated FHN acquisition-related
capital hedging strategy
1
(64)
(57)
(134)
(121)
(1,010)
Civil matter provision/Litigation settlement
4
(274)
–
(39)
(274)
(1,642)
FDIC special assessment
4
(103)
(411)
–
(514)
–
Provision for investigations related to the
Bank’s AML program
4
(615)
–
–
(615)
–
Less: Impact of income taxes
Amortization of acquired intangibles
(10)
(15)
(12)
(25)
(20)
Acquisition and integration charges related
to the Schwab transaction
(5)
(6)
(4)
(11)
(10)
Restructuring charges
(43)
(78)
–
(121)
–
Acquisition and integration-related charges
(22)
(24)
(10)
(46)
(15)
Charges related to the terminated FHN acquisition
–
–
(38)
–
(64)
Impact from the terminated FHN acquisition-related
capital hedging strategy
(16)
(14)
(33)
(30)
(249)
Civil matter provision/Litigation settlement
(69)
–
(11)
(69)
(456)
FDIC special assessment
(26)
(101)
–
(127)
–
Canada Recovery Dividend (CRD) and
federal tax rate
increase for fiscal 2022
7
–
–
–
–
585
Total adjustments for items of note
(1,225)
(813)
(401)
(2,038)
(2,974)
Net income available to common shareholders
– reported
$
2,374
$
2,750
$
3,096
$
5,124
$
4,594
1
Prior to May 4, 2023, the impact shown covers periods before the termination of the FHN transaction and includes
the following components, reported in the Corporate segment: i) mark-
to-market gains (losses) on interest rate swaps recorded in non-interest income – Q2 2023: ($263) million,
Q1 2023:
($998) million, ii) basis adjustment amortization related to de-
designated fair value hedge accounting relationships, recorded in net interest income – Q2 2023: $129 million, Q1
2023: $122 million, and iii) interest income (expense) recognized on the
interest rate swaps, reclassified from non-interest income to net interest income with no impact to total adjusted
net income – Q2 2023: $311 million, Q1 2023: $251
million. After the
termination of the merger agreement, the residual impact of the strategy is reversed through net interest income
– Q2 2024: ($64)
million, Q1 2024: ($57) million.
2
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
3
Adjusted non-interest income excludes the following item of note:
i. Stanford litigation settlement – Q2 2023: $39 million. This reflects the foreign exchange
loss and is reported in the Corporate segment.
4
Adjusted non-interest expenses exclude the following items of note:
i.
Amortization of acquired intangibles – Q2 2024: $42 million, Q1 2024: $63 million, Q2 2023: $49 million, Q1 2023:
$24 million, reported in the Corporate segment;
ii. The Bank’s own integration and acquisition costs related to the Schwab
transaction – Q2 2024: $16 million, Q1 2024: $23 million, Q2 2023: $18 million, Q1 2023: $21 million
,
reported
in the Corporate segment;
iii. Restructuring charges – Q2 2024: $165 million,
Q1 2024: $291 million, reported in the Corporate segment;
iv. Acquisition and integration-related
charges – Q2 2024: $102 million, Q1 2024: $117
million, Q2 2023: $73 million, Q1 2023: $21 million, reported in the Wholesale Banking segment;
v. Charges related to the terminated
FHN acquisition – Q2 2023: $154 million, Q1 2023: $106 million, reported in the U.S. Retail
segment;
vi. Civil matter provision/Litigation settlement – Q2 2024: $274 million in respect of a
civil matter, Q1 2023: $1,603 million in respect of the Stanford
litigation settlement, reported in the
Corporate segment;
vii. FDIC special assessment – Q2 2024: $103 million, Q1 2024: $411
million,
reported in the U.S. Retail segment; and
viii. Provision for investigations related to the Bank’s AML program
– Q2 2024: $615 million, reported in the U.S. Retail segment.
5
Adjusted share of net income from investment in Schwab excludes the following items of note on an after-tax basis.
The earnings impact of these items is reported in the Corporate
segment:
i. Amortization of Schwab-related acquired intangibles – Q2 2024: $30 million, Q1
2024: $31 million, Q2 2023: $30 million, Q1 2023: $30 million;
ii. The Bank’s share of acquisition and integration charges associated with
Schwab’s acquisition of TD Ameritrade – Q2 2024: $5 million, Q1 2024: $9 million,
Q2 2023: $12 million,
Q1 2023: $13 million;
iii. The Bank’s share of restructuring charges incurred by Schwab – Q1 2024:
$27 million;
and
iv. The Bank’s share
of the FDIC special assessment charge incurred by Schwab – Q1 2024: $22 million.
6
Amortization of acquired intangibles relates to intangibles acquired as a result of asset acquisitions and business
combinations, including the after-tax amounts for amortization of
acquired intangibles relating to the Share of net income from investment in Schwab, reported in the Corporate segment.
Refer to footnotes 4 and 5 for amounts.
7
CRD and impact from increase in the Canadian federal tax rate for fiscal 2022 recognized in the first quarter of 2023,
reported in the Corporate segment.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 9
TABLE 4: RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE
1
(Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Basic earnings per share – reported
2
$
1.35
$
1.55
$
1.69
$
2.90
$
2.52
Adjustments for items of note
0.69
0.45
0.22
1.15
1.63
Basic earnings per share – adjusted
2
$
2.04
$
2.01
$
1.91
$
4.05
$
4.15
Diluted earnings per share – reported
2
$
1.35
$
1.55
$
1.69
$
2.89
$
2.52
Adjustments for items of note
0.69
0.45
0.22
1.15
1.63
Diluted earnings per share – adjusted
2
$
2.04
$
2.00
$
1.91
$
4.04
$
4.14
1
EPS is computed by dividing net income available to common shareholders by the weighted-average number of
shares outstanding during the period. Numbers may not add due to
rounding.
2
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
Return on Common Equity
The consolidated Bank ROE is calculated
as reported net income available to common
shareholders as a percentage of average
common equity. The
consolidated Bank adjusted ROE is calculated
as adjusted net income available to
common shareholders as a percentage of average
common equity. Adjusted
ROE is a non-GAAP financial ratio and
can be utilized in assessing the Bank’s use of equity.
ROE for the business segments is calculated
as the segment net income attributable
to common shareholders as a percentage of average
allocated capital. The
Bank’s methodology for allocating capital to its
business segments is largely aligned
with the common equity capital requirements
under Basel III. Capital allocated
to the business segments was increased
to 11.5% Common Equity Tier 1 (CET1) Capital effective the first quarter of 2024,
compared with 11% in fiscal 2023.
TABLE 5: RETURN ON COMMON EQUITY
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Average common equity
$
101,137
$
100,269
$
102,800
$
100,573
$
101,750
Net income available to common shareholders
– reported
1
2,374
2,750
3,096
5,124
4,594
Items of note, net of income taxes
1,225
813
401
2,038
2,974
Net income available to common shareholders
– adjusted
1
$
3,599
$
3,563
$
3,497
$
7,162
$
7,568
Return on common equity – reported
1
9.5
%
10.9
%
12.4
%
10.2
%
9.1
%
Return on common equity – adjusted
1
14.5
14.1
14.0
14.3
15.0
1
For the three and six months ended April
30, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to Note 2 of the Bank’s
second quarter 2024 Interim
Consolidated Financial Statements for further details.
Return on Tangible Common Equity
Tangible common equity (TCE) is calculated as common shareholders’ equity
less goodwill, imputed goodwill and intangibles
on the investments in Schwab and
other acquired intangible assets, net of related
deferred tax liabilities. ROTCE is calculated
as reported net income available to common
shareholders after
adjusting for the after-tax amortization of
acquired intangibles, which are treated as an
item of note, as a percentage of average
TCE. Adjusted ROTCE is
calculated using reported net income available
to common shareholders, adjusted for all
items of note, as a percentage of average
TCE. TCE, ROTCE, and
adjusted ROTCE can be utilized in assessing
the Bank’s use of equity. TCE is a non-GAAP financial measure,
and ROTCE and adjusted ROTCE are
non-GAAP
ratios.
TABLE 6: RETURN ON TANGIBLE COMMON EQUITY
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Average common equity
$
101,137
$
100,269
$
102,800
$
100,573
$
101,750
Average goodwill
18,380
18,208
17,835
18,322
17,713
Average imputed goodwill and intangibles on
investments in Schwab
6,051
6,056
6,142
6,062
6,163
Average other acquired intangibles
1
574
615
583
595
525
Average related deferred tax liabilities
(228)
(231)
(210)
(230)
(195)
Average tangible common equity
76,360
75,621
78,450
75,824
77,544
Net income available to common shareholders
– reported
2
2,374
2,750
3,096
5,124
4,594
Amortization of acquired intangibles, net of income
taxes
62
79
67
141
113
Net income available to common shareholders
adjusted for
amortization of acquired intangibles,
net of income taxes
2
2,436
2,829
3,163
5,265
4,707
Other items of note, net of income taxes
1,163
734
334
1,897
2,861
Net income available to common shareholders
– adjusted
2
$
3,599
$
3,563
$
3,497
$
7,162
$
7,568
Return on tangible common equity
2
13.0
%
14.9
%
16.5
%
13.9
%
12.3
%
Return on tangible common equity – adjusted
2
19.2
18.7
18.3
18.9
19.7
1
Excludes intangibles relating to software and asset servicing rights.
2
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 10
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank’s business
operations and activities are organized around
the following four key business segments: Canadian
Personal and Commercial Banking, U.S.
Retail, Wealth Management and Insurance, and
Wholesale Banking. The Bank’s other activities
are grouped into the
Corporate segment.
Results of each business segment reflect revenue,
expenses, assets, and liabilities generated
by the businesses in that segment. Where
applicable,
the Bank
measures and evaluates the performance of
each segment based on adjusted results
and ROE, and for those segments,
the Bank indicates that the measure is
adjusted. For further details, refer to the “How
We Performed”
section of this document, the “Business
Focus”
section in the Bank’s 2023 MD&A, and Note 28
of
the Bank’s Consolidated Financial Statements
for the year ended October 31, 2023. Effective
the first quarter of 2024, certain asset
management businesses
which were previously reported in the
U.S. Retail segment are now reported in the
Wealth Management and Insurance segment.
Comparative period information
has been adjusted to reflect the new alignment.
PCL related to performing (Stage 1 and Stage
2) and impaired (Stage 3) financial assets, loan
commitments, and financial guarantees is recorded
within the
respective segment.
Net interest income within Wholesale Banking
is calculated on a taxable equivalent basis
(TEB), which means that the value of non-taxable
or tax-exempt
income, including certain dividends, is adjusted
to its equivalent pre-tax value. Using
TEB allows the Bank to measure income from
all securities and loans
consistently and makes for a more meaningful
comparison of net interest income with similar
institutions. The TEB increase to net interest income
and provision for
income taxes reflected in Wholesale Banking
results is reversed in the Corporate segment.
The TEB adjustment for the quarter was $4
million, compared with
$29 million in the prior quarter and $40 million
in the second quarter last year.
Share of net income from investment in
Schwab is reported in the U.S. Retail
segment. Amounts for amortization of acquired
intangibles,
the acquisition and
integration charges related to the Schwab
transaction,
and the Bank’s share of restructuring and
other charges incurred by Schwab are recorded
in the Corporate
segment.
TABLE 7: CANADIAN PERSONAL AND COMMERCIAL BANKING
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net interest income
$
3,812
$
3,833
$
3,377
$
7,645
$
6,916
Non-interest income
1,027
1,051
1,027
2,078
2,077
Total revenue
4,839
4,884
4,404
9,723
8,993
Provision for (recovery of) credit losses –
impaired
397
364
234
761
454
Provision for (recovery of) credit losses –
performing
70
59
13
129
120
Total provision for (recovery of) credit losses
467
423
247
890
574
Non-interest expenses
1,957
1,984
1,903
3,941
3,766
Provision for (recovery of) income taxes
676
692
629
1,368
1,299
Net income
$
1,739
$
1,785
$
1,625
$
3,524
$
3,354
Selected volumes and ratios
Return on common equity
1
32.9
%
34.6
%
37.4
%
33.8
%
38.6
%
Net interest margin (including on securitized
assets)
2
2.84
2.84
2.74
2.84
2.77
Efficiency ratio
40.4
40.6
43.2
40.5
41.9
Number of Canadian retail branches
1,062
1,062
1,060
1,062
1,060
Average number of full-time equivalent staff
29,053
29,271
28,797
29,163
28,800
1
Capital allocated to the business segment was increased to 11.5% CET1
Capital effective the first quarter of 2024 compared with 11%
in the prior year.
2
Net interest margin is calculated by dividing net interest income by average interest-earning assets. Average
interest-earning assets used in the calculation of net interest margin is a non-
GAAP financial measure. Refer to “Non-GAAP and Other Financial Measures” in the “How We Performed”
section of this document and the Glossary in the Bank’s second quarter 2024
MD&A for additional information about these metrics.
Quarterly comparison – Q2 2024 vs. Q2 2023
Canadian Personal and Commercial
Banking net income for the quarter was
$1,739 million, an increase of $114 million, or 7%, compared
with the second quarter
last year, reflecting higher revenue, partially offset by higher PCL
and non-interest expenses. The annualized
ROE for the quarter was 32.9%, compared
with
37.4% in the second quarter last year.
Revenue for the quarter was $4,839 million, an
increase of $435
million, or 10%, compared with the second quarter
last year. Net interest income was
$3,812 million, an increase of $435 million, or
13%, compared with the second quarter
last year, primarily reflecting volume growth and higher
margins.
Average
loan volumes increased $37 billion, or 7%,
reflecting 7% growth in personal loans
and 7% growth in business loans. Average deposit
volumes increased
$16 billion, or 4%, reflecting 6% growth in
personal deposits, partially offset by 1% decline
in business deposits. Net interest margin
was 2.84%, an increase of
10 basis points (bps), primarily due to higher
margins on deposits, partially offset by lower
margins on loans and changes to balance sheet
mix. Non-interest
income was $1,027 million, flat compared
with the second quarter last year.
PCL for the quarter was $467 million, an increase
of $220 million compared with the second
quarter last year. PCL – impaired was $397 million, an increase
of
$163 million, or 70%, reflecting credit migration
in the consumer and commercial lending
portfolios. PCL – performing was $70
million, an increase of $57 million.
The performing provisions this quarter largely
reflect credit conditions, including credit
migration in the commercial and consumer
lending portfolios, and volume
growth. Total PCL as an annualized percentage of credit volume was 0.34%,
an increase of 15 bps compared with
the second quarter last year.
Non-interest expenses for the quarter were $1,957
million, an increase of $54 million, or
3%, compared with the second quarter
last year, reflecting higher
spend supporting business growth, including
higher employee-related expenses and
technology costs, partially
offset by higher non-credit provisions in the second
quarter last year.
The efficiency ratio for the quarter was 40.4%,
compared with 43.2% in the second quarter
last year.
Quarterly comparison – Q2 2024 vs. Q1 2024
Canadian Personal and Commercial
Banking net income for the quarter was
$1,739 million, a decrease of $46 million, or
3%, compared with the prior quarter,
reflecting lower revenue and higher PCL, partially
offset by lower non-interest expenses. The annualized
ROE for the quarter was 32.9%, compared
with 34.6% in
the prior quarter.
Revenue decreased $45
million, or 1%, compared with the prior quarter. Net interest
income decreased $21 million, or 1%, reflecting
fewer days in the second
quarter, partially offset by volume growth.
Average loan volumes increased $5 billion, or
1%, reflecting 1% growth in personal loans
and 2% growth in business
loans. Average deposit volumes were relatively
flat compared with the prior quarter, reflecting 1% growth
in personal deposits, offset by 1% decline in business
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 11
deposits. Net interest margin was 2.84%,
flat compared with the prior quarter. Non-interest income decreased
$24 million, or 2%, compared with
the prior quarter,
reflecting lower fee revenue.
PCL for the quarter was $467 million, an increase
of $44 million compared with the prior
quarter. PCL – impaired was $397 million, an increase
of $33 million, or
9%, largely reflecting credit migration in the
commercial lending portfolio. PCL – performing
was $70 million, an increase of $11 million. The performing provisions
this quarter largely reflect credit conditions,
including credit migration in the commercial
and consumer lending portfolios, and
volume growth. Total PCL as an
annualized percentage of credit volume
was 0.34%, an increase of 4 bps compared
with the prior quarter.
Non-interest expenses decreased $27 million,
or 1% compared with the prior quarter, primarily reflecting
lower technology costs and employee-related
expenses
.
The efficiency ratio was 40.4%, compared
with 40.6%, in the prior quarter.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Canadian Personal and Commercial Banking
net income for the six months ended April
30, 2024, was $3,524 million, an increase
of $170 million, or 5%,
compared with the same period last year, reflecting higher
revenue, partially offset by higher PCL and non-interest
expenses. The annualized ROE for the
period
was 33.8%, compared with 38.6%, in
the same period last year.
Revenue for the period was $9,723
million, an increase of $730
million, or 8%, compared with the same period
last year. Net interest income was
$7,645 million, an increase of $729 million, or
11% compared with the same period last year, reflecting volume growth and
higher margins. Average loan volumes
increased $37 billion, or 7%, reflecting 7%
growth in personal loans and 8% growth
in business loans. Average deposit volumes
increased $15 billion, or 3%,
reflecting 6% growth in personal deposits,
partially offset by a 2% decline in business deposits.
Net interest margin was 2.84%, an increase
of 7 bps, primarily due
to higher margins on deposits, partially offset by lower
margins on loans and changes to balance
sheet mix.
Non-interest income was $2,078 million, relatively
flat
compared with the same period last year.
PCL was $890 million, an increase of $316
million compared with the same period last
year. PCL – impaired was $761 million, an increase of $307
million, or
68%, reflecting credit migration in the consumer
and commercial lending portfolios.
PCL – performing was $129 million, an increase
of $9 million. The current year
performing provisions largely reflect current
credit conditions, including credit migration,
and volume growth. Total PCL as an annualized percentage of credit
volume was 0.32%, an increase of 10 bps
compared with the same period last year.
Non-interest expenses were $3,941 million,
an increase of $175
million, or 5%, compared with the same period
last year, reflecting higher spend supporting
business growth, including higher employee-related
expenses and technology costs.
The efficiency ratio was 40.5%, compared with 41.9%,
for the same period last year.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 12
TABLE 8: U.S. RETAIL
(millions of dollars, except as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
Canadian Dollars
2024
2024
2023
2024
2023
Net interest income
$
2,841
$
2,899
$
3,034
$
5,740
$
6,201
Non-interest income
606
604
523
1,210
1,083
Total revenue
3,447
3,503
3,557
6,950
7,284
Provision for (recovery of) credit losses –
impaired
311
377
186
688
398
Provision for (recovery of) credit losses –
performing
69
8
4
77
(8)
Total provision for (recovery of) credit losses
380
385
190
765
390
Non-interest expenses – reported
2,597
2,410
2,022
5,007
4,062
Non-interest expenses – adjusted
1,2
1,879
1,999
1,868
3,878
3,802
Provision for (recovery of) income taxes – reported
73
(5)
189
68
393
Provision for (recovery of) income taxes – adjusted
1
99
96
227
195
457
U.S. Retail Bank net income – reported
397
713
1,156
1,110
2,439
U.S. Retail Bank net income – adjusted
1
1,089
1,023
1,272
2,112
2,635
Share of net income from investment in
Schwab
3,4
183
194
250
377
551
Net income – reported
$
580
$
907
$
1,406
$
1,487
$
2,990
Net income – adjusted
1
1,272
1,217
1,522
2,489
3,186
U.S. Dollars
Net interest income
$
2,094
$
2,141
$
2,241
$
4,235
$
4,589
Non-interest income
446
446
387
892
802
Total revenue
2,540
2,587
2,628
5,127
5,391
Provision for (recovery of) credit losses –
impaired
229
279
137
508
295
Provision for (recovery of) credit losses –
performing
51
6
3
57
(6)
Total provision for (recovery of) credit losses
280
285
140
565
289
Non-interest expenses – reported
1,909
1,779
1,493
3,688
3,005
Non-interest expenses – adjusted
1,2
1,384
1,479
1,380
2,863
2,814
Provision for (recovery of) income taxes – reported
54
(3)
140
51
291
Provision for (recovery of) income taxes – adjusted
1
73
71
168
144
338
U.S. Retail Bank net income – reported
297
526
855
823
1,806
U.S. Retail Bank net income – adjusted
1
803
752
940
1,555
1,950
Share of net income from investment in
Schwab
3,4
136
144
185
280
407
Net income – reported
$
433
$
670
$
1,040
$
1,103
$
2,213
Net income – adjusted
1
939
896
1,125
1,835
2,357
Selected volumes and ratios
Return on common equity – reported
5
5.4
%
8.5
%
14.1
%
6.9
%
14.8
%
Return on common equity – adjusted
1,5
11.7
11.3
15.3
11.5
15.8
Net interest margin
1,6
2.99
3.03
3.25
3.01
3.27
Efficiency ratio – reported
75.2
68.8
56.8
71.9
55.7
Efficiency ratio – adjusted
1
54.5
57.2
52.5
55.8
52.2
Assets under administration (billions of U.S.
dollars)
7
$
40
$
40
$
39
$
40
$
39
Assets under management (billions of U.S.
dollars)
7,8
7
7
7
7
7
Number of U.S. retail stores
1,167
1,176
1,164
1,167
1,164
Average number of full-time equivalent staff
27,957
27,985
28,401
27,971
27,987
1
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
and Other Financial Measures” in the “How We Performed” section of this
document.
2
Adjusted non-interest expenses exclude the following items of note:
i.
Charges related to the terminated First Horizon acquisition – Q2 2023: $154 million or US$113
million ($116 million or US$85 million after-tax),
Q1 2023: $106 million or
US$78 million ($80 million or US$59 million after-tax);
ii.
FDIC special assessment – Q2 2024: $103 million or US$75 million ($77 million or US$56 million after-tax), Q1 202
4: $411 million or US$300 million ($310 million or US$
226 million
after-tax); and
iii.
Provision for investigations related to the Bank’s AML program – Q2 2024: $615 million or US$450 million
(before and after tax).
3
The Bank’s share of Schwab’s earnings is reported with a one-month lag. Refer to
Note 7 of the Bank’s second quarter 2024
Interim Consolidated Financial Statements for further details.
4
The after-tax amounts for amortization of acquired intangibles, the Bank’s share of acquisition and integration
charges associated with Schwab’s acquisition of TD Ameritrade, the Bank’s
share of Schwab’s restructuring charges,
and the Bank’s share of Schwab’s FDIC special assessment charge are recorded in
the Corporate segment.
5
Capital allocated to the business segment was increased to 11.5% CET1
Capital effective the first quarter of 2024, compared with 11%
in the prior year.
6
Net interest margin is calculated by dividing U.S. Retail segment’s net interest income by average interest
-earning assets. For the U.S. Retail segment, this calculation excludes the
impact related to sweep deposits arrangements,
intercompany deposits,
and cash collateral.
The value of tax-exempt interest income is adjusted to its equivalent before-tax value. For
investment securities, the adjustment to fair value is included in the calculation of average interest-earning assets.
Management believes this calculation better reflects segment
performance. Net interest income and average interest-earning assets used in the calculation are non-GAAP financial
measures.
7
For additional information about this metric, refer to the Glossary in the Bank’s second quarter 2024
MD&A.
8
Refer to “How Our Businesses Performed” section regarding alignment of certain asset management businesses
from the U.S. Retail segment to the Wealth Management and Insurance
segment.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 13
Quarterly comparison – Q2 2024 vs. Q2 2023
U.S. Retail reported net income for the quarter
was $580
million (US$433 million), a decrease of $826
million (US$607 million), or 59% (58% in
U.S. dollars),
compared with the second quarter last
year. On an adjusted basis, net income for the quarter
was $1,272 million (US$939 million), a decrease
of $250 million
(US$186 million), or 16% (17% in U.S. dollars).
The reported and adjusted annualized ROE
for the quarter were 5.4% and 11.7%, respectively, compared with
14.1% and 15.3%, respectively, in the second quarter last year.
U.S. Retail net income includes contributions
from the U.S. Retail Bank and the Bank’s investment
in Schwab. Reported net income for the
quarter from the
Bank’s investment
in Schwab was $183 million (US$136
million), a decrease of $67 million (US$49
million), or 27% (26% in U.S. dollars).
U.S. Retail Bank reported net income
was $397 million (US$297 million), a decrease
of $759 million (US$558 million), or 66%
(65% in U.S. dollars), compared
with the second quarter last year, primarily reflecting higher non-interest
expenses, higher PCL, and lower net interest
income. U.S. Retail Bank adjusted net
income was $1,089 million (US$803
million), a decrease of $183 million (US$137
million), or 14% (15% in U.S. dollars),
compared with the second quarter last
year, reflecting higher PCL and lower net interest income.
Revenue for the quarter was US$2,540 million,
a decrease of US$88 million, or 3%,
compared with the second quarter last
year. Net interest income of
US$2,094 million, decreased US$147 million,
or 7%, driven by lower deposit margins
and volumes, partially offset by higher loan volumes.
Net interest margin of
2.99%, decreased 26 bps, due to lower deposit
margins reflecting higher deposit costs
and lower margins on loans. Non-interest
income of US$446 million
increased US$59 million, or 15%, compared
with the second quarter last year, primarily reflecting fee income
growth from increased customer activity and
losses
from the disposition of certain investments
in the prior year.
Average loan volumes increased US$13 billion,
or 7%, compared with the second quarter
last year. Personal loans increased 10%, reflecting strong
mortgage
and auto originations and lower prepayments
in the higher rate environment. Business
loans increased 5%, reflecting good originations
from new customer growth
and slower payment rates. Average deposit volumes
decreased US$21 billion, or 6%, reflecting
an 18% decrease in sweep deposits, a 2%
decrease in business
deposits, partially offset by a 1% increase in personal
deposit volumes. Excluding sweep deposits,
average deposits decreased 1%.
Assets under administration (AUA) were
US$40 billion as at April 30, 2024, an increase
of US$1 billion, or 3%, compared with
the second quarter last year,
reflecting net asset growth. Assets under
Management (AUM) were US$7 billion
as at April 30, 2024, flat compared
with the second quarter last year.
PCL for the quarter was US$280 million,
an increase of US$140 million compared
with the second quarter last year. PCL – impaired was US$229
million, an
increase of US$92 million, or 67%, reflecting
credit migration in the consumer and commercial
lending portfolios. PCL – performing was
US$51 million, an increase
of US$48 million. The performing provisions
this quarter reflect credit conditions and
volume growth, and are largely recorded in
the auto and commercial lending
portfolios. U.S. Retail PCL including only
the Bank’s share of PCL in the U.S. strategic cards
portfolio, as an annualized percentage of
credit volume was 0.60%,
an increase of 27 bps, compared with
the second quarter last year.
Reported non-interest expenses for the quarter
were US$1,909 million, an increase of
US$416 million, or 28%, compared with the
second quarter last year,
reflecting the impact of the provision for investigations
related to the Bank’s AML program, and FDIC
special assessment, partially offset by acquisition
and
integration-related charges for the terminated
First Horizon transaction in the second
quarter last year. On an adjusted basis, non-interest expenses
were relatively
flat, reflecting higher employee-related expenses,
partially offset by productivity initiatives.
The reported and adjusted efficiency ratios for
the quarter were 75.2% and 54.5%, respectively, compared with 56.8%
and 52.5%, respectively, in the second
quarter last year.
Quarterly comparison – Q2 2024 vs. Q1 2024
U.S. Retail reported net income of $580
million (US$433 million), a decrease of
$327 million (US$237 million), or 36% (35%
in U.S. dollars), compared with the
prior quarter. On an adjusted basis, net income for the
quarter was $1,272 million (US$939 million),
an increase of $55 million (US$43 million), or
5% (5% in
U.S. dollars). The reported and adjusted annualized
ROE for the quarter were 5.4% and 11.7%, respectively, compared with 8.5% and 11.3%, respectively, in the
prior quarter.
The contribution from Schwab of $183
million (US$136 million) decreased $11 million (US$8 million), or
6% (6% in U.S. dollars).
U.S. Retail Bank reported net income
was $397 million (US$297 million), a decrease
of $316 million (US$229 million), or 44%
(44% in U.S. dollars), compared
with the prior quarter, primarily reflecting higher non-interest
expenses and lower net interest income.
U.S. Retail Bank adjusted net income was
$1,089 million
(US$803 million), an increase of $66
million (US$51 million), or 6% (7% in U.S. dollars),
primarily reflecting lower non-interest expenses,
partially offset by lower
net interest income.
Revenue for the quarter was US$2,540 million,
a decrease of US$47 million, or 2%,
compared with the prior quarter. Net interest income of
US$2,094 million
decreased US$47 million, or 2%, primarily
reflecting the effect of fewer days in the quarter, and lower deposit
margins and volumes. Net interest margin of 2.99%
decreased 4 bps quarter-over-quarter due
to balance sheet mix and higher funding
costs. Non-interest income of US$446 million
was flat compared to the prior
quarter.
Average loan volumes increased US$2 billion,
or 1%, compared with the prior quarter. Personal loans
were relatively flat. Business loans increased
1%,
reflecting good originations from new customer
growth and slower payment rates. Average
deposit volumes decreased US$5 billion, or
1%, compared with the
prior quarter, reflecting a 5% decrease in sweep deposits
and a 2% decrease in business deposits, partially
offset by a 2% increase in personal deposit
volume.
AUA were US$40 billion
as at April 30, 2024, flat compared
with the prior quarter. AUM were US$7 billion, flat compared
with the prior quarter.
PCL for the quarter was US$280 million,
a decrease of US$5 million compared
with the prior quarter. PCL – impaired was US$229 million, a
decrease of
US$50 million, or 18%, reflecting lower provisions
in the commercial lending portfolios,
and seasonal trends in credit card and auto
portfolios. PCL – performing
was US$51 million, an increase of US$45
million. The performing provisions this quarter
reflect credit conditions and volume growth,
and are largely recorded in
the auto and commercial lending portfolios.
U.S. Retail PCL including only the Bank’s share of PCL
in the U.S. strategic cards portfolio,
as an annualized
percentage of credit volume was 0.60%, a
decrease of 1 basis point,
compared with the prior quarter.
Reported non-interest expenses for the quarter
were US$1,909 million, an increase of
US$130 million, or 7%, compared to the prior
quarter, primarily reflecting
the impact of the provision for investigations
related to the Bank’s AML program
and additional FDIC special assessment,
partially offset by the initial FDIC special
assessment in the prior quarter, and lower operating expenses.
On an adjusted basis, non-interest expenses
decreased US$95 million, or 6%, due
to seasonality
of expenses and the impact of productivity
initiatives.
The reported and adjusted efficiency ratios for
the quarter were 75.2% and 54.5%, respectively, compared with 68.8%
and 57.2%, respectively, in the prior
quarter.
Year-to-date comparison – Q2 2024 vs. Q2 2023
U.S. Retail reported net income for the
six months ended April 30, 2024, was $1,487
million (US$1,103 million), a decrease of
$1,503 million (US$1,110 million), or
50% (50% in U.S. dollars), compared with
the same period last year. On an adjusted basis, net income
for the period was $2,489 million (US$1,835
million), a
decrease of $697 million (US$522 million),
or 22% (22% in U.S. dollars). The reported
and adjusted annualized ROE for the
period were 6.9% and 11.5%,
respectively, compared
with 14.8% and 15.8%, respectively, in the same period last
year.
The contribution from Schwab of $377
million (US$280 million), decreased $174 million
(US$127 million), or 32% (31% in
U.S. dollars).
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 14
U.S. Retail Bank reported net income
for the period was $1,110
million (US$823 million), a decrease of $1,329
million (US$983 million), or 54% (54%
in U.S.
dollars), compared with the same period
last year, reflecting higher non-interest expenses, higher PCL, and
lower net interest income.
U.S. Retail Bank adjusted
net income was $2,112 million (US$1,555 million), a decrease of
$523 million (US$395 million), or 20%
(20% in U.S. dollars), primarily reflecting
higher PCL,
higher non-interest expenses, and lower net
interest income.
Revenue for the period was US$5,127
million, a decrease of US$264 million, or 5%,
compared with the same period last year. Net interest income
of
US$4,235 million decreased US$354
million, or 8%, primarily reflecting lower deposit
margins and volumes, partially offset by higher
loan volumes.
Net interest
margin of 3.01%, decreased 26 bps, due to lower
deposit margins reflecting higher deposit
costs and lower margins on loans.
Non-interest income of
US$892 million increased US$90 million,
or 11%, primarily reflecting fee income growth from increased
customer activity and higher valuation
on certain
investments in the prior year.
Average loan volumes increased US$15 billion,
or 8%, compared with the same period
last year. Personal loans increased 10%, reflecting good
originations
and slower payment rates across portfolios.
Business loans increased 6%, reflecting
good originations from new customer growth,
and slower payment rates.
Average deposit volumes decreased US$27 billion,
or 8%, reflecting a 20% decrease in sweep
deposits and a 3% decrease in business
deposits. Personal
deposit volumes
were flat. Excluding sweep deposits, average
deposits decreased 1%.
PCL was US$565 million, an increase of
US$276 million compared with the same period
last year. PCL – impaired was US$508 million, an increase
of
US$213 million, or 72%, reflecting credit
migration in the consumer and commercial lending
portfolios. PCL – performing was a build of
US$57 million, compared
with a recovery of US$6 million in the prior
year. The current year performing provisions largely reflect
current conditions, including credit migration,
and volume
growth. U.S. Retail PCL including only the
Bank’s share of PCL in the U.S. strategic cards
portfolio, as an annualized percentage of
credit volume was 0.60%, an
increase of 27 bps,
compared with the same period last
year.
Reported non-interest expenses for the period
were US$3,688 million, an increase of US$683
million, or 23%, compared with the same
period last year,
reflecting the impact of the provision for investigations
related to the Bank’s AML program,
FDIC special assessment, and higher
operating expenses, partially
offset by acquisition and integration-related charges
for the terminated First Horizon transaction
in the same period last year. On an adjusted basis, non-interest
expenses increased US$49 million, or 2%, reflecting
higher employee-related expenses.
The reported and adjusted efficiency ratios for
the quarter were 71.9% and 55.8%, respectively, compared with 55.7%
and 52.2%, respectively, for the same
period last year.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 15
TABLE 9: WEALTH MANAGEMENT AND INSURANCE
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net interest income
$
304
$
285
$
258
$
589
$
541
Non-interest income
1
2,810
2,850
2,543
5,660
5,175
Total revenue
3,114
3,135
2,801
6,249
5,716
Provision for (recovery of) credit losses –
impaired
–
–
1
–
1
Provision for (recovery of) credit losses –
performing
–
–
–
–
–
Total provision for (recovery of) credit losses
–
–
1
–
1
Insurance service expenses
1
1,248
1,366
1,118
2,614
2,282
Non-interest expenses
1
1,027
1,047
963
2,074
1,972
Provision for (recovery of) income taxes
218
167
195
385
383
Net income
$
621
$
555
$
524
$
1,176
$
1,078
Selected volumes and ratios
Return on common equity
1,2
40.8
%
37.5
%
38.0
%
39.2
%
38.6
%
Efficiency ratio
1
33.0
33.4
34.4
33.2
34.5
Efficiency ratio, net of ISE
1,3
55.0
59.2
57.2
57.1
57.4
Assets under administration (billions of Canadian
dollars)
4
$
596
$
576
$
549
$
596
$
549
Assets under management (billions of Canadian
dollars)
489
479
460
489
460
Average number of full-time equivalent staff
15,163
15,386
16,454
15,276
16,426
-
1
For the three and six months ended April 30, 2023, certain amounts have been restated for the adoption of IFRS
- Refer to Note 2 of the Bank’s second quarter 2024 Interim
Consolidated Financial Statements for further details.
2
Capital allocated to the business segment was increased to 11.5% CET1
Capital effective the first quarter of 2024, compared with 11%
in the prior year.
3
Efficiency ratio, net of ISE is calculated by dividing non-interest expenses by total revenue, net of ISE.
Total revenue, net of ISE
– Q2 2024: $1,866 million, Q1 2024: $1,769 million,
Q2 2023: $1,683 million, 2024 YTD: $3,635 million, 2023 YTD: $3,434 million. Total
revenue, net of ISE is a non-GAAP financial measure. Refer to “Non-GAAP and Other Financial
Measures” in the “How We Performed” section and the Glossary in the Bank’s second quarter 2024
MD&A for additional information about this metric.
4
Includes AUA administered by TD Investor Services, which is part of the Canadian Personal and Commercial Banking
segment.
Quarterly comparison – Q2 2024 vs. Q2 2023
Wealth Management and Insurance
net income for the quarter was $621 million,
an increase of $97 million, or 19%,
compared with the second quarter last year,
reflecting higher revenue, partially offset by higher
insurance service expenses and non-interest
expenses. The annualized ROE for the quarter
was 40.8%,
compared with 38.0% in the second quarter
last year.
Revenue for the quarter was $3,114 million, an increase of $313
million, or 11%, compared with the second quarter last year. Non-interest income was
$2,810 million, an increase of $267 million, or
10%, reflecting higher insurance
premiums, fee-based revenue commensurate
with market growth and transaction
revenue. Net interest income was $304
million, an increase of $46 million, or 18%, compared
with the second quarter last year, reflecting higher deposit
margins.
AUA were $596 billion as at April 30, 2024, an
increase of $47 billion, or 9%, compared
with the second quarter last year, reflecting market appreciation
and net
asset growth. AUM were $489 billion as at
April 30, 2024, an increase of $29 billion,
or 6%, compared with the second quarter
last year, primarily reflecting market
appreciation.
Insurance service expenses for the quarter
were $1,248 million, an increase of $130
million, or 12%, compared with the second quarter
last year, reflecting
business growth, increased claims severity and
less
favourable prior years’ claims development.
Non-interest expenses for the quarter were $1,027
million, an increase of $64 million, or
7%, compared with the second quarter
last year, reflecting higher
variable compensation commensurate
with higher revenues, and technology costs.
The efficiency ratio for the quarter was 33.0%,
compared with 34.4% in the second quarter
last year. The efficiency ratio, net of ISE for the quarter was 55.0%,
compared with 57.2% in the second quarter
last year.
Quarterly comparison – Q2 2024 vs. Q1 2024
Wealth Management and Insurance net income
for the quarter was $621 million, an increase
of $66 million, or 12%, compared with the prior
quarter, primarily
reflecting higher earnings in the wealth management
business. The annualized ROE for the quarter
was 40.8%, compared with 37.5% in the prior
quarter.
Revenue decreased $21 million, or 1%, compared
with the prior quarter. Non-interest income decreased $40 million,
or 1%, reflecting lower revenue in
the
insurance business, partially offset by higher fee-based
and transaction revenue in the wealth
management business.
Net interest income increased $19 million,
or
7%, reflecting higher deposit margins.
AUA increased $20 billion, or 3%, compared
with the prior quarter, reflecting market appreciation and net
asset growth.
AUM increased $10 billion, or 2%,
compared with prior quarter, primarily reflecting market appreciation.
Insurance service expenses for the quarter
decreased $118 million, or 9%, compared with the prior quarter, reflecting
seasonally lower claims and more
favourable prior years’ claims development.
Non-interest expenses decreased $20 million,
or 2%, compared with the prior quarter, reflecting lower
employee-related expenses.
The efficiency ratio for the quarter was 33.0%,
compared with 33.4% in the prior quarter. The efficiency ratio,
net of ISE for the quarter was 55.0%, compared
with 59.2% in the prior quarter.
Yearto-date
comparison – Q2 2024 vs. Q2 2023
Wealth Management and Insurance net income
for the six months ended April 30, 2024, was
$1,176 million, an increase of $98 million, or
9%, compared with the
same period last year, reflecting higher revenues, partially
offset by higher insurance service expenses and
non-interest expenses. The annualized ROE
for the
period was 39.2%, compared with 38.6%,
in the same period last year.
Revenue for the period was $6,249 million,
an increase of $533 million, or 9%,
compared with same period last year. Non-interest income increased
$485 million, or 9%, reflecting higher insurance
premiums, and fee-based revenue commensurate
with market growth. Net interest income
increased $48 million,
or 9%, reflecting higher investment income in
the insurance business, and higher deposit
margins, partially offset by lower deposit volumes
in the wealth
management business.
Insurance service expenses were $2,614
million, an increase of $332 million, or 15%,
compared with the same period last year, reflecting business
growth,
increased claims severity and less favourable
prior years’ claims development.
Non-interest expenses were $2,074 million,
an increase of $102 million, or 5%,
compared with the same period last year, reflecting higher
variable
compensation commensurate with higher
revenues, and technology costs.
The efficiency ratio for the period was 33.2%, compared
with 34.5% for the same period last
year. The efficiency ratio, net of ISE for the period was 57.1%,
compared with 57.4% in the same period last
year.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 16
TABLE 10: WHOLESALE BANKING
1
(millions of Canadian dollars, except
as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net interest income (TEB)
$
189
$
198
$
498
$
387
$
1,023
Non-interest income
1,751
1,582
919
3,333
1,739
Total revenue
1,940
1,780
1,417
3,720
2,762
Provision for (recovery of) credit losses –
impaired
(1)
5
5
4
6
Provision for (recovery of) credit losses –
performing
56
5
7
61
38
Total provision for (recovery of) credit losses
55
10
12
65
44
Non-interest expenses – reported
1,430
1,500
1,189
2,930
2,072
Non-interest expenses – adjusted
2,3
1,328
1,383
1,116
2,711
1,978
Provision for (recovery of) income taxes
(TEB) – reported
94
65
66
159
165
Provision for (recovery of) income taxes
(TEB) – adjusted
2
116
89
76
205
180
Net income – reported
$
361
$
205
$
150
$
566
$
481
Net income – adjusted
2
441
298
213
739
560
Selected volumes and ratios
Trading-related revenue (TEB)
4
$
693
$
730
$
482
$
1,423
$
1,144
Average gross lending portfolio (billions of Canadian
dollars)
5
96.3
96.2
95.2
96.3
96.1
Return on common equity – reported
6
9.2
%
5.3
%
4.5
%
7.3
%
7.0
%
Return on common equity – adjusted
2,6
11.3
7.6
6.4
9.5
8.2
Efficiency ratio – reported
73.7
84.3
83.9
78.8
75.0
Efficiency ratio – adjusted
2
68.5
77.7
78.8
72.9
71.6
Average number of full-time equivalent staff
7,077
7,100
6,510
7,089
5,937
-
1
Effective March 1, 2023, Wholesale Banking results include the acquisition of Cowen Inc.
2
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
and Other Financial Measures” in the “How We Performed” section of this
document.
3
Adjusted non-interest expenses exclude the acquisition and integration-related charges primarily for the Cowen acquisition
– Q2 2024: $102 million ($80 million after-tax), Q1 2024:
$117 million ($93 million after-tax), Q2 2023: $73 million ($63 million after
-tax), Q1 2023: $21 million ($16 million after-tax).
4
Includes net interest income (loss) TEB of ($118) million (Q1
2024: $(54) million, Q2 2023: $285 million, Q1 2023: $261 million), and trading income (loss) of $811
million (Q1 2024:
$784 million, Q2 2023: $197 million, Q1 2023: $401 million). Trading-related revenue
(TEB) is a non-GAAP financial measure. Refer to “Non-GAAP and Other Financial Measures” in the
“How We Performed” section and the Glossary in the Bank’s second quarter 2024 MD&A
for additional information about this metric.
5
Includes gross loans and bankers’ acceptances relating to Wholesale Banking, excluding letters of credit, cash
collateral, credit default swaps, and allowance for credit losses.
6
Capital allocated to the business segment was increased to 11.5% CET1
Capital effective the first quarter of 2024 compared with 11%
in the prior year.
Quarterly comparison – Q2 2024 vs. Q2 2023
Wholesale Banking reported net income for
the quarter was $361 million, an increase
of $211 million, compared with the second quarter last year, primarily
reflecting higher revenues, partially offset by higher
non-interest expenses. On an adjusted
basis, net income was $441 million, an increase
of $228
million.
Revenue for the quarter, including TD Cowen, was $1,940
million, an increase of $523 million, or 37%,
compared with the second quarter last
year. Higher
revenue primarily reflects higher trading-related
revenue, underwriting fees, and lending
revenue.
PCL for the quarter was $55 million, an increase
of $43 million compared with the second
quarter last year. PCL – impaired was a recovery of $1 million.
PCL –
performing was $56 million, an increase of
$49 million compared to the prior year, reflecting a higher
build in the current quarter largely related
to credit migration
across various industries.
Reported non-interest expenses for the quarter, including TD
Cowen, were $1,430 million, an increase
of $241 million, or 20%, compared
with the second
quarter last year, primarily reflecting higher variable compensation
commensurate with higher revenues,
TD Cowen and the associated acquisition and integration-
related costs. On an adjusted basis, non-interest
expenses were $1,328 million, an increase
of $212
million, or 19%.
Quarterly comparison – Q2 2024 vs. Q1 2024
Wholesale Banking reported net income for
the quarter was $361 million, an increase
of $156 million, or 76%, compared with
the prior quarter, primarily reflecting
higher revenues, and lower non-interest expenses,
partially offset by higher PCL. On an adjusted
basis, net income was $441 million, an increase
of $143 million,
or 48%.
Revenue for the quarter increased $160 million,
or 9%, compared with the prior quarter. Higher revenue
primarily reflects higher underwriting and
advisory fees,
and the net change in fair value of loan underwriting
commitments.
PCL for the quarter was $55 million, an increase
of $45 million compared with the prior quarter. PCL – impaired
was a recovery of $1 million. PCL – performing
was $56 million, an increase of $51 million
compared to the prior quarter, reflecting a higher build
in the current quarter largely related
to credit migration across
various industries.
Reported non-interest expenses for the quarter
decreased $70 million, or 5%, compared
with the prior quarter, primarily reflecting a provision of $102
million
taken in connection with the U.S. record keeping
matter recorded in the prior period,
partially offset by higher variable compensation
commensurate with higher
revenues. On an adjusted basis, non-interest expenses
decreased $55 million or 4%.
Yearto-date
comparison – Q2 2024 vs. Q2 2023
Wholesale Banking reported net income for
the six months ended April 30, 2024
was $566 million, an increase of $85 million,
or 18%, compared with the same
period last
year, reflecting higher revenues, partially offset by higher non-interest
expenses. On an adjusted basis, net income
was $739
million, an increase of
$179 million, or 32%.
Revenue,
including TD Cowen,
was $3,720 million, an increase of $958 million,
or 35%, compared with the same period
last year. Higher revenue primarily
reflects higher trading-related revenue,
underwriting fees, lending revenue largely
from syndicated and leveraged finance, and
equity commissions.
PCL was $65 million, an increase of $21
million compared with the same period
last year. PCL – impaired was $4 million. PCL – performing
was $61
million, an
increase of $23 million compared to the prior
year. The current year performing provisions largely reflect
credit migration across various industries.
Reported non-interest expenses were $2,930
million, an increase of $858 million, or 41%,
compared with the same period last year, reflecting TD
Cowen and
the associated acquisition and integration-related
costs, higher variable compensation commensurate
with higher revenues, as well as a provision
taken in
connection with the U.S. record keeping
matter. On an adjusted basis, non-interest expenses were
$2,711 million, an increase of $733
million or 37%.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 17
TABLE 11: CORPORATE
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2024
2024
2023
2024
2023
Net income (loss) – reported
$
(737)
$
(628)
$
(399)
$
(1,365)
$
(3,016)
Adjustments for items of note
Amortization of acquired intangibles
72
94
79
166
133
Acquisition and integration charges related
to the Schwab transaction
21
32
30
53
64
Share of restructuring and other charges
from investment in Schwab
–
49
–
49
–
Restructuring charges
165
291
–
456
–
Impact from the terminated FHN acquisition-related
capital hedging strategy
64
57
134
121
1,010
Civil matter provision/Litigation settlement
274
–
39
274
1,642
Less: impact of income taxes
CRD and federal tax rate increase for fiscal
2022
–
–
–
–
(585)
Other items
of note
143
113
60
256
735
Net income (loss) – adjusted
1
$
(284)
$
(218)
$
(177)
$
(502)
$
(317)
Decomposition of items included in net
income (loss) – adjusted
Net corporate expenses
2
$
(411)
$
(254)
$
(191)
$
(665)
$
(382)
Other
127
36
14
163
65
Net income (loss) – adjusted
1
$
(284)
$
(218)
$
(177)
$
(502)
$
(317)
Selected volumes
Average number of full-time equivalent staff
23,270
23,437
22,656
23,354
22,244
1
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
and Other Financial Measures” in the “How We Performed” section of this
document.
2
For additional information about this metric, refer to the Glossary in the second quarter of 2023 MD&A, which is incorporated
by reference.
Quarterly comparison – Q2 2024 vs. Q2 2023
Corporate segment’s reported net loss
for the quarter was $737 million, compared
with a reported net loss of $399 million
in the second quarter last year.
The
higher net loss primarily reflects the impacts
of a civil matter provision, higher risk
and control expenses and restructuring
charges, partially offset by higher
revenue from treasury and balance sheet activities
in the current quarter. Net corporate expenses
increased $220 million compared to
the prior year, primarily
reflecting investments in our risk and control
infrastructure. The adjusted net loss for
the quarter was $284 million, compared
with an adjusted net loss of $177
million in the second quarter last year.
Quarterly comparison – Q2 2024 vs. Q1 2024
Corporate segment’s reported net loss
for the quarter was $737 million, compared
with a reported net loss of $628 million
in the prior quarter. The higher net
loss
reflects higher risk and control expenses
and the impact of a civil matter provision,
partially offset by lower restructuring
charges and higher revenue from treasury
and balance sheet management activities.
Net corporate expenses increased $157
million compared to the prior quarter, primarily reflecting investments
in our risk
and control infrastructure. The adjusted net
loss for the quarter was $284 million,
compared with an adjusted net loss of $218
million in the prior quarter.
Year-to-date comparison – Q2 2024 vs. Q2 2023
Corporate segment’s reported net loss
for the six months ended
April 30, 2024 was $1,365 million, compared
with a reported net loss of $3,016 million in
the same
period last year. The lower net loss primarily
reflects the prior period impacts of
the Stanford litigation settlement, the terminated
FHN acquisition-related capital
hedging strategy and provision for income taxes
in connection with the CRD and increase
in the Canadian federal tax rate for fiscal
2022, partially offset by
restructuring charges and risk and control
expenses in the current period. The adjusted
net loss for the six months ended
April 30, 2024 was $502 million,
compared with an adjusted net loss of $317
million in the same period last year.
TD BANK GROUP • SECOND QUARTER 2024
• EARNINGS NEWS RELEASE
Page 18
SHAREHOLDER AND INVESTOR INFORMATION
Shareholder Services
If you:
And your inquiry relates to:
Please contact:
Are a registered shareholder (your name appears
on your TD share certificate)
Missing dividends, lost share certificates, estate
questions, address changes to the share register,
dividend bank account changes, the dividend
reinvestment plan, eliminating duplicate mailings
of
shareholder materials or stopping (or resuming)
receiving annual and quarterly reports
Transfer Agent:
TSX Trust Company
301-100 Adelaide Street West
Toronto, ON M5H 4H1
1-800-387-0825 (Canada and U.S. only)
or 416-682-3860
Facsimile: 1-888-249-6189
shareholderinquiries@tmx.com or www.tsxtrust.com
Hold your TD shares through the
Direct Registration System
in the United States
Missing dividends, lost share certificates, estate
questions, address changes to the share register,
eliminating duplicate mailings of shareholder
materials or stopping (or resuming) receiving
annual
and quarterly reports
Co-Transfer Agent and Registrar:
Computershare Trust Company, N.A.
P.O. Box 43006
Providence, RI 02940-3006
or
Computershare Trust Company,
N.A.
150 Royall Street
Canton, MA 02021
1-866-233-4836
TDD for hearing impaired: 1-800-231-5469
Shareholders outside of U.S.: 201-680-6578
TDD shareholders outside of U.S.: 201-680-6610
Email inquiries: web.queries@computershare.com
For electronic access to your account visit:
www.computershare.com/investor
Beneficially own TD shares that are
held in the
name of an intermediary, such as a bank,
a trust
company, a securities broker or other nominee
Your TD shares, including questions
regarding the
dividend reinvestment plan and mailings of
shareholder materials
Your intermediary
For all other shareholder inquiries, please
contact TD Shareholder Relations at
416-944-6367 or 1-866-756-8936 or email
tdshinfo@td.com. Please note that by
leaving us an e-mail or voicemail message,
you are providing your consent for us to
forward your inquiry to the appropriate party
for response.
Access to Quarterly Results Materials
Interested investors, the media and others
may view the second quarter earnings news
release, results slides, supplementary
financial information, and the Report
to Shareholders on the TD Investor Relations
website at www.td.com/investor/.
Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference
call in Toronto, Ontario on May 23, 2024.
The call will be audio webcast live through
TD’s
website at 8:00 a.m. ET.
The call will feature presentations by
TD executives on the Bank’s financial results
for second quarter and discussions of related
disclosures, followed by a
question-and-answer period with analysts.
The presentation material referenced
during the call will be available on the
TD website at
www.td.com/investor
on
May 23, 2024, in advance of the call.
A listen-only telephone line
is available at 416-641-6150 or 1-866-696-5894
(toll free) and the passcode is 2727354#.
The audio webcast and presentations will be
archived at
www.td.com/investor
. Replay of the teleconference will be available
from 5:00 p.m. ET on May 23, 2024,
until 11:59 p.m. ET on June 7, 2024,
by calling 905-694-9451 or 1-800-408-3053 (toll
free). The passcode is 7300743#.
About TD Bank Group
The Toronto-Dominion Bank and its
subsidiaries are collectively known as
TD Bank Group (“TD” or the “Bank”).
TD is the sixth largest bank in North
America by
assets and serves over 27.5 million customers
in four key businesses operating in
a number of locations in financial centres around
the globe: Canadian Personal
and Commercial Banking, including
TD Canada Trust and TD
Auto Finance Canada; U.S. Retail,
including TD Bank, America’s
Most Convenient Bank®, TD
Auto
Finance U.S., TD Wealth (U.S.), and an
investment in The Charles Schwab
Corporation; Wealth Management
and Insurance, including TD Wealth (Canada),
TD Direct Investing, and TD Insurance;
and Wholesale Banking, including
TD Securities and TD Cowen. TD
also ranks among the world’s leading online
financial
services firms, with more than 17 million active
online and mobile customers. TD
had $1.97 trillion in assets on
April 30, 2024. The Toronto-Dominion
Bank trades
under the symbol “TD” on the Toronto and
New York Stock Exchanges.
For further information contact:
Brooke Hales,
Vice President, Investor Relations, 416-307-8647,
Brooke.hales@td.com
Elizabeth Goldenshtein,
Senior Manager, Corporate Communications,
416-994-4124, Elizabeth.goldenshtein@td.com
ex995
TD BANK GROUP DECLARES DIVIDENDS
(all amounts in Canadian dollars)
TORONTO – May 23, 2024 -
The Toronto
-Dominion Bank (the "Bank") today announced that
a
dividend in an amount of one dollar and two cents ($1.02)
per fully paid common share in the
capital stock of the Bank has been declared for the quarter
ending July 31,
2024, payable on and
after July 31, 2024, to shareholders of record at the close
of business on July 10, 2024.
In lieu of receiving their dividends in cash, holders of the Bank’s
common shares may choose to
have their dividends reinvested in additional common shares
of the Bank in accordance with the
Dividend Reinvestment Plan (the “Plan”).
Under the Plan, the Bank has the discretion to either purchase
the additional common shares in
the open market or issue them from treasury.
If issued from treasury,
the Bank may decide to
apply a discount of up to 5% to the Average Market
Price (as defined in the Plan) of the additional
shares.
For the July 31,
2024 dividend, the Bank will issue the additional shares
from treasury,
with no discount.
Registered holders of record of the Bank's common shares
wishing to join the Plan can obtain an
Enrolment Form from TSX Trust
Company (1-800-387-0825) or on the Bank's website,
www.td.com/investor/drip.jsp.
In order to participate in the Plan in time for this dividend,
Enrolment Forms for registered holders must be received
by TSX Trust Company at P.O.
Box
4229, Postal Station A, Toronto,
Ontario, M5W 0G1, or by facsimile at 1-888-488-1416,
before
the close of business on July 10, 2024.
Beneficial or non-registered holders of the Bank's
common shares wishing to join the Plan must contact their
financial institution or broker for
instructions on how to enroll in advance of the above date.
Registered holders who participate in the Plan and who wish to
terminate that participation so that
cash dividends to which they are entitled to be paid on and
after July 31, 2024 are not reinvested
in common shares under the Plan must deliver written notice
to TSX Trust Company at the above
address by no later than July 10, 2024.
Beneficial or non-registered holders who participate in
the Plan and who wish to terminate that participation so that cash
dividends to which they are
entitled to be paid on and after July 31
,
2024 are not reinvested in common shares under the
Plan must contact their financial institution or broker for
instructions on how to terminate
participation in the Plan in advance of July 10, 2024.
The Bank also announced that dividends have been declared
on the following Non-Cumulative
Redeemable Class A First Preferred Shares of the Bank, payable
on and after July 31, 2024, to
shareholders of record at the close of business on July
10, 2024:
●
Series 1, in an amount per share of $0.228875;
●
Series 3, in an amount per share of $0.2300625;
●
Series 5, in an amount per share of $0.24225;
●
Series 7, in an amount per share of $0.2000625;
●
Series 9, in an amount per share of $0.202625;
●
Series 16, in an amount per share of $0.3938125;
●
Series 18, in an amount per share of $0.3591875; and
●
Series 24, in an amount per share of $0.31875.
The Bank for the purposes of the Income Tax
Act (Canada) and any similar provincial legislation
advises that the dividend declared for the quarter ending
July 31, 2024 and all future dividends
will be eligible dividends unless indicated otherwise.
About TD Bank Group
The Toronto
-Dominion Bank and its subsidiaries are collectively
known as TD Bank Group ("TD"
or the "Bank"). TD is the sixth largest bank in North America
by assets and serves over 27.5
million customers in four key businesses operating in a
number of locations in financial centres
around the globe: Canadian Personal and Commercial Banking,
including TD Canada Trust and
TD Auto Finance Canada; U.S. Retail, including TD
Bank, America's Most Convenient Bank®, TD
Auto Finance U.S., TD Wealth (U.S.), and an investment
in The Charles Schwab Corporation;
Wealth Management and Insurance, including TD
Wealth (Canada), TD Direct Investing,
and TD
Insurance; and Wholesale Banking, including TD Securities
and TD Cowen. TD also ranks
among the world's leading online financial services firms,
with more than 17 million active online
and mobile customers. TD had $1.97 trillion in assets
on April 30, 2024. The Toronto
-Dominion
Bank trades under the symbol "TD" on the Toronto
and New York
Stock Exchanges.
For more information contact:
Jennifer dela Cruz
Senior Legal Officer,
Corporate
Legal Department – Shareholder Relations
(416) 944-6367
Toll
free 1-866-756-8936
Elizabeth Goldenshtein
Senior Manager, Corporate
Communications
(416) 994-4124
ex996
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Bharat Masrani, Group President and Chief Executive Officer of The Toronto-Dominion
Bank, certify the following:
1.
Review
: I have reviewed
the interim financial report and interim MD&A (together, the
"interim filings") of The Toronto-Dominion Bank (the "issuer") for the interim period
ended April 30, 2024.
2.
No misrepresentations
: Based on my knowledge, having exercised reasonable
diligence, the interim filings do not contain any untrue statement
of a material fact or omit
to state a material fact required to be stated or that is necessary
to make a statement not
misleading in light of the circumstances under which it was
made, with respect to the
period covered by the interim filings.
3.
Fair presentation
: Based on my knowledge, having exercised reasonable diligence,
the interim financial report together with the other financial
information included in the
interim filings fairly present in all material respects the financial condition,
financial
performance and cash flows of the issuer, as of the date of and for the periods
presented in the interim filings.
4.
Responsibility
: The issuer's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures
(DC&P) and internal
control over financial reporting (ICFR), as those terms are defined
in National Instrument
52-109
Certification of Disclosure in Issuers' Annual and Interim Filings
, for the issuer.
5.
Design
: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the
issuer's other certifying officer(s) and I have, as at the end of the period covered
by the
interim filings
(a) designed DC&P,
or caused it to be designed under our supervision, to
provide
reasonable assurance that
(i) material information relating to the issuer is made known
to us by others,
particularly during the period in which the interim filings are being
prepared; and
(ii) information required to be disclosed by the issuer in its annual filings,
interim
filings or other reports filed or submitted by it under securities legislation
is recorded,
processed, summarized and reported within the time periods specified
in securities
legislation; and
(b) designed ICFR, or caused it to be designed under our supervision,
to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation
of financial statements for external purposes in accordance with the
issuer's GAAP.
5.1
Control framework
: The control framework the issuer's other certifying officer(s)
and I used to design the issuer's ICFR is
based on criteria established in Internal Control
– Integrated Framework issued by the Committee of Sponsoring
Organizations of the
Treadway Commission (the COSO criteria) in 2013.
5.2
N/A
5.3
N/A
6.
Reporting changes in ICFR
: The issuer has disclosed in its interim MD&A any
change in the issuer's ICFR that occurred during the period beginning
on February 1,
2024 and ended on April 30, 2024 that has materially affected, or is reasonably
likely to
materially affect, the issuer's ICFR.
Date: May 23, 2024
/s/ Bharat Masrani
Bharat Masrani
Group President and Chief Executive Officer
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Kelvin Tran,
Group Head and Chief Financial Officer of The Toronto-Dominion Bank,
certify the following:
1.
Review
: I have reviewed the interim financial report and interim MD&A
(together, the
"interim filings") of The Toronto-Dominion Bank (the "issuer") for the interim period
ended April 30, 2024.
2.
No misrepresentations
: Based on my knowledge, having exercised reasonable
diligence, the interim filings do not contain any untrue statement
of a material fact or omit
to state a material fact required to be stated or that is necessary
to make a statement not
misleading in light of the circumstances under which it was
made, with respect to the
period covered by the interim filings.
3.
Fair presentation
: Based on my knowledge, having exercised reasonable diligence,
the interim financial report together with the other financial
information included in the
interim filings fairly present in all material respects the financial condition,
financial
performance and cash flows of the issuer, as of the date of and for the periods
presented in the interim filings.
4.
Responsibility
: The issuer's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures
(DC&P) and internal
control over financial reporting (ICFR), as those terms are defined
in National Instrument
52-109
Certification of Disclosure in Issuers' Annual and Interim Filings
, for the issuer.
5.
Design
: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the
issuer's other certifying officer(s) and I have, as at the end of the period covered
by the
interim filings
(a) designed DC&P,
or caused it to be designed under our supervision, to
provide
reasonable assurance that
(i) material information relating to the issuer is made known
to us by others,
particularly during the period in which the interim filings are being
prepared; and
(ii) information required to be disclosed by the issuer in its annual
filings, interim
filings or other reports filed or submitted by it under securities legislation
is recorded,
processed, summarized and reported within the time periods specified
in securities
legislation; and
(b) designed ICFR, or caused it to be designed under our supervision,
to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation
of financial statements for external purposes in accordance with the
issuer's GAAP.
5.1
Control framework
: The control framework the issuer's other certifying officer(s)
and I used to design the issuer's ICFR is
based on criteria established in Internal Control
– Integrated Framework issued by the Committee of Sponsoring
Organizations of the
Treadway Commission (the COSO criteria) in 2013.
5.2
N/A
5.3
N/A
6.
Reporting changes in ICFR
: The issuer has disclosed in its interim MD&A any
change in the issuer's ICFR that occurred during the period beginning
on February 1,
2024 and ended on April 30, 2024 that has materially affected, or is reasonably
likely to
materially affect, the issuer's ICFR.
Date: May 23, 2024
/s/ Kelvin Tran
Kelvin Tran
Group Head and Chief Financial Officer