6-K
TORONTO DOMINION BANK (TD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
| For the month of November, 2023. | Commission File Number: 001-14446 |
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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 ✓
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
This Form 6-K, excluding Exhibit 99.2, Exhibit 99.3, Exhibit 99.4, Exhibit 99.5, andExhibit 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 | Earnings Coverage |
| 99.2 | Q4 2023 Earnings News Release |
| 99.3 | Q4 2023 Dividend News Release |
| 99.4 | Notice of Meeting and Record Date |
| 99.5 | CEO and CFO Certificates |
| 99.6 | Independent Auditor’s Report dated November 29, 2023 |
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: November 30, 2023 | By: | /s/ Ye<br>Xia |
| Name: | Ye Xia | |
| Title: | Associate Vice President, Legal Treasury and Corporate Securities |
EARNINGS COVERAGE
Exhibit 99.1
THE TORONTO-DOMINION BANK
EARNINGS COVERAGEON 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, 2023
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, 2023 and adjusted to a before-tax equivalent using an effective tax rate of 24.2% for the twelve months ended October 31, 2023, amounted to $742.6 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 $1,149.7 million for the twelve months ended October 31, 2023. The Bank’s reported net income, before interest on subordinated debt and liabilities for preferred shares and capital trust securities and income taxes was $13,525 million for the twelve months ended October 31, 2023, which was 11.8 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, 2023, was $18,210 million, which was 15.8 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 2023 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.
Q4 2023 EARNINGS NEWS RELEASE
Exhibit 99.2
| TD Bank Group Reports Fourth Quarter and Fiscal 2023 Results<br><br><br>Earnings News Release • Three and Twelve months ended October 31, 2023 |
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This quarterly earnings news release should be read in conjunction with the Bank’s unaudited fourth quarter 2023 consolidated financial results for the year ended October 31, 2023, included in this Earnings News Release and the audited 2023 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 November 29, 2023. Unless otherwise indicated, all amounts are expressed in Canadian dollars, and have been primarily derived from the Bank’s Annual or Interim Consolidated Financial Statements prepared in accordance with IFRS. Certain comparative amounts have been revised to conform to the presentation adopted in the current period. Additional information including the 2023 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.sedar.com and on the U.S. Securities and Exchange Commission’s (SEC) website at http://www.sec.gov (EDGAR filers section).
Reported results conform to generally accepted accounting principles (GAAP), in accordance with IFRS. Adjusted results are non-GAAP financial measures. For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP and Other Financial Measures” in the “How We Performed” section of this document.
FOURTH QUARTER FINANCIAL HIGHLIGHTS, compared with the fourth quarter last year:
| • | Reported diluted earnings per share were $1.49, compared with $3.62. |
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| • | Adjusted diluted earnings per share were $1.83, compared with $2.18. |
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| • | Reported net income was $2,886 million, compared with $6,671 million. |
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| • | Adjusted net income was $3,505 million, compared with $4,065 million. |
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FULL YEAR FINANCIAL HIGHLIGHTS, compared with last year:
| • | Reported diluted earnings per share were $5.60, compared with $9.47. |
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| • | Adjusted diluted earnings per share were $7.99, compared with $8.36. |
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| • | Reported net income was $10,782 million, compared with $17,429 million. |
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| • | Adjusted net income was $15,143 million, compared with $15,425 million. |
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FOURTH QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The fourth quarter reportedearnings figures included the following items of note:
| • | Amortization of intangibles of $92 million ($83 million after-tax or 4cents per share), compared with $57 million ($51 million after-tax or 3 cents per share) in the fourth quarter last year. |
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| • | Acquisition and integration charges related to the Schwab transaction of $31 million ($26 million after-tax or 1 cent per share), compared with $18 million ($16 million after-tax or 1 cent per share) in the fourth quarter last year. |
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| • | Share of restructuring charges from investment in Schwab of $35 million ($35 million after-tax or 2 cents per share). |
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| • | Restructuring charges of $363 million ($266 million after-tax or 15cents per share). |
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| • | Acquisition and integration charges primarily related to the Cowen acquisition of $197 million ($161 million after-tax or 9 cents per share). |
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| • | Residual impact from the terminated First Horizon acquisition-related capital hedging strategy, net loss of$64 million ($48 million after-tax or 3 cents per share). |
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TORONTO, November 30, 2023 – TD Bank Group (“TD” or the “Bank”) today announced its financial results for the fourth quarter ended October 31, 2023. Reported earnings were $2.9 billion, down 57% compared with the fourth quarter last year, and adjusted earnings were $3.5 billion, down 14%.
“TD delivered strong revenue growth this quarter, reflecting positive underlying business momentum and the benefits of our diversified business model,” said Bharat Masrani, Group President and CEO, TD Bank Group. “In a complex operating environment, we continued to adapt, invest in new capabilities and take important steps to deliver efficiencies and drive growth across the Bank.”
Canadian Personal and Commercial Banking delivered a strong quarter supported by net interest margin expansion and volume growth
Canadian Personal and Commercial Banking net income was $1,679 million, a decline of 1% compared to the fourth quarter last year. The decrease primarily reflects higher provisions for credit losses (PCL) and expenses, partially offset by revenue growth. Revenue was $4,754 million, an increase of 7%, reflecting volume growth and higher margins. The segment delivered its tenth quarter of positive operating leverage in a row.
Canadian Personal and Commercial Banking continued to deliver growth, driven by a record quarter for New to Canada account openings. This quarter, TD launched a First Home Savings Account to enable customers to invest tax-free for a down payment on their first home. In addition, TD was recognized by Rewards Canada readers with more credit card and loyalty program awards than any other card issuer, with the Bank taking first place in four of seven categories^1^.
The U.S. Retail Bank continued to show operating momentum in a challenging environment
U.S. Retail reported net income of $1,280 million, a decrease of 17% (19% in U.S. dollars) compared with the fourth quarter last year. On an adjusted basis net income was $1,280 million, a decline of 19% (21% in U.S. dollars). Prior year reported net income included charges for the terminated First Horizon transaction. TD Bank’s investment in The Charles Schwab Corporation (“Schwab”) contributed $197 million in earnings, a decrease of 36% (38% in U.S. dollars) compared with the fourth quarter last year.
The U.S. Retail Bank, which excludes the Bank’s investment in Schwab, reported net income of $1,083 million (US$800 million), a decrease of 12% (14% in U.S. dollars) from the fourth quarter last year, primarily reflecting higher non-interest expenses, higher PCL, and lower revenue. On an adjusted basis net income was $1,083 million (US$800 million), a decrease of 15% (17% in U.S. dollars) from the fourth quarter last year. Prior year reported net income included charges for the terminated First Horizon transaction.
The U.S. Retail Bank continued its loan growth momentum, with total average loan balances up 10% compared with the fourth quarter last year and up 2% from last quarter. This reflects new customer acquisition, deepening relationships in core franchise businesses, and slower payment rates in the high interest rate
| ^1^ | Canada’s Choice 2023 Winners: https://www.rewardscanada.ca/canadaschoice/#results.<br> |
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| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 1 |
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environment. Total personal and business deposit average balances were down 4% compared with the fourth quarter last year amid competitive market conditions. Personal and business deposit average balances increased 1% quarter over quarter, reflecting account acquisitions in term deposit and chequing products.
During the quarter, TD Bank, America’s Most Convenient Bank^®^ (TD AMCB) welcomed new customers and further strengthened its store network, opening six new stores, including one in a low- and moderate-income area. TD AMCB also introduced overdraft grace period alerts to help customers better manage their finances. For the seventh consecutive year, TD AMCB ranked #1 in its footprint by total number of approved U.S. Small Business Administration (SBA) loan units and ranked as the #2 National SBA Lender in 2023^2^.
Wealth Management andInsurance delivered solid results
Wealth Management and Insurance net income was $501 million, a decrease of 3% compared with the fourth quarter last year, primarily reflecting higher insurance claims and related expenses, partially offset by higher revenues. This quarter’s revenue growth of 9% highlighted the strength of the segment’s diversified business model as higher insurance premiums and fee-based revenue offset the impact of lower transaction revenue. Insurance claims and related expenses rose 39%, mainly reflecting increased severe weather-related events, inflation and automobile thefts.
With continued focus on client-centric innovation, TD Direct Investing launched TD Active Trader, the Bank’s redesigned platform for active traders, offering extensive order customization with speed and reliability. TD Active Trader joins the Bank’s suite of leading trading platforms. TD Private Wealth Management continues to accelerate the expansion of its advice teams while deepening relationships with existing TD clients, which translated into market share growth. TD Insurance introduced a new digital quoter for Small Business Insurance to better serve small business owners in their channel of choice.
Challenging quarter for Wholesale Banking
Wholesale Banking reported net income for the quarter was $17 million, down $244 million or 93% compared to the fourth quarter last year. The results reflect higher non-interest expenses, which include acquisition and integration costs, partially offset by higher revenues. On an adjusted basis, net income was $178 million, a decrease of $97 million, or 35%. Revenue increased 28%, reflecting the benefits of the Cowen Inc. acquisition and growth in Global Markets and Corporate and Investment Banking in a challenging market.
This quarter, the Wholesale Bank continued to demonstrate its leadership in Environmental, Social, and Governance (ESG) and deepened the Bank’s commitment to a low carbon economy. TD Securities agreed to purchase 27,500 metric tons of Direct Air Capture (DAC) carbon dioxide removal credits over a four-year period from STRATOS, 1PointFive’s first DAC plant currently under construction in Texas, subject to STRATOS becoming operational. TD Securities also reached a significant TD Cowen integration milestone, combining its U.S. Institutional Equities and Convertibles businesses to deliver a full-service North American equities platform to clients.
Shaping the future of banking
This quarter, the Bank launched TD Invent, an enterprise approach to innovation that supports its forward-focused business strategy and delivers new products and services for customers. This integration of innovation and business strategies combined with the Bank’s Next Evolution of Work agile operating model powered the recent redesign of TD’s mobile banking app. Leveraging its North American scale, TD introduced the redesigned app in both the U.S. and Canada, strengthening digital capabilities for more than 12 million North American mobile users. The Bank was also recognized by Global Finance as “Best Consumer Digital Bank in North America” for the third year in a row.
Capital
TD’s Common Equity Tier 1 Capital ratio was 14.4%.
Conclusion
For fiscal 2024, it will be challenging for the Bank to meet its medium-term adjusted EPS growth target range of 7-10% and return on equity target of 16+% as it navigates a complex macroeconomic environment, expected further normalization in PCLs and critical business investments.
“We enter 2024 from a position of strength, with proven resiliency, a powerful brand, and a strong capital position,” said Masrani. “I want to thank our more than 95,000 colleagues across the globe who bring TD’s purpose to life every day.”
The foregoing contains forward-lookingstatements. Please refer to the “Caution Regarding Forward-Looking Statements”.
| ^2^ | U.S. Small Business Administration (SBA) loan units in its Maine-to-Florida footprint for the SBA’s 2023 fiscal year. |
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| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 2 |
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Caution Regarding Forward-Looking Statements
From time to time, the Bank (as defined in this document) makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the United States (U.S.) Securities and Exchange Commission (SEC), and in other communications. In addition, representatives of the Bank may make forward-looking statements orally to analysts, investors, the media, and others. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-looking statements under, applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements made in this document, the Management’s Discussion and Analysis (“2023 MD&A”) in the Bank’s 2023 Annual Report under the heading “Economic Summary and Outlook”, under the headings “Key Priorities for 2024” and “Operating Environment and Outlook” for the Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking segments, and under the heading “2023 Accomplishments and Focus for 2024” for the Corporate segment, and in other statements regarding the Bank’s objectives and priorities for 2024 and beyond and strategies to achieve them, the regulatory environment in which the Bank operates, and the Bank’s anticipated financial performance. Forward-looking statements are typically identified by words such as “will”, “would”, “should”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plan”, “goal”, “target”, “may”, and “could”.
By their very nature, these forward-looking statements require the Bank to make assumptions and are subject to inherent risks and uncertainties, general and specific. Especially in light of the uncertainty related to the physical, financial, economic, political, and regulatory environments, such risks and uncertainties – many of which are beyond the Bank’s control and the effects of which can be difficult to predict – may cause actual results to differ materially from the expectations expressed in the forward-looking statements. Risk factors that could cause, individually or in the aggregate, such differences include: strategic, credit, market (including equity, commodity, foreign exchange, interest rate, and credit spreads), operational (including technology, cyber security, and infrastructure), model, insurance, liquidity, capital adequacy, legal, regulatory compliance and conduct, reputational, environmental and social, and other risks. Examples of such risk factors include general business and economic conditions in the regions in which the Bank operates; geopolitical risk; inflation, rising rates and recession; regulatory oversight and compliance risk; the ability of the Bank to execute on long-term strategies, shorter-term key strategic priorities, including the successful completion of acquisitions and dispositions and integration of acquisitions, the ability of the Bank to achieve its financial or strategic objectives with respect to its investments, business retention plans, and other strategic plans; technology and cyber security risk (including cyber-attacks, data security breaches or technology failures) on the Bank’s technologies, systems and networks, those of the Bank’s customers (including their own devices), and third parties providing services to the Bank; model risk; fraud activity; the failure of third parties to comply with their obligations to the Bank or its affiliates, including relating to the care and control of information, and other risks arising from the Bank’s use of third parties; the impact of new and changes to, or application of, current laws, rules and regulations, including without limitation tax laws, capital guidelines and liquidity regulatory guidance; increased competition from incumbents and new entrants (including Fintechs and big technology competitors); shifts in consumer attitudes and disruptive technology; environmental and social risk (including climate change); exposure related to significant litigation and regulatory matters; ability of the Bank to attract, develop, and retain key talent; changes to the Bank’s credit ratings; changes in foreign exchange rates, interest rates, credit spreads and equity prices; the interconnectivity of Financial Institutions including existing and potential international debt crises; increased funding costs and market volatility due to market illiquidity and competition for funding; Interbank Offered Rate (IBOR) transition risk; critical accounting estimates and changes to accounting standards, policies, and methods used by the Bank; the economic, financial, and other impacts of pandemics; and the occurrence of natural and unnatural catastrophic events and claims resulting from such events. The Bank cautions that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Bank’s results. For more detailed information, please refer to the “Risk Factors and Management” section of the 2023 MD&A, as may be updated in subsequently filed quarterly reports to shareholders and news releases (as applicable) related to any events or transactions discussed under the heading “Significant 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 2023 MD&A under the heading “Economic Summary and Outlook”, under the headings “Key Priorities for 2024” and “Operating Environment and Outlook” for the Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking segments, and under the heading “2023 Accomplishments and Focus for 2024” for the Corporate segment, each as may be updated in subsequently filed quarterly reports to shareholders.
Any forward-looking statements contained in this document represent the views of management only as of the date hereof and are presented for the purpose of assisting the Bank’s shareholders and analysts in understanding the Bank’s financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf, except as required under applicable securities legislation.
This document was reviewed by the Bank’s Audit Committee and was approved by the Bank’s Boardof Directors, on the Audit Committee’s recommendation, prior to its release.
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 3 |
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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 312023 | July 31<br>2023 | October 31<br>2022 | October 312023 | October 31<br>2022 | |||||||||||
| Results of operations | |||||||||||||||
| Total revenue – reported | $ | 13,121 | **** | $ | 12,779 | $ | 15,563 | $ | 50,492 | **** | $ | 49,032 | |||
| Total revenue – adjusted^1^ | **** | 13,185 | **** | 13,013 | 12,247 | **** | 51,839 | **** | 46,170 | ||||||
| Provision for (recovery of) credit losses | **** | 878 | **** | 766 | 617 | **** | 2,933 | **** | 1,067 | ||||||
| Insurance claims and related expenses | **** | 1,002 | **** | 923 | 723 | **** | 3,705 | **** | 2,900 | ||||||
| Non-interest expenses – reported | **** | 7,883 | **** | 7,582 | 6,545 | **** | 30,768 | **** | 24,641 | ||||||
| Non-interest expenses – adjusted^1^ | **** | 7,243 | **** | 6,953 | 6,430 | **** | 27,430 | **** | 24,359 | ||||||
| Net income – reported | **** | 2,886 | **** | 2,963 | 6,671 | **** | 10,782 | **** | 17,429 | ||||||
| Net income – adjusted^1^ | **** | 3,505 | **** | 3,731 | 4,065 | **** | 15,143 | **** | 15,425 | ||||||
| Financial positions (billions of Canadian dollars) | |||||||||||||||
| Total loans net of allowance for loan losses | $ | 895.9 | **** | $ | 867.8 | $ | 831.0 | $ | 895.9 | **** | $ | 831.0 | |||
| Total assets | **** | 1,957.0 | **** | 1,887.1 | 1,917.5 | **** | 1,957.0 | **** | 1,917.5 | ||||||
| Total deposits | **** | 1,198.2 | **** | 1,159.5 | 1,230.0 | **** | 1,198.2 | **** | 1,230.0 | ||||||
| Total equity | **** | 112.1 | **** | 112.7 | 111.4 | **** | 112.1 | **** | 111.4 | ||||||
| Total risk-weighted assets^2^ | **** | 571.2 | **** | 544.9 | 517.0 | **** | 571.2 | **** | 517.0 | ||||||
| Financial ratios | |||||||||||||||
| Return on common equity (ROE) – reported^3^ | **** | 10.6 | % | 11.2 | % | 26.5 | % | **** | 10.1 | % | 18.0 | % | |||
| Return on common equity – adjusted^1^ | **** | 13.0 | **** | 14.1 | 16.0 | **** | 14.4 | **** | 15.9 | ||||||
| Return on tangible common equity (ROTCE)^1^ | **** | 14.4 | **** | 15.1 | 35.4 | **** | 13.6 | **** | 24.3 | ||||||
| Return on tangible common equity –<br>adjusted^1^ | **** | 17.2 | **** | 18.6 | 21.2 | **** | 18.9 | **** | 21.2 | ||||||
| Efficiency ratio – reported^3^ | **** | 60.1 | **** | 59.3 | 42.1 | **** | 60.9 | **** | 50.3 | ||||||
| Efficiency ratio – adjusted^1,3^ | **** | 54.9 | **** | 53.4 | 52.5 | **** | 52.9 | **** | 52.8 | ||||||
| Provision for (recovery of) credit losses as a % of net average loans<br>and acceptances | **** | 0.39 | **** | 0.35 | 0.29 | **** | 0.34 | **** | 0.14 | ||||||
| Common share information – reported (Canadian dollars) | |||||||||||||||
| Per share earnings | |||||||||||||||
| Basic | $ | 1.49 | **** | $ | 1.57 | $ | 3.62 | $ | 5.61 | **** | $ | 9.48 | |||
| Diluted | **** | 1.49 | **** | 1.57 | 3.62 | **** | 5.60 | **** | 9.47 | ||||||
| Dividends per share | **** | 0.96 | **** | 0.96 | 0.89 | **** | 3.84 | **** | 3.56 | ||||||
| Book value per share^3^ | **** | 56.58 | **** | 55.50 | 55.00 | **** | 56.58 | **** | 55.00 | ||||||
| Closing share price^4^ | **** | 77.46 | **** | 86.96 | 87.19 | **** | 77.46 | **** | 87.19 | ||||||
| Shares outstanding (millions) | |||||||||||||||
| Average basic | **** | 1,806.3 | **** | 1,834.8 | 1,812.1 | **** | 1,822.5 | **** | 1,810.5 | ||||||
| Average diluted | **** | 1,807.8 | **** | 1,836.3 | 1,814.4 | **** | 1,824.4 | **** | 1,813.6 | ||||||
| End of period | **** | 1,790.7 | **** | 1,827.5 | 1,820.7 | **** | 1,790.7 | **** | 1,820.7 | ||||||
| Market capitalization (billions of Canadian dollars) | $ | 138.7 | **** | $ | 158.9 | $ | 158.7 | $ | 138.7 | **** | $ | 158.7 | |||
| Dividend yield^3^ | **** | 4.7 | % | 4.7 | % | 4.2 | % | **** | 4.6 | % | 3.8 | % | |||
| Dividend payout ratio^3^ | **** | 64.1 | **** | 60.9 | 24.6 | **** | 68.3 | **** | 37.5 | ||||||
| Price-earnings ratio^3^ | **** | 13.8 | **** | 11.3 | 9.2 | **** | 13.8 | **** | 9.2 | ||||||
| Total shareholder return (1 year)^3^ | **** | (6.9 | ) | 9.4 | 0.9 | **** | (6.9 | ) | 0.9 | ||||||
| Common share information – adjusted (Canadian dollars)^1,3^ | |||||||||||||||
| Per share earnings | |||||||||||||||
| Basic | $ | 1.83 | **** | $ | 1.99 | $ | 2.18 | $ | 8.00 | **** | $ | 8.38 | |||
| Diluted | **** | 1.83 | **** | 1.99 | 2.18 | **** | 7.99 | **** | 8.36 | ||||||
| Dividend payout ratio | **** | 52.1 | % | 48.1 | % | 40.8 | % | **** | 47.9 | % | 42.5 | % | |||
| Price-earnings ratio | **** | 9.7 | **** | 10.4 | 10.4 | **** | 9.7 | **** | 10.4 | ||||||
| Capital Ratios^2^ | |||||||||||||||
| Common Equity Tier 1 Capital ratio | **** | 14.4 | % | 15.2 | % | 16.2 | % | **** | 14.4 | % | 16.2 | % | |||
| Tier 1 Capital ratio | **** | 16.2 | **** | 17.2 | 18.3 | **** | 16.2 | **** | 18.3 | ||||||
| Total Capital ratio | **** | 18.1 | **** | 19.6 | 20.7 | **** | 18.1 | **** | 20.7 | ||||||
| Leverage ratio | **** | 4.4 | **** | 4.6 | 4.9 | **** | 4.4 | **** | 4.9 | ||||||
| Total Loss Absorbing Capacity (TLAC) ratio | **** | 32.7 | **** | 35.0 | 35.2 | **** | 32.7 | **** | 35.2 | ||||||
| TLAC Leverage ratio | **** | 8.9 | **** | 9.3 | 9.4 | **** | 8.9 | **** | 9.4 | ||||||
| ^1^ | ^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 atadjusted 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 reportedresults. 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.^ | ||||||||||||||
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| ^2^ | ^These measures have been included in this document in accordance with theOffice 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 2023 MD&A for further details.^ | ||||||||||||||
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| ^3^ | For additional information about this metric, refer to the Glossary in the 2023 MD&A, which is incorporated by<br>reference. | ||||||||||||||
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| ^4^ | ^Toronto Stock Exchange closing market price.^ | ||||||||||||||
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| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 4 | ||||||||||||||
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SIGNIFICANT AND SUBSEQUENT EVENTS
a) Restructuring Charges
The Bank undertook certain measures in the fourth quarter of 2023 to reduce its cost base and achieve greater efficiency. In connection with these measures, the Bank incurred $363 million of restructuring charges which primarily relate to employee severance and other personnel-related costs, real estate optimization, and asset impairments. The Bank expects to incur additional restructuring charges of a similar magnitude in the first half of calendar 2024.
b) Acquisition of Cowen Inc.
On March 1, 2023, the Bank completed the acquisition of Cowen Inc. (“Cowen”). The acquisition advances the Wholesale Banking segment’s long-term growth strategy in the U.S. and adds complementary products and services to the Bank’s existing businesses. The results of the acquired business have been consolidated by the Bank from the closing date and primarily reported in the Wholesale Banking segment. Consideration included $1,500 million (US$1,100 million) in cash for 100% of Cowen’s common shares outstanding, $253 million (US$186 million) for the settlement of Cowen’s Series A Preferred Stock, and $205 million (US$151 million) related to the replacement of share-based payment awards.
The acquisition was accounted for as a business combination under the purchase method. The purchase price allocation can be adjusted during the measurement period, which shall not exceed one year from the acquisition date, to reflect new information obtained about facts and circumstances. The acquisition contributed $10,800 million (US$7,933 million) of assets and $9,884 million (US$7,261 million) of liabilities. The excess of accounting consideration over the fair value of the tangible net assets acquired is allocated to other intangible assets of $298 million (US$219 million) net of taxes, and goodwill of $744 million (US$546 million).
c) Termination of theMerger Agreement with First Horizon Corporation
On May 4, 2023, the Bank and First Horizon Corporation (“First Horizon” or “FHN”) announced their mutual decision to terminate the previously announced merger agreement for the Bank to acquire First Horizon. Under the terms of the termination agreement, the Bank made a $306 million (US$225 million) cash payment to First Horizon on May 5, 2023. The termination payment was recognized in non-interest expenses in the third quarter of fiscal 2023 and was reported in the Corporate segment.
In connection with the transaction, the Bank had invested US$494 million in non-voting First Horizon preferred stock. During the second quarter of fiscal 2023, the Bank recognized a valuation adjustment loss of $199 million (US$147 million) on this investment, recorded in other comprehensive income (OCI). On June 26, 2023, in accordance with the terms of the preferred share purchase agreement, the preferred stock converted into approximately 19.7 million common shares of First Horizon, resulting in the Bank recognizing a loss of $166 million (US$126 million) during the third quarter of fiscal 2023 in OCI based on First Horizon’s common share price at the time of conversion.
The Bank had also implemented a strategy to mitigate the impact of interest rate volatility to capital on closing of the acquisition. The Bank determined that the fair value of First Horizon’s fixed rate financial assets and liabilities and certain intangible assets would have been sensitive to interest rate changes. The fair value of net assets would have determined the amount of goodwill to be recognized on closing of the acquisition. Increases in goodwill and intangibles would have negatively impacted capital ratios because they are deducted from capital under OSFI Basel III rules. In order to mitigate this volatility to closing capital, the Bank de-designated certain interest rate swaps hedging fixed income investments in fair value hedge accounting relationships.
As a result of the de-designation, mark-to-market gains (losses) on these swaps were recognized in earnings, without any corresponding offset from the previously hedged investments. Such gains (losses) would have mitigated the capital impact from changes in the amount of goodwill recognized on closing of the acquisition. The de-designation also triggered the amortization of the investments’ basis adjustment to net interest income over the remaining expected life of the investments.
Prior to the termination of the merger agreement on May 4, 2023, for the year ended October 31, 2023, the Bank reported ($1,386) million in non-interest income related to the mark-to-market on the swaps, and $262 million in net interest income related to the basis adjustment amortization. In addition, for the year ended October 31, 2023, the Bank reported $585 million in non-interest income related to the net interest earned on the swaps.
Following the announcement to terminate the merger agreement, the Bank discontinued this strategy and reinstated hedge accounting on the portfolio of fixed income investments using new swaps entered into at higher market rates. Income recognized from this strategy will reverse over time causing a decrease to net interest income. For the year ended October 31, 2023, the decrease to net interest income was ($127) million, recorded in the Corporate segment.
The Bank had also implemented a strategy to mitigate FX risk on the expected USD cash consideration. Following the announcement to terminate the merger agreement, the Bank discontinued this strategy. Given the appreciation of the U.S. dollar during the life of the strategy, the Bank was in a net gain position on the date of hedge termination and cumulative net gains were recognized in accumulated other comprehensive income (AOCI).
d) Implementation ofthe Canada Recovery Dividend and Change in Corporate Tax Rate
On December 15, 2022, Bill C-32, FallEconomic Statement Implementation Act, 2022, received Royal Assent. This bill enacted the Canada Recovery Dividend (CRD) and increased the Canadian federal tax rate for bank and life insurer groups by 1.5%.
The implementation of the CRD resulted in a provision for income taxes of $553 million and a charge to OCI of $239 million, recognized in the first quarter of 2023.
The increase in the Canadian federal tax rate of 1.5%, prorated for the first taxation year that ends after April 7, 2022, resulted in a provision for income taxes of $82 million and a tax benefit of $75 million in OCI related to fiscal 2022, recognized in the first quarter of 2023. The Bank also remeasured certain Canadian deferred tax assets and liabilities for the increase in tax rate, which resulted in an increase in net deferred tax assets of $50 million, which is recorded in provision for income taxes.
e) Stanford Litigation Settlement
In the US Rotstainv. Trustmark National Bank, et al. action, on February 24, 2023, the Bank reached a settlement in principle (the “settlement” or “agreement”) relating to litigation involving the Stanford Financial Group (the “Stanford litigation”), pursuant to which the Bank agreed to pay US$1.205 billion to the court-appointed receiver for the Stanford Receivership Estate. Under the terms of the agreement, TD has settled with the receiver, the Official Stanford Investors Committee, and other plaintiffs in the litigation and these parties have agreed to release and dismiss all current or future claims arising from or related to the Stanford matter. As a result of this agreement, the Bank recorded a provision of approximately $1.6 billion pre-tax ($1.2 billion after-tax) in the first quarter of 2023. The Bank recognized a foreign exchange loss of $39 million ($28 million after-tax) in the second quarter of 2023, reflecting the impact of the difference between the foreign exchange rate used for recording the provision (effective January 31, 2023) and the foreign exchange rate at the time the settlement was reached.
f) **** Federal DepositInsurance 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 Spring 2023 (the “Special Assessment”). The Special Assessment is expected to result in the recognition of a provision of approximately US$300 million pre-tax in the first quarter of the Bank’s fiscal 2024.
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 5 |
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HOW WE PERFORMED
ECONOMIC SUMMARY AND OUTLOOK
The global economy remains on track to slow in calendar 2023 and 2024, but to a lesser extent than anticipated in the previous quarter. Inflation has generally continued to cool across the G-7, and more central banks have taken a pause on interest rate hikes. Central bankers will remain vigilant on inflation and further rate hikes cannot be ruled out, but most are fine-tuning interest rate adjustments at this stage. The lagged impact of cumulative interest rate hikes is expected to be the primary influence dampening economic growth and returning inflation closer to the target ranges of the various regions by the end of calendar 2024.
The U.S. economy expanded by 4.9% annualized in the third calendar quarter of 2023. Underlying domestic demand grew at an impressive 3.5% pace, as consumer spending accelerated from a soft performance in the second calendar quarter. Government spending accelerated, driven by an uptick in federal defence spending. Housing activity also increased for the first time in over two years, reflecting lower mortgage rates earlier in the year. However, business investment weakened, after a stronger-than-expected performance in the first half of calendar 2023.
As of October, the U.S. job market was still tight with the unemployment rate still historically low at 3.9%. However, there are signs that demand for workers is cooling, as evidenced by both slower trend growth in payrolls and a slight increase in the unemployment rate over the prior six months. Although the downturn in total inflation has stalled in recent months due to higher energy costs, core inflation measures have continued to move lower. Underlying services prices continue to be a source of persistent price pressure. Given that inflation remains well above the U.S. Federal Reserve’s 2% target, the central bank remains highly attentive to upside risks.
TD Economics continues to believe there is a chance the federal funds rate may rise a further quarter point from its current range of 5.25-5.50% early in calendar 2024. The economic environment remains fluid. If the central bank sees evidence of further cooling in the labor market and is increasingly confident that inflation is headed towards its 2% target, it could opt to hold rates steady. Given the steep rise in interest rates over the past year, the trend towards tighter U.S. credit and financial conditions, and the likelihood of rolling periods of financial stress related to risk factors, the probability of a recession stateside remains elevated.
The Canadian economy has been affected by numerous temporary economic events, which have contributed to weakness in the economic activity data. Real GDP was nearly unchanged in the second calendar quarter of 2023, reflecting softer consumer spending and ongoing weakness in housing activity. Business investment was one bright spot, as investment in engineering structures and transportation equipment increased.
Despite signs of slowing in the Canadian economy, progress on inflation has stalled in recent months. The trend rate of job growth has slowed below that of the labour force, pushing the unemployment rate higher. TD Economics expects the unemployment rate to continue to move higher in the months ahead, contributing to prolonged weakness in consumer spending. Given the uncertainty surrounding the impact of substantial interest rate hikes on highly indebted Canadian households, the risk of recession also remains elevated in Canada.
The Bank of Canada has left the overnight interest rate unchanged at 5.00% since July. However, it has expressed concern about the persistence of underlying inflation. TD Economics does not expect further interest rate hikes, but the incoming economic data will determine whether more will be required in Canada to bring inflation down to the 2% target. The Canadian dollar is expected to hover in the 72 to 74 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 Corporationand IDA Agreement
On October 6, 2020, the Bank acquired an approximately 13.5% stake in The Charles Schwab Corporation (“Schwab”) following the completion of Schwab’s acquisition of TD Ameritrade Holding Corporation (“TD Ameritrade”) of which the Bank was a major shareholder (the “Schwab transaction”). On August 1, 2022, the Bank sold 28.4 million non-voting common shares of Schwab, at a price of US$66.53 per share for proceeds of $2.5 billion (US$1.9 billion), which reduced the Bank’s ownership interest in Schwab to approximately 12.0%. The Bank recognized $997 million as other income (net of $368 million loss from AOCI reclassified to earnings), in the fourth quarter of fiscal 2022.
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 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 2023 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
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 6 |
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sweep deposit balances to fluctuate over time, under certain conditions and subject to certain limitations. Refer to the “Related Party Transactions” section in the 2023 MD&A for further details.
On May 4, 2023, the Bank and Schwab entered into an amended insured deposit account agreement (the “2023 Schwab IDA Agreement” or the “Schwab IDA Agreement”), which replaced the 2019 Schwab IDA Agreement. Pursuant to the 2023 Schwab IDA Agreement, the Bank continues to make sweep deposit accounts available to clients of Schwab. Schwab designates a portion of the deposits with the Bank as fixed-rate obligation amounts (FROA). Remaining deposits over the minimum level of FROA are designated as floating-rate obligations. In comparison to the 2019 Schwab IDA Agreement, the 2023 Schwab IDA Agreement extends the initial expiration date by three years to July 1, 2034 and provides for lower deposit balances in its first six years, followed by higher balances in the later years. Specifically, until September 2025, the aggregate FROA will serve as the floor. Thereafter, the floor will be set at US$60 billion. In addition, Schwab has the option to buy down up to $6.8 billion (US$5 billion) of FROA by paying the Bank certain fees in accordance with the 2023 Schwab IDA Agreement, subject to certain limits.
During the year ended October 31, 2023, Schwab exercised its option to buy down $6.1 billion (US$4.5 billion) of FROA and paid $305 million (US$227 million) in termination fees to the Bank in accordance with the 2023 Schwab IDA Agreement. The fees are intended to compensate the Bank for losses incurred this year from discontinuing certain hedging relationships, as well as for lost revenues. The net impact is recorded in net interest income.
The following table provides the operating results on a reported basis for the Bank.
TABLE 2: OPERATING RESULTS – Reported
| (millions of Canadian dollars) | For the three months ended | For the twelve months ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| October 312023 | July 31<br>2023 | October 31<br>2022 | October 312023 | October 31<br>2022 | ||||||
| Net interest income | $ | 7,494 | $ | 7,289 | $ | 7,630 | $ | 29,944 | $ | 27,353 |
| Non-interest income | **** | 5,627 | 5,490 | 7,933 | **** | 20,548 | 21,679 | |||
| Total revenue | **** | 13,121 | 12,779 | 15,563 | **** | 50,492 | 49,032 | |||
| Provision for (recovery of) credit losses | **** | 878 | 766 | 617 | **** | 2,933 | 1,067 | |||
| Insurance claims and related expenses | **** | 1,002 | 923 | 723 | **** | 3,705 | 2,900 | |||
| Non-interest<br>expenses | **** | 7,883 | 7,582 | 6,545 | **** | 30,768 | 24,641 | |||
| Income before income taxes and share of net income from investment in Schwab | **** | 3,358 | 3,508 | 7,678 | **** | 13,086 | 20,424 | |||
| Provision for (recovery of) income taxes | **** | 628 | 727 | 1,297 | **** | 3,168 | 3,986 | |||
| Share of net income from investment in Schwab | **** | 156 | 182 | 290 | **** | 864 | 991 | |||
| Net income – reported | **** | 2,886 | 2,963 | 6,671 | **** | 10,782 | 17,429 | |||
| Preferred dividends and distributions on other equity<br>instruments | **** | 196 | 74 | 107 | **** | 563 | 259 | |||
| Net income available to common shareholders | $ | 2,690 | $ | 2,889 | $ | 6,564 | $ | 10,219 | $ | 17,170 |
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 7 | |||||||||
| --- | --- |
The following table provides a reconciliation between the Bank’s adjusted and reported results. For further details refer to the “Significant and Subsequent Events” or “How the Bank Reports” sections.
TABLE 3: NON-GAAP FINANCIAL MEASURES – Reconciliation of Adjusted to Reported Net Income
| (millions of Canadian dollars) | For the three months ended | For the twelve months ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 312023 | July 31<br>2023 | October 31<br>2022 | October 312023 | October 31<br>2022 | |||||||||||
| Operating results – adjusted | |||||||||||||||
| Net interest income^6^ | $ | 7,558 | **** | $ | 7,364 | $ | 7,627 | $ | 30,394 | **** | $ | 27,307 | |||
| Non-interest income^1,6^ | **** | 5,627 | **** | 5,649 | 4,620 | **** | 21,445 | **** | 18,863 | ||||||
| Total revenue | **** | 13,185 | **** | 13,013 | 12,247 | **** | 51,839 | **** | 46,170 | ||||||
| Provision for (recovery of) credit losses | **** | 878 | **** | 766 | 617 | **** | 2,933 | **** | 1,067 | ||||||
| Insurance claims and related expenses | **** | 1,002 | **** | 923 | 723 | **** | 3,705 | **** | 2,900 | ||||||
| Non-interest expenses^2^ | **** | 7,243 | **** | 6,953 | 6,430 | **** | 27,430 | **** | 24,359 | ||||||
| Income before income taxes and share of net income from investment in Schwab | **** | 4,062 | **** | 4,371 | 4,477 | **** | 17,771 | **** | 17,844 | ||||||
| Provision for (recovery of) income taxes | **** | 791 | **** | 868 | 747 | **** | 3,701 | **** | 3,595 | ||||||
| Share of net income from investment in Schwab^3^ | **** | 234 | **** | 228 | 335 | **** | 1,073 | **** | 1,176 | ||||||
| Net income – adjusted | **** | 3,505 | **** | 3,731 | 4,065 | **** | 15,143 | **** | 15,425 | ||||||
| Preferred dividends and distributions on other equity<br>instruments | **** | 196 | **** | 74 | 107 | **** | 563 | **** | 259 | ||||||
| Net income available to common shareholders –adjusted | **** | 3,309 | **** | 3,657 | 3,958 | **** | 14,580 | **** | 15,166 | ||||||
| Pre-tax adjustments for items of note | |||||||||||||||
| Amortization of acquired intangibles^4^ | **** | (92 | ) | (88 | ) | (57 | ) | **** | (313 | ) | (242 | ) | |||
| Acquisition and integration charges related to the Schwab transaction^5^ | **** | (31 | ) | (54 | ) | (18 | ) | **** | (149 | ) | (111 | ) | |||
| Share of restructuring charges from investment in<br>Schwab^5^ | **** | (35 | ) | – | – | **** | (35 | ) | – | ||||||
| Restructuring charges^2^ | **** | (363 | ) | – | – | **** | (363 | ) | – | ||||||
| Acquisition and integration-related charges^2^ | **** | (197 | ) | (143 | ) | (18 | ) | **** | (434 | ) | (18 | ) | |||
| Charges related to the terminated FHN<br>acquisition^2^ | **** | – | **** | (84 | ) | (67 | ) | **** | (344 | ) | (96 | ) | |||
| Payment related to the termination of the FHN<br>transaction^2^ | **** | – | **** | (306 | ) | – | **** | (306 | ) | – | |||||
| Impact from the terminated FHN acquisition-related capital hedging strategy^6^ | **** | (64 | ) | (177 | ) | 2,319 | **** | (1,251 | ) | 1,641 | |||||
| Impact of retroactive tax legislation on payment card clearing services^1^ | **** | – | **** | (57 | ) | – | **** | (57 | ) | – | |||||
| Litigation (settlement)/recovery^1,2^ | **** | – | **** | – | – | **** | (1,642 | ) | 224 | ||||||
| Gain on sale of Schwab shares^1^ | **** | – | **** | – | 997 | **** | – | **** | 997 | ||||||
| Less: Impact of income taxes | |||||||||||||||
| Amortization of acquired intangibles | **** | (9 | ) | (13 | ) | (6 | ) | **** | (42 | ) | (26 | ) | |||
| Acquisition and integration charges related to the Schwab transaction | **** | (5 | ) | (10 | ) | (2 | ) | **** | (25 | ) | (16 | ) | |||
| Restructuring charges | **** | (97 | ) | – | – | **** | (97 | ) | – | ||||||
| Acquisition and integration-related charges | **** | (36 | ) | (38 | ) | (4 | ) | **** | (89 | ) | (4 | ) | |||
| Charges related to the terminated FHN acquisition | **** | – | **** | (21 | ) | (16 | ) | **** | (85 | ) | (23 | ) | |||
| Impact from the terminated FHN acquisition-related capital hedging strategy | **** | (16 | ) | (43 | ) | 578 | **** | (308 | ) | 405 | |||||
| Impact of retroactive tax legislation on payment card clearing services | **** | – | **** | (16 | ) | – | **** | (16 | ) | – | |||||
| Litigation (settlement)/recovery | **** | – | **** | – | – | **** | (456 | ) | 55 | ||||||
| CRD and federal tax rate increase for fiscal 2022^7^ | **** | – | **** | – | – | **** | 585 | **** | – | ||||||
| Total adjustments for items of note | **** | (619 | ) | (768 | ) | 2,606 | **** | (4,361 | ) | 2,004 | |||||
| Net income available to common shareholders –reported | $ | 2,690 | $ | 2,889 | $ | 6,564 | $ | 10,219 | **** | $ | 17,170 | ||||
| ^1^ | Adjusted non-interest income excludes the following items of note:<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| i. | Stanford litigation settlement – 2023: $39 million. This reflects the foreign exchange loss and is reported in<br>the Corporate segment; | ||||||||||||||
| --- | --- | ||||||||||||||
| ii. | Settlement of TD Bank, N.A. v. Lloyd’s Underwriter et al., in Canada pursuant to which the Bank recovered<br>losses resulting from the previous resolution of proceedings in the U.S. related to an alleged Ponzi scheme perpetrated by Scott Rothstein – 2022: $224 million, reported in the U.S. Retail segment; | ||||||||||||||
| --- | --- | ||||||||||||||
| iii. | Impact of retroactive tax legislation on payment card clearing services – Q3 2023: $57 million, 2023:<br>$57 million, reported in the Corporate segment; and | ||||||||||||||
| --- | --- | ||||||||||||||
| iv. | The Bank sold 28.4 million non-voting common shares of Schwab and<br>recognized a gain on the sale – Q4 2022: $997 million, 2022: $997 million, reported in the Corporate segment. | ||||||||||||||
| --- | --- | ||||||||||||||
| ^2^ | Adjusted non-interest expenses exclude the following items of note:<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| i. | Amortization of acquired intangibles – Q4 2023: $62 million, Q3 2023: $58 million, 2023:<br>$193 million, Q4 2022: $24 million, 2022: $106 million, reported in the Corporate segment; | ||||||||||||||
| --- | --- | ||||||||||||||
| ii. | The Bank’s own integration and acquisition costs related to the Schwab transaction – Q4 2023:<br>$18 million, Q3 2023: $38 million, 2023: $95 million, Q4 2022: $6 million, 2022: $62 million, reported in the Corporate segment; | ||||||||||||||
| --- | --- | ||||||||||||||
| iii. | Acquisition and integration-related charges – Q4 2023: $197 million, Q3 2023: $143 million, 2023:<br>$434 million, Q4 2022: $18 million, 2022: $18 million, reported in the Wholesale segment. | ||||||||||||||
| --- | --- | ||||||||||||||
| iv. | Charges related to the terminated First Horizon acquisition – Q3 2023: $84 million, 2023: $344 million,<br>Q4 2022: $67 million, 2022: $96 million, reported in the U.S. Retail segment. | ||||||||||||||
| --- | --- | ||||||||||||||
| v. | Payment related to the termination of the First Horizon transaction – Q3 2023: $306 million, 2023:<br>$306 million, reported in the Corporate segment; | ||||||||||||||
| --- | --- | ||||||||||||||
| vi. | Stanford litigation settlement – 2023: $1,603 million, reported in the Corporate segment; and<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| vii. | Restructuring charges – Q4 2023: $363 million, 2023: $363 million, reported in the Corporate segment.<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| ^3^ | Adjusted share of net income from investment in Schwab excludes the following items of note on an after-tax basis. The earnings impact of these items is reported in the Corporate segment: | ||||||||||||||
| --- | --- | ||||||||||||||
| i. | Amortization of Schwab-related acquired intangibles – Q4 2023: $30 million, Q3 2023: $30 million, 2023:<br>$120 million, Q4 2022: $33 million, 2022: $136 million; | ||||||||||||||
| --- | --- | ||||||||||||||
| ii. | The Bank’s share of acquisition and integration charges associated with Schwab’s acquisition of TD Ameritrade<br>– Q4 2023: $13 million, Q3 2023: $16 million, 2023: $54 million, Q4 2022: $12 million, 2022: $49 million; and | ||||||||||||||
| --- | --- | ||||||||||||||
| iii. | The Bank’s share of restructuring charges incurred by Schwab – Q4 2023: $35 million, 2023:<br>$35 million. | ||||||||||||||
| --- | --- | ||||||||||||||
| ^4^ | Amortization of acquired intangibles relates to intangibles acquired as a result of asset acquisitions and business<br>combinations, including the after-tax amounts for amortization of acquired intangibles relating to the Share of net income from investment in Schwab, reported in the Corporate segment. Refer to footnotes 2 and<br>3 for amounts. | ||||||||||||||
| --- | --- | ||||||||||||||
| ^5^ | Impact of charges related to the Schwab investment includes the following components, reported in the Corporate segment:<br>i) the Bank’s own integration and acquisition costs related to the Schwab transaction, ii) the Bank’s share of acquisition and integration charges associated with Schwab’s acquisition of TD Ameritrade on an after-tax basis, and iii) the Bank’s share of restructuring charges incurred by Schwab on an after-tax basis. Refer to footnotes 2 and 3 for amounts.<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| ^6^ | Prior to May 4, 2023, the impact shown covers periods before the termination of the First Horizon transaction and<br>includes the following components, reported in the Corporate segment: i) mark-to-market gains (losses) on interest rate swaps recorded in<br>non-interest income – Q4 2023: nil, Q3 2023: ($125) million, 2023: ($1,386) million, Q4 2022: $2,208 million, 2022: $1,487 million, ii) basis adjustment amortization related to de-designated fair value hedge accounting relationships, recorded in net interest income – Q4 2023: nil, Q3 2023: $11 million, 2023: $262 million, Q4 2022: $111 million, 2022: $154 million,<br>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 – Q4 2023: nil, Q3 2023:<br>$23 million, 2023: $585 million, Q4 2022: $108 million, 2022: $108 million. After the termination of the merger agreement, the residual impact of the strategy is reversed through net interest income – Q4 2023:<br>($64) million, Q3 2023: ($63) million, 2023: ($127) million. | ||||||||||||||
| --- | --- | ||||||||||||||
| ^7^ | CRD and impact from increase in the Canadian federal tax rate for fiscal 2022 recognized in the first quarter of 2023,<br>reported in the Corporate segment. | ||||||||||||||
| --- | --- | ||||||||||||||
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 8 | ||||||||||||||
| --- | --- |
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<br><br><br>2023 | July 31<br><br><br>2023 | October 31<br><br><br>2022 | October 31<br><br><br>2023 | October 31<br><br><br>2022 | ||||||||
| Basic earnings per share – reported | $ | 1.49 | $ | 1.57 | $ | 3.62 | $ | 5.61 | $ | 9.48 | ||
| Adjustments for items of note | **** | 0.34 | 0.42 | (1.44 | ) | **** | 2.39 | (1.11 | ) | |||
| Basic earnings per share – adjusted | $ | 1.83 | $ | 1.99 | $ | 2.18 | $ | 8.00 | $ | 8.38 | ||
| Diluted earnings per share – reported | $ | 1.49 | $ | 1.57 | $ | 3.62 | $ | 5.60 | $ | 9.47 | ||
| Adjustments for items of note | **** | 0.34 | 0.42 | (1.44 | ) | **** | 2.39 | (1.10 | ) | |||
| Diluted earnings per share – adjusted | $ | 1.83 | $ | 1.99 | $ | 2.18 | $ | 7.99 | $ | 8.36 | ||
| ^1^ | EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares<br>outstanding during the period. Numbers may not add due to rounding. | |||||||||||
| --- | --- |
TABLE 5: NON-GAAP FINANCIAL MEASURES – Reconciliation of Reported to Adjusted Provision forIncome Taxes
| (millions of Canadian dollars, except as noted) | For the three months ended | For the twelve months ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 31<br><br><br>2023 | July 31<br><br><br>2023 | October 31<br><br><br>2022 | October 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||||||
| Provision for income taxes – reported | $ | 628 | **** | $ | 727 | $ | 1,297 | $ | 3,168 | **** | $ | 3,986 | |||
| Total adjustments for items of note | **** | 163 | **** | 141 | (550 | ) | **** | 533 | **** | (391 | ) | ||||
| Provision for income taxes – adjusted | $ | 791 | **** | $ | 868 | $ | 747 | $ | 3,701 | **** | $ | 3,595 | |||
| Effective income tax rate – reported | **** | 18.7 | % | 20.7 | % | 16.9 | % | **** | 24.2 | % | 19.5 | % | |||
| Effective income tax rate – adjusted^1^ | **** | 19.5 | **** | 19.9 | 16.7 | **** | 20.8 | **** | 20.1 | ||||||
| ^1^ | For additional information about this metric, refer to the Glossary in the 2023 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 attributable to common shareholders as a percentage of average allocated capital. The Bank’s methodology for allocating capital to its business segments is largely aligned with the common equity capital requirements under Basel III. Capital allocated to the business segments increased to 11% Common Equity Tier 1 (CET1) Capital effective the first quarter of 2023 compared with 10.5% in fiscal 2022.
TABLE 6: RETURN ON COMMON EQUITY
| (millions of Canadian dollars, except as noted) | For the three months ended | For the twelve months ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 31<br><br><br>2023 | July 31<br><br><br>2023 | October 31<br><br><br>2022 | October 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||||||
| Average common equity | $ | 101,027 | **** | $ | 102,728 | $ | 98,199 | $ | 101,555 | **** | $ | 95,326 | |||
| Net income available to common shareholders – reported | **** | 2,690 | **** | 2,889 | 6,564 | **** | 10,219 | **** | 17,170 | ||||||
| Items of note, net of income taxes | **** | 619 | **** | 768 | (2,606 | ) | **** | 4,361 | **** | (2,004 | ) | ||||
| Net income available to common shareholders –adjusted | $ | 3,309 | **** | $ | 3,657 | $ | 3,958 | $ | 14,580 | **** | $ | 15,166 | |||
| Return on common equity – reported | **** | 10.6 | % | 11.2 | % | 26.5 | % | **** | 10.1 | % | 18.0 | % | |||
| Return on common equity – adjusted | **** | 13.0 | **** | 14.1 | 16.0 | **** | 14.4 | **** | 15.9 |
RETURN ON TANGIBLE COMMON EQUITY
Tangible common equity (TCE) is calculated as common shareholders’ equity less goodwill, imputed goodwill and intangibles on the investments in Schwab and other acquired intangible assets, net of related deferred tax liabilities. ROTCE is calculated as reported net income available to common shareholders after adjusting for the after-tax amortization of acquired intangibles, which are treated as an item of note, as a percentage of average TCE. Adjusted ROTCE is calculated using reported net income available to common shareholders, adjusted for all items of note, as a percentage of average TCE. TCE, ROTCE, and adjusted ROTCE can be utilized in assessing the Bank’s use of equity. TCE is a non-GAAP financial measure, and ROTCE and adjusted ROTCE are non-GAAP ratios.
TABLE 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<br><br><br>2023 | July 31<br><br><br>2023 | October 31<br><br><br>2022 | October 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||||||
| Average common equity | $ | 101,027 | **** | $ | 102,728 | $ | 98,199 | $ | 101,555 | **** | $ | 95,326 | |||
| Average goodwill | **** | 18,217 | **** | 18,018 | 17,334 | **** | 17,919 | **** | 16,803 | ||||||
| Average imputed goodwill and intangibles on investments in Schwab | **** | 6,094 | **** | 6,058 | 6,374 | **** | 6,127 | **** | 6,515 | ||||||
| Average other acquired intangibles^1^ | **** | 635 | **** | 683 | 463 | **** | 584 | **** | 492 | ||||||
| Average related deferred tax liabilities | **** | (114 | ) | (132 | ) | (172 | ) | **** | (154 | ) | (172 | ) | |||
| Average tangible common equity | **** | 76,195 | **** | 78,101 | 74,200 | **** | 77,079 | **** | 71,688 | ||||||
| Net income available to common shareholders – reported | **** | 2,690 | **** | 2,889 | 6,564 | **** | 10,219 | **** | 17,170 | ||||||
| Amortization of acquired intangibles, net of income taxes | **** | 83 | **** | 75 | 51 | **** | 271 | **** | 216 | ||||||
| Net income available to common shareholders adjusted for amortization of acquired intangibles, net of incometaxes | **** | 2,773 | **** | 2,964 | 6,615 | **** | 10,490 | **** | 17,386 | ||||||
| Other items of note, net of income taxes | **** | 536 | **** | 693 | (2,657 | ) | **** | 4,090 | **** | (2,220 | ) | ||||
| Net income available to common shareholders –adjusted | $ | 3,309 | **** | $ | 3,657 | $ | 3,958 | $ | 14,580 | **** | $ | 15,166 | |||
| Return on tangible common equity | **** | 14.4 | % | 15.1 | % | 35.4 | % | **** | 13.6 | % | 24.3 | % | |||
| Return on tangible common equity – adjusted | **** | 17.2 | **** | 18.6 | 21.2 | **** | 18.9 | **** | 21.2 | ||||||
| ^1^ | Excludes intangibles relating to software and asset servicing rights. | ||||||||||||||
| --- | --- | ||||||||||||||
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 9 | ||||||||||||||
| --- | --- |
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, 2023 vs.October 31, 2022Increase (Decrease) | October 31, 2023 vs.October 31,2022<br> <br>Increase (Decrease) | |||||||
| U.S. Retail Bank | ||||||||
| Total revenue – reported | $ | 69 | $ | 657 | ||||
| Total revenue – adjusted^1^ | **** | 69 | **** | 657 | ||||
| Non-interest expenses – reported | **** | 40 | **** | 370 | ||||
| Non-interest expenses –<br>adjusted^1^ | **** | 40 | **** | 351 | ||||
| Net income – reported, after-tax | **** | 21 | **** | 215 | ||||
| Net income – adjusted, after-tax^1^ | **** | 21 | **** | 229 | ||||
| Share of net income from investment in Schwab^2^ | **** | 5 | **** | 51 | ||||
| U.S. Retail segment net income – reported,after-tax | **** | 26 | **** | 266 | ||||
| U.S. Retail segment net income – adjusted, after-tax^1^ | **** | 26 | **** | 280 | ||||
| Earnings per share (Canadian dollars) | ||||||||
| Basic – reported | $ | 0.01 | $ | 0.15 | ||||
| Basic – adjusted^1^ | **** | 0.01 | **** | 0.15 | ||||
| Diluted – reported | **** | 0.01 | **** | 0.15 | ||||
| Diluted –<br>adjusted^1^ | **** | 0.01 | **** | 0.15 | ||||
| ^1^ | For additional information about the Bank’s use of non-GAAP financial<br>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 312023 | October 31<br>2022 | October 312023 | October 31<br>2022 | |||||
| U.S. dollar | **** | 0.736 | 0.751 | **** | 0.741 | 0.777 | ||
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 10 | |||||||
| --- | --- |
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, 2023.
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 $44 million, compared with $36 million in the fourth quarter last year, and $40 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<br><br><br>2023 | July 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||
| Net interest income | $ | 3,705 | **** | $ | 3,571 | $ | 3,388 | ||
| Non-interest income | **** | 1,049 | **** | 999 | 1,066 | ||||
| Total revenue | **** | 4,754 | **** | 4,570 | 4,454 | ||||
| Provision for (recovery of) credit losses – impaired | **** | 274 | **** | 285 | 184 | ||||
| Provision for (recovery of) credit losses – performing | **** | 116 | **** | 94 | 45 | ||||
| Total provision for (recovery of) credit losses | **** | 390 | **** | 379 | 229 | ||||
| Non-interest expenses | **** | 2,039 | **** | 1,895 | 1,921 | ||||
| Provision for (recovery of) income taxes | **** | 646 | **** | 641 | 610 | ||||
| Net income | $ | 1,679 | **** | $ | 1,655 | $ | 1,694 | ||
| Selected volumes andratios | |||||||||
| Return on common equity^1^ | **** | 35.1 | % | 35.4 | % | 41.9 | % | ||
| Net interest margin (including on securitized assets)^2^ | **** | 2.78 | **** | 2.74 | 2.70 | ||||
| Efficiency ratio | **** | 42.9 | **** | 41.5 | 43.1 | ||||
| Number of Canadian Retail branches at period end | **** | 1,062 | **** | 1,060 | 1,060 | ||||
| Average number of full-time equivalent staff | **** | 29,069 | **** | 29,172 | 28,936 | ||||
| ^1^ | ^Capital allocated to the business segment was increased to 11% CET1Capital effective the first quarter of fiscal 2023 compared with 10.5% in the prior year.^ | ||||||||
| --- | --- | ||||||||
| ^2^ | ^Net interest margin is calculated by dividing net interest income byaverage interest-earning assets. Average interest-earning assets used in the calculation of net interest margin is a non-GAAP financial measure. Refer to “Non-GAAPand Other Financial Measures” in the “How We Performed” section of this document and the Glossary in the 2023 MD&A, for additional information about these metrics.^ | ||||||||
| --- | --- |
Quarterly comparison – Q4 2023 vs. Q4 2022
Canadian Personal and Commercial Banking net income for the quarter was $1,679 million, a decrease of $15 million, or 1%, compared with the fourth quarter last year, reflecting higher PCL and non-interest expenses, partially offset by revenue growth. The annualized ROE for the quarter was 35.1%, compared with 41.9%, in the fourth quarter last year.
Revenue for the quarter was $4,754 million, an increase of $300 million, or 7%, compared with the fourth quarter last year.
Net interest income was $3,705 million, an increase of $317 million, or 9%, reflecting volume growth and higher margins. Average loan volumes increased $33 billion, or 6%, reflecting 6% growth in personal loans and 9% growth in business loans. Average deposit volumes increased $9 billion, or 2%, reflecting 5% growth in personal deposits, partially offset by 3% decline in business deposits. Net interest margin was 2.78%, an increase of 8 basis points (bps), primarily due to higher margins on deposits reflecting rising interest rates, partially offset by lower margin on loans.
Non-interest income was $1,049 million, a decrease of $17 million, or 2%, compared with the fourth quarter last year, reflecting lower fee revenue.
PCL for the quarter was $390 million, an increase of $161 million, compared with the fourth quarter last year. PCL – impaired was $274 million, an increase of $90 million, or 49%, reflecting some normalization of credit performance. PCL – performing was $116 million, an increase of $71 million. The performing provisions this quarter largely reflect credit conditions, including some normalization of credit performance in the consumer lending portfolios, credit migration in the commercial lending portfolios, and volume growth. Total PCL as an annualized percentage of credit volume was 0.28%, an increase of 11 bps compared with the fourth quarter last year.
Non-interest expenses for the quarter were $2,039 million, an increase of $118 million, or 6%, compared with the fourth quarter last year, primarily reflecting higher technology spend supporting business growth and higher non-credit provisions.
The efficiency ratio for the quarter was 42.9%, compared with 43.1% in the fourth quarter last year.
Quarterly comparison – Q4 2023 vs. Q3 2023
Canadian Personal and Commercial Banking net income for the quarter was $1,679 million, an increase of $24 million, or 1%, compared with the prior quarter, reflecting higher revenue, partially offset by higher non-interest expenses and PCL. The annualized ROE for the quarter was 35.1%, compared with 35.4% in the prior quarter.
Revenue increased $184 million, or 4%, compared with the prior quarter. Net interest income increased $134 million, or 4%, reflecting volume growth and higher margins. Average loan volumes increased $13 billion, or 2%, reflecting 3% growth in personal loans and 2% growth in business loans. Average deposit volumes increased $5 billion, or 1%, reflecting 1% growth in both personal deposits and business deposits. Net interest margin was 2.78%, an increase of 4 bps, due to higher margins on deposits reflecting tractor maturities, partially offset by lower margin on loans.
Non-interest income increased $50 million, or 5%, compared with the prior quarter, **** primarily reflecting a prior years’ adjustment in the prior quarter, partially offset by lower fee revenue.
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 11 |
|---|
PCL for the quarter was $390 million, increased by $11 million compared with the prior quarter. PCL – impaired was $274 million, a decrease of $11 million, or 4%. PCL – performing was $116 million, an increase of $22 million. The performing provisions this quarter largely reflect credit conditions including some normalization of credit performance in the consumer lending portfolios, credit migration in the commercial lending portfolios, and volume growth. Total PCL as an annualized percentage of credit volume was 0.28%, flat compared with the prior quarter.
Non-interest expenses increased $144 million, or 8%, compared with the prior quarter, primarily reflecting higher non-credit provisions, higher marketing and technology spend supporting business growth, and higher employee-related expenses.
The efficiency ratio for the quarter was 42.9%, compared with 41.5% in the prior quarter.
TABLE 10: U.S. RETAIL
| (millions of dollars, except as noted) | For the three months ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Canadian Dollars | October 31<br><br><br>2023 | July 31<br><br><br>2023 | October 31<br><br><br>2022 | ||||||
| Net interest income | $ | 2,955 | **** | $ | 2,879 | $ | 2,957 | ||
| Non-interest income | **** | 603 | **** | 648 | 638 | ||||
| Total revenue | **** | 3,558 | **** | 3,527 | 3,595 | ||||
| Provision for (recovery of) credit losses – impaired | **** | 308 | **** | 259 | 166 | ||||
| Provision for (recovery of) credit losses – performing | **** | (19 | ) | (10 | ) | 59 | |||
| Total provision for (recovery of) credit losses | **** | 289 | **** | 249 | 225 | ||||
| Non-interest expenses – reported | **** | 2,066 | **** | 2,004 | 1,976 | ||||
| Non-interest expenses – adjusted^1,2^ | **** | 2,066 | **** | 1,920 | 1,909 | ||||
| Provision for (recovery of) income taxes – reported | **** | 120 | **** | 151 | 165 | ||||
| Provision for (recovery of) income taxes – adjusted^1^ | **** | 120 | **** | 172 | 181 | ||||
| U.S. Retail Bank net income – reported | **** | 1,083 | **** | 1,123 | 1,229 | ||||
| U.S. Retail Bank net income – adjusted^1^ | **** | 1,083 | **** | 1,186 | 1,280 | ||||
| Share of net income from investment in Schwab^3,4^ | **** | 197 | **** | 191 | 310 | ||||
| Net income – reported | $ | 1,280 | **** | $ | 1,314 | $ | 1,539 | ||
| Net income – adjusted^1^ | **** | 1,280 | **** | 1,377 | 1,590 | ||||
| U.S. Dollars | |||||||||
| Net interest income | $ | 2,178 | **** | $ | 2,157 | $ | 2,220 | ||
| Non-interest income | **** | 444 | **** | 485 | 479 | ||||
| Total revenue | **** | 2,622 | **** | 2,642 | 2,699 | ||||
| Provision for (recovery of) credit losses – impaired | **** | 227 | **** | 193 | 125 | ||||
| Provision for (recovery of) credit losses – performing | **** | (14 | ) | (8 | ) | 44 | |||
| Total provision for (recovery of) credit losses | **** | 213 | **** | 185 | 169 | ||||
| Non-interest expenses – reported | **** | 1,520 | **** | 1,502 | 1,482 | ||||
| Non-interest expenses – adjusted^1,2^ | **** | 1,520 | **** | 1,439 | 1,432 | ||||
| Provision for (recovery of) income taxes – reported | **** | 89 | **** | 113 | 122 | ||||
| Provision for (recovery of) income taxes – adjusted^1^ | **** | 89 | **** | 128 | 135 | ||||
| U.S. Retail Bank net income – reported | **** | 800 | **** | 842 | 926 | ||||
| U.S. Retail Bank net income – adjusted^1^ | **** | 800 | **** | 890 | 963 | ||||
| Share of net income from investment in Schwab^3,4^ | **** | 146 | **** | 142 | 237 | ||||
| Net income – reported | $ | 946 | **** | $ | 984 | $ | 1,163 | ||
| Net income – adjusted^1^ | **** | 946 | **** | 1,032 | 1,200 | ||||
| Selected volumes andratios | |||||||||
| Return on common equity – reported^5^ | **** | 12.2 | % | 12.7 | % | 15.4 | % | ||
| Return on common equity – adjusted^1,5^ | **** | 12.2 | **** | 13.3 | 15.8 | ||||
| Net interest margin^1,6^ | **** | 3.07 | **** | 3.00 | 3.13 | ||||
| Efficiency ratio – reported | **** | 58.0 | **** | 56.9 | 54.9 | ||||
| Efficiency ratio – adjusted^1^ | **** | 58.0 | **** | 54.5 | 53.1 | ||||
| Assets under administration (billions of U.S.<br>dollars)^7^ | $ | 37 | **** | $ | 36 | $ | 34 | ||
| Assets under management (billions of U.S. dollars)^7^ | **** | 33 | **** | 37 | 33 | ||||
| Number of U.S. retail stores | **** | 1,177 | **** | 1,171 | 1,160 | ||||
| Average number of full-time equivalent staff | **** | 28,287 | **** | 28,485 | 26,710 | ||||
| ^1^ | For additional information about the Bank’s use of non-GAAP financial<br>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 charges related to the terminated<br>First Horizon acquisition – Q3 2023: $84 million or US$63 million ($63 million or US$48 million after-tax); Q4 2022: $67 million or US$50 million ($51 million<br>or US$37 million after-tax). | ||||||||
| --- | --- | ||||||||
| ^3^ | The Bank’s share of Schwab’s earnings is reported with a one-month<br>lag. Refer to Note 12 of the 2023 Consolidated Financial Statements for further details. | ||||||||
| --- | --- | ||||||||
| ^4^ | The after-tax amounts for amortization of acquired intangibles, the Bank’s<br>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.^^ | ||||||||
| --- | --- | ||||||||
| ^5^ | Capital allocated to the business segment was increased to 11% CET1 Capital effective in the first quarter of the fiscal<br>2023 compared with 10.5% in the prior year. | ||||||||
| --- | --- | ||||||||
| ^6^ | Net interest margin is calculated by dividing U.S. Retail segment’s net interest income by average interest-earning<br>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<br>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. | ||||||||
| --- | --- | ||||||||
| ^7^ | For additional information about this metric, refer to the Glossary in the 2023 MD&A. | ||||||||
| --- | --- |
Quarterly comparison – Q4 2023 vs. Q4 2022
U.S. Retail reported net income for the quarter was $1,280 million (US$946 million), a decrease of $259 million (US$217 million), or 17% (19% in U.S. dollars) compared with the fourth quarter last year. On an adjusted basis, net income for the quarter was $1,280 million (US$946 million), a decrease of $310 million (US$254 million), or 19% (21% in U.S. dollars). Reported net income in the fourth quarter last year included acquisition and integration-related charges for the terminated First Horizon transaction of $67 million (US$50 million) or $51 million (US$37 million) after-tax. The reported and adjusted annualized ROE for the quarter were 12.2%, compared with 15.4% and 15.8%, respectively, 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 $197 million (US$146 million), a decrease of $113 million (US$91 million), or 36% (38% in U.S. dollars), reflecting lower net interest revenue, lower bank deposit account fees, and lower trading revenue as well as higher expenses, partially offset by an increase in asset management and administration fees.
U.S. Retail Bank reported net income was $1,083 million (US$800 million), a decrease of $146 million (US$126 million), or 12% (14% in U.S. dollars), compared with the fourth quarter last year, primarily reflecting higher non-interest expenses, higher PCL, and lower revenue. Reported net income in the fourth quarter last year included acquisition and integration-related charges for the terminated First Horizon transaction. U.S. Retail Bank adjusted net income was
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 12 |
|---|
$1,083 million (US$800 million), a decrease of $197 million (US$163 million), or 15% (17% in U.S. dollars), compared with the fourth quarter last year, reflecting higher non-interest expenses, higher PCL, and lower revenue.
U.S. Retail Bank revenue is derived from the personal and business banking and wealth management businesses. Revenue for the quarter was US$2,622 million, a decrease of US$77 million, or 3%, compared with the fourth quarter last year. Net interest income of US$2,178 million, decreased US$42 million, or 2%, driven by lower deposit volumes and lower margin on loans, partially offset by the benefit of higher deposit margins from the rising rate environment and higher loan volumes. Net interest margin of 3.07%, decreased 6 bps, as lower margin on loans was partially offset by positive balance sheet mix. Non-interest income of US$444 million decreased US$35 million, or 7%, compared with the fourth quarter last year, reflecting lower overdraft fees, partially offset by fee income growth from increased customer activity.
Average loan volumes increased US$18 billion, or 10%, compared with the fourth quarter last year. Personal loans increased 12%, reflecting good originations and slower payment rates across portfolios. Business loans increased 9%, reflecting good originations from new customer growth, higher commercial line utilization, and slower payment rates. Average deposit volumes decreased US$44 billion, or 12%, reflecting a 4% decrease in personal deposits, a 5% decrease in business deposits, and a 25% decrease in sweep deposits.
Assets under administration (AUA) were US$37 billion as at October 31, 2023, an increase of US$3 billion, or 9%, compared with the fourth quarter last year, reflecting net asset growth. Assets under Management (AUM) were US$33 billion as at October 31, 2023, flat compared with the fourth quarter last year.
PCL for the quarter was US$213 million, an increase of US$44 million compared with the fourth quarter last year. PCL – impaired was US$227 million, an increase of US$102 million, or 82%, reflecting some normalization of credit performance. PCL – performing was a recovery of US$14 million, compared with a build of US$44 million in the prior year. U.S. Retail PCL including only the Bank’s share of PCL in the U.S. strategic cards portfolio, as an annualized percentage of credit volume was 0.46%, an increase of 6 bps, compared with the fourth quarter last year.
Reported non-interest expenses for the quarter were US$1,520 million, an increase of US$38 million, or 3%, compared with the fourth quarter last year, reflecting higher legal expenses, regulatory expenses and investments, higher employee-related expenses, and higher FDIC assessment fees as a result of an increase to FDIC assessment rates effective January 1, 2023, partially offset by acquisition and integration-related charges for the terminated First Horizon transaction in the fourth quarter last year. On an adjusted basis, excluding acquisition and integration-related charges for the terminated First Horizon transaction in the fourth quarter last year, non-interest expenses increased US$88 million, or 6%.
The reported and adjusted efficiency ratios for the quarter were 58.0%, compared with 54.9% and 53.1%, respectively, in the fourth quarter last year.
Quarterly comparison – Q4 2023 vs. Q3 2023
U.S. Retail reported net income of $1,280 million (US$946 million) decreased $34 million (US$38 million), or 3% (4% in U.S. dollars) compared with the prior quarter. On an adjusted basis, net income for the quarter was $1,280 million (US$946 million), a decrease of $97 million (US$86 million), or 7% (8% in U.S. dollars). Reported net income in the prior quarter included acquisition and integration-related charges for the terminated First Horizon transaction of $84 million (US$63 million) or $63 million (US$48 million) after-tax. The reported and adjusted annualized ROE for the quarter were 12.2%, compared with 12.7% and 13.3%, respectively, in the prior quarter.
The contribution from Schwab of $197 million (US$146 million), increased $6 million (US$4 million), or 3% (3% in U.S. dollars), reflecting higher asset management and administration fees and higher bank deposit account fees, partially offset by lower net interest revenue and lower trading revenue. U.S. Retail Bank reported net income was $1,083 million (US$800 million), a decrease of $40 million (US$42 million), or 4% (5% in U.S. dollars), compared with the prior quarter, reflecting higher non-interest expenses and higher PCL, partially offset by higher revenue. U.S. Retail Bank adjusted net income was $1,083 million (US$800 million), a decrease of $103 million (US$90 million), or 9% (10% in U.S. dollars), reflecting higher non-interest expenses and higher PCL, partially offset by higher revenue. Reported net income in the prior quarter included acquisition and integration-related charges for the terminated First Horizon transaction of $84 million (US$63 million) or $63 million (US$48 million) after-tax.
Revenue decreased US$20 million, or 1%, compared with the prior quarter. Net interest income of US$2,178 million increased US$21 million, or 1%, reflecting higher deposit margins and higher loan volumes, partially offset by lower margin on loans. Net interest margin of 3.07% increased 7 bps quarter over quarter, as higher investment returns from matured tractors and positive balance sheet mix with lower borrowings were partially offset by migration to term deposits and high yield savings as well as modestly lower loan margins. Non-interest income of US$444 million decreased US$41 million, or 8%, reflecting lower deposit-related fees and lower valuation on certain investments.
Average loan volumes increased US$5 billion, or 2%, compared with the prior quarter. Personal loans increased 4%, reflecting good originations and slower payment rates across portfolios. Business loans increased 1%, reflecting good originations from new customer growth, higher commercial line utilization, and slower payment rates. Average deposit volumes were relatively flat compared with the prior quarter reflecting flat personal deposits, a 2% increase in business deposits, and a 3% decline in sweep deposits.
AUA were US$37 billion as at October 31, 2023, an increase of US$1 billion, or 3%, compared with the prior quarter, reflecting net asset growth. AUM were US$33 billion as at October 31, 2023, a decrease of US$4 billion, or 11%, reflecting market depreciation and net asset outflows.
PCL for the quarter was US$213 million, an increase of US$28 million compared with the prior quarter. PCL – impaired was US$227 million, an increase of US$34 million, or 18%, reflecting some further normalization of credit performance in the consumer lending portfolios. PCL – performing was a recovery of US$14 million, compared with a recovery of US$8 million in the prior quarter. U.S. Retail PCL including only the Bank’s share of PCL in the U.S. strategic cards portfolio, as an annualized percentage of credit volume was 0.46%, higher by 5 bps.
Reported non-interest expenses for the quarter were US$1,520 million, an increase of US$18 million, or 1%, reflecting higher legal expenses, regulatory expenses and investments, and higher employee-related expenses, partially offset by acquisition and integration-related charges for the terminated First Horizon transaction in the prior quarter. On an adjusted basis, excluding acquisition and integration-related charges for the terminated First Horizon transaction in the prior quarter, non-interest expenses increased US$81 million, or 6%.
The reported and adjusted efficiency ratios for the quarter were 58.0%, compared with 56.9% and 54.5%, respectively, in the prior quarter.
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 13 |
|---|
TABLE 11: WEALTH MANAGEMENT AND INSURANCE
| (millions of Canadian dollars, except as noted) | For the three months ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| October 31<br><br><br>2023 | July 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||
| Net interest income | $ | 261 | **** | $ | 256 | $ | 272 | ||
| Non-interest income | **** | 2,603 | **** | 2,523 | 2,359 | ||||
| Total revenue | **** | 2,864 | **** | 2,779 | 2,631 | ||||
| Provision for (recovery of) credit losses – impaired | **** | – | **** | – | – | ||||
| Provision for (recovery of) credit losses – performing | **** | – | **** | – | – | ||||
| Total provision for (recovery of) credit losses | **** | – | **** | – | – | ||||
| Insurance claims and related expenses | **** | 1,002 | **** | 923 | 723 | ||||
| Non-interest expenses | **** | 1,191 | **** | 1,170 | 1,208 | ||||
| Provision for (recovery of) income taxes | **** | 170 | **** | 182 | 184 | ||||
| Net income | $ | 501 | **** | $ | 504 | $ | 516 | ||
| Selected volumes and ratios | |||||||||
| Return on common equity^1^ | **** | 36.1 | % | 35.3 | % | 39.5 | % | ||
| Efficiency ratio | **** | 41.6 | **** | 42.1 | 45.9 | ||||
| Assets under administration (billions of Canadian<br>dollars)^2^ | $ | 531 | **** | $ | 559 | $ | 517 | ||
| Assets under management (billions of Canadian dollars) | **** | 405 | **** | 421 | 397 | ||||
| Average number of full-time equivalent staff | **** | 15,569 | **** | 15,892 | 15,952 | ||||
| ^1^ | Capital allocated to the business segment was increased to 11% CET1 Capital effective the first quarter of 2023 compared<br>with 10.5% in the prior year. | ||||||||
| --- | --- | ||||||||
| ^2^ | Includes AUA administered by TD Investor Services, which is part of the Canadian Personal and Commercial Banking<br>segment. | ||||||||
| --- | --- |
Quarterly comparison – Q4 2023 vs. Q4 2022
Wealth Management and Insurance net income for the quarter was $501 million, a decrease of $15 million, or 3%, compared with the fourth quarter last year, reflecting higher insurance claims and related expenses, partially offset by higher non-interest income. The annualized ROE for the quarter was 36.1%, compared with 39.5%, in the fourth quarter last year.
Revenue for the quarter was $2,864 million, an increase of $233 million, or 9%, compared with the fourth quarter last year. Non-interest income was $2,603 million, an increase of $244 million, or 10%, reflecting higher insurance premiums, an increase in the fair value of investments supporting claims liabilities which resulted in a similar increase in insurance claims, and higher fee-based revenue, partially offset by lower transaction revenue in the wealth management business. Net interest income was $261 million, a decrease of $11 million, or 4%, reflecting lower deposit volumes, partially offset by higher deposit margins in the wealth management business, and higher investment income in the insurance business.
AUA were $531 billion as at October 31, 2023, an increase of $14 billion, or 3%, reflecting market appreciation and net asset growth. AUM were $405 billion as at October 31, 2023, an increase of $8 billion, or 2%, compared with last year, reflecting market appreciation, partially offset by mutual fund redemptions.
Insurance claims and related expenses were $1,002 million, an increase of $279 million, or 39%, compared with the fourth quarter last year, reflecting increased claims severity, more severe weather-related events, and the impact of changes in the discount rate which resulted in a similar increase in the fair value of investments supporting claims liabilities reported in non-interest income.
Non-interest expenses for the quarter were $1,191 million, a decrease of $17 million, or 1%, compared with the fourth quarter last year.
The efficiency ratio for the quarter was 41.6%, compared with 45.9% in the fourth quarter last year.
Quarterly comparison – Q4 2023 vs. Q3 2023
Wealth Management and Insurance net income for the quarter was $501 million, a decrease of $3 million, or 1%, compared with the prior quarter, reflecting higher insurance claims and related expenses, mostly offset by higher insurance revenue. The annualized ROE for the quarter was 36.1%, compared with 35.3%, in the prior quarter.
Revenue increased $85 million, or 3%, compared with the prior quarter. Non-interest income increased $80 million, or 3%, reflecting an increase in the fair value of investments supporting claims liabilities which resulted in a similar increase in insurance claims, higher insurance premiums, and higher fee-based revenue, partially offset by lower transaction revenue in the wealth management business. Net interest income increased $5 million, or 2%, reflecting higher investment income in the insurance business.
AUA decreased $28 billion, or 5%, and AUM decreased $16 billion, or 4%, compared with the prior quarter, both primarily reflecting market depreciation.
Insurance claims and related expenses increased $79 million, or 9%, compared with the prior quarter, reflecting the impact of changes in the discount rate which resulted in a similar increase in the fair value of investments supporting claims liabilities reported in non-interest income, partially offset by more favourable prior years’ claims development.
Non-interest expenses for the quarter increased $21 million, or 2%, compared with the prior quarter.
The efficiency ratio for the quarter was 41.6%, compared with 42.1% in the prior quarter.
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 14 |
|---|
TABLE 12: WHOLESALE BANKING^1^
| (millions of Canadian dollars, except as noted) | For the three months ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| October 31<br><br><br>2023 | July 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||
| Net interest income (TEB) | $ | 245 | **** | $ | 270 | $ | 683 | ||
| Non-interest income | **** | 1,243 | **** | 1,298 | 476 | ||||
| Total revenue | **** | 1,488 | **** | 1,568 | 1,159 | ||||
| Provision for (recovery of) credit losses – impaired | **** | – | **** | 10 | 24 | ||||
| Provision for (recovery of) credit losses – performing | **** | 57 | **** | 15 | 2 | ||||
| Total provision for (recovery of) credit losses | **** | 57 | **** | 25 | 26 | ||||
| Non-interest expenses – reported | **** | 1,441 | **** | 1,247 | 802 | ||||
| Non-interest expenses – adjusted^2,3^ | **** | 1,244 | **** | 1,104 | 784 | ||||
| Provision for (recovery of) income taxes (TEB) – reported | **** | (27 | ) | 24 | 70 | ||||
| Provision for (recovery of) income taxes (TEB) – adjusted^2^ | **** | 9 | **** | 62 | 74 | ||||
| Net income – reported | **** | 17 | **** | 272 | 261 | ||||
| Net income – adjusted^2^ | $ | 178 | **** | $ | 377 | $ | 275 | ||
| Selected volumes and ratios | |||||||||
| Trading-related revenue (TEB)^4^ | $ | 590 | **** | $ | 626 | $ | 560 | ||
| Average gross lending portfolio (billions of Canadian<br>dollars)^5^ | **** | 93.0 | **** | 93.8 | 85.0 | ||||
| Return on common equity – reported^6^ | **** | 0.5 | % | 7.4 | % | 8.2 | % | ||
| Return on common equity – adjusted^2,6^ | **** | 4.9 | **** | 10.3 | 8.6 | ||||
| Efficiency ratio – reported | **** | 96.8 | **** | 79.5 | 69.2 | ||||
| Efficiency ratio – adjusted^2^ | **** | 83.6 | **** | 70.4 | 67.6 | ||||
| Average number of full-time equivalent staff | **** | 7,346 | **** | 7,233 | 5,301 | ||||
| ^1^ | Wholesale Banking results for 2023 include the acquisition of Cowen Inc. effective March 1, 2023.<br> | ||||||||
| --- | --- | ||||||||
| ^2^ | For additional information about the Bank’s use of non-GAAP financial<br>measures, refer to “Non-GAAP and Other Financial Measures” in the “How We Performed” section of this document. | ||||||||
| --- | --- | ||||||||
| ^3^ | Adjusted non-interest expenses exclude the acquisition and integration-related<br>charges primarily for the Cowen acquisition – Q4 2023: $197 million ($161 million after-tax), Q3 2023: $143 million ($105 million<br>after-tax), Q4 2022: $18 million ($14 million after-tax). | ||||||||
| --- | --- | ||||||||
| ^4^ | Includes net interest income TEB of $61 million (Q3 2023 – $8 million, Q4 2022 –<br>$407 million), and trading income (loss) of $529 million (Q3 2023 – $618 million, Q4 2022 – $153 million). Trading-related revenue (TEB) is a non-GAAP financial measure.<br>Refer to “Non-GAAP and Other Financial Measures” in the “How We Performed” section and the Glossary in the 2023 MD&A, for additional information about this metric.<br> | ||||||||
| --- | --- | ||||||||
| ^5^ | Includes gross loans and bankers’ acceptances relating to Wholesale Banking, excluding letters of credit, cash<br>collateral, credit default swaps, and allowance for credit losses. | ||||||||
| --- | --- | ||||||||
| ^6^ | Capital allocated to the business segment was increased to 11% CET1 Capital effective in the first quarter of the fiscal<br>2023 compared with 10.5% in the prior year. | ||||||||
| --- | --- |
Quarterly comparison – Q4 2023 vs. Q4 2022
Wholesale Banking reported net income for the quarter was $17 million, a decrease of $244 million, or 93%, compared with the fourth quarter last year, primarily reflecting higher non-interest expenses partially offset by higher revenues. On an adjusted basis, net income was $178 million, a decrease of $97 million, or 35%.
Revenue for the quarter, including the acquisition of Cowen Inc., was $1,488 million, an increase of $329 million, or 28%, compared with the fourth quarter last year, primarily reflecting higher equity commissions, advisory fees, equity underwriting fees, and markdowns in certain loan underwriting commitments in the prior year, partially offset by lower equity and foreign exchange trading-related revenue.
PCL for the quarter was $57 million, an increase of $31 million compared with the fourth quarter last year. PCL – impaired was nil. PCL – performing was $57 million, an increase of $55 million. The current quarter performing provisions largely reflect credit migration and volume growth.
Reported non-interest expenses for the quarter were $1,441 million, an increase of $639 million, or 80%, compared with the fourth quarter last year, primarily reflecting the acquisition of Cowen Inc. and acquisition and integration-related costs, continued investments in Wholesale Banking’s U.S. dollar strategy, including the hiring of banking, sales and trading, and technology professionals, and the impact of foreign exchange translation. On an adjusted basis, excluding acquisition and integration-related costs, non-interest expenses were $1,244 million, an increase of $460 million, or 59%.
Quarterly comparison – Q4 2023 vs. Q3 2023
Wholesale Banking reported net income for the quarter was $17 million, a decrease of $255 million, or 94%, compared with the prior quarter, reflecting higher non-interest expenses and lower revenue. On an adjusted basis, net income was $178 million, a decrease of $199 million, or 53%.
Revenue for the quarter, including the acquisition of Cowen Inc., decreased $80 million, or 5%, compared with the prior quarter, primarily reflecting lower underwriting fees and trading-related revenue.
PCL for the quarter was $57 million, an increase of $32 million compared with the prior quarter. PCL – impaired was nil. PCL – performing was $57 million, an increase of $42 million. The current quarter performing provisions largely reflect credit migration and volume growth.
Reported non-interest expenses for the quarter increased $194 million, or 16%, compared with the prior quarter, primarily reflecting the timing of employee-related costs and acquisition and integration-related costs. On an adjusted basis, excluding acquisition and integration-related costs, non-interest expenses increased $140 million or 13%.
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 15 |
|---|
TABLE 13: CORPORATE
| (millions of Canadian dollars) | For the three months ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| October 31<br><br><br>2023 | July 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||
| Net income (loss) – reported | $ | (591 | ) | $ | (782 | ) | $ | 2,661 | |
| Adjustments for items of note | |||||||||
| Amortization of acquired intangibles | **** | 92 | **** | 88 | 57 | ||||
| Acquisition and integration charges related to the Schwab transaction | **** | 31 | **** | 54 | 18 | ||||
| Share of restructuring charges from investment in Schwab | **** | 35 | **** | – | – | ||||
| Restructuring charges | **** | 363 | **** | – | – | ||||
| Payment related to the termination of the FHN transaction | **** | – | **** | 306 | – | ||||
| Impact from the terminated FHN acquisition-related capital hedging strategy | **** | 64 | **** | 177 | (2,319 | ) | |||
| Impact of retroactive tax legislation on payment card clearing services | **** | – | **** | 57 | – | ||||
| Gain on sale of Schwab shares | **** | – | **** | – | (997 | ) | |||
| Less: impact of income taxes | **** | 127 | **** | 82 | (570 | ) | |||
| Net income (loss) – adjusted^1^ | $ | (133 | ) | $ | (182 | ) | $ | (10 | ) |
| Decomposition of items included in net income (loss) – adjusted | |||||||||
| Net corporate expenses^2^ | $ | (227 | ) | $ | (333 | ) | $ | (187 | ) |
| Other | **** | 94 | **** | 151 | 177 | ||||
| Net income (loss) – adjusted^1^ | $ | (133 | ) | $ | (182 | ) | $ | (10 | ) |
| Selected volumes | |||||||||
| Average number of full-time equivalent staff | **** | 23,491 | **** | 23,486 | 21,373 | ||||
| ^1^ | For additional information about the Bank’s use of non-GAAP financial<br>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 2023 MD&A. | ||||||||
| --- | --- |
Quarterly comparison – Q4 2023 vs. Q4 2022
Corporate segment’s reported net loss for the quarter was $591 million, compared with net income of $2,661 million in the fourth quarter last year. The year-over-year decrease primarily reflects gains in the prior year from the impact of the terminated First Horizon acquisition-related capital hedging strategy and from the sale of Schwab shares, and restructuring charges in the current quarter. Other items decreased $83 million, primarily reflecting the favourable tax impact of earnings mix and the recognition of unused tax losses in the prior year, partially offset by higher revenue from treasury and balance sheet management activities this quarter. The adjusted net loss for the quarter was $133 million, compared with an adjusted net loss of $10 million in the fourth quarter last year.
Quarterly comparison – Q4 2023 vs. Q3 2023
Corporate segment’s reported net loss for the quarter was $591 million, compared with net loss of $782 million in the prior quarter. The lower net loss quarter-over-quarter primarily reflects the payment related to the termination of the First Horizon transaction in the prior quarter, a lower net loss from the impact of the terminated First Horizon acquisition-related capital hedging strategy in the current quarter and lower net corporate expenses, partially offset by restructuring charges in the current quarter. Net corporate expenses decreased by $106 million, primarily reflecting litigation expenses in the prior quarter. The adjusted net loss for the quarter was $133 million, compared with an adjusted net loss of $182 million in the prior quarter.
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 16 |
|---|
CONSOLIDATED FINANCIAL STATEMENTS
| CONSOLIDATED BALANCE SHEET^1^ | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of Canadian dollars) | As at | |||||||||||
| October 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | $ | 6,721 | **** | $ | 8,556 | |||||||
| Interest-bearing deposits with banks | **** | 98,348 | **** | 137,294 | ||||||||
| **** | 105,069 | **** | 145,850 | |||||||||
| Trading loans, securities, and other | **** | 152,090 | **** | 143,726 | ||||||||
| Non-trading financial assets at fair value through profit or<br>loss | **** | 7,340 | **** | 10,946 | ||||||||
| Derivatives | **** | 87,382 | **** | 103,873 | ||||||||
| Financial assets designated at fair value through profit or loss | **** | 5,818 | **** | 5,039 | ||||||||
| Financial assets at fair value through other comprehensive<br>income | **** | 69,865 | **** | 69,675 | ||||||||
| **** | 322,495 | **** | 333,259 | |||||||||
| Debt securities at amortized cost, net of allowance for creditlosses | **** | 308,016 | **** | 342,774 | ||||||||
| Securities purchased under reverse repurchaseagreements | **** | 204,333 | **** | 160,167 | ||||||||
| Loans | ||||||||||||
| Residential mortgages | **** | 320,341 | **** | 293,924 | ||||||||
| Consumer instalment and other personal | **** | 217,554 | **** | 206,152 | ||||||||
| Credit card | **** | 38,660 | **** | 36,010 | ||||||||
| Business and government | **** | 326,528 | **** | 301,389 | ||||||||
| **** | 903,083 | **** | 837,475 | |||||||||
| Allowance for loan losses | **** | (7,136 | ) | (6,432 | ) | |||||||
| Loans, net of allowance for loan losses | **** | 895,947 | **** | 831,043 | ||||||||
| Other | ||||||||||||
| Customers’ liability under acceptances | **** | 17,569 | **** | 19,733 | ||||||||
| Investment in Schwab | **** | 8,907 | **** | 8,088 | ||||||||
| Goodwill | **** | 18,602 | **** | 17,656 | ||||||||
| Other intangibles | **** | 2,771 | **** | 2,303 | ||||||||
| Land, buildings, equipment, other depreciable assets, and right-of-use assets | **** | 9,434 | **** | 9,400 | ||||||||
| Deferred tax assets | **** | 3,960 | **** | 2,193 | ||||||||
| Amounts receivable from brokers, dealers, and clients | **** | 30,416 | **** | 19,760 | ||||||||
| Other assets | **** | 29,505 | **** | 25,302 | ||||||||
| **** | 121,164 | **** | 104,435 | |||||||||
| Total assets | $ | 1,957,024 | **** | $ | 1,917,528 | |||||||
| LIABILITIES | ||||||||||||
| Trading deposits | $ | 30,980 | **** | $ | 23,805 | |||||||
| Derivatives | **** | 71,640 | **** | 91,133 | ||||||||
| Securitization liabilities at fair value | **** | 14,422 | **** | 12,612 | ||||||||
| Financial liabilities designated at fair value through profit or<br>loss | **** | 192,130 | **** | 162,786 | ||||||||
| **** | 309,172 | **** | 290,336 | |||||||||
| Deposits | ||||||||||||
| Personal | **** | 626,596 | **** | 660,838 | ||||||||
| Banks | **** | 31,225 | **** | 38,263 | ||||||||
| Business and government | **** | 540,369 | **** | 530,869 | ||||||||
| **** | 1,198,190 | **** | 1,229,970 | |||||||||
| Other | ||||||||||||
| Acceptances | **** | 17,569 | **** | 19,733 | ||||||||
| Obligations related to securities sold short | **** | 44,661 | **** | 45,505 | ||||||||
| Obligations related to securities sold under repurchase agreements | **** | 166,854 | **** | 128,024 | ||||||||
| Securitization liabilities at amortized cost | **** | 12,710 | **** | 15,072 | ||||||||
| Amounts payable to brokers, dealers, and clients | **** | 30,872 | **** | 25,195 | ||||||||
| Insurance-related liabilities | **** | 7,605 | **** | 7,468 | ||||||||
| Other liabilities | **** | 47,664 | **** | 33,552 | ||||||||
| **** | 327,935 | **** | 274,549 | |||||||||
| Subordinated notes and debentures | **** | 9,620 | **** | 11,290 | ||||||||
| Total liabilities | **** | 1,844,917 | **** | 1,806,145 | ||||||||
| EQUITY | ||||||||||||
| Shareholders’ Equity | ||||||||||||
| Common shares | **** | 25,434 | **** | 24,363 | ||||||||
| Preferred shares and other equity instruments | **** | 10,853 | **** | 11,253 | ||||||||
| Treasury – common shares | **** | (64 | ) | (91 | ) | |||||||
| Treasury – preferred shares and other equity instruments | **** | (65 | ) | (7 | ) | |||||||
| Contributed surplus | **** | 155 | **** | 179 | ||||||||
| Retained earnings | **** | 73,044 | **** | 73,698 | ||||||||
| Accumulated other comprehensive income (loss) | **** | 2,750 | **** | 1,988 | ||||||||
| Total equity | **** | 112,107 | **** | 111,383 | ||||||||
| Total liabilities and equity | $ | 1,957,024 | **** | $ | 1,917,528 | |||||||
| ^1^ | The amounts as at October 31, 2023 and October 31, 2022, have been derived from the audited financial<br>statements. | |||||||||||
| --- | --- | |||||||||||
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 17 | |||||||||||
| --- | --- | |||||||||||
| CONSOLIDATED STATEMENT OF INCOME^1^ | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (millions of Canadian dollars, except as noted) | For the three months ended | For the twelve months ended | ||||||||||
| October 31<br><br><br>2023 | October 31<br><br><br>2022 | October 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||||
| Interest income^2^ | ||||||||||||
| Loans | $ | 12,464 | **** | $ | 8,637 | $ | 44,518 | **** | $ | 27,721 | ||
| Reverse repurchase agreements | **** | 2,945 | **** | 1,156 | **** | 9,520 | **** | 1,945 | ||||
| Securities | ||||||||||||
| Interest | **** | 5,241 | **** | 3,419 | **** | 19,029 | **** | 7,928 | ||||
| Dividends | **** | 548 | **** | 500 | **** | 2,289 | **** | 1,822 | ||||
| Deposits with banks | **** | 1,178 | **** | 987 | **** | 5,318 | **** | 1,616 | ||||
| **** | 22,376 | **** | 14,699 | **** | 80,674 | **** | 41,032 | |||||
| Interest expense | ||||||||||||
| Deposits | **** | 11,257 | **** | 5,255 | **** | 38,351 | **** | 9,748 | ||||
| Securitization liabilities | **** | 253 | **** | 185 | **** | 915 | **** | 573 | ||||
| Subordinated notes and debentures | **** | 103 | **** | 105 | **** | 436 | **** | 397 | ||||
| Repurchase agreements and short sales | **** | 2,992 | **** | 1,413 | **** | 10,083 | **** | 2,706 | ||||
| Other | **** | 277 | **** | 111 | **** | 945 | **** | 255 | ||||
| **** | 14,882 | **** | 7,069 | **** | 50,730 | **** | 13,679 | |||||
| Net interest income | **** | 7,494 | **** | 7,630 | **** | 29,944 | **** | 27,353 | ||||
| Non-interest income | ||||||||||||
| Investment and securities services | **** | 1,651 | **** | 1,381 | **** | 6,420 | **** | 5,869 | ||||
| Credit fees | **** | 472 | **** | 438 | **** | 1,796 | **** | 1,615 | ||||
| Trading income (loss) | **** | 750 | **** | (219 | ) | **** | 2,417 | **** | (257 | ) | ||
| Service charges | **** | 649 | **** | 719 | **** | 2,609 | **** | 2,871 | ||||
| Card services | **** | 754 | **** | 750 | **** | 2,932 | **** | 2,890 | ||||
| Insurance revenue | **** | 1,491 | **** | 1,310 | **** | 5,671 | **** | 5,380 | ||||
| Other income (loss) | **** | (140 | ) | 3,554 | **** | (1,297 | ) | 3,311 | ||||
| **** | 5,627 | **** | 7,933 | **** | 20,548 | **** | 21,679 | |||||
| Total revenue | **** | 13,121 | **** | 15,563 | **** | 50,492 | **** | 49,032 | ||||
| Provision for (recovery of) credit losses | **** | 878 | **** | 617 | **** | 2,933 | **** | 1,067 | ||||
| Insurance claims and related expenses | **** | 1,002 | **** | 723 | **** | 3,705 | **** | 2,900 | ||||
| Non-interest expenses | ||||||||||||
| Salaries and employee benefits | **** | 4,107 | **** | 3,507 | **** | 15,753 | **** | 13,394 | ||||
| Occupancy, including depreciation | **** | 460 | **** | 433 | **** | 1,799 | **** | 1,660 | ||||
| Technology and equipment, including depreciation | **** | 620 | **** | 521 | **** | 2,308 | **** | 1,902 | ||||
| Amortization of other intangibles | **** | 185 | **** | 147 | **** | 672 | **** | 599 | ||||
| Communication and marketing | **** | 418 | **** | 403 | **** | 1,452 | **** | 1,355 | ||||
| Restructuring charges | **** | 363 | **** | – | **** | 363 | **** | – | ||||
| Brokerage-related and sub-advisory fees | **** | 128 | **** | 97 | **** | 456 | **** | 408 | ||||
| Professional, advisory and outside services | **** | 703 | **** | 692 | **** | 2,490 | **** | 2,190 | ||||
| Other | **** | 899 | **** | 745 | **** | 5,475 | **** | 3,133 | ||||
| **** | 7,883 | **** | 6,545 | **** | 30,768 | **** | 24,641 | |||||
| Income before income taxes and share of net income from investment in Schwab | **** | 3,358 | **** | 7,678 | **** | 13,086 | **** | 20,424 | ||||
| Provision for (recovery of) income taxes | **** | 628 | **** | 1,297 | **** | 3,168 | **** | 3,986 | ||||
| Share of net income from investment in Schwab | **** | 156 | **** | 290 | **** | 864 | **** | 991 | ||||
| Net income | **** | 2,886 | **** | 6,671 | **** | 10,782 | **** | 17,429 | ||||
| Preferred dividends and distributions on other equityinstruments | **** | 196 | **** | 107 | **** | 563 | **** | 259 | ||||
| Net income available to common shareholders | $ | 2,690 | **** | $ | 6,564 | $ | 10,219 | **** | $ | 17,170 | ||
| Earnings per share (Canadian dollars) | ||||||||||||
| Basic | $ | 1.49 | **** | $ | 3.62 | $ | 5.61 | **** | $ | 9.48 | ||
| Diluted | **** | 1.49 | **** | 3.62 | **** | 5.60 | **** | 9.47 | ||||
| Dividends per common share (Canadian dollars) | **** | 0.96 | **** | 0.89 | **** | 3.84 | **** | 3.56 | ||||
| ^1^ | The amounts for the three months ended October 31, 2023, and October 31, 2022, have been derived from<br>unaudited financial statements. The amounts for the twelve months ended October 31, 2023 and October 31, 2022, have been derived from the audited financial statements. | |||||||||||
| --- | --- | |||||||||||
| ^2^ | Includes $19,983 million and $72,403 million, for the three and twelve months ended October 31, 2023,<br>respectively (three and twelve months ended October 31, 2022 – $13,358 million and $37,105 million, respectively) which have been calculated based on the effective interest rate method. | |||||||||||
| --- | --- | |||||||||||
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 18 | |||||||||||
| --- | --- | |||||||||||
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME^1^ | ||||||||||||
| --- | ||||||||||||
| (millions of Canadian dollars) | For the three months ended | For the twelve months ended | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| October 31<br><br><br>2023 | October 31<br><br><br>2022 | October 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||||
| Net income | $ | 2,886 | **** | $ | 6,671 | $ | 10,782 | **** | $ | 17,429 | ||
| 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 comprehensiveincome | ||||||||||||
| Change in unrealized gain/ (loss) | **** | (295 | ) | (269 | ) | **** | 96 | **** | (1,343 | ) | ||
| Reclassification to earnings of net loss /(gain) | **** | 1 | **** | 7 | **** | (9 | ) | 2 | ||||
| Changes in allowance for credit losses recognized in earnings | **** | 1 | **** | (2 | ) | **** | – | **** | (5 | ) | ||
| Income taxes relating to: | ||||||||||||
| Change in unrealized gain/(loss) | **** | 72 | **** | 63 | **** | (32 | ) | 360 | ||||
| Reclassification to earnings of net loss/(gain) | **** | 1 | **** | – | **** | 8 | **** | – | ||||
| **** | (220 | ) | (201 | ) | **** | 63 | **** | (986 | ) | |||
| Net change in unrealized foreign currency translation gain/(loss) on investments in foreign operations,net of hedging activities | ||||||||||||
| Unrealized gain/(loss) | **** | 5,740 | **** | 5,871 | **** | 2,233 | **** | 9,230 | ||||
| Reclassification to earnings of net loss /(gain) | **** | – | **** | 50 | **** | 11 | **** | 50 | ||||
| Net gain/(loss) on hedges | **** | (3,565 | ) | (2,084 | ) | **** | (1,821 | ) | (3,271 | ) | ||
| Reclassification to earnings of net loss /(gain) on hedges | **** | – | **** | (68 | ) | **** | (15 | ) | (68 | ) | ||
| Income taxes relating to: | ||||||||||||
| Net gain/(loss) on hedges | **** | 987 | **** | 548 | **** | 217 | **** | 859 | ||||
| Reclassification to earnings of net loss /(gain) on hedges | **** | – | **** | 18 | **** | 4 | **** | 18 | ||||
| **** | 3,162 | **** | 4,335 | **** | 629 | **** | 6,818 | |||||
| Net change in gain/(loss) on derivatives designated as cash flow hedges | ||||||||||||
| Change in gain/(loss) | **** | 991 | **** | (1,485 | ) | **** | (78 | ) | (6,179 | ) | ||
| Reclassification to earnings of loss/(gain) | **** | (1,583 | ) | (3,600 | ) | **** | 238 | **** | (4,100 | ) | ||
| Income taxes relating to: | ||||||||||||
| Change in gain/(loss) | **** | (251 | ) | 419 | **** | 137 | **** | 1,660 | ||||
| Reclassification to earnings of loss/(gain) | **** | 451 | **** | 890 | **** | (52 | ) | 972 | ||||
| **** | (392 | ) | (3,776 | ) | **** | 245 | **** | (7,647 | ) | |||
| Share of other comprehensive income (loss) from investment inSchwab | **** | (385 | ) | (721 | ) | **** | 91 | **** | (3,200 | ) | ||
| Items that will not be subsequently reclassified to net income | ||||||||||||
| Remeasurement gain/(loss) on employee benefit plans | ||||||||||||
| Gain/(loss) | **** | (7 | ) | (399 | ) | **** | (95 | ) | 1,105 | |||
| Income taxes | **** | 1 | **** | 105 | **** | 9 | **** | (290 | ) | |||
| **** | (6 | ) | (294 | ) | **** | (86 | ) | 815 | ||||
| Change in net unrealized gain/(loss) on equity securities designated at fair value through othercomprehensive income | ||||||||||||
| Change in net unrealized gain/(loss) | **** | (194 | ) | (62 | ) | **** | (204 | ) | (214 | ) | ||
| Income taxes | **** | 53 | **** | 16 | **** | 54 | **** | 56 | ||||
| **** | (141 | ) | (46 | ) | **** | (150 | ) | (158 | ) | |||
| Gain/(loss) from changes in fair value due to own credit risk on financial liabilities designated at fairvalue through profit or loss | ||||||||||||
| Gain/(loss) | **** | (12 | ) | 52 | **** | (158 | ) | 87 | ||||
| Income taxes | **** | 3 | **** | (14 | ) | **** | 42 | **** | (23 | ) | ||
| **** | (9 | ) | 38 | **** | (116 | ) | 64 | |||||
| Total other comprehensive income (loss) | **** | 2,009 | **** | (665 | ) | **** | 676 | **** | (4,294 | ) | ||
| Total comprehensive income (loss) | $ | 4,895 | **** | $ | 6,006 | $ | 11,458 | **** | $ | 13,135 | ||
| Attributable to: | ||||||||||||
| Common shareholders | $ | 4,699 | **** | $ | 5,899 | $ | 10,895 | **** | $ | 12,876 | ||
| Preferred shareholders and other equity instrument holders | **** | 196 | **** | 107 | **** | 563 | **** | 259 | ||||
| ^1^ | The amounts for the three months ended October 31, 2023, and October 31, 2022, have been derived from<br>unaudited financial statements. The amounts for the twelve months ended October 31, 2023 and October 31, 2022, have been derived from the audited financial statements. | |||||||||||
| --- | --- | |||||||||||
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 19 | |||||||||||
| --- | --- | |||||||||||
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY^1^ | ||||||||||||
| --- | ||||||||||||
| (millions of Canadian<br>dollars) | For the three months ended | For the twelve months ended | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| **** | October 31<br> <br>2023 | **** <br> <br>**** | October 31<br> <br>2022 | **** | October 31<br> <br>2023 | **** <br> <br>**** | October 31<br> <br>2022 | |||||
| Common shares | ||||||||||||
| Balance at beginning of period | $ | 25,833 | **** | $ | 23,744 | $ | 24,363 | **** | $ | 23,066 | ||
| Proceeds from shares issued on exercise of stock options | **** | 6 | **** | 23 | **** | 83 | **** | 120 | ||||
| Shares issued as a result of dividend reinvestment plan | **** | 127 | **** | 596 | **** | 1,720 | **** | 1,442 | ||||
| Purchase of shares for cancellation and other | **** | (532 | ) | – | **** | (732 | ) | (265 | ) | |||
| Balance at end of period | **** | 25,434 | **** | 24,363 | **** | 25,434 | **** | 24,363 | ||||
| Preferred shares and other equity instruments | ||||||||||||
| Balance at beginning of period | **** | 11,253 | **** | 7,350 | **** | 11,253 | **** | 5,700 | ||||
| Issue of shares and other equity instruments | **** | – | **** | 3,903 | **** | – | **** | 5,553 | ||||
| Redemption of shares and other equity instruments | **** | (400 | ) | – | **** | (400 | ) | – | ||||
| Balance at end of period | **** | 10,853 | **** | 11,253 | **** | 10,853 | **** | 11,253 | ||||
| Treasury – common shares | ||||||||||||
| Balance at beginning of period | **** | – | **** | (104 | ) | **** | (91 | ) | (152 | ) | ||
| Purchase of shares | **** | (1,943 | ) | (2,721 | ) | **** | (7,959 | ) | (10,852 | ) | ||
| Sale of shares | **** | 1,879 | **** | 2,734 | **** | 7,986 | **** | 10,913 | ||||
| Balance at end of period | **** | (64 | ) | (91 | ) | **** | (64 | ) | (91 | ) | ||
| Treasury – preferred shares and other equity instruments | ||||||||||||
| Balance at beginning of period | **** | (11 | ) | (16 | ) | **** | (7 | ) | (10 | ) | ||
| Purchase of shares and other equity instruments | **** | (218 | ) | (113 | ) | **** | (590 | ) | (255 | ) | ||
| Sale of shares and other equity instruments | **** | 164 | **** | 122 | **** | 532 | **** | 258 | ||||
| Balance at end of period | **** | (65 | ) | (7 | ) | **** | (65 | ) | (7 | ) | ||
| Contributed surplus | ||||||||||||
| Balance at beginning of period | **** | 195 | **** | 169 | **** | 179 | **** | 173 | ||||
| Net premium (discount) on sale of treasury instruments | **** | (39 | ) | (19 | ) | **** | (21 | ) | (3 | ) | ||
| Issuance of stock options, net of options exercised | **** | 6 | **** | 2 | **** | 27 | **** | 18 | ||||
| Other | **** | (7 | ) | 27 | **** | (30 | ) | (9 | ) | |||
| Balance at end of period | **** | 155 | **** | 179 | **** | 155 | **** | 179 | ||||
| Retained earnings | ||||||||||||
| Balance at beginning of period | **** | 74,659 | **** | 69,090 | **** | 73,698 | **** | 63,944 | ||||
| Net income attributable to equity instrument holders | **** | 2,886 | **** | 6,671 | **** | 10,782 | **** | 17,429 | ||||
| Common dividends | **** | (1,724 | ) | (1,613 | ) | **** | (6,982 | ) | (6,442 | ) | ||
| Preferred dividends and distributions on other equity instruments | **** | (196 | ) | (107 | ) | **** | (563 | ) | (259 | ) | ||
| Share and other equity instrument issue expenses | **** | – | **** | (19 | ) | **** | – | **** | (24 | ) | ||
| Net premium on repurchase of common shares and redemption of preferred shares and other equity<br>instruments | **** | (2,572 | ) | – | **** | (3,553 | ) | (1,930 | ) | |||
| Remeasurement gain/(loss) on employee benefit plans | **** | (6 | ) | (294 | ) | **** | (86 | ) | 815 | |||
| Realized gain/(loss) on equity securities designated at fair value<br>through other comprehensive income | **** | (3 | ) | (30 | ) | **** | (252 | ) | 165 | |||
| Balance at end of period | **** | 73,044 | **** | 73,698 | **** | 73,044 | **** | 73,698 | ||||
| Accumulated other comprehensive income (loss) | ||||||||||||
| Net unrealized gain/(loss) on financial assets at fair value through other comprehensiveincome: | ||||||||||||
| Balance at beginning of period | **** | (193 | ) | (275 | ) | **** | (476 | ) | 510 | |||
| Other comprehensive income (loss) | **** | (221 | ) | (199 | ) | **** | 63 | **** | (981 | ) | ||
| Allowance for credit losses | **** | 1 | **** | (2 | ) | **** | – | **** | (5 | ) | ||
| Balance at end of period | **** | (413 | ) | (476 | ) | **** | (413 | ) | (476 | ) | ||
| Net unrealized gain/(loss) on equity securities designated at fair value through other comprehensiveincome: | ||||||||||||
| Balance at beginning of period | **** | 14 | **** | 69 | **** | 23 | **** | 181 | ||||
| Other comprehensive income (loss) | **** | (144 | ) | (76 | ) | **** | (402 | ) | 7 | |||
| Reclassification of loss/(gain) to retained earnings | **** | 3 | **** | 30 | **** | 252 | **** | (165 | ) | |||
| Balance at end of period | **** | (127 | ) | 23 | **** | (127 | ) | 23 | ||||
| Gain/(loss) from changes in fair value due to own credit risk on financial liabilities designated at fairvalue through profit or loss: | ||||||||||||
| Balance at beginning of period | **** | (29 | ) | 40 | **** | 78 | **** | 14 | ||||
| Other comprehensive income (loss) | **** | (9 | ) | 38 | **** | (116 | ) | 64 | ||||
| Balance at end of period | **** | (38 | ) | 78 | **** | (38 | ) | 78 | ||||
| Net unrealized foreign currency translation gain/(loss) on investments in foreign operations, net ofhedging activities: | ||||||||||||
| Balance at beginning of period | **** | 9,515 | **** | 7,713 | **** | 12,048 | **** | 5,230 | ||||
| Other comprehensive income (loss) | **** | 3,162 | **** | 4,335 | **** | 629 | **** | 6,818 | ||||
| Balance at end of period | **** | 12,677 | **** | 12,048 | **** | 12,677 | **** | 12,048 | ||||
| Net gain/(loss) on derivatives designated as cash flow hedges: | ||||||||||||
| Balance at beginning of period | **** | (5,080 | ) | (1,941 | ) | **** | (5,717 | ) | 1,930 | |||
| Other comprehensive income (loss) | **** | (392 | ) | (3,776 | ) | **** | 245 | **** | (7,647 | ) | ||
| Balance at end of period | **** | (5,472 | ) | (5,717 | ) | **** | (5,472 | ) | (5,717 | ) | ||
| Share of accumulated other comprehensive income (loss) fromInvestment in Schwab | **** | (3,877 | ) | (3,968 | ) | **** | (3,877 | ) | (3,968 | ) | ||
| Total accumulated other comprehensive income | **** | 2,750 | **** | 1,988 | **** | 2,750 | **** | 1,988 | ||||
| Total equity | $ | 112,107 | **** | $ | 111,383 | $ | 112,107 | **** | $ | 111,383 | ||
| ^1^ | The amounts for the three months ended October 31, 2023, and October 31, 2022, have been derived from<br>unaudited financial statements. The amounts for the twelve months ended October 31, 2023 and October 31, 2022, have been derived from the audited financial statements. | |||||||||||
| --- | --- | |||||||||||
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 20 | |||||||||||
| --- | --- | |||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS^1^ | ||||||||||||
| --- | ||||||||||||
| (millions of Canadian dollars) | For the three months ended | For the twelve months ended | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| October 31<br><br><br>2023 | October 31<br><br><br>2022 | October 31<br><br><br>2023 | October 31<br><br><br>2022 | |||||||||
| Cash flows from (used in) operating activities | ||||||||||||
| Net income | $ | 2,886 | **** | $ | 6,671 | $ | 10,782 | **** | $ | 17,429 | ||
| Adjustments to determine net cash flows from (used in) operating activities | ||||||||||||
| Provision for (recovery of) credit losses | **** | 878 | **** | 617 | **** | 2,933 | **** | 1,067 | ||||
| Depreciation | **** | 320 | **** | 316 | **** | 1,239 | **** | 1,167 | ||||
| Amortization of other intangibles | **** | 185 | **** | 147 | **** | 672 | **** | 599 | ||||
| Net securities loss/(gain) | **** | – | **** | (8 | ) | **** | 48 | **** | (60 | ) | ||
| Share of net income from investment in Schwab | **** | (156 | ) | (290 | ) | **** | (864 | ) | (991 | ) | ||
| Gain on sale of Schwab shares | **** | – | **** | (997 | ) | **** | – | **** | (997 | ) | ||
| Deferred taxes | **** | (250 | ) | 469 | **** | (1,256 | ) | 502 | ||||
| Changes in operating assets and liabilities | ||||||||||||
| Interest receivable and payable | **** | 297 | **** | (150 | ) | **** | 812 | **** | (412 | ) | ||
| Securities sold under repurchase agreements | **** | 3,144 | **** | 1,078 | **** | 36,832 | **** | (16,073 | ) | |||
| Securities purchased under reverse repurchase agreements | **** | (2,816 | ) | 1,108 | **** | (41,873 | ) | 7,117 | ||||
| Securities sold short | **** | (493 | ) | (4,563 | ) | **** | (2,722 | ) | 3,121 | |||
| Trading loans, securities, and other | **** | 6,515 | **** | 4,407 | **** | (5,332 | ) | 3,864 | ||||
| Loans net of securitization and sales | **** | (29,001 | ) | (40,791 | ) | **** | (67,766 | ) | (109,463 | ) | ||
| Deposits | **** | 41,350 | **** | 33,435 | **** | (25,487 | ) | 105,759 | ||||
| Derivatives | **** | (7,802 | ) | (9,817 | ) | **** | (2,341 | ) | (15,435 | ) | ||
| Non-trading financial assets at fair value through profit or<br>loss | **** | 529 | **** | 480 | **** | 3,897 | **** | (1,556 | ) | |||
| Financial assets and liabilities designated at fair value through profit or loss | **** | 8,565 | **** | 22,697 | **** | 28,565 | **** | 48,323 | ||||
| Securitization liabilities | **** | (801 | ) | (215 | ) | **** | (552 | ) | (1,083 | ) | ||
| Current taxes | **** | (1,150 | ) | (1,121 | ) | **** | 1,228 | **** | (4,100 | ) | ||
| Brokers, dealers and clients amounts receivable and payable | **** | 3,367 | **** | 2,165 | **** | (5,128 | ) | 8,799 | ||||
| Other, including unrealized foreign currency translation<br>loss/(gain) | **** | (11,049 | ) | (13,047 | ) | **** | 1,011 | **** | (8,628 | ) | ||
| Net cash from (used in) operating activities | **** | 14,518 | **** | 2,591 | **** | (65,302 | ) | 38,949 | ||||
| Cash flows from (used in) financing activities | ||||||||||||
| Redemption or repurchase of subordinated notes and debentures | **** | (1,751 | ) | (42 | ) | **** | (1,716 | ) | 6 | |||
| Common shares issued, net | **** | 5 | **** | 21 | **** | 74 | **** | 108 | ||||
| Repurchase of common shares | **** | (3,104 | ) | – | **** | (4,285 | ) | (2,195 | ) | |||
| Preferred shares and other equity instruments issued | **** | – | **** | 3,884 | **** | – | **** | 5,529 | ||||
| Redemption of preferred shares and other equity instruments | **** | (400 | ) | – | **** | (400 | ) | (1,000 | ) | |||
| Sale of treasury shares and other equity instruments | **** | 2,004 | **** | 2,837 | **** | 8,497 | **** | 11,168 | ||||
| Purchase of treasury shares and other equity instruments | **** | (2,161 | ) | (2,834 | ) | **** | (8,549 | ) | (11,107 | ) | ||
| Dividends paid on shares and distributions paid on other equity instruments | **** | (1,793 | ) | (2,156 | ) | **** | (5,825 | ) | (6,665 | ) | ||
| Repayment of lease liabilities^^ | **** | (163 | ) | (185 | ) | **** | (643 | ) | (663 | ) | ||
| Net cash from (used in) financing activities | **** | (7,363 | ) | 1,525 | **** | (12,847 | ) | (4,819 | ) | |||
| Cash flows from (used in) investing activities | ||||||||||||
| Interest-bearing deposits with banks | **** | (13,048 | ) | (532 | ) | **** | 41,446 | **** | 30,455 | |||
| Activities in financial assets at fair value through other comprehensive income | ||||||||||||
| Purchases | **** | (4,291 | ) | (7,079 | ) | **** | (24,336 | ) | (31,135 | ) | ||
| Proceeds from maturities | **** | 3,884 | **** | 8,002 | **** | 17,893 | **** | 33,158 | ||||
| Proceeds from sales | **** | 1,029 | **** | 1,540 | **** | 5,838 | **** | 6,723 | ||||
| Activities in debt securities at amortized cost | ||||||||||||
| Purchases | **** | (5,136 | ) | (30,848 | ) | **** | (26,987 | ) | (149,560 | ) | ||
| Proceeds from maturities | **** | 9,966 | **** | 20,250 | **** | 52,819 | **** | 68,719 | ||||
| Proceeds from sales | **** | 46 | **** | 5,160 | **** | 12,021 | **** | 8,720 | ||||
| Net purchases of land, buildings, equipment, other depreciable assets, and other intangibles | **** | (554 | ) | (461 | ) | **** | (1,844 | ) | (1,454 | ) | ||
| Net cash acquired from (paid for) divestitures and<br>acquisitions | **** | – | **** | 2,479 | **** | (624 | ) | 2,479 | ||||
| Net cash from (used in) investing activities | **** | (8,104 | ) | (1,489 | ) | **** | 76,226 | **** | (31,895 | ) | ||
| Effect of exchange rate changes on cash and due from<br>banks | **** | 250 | **** | 255 | **** | 88 | **** | 390 | ||||
| Net increase (decrease) in cash and due from banks | **** | (699 | ) | 2,882 | **** | (1,835 | ) | 2,625 | ||||
| Cash and due from banks at beginning of period | **** | 7,420 | **** | 5,674 | **** | 8,556 | **** | 5,931 | ||||
| Cash and due from banks at end of period | $ | 6,721 | **** | $ | 8,556 | $ | 6,721 | **** | $ | 8,556 | ||
| Supplementary disclosure of cash flows from operating activities | ||||||||||||
| Amount of income taxes paid (refunded) during the period | $ | 1,036 | **** | $ | 301 | $ | 3,036 | **** | $ | 4,404 | ||
| Amount of interest paid during the period | **** | 14,193 | **** | 6,428 | **** | 48,179 | **** | 12,523 | ||||
| Amount of interest received during the period | **** | 21,436 | **** | 13,408 | **** | 76,646 | **** | 37,642 | ||||
| Amount of dividends received during the period | **** | 513 | **** | 281 | **** | 2,247 | **** | 1,792 | ||||
| ^1^ | The amounts for the three months ended October 31, 2023, and October 31, 2022, have been derived<br>from unaudited financial statements. The amounts for the twelve months ended October 31, 2023 and October 31, 2022, have been derived from the audited financial statements. | |||||||||||
| --- | --- |
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 2023 • EARNINGS NEWS RELEASE | Page 21 |
|---|
Results for these segments for the years ended October 31, 2023 and October 31, 2022 are presented in the following tables.
| Results by Business Segment^1,2^ | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of Canadian dollars) | |||||||||||||||||||||||||||
| **** | Canadian<br> <br>PersonalandCommercial Banking | **** | U.S. Retail | **** | WealthManagementand Insurance | **** | Wholesale Banking^3^ | **** | Corporate^3^ | **** | **** | Total | |||||||||||||||
| For the three months ended October 31 | |||||||||||||||||||||||||||
| **** | 2023 | 2022 | **** | 2023 | 2022 | **** | 2023 | 2022 | **** | 2023 | **** | 2022 | **** | 2023 | **** | 2022 | **** | 2023 | 2022 | ||||||||
| Net interest income (loss) | $ | 3,705 | $ | 3,388 | $ | 2,955 | $ | 2,957 | $ | 261 | $ | 272 | $ | 245 | **** | $ | 683 | $ | 328 | **** | $ | 330 | $ | 7,494 | $ | 7,630 | |
| Non-interest income (loss)^^ | **** | 1,049 | 1,066 | **** | 603 | 638 | **** | 2,603 | 2,359 | **** | 1,243 | **** | 476 | **** | 129 | **** | 3,394 | **** | 5,627 | 7,933 | |||||||
| Total revenue^^ | **** | 4,754 | 4,454 | **** | 3,558 | 3,595 | **** | 2,864 | 2,631 | **** | 1,488 | **** | 1,159 | **** | 457 | **** | 3,724 | **** | 13,121 | 15,563 | |||||||
| Provision for (recovery of) credit losses | **** | 390 | 229 | **** | 289 | 225 | **** | – | – | **** | 57 | **** | 26 | **** | 142 | **** | 137 | **** | 878 | 617 | |||||||
| Insurance claims and related expenses | **** | – | – | **** | – | – | **** | 1,002 | 723 | **** | – | **** | – | **** | – | **** | – | **** | 1,002 | 723 | |||||||
| Non-interest<br>expenses | **** | 2,039 | 1,921 | **** | 2,066 | 1,976 | **** | 1,191 | 1,208 | **** | 1,441 | **** | 802 | **** | 1,146 | **** | 638 | **** | 7,883 | 6,545 | |||||||
| Income (loss) before income taxes and share of net income from<br>investment in Schwab | **** | 2,325 | 2,304 | **** | 1,203 | 1,394 | **** | 671 | 700 | **** | (10 | ) | 331 | **** | (831 | ) | 2,949 | **** | 3,358 | 7,678 | |||||||
| Provision for (recovery of) income taxes | **** | 646 | 610 | **** | 120 | 165 | **** | 170 | 184 | **** | (27 | ) | 70 | **** | (281 | ) | 268 | **** | 628 | 1,297 | |||||||
| Share of net income from investment in Schwab^4,5^ | **** | – | – | **** | 197 | 310 | **** | – | – | **** | – | **** | – | **** | (41 | ) | (20 | ) | **** | 156 | 290 | ||||||
| Net income (loss) | $ | 1,679 | $ | 1,694 | $ | 1,280 | $ | 1,539 | $ | 501 | $ | 516 | $ | 17 | **** | $ | 261 | $ | (591 | ) | $ | 2,661 | $ | 2,886 | $ | 6,671 | |
| For thetwelve months ended October 31 | |||||||||||||||||||||||||||
| **** | 2023 | 2022 | **** | 2023 | 2022 | **** | 2023 | 2022 | **** | 2023 | **** | 2022 | **** | 2023 | **** | 2022 | **** | 2023 | 2022 | ||||||||
| Net interest income (loss) | $ | 14,192 | $ | 12,396 | $ | 12,037 | $ | 9,604 | $ | 1,056 | $ | 945 | $ | 1,538 | **** | $ | 2,937 | $ | 1,121 | **** | $ | 1,471 | $ | 29,944 | $ | 27,353 | |
| Non-interest income (loss)^^ | **** | 4,125 | 4,190 | **** | 2,405 | 2,821 | **** | 10,224 | 9,915 | **** | 4,280 | **** | 1,894 | **** | (486 | ) | 2,859 | **** | 20,548 | 21,679 | |||||||
| Total revenue^^ | **** | 18,317 | 16,586 | **** | 14,442 | 12,425 | **** | 11,280 | 10,860 | **** | 5,818 | **** | 4,831 | **** | 635 | **** | 4,330 | **** | 50,492 | 49,032 | |||||||
| Provision for (recovery of) credit losses | **** | 1,343 | 491 | **** | 928 | 335 | **** | 1 | 1 | **** | 126 | **** | 37 | **** | 535 | **** | 203 | **** | 2,933 | 1,067 | |||||||
| Insurance claims and related expenses | **** | – | – | **** | – | – | **** | 3,705 | 2,900 | **** | – | **** | – | **** | – | **** | – | **** | 3,705 | 2,900 | |||||||
| Non-interest<br>expenses | **** | 7,700 | 7,176 | **** | 8,191 | 6,920 | **** | 4,709 | 4,711 | **** | 4,760 | **** | 3,033 | **** | 5,408 | **** | 2,801 | **** | 30,768 | 24,641 | |||||||
| Income (loss) before income taxes and share of net income from<br>investment in Schwab | **** | 9,274 | 8,919 | **** | 5,323 | 5,170 | **** | 2,865 | 3,248 | **** | 932 | **** | 1,761 | **** | (5,308 | ) | 1,326 | **** | 13,086 | 20,424 | |||||||
| Provision for (recovery of) income taxes | **** | 2,586 | 2,361 | **** | 667 | 625 | **** | 747 | 853 | **** | 162 | **** | 436 | **** | (994 | ) | (289 | ) | **** | 3,168 | 3,986 | ||||||
| Share of net income from investment in Schwab^4,5^ | **** | – | – | **** | 939 | 1,075 | **** | – | – | **** | – | **** | – | **** | (75 | ) | (84 | ) | **** | 864 | 991 | ||||||
| Net income (loss) | $ | 6,688 | $ | 6,558 | $ | 5,595 | $ | 5,620 | $ | 2,118 | $ | 2,395 | $ | 770 | **** | $ | 1,325 | $ | (4,389 | ) | $ | 1,531 | $ | 10,782 | $ | 17,429 | |
| Total Assets by Business Segment^6^ | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| (millions of Canadian dollars) | |||||||||||||||||||||||||||
| Canadian<br> <br>Personal andCommercial Baking | **** | U.S. Retail | WealthManagementand Insurance | **** | WholesaleBanking | **** | Corporate | **** | Total | ||||||||||||||||||
| As at October 31, 2023 | |||||||||||||||||||||||||||
| Total assets | $ 560,303 | $ | 561,189 | $ 23,574 | $ | 673,398 | $ | 138,560 | $ | 1,957,024 | |||||||||||||||||
| As atOctober 31, 2022 | |||||||||||||||||||||||||||
| Total assets | $ 526,374 | $ | 585,297 | $ 23,721 | $ | 635,094 | $ | 147,042 | $ | 1,917,528 | |||||||||||||||||
| ^1^ | The amounts for the three months ended October 31, 2023 and October 31, 2022 have been derived from the<br>unaudited financial statements. The amounts for the twelve months ended October 31, 2023 and October 31, 2022 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<br>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.<br>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<br>is reversed in the Corporate segment. | ||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||
| ^4^ | The after-tax amounts for amortization of acquired intangibles, the Bank’s<br>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. | ||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||
| ^5^ | The Bank’s share of Schwab’s earnings is reported with a one month lag. Refer to Note 12 of the 2023<br>Consolidated Financial Statements for further details. | ||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||
| ^6^ | Total assets as at October 31, 2023 and October 31, 2022 have been derived from the audited financial<br>statements. | ||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 22 | ||||||||||||||||||||||||||
| --- | --- |
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<br>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:<br><br><br>TSX Trust Company<br> <br>301-100 Adelaide Street<br>West<br> <br>Toronto, ON M5H 4H1 <br>1-800-387-0825<br>(Canada and U.S. only)<br> <br>or 416-682-3860<br><br><br>Facsimile: 1-888-249-6189<br><br><br>shareholderinquiries@tmx.com or<br> <br>http://www.tsxtrust.com |
| Hold your TD shares through the<br><br><br>Direct Registration System<br> <br>in the United States | Missing dividends, lost share certificates, estate questions, address changes to the<br>share register, eliminating duplicate mailings of shareholder materials or stopping (or resuming) receiving annual and quarterly reports | Co-TransferAgent and Registrar:<br> <br>Computershare Trust Company, N.A. <br>P.O. Box 43006<br><br><br>Providence, RI 02940-3006<br> <br>or<br><br><br>Computershare Trust Company, N.A.<br> <br>150 Royall Street<br><br><br>Canton, MA 02021<br> <br>1-866-233-4836<br> <br>TDD for hearing impaired: 1-800-231-5469<br> <br>Shareholders outside of U.S.:<br>201-680-6578<br> <br>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<br>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 2023 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 2023 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 2023 • EARNINGS NEWS RELEASE | Page 23 |
|---|
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 2023 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 November 30, 2023. The call will be available live via TD’s website at 1:30 p.m. ET. The call and audio webcast will feature presentations by TD executives on the Bank’s financial results for the fourth quarter, followed by a question-and-answer period with analysts. The presentation material referenced during the call will be available on the TD website at www.td.com/investor on December 1, 2023 before 1:30 p.m. ET. A listen-only telephone line is available at 416-641-6150 or 1-866-696-5894 (toll free) and the passcode is 2727354#.
The audio webcast and presentations will be archived at www.td.com/investor. Replay of the teleconference will be available from 5:00 p.m. ET on November 30, 2023, until 11:59 p.m. ET on December 15, 2023 by calling 905-694-9451 or 1-800-408-3053 (toll free). The passcode is 7300743#.
Annual Meeting
Thursday, April 18, 2024
Toronto, Ontario
Record Date for Notice and Voting:
February 20, 2024
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group (“TD” or the “Bank”). TD is the sixth largest bank in North America by assets and serves over 27.5 million customers in four key businesses operating in a number of locations in financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Auto Finance Canada; U.S. Retail, including TD Bank, America’s Most Convenient Bank^®^, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in The Charles Schwab Corporation; Wealth Management and Insurance, including TD Wealth (Canada), TD Direct Investing, and TD Insurance; and Wholesale Banking, including TD Securities and TD Cowen. TD also ranks among the world’s leading online financial services firms, with more than 16 million active online and mobile customers. TD had $1.96 trillion in assets on October 31, 2023. 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
| TD BANK GROUP • FOURTH QUARTER 2023 • EARNINGS NEWS RELEASE | Page 24 |
|---|
Q4 2023 DIVIDEND NEWS RELEASE
Exhibit 99.3
TD BANK GROUP DECLARES DIVIDENDS
(all amounts in Canadian dollars)
TORONTO – November 30 , 2023 – The Toronto-Dominion Bank (the “Bank”) today announced that a dividend in an amount of one dollar and two cents ($1.02) per fully paid common share in the capital stock of the Bank has been declared for the quarter ending January 31, 2024, payable on and after January 31, 2024, to shareholders of record at the close of business on January 10, 2024.
In lieu of receiving their dividends in cash, holders of the Bank’s common shares may choose to have their dividends reinvested in additional common shares of the Bank in accordance with the Dividend Reinvestment Plan (the “Plan”).
Under the Plan, the Bank has the discretion to either purchase the additional common shares in the open market or issue them from treasury. If issued from treasury, the Bank may decide to apply a discount of up to 5% to the Average Market Price (as defined in the Plan) of the additional shares. For the January 31, 2024 dividend, the Bank will issue the additional shares from treasury, with no discount.
Registered holders of record of the Bank’s common shares wishing to join the Plan can obtain an Enrolment Form from TSX Trust Company (1-800-387-0825) or on the Bank’s website, www.td.com/investor/drip.jsp. In order to participate in the Plan in time for this dividend, Enrolment Forms for registered holders must be received by TSX Trust Company at P.O. Box 4229, Postal Station A, Toronto, Ontario, M5W 0G1, or by facsimile at 1-888-488-1416, before the close of business on January 10, 2024. Beneficial or non-registered holders of the Bank’s common shares wishing to join the Plan must contact their financial institution or broker for instructions on how to enroll in advance of the above date.
Registered holders who participate in the Plan and who wish to terminate that participation so that cash dividends to which they are entitled to be paid on and after January 31, 2024 are not reinvested in common shares under the Plan must deliver written notice to TSX Trust Company at the above address by no later than January 10, 2024. Beneficial or non-registered holders who participate in the Plan and who wish to terminate that participation so that cash dividends to which they are entitled to be paid on and after January 31, 2024 are not reinvested in common shares under the Plan must contact their financial institution or broker for instructions on how to terminate participation in the Plan in advance of January 10, 2024.
The Bank also announced that dividends have been declared on the following Non-Cumulative Redeemable Class A First Preferred Shares of the Bank, payable on and after January 31, 2024, to shareholders of record at the close of business on January 10, 2024:
| ● | Series 1, in an amount per share of $0.228875; |
|---|---|
| ● | Series 3, in an amount per share of $0.2300625; |
| --- | --- |
| ● | Series 5, in an amount per share of $0.24225; |
| --- | --- |
| ● | Series 7, in an amount per share of $0.2000625; |
| --- | --- |
| ● | Series 9, in an amount per share of $0.202625; |
| --- | --- |
| ● | Series 16, in an amount per share of $0.3938125; |
| --- | --- |
| ● | Series 18, in an amount per share of $0.3591875; |
| --- | --- |
| ● | Series 22, in an amount per share of $0.325; and |
| --- | --- |
| ● | Series 24, in an amount per share of $0.31875. |
| --- | --- |
The Bank for the purposes of the Income Tax Act (Canada) and any similar provincial legislation advises that the dividend declared for the quarter ending January 31, 2024 and all future dividends will be eligible dividends unless indicated otherwise.
About TD BankGroup
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group (“TD” or the “Bank”). TD is the sixth largest bank in North America by assets and serves over 27.5 million customers in four key businesses operating in a number of locations in financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Auto Finance Canada; U.S. Retail, including TD Bank, America’s Most Convenient Bank^®^, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in The Charles Schwab Corporation; Wealth Management and Insurance, including TD Wealth (Canada), TD Direct Investing, and TD Insurance; and Wholesale Banking, including TD Securities and TD Cowen. TD also ranks among the world’s leading online financial services firms, with more than 16 million active online and mobile customers. TD had $1.96 trillion in assets on October 31, 2023. The Toronto-Dominion Bank trades under the symbol “TD” on the Toronto and New York Stock Exchanges.
| For more information contact: | Jennifer dela Cruz<br> <br>Senior Legal Officer, Corporate<br><br><br>Legal Department – Shareholder Relations<br> <br>(416)<br>944-6367<br> <br>Toll free<br>1-866-756-8936 |
|---|---|
| Elizabeth Goldenshtein<br> <br>Senior Manager, Corporate Communications<br><br><br>(416) 994-4124 |
NOTICE OF MEETING AND RECORD DATE
Exhibit 99.4
November 30, 2023
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 withBeneficial 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 18, 2024 |
| Record Date for Notice | February 20, 2024 |
| Record Date for Voting | February 20, 2024 |
| Beneficial Ownership Determination Date | February 20, 2024 |
| 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 | Yes |
| Notice & Access – Beneficial Holders | Yes |
| Issuer Sending Material Directly to NOBOs | No |
| Issuer Paying to Send Material to OBOs | Yes |
| Whether the meeting is a special meeting^1^ | Yes |
| Yours very truly, | |
| --- | |
| /s/ Ye Xia | |
| Ye Xia | |
| 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.
CEO AND CFO CERTIFICATES
Exhibit 99.5
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,<br>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<br>October 31, 2023. |
|---|---|
| 2. | No misrepresentations : Based on my knowledge, having exercised reasonable diligence, the<br>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<br>period covered by the annual filings. |
| --- | --- |
| 3. | Fair presentation : Based on my knowledge, having exercised reasonable diligence, the<br>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<br>the periods presented in the annual filings. |
| --- | --- |
| 4. | Responsibility : The issuer’s other certifying officer(s) and I are responsible for<br>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 ofDisclosure 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<br>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<br> |
| --- | --- |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in<br>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<br>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<br>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<br>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<br> |
| --- | --- |
| (a) | evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at<br>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<br>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<br> |
| --- | --- |
| (ii) | N/A |
| --- | --- |
| 7. | Reporting changes in ICFR : The issuer has disclosed in its annual MD&A any change in<br>the issuer’s ICFR that occurred during the period beginning on August 1, 2023 and ended on October 31, 2023 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<br>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<br>management or other employees who have a significant role in the issuer’s ICFR. |
| --- | --- |
| Date: November 30, 2023 | |
| --- | |
| /s/ Bharat Masrani | |
| Bharat Masrani<br> <br>Group President and Chief<br>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,<br>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<br>October 31, 2023. |
|---|---|
| 2. | No misrepresentations : Based on my knowledge, having exercised reasonable diligence, the<br>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<br>period covered by the annual filings. |
| --- | --- |
| 3. | Fair presentation : Based on my knowledge, having exercised reasonable diligence, the<br>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<br>the periods presented in the annual filings. |
| --- | --- |
| 4. | Responsibility : The issuer’s other certifying officer(s) and I are responsible for<br>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 ofDisclosure 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<br>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<br> |
| --- | --- |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in<br>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<br>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<br>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<br>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<br> |
| --- | --- |
| (a) | evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at<br>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<br>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<br> |
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| (ii) | N/A |
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| 7. | Reporting changes in ICFR : The issuer has disclosed in its annual MD&A any change in<br>the issuer’s ICFR that occurred during the period beginning on August 1, 2023 and ended on October 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
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| 8. | Reporting to the issuer’s auditors and board of directors or audit committee : The<br>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<br>management or other employees who have a significant role in the issuer’s ICFR. |
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| Date: November 30, 2023 | |
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| /s/ Kelvin Tran | |
| Kelvin Tran<br> <br>Group Head and Chief Financial<br>Officer |
INDEPENDENT AUDITORS' REPORT
Exhibit 99.6
INDEPENDENT AUDITOR’S REPORT
To the Shareholders and Directors of TheToronto-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, 2023 and 2022, 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 significant 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, 2023 and 2022, 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, 2023. 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 | |
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| 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<br>consolidated financial statements. As disclosed in Note 8 to the consolidated financial statements, TD recognized $8,189 million in allowances for credit losses on its consolidated balance sheet using an expected credit loss model (ECL).<br>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<br>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<br>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)<br>since initial recognition or when there is objective evidence of impairment.<br> <br><br> <br>Auditing the<br>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<br>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<br>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<br>applied to the modelled ECL based on management’s expert credit judgment. |
| How our audit<br> <br>addressed the<br><br><br>key audit matter | We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the allowance for<br>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<br>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.<br><br><br><br> <br>To test the allowance for credit losses, our audit procedures included, amongst others, involving<br>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<br>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<br>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<br>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<br>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<br>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<br>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<br>consolidated financial statements, TD has derivative assets of $87,382 million and derivative liabilities of $71,640 million recorded at fair value. Certain of these |
| TD BANK GROUP • 2023 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES | Page 1 |
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| derivatives are complex and illiquid and require valuation techniques that may include complex models and<br>non-observable inputs, requiring management’s estimation and judgment.<br> <br><br><br><br>Auditing the valuation of certain derivatives required the application of significant auditor judgment and involvement of valuation specialists in assessing the complex<br>models and non-observable inputs used, including any significant valuation adjustments applied. Certain valuation inputs used to determine fair value that may be<br>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<br>market conditions. | |
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| How our audit<br> <br>addressed the<br><br><br>key audit matter | We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls, including the associated<br>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,<br>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, and controls over the review of significant valuation adjustments applied.<br><br><br><br> <br>To test the valuation of these derivatives, our audit procedures included, amongst others, an<br>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<br>estimate the fair value, which involved obtaining significant inputs from independent external sources, where available. For a sample of valuation adjustments, we utilized the assistance of our valuation specialists to evaluate the methodology<br>applied and performed a recalculation of these adjustments. 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<br>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.<br>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.<br><br><br><br> <br>Auditing TD0s provision for uncertain tax positions involved the application of judgment and is<br>based on interpretation of tax legislation and jurisprudence. |
| How our audit<br> <br>addressed the<br><br><br>key audit matter | We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over TD’s provision for<br>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.<br><br><br><br> <br>With the assistance of our tax professionals, we assessed the technical merits and the amount<br>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<br>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<br>adequacy of the disclosures related to uncertain tax positions. |
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 2023 Annual<br>Report. |
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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 2023 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.
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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<br>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<br>than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
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| • | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate<br>in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of TD’s internal control. |
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| • | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related<br>disclosures made by management. |
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| • | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit<br>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<br>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<br>auditor’s report. However, future events or conditions may cause TD to cease to continue as a going concern. |
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| • | Evaluate the overall presentation, structure and content of the consolidated financial statements, including the<br>disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
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| • | Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities<br>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. |
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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.
/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
November 29, 2023
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November 30, 2023
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 November 29, 2023 as Exhibit 99.6 to its Form 6-K filed on November 30, 2023.
Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
| TD BANK GROUP • 2023 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES | Page 4 |
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