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 December,
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 99.2, Exhibit
99.3, 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
99.2
99.3
99.4
of Meeting and Record Date
99.5
99.6
Independent Auditor's Report dated December 4, 2024
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:
December 5, 2024
By:
/s/ Caroline Cook
Name:
Caroline Cook
Title:
Associate Vice President, Legal Treasury and
Corporate Securities
ex991
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 OCTOBER 31, 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 October 31, 2024 and adjusted to a before-tax
equivalent using an effective tax rate of 24.8%
for the twelve months ended October 31,
2024, amounted to
$700.0 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 $1,128.3
million for the twelve months ended
October 31, 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 $11,270 million for the twelve months ended October 31,
2024,
which was 10.0 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 capital trust securities
and income
taxes for the twelve months ended October
31, 2024,
was $17,181 million, which was 15.2 times
the Bank’s aggregate dividend and interest
requirement for this
period.
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 “Financial Results
Overview”
in the Bank’s 2024 MD&A (available at www.td.com/investor
and
www.sedar+.com), which is incorporated by reference, for
further explanation, reported basis results,
a list of the items of note, and a reconciliation
of adjusted to
reported results.
ex992
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 1
TD Bank Group Reports Fourth Quarter and Fiscal 2024 Results
Earnings News Release •
Three and twelve months ended October 31, 2024
FOURTH QUARTER FINANCIAL HIGHLIGHTS,
compared with the fourth quarter last
year:
●
Reported diluted earnings per share were
$1.97, compared with $1.48.
●
Adjusted diluted earnings per share were
$1.72, compared with $1.82.
●
Reported net income was $3,635 million,
compared with $2,866 million.
●
Adjusted net income was $3,205 million,
compared with $3,485 million.
FULL YEAR FINANCIAL HIGHLIGHTS, compared
with last year:
●
Reported diluted earnings per share were
$4.72, compared with $5.52.
●
Adjusted diluted earnings per share were
$7.81, compared with $7.91.
●
Reported net income was $8,842 million,
compared with $10,634 million.
●
Adjusted net income was $14,277 million,
compared with $14,995 million.
FOURTH QUARTER ADJUSTMENTS –
CHARGE (GAIN) FOR ITEMS OF NOTE:
The fourth quarter reported earnings figures
included the following items of note:
●
Amortization of acquired intangibles of $60
million ($52 million after-tax or 3 cents
per share), compared with $92 million
($83 million after-tax or
4 cents per share) in the fourth quarter last
year.
●
Acquisition and integration charges related
to the Schwab transaction of $35 million
($26 million after-tax or 2 cents per share),
compared with
$31 million ($26 million after-tax or 1 cent
per share) in the fourth quarter last year.
●
Acquisition and integration charges related
to the Cowen acquisition of $82 million
($64 million after-tax or 4 cents per share),
compared with
$197 million ($161 million after-tax or 9 cents
per share) in the fourth quarter last year.
●
Impact from the terminated First Horizon
(FHN) acquisition-related capital
hedging strategy of $59 million ($45
million after-tax or 2 cents per share),
compared with $64 million ($48 million after-tax
or 3 cents per share) in the fourth quarter
last year.
●
Gain on sale of Schwab shares of ($1,022)
million (($1,022) million after-tax
or (59) cents per share).
●
U.S. balance sheet restructuring of $311 million ($234
million after-tax or 13 cents
per share).
●
Indirect tax matters of $226 million ($173
million after-tax or 10 cents per share).
●
Federal Deposit Insurance Corporation
(FDIC)
special assessment of ($72)
million (($54)
million after-tax or (3) cents per share).
●
Global resolution of the investigations
into the Bank’s U.S. BSA/AML program of $52 million
($52 million after-tax or 3 cents per share).
TORONTO
, December 5, 2024 – TD Bank Group (“TD”
or the “Bank”) today announced its financial
results for the fourth quarter ended October
31, 2024.
Reported earnings were $3.6 billion,
up 26.8% compared with the fourth quarter last
year, and adjusted earnings were $3.2 billion,
down 8.0%.
“Despite a challenging quarter, we are pleased with
the Bank’s underlying fundamentals, which were
reflected in our revenue growth.
This quarter, we delivered
higher fee income in our markets-related businesses,
volume growth in Canada, and stable deposits
in the U.S.,”
said Bharat Masrani, Group President and
CEO,
TD Bank Group. “A key development this quarter
was the resolution of our U.S. AML matters,
bringing important clarity to our stakeholders.
Remediation is our
number one priority, and we continue to make meaningful progress
in addressing the failures.”
Canadian Personal and Commercial
Banking delivered a strong quarter
with record revenue and continued positive
operating leverage
Canadian Personal and Commercial
Banking net income was $1,823 million, an
increase of 9% compared to the fourth quarter
last year, reflecting higher revenue,
partially offset by higher non-interest expenses and
provisions for credit losses. Revenue
was a record $5,064 million, an increase
of 7%, primarily reflecting loan
and deposit volume growth and margin expansion
on deposits.
This quarter, Canadian Personal and Commercial Banking
enhanced its credit card loyalty programs,
teaming up with the Vancouver Canucks to offer exclusive
perks at home games for eligible TD credit
cardholders. Canadian Business Banking
continued to drive innovation with the launch
of TD eCommerce Solutions, a
full-service e-commerce platform for businesses
to sell online and take payments,
and through a collaboration with TouchBistro to provide a streamlined
payment
and operations
management platform for restaurant owners.
The U.S. Retail Bank delivered loan growth
and stable deposits in a challenging
quarter
U.S. Retail reported net income for the quarter
was $863 million (US$634 million), down 32% (32%
in U.S. dollars) compared with the fourth quarter
last year. On
an adjusted basis, net income was $1,095
million (US$803 million), down 14% (14%
in U.S. dollars). Reported net income
for the quarter from the Bank’s
investment in The Charles Schwab Corporation
(“Schwab”) was $154 million (US$114 million), down 22% (22% in
U.S. dollars).
This quarterly earnings news release should
be read in conjunction with the Bank’s unaudited
fourth quarter 2024 consolidated financial results
for the year
ended October 31, 2024, included in this Earnings
News Release and the audited 2024 Consolidated
Financial Statements, prepared in accordance
with
International Financial Reporting Standards
(IFRS) as issued by the International Accounting
Standards Board (IASB), which is available
on TD’s website at
http://www.td.com/investor/.
This analysis is dated December 4, 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 to the presentation
adopted in the current period. Additional
information including the 2024 MD&A 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 to generally accepted
accounting principles (GAAP), in accordance
with IFRS. Adjusted results are non-GAAP financial
measures.
For additional information about the Bank’s use of
non-GAAP financial measures, refer to “Significant
Events” and “Non-GAAP and Other
Financial Measures” in
the “How We Performed”
section of this document.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 2
U.S. Retail Bank, which excludes the Bank’s investment
in Schwab, reported net income was $709
million (US$520 million), down 34% (34% in
U.S. dollars)
compared with the fourth quarter last year, reflecting higher
PCL, higher non-interest expenses, and lower
revenue. On an adjusted basis, net income
was
$941 million (US$689 million), down 12%
(13% in U.S. dollars), reflecting higher PCL
and higher non-interest expenses.
This quarter, the U.S Retail Bank announced an extension
to its credit card program agreement with
Nordstrom to continue as the exclusive issuer
of Nordstrom’s
Visa and private label consumer credit cards through
2032.
TD Bank,
America’s Most Convenient Bank
®
(TD AMCB), ranked #1 for the eighth
consecutive year in
total number of approved U.S. Small Business
Administration (SBA) loans in its Maine
to Florida footprint and #2 in SBA loans nationally. In addition, TD AMCB
earned the 2024 Great Places to Work Certification™
for the ninth year in a row.
Wealth Management and Insurance delivered strong
underlying performance offset by impact
of severe weather events
Wealth Management and Insurance net income
was $349 million, down 29% compared
with the fourth quarter last year. Revenue for the quarter was
$3,937 million, an increase of $981 million, or
33%. Of the increase, $718 million, or 27%,
was driven by reinsurance recoveries with
the remainder reflecting
higher insurance premiums, asset growth, increased
transaction revenue and higher deposit
margins. TD Insurance reported higher claims
costs due to a
significant hailstorm in Calgary and severe
weather events in Quebec, in addition to increased
claims severity.
This quarter, Wealth Management and Insurance continued its
focus on client-centric innovation. TD Direct Investing
launched TD Active Trader Live, a new
weekly streaming program designed to
enhance clients’ trading experience with in-depth
analysis, insights and strategies.
TD Asset Management grew its ETF
business, leading the Big 5 banks in market
share growth this fiscal year
1
. TD Insurance continued its digital transformation,
with over 40% of eligible customers
now purchasing their insurance online. Additionally, TD Insurance
provided support and advice to customers
and communities impacted by severe
weather events
this quarter.
Wholesale Banking continued to demonstrate
increased earnings power from combined
TD Securities and TD Cowen capabilities
Wholesale Banking reported net income for
the quarter was $235 million, an increase
of $218
million compared with the fourth quarter last
year, primarily reflecting
higher revenue and lower non-interest expenses,
partially offset by higher income taxes and PCL.
On an adjusted basis, net income was $299
million, an increase
of $121 million, or 68%. Revenue for the
quarter was $1,771 million, an increase of
$283 million, or 19%, compared with the
fourth quarter last year, reflecting
higher lending
revenue, underwriting fees and trading-related
revenue.
This quarter, TD Securities was joint lead on the Bank’s secondary
sale of Schwab shares in a US$2.5 billion
block trade, one of the ten largest U.S. block
trades
since 2010. TD Cowen was recognized
for its industry-leading research capabilities
in the 2024 Extel Research Surveys, including
#1 in Telecom & Media and
third place overall in Canada. In the U.S.
survey, TD Cowen’s Washington Research team ranked #1. In addition,
TD Securities was recognized in four categories
at the Euromoney FX Awards, including Canada
’
s Best FX Bank.
Capital
TD’s Common Equity Tier 1 Capital ratio was 13.1%.
Looking Forward
For fiscal 2025, it will be challenging for the
Bank to generate earnings growth as it navigates
a transition year, advances AML remediation with investments
in its
risk and control infrastructure, and continues
to invest in its businesses.
The Bank is currently undertaking a strategic
review of organic opportunities and priorities,
productivity and efficiency initiatives, and
capital allocation alternatives.
As a result, TD is suspending the following
medium-term financial targets: 7-10%
adjusted EPS growth, 16%+ return on
equity and positive operating leverage.
The Bank expects to update its medium-term
financial targets in the second half of 2025.
“TD faced challenges in 2024, but we have
a strong Bank, with well-positioned businesses
serving millions of customers. Our AML
remediation is our top priority,
and we remain focused on strengthening
our risk and controls to meet our obligations,”
said Raymond Chun, Chief Operating Officer, TD Bank Group. “I’m
confident that in the year ahead, we will refresh
our strategy, drive change, and enhance efficient execution to deliver
for our shareholders and all stakeholders.”
The foregoing contains forward-looking statements. Refer to the
“Caution Regarding Forward-Looking Statements”
on page 3.
1
IFIC. As of September 30
th
, 2024.
TD BANK GROUP • FOURTH 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 (“2024 MD&A”) in the Bank’s 2024 Annual
Report under the heading “Economic Summary
and Outlook”, under the headings “Key Priorities
for 2025” 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
“2024 Accomplishments and Focus for
2025” for the Corporate segment, and in other
statements regarding the Bank’s
objectives and priorities for 2025
and beyond and strategies to achieve
them, the regulatory environment in which
the Bank operates, and the Bank’s anticipated
financial performance.
Forward-looking statements are typically identified
by words such as “will”, “would”, “should”,
“believe”, “expect”, “anticipate”, “intend”,
“estimate”, “plan”, “goal”,
“target”, “may”, and “could”. By their very
nature, these forward-looking statements
require the Bank to make assumptions
and are subject to inherent risks and
uncertainties, general and specific. Especially
in light of the uncertainty related
to the physical, financial, economic, political, and
regulatory environments, such
risks and uncertainties – many of which are
beyond the Bank’s control and the effects of which
can be difficult to predict – may cause actual
results to differ
materially from the expectations expressed
in the forward-looking statements.
Risk factors that could cause, individually or
in the aggregate, such differences include:
strategic, credit, market (including equity, commodity, foreign exchange,
interest rate, and credit spreads), operational
(including technology, cyber security, process, systems, data, third-party, fraud, infrastructure, insider and
conduct),
model, insurance, liquidity, capital adequacy, legal and regulatory compliance (including
financial crime), 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 (including
the economic, financial, and
other impacts of pandemics); geopolitical
risk; inflation, interest rates and recession
uncertainty; regulatory oversight and
compliance risk; risks associated with the
Bank’s ability to satisfy the terms of the global resolution
of the civil and criminal investigations into
the Bank’s U.S. BSA/AML program; the impact
of the global
resolution of the civil and criminal investigations
into the Bank’s U.S. BSA/AML program on the
Bank’s businesses, operations,
financial condition,
and reputation;
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; the risk of large declines
in the value of Bank’s Schwab equity investment
and corresponding impact on TD’s market
value; 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; data risk; model risk; fraud activity;
insider risk; conduct 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
consumer protection
laws and regulations, 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-related risk); exposure
related to litigation and regulatory matters; ability
of the Bank to attract, develop, and
retain key talent; changes in foreign exchange
rates, interest rates, credit
spreads and equity prices; downgrade, suspension
or withdrawal of ratings assigned by any rating
agency, the value and market price of the Bank’s common
shares and other securities may be impacted
by market conditions and other factors;
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; critical accounting
estimates and
changes to accounting standards, policies,
and methods used by the Bank; 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 2024 MD&A, as may be updated in
subsequently filed quarterly reports to
shareholders and news releases (as
applicable) related to any events or transactions
discussed under the headings
“Significant Events” or “Significant and
Subsequent Events” in the relevant MD&A,
which applicable releases may be found on
www.td.com.
All such factors, as well as other uncertainties
and potential events, and the inherent
uncertainty of forward-looking statements,
should be considered carefully
when making decisions with respect
to the Bank. The Bank cautions readers not
to place undue reliance on the Bank’s forward-looking
statements. Material
economic assumptions underlying the
forward-looking statements contained in
this document are set out in the 2024 MD&A
under the headings
“Economic
Summary and Outlook” and “Significant Events”,
under the headings “Key Priorities
for 2025” 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
“2024 Accomplishments
and Focus for 2025” for the Corporate segment,
each as may be updated in subsequently
filed quarterly reports to shareholders.
Any forward-looking statements contained
in this document represent the views of
management only as of the date hereof and
are presented for the purpose of
assisting the Bank’s shareholders and analysts in
understanding the Bank’s financial position,
objectives and priorities and anticipated financial
performance as at
and for the periods ended on the dates presented,
and may not be appropriate for other purposes.
The Bank does not undertake to update any
forward-looking
statements, whether written or oral, that
may be made from time to time by or on its
behalf, except as required under applicable
securities legislation.
This document was reviewed by the Bank’s Audit Committee and was approved by the Bank’s Board of Directors,
on the Audit Committee’s recommendation, prior to its release.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 4
TABLE 1: FINANCIAL HIGHLIGHTS
(millions of Canadian dollars, except
as noted)
As at or for the three months ended
As at or for the twelve months ended
October 31
July 31
October 31
October 31
October 31
2024
2024
2023
2024
2023
Results of operations
Total revenue – reported
1
$
15,514
$
14,176
$
13,178
$
57,223
$
50,690
Total revenue – adjusted
1,2
14,897
14,238
13,242
56,789
52,037
Provision for (recovery of) credit losses
1,109
1,072
878
4,253
2,933
Insurance services expenses (ISE)
1
2,364
1,669
1,346
6,647
5,014
Non-interest expenses – reported
1
8,050
11,012
7,628
35,493
29,855
Non-interest expenses – adjusted
1,2
7,731
7,208
6,988
29,148
26,517
Net income (loss) – reported
1
3,635
(181)
2,866
8,842
10,634
Net income – adjusted
1,2
3,205
3,646
3,485
14,277
14,995
Financial positions
(billions of Canadian dollars)
Total loans net of allowance for loan losses
$
949.5
$
938.3
$
895.9
$
949.5
$
895.9
Total assets
1
2,061.8
1,967.2
1,955.1
2,061.8
1,955.1
Total deposits
1,268.7
1,220.6
1,198.2
1,268.7
1,198.2
Total equity
115.2
111.6
112.1
115.2
112.1
Total risk-weighted assets (RWA)
3
630.9
610.5
571.2
630.9
571.2
Financial ratios
Return on common equity (ROE) – reported
1,4
13.4
%
(1.0)
%
10.5
%
8.2
%
9.9
%
Return on common equity – adjusted
1,2
11.7
14.1
12.9
13.6
14.2
Return on tangible common equity (ROTCE)
1,2,4
17.8
(1.0)
14.3
11.2
13.4
Return on tangible common equity – adjusted
1,2
15.4
18.8
17.1
18.0
18.7
Efficiency ratio – reported
1,4
51.9
77.7
57.9
62.0
58.9
Efficiency ratio – adjusted, net of ISE
1,2,4,5
61.7
57.3
58.7
58.1
56.4
Provision for (recovery of) credit losses
as a % of net
average loans and acceptances
0.47
0.46
0.39
0.46
0.34
Common share information – reported
(Canadian dollars)
Per share earnings (loss)
1
Basic
$
1.97
$
(0.14)
$
1.48
$
4.73
$
5.53
Diluted
1.97
(0.14)
1.48
4.72
5.52
Dividends per share
1.02
1.02
0.96
4.08
3.84
Book value per share
4
59.59
57.61
56.56
59.59
56.56
Closing share price
6
76.97
81.53
77.46
76.97
77.46
Shares outstanding (millions)
Average basic
1,748.2
1,747.8
1,806.3
1,758.8
1,822.5
Average diluted
1,749.3
1,747.8
1,807.8
1,760.0
1,824.4
End of period
1,750.1
1,747.9
1,790.7
1,750.1
1,790.7
Market capitalization (billions of Canadian dollars)
$
134.7
$
142.5
$
138.7
$
134.7
$
138.7
Dividend yield
4
5.0
%
5.3
%
4.7
%
5.1
%
4.6
%
Dividend payout ratio
4
51.8
n/m
7
64.6
86.1
69.3
Price-earnings ratio
1,4
16.3
19.2
14.0
16.3
14.0
Total shareholder return (1 year)
4
4.5
(1.4)
(6.9)
4.5
(6.9)
Common share information – adjusted
(Canadian dollars)
1,2
Per share earnings
1
Basic
$
1.72
$
2.05
$
1.82
$
7.82
$
7.92
Diluted
1.72
2.05
1.82
7.81
7.91
Dividend payout ratio
59.2
%
49.7
%
52.4
%
52.1
%
48.4
%
Price-earnings ratio
1
9.9
10.3
9.8
9.9
9.8
Capital Ratios
3
Common Equity Tier 1 Capital ratio
13.1
%
12.8
%
14.4
%
13.1
%
14.4
%
Tier 1 Capital ratio
14.8
14.6
16.2
14.8
16.2
Total Capital ratio
16.8
16.3
18.1
16.8
18.1
Leverage ratio
4.2
4.1
4.4
4.2
4.4
Total Loss Absorbing Capacity (TLAC) ratio
28.7
29.1
32.7
28.7
32.7
TLAC Leverage ratio
8.1
8.3
8.9
8.1
8.9
1
For the three and twelve months ended October 31, 2023, certain amounts have been restated for the adoption
of IFRS 17,
Insurance Contracts
(IFRS 17). Refer to Note 4 of the Bank’s
2024 Consolidated Financial Statements for further details.
2
The Toronto-Dominion Bank (“TD” or the
“Bank”) prepares its Consolidated Financial Statements in accordance with 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 and non-GAAP ratios to
assess each of its businesses and to measure overall Bank performance. To
arrive at adjusted results, the Bank adjusts reported results for “items of note”. Refer to the
“How We
Performed” section of this document for further explanation, a list of the items of note, and a reconciliation of adjusted
to reported results. Non-GAAP financial measures and ratios used
in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms
used by other issuers.
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 TLAC guidelines. Refer to the “Capital Position” section in the Bank’s
2024 MD&A for further details.
4
For additional information about this metric, refer to the Glossary in the Bank’s 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 –
Q4 2024: $12,533 million, Q3 2024: $12,569 million, Q4 2023: $11,
896 million, 2024: $50,142 million, 2023: $47,023 million. Effective fiscal 2024, the composition
of this non-GAAP ratio
and the comparative amounts have been revised.
6
Toronto Stock Exchange closing market
price.
7
Not meaningful.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 5
SIGNIFICANT EVENTS
a) Global Resolution of the Investigations into the Bank’s U.S. BSA/AML Program
On October 10, 2024, following active cooperation
and engagement with authorities and
regulators, the Bank reached a resolution
with respect to previously
disclosed investigations related to its U.S. Bank
Secrecy Act (BSA) and Anti-Money Laundering
(AML) compliance programs. The Bank
and certain of its U.S.
subsidiaries consented to orders with the Office of
the Comptroller of the Currency (OCC), the
Federal Reserve Board (FRB), and the Financial
Crimes
Enforcement Network (FinCEN) and entered
into plea agreements with the Department
of Justice (DOJ), Criminal Division,
Money Laundering and Asset
Recovery Section and the United States
Attorney’s Office for the District of New Jersey (collectively, the “Global
Resolution”). Details of the Global Resolution
include: (i) a total payment of US$3.088 billion
(C$4.233 billion), all of which was provisioned
during the 2024 fiscal year; (ii) TD Bank,
N.A. (TDBNA) pleading
guilty to one count of conspiring to fail to
maintain an adequate AML program, fail
to file accurate
currency transaction reports (CTRs) and
launder money and TD
Bank US Holding Company (TDBUSH) pleading
guilty to two counts of failing to
maintain an adequate AML program and failing
to file accurate CTRs; (iii)
requirements to remediate the Bank’s U.S. BSA/AML
program, broadly aligned to its existing
remediation program, which requirements
the Bank has begun to
address; (iv) a requirement to prioritize the
funding and staffing of the remediation, which includes
Board certifications for dividend distributions
from certain of the
Bank’s U.S. subsidiaries to the Bank; (v) formal oversight
of the U.S. BSA/AML remediation through
an independent compliance monitorship;
(vi) a prohibition
against the average combined total assets
of TD’s two U.S. banking subsidiaries (TD Bank,
N.A. and TD Bank USA, N.A.) (collectively, the “U.S. Bank”) exceeding
US$434 billion (representing the combined
total assets of the U.S. Bank as at September
30, 2024) (the “Asset Limitation”), and if
the U.S. Bank does not achieve
compliance with all actionable articles in
the OCC consent orders (and for each successive
year that the U.S. Bank remains non-compliant),
the OCC may require
the U.S. Bank to further reduce total consolidated
assets by up to 7%; (vii) the U.S. Bank being
subject
to OCC supervisory approval processes
for any additions
of new bank products, services, markets, and
stores prior to the OCC’s acceptance of the U.S. Bank’s
improved AML policies and procedures,
to ensure the AML
risk of new initiatives is appropriately considered
and mitigated; (viii) requirements for
the Bank and TD Group U.S. Holdings, LLC
(TDGUS) to retain a third party
to assess the effectiveness of the corporate governance
and U.S. management structure and composition
to adequately oversee U.S. operations;
and (ix)
requirements to comply with the terms of the
plea agreements with the DOJ during a
five-year term of probation (which could be
extended as a result of the Bank
failing to complete the compliance undertakings,
failing to cooperate or to report alleged misconduct
as required, or committing additional crimes);
(x) an ongoing
obligation to cooperate with DOJ investigations;
and (xi) an ongoing obligation to report evidence
or allegations of violations by the Bank, its
affiliates, or their
employees that may be a violation of U.S. federal
law.
Refer to “Key Terms of the Global Resolution”
below for additional information about
the terms of the orders and plea agreements.
Key Terms of the Global Resolution
Order/Agreement
Key Requirements
Plea Agreements between the DOJ and
TDBUSH and TDBNA dated
October 10, 2024
●
TDBUSH plead guilty to BSA/AML program violations (31 U.S.C. § 5318(h) and 5322) and currency transaction report violations (31 U.S.C. § 5313
and 5324).
●
TDBNA plead guilty to conspiracy (18 U.S.C. § 371) with three objects: BSA/AML program violations (31 U.S.C. § 5318(h)) and 5322), currency
transaction report violations (31 U.S.C. § 5313 and 5324), and money laundering (18 U.S.C. § 1956(a)(2)(B)(i)).
●
Monetary Penalty: fine of US$1,434,013,478.40 (US$1,428,513,478.40 after crediting) for TDBUSH and a fine of US$500,000 and a forfeiture of
US$452,432,302 (US$328,932,302 after crediting) for TDBNA.
●
Term of Probation: Five-year term of probation.
●
Remediation requirements:
-
Independent Compliance Monitor. Retain an independent compliance monitor for a period of three years to oversee the Bank’s compliance
remediation and enhancement.
-
BSA/AML Compliance Obligations. Continue to implement and enhance its AML compliance program such that, at minimum, it meets the
requirements as set forth in Attachment C to the Plea Agreements, which lays out compliance commitments, including with respect to tone
from the top; policies, procedures, and internal controls; transaction monitoring and reporting; oversight and independence; insider risk;
training; internal reporting; employee discipline; monitoring, testing, and audit; and address any deficiencies in its AML compliance program,
as specified in the Plea Agreements.
●
Cooperation: Cooperate with the DOJ in any investigation or prosecution relating to the conduct, individuals, and entities described in the Plea
Agreements and the Statement of Facts attached to the Plea Agreements, as well as any other conduct, individuals, and entities under investigation
by the DOJ at any time during the length of the Agreements’ obligations.
●
Disclosure: To the extent that the Bank learns of any evidence or allegation of conduct by the Bank, its affiliates, or their employees that may be a
violation of U.S. federal law, promptly report to the DOJ any such evidence or allegation.
●
Sale/Merger/Transfer: Any change in corporate form, including a sale, merger, or transfer of business operations that are material to the Bank’s
consolidated operations, or to the operations of any subsidiaries, branches, or affiliates involved in the conduct described in the Statement of Facts,
as they exist as of the date of the Agreements, whether such transaction is structured as a sale, asset sale, merger, transfer, or other change in
corporate form, the Bank must include in any such contract a provision binding the purchaser, or any successor in interest thereto, to the obligations
described in the Agreements, and the other party to the contract must agree in writing to the terms and obligations to the Agreements; meet other
requirements prior to any such change in corporate form, including a sale, merger, or transfer of business operations, as specified in the
Agreements.
●
Breach of Agreements: The following would constitute a breach of the Agreements: (a) any felony under U.S. federal law; (b) providing deliberately
false, incomplete, or misleading information to the DOJ; (c) failing to cooperate with the DOJ; (d) failing to implement a compliance program as set
forth in the Plea Agreements and Attachment C to the Plea Agreements and complete the monitorship as set forth in the Plea Agreements and
Attachment D to the Plea Agreements; (e) committing any acts that, had they occurred within the jurisdictional reach of the United States, would be
a violation of federal money laundering laws or the Bank Secrecy Act; or (f) otherwise failing specifically to perform or to fulfill completely each of the
obligations under the Agreements. In the event of a breach of the Agreements, the Bank will be subject to prosecution for any federal criminal
violation of which the DOJ is aware, including the charges to which the Bank pleaded guilty.
●
Non-Contradiction: The Bank will not make any public statement, in litigation or otherwise, contradicting its acceptance of responsibility or the facts
described in the Information or Statement of Facts. The Bank will seek preclearance from the DOJ before issuing any affirmative public statement in
connection with the resolutions, including via press release, press conference remarks, or a scripted statement to investors.
●
Acknowledgement by the Bank and TDGUS of the Agreements by TDBNA and TDBUSH and agreement to undertake the cooperation commitments
outlined in the Agreements and ensure that TDBNA and TDBUSH comply with all terms of the Agreements.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 6
Order/Agreement
Key Requirements
FinCEN Consent Order involving TDBNA
and TD Bank USA, N.A. (TDBUSA)
●
BSA/AML program violations (31 U.S.C. § 5318 (h)(1) and 31 C.F.R. § 1020.210(a)), suspicious activity report violations (31 U.S.C. § 5318(g) and
31 C.F.R. § 1020.320), and currency transaction report violations (31 U.S.C. § 5313 and 31 C.F.R.
§ 1010.311).
●
BSA/AML program violations (31 U.S.C. § 5318 (h)(1) and 31 C.F.R. § 1020.210(a)), suspicious activity report violations (31 U.S.C. § 5318(g) and
31 C.F.R. § 1020.320), and currency transaction report violations (31 U.S.C. § 5313 and 31 C.F.R.
§ 1010.311).
●
Monetary Penalty: US$1.3 billion (requiring a payment of US$757 million after crediting).
●
Remediation Requirements:
-
Independent Compliance Monitor. The Order requires the Bank to retain an independent compliance monitor for a period of 4 years, which
will be required to undertake various reviews and issue reports as outlined in the Order.
-
Suspicious activity report (SAR) Lookback. The Order recognized that the Bank has retained an independent third party to conduct a SAR
lookback review, which will be overseen by the independent compliance monitor. Within 150 days from the engagement of the monitor, the
SAR lookback consultant must deliver to FinCEN and the monitor a report summarizing the proposed scope and methodology of the review.
Within 18 months from the date of the SAR lookback report, the SAR lookback consultant must deliver a detailed report that summarizes the
findings of its review.
-
BSA/AML Program Review. The Order requires the Bank to retain an independent third party to conduct a review of the effectiveness of its
BSA/AML program, similar to the review required by the FRB and OCC. Within 60 days from the engagement of the monitor, the monitor
must propose an AML program consultant or elect to serve as the consultant. Within 90 days from the engagement of the consultant, the
consultant must deliver to FinCEN a report summarizing the proposed scope and methodology of the review. Within 60 days from the end of
the consultant’s review, but no later than one year from the date of its engagement, the consultant must submit to FinCEN a final written
report.
-
Accountability Review. The Order requires the independent compliance monitor to assess the accountability review work that the Bank has
conducted concerning the involvement of personnel in the conduct described in the Order. Within 120 days from the engagement of the
monitor, the monitor must deliver to FinCEN a report summarizing the proposed scope and methodology of the review. Within 60 days from
the end of the monitor’s review, but no later than one year from the date of its engagement, the monitor must submit to FinCEN a final
written report.
-
Data Governance Review. The Order requires the independent compliance monitor to oversee a data governance review, which will involve
an assessment of the Bank’s data governance framework. Within 120 days from the engagement of the monitor, the monitor must deliver to
FinCEN a report summarizing the proposed scope and methodology of the review. Within 60 days from the end of the monitor’s review, but
no later than one year from the date of its engagement, the monitor must submit to FinCEN a final written report.
●
Cooperation: The Order requires the Bank to cooperate with FinCEN in all matters within the scope of or related to the resolution.
●
Non-Contradiction: The Order requires the Bank not to make any public statement that contradicts the admissions or acceptance of responsibility or
any terms of the Order.
OCC Consent Orders involving TDBNA and
TDBUSA
●
BSA/AML program violation (12 C.F.R. § 21.21), suspicious activity report violations (12 C.F.R.
§ 21.11), currency transaction report violations (31
C.F.R. § 1010.312), customer due diligence violation (31 C.F.R.
§ 1020.210(a)(2)(v)) and recklessly engaging in unsafe or unsound practices
related to the Bank’s BSA/AML Compliance Program.
●
Monetary Penalty: US$450 million.
●
The Orders will remain in effect until amended, suspended, waived, or terminated, in writing by the OCC.
●
Remediation Requirements (dates listed below may be extended by written approval from the OCC):
-
Compliance Committee. Appoint, within 15 days of the Order’s effective date, a Compliance Committee to monitor and oversee the
TDBNA’s and TDBUSA’s compliance
with the Orders.
-
BSA/AML Action Plan. Submit a written plan, within 150 days of the Order’s effective date, detailing the remedial actions necessary to
achieve and sustain compliance with the BSA, its implementing regulations, and specified articles of the Orders, and to address all
BSA/AML deficiencies, violations, and corrective actions (the “BSA/AML Action Plan”). Adopt and implement the BSA/AML Action Plan and
provide progress reports.
-
BSA/AML Program Assessment and Remediation.
Retain, within 60 days of the Order’s effective date or as otherwise specified in the
BSA/AML Action Plan, an independent third-party consultant to conduct an end-to-end review and assessment of their BSA/AML Program
and draft a written report documenting its findings and recommendations, to be submitted to the boards of directors (Boards) of TDBNA and
TDBUSA, and the OCC, at the same time. Effectively remediate any identified gaps and deficiencies.
-
New Products, Services, Branches, and Markets. Submit, within 150 days of the Order’s effective date, or as otherwise specified in the
BSA/AML Action Plan, to the OCC for review and prior written determination of no supervisory objection, improved policies and procedures
for evaluating the BSA/AML risks posed by adding a new product or service and ensuring the Bank has adequate controls to mitigate such
risks, prohibits TDBNA and TDBUSA from adding new products or services until they receive a determination of no supervisory objection to
the improved policies and procedures. After receiving no supervisory objection to the policies and procedures, the Orders prohibit TDBNA
and TDBUSA from adding any new medium or high BSA/AML risk product or service without, among other requirements, a prior
determination of no supervisory objection. Prohibition from opening a new branch or entering a new market without first receiving no
supervisory objection.
-
BSA Officer and Staffing. Maintain a qualified BSA Officer vested with sufficient independence, authority, stature, and resources, and
requires the Boards to ensure that TDBNA and TDBUSA have sufficient managers and staff with the appropriate skills, expertise, and with
the requisite authority, to support the BSA Officer and BSA/AML program. Following the Independent Consultant review, ensure there is an
annual review of the adequacy of the Bank’s BSA Officer and staff, with the determinations finalized in writing, to be submitted to the OCC,
and the Boards are responsible for ensuring any necessary changes are implemented. Ensure that the BSA Officer and staff have sufficient
training, authority, resources, and skill, that management has the necessary knowledge to oversee the Bank’s compliance with the BSA, that
information systems are effective, and that there are clear lines of authority and responsibility for the BSA/AML compliance function and
staff, including giving the BSA Officer the ultimate accountability for and authority over all the U.S. BSA/AML Program components.
-
BSA/AML Training. Implement, within 120 days of the Order’s effective date, or as otherwise specified in the BSA/AML Action Plan, an
effective BSA/AML Training Program that meets certain minimum requirements, as detailed in the Orders.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 7
Order/Agreement
Key Requirements
OCC Consent Orders involving TDBNA and
TDBUSA
-
BSA/AML Internal Controls. Develop and implement, within 120 days of the Order’s effective date, or as otherwise specified in the BSA/AML
Action Plan, an effective Internal Controls Program to identify and control the risks associated with money laundering and terrorist financing
and other illicit financial activity, and to achieve and maintain compliance with the BSA. The Internal Controls Program must meet certain
minimum requirements, as detailed in the Orders.
-
Customer Due Diligence and Risk Identification. Develop and implement, within 120 days of the Order’s effective date, or as otherwise
specified in the BSA/AML Action Plan, an effective customer due diligence (CDD) program to ensure appropriate collection and analysis of
customer information when opening new accounts, when renewing or modifying existing accounts for customers, and when the Bank
obtains event-driven information indicating that it would be prudent to obtain updated information and maintain accurate customer risk
profiles. The CDD Program must meet certain minimum requirements, as detailed in the Orders.
-
Suspicious Activity Identification, Evaluation, and Reporting. Develop and implement, within 120 days of the Order’s effective date, or as
otherwise specified in the BSA/AML Action Plan, an effective suspicious activity monitoring and reporting program to ensure the timely and
appropriate identification, review, and disposition of unusual activity, and the filing of SARs. The Suspicious Activity Review Program must
meet certain minimum requirements, as detailed in the Orders.
-
BSA/AML Independent Testing. Develop and implement, within 120 days of the Order’s effective date, or as otherwise specified in the
BSA/AML Action Plan, an effective BSA/AML independent testing program to test the Bank’s compliance with the BSA, relative to its risk
profile, and the overall adequacy of the Bank’s BSA/AML Program. The BSA/AML Audit Program must meet certain minimum requirements,
as detailed in the Orders. Develop risk assessment and planning processes that clearly document AML risk, and for management to require
reporting on no less than a quarterly basis of all deficiencies in BSA/AML processes and controls identified through the BSA/AML Audit
Program to the Bank’s Board or BSA/AML Audit Committee, and to senior management, after which the Boards or BSA/AML Audit
Committee must ensure that management takes prompt action to remediate the cited deficiencies and validates corrective action.
-
Suspicious Activity Review Lookback. Retain, within 60 days of the Order’s effective date, or as otherwise specified in the BSA/AML Action
Plan, an independent third-party consultant to conduct a review and provide a written report on the Bank’s suspicious activity monitoring,
investigation, decisioning, and reporting. The OCC has discretion to expand the scope of the look-back after its review of the report.
-
Accountability for Employees Involved in Misconduct. TDBNA and TDBUSA are prohibited from retaining, now or in the future, any individual
as an officer, employee, agent, consultant, or contractor who participated in, was subject to formal discipline, or was separated or terminated
in connection with the underlying conduct described in the Orders, and TDBNA and TDBUSA are required to submit, within 30 days of the
Order’s effective date, to the OCC policies, procedures, and reporting requirements for ensuring compliance with the accountability
requirements. The Orders also require the HR senior executive officers of TDBNA and TDBUSA to submit, on a quarterly basis, compliance
with the accountability requirements.
-
General Board Requirements. Ensure timely adoption and implementation of all corrective actions required by the Orders, verification of
adherence to the corrective actions, and ensure the corrective actions are effective in addressing the deficiencies that led to the Orders.
●
Limits on Growth. TDBNA and TDBUSA may not take any action that would cause the average of the Bank’s total consolidated assets for the
current calendar quarter and the immediately preceding calendar quarter to exceed the total consolidated assets reported as of September 30,
- If TDBNA and TDBUSA do not meet the deadline for compliance with all actionable articles in the Orders, the OCC may require TDBNA and
TDBUSA to reduce their total consolidated assets by up to 7% from their total consolidated assets as reported as of the most recent quarter, and for
each year TDBNA and TDBUSA continue to be in noncompliance with the Orders, the OCC may require further reductions up to 7% from their total
consolidated assets as reported as of the most recent calendar quarter. The Deputy Comptroller of the OCC may, at their discretion, temporarily
suspend the asset limit in light of unusual circumstances at TDBNA or TDBUSA.
●
Prioritization of Expenditure on Remediation. Prior to declaring or paying dividends, engaging in share repurchases, or making any other capital
distribution, the Boards of TDBNA and TDBUSA must certify in writing to the OCC that the Bank has allocated appropriate resources and staffing to
the remediation required by the Orders.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 8
Order/Agreement
Key Requirements
Federal Reserve Cease & Desist Order with
TD Bank, TD Group US Holdings LLC
(TDGUS) and TDBUSH
●
Issued pursuant to 12 U.S.C. § 1818(b) and (i)(2)(B)
●
Monetary Penalty: US$123.5 million.
●
The Order will remain in effect until stayed, modified, terminated, or suspended in writing by the FRB.
●
Remediation Requirements (dates listed below may be extended by written approval from the FRB):
-
Board Oversight. Submit to the FRB, within 90 days of the Order’s effective date, a written plan to oversee the matters identified in the
Order.
-
Corporate Governance and Management Review. Retain, within 30 days of the Order’s effective date, an independent third party to assess
the effectiveness of the corporate governance, board and U.S. management structure, and staffing needs at TD Bank, TDGUS, and
TDBUSH and draft a written report of findings and recommendations, which will be provided to the FRB and to the Office of the
Superintendent of Financial Institutions (OSFI) at the same time it is provided to the Boards of TD Bank and TDGUS. Submit to the FRB and
OSFI a written board oversight plan that is designed to address the findings and recommendations in the report and that describes the
actions the Boards of TD Bank and TDGUS will take to strengthen the management and corporate governance structure of TD Bank,
TDGUS, and TDBUSH.
-
U.S. Remediation Office: Submit, within 90 days of the Order’s effective date, a written plan to establish a Remediation Office in the United
States to operate under the oversight of the Boards. The Remediation Office will be responsible for several undertakings pursuant to the
Order.
-
U.S. Law Compliance Program. Submit, within 60 days of the Order’s effective date, a compliance program (U.S. Law Compliance Program)
to the FRB, including a timeline for implementation. The U.S. Law Compliance Program related obligations include, among other
requirements, the relocation to the U.S. the part of the TD Bank, TDGUS, and TDBUSH compliance function that is responsible for
establishing and maintaining compliance with the applicable BSA/AML requirements by the branches, affiliates, and global business lines of
TD Bank, TDGUS, and TDBUSH.
-
BSA/AML Compliance Review. Retain, within 30 days of the Order’s effective date, an independent third party to conduct a review of the
BSA/AML compliance elements of the U.S. Law Compliance Program. The independent third party will be responsible for preparing a written
report of findings and recommendations, which will be provided to the FRB at the same time it is provided to the Boards. TD Bank, TDGUS,
and TDBUSH must submit a written plan that is designed to fully address the findings and recommendations in the report and that describes
the actions that will be taken to strengthen compliance with the applicable BSA/AML requirements.
-
Resource Allocation for Remediation. Prior to TDGUS or TDBUSH declaring or paying dividends, engaging in share repurchases, or making
any other capital distribution, the Boards must certify to the FRB that the appropriate resources and staffing have been allocated to
remediation, as required by the Order.
-
Accountability for Employees Involved in Misconduct. TD Bank, TDGUS, and TDBUSH are prohibited from retaining, now or in the future,
any individual as an officer, employee, agent, consultant, or contractor who participated in, was subject to formal discipline, or was
separated or terminated in connection with the underlying described in the Order.
-
Ongoing Reporting. Submit quarterly progress reports detailing the form and manner of actions taken to comply with the Order, a timetable
and schedule to implement specific remedial actions to be taken, and the results thereof. Pursuant to the Order, the written OCC progress
reports will be sent to the FRB.
Remediation of U.S. BSA/AML Program
As described in the DOJ Statement of Facts,
between January 2014 and October 2023,
the U.S. Bank’s BSA/AML Program had long-term,
pervasive, and
systemic deficiencies and the U.S. Bank (a)
failed to substantively update, and severely
limited the types of activity screened
through, the transaction monitoring
system, and (b) failed to adequately train employees
who served as the first line of defense against
money laundering. TDBNA’s failure to effectively manage its
employee risk also contributed to insider
misconduct. In addition, as noted in the OCC
Consent Order, deficiencies in the U.S. Bank’s BSA/AML Program
included
deficiencies related to: internal controls and risk
management practices; risk assessments;
customer due diligence; customer risk ratings;
suspicious activity
identification, evaluation, and reporting; governance;
staffing; independent testing; and training, among
others. There was a systemic breakdown
in the policies,
procedures, and processes to identify and report
suspicious activity.
The Bank is focused on remediating its U.S.
BSA/AML program to meet the requirements
of the Global Resolution, and it has organized
its remediation efforts
consistent with the requirements of the Global
Resolution. The redesign of the U.S. BSA/AML
program is focused on improvements
to capabilities across five core
pillars, namely: (i) People and Talent, (ii) Governance and Structure, (iii)
Policy and Risk Assessment, (iv) Process and
Control, and (v) Data and Technology.
Progress to date on the remediation includes:
(i)
People and Talent: The Bank has overhauled its U.S. BSA/AML program
resourcing across all three lines of defence. The
Bank has established a
dedicated and expanded U.S. Financial
Crime Risk Management leadership team and
structure, with emphasis on specific experience
and subject matter
expertise, including the appointment of the
BSA Officer as required by the OCC order. The Bank has also
created and hired new resources across
the first
line of defence with years of risk management
and control experience, particularly in
Financial Crime areas. The Internal Audit
function has also been
further developed to include resources with
specialized testing experience in the domain
as well as specific to remediation validation
work.
(ii)
Governance and Structure: The Bank has
strengthened its oversight structure and accountability
across all three lines of defence, including
the risk
management and audit functions, and has
established a dedicated committee at the
U.S. boards (the “U.S. Compliance Committee”)
as well as a
dedicated committee of the Bank’s Board of Directors
(the “Remediation Committee”) for remediation
oversight. In addition, the Bank has established
an
executive U.S. Remediation Office, which will be responsible
for overseeing the execution of the remediation
program and engaging with the U.S.
regulators in relation to the actions required
to be taken by the Bank under the Global
Resolution. The Bank also anticipates that
the monitorship will be
appointed in fiscal 2025
2
.
(iii)
Policy and Risk Assessment: The Bank has
introduced new standards with the goal of
enhancing capabilities to measure financial
crime risk more
effectively. Specifically, new risk limits
have been designed and implemented, and changes
to certain risk assessment processes were introduced
to help
highlight specific products and areas of
specific risk.
(iv)
Process and Control: The Bank has enhanced
customer onboarding procedures for cash
intensive clients. In addition, the Bank has
added additional
transactions to the Bank’s monitoring system and
added new scenarios to help increase the
detection of potentially suspicious activity across
its products
2
Under the terms of the plea agreements and consent orders, the selection of the monitor will be made by the DOJ
and FinCEN. Accordingly, the timing of the appointment
of the
monitorship is not entirely within the Bank’s control.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 9
and services. The Bank has also implemented
role-based targeted training and enhanced
Bank-wide general training to reinforce understanding
and
accountability.
(v)
Data and Technology: The Bank has deployed new data-driven technology solutions
and has deployed the first phases of an enhanced
transaction
monitoring platform. The new system has an
enhanced data model and new capabilities
to modernize and manage the Bank’s detection
proficiency into
the future. Advanced analytics have been introduced
to improve the speed of investigation activities,
and to do proactive modeling of current risks
that
impact the Bank.
With the talent, governance, structure, and policy
foundations in place, the Bank expects
to have the majority of its management remediation
actions implemented
in calendar 2025, with additional management
actions planned for calendar 2026. In addition,
sustainability and testing activities are planned
for calendar 2026
and calendar 2027. The Bank is also targeting
to have the Suspicious Activity Report lookback
to be completed in 2027 per the FinCEN
Consent Order.
All
management remediation actions will be
subject to validation by the Bank’s internal audit
function, followed by the review and acceptance
by the appointed
monitor, demonstrated sustainability, and, ultimately, the review and approval of the Bank’s U.S. banking regulators
and the DOJ. The following graph illustrates
the Bank’s expected remediation plan and progress.
The Bank’s remediation timeline is based on the Bank’s
current plans, as well as assumptions related
to the duration of planning activities, including
the
completion of external benchmarking and
lookback reviews. The Bank’s ability to
meet its planned remediation milestones assumes
that the Bank will be able to
successfully execute against its U.S. BSA/AML
remediation program plan, which is
subject to inherent risks and uncertainties including
the Bank’s ability to attract
and retain key employees, the ability of
third parties to deliver on their contractual obligations,
and the successful development and implementation
of required
technology solutions. Furthermore, the execution
of the U.S. BSA/AML remediation plan, including
these planned milestones, will not be entirely
within the Bank’s
control including because of (i) the requirement
to obtain regulatory approval or non-objection
before proceeding with various steps, and
(ii) the requirement for the
various deliverables to be acceptable to the regulators
and/or the monitors. For additional information
on the risks associated with the remediation
of the Bank’s
U.S. BSA/AML program, see “Risk Factors That
May Affect Future Results – Global Resolution of
the Investigations into
the Bank’s U.S. BSA/AML Program”.
For information about estimated U.S. BSA/AML
remediation and governance and
control expenses for the 2025 fiscal year, see the “Key Priorities
for 2025”
section of the U.S. Retail segment; for additional
information about the Bank’s AML governance
framework, see the “Managing Risk”
section; and for information
about the risks associated with the remediation
of the Bank’s U.S. BSA/AML program, see
the “Risk Factors That May Affect Future Results
– Global Resolution of
the Investigations into the Bank’s U.S. BSA/AML
Program”
section.
Assessment and Strengthening of the
Bank’s Enterprise AML Program
The Bank is undertaking several improvements
to the Bank’s enterprise-wide AML/Anti-Terrorist Financing and Sanctions Programs
(“Enterprise AML Program”).
These improvements are made in the context
of the Bank’s 2023 annual assessment of
its Enterprise AML Program, which was
rated unsatisfactory as of October
31, 2023. The depth and severity of U.S. BSA/AML
program deficiencies contributed to
the effectiveness rating of the Enterprise AML Program.
Moreover, during
fiscal 2024, Financial Transactions and Reports Analysis
Centre of Canada (FINTRAC) undertook a
compliance examination of certain aspects of
the Bank’s AML
program in Canada. FINTRAC imposed
an administrative monetary penalty of $9.2
million and issued five violations: (i) FINTRAC
found that TD failed to file
suspicious transaction reports (STRs) in
20 of the cases it had reviewed and (ii)
FINTRAC issued four inter-related violations
that primarily stemmed from the
Bank’s failure to properly identify (i.e., assess
and document) its full population of high-risk
customers. Based on the Bank’s work to date,
the Bank (a) has not
identified issues to the same extent in Canada,
Europe or Asia as in the U.S., and (b)
has not experienced the same severe AML-related
events in Canada,
Europe or Asia as those experienced in the
U.S. However, the Bank has concluded that most of the pervasive
AML related issues in the U.S. are, to a
varying
extent, also applicable to certain aspects of
the Enterprise AML Program outside
the U.S. The Bank has identified a number
of areas in the Enterprise AML
Program outside the U.S. that require improvement.
Common themes requiring attention relate
to governance and oversight of various
components of the
Enterprise AML Program, quality of reporting
to senior management and the board of
directors, quality control processes, adequacy
of procedures in targeted
areas, operational deficiencies in respect of high-risk
customers, and certain aspects of
transaction monitoring.
Improvements to the Enterprise AML Program
outside the U.S. are underway, with corresponding investments
and resourcing in place across all three lines
of
defence, including key technology initiatives,
to ensure the Bank can address these deficiencies.
The Bank is also applying learnings obtained from
the
deficiencies identified in its U.S. BSA/AML
program to its Enterprise AML Program
outside the U.S. In particular, these improvements to
the Enterprise AML
Program outside the U.S. fall under three
main categories:
●
Tactical Enhancements: The Bank has launched the implementation of a number
of operational and business process enhancements
across the
enterprise, where necessary, that are similar to the initial enhancements
made to its U.S. BSA/AML program. These
enhancements are intended to
provide interim risk mitigation and strengthen
the control environment in specific key
areas.
●
Strategic Enhancements: A detailed plan
has been developed to upgrade the Enterprise
AML Program outside the U.S. and address
the areas that require
improvement, with ongoing updates.
●
FINTRAC Remediation: As a result of
the FINTRAC examination, the Bank
has established a remediation program and
submitted a detailed plan to
FINTRAC to address the FINTRAC violations
and ensure compliance with regulatory expectations.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 10
Similar to the U.S. BSA/AML remediation program,
the FINTRAC remediation and other planned
strategic enhancements of the Enterprise AML
Program outside
the U.S. are organized under five core pillars:
i.
People & Talent: Similar to investments made in the U.S., the Bank has
recruited AML program leadership and
talent with a focus on deep subject matter
expertise, with additional recruitment underway.
ii.
Governance & Structure: The Bank is redefining
its enterprise AML governance approach,
including strengthening oversight structure
and reporting across
all three lines of defense.
iii. Policy & Risk Assessment: Similar to the changes
being made in the U.S., new enterprise
standards and capabilities are being updated
to measure
financial crime risk more effectively, and strengthen oversight across
key areas of the program, including high
risk and high cash customer activity.
iv. Process & Control: The Bank is in the process of enhancing
enterprise customer onboarding procedures,
updating approaches to transaction and
customer monitoring, and implementing
training to support enhanced processes and
reinforce accountability.
v.
Data & Technology: The Bank has established an enhancement plan to deliver
new technology solutions with stronger
detection and data management
capabilities, advanced analytics, new scenarios,
and modelling capabilities.
Based on the Bank’s current plans, the majority
of the above-mentioned remediation and
enhancement actions are anticipated
to be implemented by the Bank by
the end of calendar 2025, and will then be
subject to internal review, challenge, and validation of the
activities. See “Remediation of U.S. BSA/AML
Program”
for
U.S. BSA/AML remediation timeline.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 11
Impact on the Bank’s Financial Performance Objectives
Reflecting a challenging macroeconomic
environment and the impact of the resolution
of investigations related to the Bank’s AML program,
in fiscal 2024, the
Bank did not meet the Bank’s medium-term financial
targets to attain 7-10% adjusted EPS growth (the
Bank’s fiscal 2024 adjusted EPS growth
was -1.3%), a
16%+ return on equity (the Bank’s fiscal 2024
adjusted return on equity was 13.6%), and
a positive operating leverage
3
(the Bank’s fiscal 2024 adjusted revenue,
net of insurance service expense, and adjusted
expense growth were 7.1% and 10.5%,
respectively).
The Bank expects that fiscal 2025 will be a transition
year, is prioritizing the investments and work that are required
to meet its regulatory commitments, and
expects that elevated risk and control expenses
will negatively impact earnings during the 2025
fiscal year. In addition, the Bank continues to invest in its
businesses. Accordingly, for fiscal 2025, it will be challenging for
the Bank to generate earnings growth.
The Bank does not expect to meet the following
three
previously disclosed medium-term financial
targets in fiscal 2025: 7-10% adjusted EPS
growth, 16%+ return on equity and positive
operating leverage.
The Bank is currently undertaking a broad-based
strategic review and will reassess organic
opportunities and priorities, productivity
and efficiency initiatives, and
capital allocation alternatives, with the objective
of delivering competitive returns for our
shareholders. As a result of this review, the Bank is suspending
the
following medium-term financial targets:
7-10% adjusted EPS growth, 16%+
return on equity and positive operating leverage.
The Bank expects to provide
updates on its strategic review, and on the Bank's medium-term
financial targets, in the second half of 2025.
The Bank remains confident in the earnings
growth
potential of its Canadian Personal & Commercial
Banking, Wealth Management & Insurance and
Wholesale Banking segments. While the Bank
expects that its
balance sheet restructuring activities in the
U.S. Retail segment and U.S. AML remediation
will impact the U.S. Retail segment, it
remains committed to the US
market and confident in the strength of the
US franchise.
As a result of the Bank’s investments in its risk
and control infrastructure and investments
supporting business growth, including employee-related
expenses, net
of expected productivity and restructuring
run-rate savings, the Bank expects
that expense growth for the 2025 fiscal year
will be in the range of 5-7%
4
.
Impact on the Bank’s U.S. Priorities
The U.S. Retail segment’s top priority remains
remediating the U.S. BSA/AML program
and strengthening the governance and
control environment. In addition, to
help ensure we can continue to support our
customers’ financial needs in the U.S.
while not exceeding the limitation on the combined
total assets of the U.S. Bank,
the Bank is focused on executing multiple balance
sheet restructuring actions in fiscal 2025. Refer
to the “Key Priorities for 2025”
section of the U.S. Retail
segment section for additional information,
including the loss associated with the balance
sheet restructuring actions which is treated as
an item of note in the U.S.
Retail segment results.
Impact on the Bank’s Operations
The plea agreements have resulted in one
TD entity being disqualified from serving as
an investment adviser or underwriter
to registered investment companies in
the United States,
which has required TD to seek a waiver
from the U.S. Securities and Exchange
Commission (“SEC”) and implement interim
arrangements until
a waiver is obtained. Another TD entity has
become disqualified from relying on the
U.S. Department of Labor’s “qualified
professional asset manager” exemption
for purposes of providing asset management
services to employee benefit plans subject
to the U.S. Employee Retirement Income
Security Act of 1974 (“ERISA”).
As a result, TD is relying on alternative exemptions
for purposes of ERISA compliance, which
are expected to allow TD to continue
to operate these businesses
without disruption. In addition, TD has made
minor modifications to its U.S. registered
securities programs. None of these changes
had a material impact on the
Bank’s fourth quarter of 2024 results.
The terms of the Global Resolution and
the financial, operational and business impact
that those terms have had on the Bank have led
to the Bank exceeding
certain internal risk metrics, resulting in
additional escalation and monitoring activities
within the Bank, including with respect to the
Bank’s remediation activities.
b)
Restructuring Charges
The Bank continued to undertake certain
measures in 2024 to reduce its cost base and
achieve greater efficiency. In connection with these measures, the Bank
incurred $566 million of restructuring charges
for the year ended October 31, 2024 (October 31,
2023 – $363 million), which primarily
relate to employee
severance and other personnel-related
costs and real estate optimization. This restructuring
program concluded in the third quarter
of 2024.
c) Federal Deposit Insurance Corporation Special
Assessment
On November 16, 2023, the Federal Deposit
Insurance Corporation (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 fiscal 2024.
On February 23, 2024, the FDIC notified
all institutions subject to the special assessment
that its estimate of total losses 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 fiscal 2024.
During the fourth quarter of fiscal 2024,
the Bank updated the special assessment
estimate based on actual
invoices received during the year and recognized
an expense recovery of $72 million (US$52
million).
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.
d) Sale of Schwab Common Shares
On August 21, 2024, the Bank sold 40.5
million shares of common stock of The Charles
Schwab Corporation (“Schwab”) for proceeds
of approximately $3.4 billion
(US$2.5 billion). The share sale reduced the
Bank’s ownership interest in Schwab from 12.3%
to 10.1%. The Bank recognized approximately
$1.0 billion
(US$0.7 billion) as other income (net of $0.5
billion (US$0.4 billion) loss from accumulated
other comprehensive income (AOCI),
reclassified to earnings), in the
fourth quarter of fiscal 2024.
3
Operating leverage is a non-GAAP measure. At the total Bank level, TD calculates operating leverage
as the difference between the % change in adjusted revenue (U.S. Retail in source
currency) net of insurance service expense, and adjusted expenses (U.S. Retail in US$) grossed up
by the retailer program partners' share of PCL for the Bank's U.S. strategic card
portfolio. Collectively, these adjustments provide a measure
of operating leverage that management believes is more reflective of underlying business performance.
4
The Bank’s
expectations regarding
expense growth
is based
on the
Bank’s assumptions
regarding risk
and control
investments, employee-related
expenses, foreign
exchange impact,
and productivity and restructuring savings. These assumptions are subject to inherent uncertainties
and may vary based on factors both within and outside the Bank’s control including the
accuracy of
the Bank’s
employee compensation
and benefit
expense forecasts,
impact of
business performance
on variable
compensation, inflation,
the pace
of productivity
initiatives
across the
organization, and
unexpected expenses
such as
legal matters.
Refer to
the “Risk
Factors that
May Affect
Future Results”
section in
the Bank’s
2024 MD&A
for additional
information about risks and uncertainties that may impact the Bank’s estimates.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 12
HOW WE PERFORMED
ECONOMIC SUMMARY AND OUTLOOK
The global economy remains on track for a
modest slowdown in calendar 2024, as high
interest rates continue to weigh on growth.
Alongside slower growth,
inflation across the G-7 has cooled, and
central banks have started to lower interest
rates. TD Economics expects future interest
rate reductions to be gradual, as
central banks assess how growth and inflation
respond. In addition, the evolution of geopolitical
risks maintains a degree of uncertainty
on both the economic
outlook and the inflation trajectory.
The U.S. economy has continued to grow at
a solid pace in calendar 2024 supported
by resilient consumer spending and
strength in business investment. High
borrowing costs have curtailed residential investment,
which has weighed on overall growth.
With U.S. domestic demand outpacing many
of its advanced economy
peers, import growth has also run ahead
of exports, leading to little support to growth
from international trade.
Based on the October 2024 data, the
U.S. job market has stabilized recently, with the unemployment rate
at 4.1%, up modestly from a year ago.
This can be
characterized as a normalization following
tight conditions that persisted for longer than
expected after the pandemic. The U.S. economy
carries the markings of a
“soft landing” that is allowing inflation pressures
to gradually drift lower and opened
the door to interest rate cuts by the U.S. Federal
Reserve. The U.S. central
bank lowered its policy rate by half a point in
September and another quarter point in October.
TD Economics expects the U.S. Federal
Reserve to continue to lower interest rates
over the next year. However, the pace of interest rate reductions has
become more uncertain following the November
election. Given the likelihood of increased
tariffs under the new administration,
and the potential for tax cuts, the
risk that inflation experiences renewed upward
pressure has increased. This could
slow the pace of interest rate reductions. TD
Economics expects the federal
funds rate to be lowered to 3.25-3.50% by the
end of calendar 2025 – a level that is still on
the restrictive side.
After Canada’s economy slowed notably in calendar
2023, strong population gains have lifted
economic growth in the first half of calendar
- Population
increases have also contributed to labour force
growth outpacing job creation, taking
the unemployment rate higher and cooling
labour market conditions. The
unemployment rate was 6.5% in October, above its pre-pandemic
level, but still below its long-run average.
Looking ahead, TD Economics expects
population
growth to slow sharply over the next
few years as the federal government reduced
its targets for permanent and non-permanent
residents. The negative impact of
the weaker population inflows on consumer
spending and housing activity is likely to be
more than offset by the boost to activity from lower
interest rates. As such,
TD Economics forecasts a modest pickup
in overall economic growth in calendar 2025
from this year’s estimated tepid
rate of around 1%.
As a result of favourable inflation dynamics
alongside a softening economy, the Bank of Canada has
cut interest rates four times in calendar 2024, taking
the
overnight rate to 3.75% in October. TD Economics expects
the Bank of Canada to continue lowering interest
rates over the next year, reaching between 2.25% to
2.50% by the end of calendar 2025. Interest
rates differentials between Canada and the
U.S. have widened, weakening the Canadian dollar. TD Economics
expects the Canadian dollar will trade in the
71 to 73 U.S. cent range over the next
few quarters.
HOW THE BANK REPORTS
The Bank prepares its Consolidated Financial
Statements in accordance with IFRS, the
current GAAP,
and refers to results prepared in accordance
with IFRS as
“reported” results.
Non-GAAP and Other Financial Measures
In addition to reported results, the Bank also
presents certain financial measures, including
non-GAAP financial measures that are
historical, non-GAAP ratios,
supplementary financial measures and capital
management measures, to assess its results.
Non-GAAP financial measures, such as “adjusted”
results, are utilized
to assess the Bank’s businesses and to measure
the Bank’s overall performance. To arrive at adjusted results, the Bank adjusts for “items
of note”, from reported
results. Items of note are items which
management does not believe are indicative of
underlying business performance and are
disclosed in Table 3. Non-GAAP
ratios include a non-GAAP financial measure
as one or more of its components. Examples
of non-GAAP ratios include adjusted basic
and diluted earnings per
share (EPS), adjusted dividend payout ratio, adjusted
efficiency ratio, and adjusted effective income
tax rate. The Bank believes that non-GAAP
financial
measures and non-GAAP ratios provide
the reader with a better understanding of how
management views the Bank’s performance.
Non-GAAP financial measures
and non-GAAP ratios used in this document
are not defined terms under IFRS and,
therefore, may not be comparable to similar
terms used by other issuers.
Supplementary financial measures depict
the Bank’s financial performance and position,
and capital management measures depict
the Bank’s capital position, and
both are explained in this document where
they first appear.
U.S. Strategic Cards
The Bank’s U.S. strategic cards portfolio is comprised
of agreements with certain U.S. retailers
pursuant to which TD is the U.S. issuer
of private label and co-
branded consumer credit cards to their U.S.
customers. Under the terms of the individual
agreements, the Bank and the retailers share
in the profits generated by
the relevant portfolios after credit losses.
Under IFRS, TD is required to present
the gross amount of revenue and provisions
for credit losses (PCL) related to
these portfolios in the Bank’s 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 August 21, 2024, the Bank sold 40.5
million shares of common stock of Schwab for
proceeds of approximately $3.4 billion (US$2.5
billion). The share sale
reduced the Bank’s ownership interest in Schwab
from 12.3% to 10.1%. The Bank recognized
approximately $1.0 billion (US$0.7 billion) as
other income (net of
$0.5 billion (US$0.4 billion) loss from AOCI
reclassified to earnings), in the fourth quarter
of fiscal 2024.
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 12 of the 2024 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”
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
are designated as floating-rate obligations.
In comparison to the 2019 Schwab IDA Agreement,
the 2023 Schwab IDA Agreement extends
the initial expiration date
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 13
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 had 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.
By the end of the first quarter of fiscal 2024,
Schwab had fully exercised its option
buy down up to US$5 billion of FROA and
had paid a total of $337 million
(US$250 million) in termination fees to the
Bank in accordance with the 2023 Schwab
IDA Agreement. 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. Refer to
the “Related Party
Transactions” section in the Bank’s 2024 MD&A for further
details.
The following table provides the operating results
on a reported basis for the Bank.
TABLE 2: OPERATING RESULTS – Reported
(millions of Canadian dollars)
For the three months ended
For the twelve months ended
October 31
July 31
October 31
October 31
October 31
2024
2024
2023
2024
2023
Net interest income
$
7,940
$
7,579
$
7,494
$
30,472
$
29,944
Non-interest income
1
7,574
6,597
5,684
26,751
20,746
Total revenue
1
15,514
14,176
13,178
57,223
50,690
Provision for (recovery of) credit losses
1,109
1,072
878
4,253
2,933
Insurance service expenses
1
2,364
1,669
1,346
6,647
5,014
Non-interest expenses
1
8,050
11,012
7,628
35,493
29,855
Income before income taxes and share
of net income from
investment in Schwab
1
3,991
423
3,326
10,830
12,888
Provision for (recovery of) income taxes
1
534
794
616
2,691
3,118
Share of net income from investment in
Schwab
178
190
156
703
864
Net income (loss) – reported
1
3,635
(181)
2,866
8,842
10,634
Preferred dividends and distributions on other
equity instruments
193
69
196
526
563
Net income (loss) available to common shareholders
1
$
3,442
$
(250)
$
2,670
$
8,316
$
10,071
1
For the three and twelve months ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to Note 4 of the Bank’s 2024 Consolidated Financial Statements for
further details.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 14
The following table provides a reconciliation between
the Bank’s adjusted and reported results.
For further details refer to the “Significant
Events” or “How the Bank
Reports”
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 twelve months ended
October 31
July 31
October 31
October 31
October 31
2024
2024
2023
2024
2023
Operating results – adjusted
Net interest income
1,2
$
8,034
$
7,641
$
7,558
$
30,749
$
30,394
Non-interest income
1,3,4
6,863
6,597
5,684
26,040
21,643
Total revenue
3
14,897
14,238
13,242
56,789
52,037
Provision for (recovery of) credit losses
1,109
1,072
878
4,253
2,933
Insurance service expenses
3
2,364
1,669
1,346
6,647
5,014
Non-interest expenses
3,5
7,731
7,208
6,988
29,148
26,517
Income before income taxes and share of net income from
investment in Schwab
3,693
4,289
4,030
16,741
17,573
Provision for (recovery of) income taxes
695
868
779
3,355
3,651
Share of net income from investment in Schwab
6
207
225
234
891
1,073
Net income – adjusted
3
3,205
3,646
3,485
14,277
14,995
Preferred dividends and distributions on other equity instruments
193
69
196
526
563
Net income available to common shareholders –
adjusted
3
3,012
3,577
3,289
13,751
14,432
Pre-tax adjustments for items of note
Amortization of acquired intangibles
7
(60)
(64)
(92)
(290)
(313)
Acquisition and integration charges related to the Schwab
transaction
5,6
(35)
(21)
(31)
(109)
(149)
Share of restructuring and other charges from investment
in Schwab
6
–
–
(35)
(49)
(35)
Restructuring charges
5
–
(110)
(363)
(566)
(363)
Acquisition and integration-related charges
5
(82)
(78)
(197)
(379)
(434)
Charges related to the terminated FHN acquisition
5
–
–
–
–
(344)
Payment related to the termination of the FHN transaction
5
–
–
–
–
(306)
Impact from the terminated FHN acquisition-related capital
hedging strategy
1
(59)
(62)
(64)
(242)
(1,251)
Impact of retroactive tax legislation on payment card clearing services
4
–
–
–
–
(57)
Gain on sale of Schwab shares
4
1,022
–
–
1,022
–
U.S. balance sheet restructuring
4
(311)
–
–
(311)
–
Indirect tax matters
2,5
(226)
–
–
(226)
–
Civil matter provision/Litigation settlement
4,5
–
–
–
(274)
(1,642)
FDIC special assessment
5
72
–
–
(442)
–
Global resolution of the investigations into the Bank’s
U.S. BSA/AML program
5
(52)
(3,566)
–
(4,233)
–
Less: Impact of income taxes
Amortization of acquired intangibles
(8)
(8)
(9)
(41)
(42)
Acquisition and integration charges related to the Schwab
transaction
(9)
(3)
(5)
(23)
(25)
Restructuring charges
–
(29)
(97)
(150)
(97)
Acquisition and integration-related charges
(18)
(18)
(36)
(82)
(89)
Charges related to the terminated FHN acquisition
–
–
–
–
(85)
Impact from the terminated FHN acquisition-related capital
hedging strategy
(14)
(16)
(16)
(60)
(308)
Impact of retroactive tax legislation on payment card clearing services
–
–
–
–
(16)
U.S. balance sheet restructuring
(77)
–
–
(77)
–
Indirect tax matters
(53)
–
–
(53)
–
Civil matter provision/Litigation settlement
–
–
–
(69)
(456)
FDIC special assessment
18
–
–
(109)
–
Canada Recovery Dividend (CRD) and federal tax rate increase
for fiscal 2022
8
–
–
–
–
585
Total adjustments for items
of note
430
(3,827)
(619)
(5,435)
(4,361)
Net income (loss) available to common shareholders
– reported
3
$
3,442
$
(250)
$
2,670
$
8,316
$
10,071
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 – 2023: ($1,386)
million, ii) basis adjustment amortization related to de-designated fair value hedge accounting relationships,
recorded in net interest income – 2023: $262
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 – 2023: $585 million. After the
termination of the merger agreement, the residual impact of the strategy is reversed through net
interest income – Q4 2024: ($59) million, Q3 2024: ($62) million, 2024: ($242) million, Q4 2023: ($64)
million, 2023: ($127)
million.
2
Adjusted net interest income excludes the following item of note:
i.
Indirect tax matters – Q4 2024: $35 million, 2024: $35 million, reported in the Corporate segment. Refer
to “Taxes”
in the “Financial Results Overview” section in the Bank’s 2024 MD&A for further details.
3
For the three and twelve months ended October 31, 2023, certain amounts have been restated for
the adoption of IFRS 17. Refer to Note 4 of the Bank’s 2024 Consolidated Financial Statements for
further details.
4
Adjusted non-interest income excludes the following items of note:
i.
Impact of retroactive tax legislation on payment card clearing services – 2023: $57 million, reported
in the Corporate segment;
ii.
The Bank sold 40.5 million shares of common stock of Schwab and recognized a gain on the sale
– Q4 2024: $1,022 million, 2024: $1,022 million, reported in the Corporate segment;
iii.
U.S. balance sheet restructuring – Q4 2024: $311 million, 2024: $311 million, reported in the U.S. Retail segment; and
iv.
Stanford litigation settlement – 2023: $39 million. This reflects the foreign exchange loss and is reported
in the Corporate segment.
5
Adjusted non-interest expenses exclude the following items of note:
i.
Amortization of acquired intangibles – Q4 2024: $33 million, Q3 2024: $34 million, 2024: $172 million, Q4
2023: $62 million, 2023: $193 million, reported in the Corporate segment;
ii.
The Bank’s own acquisition and integration charges related to the Schwab transaction – Q4 2024: $33
million, Q3 2024: $16 million, 2024: $88 million, Q4 2023: $18 million, 2023: $95 million, reported in the
Corporate segment;
iii.
Restructuring charges – Q3 2024: $110 million, 2024: $566 million, Q4 2023: $363 million, 2023: $363 million, reported in the Corporate segment;
iv.
Acquisition and integration-related charges – Q4 2024: $82 million, Q3 2024: $78 million, 2024: $379
million, Q4 2023: $197 million, 2023: $434 million, reported in the Wholesale segment;
v.
Charges related to the terminated FHN acquisition – 2023: $344 million, reported in the U.S. Retail segment;
vi.
Payment related to the termination of the FHN transaction – 2023: $306 million, reported in the Corporate
segment;
vii.
Indirect tax matters – Q4 2024: $191 million, 2024: $191 million, reported in the Corporate segment.
Refer to “Taxes”
in the “Financial Results Overview” section in the Bank’s 2024 MD&A for further details;
viii.
Civil matter provision/Litigation settlement – 2024: $274 million in respect of a civil matter, 2023: $1,603 million in respect
of the Stanford litigation settlement, reported in the Corporate segment;
ix.
FDIC special assessment – Q4 2024: ($72) million, 2024: $442 million, reported in the U.S. Retail segment;
and
x.
Charges for the global resolution of the investigations into the Bank’s U.S. BSA/AML program – Q4 2024:
$52 million, Q3 2024: $3,566 million, 2024: $4,233 million, reported in the U.S. Retail segment.
6
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 – Q4 2024: $27 million, Q3 2024: $30 million, 2024:
$118 million, Q4 2023: $30 million, 2023: $120 million;
ii.
The Bank’s share of acquisition and integration charges associated with Schwab’s acquisition of TD Ameritrade – Q4 2024: $2
million, Q3 2024: $5 million, 2024: $21 million, Q4 2023: $13 million, 2023:
$54 million;
iii.
The Bank’s share of restructuring charges incurred by Schwab – 2024: $27 million; Q4 2023: $35 million, 2023:
$35 million; and
iv.
The Bank’s share of the FDIC special assessment charge incurred by Schwab – 2024: $22 million.
7
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 5
and 6 for amounts.
8
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 • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 15
TABLE 4: RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE
1
(Canadian dollars)
For the three months ended
For the twelve months ended
October 31
July 31
October 31
October 31
October 31
2024
2024
2023
2024
2023
Basic earnings (loss) per share – reported
2
$
1.97
$
(0.14)
$
1.48
$
4.73
$
5.53
Adjustments for items of note
(0.25)
2.19
0.34
3.09
2.39
Basic earnings per share – adjusted
2
$
1.72
$
2.05
$
1.82
$
7.82
$
7.92
Diluted earnings (loss) per share – reported
2
$
1.97
$
(0.14)
$
1.48
$
4.72
$
5.52
Adjustments for items of note
(0.25)
2.19
0.34
3.09
2.39
Diluted earnings per share – adjusted
2
$
1.72
$
2.05
$
1.82
$
7.81
$
7.91
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 twelve months ended October 31, 2023, certain amounts have been restated for the adoption
of IFRS 17. Refer to Note 4 of the Bank’s 2024 Consolidated Financial
Statements for further details.
TABLE 5: NON-GAAP FINANCIAL MEASURES – Reconciliation
of Reported to Adjusted Provision for Income
Taxes
(millions of Canadian dollars, except
as noted)
For the three months ended
For the twelve months ended
October 31
July 31
October 31
October 31
October 31
2024
2024
2023
2024
2023
Provision for income taxes – reported
1
$
534
$
794
$
616
$
2,691
$
3,118
Total adjustments for items of note
161
74
163
664
533
Provision for income taxes – adjusted
1,2
$
695
$
868
$
779
$
3,355
$
3,651
Effective income tax rate – reported
1
13.4
%
187.7
%
18.5
%
24.8
%
24.2
%
Effective income tax rate – adjusted
1,2
18.8
20.2
19.3
20.0
20.8
1
For the three and twelve months ended October 31 2023, certain amounts have been restated for the adoption of IFRS 17.
Refer to Note 4 of the Bank’s 2024 Consolidated Financial
Statements for further details.
2
For additional information about this metric, refer to the Glossary in the Bank’s 2024
MD&A.
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 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 available 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 increased to 11.5% of Common Equity
Tier 1 (CET1) Capital effective in the first quarter of 2024,
compared with 11% in fiscal 2023.
TABLE 6: RETURN ON COMMON EQUITY
1
(millions of Canadian dollars, except
as noted)
For the three months ended
For the twelve months ended
October 31
July 31
October 31
October 31
October 31
2024
2024
2023
2024
2023
Average common equity
1
$
102,051
$
100,677
$
100,998
$
100,979
$
101,608
Net income (loss) available to common shareholders
– reported
1
3,442
(250)
2,670
8,316
10,071
Items of note, net of income taxes
(430)
3,827
619
5,435
4,361
Net income available to common shareholders
– adjusted
1
$
3,012
$
3,577
$
3,289
$
13,751
$
14,432
Return on common equity – reported
1
13.4
%
(1.0)
%
10.5
%
8.2
%
9.9
%
Return on common equity – adjusted
1
11.7
14.1
12.9
13.6
14.2
1
For the three and twelve months
ended October 31 2023, certain amounts have been restated for the adoption of IFRS 17. Refer
to Note 4 of the Bank’s 2024 Consolidated Financial
Statements.
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 • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 16
TABLE 7: RETURN ON TANGIBLE COMMON EQUITY
(millions of Canadian dollars, except
as noted)
For the three months ended
For the twelve months ended
October 31
July 31
October 31
October 31
October 31
2024
2024
2023
2024
2023
Average common equity
1
$
102,051
$
100,677
$
100,998
$
100,979
$
101,608
Average goodwill
18,568
18,608
18,217
18,431
17,919
Average imputed goodwill and intangibles on
investments in Schwab
5,328
6,087
6,094
5,836
6,127
Average other acquired intangibles
2
508
544
635
560
584
Average related deferred tax liabilities
(230)
(228)
(114)
(230)
(154)
Average tangible common equity
1
77,877
75,666
76,166
76,382
77,132
Net income (loss) available to common
shareholders – reported
1
3,442
(250)
2,670
8,316
10,071
Amortization of acquired intangibles, net of income
taxes
52
56
83
249
271
Net income (loss) available to common
shareholders adjusted for amortization
of
acquired intangibles, net of income taxes
1
3,494
(194)
2,753
8,565
10,342
Other items of note, net of income taxes
(482)
3,771
536
5,186
4,090
Net income available to common
shareholders – adjusted
1
$
3,012
$
3,577
$
3,289
$
13,751
$
14,432
Return on tangible common equity
1
17.8
%
(1.0)
%
14.3
%
11.2
%
13.4
%
Return on tangible common equity – adjusted
1
15.4
18.8
17.1
18.0
18.7
1
For the three and twelve months ended October 31 2023, certain amounts have been restated for the adoption
of IFRS 17. Refer to Note 4 of the Bank’s 2024 Consolidated Financial
Statements.
2
Excludes intangibles relating to software and asset servicing rights.
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
US 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 twelve months ended
October 31, 2024 vs.
October 31, 2024 vs.
October 31, 2023
October 31, 2023
Increase (Decrease)
Increase (Decrease)
U.S. Retail Bank
Total revenue – reported
$
17
$
126
Total revenue – adjusted
1
19
128
Non-interest expenses – reported
11
166
Non-interest expenses – adjusted
1
11
70
Net income – reported, after-tax
3
(57)
Net income – adjusted, after-tax
1
5
39
Share of net income from investment in
Schwab
2
2
6
U.S. Retail segment net income – reported,
after-tax
5
(51)
U.S. Retail segment net income – adjusted,
after-tax
1
7
45
Earnings per share (Canadian dollars)
Basic – reported
$
–
$
(0.03)
Basic – adjusted
1
–
0.02
Diluted – reported
–
(0.03)
Diluted – adjusted
1
–
0.02
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.
Average foreign exchange rate (equivalent of CAD $1.00)
For the three months ended
For the twelve months ended
October 31
October 31
October 31
October 31
2024
2023
2024
2023
U.S. dollar
0.733
0.736
0.735
0.741
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 17
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank’s 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 Note 28
of the Bank’s Consolidated Financial Statements
for the year ended October 31, 2024. Effective fiscal
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 dividends, is adjusted
to its equivalent before-tax value. Using
TEB allows the Bank to measure income
from all securities and loans consistently
and makes for a more meaningful comparison
of net interest income with similar institutions.
The TEB increase to net interest income and
provision for income
taxes reflected in Wholesale Banking results
is reversed in the Corporate segment.
The TEB adjustment for the quarter
was $19 million, compared with $44 million
in the fourth quarter last year, and $27 million in the prior quarter.
Share of net income from investment in
Schwab is reported in the U.S. Retail
segment. Amounts for amortization of acquired
intangibles, the Bank’s share of
acquisition and integration charges associated
with Schwab’s acquisition of TD Ameritrade, and
the Bank’s share of Schwab’s restructuring charges
are recorded
in the Corporate segment.
TABLE 9: CANADIAN PERSONAL AND COMMERCIAL BANKING
(millions of Canadian dollars, except
as noted)
For the three months ended
October 31
July 31
October 31
2024
2024
2023
Net interest income
$
4,058
$
3,994
$
3,705
Non-interest income
1,006
1,009
1,049
Total revenue
5,064
5,003
4,754
Provision for (recovery of) credit losses –
impaired
456
338
274
Provision for (recovery of) credit losses –
performing
(26)
97
116
Total provision for (recovery of) credit losses
430
435
390
Non-interest expenses
2,102
1,967
2,039
Provision for (recovery of) income taxes
709
729
646
Net income
$
1,823
$
1,872
$
1,679
Selected volumes and ratios
Return on common equity
1
32.0
%
34.1
%
35.1
%
Net interest margin (including on securitized
assets)
2
2.80
2.81
2.78
Efficiency ratio
41.5
39.3
42.9
Number of Canadian Retail branches at period
end
1,060
1,060
1,062
Average number of full-time equivalent staff
27,930
28,465
29,069
–
1
Capital allocated to the business segment was increased to 11.5%
CET1 Capital effective fiscal 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
2024 MD&A, for
additional information about these metrics.
Quarterly comparison
Q4 2024 vs. Q4 2023
Canadian Personal and Commercial
Banking net income for the quarter was
$1,823 million, an increase of $144 million,
or 9%, compared with the fourth quarter
last year, reflecting higher revenue, partially
offset by higher non-interest expenses
and PCL. The annualized ROE for
the quarter was 32.0%, compared with
35.1%, in the fourth quarter last year.
Revenue for the quarter was $5,064 million, an
increase of $310 million, or 7%,
compared with the fourth quarter last year. Net
interest income was
$4,058 million, an increase of $353 million, or
10%, primarily reflecting volume growth
and higher deposit margins, partially offset
by lower loan margins.
Average
loan volumes increased $25 billion, or 5%,
reflecting 4% growth in personal loans
and 6% growth in business loans.
Average deposit volumes increased
$24 billion, or 5%, reflecting 6% growth in
personal deposits and 4% growth in business
deposits. Net interest margin was 2.80%,
an increase of 2 basis points
(bps), primarily due to higher margins on deposits,
partially offset by changes to balance
sheet mix reflecting the transition of Bankers’
Acceptances (BAs) to
Canadian Overnight Repo Rate Average (CORRA)-based
loans and lower margins on loans. Non-interest
income was $1,006 million, a decrease
of $43 million, or
4%, compared with the fourth quarter last
year, primarily reflecting lower fees due
to the transition of BAs to CORRA-based loans,
the impact of which is offset in
net interest income.
PCL for the quarter was
$430 million, an increase of
$40 million compared with the
fourth quarter last year. PCL
– impaired was $456 million,
an
increase of $182 million, or
66%, reflecting credit migration in the
commercial and consumer lending portfolios.
PCL – performing was
a recovery of
$26 million, compared with
a build of $116 million
in the prior year. The performing
release this quarter was largely
recorded in the consumer lending
portfolios, reflecting improvement in the
economic outlook, including the impact
of lower interest rates. Total PCL
as an annualized percentage
of credit
volume was 0.30%, an increase
of 2 bps compared with
the fourth quarter last year.
Non-interest expenses for the quarter were $2,102
million, an increase of $63 million,
or 3%, compared with the fourth quarter last
year, primarily reflecting
higher technology and marketing spend
supporting business growth, partially offset by lower
non-credit provisions.
The efficiency ratio for the quarter was 41.5%,
compared with 42.9% in the fourth quarter
last year.
Quarterly comparison – Q4 2024 vs. Q3 2024
Canadian Personal and Commercial
Banking net income for the quarter was
$1,823 million, a decrease of $49 million, or
3%, compared with the prior quarter,
primarily reflecting higher non-interest expenses,
partially offset by higher revenue.
The annualized ROE for the quarter was 32.0%,
compared with 34.1% in the
prior quarter.
Revenue increased $61 million, or 1%, compared
with the prior quarter. Net interest income
increased $64 million, or 2%, mainly driven
by volume growth.
Average loan volumes increased $6 billion,
or 1%, reflecting 1% growth in personal loans
and 1% growth in business loans.
Average deposit volumes increased
$7 billion, or 2%, reflecting 1% growth
in personal deposits and 3% growth in business
deposits. Net interest margin was 2.80%, a
decrease of 1 basis point
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 18
compared with the prior quarter, primarily due
to changes in balance sheet mix reflecting the
transition of BAs to CORRA-based loans. Non-interest
income
decreased $3 million, relatively flat compared
with the prior quarter.
PCL for the quarter was $430 million,
a decrease of $5 million compared with the prior
quarter. PCL – impaired was
$456 million, an increase of $118 million, or
35%, reflecting credit migration in the commercial
and consumer lending portfolios. PCL
– performing was a recovery of $26 million,
compared with a build of
$97 million in the prior quarter. The performing
release this quarter was largely recorded in
the consumer lending portfolios, reflecting
improvement in the
economic outlook, including the impact of
lower interest rates. Total PCL
as an annualized percentage of credit volume
was 0.30%, flat compared with the prior
quarter.
Non-interest expenses increased $135 million, or
7% compared with the prior quarter,
primarily reflecting higher marketing and
technology spend supporting
business growth, and various other operating
expenses.
The efficiency ratio was 41.5%, compared
with 39.3% in the prior quarter.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 19
TABLE 10: U.S. RETAIL
(millions of dollars, except as noted)
For the three months ended
October 31
July 31
October 31
Canadian Dollars
2024
2024
2023
Net interest income
$
2,924
$
2,936
$
2,951
Non-interest income – reported
287
616
572
Non-interest income – adjusted
1,2
598
616
572
Total revenue – reported
3,211
3,552
3,523
Total revenue – adjusted
1,2
3,522
3,552
3,523
Provision for (recovery of) credit losses –
impaired
418
331
308
Provision for (recovery of) credit losses –
performing
(29)
47
(19)
Total provision for (recovery of) credit losses
389
378
289
Non-interest expenses – reported
2,110
5,498
2,045
Non-interest expenses – adjusted
1,3
2,130
1,932
2,045
Provision for (recovery of) income taxes – reported
3
129
117
Provision for (recovery of) income taxes – adjusted
1
62
129
117
U.S. Retail Bank net income (loss) – reported
709
(2,453)
1,072
U.S. Retail Bank net income – adjusted
1
941
1,113
1,072
Share of net income from investment in
Schwab
4,5
154
178
197
Net income (loss) – reported
$
863
$
(2,275)
$
1,269
Net income – adjusted
1
1,095
1,291
1,269
U.S. Dollars
Net interest income
$
2,141
$
2,144
$
2,175
Non-interest income – reported
212
450
421
Non-interest income – adjusted
1,2
438
450
421
Total revenue – reported
2,353
2,594
2,596
Total revenue – adjusted
1,2
2,579
2,594
2,596
Provision for (recovery of) credit losses –
impaired
306
242
227
Provision for (recovery of) credit losses –
performing
(21)
34
(14)
Total provision for (recovery of) credit losses
285
276
213
Non-interest expenses – reported
1,546
4,011
1,505
Non-interest expenses – adjusted
1,3
1,560
1,411
1,505
Provision for (recovery of) income taxes – reported
2
94
87
Provision for (recovery of) income taxes – adjusted
1
45
94
87
U.S. Retail Bank net income (loss) – reported
520
(1,787)
791
U.S. Retail Bank net income – adjusted
1
689
813
791
Share of net income from investment in
Schwab
4,5
114
129
146
Net income (loss) – reported
$
634
$
(1,658)
$
937
Net income – adjusted
1
803
942
937
Selected volumes and ratios
Return on common equity – reported
6
7.6
%
(19.8)
%
12.2
%
Return on common equity – adjusted
1,6
9.6
11.3
12.2
Net interest margin
1,7
2.77
3.02
3.07
Efficiency ratio – reported
65.7
154.6
58.0
Efficiency ratio – adjusted
1
60.5
54.4
58.0
Assets under administration (billions of U.S.
dollars)
8
$
43
$
41
$
40
Assets under management (billions of U.S.
dollars)
8,9
8
8
6
Number of U.S. retail stores
1,132
1,150
1,177
Average number of full-time equivalent staff
27,802
27,627
28,182
–
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 income excludes the following item of note:
i.
U.S. balance sheet restructuring – Q4 2024: $311 million or
US$226 million ($234 million or US$170 million after-tax).
3
Adjusted non-interest expenses exclude the following items of note:
i.
FDIC special assessment – Q4 2024: ($72) million or US($52) million (($54) million or US($39) million after-tax); and
ii.
Charges for the global resolution of the investigations into the Bank’s U.S. BSA/AML program – Q4 2024:
$52 million or US$38 million (before and after-tax), Q3 2024: $3,566 million
or US$2,600 million (before and after-tax).
4
The Bank’s share of Schwab’s earnings is reported with a one-month lag. Refer to
Note 12 of the 2024
Consolidated Financial Statements for further details.
5
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.
6
Capital allocated to the business segment was increased to 11.5%
CET1 Capital effective fiscal 2024 compared with 11%
in the prior year.
7
Net interest margin is calculated by dividing U.S. Retail segment’s net interest income
by average interest-earning assets excluding the impact related to sweep deposits arrangements
and the impact of intercompany deposits and cash collateral, which management believes better reflects segment
performance. In addition, the value of tax-exempt interest income is
adjusted to its equivalent before-tax value.
Net interest income and average interest-earning assets used in the calculation are non-GAAP financial measures.
8
For additional information about this metric, refer to the Glossary in the Bank’s 2024
MD&A.
9
Refer to “Business Focus” section in the Bank’s 2024 MD&A regarding alignment of certain asset management
businesses from the U.S. Retail segment to the Wealth Management and
Insurance segment.
Quarterly comparison
Q4 2024 vs. Q4 2023
U.S. Retail reported net income for the quarter
was $863 million (US$634 million), a decrease
of $406 million (US$303 million), or 32%
(32% in U.S. dollars)
compared with the fourth quarter last year. On an adjusted basis,
net income for the quarter was $1,095
million (US$803 million), a decrease of $174
million
(US$134 million), or 14% (14% in U.S. dollars).
The reported and adjusted annualized ROE
for the quarter were 7.6% and 9.6%, respectively, compared
with
12.2% in the fourth quarter last year.
U.S. Retail net income includes contributions
from the U.S. Retail Bank and the Bank’s investment
in Schwab. Reported net income
for the quarter from the
Bank’s investment in Schwab was $154 million (US$114 million), a decrease
of $43 million (US$32 million), or 22% (22%
in U.S. dollars), compared with the fourth
quarter last year.
U.S. Retail Bank reported net income
was $709 million (US$520 million), a decrease
of $363 million (US$271
million), or 34% (34% in U.S. dollars), compared
with the fourth quarter last year, primarily reflecting higher PCL,
higher non-interest expenses, and lower
revenue. U.S. Retail Bank adjusted net income
was
$941 million (US$689
million), a decrease of $131 million (US$102
million), or 12% (13% in U.S. dollars), compared
with the fourth quarter last year, reflecting
higher PCL and higher non-interest expenses.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 20
Reported revenue for the quarter was US$2,353
million, a decrease of US$243 million, or 9%,
compared with the fourth quarter last year, primarily reflecting
the
impact of U.S. balance sheet restructuring.
On an adjusted basis, revenue for the
quarter was US$2,579 million, a decrease of
US$17 million, or 1%. Net interest
income of US$2,141 million, decreased
US$34 million, or 2%, primarily driven by
lower deposit volumes, partially offset by higher
deposit margins, and higher loan
volumes and margins.
Net interest margin of 2.77% decreased
30 bps, primarily due to maintaining elevated liquidity
levels,
partially offset by higher deposit and
loan margins. Reported non-interest income of
US$212 million decreased US$209 million, or
50%, compared with the fourth quarter last
year, reflecting the impact
of U.S. balance sheet restructuring,
partially offset by higher fee revenue. On an adjusted
basis, non-interest income of US$438
million increased US$17 million, or
4%, compared with the fourth quarter last
year, reflecting higher fee revenue.
Average loan volumes increased US$5 billion, or
3%, compared with the fourth quarter last
year. Personal loans increased 4% reflecting good mortgage and
auto originations, and business loans increased
1%. Average deposit volumes decreased
US$18 billion, or 5%, reflecting a 17% decrease
in sweep deposits, and
a 4% decrease in business deposits, partially
offset by a 3% increase in personal deposit volumes.
Excluding sweep deposits, average deposits
remained
relatively stable.
Assets under administration (AUA) were
US$43 billion as at October 31, 2024, an increase
of US$3 billion, or 8%, compared with the
fourth quarter last year,
reflecting net asset growth. Assets under
Management (AUM) were US$8 billion as
at October 31, 2024, an increase of US$2 billion,
or 33%, compared with the
fourth quarter last year, reflecting net asset growth.
PCL for the quarter was US$285 million,
an increase of US$72 million, or 34%,
compared with the fourth quarter last year. PCL – impaired
was US$306 million,
an increase of US$79 million, or 35%, largely
reflecting credit migration in the commercial
lending portfolio. PCL – performing was
a recovery of US$21 million,
compared with a recovery of US$14 million
in the fourth quarter last year. The performing release
this quarter reflects improvement in the economic
outlook,
including the impact of lower interest rates,
and migration from performing to impaired,
and was largely recorded in the commercial
lending portfolio. 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 14 bps,
compared with the fourth quarter last year.
Reported non-interest expenses for the quarter
were US$1,546 million, an increase of
US$41 million, or 3%, compared with the fourth
quarter last year,
reflecting the impact of the charges for the global
resolution of the investigations into the Bank’s
U.S. BSA/AML program,
costs associated with the extension of
our credit card program agreement with Nordstrom,
higher legal
and regulatory expenses, and higher operating
expenses, partially offset by ongoing productivity
initiatives and the expense recovery of the
FDIC special assessment charge. On an adjusted
basis, non-interest expenses increased
US$55 million, or 4%,
reflecting costs associated with the extension
of our credit card program agreement
with Nordstrom, higher legal and regulatory
expenses, and higher operating
expenses, partially offset by ongoing productivity initiatives.
The reported and adjusted efficiency ratios for
the quarter were 65.7% and 60.5%, respectively, compared with 58.0%,
in the fourth quarter last year.
Quarterly comparison – Q4 2024 vs. Q3 2024
U.S. Retail reported net income of $863 million
(US$634 million) increased $3,138 million
(US$2,292 million), compared with
the prior quarter. On an adjusted
basis, net income for the quarter was $1,095
million (US$803 million), a decrease of $196
million (US$139 million), or 15% (15%
in U.S. dollars). The reported and
adjusted annualized ROE for the quarter
were 7.6% and 9.6%, respectively, compared with (19.8)% and 11.3%, respectively, in the prior quarter.
The contribution from Schwab of $154
million (US$114 million) decreased $24 million (US$15 million), or
13% (12% in U.S. dollars),
compared
with the prior
quarter.
U.S. Retail Bank reported net income
was $709 million (US$520 million), an increase
of $3,162 million (US$2,307
million), compared with the prior quarter,
reflecting the higher impact of the charges
for the global resolution of the investigations
into
the Bank’s U.S. BSA/AML program from
the prior quarter, partially
offset by lower
revenue and higher operating expenses.
U.S. Retail Bank adjusted net income
was $941 million (US$689
million), a decrease of $172
million
(US$124 million), or 15% (15% in U.S. dollars),
reflecting higher operating expenses
and lower revenue.
Reported revenue decreased US$241
million, or 9%, compared with the prior quarter, primarily reflecting
the impact of U.S. balance sheet restructuring.
On an
adjusted basis, revenue decreased US$15 million,
or 1%. Net interest income of US$2,141
million decreased US$3 million, reflecting lower
investment margins,
partially offset by an increase in deposit and loan
margins. Net interest margin of 2.77% decreased
25 bps, which differs from the estimated modest
expansion of
net interest margin communicated in the
third quarter of 2024, primarily due to maintaining
elevated liquidity levels.
Reported non-interest income of
US$212 million decreased US$238 million, or
53%, reflecting the impact of U.S. balance
sheet restructuring and higher valuation of
certain investments in the prior
quarter. On an adjusted basis, non-interest income of US$438
million decreased US$12 million, or 3%,
reflecting higher valuation of certain investments
in the
prior quarter.
Average loan volumes were flat, compared with
the prior quarter. Personal loans increased 1% and business loans
decreased 1%. Average deposit volumes
were relatively flat, compared with the prior
quarter, reflecting a 3% decline in sweep deposits, partially
offset by a 1% increase
in business deposits. Personal
deposits were relatively flat.
AUA were US$43 billion as at October 31,
2024, an increase of US$2 billion, or 5%,
compared with the prior quarter, reflecting net asset growth.
AUM were
US$8 billion as at October 31, 2024, relatively
flat compared with the prior quarter.
PCL for the quarter was US$285 million,
an increase of US$9 million, or 3%, compared
with the prior quarter. PCL – impaired was US$306 million,
an increase
of US$64 million, or 26%, reflecting credit
migration in the commercial lending portfolio.
PCL – performing was a recovery of
US$21 million, compared with a build
of US$34 million in the prior quarter. The performing release
this quarter reflects improvement in the economic
outlook, including the impact of lower interest
rates,
and migration from performing to impaired,
and was largely recorded in the commercial lending
portfolio. 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 2 bps, compared with the
prior quarter.
Reported non-interest expenses for the quarter
were US$1,546 million, a decrease of US$2,465
million, or 61%, reflecting the higher impact of
the charges for
the global resolution of the investigations into
the Bank’s U.S. BSA/AML program in the
prior quarter,
partially offset by higher legal and regulatory
expenses, costs
associated with the extension of our credit
card program agreement with Nordstrom, higher
operating expenses, and the expense recovery
of the FDIC special
assessment charge in the current quarter. On an adjusted
basis, non-interest expenses increased
US$149 million, or 11%, reflecting costs associated with the
extension of our credit card program
agreement with Nordstrom, higher legal and
regulatory expenses, and higher operating
expenses.
The reported and adjusted efficiency ratios for
the quarter were 65.7% and 60.5%, respectively, compared with 154.6%
and 54.4%, respectively, in the prior
quarter.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 21
TABLE 11: WEALTH MANAGEMENT AND INSURANCE
(millions of Canadian dollars, except
as noted)
For the three months ended
October 31
July 31
October 31
2024
2024
2023
Net interest income
$
321
$
316
$
265
Non-interest income
1,2
3,616
3,033
2,691
Total revenue
1
3,937
3,349
2,956
Provision for (recovery of) credit losses –
impaired
–
–
–
Provision for (recovery of) credit losses –
performing
–
–
–
Total provision for (recovery of) credit losses
–
–
–
Insurance service expenses
1,3
2,364
1,669
1,346
Non-interest expenses
1
1,107
1,104
957
Provision for (recovery of) income taxes
1
117
146
161
Net income
1
$
349
$
430
$
492
Selected volumes and ratios
Return on common equity
1,4
22.5
%
27.1
%
33.9
%
Efficiency ratio
1
28.1
33.0
32.4
Efficiency ratio, net of ISE
1,5
70.4
65.7
59.4
Assets under administration (billions of Canadian
dollars)
6
$
651
$
632
$
531
Assets under management (billions of Canadian
dollars)
530
523
441
Average number of full-time equivalent staff
14,939
14,887
15,674
–
1
For the three months ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17.
Refer to Note 4 of the Bank’s 2024 Consolidated Financial Statements for
further details.
2
Includes recoveries from reinsurers for catastrophe claims – Q4 2024: $718 million, Q3 2024: nil, Q4 2023: nil.
3
Includes estimated losses related to catastrophe claims – Q4 2024: $1,020 million, Q3 2024: $186 million, Q4 2023:
$127 million.
4
Capital allocated to the business segment was increased to 11.5%
CET1 Capital effective fiscal 2024 compared with 11%
in the prior year.
5
Efficiency ratio, net of ISE is calculated by dividing non-interest expenses by total revenue, net of ISE.
Total revenue, net of ISE
– Q4 2024: $1,573
million, Q3 2024: $1,680 million,
Q4 2023: $1,610 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 2024 MD&A for additional information about this metric.
6
Includes
AUA administered by TD Investor Services, which is part of the Canadian Personal and Commercial
Banking segment.
Quarterly comparison
Q4 2024 vs. Q4 2023
Wealth Management and Insurance net
income for the quarter was $349 million, a
decrease of $143 million, or 29%,
compared with the fourth quarter last year,
reflecting higher estimated losses from catastrophe
claims,
partially offset by higher revenue from both
business lines. The annualized ROE
for the quarter was
22.5%, compared with 33.9% in the fourth quarter
last year.
Revenue for the quarter was $3,937 million.
This represents an increase of $981 million, or
33%, compared with the fourth quarter last
year, of which
$718 million, or 24%, was driven by reinsurance
recoveries for catastrophe claims. Non-interest
income was $3,616 million. This represents
an increase of
$925 million, or 34%, compared with the fourth
quarter last year, of which $718 million, or 27%, was driven
by reinsurance recoveries for catastrophe
claims. The
remaining increase was driven by higher insurance
premiums, fee-based revenue, and transaction
revenue. Net interest income was
$321 million, an increase of
$56 million, or 21%, compared with the
fourth quarter last year, reflecting higher deposit margins.
AUA were $651 billion as at October 31, 2024,
an increase of $120 billion, or 23%, compared
with the fourth quarter last year, reflecting market appreciation
and net asset growth. AUM were $530 billion
as at October 31, 2024, an increase of $89
billion, or 20%, compared with the
fourth quarter last year, primarily
reflecting market appreciation.
Insurance service expenses for the quarter
were $2,364 million. This represents an increase
of $1,018 million, or 76%, compared with
the fourth quarter last
year, of which $893 million, or 66%, was driven by estimated
losses from catastrophe claims.
The remaining increase reflects less favourable
prior years’ claims
development and increased claims severity.
Non-interest expenses for the quarter were $1,107
million, an increase of $150 million, or
16%, compared with the fourth quarter last
year, reflecting higher
variable compensation and higher technology
and marketing spend supporting business
growth initiatives.
The efficiency ratio for the quarter was 28.1%, compared
with 32.4% in the fourth quarter last
year. The efficiency ratio, net of ISE for the quarter was 70.4%,
compared with 59.4% in the fourth quarter last
year.
Quarterly comparison – Q4 2024 vs. Q3 2024
Wealth Management and Insurance net income
for the quarter was $349 million, a decrease
of $81 million, or 19%, compared
with the prior quarter, primarily
reflecting higher estimated losses from catastrophe
claims, partially offset by higher revenue.
T
he annualized ROE for the quarter was
22.5%, compared with
27.1% in the prior quarter.
Revenue increased $588 million, or 18%,
compared with the prior quarter, primarily as a result of reinsurance
recoveries for catastrophe claims which drove
$718 million of the increase. Non-interest
income increased $583 million, or 19%,
compared with the prior quarter, reflecting reinsurance recoveries
for
catastrophe claims and higher fee-based revenue,
partially offset by the cost of reinsurance reinstatement
premiums and lower insurance revenue.
Net interest
income increased $5 million, or 2%.
AUA increased $19 billion, or 3%, compared
with the prior quarter, reflecting market appreciation and net
asset growth. AUM increased $7 billion, or
1%,
compared with the prior quarter, primarily reflecting market appreciation.
Insurance service expenses for the quarter
increased $695 million, or 42%, compared
with the prior quarter, primarily the result of estimated losses
from
catastrophe claims of $834 million, partially
offset by more favourable claims experience.
Non-interest expenses were relatively flat
compared with the prior quarter.
The efficiency ratio for the quarter was 28.1%,
compared with 33.0% in the prior quarter. The efficiency ratio,
net of ISE for the quarter was 70.4%, compared
with 65.7% in the prior quarter.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 22
TABLE 12: WHOLESALE BANKING
(millions of Canadian dollars, except
as noted)
For the three months ended
October 31
July 31
October 31
2024
2024
2023
Net interest income (TEB)
$
221
$
(26)
$
245
Non-interest income
1,550
1,821
1,243
Total revenue
1,771
1,795
1,488
Provision for (recovery of) credit losses –
impaired
134
109
–
Provision for (recovery of) credit losses –
performing
–
9
57
Total provision for (recovery of) credit losses
134
118
57
Non-interest expenses – reported
1,336
1,310
1,441
Non-interest expenses – adjusted
1,2
1,254
1,232
1,244
Provision for (recovery of) income taxes
(TEB) – reported
66
50
(27)
Provision for (recovery of) income taxes
(TEB) – adjusted
1
84
68
9
Net income – reported
235
317
17
Net income – adjusted
1
$
299
$
377
$
178
Selected volumes and ratios
Trading-related revenue (TEB)
3
$
633
$
726
$
590
Average gross lending portfolio (billions of Canadian
dollars)
4
97.0
97.4
93.0
Return on common equity – reported
5
5.9
%
7.8
%
0.5
%
Return on common equity – adjusted
1,5
7.5
9.4
4.9
Efficiency ratio – reported
75.4
73.0
96.8
Efficiency ratio – adjusted
1
70.8
68.6
83.6
Average number of full-time equivalent staff
6,975
7,018
7,346
1
For additional information about the Bank’s use of non-GAAP financial measures,
refer to “Non-GAAP and Other Financial Measures” in the “How We Performed” section
of this
document.
2
Adjusted non-interest expenses exclude the acquisition and integration-related charges for the Cowen
acquisition – Q4 2024: $82 million ($64 million after-tax), Q3 2024: $78 million
($60 million after-tax), Q4 2023: $197 million ($161 million after-tax).
3
Includes net interest income (loss) (TEB) of ($149) million (Q3 2024 – ($332) million, Q4 2023 – $61 million), and
trading income (loss) of $782 million (Q3 2024 – $1,058 million, Q4 2023
– $529 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 2024 MD&A, for additional information about this metric.
4
Includes gross loans and bankers’
acceptances relating to Wholesale Banking, excluding letters of credit, cash collateral, credit
default swaps, and allowance for credit losses.
5
Capital allocated to the business segment was increased to 11.5%
CET1 Capital effective fiscal 2024 compared with 11%
in the prior year.
Quarterly comparison – Q4 2024 vs. Q4 2023
Wholesale Banking reported net income for
the quarter was $235 million, an increase
of $218
million, compared with the fourth quarter last
year, primarily
reflecting higher revenue and lower non-interest
expenses,
partially offset by higher income taxes and
PCL. On an adjusted basis, net income
was $299 million, an
increase of $121 million, or 68%.
Revenue for the quarter was $1,771 million, an
increase of $283 million, or 19%,
compared with the fourth quarter last year, primarily reflecting
higher lending
revenue, underwriting fees and trading-related
revenue, partially offset by the net change
in fair value of loan underwriting commitments
in the prior year.
PCL for the quarter was $134 million, an increase
of $77 million compared with the fourth
quarter last year. PCL – impaired was $134 million, an
increase of
$134 million compared with the prior
year, primarily reflecting a few impairments across various industries.
PCL – performing was nil, a decrease of
$57 million
from the prior period build.
Reported non-interest expenses for the quarter
were $1,336 million, a decrease of $105
million, or 7%, compared with the fourth quarter
last year, primarily
reflecting lower acquisition and integration-related
costs, and lower variable compensation,
partially offset by penalties arising from a trading
regulatory matter. On
an adjusted basis, non-interest expenses
were $1,254 million, an increase of $10
million, or 1%.
Quarterly comparison – Q4 2024 vs. Q3 2024
Wholesale Banking reported net income for
the quarter was $235 million, a decrease
of $82 million, or 26%, compared with the prior
quarter, reflecting higher non-
interest expenses, lower revenue, higher income
taxes and PCL. On an adjusted basis, net
income was $299 million, a decrease of
$78 million, or 21%.
Revenue for the quarter decreased $24 million,
or 1%, compared with the prior quarter, primarily reflecting
lower trading-related revenue, partially
offset by
higher lending revenue and equity underwriting
fees.
PCL for the quarter was $134 million, an increase
of $16 million compared with the prior
quarter. PCL – impaired was $134 million, an increase of
$25 million,
primarily reflecting a few impairments across
various industries. PCL – performing was nil,
a decrease of $9 million from the prior
quarter build.
Reported non-interest expenses for the quarter
increased $26 million, or 2%, compared
with the prior quarter, primarily reflecting penalties arising
from a trading
regulatory matter, and the impact of foreign exchange translation,
partially offset by lower variable compensation.
On an adjusted basis, non-interest expenses
increased $22 million or 2%.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 23
TABLE 13: CORPORATE
(millions of Canadian dollars)
For the three months ended
October 31
July 31
October 31
2024
2024
2023
Net income (loss) – reported
$
365
$
(525)
$
(591)
Adjustments for items of note
Amortization of acquired intangibles
60
64
92
Acquisition and integration charges related
to the Schwab transaction
35
21
31
Share of restructuring and other charges
from investment in Schwab
–
–
35
Restructuring charges
–
110
363
Impact from the terminated FHN acquisition-related
capital hedging strategy
59
62
64
Gain on sale of Schwab shares
(1,022)
–
–
Indirect tax matters
226
–
–
Less: impact of income taxes on items
of note
84
56
127
Net (loss) – adjusted
1
$
(361)
$
(324)
$
(133)
Decomposition of items included in net
(loss) – adjusted
Net corporate expenses
2
$
(550)
$
(426)
$
(227)
Other
189
102
94
Net (loss) – adjusted
1
$
(361)
$
(324)
$
(133)
Selected volumes
Average number of full-time equivalent staff
22,826
22,881
23,491
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 Bank’s 2024
MD&A.
Quarterly comparison – Q4 2024 vs. Q4 2023
Corporate segment’s reported net income for the quarter
was $365 million, compared with a net loss
of $591 million in the fourth quarter last
year. The year-over-
year increase primarily reflects the impacts
of current quarter’s gain on
sale of Schwab shares and prior year’s
restructuring charges, partially offset by the impact
of the provision for indirect tax matters
in the current quarter. Net corporate expenses increased $323
million compared to the prior year, primarily reflecting higher
investments in risk and control infrastructure.
The adjusted net loss for the quarter was $361
million, compared with an adjusted net loss of
$133 million in the
fourth quarter last year.
Quarterly comparison – Q4 2024 vs. Q3 2024
Corporate segment’s reported net income for the quarter
was $365 million, compared with a net loss
of $525 million in the prior quarter. The quarter-over-quarter
increase primarily reflects the impacts
of current quarter’s gain on sale of
Schwab shares and prior quarter’s restructuring
charges, partially offset by the impact of
the provision for indirect tax matters in
the current quarter. Net corporate expenses increased $124
million compared to the prior quarter, primarily reflecting
higher
investments in risk and control infrastructure.
The adjusted net loss for the quarter was $361
million, compared with an adjusted net loss
of $324 million in the prior
quarter.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 24
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
1
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
ASSETS
Cash and due from banks
$
6,437
$
6,721
Interest-bearing deposits with banks
169,930
98,348
176,367
105,069
Trading loans, securities, and other
175,770
152,090
Non-trading financial assets at fair value through
profit or loss
5,869
7,340
Derivatives
78,061
87,382
Financial assets designated at fair value through
profit or loss
6,417
5,818
Financial assets at fair value through other
comprehensive income
93,897
69,865
360,014
322,495
Debt securities at amortized cost, net
of allowance for credit losses
271,615
308,016
Securities purchased under reverse repurchase
agreements
208,217
204,333
Loans
Residential mortgages
331,649
320,341
Consumer instalment and other personal
228,382
217,554
Credit card
40,639
38,660
Business and government
356,973
326,528
957,643
903,083
Allowance for loan losses
(8,094)
(7,136)
Loans, net of allowance for loan losses
949,549
895,947
Other
Customers’ liability under acceptances
–
17,569
Investment in Schwab
9,024
8,907
Goodwill
18,851
18,602
Other intangibles
3,044
2,771
Land, buildings, equipment, other depreciable
assets, and right-of-use assets
9,837
9,434
Deferred tax assets
2
4,937
3,951
Amounts receivable from brokers, dealers,
and clients
22,115
30,416
Other assets
2
28,181
27,629
95,989
119,279
Total assets
2
$
2,061,751
$
1,955,139
LIABILITIES
Trading deposits
$
30,412
$
30,980
Derivatives
68,368
71,640
Securitization liabilities at fair value
20,319
14,422
Financial liabilities designated at fair value
through profit or loss
207,914
192,130
327,013
309,172
Deposits
Personal
641,667
626,596
Banks
57,698
31,225
Business and government
569,315
540,369
1,268,680
1,198,190
Other
Acceptances
–
17,569
Obligations related to securities sold
short
39,515
44,661
Obligations related to securities sold
under repurchase agreements
201,900
166,854
Securitization liabilities at amortized
cost
12,365
12,710
Amounts payable to brokers, dealers, and
clients
26,598
30,872
Insurance contract liabilities
2
7,169
5,846
Other liabilities
2
51,878
47,574
339,425
326,086
Subordinated notes and debentures
11,473
9,620
Total liabilities
2
1,946,591
1,843,068
EQUITY
Shareholders’ Equity
Common shares
25,373
25,434
Preferred shares and other equity instruments
10,888
10,853
Treasury – common shares
(17)
(64)
Treasury – preferred shares and other equity instruments
(18)
(65)
Contributed surplus
204
155
Retained earnings
2
70,826
73,008
Accumulated other comprehensive income (loss)
7,904
2,750
Total equity
2
115,160
112,071
Total liabilities and equity
2
$
2,061,751
$
1,955,139
1
The amounts as at October 31, 2024 and October 31, 2023, have been derived from the audited financial statements.
2
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17,
Insurance Contracts
(IFRS 17). Refer to Note 4 of the Bank’s 2024 Consolidated Financial Statements
for details.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 25
CONSOLIDATED STATEMENT OF INCOME
1
(millions of Canadian dollars, except
as noted)
For the three months ended
For the twelve months ended
October 31
October 31
October 31
October 31
2024
2023
2024
2023
Interest income
2
Loans
$
13,706
$
12,464
$
53,676
$
44,518
Reverse repurchase agreements
2,809
2,945
11,621
9,520
Securities
Interest
4,785
5,241
20,295
19,029
Dividends
579
548
2,371
2,289
Deposits with banks
1,895
1,178
5,426
5,318
23,774
22,376
93,389
80,674
Interest expense
Deposits
11,814
11,257
46,860
38,351
Securitization liabilities
221
253
1,002
915
Subordinated notes and debentures
124
103
436
436
Repurchase agreements and short sales
3,280
2,992
13,322
10,083
Other
395
277
1,297
945
15,834
14,882
62,917
50,730
Net interest income
7,940
7,494
30,472
29,944
Non-interest income
Investment and securities services
1,924
1,651
7,400
6,420
Credit fees
388
472
1,898
1,796
Trading income (loss)
835
750
3,628
2,417
Service charges
3
663
624
2,626
2,514
Card services
730
754
2,947
2,932
Insurance revenue
3
1,829
1,644
6,952
6,311
Other income (loss)
3
1,205
(211)
1,300
(1,644)
7,574
5,684
26,751
20,746
Total revenue
3
15,514
13,178
57,223
50,690
Provision for (recovery of) credit losses
1,109
878
4,253
2,933
Insurance service expenses
3
2,364
1,346
6,647
5,014
Non-interest expenses
Salaries and employee benefits
4,080
4,107
16,733
15,753
Occupancy, including depreciation
553
460
1,958
1,799
Technology and equipment, including depreciation
730
620
2,656
2,308
Amortization of other intangibles
176
185
702
672
Communication and marketing
431
418
1,516
1,452
Restructuring charges
–
363
566
363
Brokerage-related and sub-advisory fees
119
128
498
456
Professional, advisory and outside services
3
1,079
706
3,064
2,493
Other
3
882
641
7,800
4,559
8,050
7,628
35,493
29,855
Income before income taxes and share
of net income from investment
in Schwab
3,991
3,326
10,830
12,888
Provision for (recovery of) income taxes
3
534
616
2,691
3,118
Share of net income from investment
in Schwab
178
156
703
864
Net income
3
3,635
2,866
8,842
10,634
Preferred dividends and distributions
on other equity instruments
193
196
526
563
Net income available to common shareholders
3
$
3,442
$
2,670
$
8,316
$
10,071
Earnings per share
(Canadian dollars)
Basic
3
$
1.97
$
1.48
$
4.73
$
5.53
Diluted
3
1.97
1.48
4.72
5.52
Dividends per common share
(Canadian dollars)
1.02
0.96
4.08
3.84
1
The amounts for the three months ended October 31, 2024, and October 31, 2023, have been derived from unaudited
financial statements. The amounts for the twelve months ended
October 31, 2024 and October 31, 2023,
have been derived from the audited financial statements.
2
Includes $21,614 million and $84,324 million,
for the three and twelve months ended October 31, 2024, respectively (three and twelve months ended October
31, 2023 – $19,983 million
and $72,403 million, respectively)
which have been calculated based on the effective interest rate method.
3
Amounts for the three and twelve months ended October 31, 2023 have been restated for the adoption
of IFRS 17. Refer to Note 4 of the Bank’s 2024 Consolidated Financial Statements
for details.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 26
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
1
(millions of Canadian dollars)
For the three months ended
For the twelve months ended
October 31
October 31
October 31
October 31
2024
2023
2024
2023
Net income
2
$
3,635
$
2,866
$
8,842
$
10,634
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)
(153)
(295)
285
96
Reclassification to earnings of net loss /(gain)
(7)
1
(23)
(9)
Changes in allowance for credit losses recognized
in earnings
–
1
(1)
–
Income taxes relating to:
Change in unrealized gain/(loss)
40
72
(68)
(32)
Reclassification to earnings of net loss/(gain)
4
1
12
8
(116)
(220)
205
63
Net change in unrealized foreign currency
translation gain/(loss) on
investments in foreign operations, net
of hedging activities
Unrealized gain/(loss)
1,071
5,740
540
2,233
Reclassification to earnings of net loss /(gain)
(19)
–
(19)
11
Net gain/(loss) on hedges
(723)
(3,565)
(457)
(1,821)
Reclassification to earnings of net loss /(gain)
on hedges
41
–
41
(15)
Income taxes relating to:
Net gain/(loss) on hedges
200
987
122
217
Reclassification to earnings of net loss /(gain)
on hedges
(11)
–
(11)
4
559
3,162
216
629
Net change in gain/(loss) on derivatives
designated as cash flow hedges
Change in gain/(loss)
867
991
3,354
(78)
Reclassification to earnings of loss/(gain)
(475)
(1,583)
173
238
Income taxes relating to:
Change in gain/(loss)
(242)
(251)
(929)
137
Reclassification to earnings of loss/(gain)
123
451
(50)
(52)
273
(392)
2,548
245
Share of other comprehensive income (loss) from investment
in Schwab
1,155
(385)
2,007
91
Items that will not be subsequently reclassified
to net income
Remeasurement gain/(loss) on employee
benefit plans
Gain/(loss)
(217)
(7)
(151)
(95)
Income taxes
59
1
40
9
(158)
(6)
(111)
(86)
Change in net unrealized gain/(loss)
on equity securities designated at
fair value through other comprehensive income
Change in net unrealized gain/(loss)
37
(194)
222
(204)
Income taxes
(13)
53
(60)
54
24
(141)
162
(150)
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)
(8)
(12)
22
(158)
Income taxes
2
3
(6)
42
(6)
(9)
16
(116)
Total
other comprehensive income (loss)
1,731
2,009
5,043
676
Total comprehensive income (loss)
2
$
5,366
$
4,875
$
13,885
$
11,310
Attributable to:
Common shareholders
2
$
5,173
$
4,679
$
13,359
$
10,747
Preferred shareholders and other equity instrument
holders
2
193
196
526
563
1
The amounts for the three months ended October 31, 2024, and October 31, 2023, have been derived from unaudited
financial statements. The amounts for the twelve months ended
October 31, 2024 and October 31, 2023, have been derived from the audited financial statements.
2
Amounts for the three and twelve months ended October 31, 2023 have been restated for the adoption of IFRS
- Refer to Note 4 of the Bank’s 2024 Consolidated Financial Statements
for details.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 27
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
1
(millions of Canadian dollars)
For the three months ended
For the twelve months ended
October 31
October 31
October 31
October 31
2024
2023
2024
2023
Common shares
Balance at beginning of period
$
25,222
$
25,833
$
25,434
$
24,363
Proceeds from shares issued on exercise of stock options
20
6
112
83
Shares issued as a result of dividend reinvestment plan
131
127
529
1,720
Purchase of shares for cancellation and other
–
(532)
(702)
(732)
Balance at end of period
25,373
25,434
25,373
25,434
Preferred shares and other equity instruments
Balance at beginning of period
10,888
11,253
10,853
11,253
Issue of shares and other equity instruments
–
–
1,335
–
Redemption of shares and other equity instruments
–
(400)
(1,300)
(400)
Balance at end of period
10,888
10,853
10,888
10,853
Treasury – common shares
Balance at beginning of period
(35)
–
(64)
(91)
Purchase of shares
(3,214)
(1,943)
(11,209)
(7,959)
Sale of shares
3,232
1,879
11,256
7,986
Balance at end of period
(17)
(64)
(17)
(64)
Treasury – preferred shares and other equity instruments
Balance at beginning of period
(17)
(11)
(65)
(7)
Purchase of shares and other equity instruments
(227)
(218)
(625)
(590)
Sale of shares and other equity instruments
226
164
672
532
Balance at end of period
(18)
(65)
(18)
(65)
Contributed surplus
Balance at beginning of period
187
195
155
179
Net premium (discount) on sale of treasury instruments
5
(39)
20
(21)
Issuance of stock options, net of options exercised
3
6
22
27
Other
9
(7)
7
(30)
Balance at end of period
204
155
204
155
Retained earnings
Balance at beginning of period
2
69,316
74,643
73,008
73,698
Impact on adoption of IFRS 17
3
–
–
–
112
Impact of reclassification of securities supporting insurance operations
related to the adoption of IFRS 17
3
–
–
(10)
–
Net income attributable to equity instrument holders
2
3,635
2,866
8,842
10,634
Common dividends
(1,782)
(1,724)
(7,163)
(6,982)
Preferred dividends and distributions on other equity instruments
(193)
(196)
(526)
(563)
Share and other equity instrument issue expenses
–
–
(7)
–
Net premium on repurchase of common shares and redemption of preferred shares and other equity instruments
6
(2,572)
(3,295)
(3,553)
Remeasurement gain/(loss) on employee benefit plans
(158)
(6)
(111)
(86)
Realized gain/(loss) on equity securities designated at fair value through other comprehensive income
2
(3)
88
(252)
Balance at end of period
2
70,826
73,008
70,826
73,008
Accumulated other comprehensive income (loss)
Net unrealized gain/(loss) on financial assets at fair value through other comprehensive income:
Balance at beginning of period
(92)
(193)
(413)
(476)
Impact of reclassification of securities supporting insurance operations
related to the adoption of IFRS 17
3
–
–
10
–
Other comprehensive income (loss)
(116)
(221)
196
63
Allowance for credit losses
–
1
(1)
–
Balance at end of period
(208)
(413)
(208)
(413)
Net unrealized gain/(loss) on equity securities designated at fair value through other comprehensive income:
Balance at beginning of period
11
14
(127)
23
Other comprehensive income (loss)
26
(144)
250
(402)
Reclassification of loss/(gain) to retained earnings
(2)
3
(88)
252
Balance at end of period
35
(127)
35
(127)
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
(16)
(29)
(38)
78
Other comprehensive income (loss)
(6)
(9)
16
(116)
Balance at end of period
(22)
(38)
(22)
(38)
Net unrealized foreign currency translation gain/(loss) on investments in foreign operations, net of hedging activities:
Balance at beginning of period
12,334
9,515
12,677
12,048
Other comprehensive income (loss)
559
3,162
216
629
Balance at end of period
12,893
12,677
12,893
12,677
Net gain/(loss) on derivatives designated as cash flow hedges:
Balance at beginning of period
(3,197)
(5,080)
(5,472)
(5,717)
Other comprehensive income (loss)
273
(392)
2,548
245
Balance at end of period
(2,924)
(5,472)
(2,924)
(5,472)
Share of accumulated other comprehensive income (loss) from Investment in Schwab
(1,870)
(3,877)
(1,870)
(3,877)
Total accumulated other comprehensive income
7,904
2,750
7,904
2,750
Total equity
2
$
115,160
$
112,071
$
115,160
$
112,071
1
The amounts for the three months ended October 31, 2024,
and October 31, 2023, have been derived from unaudited financial statements. The amounts for the twelve
months ended
October 31, 2024 and October 31, 2023, have been derived from the audited financial statements.
2
Amounts have been restated for the adoption of IFRS 17 as at and for the three months and twelve months ended
October 31, 2023. Refer to Note 4 of the Bank’s 2024 Consolidated
Financial Statements for details.
3
Refer to Note 4 of the Bank’s 2024 Consolidated Financial Statements for details on the adoption of
IFRS 17.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 28
CONSOLIDATED STATEMENT
OF CASH FLOWS
1
(millions of Canadian dollars)
For the three months ended
For the twelve months ended
October 31
October 31
October 31
October 31
2024
2023
2024
2023
Cash flows from (used in) operating activities
Net income
2
$
3,635
$
2,866
$
8,842
$
10,634
Adjustments to determine net cash flows from (used in) operating activities
Provision for (recovery of) credit losses
1,109
878
4,253
2,933
Depreciation
368
320
1,325
1,239
Amortization of other intangibles
176
185
702
672
Net securities loss/(gain)
305
–
358
48
Share of net income from investment in Schwab
(178)
(156)
(703)
(864)
Gain on sale of Schwab shares
(1,022)
–
(1,022)
–
Deferred taxes
2
(89)
(262)
(1,061)
(1,306)
Changes in operating assets and liabilities
Interest receivable and payable
443
297
1,133
812
Securities sold under repurchase agreements
19,087
3,144
35,046
36,832
Securities purchased under reverse repurchase agreements
4,701
(2,816)
(3,884)
(41,873)
Securities sold short
(1,041)
(493)
(5,146)
(2,722)
Trading loans, securities, and other
(2,595)
6,515
(23,680)
(5,332)
Loans net of securitization and sales
(12,358)
(29,001)
(57,908)
(67,766)
Deposits
46,521
41,350
69,922
(25,487)
Derivatives
21
(7,802)
6,049
(2,341)
Non-trading financial assets at fair value through profit or loss
(269)
529
1,471
3,897
Financial assets and liabilities designated at fair value through profit or loss
11,190
8,565
15,185
28,565
Securitization liabilities
1,928
(801)
5,552
(552)
Current taxes
(296)
(1,150)
658
1,228
Brokers, dealers and clients amounts receivable and payable
11,727
3,367
4,027
(5,128)
Other, including unrealized foreign currency translation loss/(gain)
2
(3,669)
(11,017)
(6,182)
1,209
Net cash from (used in) operating activities
79,694
14,518
54,937
(65,302)
Cash flows from (used in) financing activities
Issuance of subordinated notes and debentures
1,574
–
3,324
–
Redemption or repurchase of subordinated notes and debentures
(19)
(1,751)
(1,544)
(1,716)
Common shares issued, net of issuance costs
17
5
100
74
Repurchase of common shares, including tax on net value of share repurchases
6
(3,104)
(3,997)
(4,285)
Preferred shares and other equity instruments issued, net of issuance costs
–
–
1,328
–
Redemption of preferred shares and other equity instruments
–
(400)
(1,300)
(400)
Sale of treasury shares and other equity instruments
3,463
2,004
11,948
8,497
Purchase of treasury shares and other equity instruments
(3,441)
(2,161)
(11,834)
(8,549)
Dividends paid on shares and distributions paid on other equity instruments
(1,844)
(1,793)
(7,160)
(5,825)
Repayment of lease liabilities
(172)
(163)
(678)
(643)
Net cash from (used in) financing activities
(416)
(7,363)
(9,813)
(12,847)
Cash flows from (used in) investing activities
Interest-bearing deposits with banks
(77,193)
(13,048)
(71,153)
41,446
Activities in financial assets at fair value through other comprehensive income
Purchases
(20,680)
(4,291)
(42,542)
(24,336)
Proceeds from maturities
2,505
3,884
18,825
17,893
Proceeds from sales
1,080
1,029
4,130
5,838
Activities in debt securities at amortized cost
Purchases
(2,883)
(5,136)
(11,306)
(26,987)
Proceeds from maturities
11,379
9,966
49,606
52,819
Proceeds from sales
3,027
46
5,772
12,021
Net purchases of land, buildings, equipment, other depreciable assets, and other intangibles
(713)
(554)
(2,177)
(1,844)
Net cash acquired from (paid for) divestitures and acquisitions
3,353
–
3,423
(624)
Net cash from (used in) investing activities
(80,125)
(8,104)
(45,422)
76,226
Effect of exchange rate changes on cash and due from banks
39
250
14
88
Net increase (decrease) in cash and due from banks
(808)
(699)
(284)
(1,835)
Cash and due from banks at beginning of period
7,245
7,420
6,721
8,556
Cash and due from banks at end of period
$
6,437
$
6,721
$
6,437
$
6,721
Supplementary disclosure of cash flows from operating activities
Amount of income taxes paid (refunded) during the period
$
773
$
1,036
$
3,812
$
3,036
Amount of interest paid during the period
15,531
14,193
61,779
48,179
Amount of interest received during the period
23,335
21,436
91,013
76,646
Amount of dividends received during the period
632
513
2,694
2,247
1
The amounts for the three months ended October 31, 2024, and October 31, 2023, have been derived from unaudited
financial statements. The amounts for the twelve months ended
October 31, 2024 and October 31, 2023, have been derived from the audited financial statements.
2
Amounts for the three months and twelve months ended October 31, 2023 have been restated for the adoption
of IFRS 17. Refer to Note 4 of the Bank’s 2024 Consolidated Financial
Statements for details.
Appendix A – Segmented Information
For management reporting purposes, the Bank
reports its results under four key business
segments: Canadian Personal and Commercial
Banking, which includes
the results of the Canadian personal and commercial
banking businesses, and TD Auto Finance
Canada; U.S. Retail, which includes the results
of the U.S.
personal and commercial banking businesses,
U.S. credit cards, TD Auto Finance U.S.,
U.S. wealth business,
and the Bank’s investment in Schwab;
Wealth
Management and Insurance; and Wholesale
Banking. The Bank’s other activities are grouped
into the Corporate segment.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 29
Results for these segments for the years ended
October 31,
2024 and October 31, 2023 are presented
in the following tables.
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 October 31
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Net interest income (loss)
$
4,058
$
3,705
$
2,924
$
2,951
$
321
$
265
$
221
$
245
$
416
$
328
$
7,940
$
7,494
Non-interest income (loss)
1,006
1,049
287
572
3,616
2,691
1,550
1,243
1,115
129
7,574
5,684
Total revenue
5,064
4,754
3,211
3,523
3,937
2,956
1,771
1,488
1,531
457
15,514
13,178
Provision for (recovery of)
credit losses
430
390
389
289
–
–
134
57
156
142
1,109
878
Insurance service expenses
–
–
–
–
2,364
1,346
–
–
–
–
2,364
1,346
Non-interest expenses
2,102
2,039
2,110
2,045
1,107
957
1,336
1,441
1,395
1,146
8,050
7,628
Income (loss) before income taxes
and share of net income from
investment in Schwab
2,532
2,325
712
1,189
466
653
301
(10)
(20)
(831)
3,991
3,326
Provision for (recovery of)
income taxes
709
646
3
117
117
161
66
(27)
(361)
(281)
534
616
Share of net income from
investment in Schwab
4,5
–
–
154
197
–
–
–
–
24
(41)
178
156
Net income (loss)
$
1,823
$
1,679
$
863
$
1,269
$
349
$
492
$
235
$
17
$
365
$
(591)
$
3,635
$
2,866
For the twelve months ended October 31
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Net interest income (loss)
$
15,697
$
14,192
$
11,600
$
12,029
$
1,226
$
1,064
$
582
$
1,538
$
1,367
$
1,121
$
30,472
$
29,944
Non-interest income (loss)
4,093
4,125
2,113
2,261
12,309
10,566
6,704
4,280
1,532
(486)
26,751
20,746
Total revenue
19,790
18,317
13,713
14,290
13,535
11,630
7,286
5,818
2,899
635
57,223
50,690
Provision for (recovery of)
credit losses
1,755
1,343
1,532
928
–
1
317
126
649
535
4,253
2,933
Insurance service expenses
–
–
–
–
6,647
5,014
–
–
–
–
6,647
5,014
Non-interest expenses
8,010
7,700
12,615
8,079
4,285
3,908
5,576
4,760
5,007
5,408
35,493
29,855
Income (loss) before income taxes
and share of net income from
investment in Schwab
10,025
9,274
(434)
5,283
2,603
2,707
1,393
932
(2,757)
(5,308)
10,830
12,888
Provision for (recovery of)
income taxes
2,806
2,586
200
658
648
706
275
162
(1,238)
(994)
2,691
3,118
Share of net income from
investment in Schwab
4,5
–
–
709
939
–
–
–
–
(6)
(75)
703
864
Net income (loss)
$
7,219
$
6,688
$
75
$
5,564
$
1,955
$
2,001
$
1,118
$
770
$
(1,525)
$
(4,389)
$
8,842
$
10,634
Total Assets by Business Segment
6
(millions of Canadian dollars)
Canadian
Wealth
Personal and
Management
Wholesale
Commercial Baking
U.S. Retail
and Insurance
Banking
Corporate
Total
As at October 31, 2024
Total assets
$
584,468
$
606,572
$
23,217
$
686,795
$
160,699
$
2,061,751
As at October 31, 2023
Total assets
$
560,303
$
561,350
$
22,293
$
673,398
$
137,795
$
1,955,139
1
The amounts for the three months ended October 31, 2024 and October 31, 2023 have been derived from the
unaudited financial statements. The amounts for the twelve months ended
October 31, 2024 and October 31, 2023 have been derived from the audited financial statements.
2
The retailer program partners’ share of revenues and credit losses is presented in the Corporate segment, with an
offsetting amount (representing the partners’ net share) recorded in
Non-interest expenses, resulting in no impact to Corporate reported Net income (loss). The Net income
(loss) included in the U.S. Retail segment includes only the portion of revenue and
credit losses attributable to the Bank under the agreements.
3
Net interest income within Wholesale Banking is calculated on a TEB. The TEB adjustment reflected in
Wholesale Banking is reversed in the Corporate segment.
4
The 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 12 of the 2024 Consolidated Financial Statements for further details.
6
Total assets as at October 31, 2024 and
October 31, 2023 have been derived from the audited financial statements.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 30
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
http://www.tsxtrust.com
Hold your TD shares through the
Direct Registration System
in the United States
Missing dividends, lost share certificates, estate
questions, address changes to the share register,
eliminating duplicate mailings of shareholder
materials
or stopping (or resuming) receiving annual
and quarterly
reports
Co-Transfer Agent and Registrar:
Computershare Trust Company, N.A.
P.O. Box 43006
Providence, RI 02940-3006
or
Computershare Trust Company, N.A.
150 Royall Street
Canton, MA 02021
1-866-233-4836
TDD for hearing impaired: 1-800-231-5469
Shareholders outside of U.S.: 201-680-6578
TDD shareholders outside of U.S.: 201-680-6610
www.computershare.com/investor
Beneficially own
TD shares that are held in
the name of an intermediary, such as a bank,
a trust company, a securities broker,
or other
nominee
Your TD shares, including questions regarding the
dividend reinvestment plan and mailings of
shareholder
materials
Your intermediary
For all other shareholder inquiries, please
contact TD Shareholder Relations at 416-944-6367
or 1-866-756-8936 or email tdshinfo@td.com.
Please note that by leaving us an e-mail or
voicemail message, you are providing
your consent for us to forward your inquiry to
the appropriate party for response.
Annual Report on Form 40-F (U.S.)
A copy of the Bank’s Annual Report on Form
40-F for fiscal 2024 will be filed with the
Securities and Exchange Commission
later today and will be available at
http://www.td.com. You may obtain a printed copy of the Bank’s Annual Report on Form 40-F
for fiscal 2024 free of charge upon request
to TD Shareholder
Relations at 416-944-6367 or 1-866-756-8936
or e-mail tdshinfo@td.com.
TD BANK GROUP • FOURTH QUARTER 2024 • EARNINGS NEWS RELEASE
Page 31
Access to Quarterly Results Materials
Interested investors, the media, and others
may view this fourth quarter earnings news
release, results slides, supplementary
financial information, supplemental
regulatory disclosure, and the 2024 Consolidated
Financial Statements and MD&A documents on
the TD website at www.td.com/investor/.
General Information
Products and services: Contact TD Canada
Trust, 24 hours a day, seven days a week: 1-866-567-8888 French: 1-866-233-2323
Cantonese/Mandarin: 1-800-328-3698
Telephone device for the hearing impaired (TTY): 1-800-361-1180
Website:
www.td.com
Email: customer.service@td.com
Media contacts: https://stories.td.com/media-contacts
Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference
call in Toronto, Ontario on December 5,
- The call will be available live
via TD’s website at 9:30 a.m. ET.
The
call and audio webcast will feature presentations
by TD executives on the Bank’s
financial results for the fourth quarter,
followed by a question-and-answer period
with analysts. The presentation material
referenced during the call will be
available on the TD website at www.td.com/investor
on December 5, 2024 at
approximately 6:30 a.m. ET.
A listen-only telephone line is
available at 416-340-2217 or 1-800-806-5484 (toll free)
and the passcode is 2829533#.
The audio webcast and presentations will be
archived at
www.td.com/investor.
Replay of the teleconference will be available
from 5:00 p.m. ET on
December 5, 2024,
until 11:59 p.m. ET on December
20, 2024 by calling 905-694-9451 or 1-800-408-3053 (toll
free). The passcode is 8753393#.
Annual Meeting
Thursday, April 10, 2025
Toronto, Ontario
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 27.9 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 $2.06 trillion in assets on October 31,
- 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
Elizabeth Goldenshtein,
Senior Manager, Corporate Communications,
416-994-4124
ex993
TD BANK GROUP DECLARES DIVIDENDS
(all amounts in Canadian dollars)
TORONTO – December 5, 2024 -
The Toronto
-Dominion Bank (the "Bank") today announced that a dividend
in an
amount of one dollar and five cents ($1.05) per fully paid common
share in the capital stock of the Bank has been
declared for the quarter ending January 31, 2025, payable
on and after January 31,
2025, to shareholders of record at the
close of business on January 10, 2025.
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 January 31,
2025 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 January 10, 2025.
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 January
31, 2025 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 January 10, 2025.
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 January
31, 2025 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
January 10, 2025.
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 January 31,
2025, to shareholders of record at the close of business
on January 10, 2025:
●
Series 1, in an amount per share of $0.310625;
●
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; and
●
Series 18, in an amount per share of $0.3591875.
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 January 31, 2025 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 27.9 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 $2.06 trillion
in assets on October 31, 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
ex994
December 5, 2024
The Toronto
Stock Exchange
Canadian Securities Commissions
CDS Clearing and Depository Services Inc.
The Depository Trust & Clearing Corporation
Dear Sir/Madam:
Re:
The Toronto-Dominion
Bank (the "Bank") - Notice of Meeting and Record Dates
Pursuant to s. 2.2 of National
Instrument 54-101
Communication with Beneficial
Owners of Securities of a
Reporting Issuer
("NI 54-101"),
we advise as follows:
Name of Reporting Issuer
The Toronto
-Dominion Bank
Meeting Date
April 10, 2025
Record Date for Notice
February 10, 2025
Record Date for Voting
Beneficial Ownership Determination Date
February 10, 2025
February 10, 2025
Classes or series of securities that entitle the
holder to receive notice of the meeting
Common shares
Classes or series of securities that entitle the
holder to vote at the meeting
Common shares
Notice & Access – Registered Holders
Notice & Access – Beneficial Holders
Issuer Sending Material Directly to NOBOs
Issuer Paying to Send Material to OBOs
Whether the meeting is a special meeting
1
Yes
Yes
No
Yes
No
Yours very
truly,
/s/ Caroline Cook
Caroline Cook
Associate Vice President, Legal Treasury
and Corporate
Securities
1
As defined
by NI
54-101
meaning
a meeting
at which
a special
resolution,
as defined
in
the
Bank
Act
(Canada)
, is expected to be submitted to common shareholders.
ex995
FORM 52-109F1
CERTIFICATION OF ANNUAL 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 AIF, if any,
annual financial statements and annual
MD&A, including, for greater certainty, all documents and information that are
incorporated by reference in the AIF (together, the “annual filings”) of The Toronto-
Dominion Bank (the “issuer”) for the financial year ended October
31, 2024.
2.
No misrepresentations
:
Based on my knowledge, having exercised reasonable
diligence, the annual 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, for
the period covered by the annual filings.
3.
Fair presentation
:
Based on my knowledge, having exercised reasonable
diligence, the annual financial statements together with the other
financial
information included in the annual 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 annual 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 financial year
end
(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 annual
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.
Evaluation:
The issuer’s other certifying officer(s) and I have
(a)
evaluated, or caused to be evaluated under our supervision, the
effectiveness of
the issuer’s DC&P at the financial year end and the
issuer
has disclosed in its
annual MD&A our conclusions about the effectiveness of
DC&P at the financial
year end based on that evaluation; and
(b)
evaluated, or caused to be evaluated under our supervision, the
effectiveness of
the issuer’s ICFR at the financial year end and the
issuer
has disclosed in its
annual MD&A
(i)
our conclusions about the effectiveness of ICFR at the financial
year end
based on that evaluation; and
(ii)
N/A
7.
Reporting changes in ICFR
:
The issuer has disclosed in its annual MD&A any
change in the issuer’s ICFR that occurred during the
period beginning on August 1,
2024 and ended on October 31, 2024 that has materially affected, or
is reasonably
likely to materially affect, the issuer’s ICFR.
8.
Reporting to the issuer’s auditors and board of directors
or audit committee
:
The issuer’s other certifying officer(s) and I have disclosed, based
on our most
recent evaluation of ICFR, to the issuer’s auditors,
and the board of directors or the
audit committee of the board of directors any fraud that involves
management or
other employees who have a significant role in the issuer’s
ICFR.
Date:
December 5, 2024
/s/ Bharat Masrani
Bharat Masrani
Group President and Chief Executive Officer
FORM 52-109F1
CERTIFICATION OF ANNUAL 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 AIF, if any,
annual financial statements and annual
MD&A, including, for greater certainty, all documents and information that are
incorporated by reference in the AIF (together, the “annual filings”) of The Toronto-
Dominion Bank (the “issuer”) for the financial year ended October
31, 2024.
2.
No misrepresentations
:
Based on my knowledge, having exercised reasonable
diligence, the annual 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, for
the period covered by the annual filings.
3.
Fair presentation
:
Based on my knowledge, having exercised reasonable
diligence, the annual financial statements together with the other
financial
information included in the annual 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 annual 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 financial year
end
(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 annual
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.
Evaluation:
The issuer’s other certifying officer(s) and I have
(a)
evaluated, or caused to be evaluated under our supervision, the
effectiveness of
the issuer’s DC&P at the financial year end and the
issuer
has disclosed in its
annual MD&A our conclusions about the effectiveness of
DC&P at the financial
year end based on that evaluation; and
(b)
evaluated, or caused to be evaluated under our supervision, the
effectiveness of
the issuer’s ICFR at the financial year end and the
issuer
has disclosed in its
annual MD&A
(i)
our conclusions about the effectiveness of ICFR at the financial
year end
based on that evaluation; and
(ii)
N/A
7.
Reporting changes in ICFR
:
The issuer has disclosed in its annual MD&A any
change in the issuer’s ICFR that occurred during the
period beginning on August 1,
2024 and ended on October 31, 2024 that has materially affected, or
is reasonably
likely to materially affect, the issuer’s ICFR.
8.
Reporting to the issuer’s auditors and board of directors
or audit committee
:
The issuer’s other certifying officer(s) and I have disclosed, based
on our most
recent evaluation of ICFR, to the issuer’s auditors,
and the board of directors or the
audit committee of the board of directors any fraud that involves
management or
other employees who have a significant role in the issuer’s
ICFR.
Date:
December 5, 2024
/s/ Kelvin Tran
Kelvin Tran
Group Head and Chief Financial Officer
ex996
INDEPENDENT AUDITOR’S REPORT
To the Shareholders and the Board of Directors of The Toronto-Dominion Bank
Opinion
We have audited the consolidated financial statements
of The Toronto-Dominion Bank and its subsidiaries (TD), which comprise
the Consolidated Balance Sheets
as at October 31, 2024 and 2023, and
the Consolidated Statements of Income, Consolidated
Statements of Comprehensive Income,
Consolidated Statements of
Changes in Equity, and Consolidated Statements of Cash Flows
for the years then ended, and notes to the
consolidated financial statements, including
a summary
of material accounting policies (collectively
referred to as the “consolidated financial
statements”).
In our opinion, the accompanying consolidated
financial statements present fairly, in all material respects, the
consolidated financial position of TD as at
October
31, 2024 and 2023, and its consolidated financial
performance and its consolidated cash
flows for the years then ended, in accordance
with International Financial
Reporting Standards (IFRS) as issued by
the International Accounting Standards Board.
Basis for Opinion
We conducted our audit in accordance with Canadian
generally accepted auditing standards. Our
responsibilities under those standards are further
described in
the
Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements
section of our report. We are independent of
TD in accordance with the ethical
requirements that are relevant to our audit
of the consolidated financial statements in
Canada, and we have fulfilled our other
ethical responsibilities in accordance
with these requirements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters
that, in our professional judgment, were
of most significance in our audit of the consolidated
financial statements of the year
ended October 31, 2024. These matters
were addressed in the context of our audit of
the consolidated financial statements as a
whole, and in forming our opinion
thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description
of how our audit addressed the matter is
provided in
that context.
We have fulfilled the responsibilities described in
the
Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements
section of our report,
including in relation to these matters. Accordingly, our audit included
the performance of procedures designed to respond
to our assessment of the risks of material
misstatement of the consolidated financial
statements. The results of our audit procedures,
including the procedures performed
to address the matters below,
provide the basis for our audit opinion on
the accompanying consolidated financial
statements.
Allowance for credit losses
Key audit matter
TD describes its significant accounting judgments,
estimates, and assumptions in relation
to the allowance for credit losses in Note
3 of the consolidated financial statements.
As disclosed in Note 8 to the consolidated
financial statements, TD recognized $9,141
million in allowances for credit losses on its
consolidated balance sheet using an
expected credit loss model (ECL). The ECL
is an
unbiased and probability-weighted estimate of
credit losses expected to occur in the future,
which is based on the probability of
default (PD), loss given default (LGD) and exposure
at default (EAD) or the expected cash
shortfall relating to the underlying
financial asset. The ECL is determined by evaluating
a range of possible outcomes incorporating
the time value of money and
reasonable and supportable information about
past events, current conditions, and future economic
forecasts. ECL allowances are
measured at amounts equal to either (i) 12-month
ECL; or (ii) lifetime ECL for those financial
instruments that have experienced a
significant increase in credit risk (SICR) since
initial recognition or when there is objective
evidence of impairment.
Auditing the allowance for credit losses was
complex and required the application of
significant judgment and involvement of
specialists because of the sophistication of
the models, the forward-looking nature
of the key assumptions, and the inherent
interrelationship of the critical variables used
in measuring the ECL. Key areas of judgment
include evaluating: (i) the models and
methodologies used for measuring both the
12-month and lifetime expected credit losses;
(ii) the assumptions used in the ECL
scenarios including forward-looking information
(FLI) and assigning probability weighting;
(iii) the determination of SICR; and (iv)
the
assessment of the qualitative component applied
to the modelled ECL based on management’s
expert credit judgment.
How our audit
addressed the
key audit matter
We obtained an understanding, evaluated the design,
and tested the operating effectiveness of
management’s controls over the
allowance for credit losses. The controls
we tested included, amongst others, the development
and validation of models and
selection of appropriate inputs including economic
forecasting, determination of non-retail borrower
risk ratings, the integrity of the
data used including the associated controls over
relevant information technology (IT)
systems, and the governance and oversight
over the modelled results and the use of expert
credit judgment.
To test the allowance for credit losses, our audit procedures included, amongst
others, involving our credit risk specialists
to assess
whether the methodology and assumptions,
including management’s SICR triggers, used in
significant models that estimate the
ECL across various portfolios are consistent
with the requirements of IFRS. This included
reperforming the model validation
procedures for a sample of models to evaluate
whether management’s conclusions were appropriate.
With the assistance of our
economic specialists, we evaluated the
models, methodology and process used by
management to develop the FLI variable
forecasts for each scenario and the scenario
probability weights. For a sample of
FLI variables, we compared management’s FLI to
independently derived forecasts and publicly available
information. On a sample basis, we recalculated
the ECL to test the
mathematical accuracy of management’s
models. We tested the completeness and accuracy
of data used in measuring the ECL by
agreeing to source documents and systems
and evaluated a sample of management’s non-retail
borrower risk ratings against TD’s
risk rating policy. With the assistance of our credit risk specialists,
we also evaluated management’s methodology
and governance
over the application of expert credit judgment
by evaluating that the amounts recorded
were reflective of underlying credit quality
and macroeconomic trends. We also assessed
the adequacy of disclosures related to the
allowance for credit losses.
Fair value measurement of derivatives
Key audit matter
TD describes its significant accounting judgments,
estimates, and assumptions in relation
to the fair value measurement of
derivatives in Note 3 of the consolidated financial
statements. As disclosed in Note 5 of the consolidated
financial statements, TD
has derivative assets of $78,061 million and
derivative liabilities of $68,368 million recorded
at fair value. Certain of these
derivatives are complex and illiquid and require
valuation techniques that may include complex
models and non-observable inputs,
requiring management’s estimation and judgment.
Auditing the valuation of certain derivatives required
the application of significant auditor judgment
and involvement of valuation
specialists in assessing the complex
models and non-observable inputs used. Certain
valuation inputs used to determine fair
value
that may be non-observable include volatilities,
correlations, and credit spreads. The
valuation of certain derivatives is sensitive
to
these inputs as they are forward-looking and
could be affected by future economic and
market conditions.
How our audit
addressed the
key audit matter
We obtained an understanding, evaluated the design,
and tested the operating effectiveness of
management’s controls, including
the associated controls over relevant IT systems,
over the valuation of TD’s derivative portfolio.
The controls we tested included,
amongst others, the controls over the
suitability and mechanical accuracy of models
used in the valuation of derivatives,
and
controls over management’s independent assessment
of fair values, including the integrity of data
used in the valuation such as the
significant inputs noted above.
To test the valuation of these derivatives, our audit procedures included,
amongst others, an evaluation of the
methodologies and
significant inputs used by TD. With the assistance
of our valuation specialists, we performed
an independent valuation for a sample
of derivatives to assess the modelling assumptions
and significant inputs used to estimate
the fair value, which involved obtaining
significant inputs from independent external
sources, where available. We also assessed
the adequacy of the disclosures related
to
the fair value measurement of derivatives.
Measurement of provision for uncertain
tax positions
Key audit matter
TD describes its significant accounting judgments,
estimates, and assumptions in relation
to income taxes in Note 3 and Note 24 of
the consolidated financial statements. As a
financial institution operating in multiple jurisdictions,
TD is subject to complex and
constantly evolving tax legislation. Uncertainty
in a tax position may arise as tax laws are
subject to interpretation. TD uses
significant judgment in i) determining whether
it is probable that TD will have to make
a payment to tax authorities upon their
examination of certain uncertain tax positions
and ii) measuring the amount of
the provision.
Auditing TD’s provision for uncertain tax positions
involved the application of judgment and
is based on interpretation of tax
legislation and jurisprudence.
How our audit
addressed the
key audit matter
We obtained an understanding, evaluated the design,
and tested the operating effectiveness of
management’s controls over TD’s
provision for uncertain tax positions.
The controls we tested included, amongst others,
the controls over the assessment of the
technical merits of tax positions and management’s
process to measure the provision for
uncertain tax positions.
With the assistance of our tax professionals,
we assessed the technical merits and the
amount recorded for uncertain tax positions.
Our audit procedures included, amongst others,
using our knowledge of, and experience
with, the application of tax laws by the
relevant income tax authorities to evaluate
TD’s interpretations and assessment of tax laws
with respect to uncertain tax positions.
We assessed the implications of correspondence
received by TD from the relevant tax
authorities and evaluated income tax
opinions or other third-party advice obtained.
We also assessed the adequacy of the disclosures
related to uncertain tax positions.
Valuation of Goodwill in the U.S. Personal and
Commercial Banking group of Cash Generating
Units
Key audit matter
TD describes its significant accounting judgments,
estimates, and assumptions in relation
to the recoverable amount of its cash
generating units (‘CGU”) or group of
CGUs to which goodwill has been allocated
in Note 3 of the consolidated financial
statements.
As disclosed in Note 14 of the consolidated
financial statements, TD has $14,663
million of goodwill in the U.S. Retail segment,
which predominantly relates to the U.S.
Personal and Commercial Banking group
of cash generating units (“US P&C
CGUs”).
Goodwill is assessed for impairment annually, or more frequently
if impairment indicators are present.
Auditing the recoverable amount for the
U.S. P&C CGUs was complex and required
the application of significant auditor judgment
and involvement of valuation specialists in
assessing certain significant assumptions
in the impairment test. Significant assumptions
in the estimate of the recoverable amount
included the discount rate and certain
forward-looking assumptions, such as the
terminal
growth rate, and forecasted earnings, which
are affected by expectations about future
market or economic conditions.
How our audit
addressed the
key audit matter
We obtained an understanding, evaluated the design,
and tested the operating effectiveness of
management’s controls over the
recoverable amount of TD’s U.S. P&C CGUs.
The controls we tested included, amongst
others, the controls over management’s
review of TD’s forecast as well as controls over
management’s review of the model and methodology
over significant assumptions
such as the discount rate and the terminal
growth rate. We also tested controls over
management’s review of the integrity of the
data used and the mathematical accuracy
of their valuation model.
To test the estimated recoverable amount of the U.S. P&C CGUs, our audit procedures
included, amongst others, with the
assistance of our valuation specialists, assessing
the methodology and testing the significant
assumptions and underlying data used
by TD in its assessment. We considered the selection
and application of the discount rate
by evaluating the inputs and
mathematical accuracy of the calculation,
while also developing an independent estimate
and comparing it to the discount rate
selected by management. We considered the selection
and application of the terminal growth
rate by evaluating the selected rate
against relevant market and economic forecast
data. We evaluated the reasonability of the
forecasted earnings by comparing to
historical results and considering our current
understanding of the business as well as
current economic trends. We assessed the
historical accuracy of management’s prior year
estimates by performing a comparison of
management’s prior year projections to
actual results. We performed sensitivity analysis on
the significant assumptions to consider
the impact of changes in the recoverable
amount that would result from changes in
the assumptions. We also assessed the
adequacy of the disclosures related
to the
valuation of goodwill.
Other Information
Management is responsible for the other information.
The other information comprises:
●
Management’s Discussion and Analysis; and
●
The information, other than the consolidated
financial statements and our auditor’s report
thereon, in the 2024 Annual Report
.
Our opinion on the consolidated financial
statements does not cover the other information
and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated
financial statements, our responsibility is
to read the other information, and in doing
so, consider whether the other
information is materially inconsistent
with the consolidated financial statements
or our knowledge obtained in the audit or otherwise
appears to be materially
misstated.
We obtained Management’s Discussion and Analysis
and the 2024 Annual Report prior to the date
of this auditor’s report. If, based on the
work we have
performed, we conclude that there is a material
misstatement of this other information,
we are required to report that fact in this auditor’s
report. We have nothing
to report in this regard.
Responsibilities of Management and
Those Charged with Governance for
the Consolidated Financial Statements
Management is responsible for the preparation
and fair presentation of the consolidated
financial statements in accordance with
IFRS, and for such internal control
as management determines is necessary
to enable the preparation of consolidated
financial statements that are free from material
misstatement, whether due to
fraud or error.
In preparing the consolidated financial
statements, management is responsible for assessing
TD’s ability to continue as a going concern, disclosing,
as applicable,
matters related to going concern and using
the going concern basis of accounting
unless management either intends to liquidate
TD or to cease operations, or has
no realistic alternative but to do so.
Those charged with governance are responsible
for overseeing TD’s financial reporting process.
Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance
about whether the consolidated financial
statements as a whole are free from material
misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee
that an
audit conducted in accordance with Canadian
generally accepted auditing standards
will always detect a material misstatement when
it exists. Misstatements can
arise from fraud or error and are considered
material if, individually or in the aggregate,
they could reasonably be expected to influence
the economic decisions of
users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with Canadian
generally accepted auditing standards,
we exercise professional judgment and maintain
professional skepticism
throughout the audit. We also:
●
Identify and assess the risks of material
misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform
audit
procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The
risk of not detecting a
material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions,
misrepresentations, or the override of internal
control.
●
Obtain an understanding of internal control relevant
to the audit in order to design audit procedures
that are appropriate in the circumstances,
but not for the
purpose of expressing an opinion on the effectiveness
of TD’s internal control.
●
Evaluate the appropriateness of accounting
policies used and the reasonableness
of accounting estimates and related disclosures
made by management.
●
Conclude on the appropriateness of management’s
use of the going concern basis of accounting
and, based on the audit evidence obtained,
whether a material
uncertainty exists related to events or conditions
that may cast significant doubt on TD’s ability
to continue as a going concern. If we
conclude that a material
uncertainty exists, we are required to draw
attention in our auditor’s report to the related
disclosures in the consolidated financial statements
or, if such
disclosures are inadequate, to modify our
opinion. Our conclusions are based on
the audit evidence obtained up to the date
of our auditor’s report. However,
future events or conditions may cause
TD to cease to continue as a going concern.
●
Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether
the consolidated
financial statements represent the underlying
transactions and events in a manner that achieves
fair presentation.
●
Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within TD to express an opinion
on the
consolidated financial statements. We are responsible
for the direction, supervision and performance
of the group audit. We remain solely responsible
for our
audit opinion.
We communicate with those charged with governance
regarding, among other matters, the planned
scope and timing of the audit and significant
audit findings,
including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance
with a statement that we have complied
with relevant ethical requirements regarding
independence, and to
communicate with them all relationships and
other matters that may reasonably be thought
to bear on our independence, and where
applicable, related
safeguards.
From the matters communicated with
those charged with governance, we determine
those matters that were of most significance
in the audit of the consolidated
financial statements of the current period
and are therefore the key audit matters.
We describe these matters in our auditor’s
report unless law or regulation
precludes public disclosure about the matter
or when, in extremely rare circumstances,
we determine that a matter should not be
communicated in our report
because the adverse consequences of doing
so would reasonably be expected to outweigh
the public interest benefits of such communication.
The engagement partner on the audit resulting
in this independent auditor’s report is
Helen Mitchell.
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
December 4, 2024
December 5, 2024
Shareholders and Directors of The Toronto-Dominion Bank
We are aware that The Toronto-Dominion Bank will furnish EY's Independent Auditor's
Report prepared in accordance with Canadian
generally accepted auditing
standards and dated December 4, 2024 as Exhibit
99.6 to its Form 6-K filed on December
5, 2024.
Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants