Earnings Call Transcript - TD Q1 2022

Operator, Operator

Good afternoon, everyone. Welcome to the TD Bank Group Q1 2022 Earnings Conference Call. I would now like to turn the meeting over to Ms. Brooke Hales. Please go ahead, Ms. Hales.

Brooke Hales, Head of Investor Relations

Thank you, operator. Good afternoon and welcome to TD Bank Group's first quarter 2022 investor presentation. We will begin today's presentation with remarks from Bharat Masrani, the bank's CEO, after which Kelvin Tran, the bank's CFO, will present our fourth quarter operating results. Ajai Bambawale, Chief Risk Officer, will then offer comments on credit quality, after which we will invite questions from prequalified analysts and investors on the phone. Also present today to answer your questions are Michael Rhodes, Group Head, Canadian Personal Banking; Paul Douglas, Group Head, Canadian Business Banking; Raymond Chun, Group Head, Wealth & Insurance; Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank; and Riaz Ahmed, Group Head, Wholesale Banking. Please turn to Slide 2. At this time, I would like to caution our listeners that this presentation contains forward-looking statements, that there are risks that actual results could differ materially from what is discussed and that certain material factors or assumptions are applied in making these forward-looking statements. Any forward-looking statements contained in this presentation represent the views of management 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. Forward-looking statements may not be appropriate for other purposes. I would also like to remind listeners that the bank uses non-GAAP financial measures such as adjusted results to assess each of its businesses and to measure overall bank performance. The bank believes that adjusted results provide readers with a better understanding of how management views the bank's performance. Bharat will be referring to adjusted results in his remarks. Additional information on items of note, the bank's use of non-GAAP and other financial measures, the bank's reported results and factors and assumptions related to forward-looking information are all available in our Q1 2022 Report to Shareholders. With that, let me turn the presentation over to Bharat.

Bharat Masrani, CEO

Thank you, Brooke, and thank you everyone for joining us today. I'd like to welcome Michael Rhodes, Group Head, Canadian Personal Banking; and Leo Salom, President and CEO TD Bank America's Most Convenient Bank, who are joining us for the first time. We're also including two additional participants on the call beginning this quarter, Paul Douglas, who leads Canadian Business Banking, and Ray Chun, who leads Wealth & Insurance. They are here to answer more specific questions you may have about their businesses and results. Before we review the quarter, I want to once again express to all Ukrainians around the world and across our footprints, our sincere hope that the violence will come to an end as soon as possible. To help support humanitarian efforts, we have donated more than $25 million to agencies who are on the ground providing urgent care to the people of Ukraine. TD customers can make donations to the Canadian Red Cross and our branches in Canada, and soon to be American Red Cross in all U.S. stores. Together a collective effort can make a real difference. Let me now turn to our first quarter performance. Q1 was a great quarter for TD, earnings were $3.8 billion, and EPS was $2.08, up 13% and 14%, respectively, from the first quarter of last year. Revenue increased across our retail and wholesale segments as customers and clients brought us more of their business and PCL remained low reflecting good credit performance against the backdrop of an improving economic outlook. Reflecting the strong results, our CET1 ratio ended the quarter at 15.2%, including a 17 basis point impact from the repurchase of 7.5 million common shares during the quarter. Our proven business model anchored by our diversified business mix, North American scale and risk discipline has enabled us to continue to invest in transforming the bank for the digital age. This quarter, we announced an acceleration of our strategy to establish an enterprise-level data platform on Microsoft Azure. This initiative to modernize our data infrastructure, which includes a multi-year agreement with Databricks, data at scale will further enhance our analytical capabilities and deliver richer insights, driving better customer experiences and enabling colleagues to collaborate with more agility across the bank. We're also investing in our colleagues, building on our brand as an employer of choice for top technology talent. We are hiring more than 2,000 technology roles in 2022 to drive investments that will help power the future of banking with a focus on skills in cloud, machine learning and automation. As we continue to evolve the colleague and customer experience, growing and empowering skilled technology talent will remain a cornerstone of our forward-focused strategy. Let me now turn to each of our businesses and review some highlights from Q1. Our Canadian Retail segment earned $2.3 billion, delivering record revenue and earnings. The personal bank had a strong quarter. In our real estate secured lending business, we have been encouraged by the early response to the introduction of our popular FlexLine hybrid lending product into the broker channel in January. Our cards business is performing very well. Balances rose year over year for the first time since Q1 2020 and card retail sales were up 23% year-over-year. Our customers are highly engaged with our loyalty programs, including our Amazon Shop with Points offer, where you've seen approximately 2 million redemptions to date. Even as we continue to grow personal deposits, we took market share in mutual funds as we leverage our One TD strategy to help more Canadians meet their long-term investing goals. And we strengthened our New to Canada offering, bundling a digitally convenient way to send money to over 200 countries via our award-winning TD Global Transfer service. Since launch, we have seen increased customer acquisition and volume growth with over 200,000 customers conducting more than 1.8 million transfers to date. It was also a very strong quarter for the business bank with double-digit growth in both loans and deposits. In our wealth business, revenue increased 7% as strong net asset growth in mutual fund sales helped offset a moderation in direct investing trading volumes. Our WebBroker platform, again, took top spot among Canadian banks in the Globe and Mail annual ranking of digital brokers, and we are excited to have extended those capabilities into a fully mobile environment with the launch of the TD Easy Trade app this quarter. We've seen strong take-up of the app, which is designed to make investing simpler for new and emerging investors. Turning to the U.S. Our U.S. Retail bank earned $806 million in Q1, an increase of 31% year-over-year. Commercial loan origination volumes improved with mid-single-digit growth in the middle market offset by continued PPP runoff and lower commercial real estate exposures. Line of credit utilization rates also increased modestly quarter-over-quarter. This quarter, we piloted a next-generation digital platform for U.S. commercial clients, providing them with an end-to-end view of their relationship with TD, including access to treasury applications and the ability to transact across products. We also announced additional enhancements to our overdraft policies. These build on the changes we introduced last August, including the launch of TD Essential Banking, a low-cost deposit account designed to meet the needs of unbanked or underbanked households. The latest enhancements are intended to help customers better manage their accounts and make informed financial choices. And we continue to see good take-up of our Double Up credit card. Double Up has become a primary driver of new bank card accounts for U.S. retail bank with almost 100,000 accounts added to date since its launch last spring. And with the contribution from our investment in Schwab of $200 million, our U.S. Retail segment earnings were $1 billion this quarter. Let me turn briefly to our announcement this week of the agreement to acquire First Horizon headquartered in Memphis, Tennessee. I was in Tennessee this week meeting with First Horizon associates, and I was incredibly impressed with the talented people I met with their passion for their customers and communities. Regarding our U.S. aspirations, for years, I've been sharing on these calls and elsewhere that one of our goals is to expand in the fast-growing Southeast of the United States. This week, we delivered on that promise with the announcement of our agreement to acquire First Horizon. Upon closing, we will achieve leadership positions in key markets, strengthen our presence in states such as Florida and the Carolinas and gain footholds in the large Georgia and Texas markets. As you heard on Monday, First Horizon's banking centers are located in markets whose populations are projected to grow 50% faster than the U.S. national average. First Horizon is a fantastic bank, customer-centric deeply committed to the communities in which they operate and focused on growth just like TD. With this acquisition, we extend our reach, acquire nuclear and specialty banking capabilities, add over 400 branches and expand to serve 1.1 million more customers. And as we said on Monday, we expect to achieve $610 million in annual cost synergies. The main drivers of these savings are expected to be technology and vendor costs as we reap the benefit of scale across our platforms and vendor relationships and corporate real estate. With overall bank costs across the industry migrating to the center and away from the branch network over the past few years, the benefits of consolidation are increasingly achievable in market-adjacent deals without significant impacts to the frontline. As outlined in our First Horizon Investor presentation, this transaction is expected to deliver 10% plus fully synergized adjusted EPS accretion in fiscal 2023, and the deal is immediately accretive to adjusted EPS at closing. This transaction is strategically compelling, financially attractive within our risk appetite, and culturally aligned. First Horizon is a terrific fit for TD and will enable us to further accelerate our growth in the U.S. Let me now return to our Q1 results. In Wholesale Banking, earnings were $434 million this quarter. Business activity and markets remained robust, resulting in strong revenue performance and continued lower PCL. Our U.S. dollar strategy and investments continue to bear fruit and have contributed significantly to the revenue growth over the last three years. In addition, TD Securities won several key mandates in the quarter. In Canada, we acted as joint lead bookrunner on Nestle's inaugural Canadian dollar offering, a successful $2 billion issuance. TD Securities continued to demonstrate its advisory and financing capabilities in the sustainable finance space, acting as adviser to Clearway Energy on its $1.9 billion sale of Clearway Community Energy to KKR. Further reflecting our commitment to embed ESG principles across our business, this quarter, TD Securities' debt capital markets team partnered with a syndicate of underwriters, the majority of which were diverse-owned businesses to lead a $500 million green bond offering by TD Bank. This offering was the first time that a syndicate group for a Canadian bank offering bond offering included minority, women, and veteran-owned businesses as active joint book runners. This was just one of the deals making up a record quarter for our debt capital markets team and financial institutions which participated in underwriting almost $40 billion of investment-grade debt for the sector. Overall, as I reflect on our performance this quarter, I'm pleased with our strong start to fiscal 2022 and encouraged by the momentum in our businesses. It's been two years since the COVID-19 pandemic transformed the way we work and live. While there are still challenges ahead, including inflation, labor market and supply chain pressures, and serious geopolitical tensions, macroeconomic conditions remain positive as we evolve our approach to COVID-19 and economies recover. With the strength of our business model and balance sheet, we remain well positioned to continue executing on our growth strategies. At the same time, we know the impact of the pandemic has not been evenly distributed. In particular, it has disrupted education across North America and the transition to alternative ways of teaching has created challenges for both students and teachers due to uneven implementation and unequal access to technology. That's why the focus of the 2021 TD Ready Challenge was on supporting innovative solutions to address predicted learning loss in math and reading for disproportionately impacted students in grades K-12. This quarter, we were pleased to announce $10 million in grants to 15 organizations to help them develop innovative solutions to address these inequities. We're also promoting equitable and inclusive innovation through TD Labs' new equity diversity and inclusion resource hub, a platform to support the inclusion of the unique perspectives and experiences of different community groups into the development, design, and build of our products and services. This platform has been piloted with success, and we look forward to leveraging it more broadly. We also continue to focus on inclusion and diversity across the bank most recently through a series of well-attended Black History Month events and initiatives. TD's commitment to diversity and inclusion and environmental, social and governance initiatives more broadly continues to receive recognition. This quarter, we were proud to be recognized with an S&P Global Silver Class distinction in the 2022 S&P Global Sustainability Yearbook, one of the most comprehensive annual publications on the state of corporate responsibility, the only North American bank to carry the S&P Global gold or silver class distinctions. Our strategy is centered on our vision, purpose and shared commitments, and I'd like to thank our 3,000 bankers across the globe, who bring those commitments to life every day. Their hard work, dedication and strong performance sustains and strengthens our winning culture. With that, I'll turn things over to Kelvin.

Kelvin Tran, CFO

Thank you, Bharat. Good afternoon, everyone, and please turn to Slide 10. This quarter, the bank reported earnings of $3.7 billion and earnings per share of $2.02, both up 14%. Adjusted earnings were $3.8 billion and adjusted earnings per share was $2.08, up 13% and 14%, respectively. Revenue increased 4%, reflecting higher volumes and fee-based revenue in the banking and wealth businesses and higher insurance volumes partly offset by our normalization in direct investing trading activity and lower retail margins. Provision for credit losses was $72 million. Expenses increased 3% year-over-year, reflecting higher spending supporting business growth and higher employee-related expenses partially offset by prior year store optimization costs and the impact of foreign exchange translation. Adjusted expenses also increased 3%. The retailer partners net share of the profit from the U.S. strategic card portfolio did not have a notable impact on expense growth this quarter as PCL was stable across both periods. Absent the partners' share, adjusted expense growth was 3% year-over-year or 3.6% ex-FX. For the same reason, the accounting for the U.S. strategic card portfolio had only a minimal impact on pretax, pre-provision earnings and operating leverage this quarter. Slide 24 shows how we calculate total bank PTPP and operating leverage removing this impact, along with the impact of foreign currency translation and the insurance fair value change. Total bank PTPP was up 6% year-over-year before these modifications and 7% after reflecting strong volume growth. PTPP was up 6% quarter-over-quarter on both measures, mainly reflecting higher wholesale trading-related revenue. Please turn to Slide 11. The Canadian Retail net income for the quarter was $2.3 billion, up 11% year-over-year. Revenue increased 6% reflecting higher fee-based revenue in the banking and wealth businesses and higher loan, deposit, and insurance volumes, partially offset by lower direct investing transaction volumes and lower margins. Average loan volumes rose 9%, reflecting 8% growth in personal volume and 14% growth in business volume. Average deposits rose 9%, including 7% growth in personal volumes, 13% growth in business volumes, and 9% growth in wealth deposits. Wealth assets increased 14%. Net interest margin was 2.53% down 4 basis points compared to the prior quarter, reflecting lower loan margins. Total PCL of $33 million declined $20 million sequentially. Total PCL as an annualized percentage of credit volume was 0.03% down 1 basis point sequentially. Insurance claims decreased 3% year-over-year, primarily reflecting a decrease in the fair value of investments supporting claims liabilities, which resulted in a similar decrease in noninterest income partially offset by more severe weather-related events. Noninterest expenses increased 8% year-over-year, reflecting higher spending supporting business growth, including technology and marketing costs and higher employee-related expenses and variable compensation. Please turn to Slide 12. The U.S. Retail segment reported net income for the quarter of $1 billion, up 30% year-over-year. U.S. Retail Bank net income was $806 million, up 31%, primarily reflecting higher revenue, lower PCL and lower noninterest expenses. Revenue increased 6% year-over-year, reflecting higher deposit volumes and margins and increased earnings on the investment portfolio and higher fee income from rising customer activity, partly offset by low margin. Average loan volumes decreased 6% year-over-year, reflecting an 11% decline in business loans primarily due to PPP loan forgiveness and paydowns on commercial loans. Personal volumes were flat. Average deposit volumes, excluding fixed deposits, were up 13% year-over-year. Total deposits were up 15%, including 21% growth in consumer checking. Business deposits were up 12%. Sweep deposits declined 6%. Net interest margin was 2.21% flat sequentially as the impact of lower accelerated fee amortization from PPP forgiveness was offset by higher deposit margins and increased earnings on the investment portfolio. On Slide 28, we've continued our disclosure on the impact of the PPP program. This quarter, PPP revenue contributed approximately $65 million to net interest income and 10 basis points to NIM. We expect most of this benefit to be realized by the second quarter of this year. Total PCL was $17 million, up $79 million sequentially. The UIL net PCL ratio, including only the bank's share of PCL for the U.S. strategic cards portfolio, as an annualized percentage of credit volume was 0.04%, higher by 19 basis points sequentially. Expenses decreased 4% year-over-year primarily reflecting prior year store optimization costs of $76 million and productivity savings in the current year, partly offset by higher employee-related expenses and investments in the business. The contribution from TD's investment in Schwab was $200 million, up 24% from a year ago. Please turn to Slide 13. Wholesale net income for the quarter was $434 million, a decrease of 1% year-over-year reflecting higher revenue and lower PCL offset by higher noninterest expenses. Revenue was $1.3 billion, up 3% year-over-year primarily reflecting robust client activity and market. PCL for the quarter was a recovery of $5 million compared with a recovery of $77 million in the prior quarter. Expenses increased 7% year-over-year primarily reflecting higher employee-related costs and continued investment in the Wholesale Banking's U.S. dollar strategy, including the investments in TD Securities' automated trading and the electronic fixed income trading business we acquired from Headlands last year. Please turn to Slide 14. Corporate segment reported a net loss of $227 million in the quarter compared with a reported net loss of $197 million in the first quarter last year. The year-over-year increase reflects a lower contribution from other items, partially offset by lower net corporate expenses. The decrease in other items primarily reflects lower revenue from treasury and balance sheet management activities this quarter. Adjusted net loss for the quarter was $127 million compared with an adjusted net loss of $94 million in the first quarter last year. Please turn to Slide 15. The common equity Tier 1 ratio ended the quarter at 15.2%, flat sequentially. We had strong organic capital generation this quarter, which added 45 basis points to CET1 capital. This was offset by the repurchase of 7.5 million common shares under our share buyback program, higher RWA and a reduction in the scaler for OSFI's transitional adjustment for ECL reclassified from Tier 2 to CET1 capital, which declined to 25% from 50% effective this quarter. RWA increased 2% quarter-over-quarter, mainly reflecting higher credit risk and market risk RWA. Credit risk RWA increased $7 billion or 2%, mainly reflecting higher volumes, partly offset by a decrease in U.S. retail RWA due to a parameter update for the non-retail portfolio. Market risk RWA increased $2.8 billion or 17% reflecting higher wholesale exposures. The leverage ratio was 4.4% this quarter and the LCR ratio was 124%, both well above regulatory minimums. I will hand the call over to Ajai.

Ajai Bambawale, Chief Risk Officer

Thank you, Kelvin, and good afternoon, everyone. Please turn to Slide 16. Gross impaired loan formations increased 5 basis points quarter-over-quarter to 16 basis points, driven by U.S. commercial primarily related to government guaranteed paycheck protection program loans, which are now largely resolved. U.S. residential reflects loans exiting deferral programs and some early signs of credit normalization, including the reemergence of seasonal trends in the U.S. card and auto portfolios. Please turn to Slide 17. Gross impaired loans were stable quarter-over-quarter at 33 basis points, remaining at cyclically low levels. Please turn to Slide 18. Recall that our presentation reports PCL ratios both gross and net of the partner share of the U.S. strategic card PCLs. We remind you that PCLs recorded in the corporate segment are fully absorbed by our partners and do not impact the bank's net income. The bank recorded provisions of $72 million this quarter compared with a recovery of $123 million last quarter. The quarter-over-quarter increase reflects higher impaired PCLs rising from a cyclical low in the prior quarter, coupled with a smaller performing allowance release this quarter. Please turn to Slide 19. The bank's impaired PCL was $329 million, increasing by $109 million quarter-over-quarter, reflecting some normalization of credit performance, including the reemergence of seasonal trends in the U.S. card and auto portfolios. Performing PCL was a recovery of $257 million compared to a recovery of $343 million last quarter. The current quarter recovery reflects additional allowance releases across all segments. Please turn to Slide 20. The allowance for credit losses decreased $107 million quarter-over-quarter to $7.1 billion or 93 basis points, reflecting a more favorable economic outlook, partially offset by the impact of foreign exchange. The bank's allowance coverage remains elevated from pre-COVID levels given ongoing uncertainty that could affect the economic trajectory and the ultimate credit impact of the pandemic. In summary, the bank exhibited strong credit performance again this quarter, with key credit metrics remaining at or near cyclically low levels. However, as expected, early signs of credit normalization are emerging, including modestly higher early delinquencies and impairments in certain portfolios and more typical consumer behavior, including higher seasonal spending. While credit results may vary by quarter, I continue to expect PCLs to be higher for fiscal '22 increasing from unsustainably low levels last year as credit conditions continue to normalize. To conclude, TD remains well positioned given we are adequately provisioned, have a strong capital position, and have a business that is broadly diversified across products and geographies. With that, operator, we are now ready to begin the Q&A session.

Operator, Operator

Thank you. We will now take questions from the telephone lines. Our first question is from Meny Grauman from Scotiabank. Please go ahead.

Meny Grauman, Analyst

Just wanted to ask about RESL growth in Canada. Year-over-year, it's underperforming the peer group. And when I look, that gap opened up early in the pandemic, but it looks like it actually has widened recently. So I'm wondering, as you look at that, what is your assessment of what's driving that? What's the reason for that?

Michael Rhodes, Group Head, Canadian Personal Banking

Okay. Meny, hi, this is Michael Rhodes. Nice to meet over the phone at least. So your question about RESL. First of all, it's interesting when you look at the numbers and you see almost 9% RESL growth, it's fit and see what was elsewhere in the market. I think that was pretty good. But the truth of the matter is we do have an opportunity, and we do expect to do better. In terms of why, look, our branch network, I think everyone knows, has been a historic source of strength. This was clearly disproportionately impacted during COVID. But then coming out of COVID, we do look to create momentum in all channels, and that's why I said we expect to do better. So hours returned to normal as our mobile mortgage specialist productivity continues to improve, and we are seeing implement. And as we continue to invest in training, operations, account management, and again, we've seen improvements in account management and retention, and see the benefits of the recent enhancements such as FlexLine in the brokerage channel, Bharat had referred to this in his remarks, we will not see any actuals in our financial numbers, but we are pleased with what we're seeing there. And so, I start off by saying we expect to do better, and I'll conclude with that. The other comment I would make is if you look just over the past year or so, and just look at the sequential performance in the past year or so, I think you will see some momentum and it's certainly my job you enroll, and my job is to ensure that momentum continues.

Meny Grauman, Analyst

Is your assessment that part of the issue is a more cautious approach to risk? Is this something that needs to be addressed?

Michael Rhodes, Group Head, Canadian Personal Banking

As I'm sure you've heard before, we're through the cycle lenders. And I think that narrative stays the same today as it has last year, and it will be a year from now. Realistically, it's the closing down the loss of capacity for 10 hours in the branch has distortedly impacted us. We were more reliant. And so being through the cycle lenders, you're going to see us be relatively consistent with our credit approach.

Meny Grauman, Analyst

How are you planning to address the issue you mentioned regarding the FlexLine in the broker channel? How critical is it for you to return to or exceed the peer range?

Michael Rhodes, Group Head, Canadian Personal Banking

Yes. So, we're optimistic that FlexLine and broker channel will drive some nice performance on a go-forward basis. At the end of the day, and I know I'm not new to this call, you would have heard before that we like to be in all channels to be everywhere where our customer is. And certainly, broker is a channel where we want to be. But I don't want to diminish the importance of our core retail franchise, and we expect to see strong performance of our core retail franchise. And I'd also offer that our mobile mortgage specialists, I said this is true, our productivity is improving. And so, we're looking to see performance in all channels and improved performance in all channels. Broker is one of those and FlexLine will certainly be helped there.

Meny Grauman, Analyst

And just a final one, just as a follow-up, just in terms of timing there in terms of when you think you'll be able to close that gap with the peer group.

Michael Rhodes, Group Head, Canadian Personal Banking

Yes. So I might play the new guy card here. So I don't want to get too precise on timing. I will just offer that you should expect to see continued momentum.

Operator, Operator

Thank you. Following question is from Gabriel Dechaine from National Bank Financial. Please go ahead.

Gabriel Dechaine, Analyst

My question is for Leo. During the quarter, you made some additional adjustments to the overdraft fee structure in your business. I'm wondering if you can quantify the potential revenue impact and the timing thereof as you see it. I know there were some changes last August. And at the time, you guys said it was about a $40 million to $50 million impact. Just wondering what the latest round would be.

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

Gabe, thank you very much for the question. Let me just describe very quickly what we actually announced February 1. We made a series of changes. We changed the minimum threshold by which a client would be charged overdraft to $50. We indicated that we will implement a 24-hour grace period. We also announced that we're launching real-time alerts to keep clients informed with regards to overall balances and overdraft events. And then, finally, we implemented a cap to no more than three overdrafts in any given day. We feel that this was an appropriate set of changes. We thought it both gives clients optionality and convenience. And so we're comfortable with the changes that we made. To your question about the overall impact, our estimate at this point is that if I add the changes that we made in 2021 and these most recent changes, the in-year impact will be $165 million. And if you annualize that, just to get a sense of what the total number would be on an annual basis, we'd be about $250 million. That's about 45% of what our pre-COVID overdraft levels were. Once again, quite comfortable with the changes, and I think we were trying to be responsive to client needs and certainly to the marketplace.

Gabriel Dechaine, Analyst

That's U.S. dollars, I imagine?

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

Yes, it is.

Gabriel Dechaine, Analyst

And is there a timing that you have in mind? It's not as if behaviors changed because of some of the changes you introduced were included launching overdraft fee products. There could be some switching involved. I don't know if this stuff happens overnight or what. How do you see it?

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

No, Gabe, it's a very good question. We launched the TD Essential checking account product late last year, which is essentially a no overdraft product. About 10% of all our accounts are now in that product. We believe it provides more options for our clients. When we discuss the flexibility between the TD Essential product, the changes we've made, and the introduction of real-time alerts, I truly think we will be launching a series of other real-time alerts. Overdraft is one specific area where we aim to give clients greater control and more options.

Gabriel Dechaine, Analyst

Okay. And but does this phase in over time, something kind of just so I can model it?

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

So, we actually announced that the $50 threshold, which will trigger not all of the impact but most of the impact would go into effect on April 1.

Operator, Operator

Thank you. Following question is from Ebrahim Poonawala from Bank of America. Please go ahead.

Ebrahim Poonawala, Analyst

I guess maybe sticking with Leo on looking at Slide 28. Just talk to us, your business lending ex-PPP was fairly weak, and it has been very weak. You saw some strong growth from some of your peers. We've seen strong growth from the U.S. banks. Why we're not seeing the same commercial strength in the lending book, and just your outlook on that business? And also, I would love to hear if you think First Horizon adds anything on the commercial lending side for building.

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

Thank you, Ebrahim. Let me clarify a few points. There are two main factors affecting our year-over-year performance. As you mentioned, we are seeing the reduction of the PPP portfolio. We issued 130,000 PPP loans totaling nearly $14 billion when our clients needed support, which we take pride in. However, we ended up having a higher proportion of PPP loans relative to our overall commercial banking book compared to both larger banks and regional competitors. As this portfolio unwinds, it has created a structural drag for us, but that impact is nearly over. We expect most of this portfolio to be resolved by the end of the second quarter. The second issue pertains to our commercial real estate book, which has faced decreased origination volumes, especially in the office and retail sectors, alongside quicker repayment activities. Our overall book's duration is slightly shorter than that of our competitors, which has also affected performance during this period. Despite these structural challenges, I want to highlight some positive developments. We saw a significant rise in gross loan originations in the first quarter, returning to levels above those before the pandemic, which is quite promising. We also noted a plateau in line utilization, with a slight increase in the first quarter continuing into February, particularly in the middle market segment, which is reacting more quickly. On a quarter-over-quarter basis, we observed a 5% rise in overall loan balances. While it is still early, we recognize increasing demand. I anticipate that as liquidity conditions in the marketplace stabilize, our community banking segment, middle market, and asset-based lending areas will all experience heightened activity and growth in loan balances this year, and I am optimistic about this. Regarding First Horizon, I believe it will definitely enhance our commercial banking capabilities, thanks to its attractive geographic presence and solid commercial banking franchise. Additionally, we can leverage our resources, whether it's through TD Securities or our balance sheet, to support them in taking on more transactions or collaborating in various vertical sectors. All of these aspects will positively contribute to our existing commercial banking operations.

Ebrahim Poonawala, Analyst

Got it. So do you expect, when considering the ex-PPP business loans, that we should anticipate mid- to high single-digit loan growth that your peers are discussing or not?

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

I would expect that we would see a gradual improvement quarter-on-quarter, and we should be able to get to loan growth levels that we're achieving pre-COVID.

Operator, Operator

Got it. And I guess just one question on Canadian Retail. Mike, we saw revenues up 6%, expenses up 8%. As we think about the outlook for the rest of the year. Just give us a sense of how you're thinking about operating leverage going forward? And any puts and takes around what drivers of expense growth versus where you see potential savings?

Michael Rhodes, Group Head, Canadian Personal Banking

I'll begin by discussing the expense growth in Canadian retail, specifically the 8% figure. It's important to break this down because it includes components from wealth and insurance as well as the Canadian personal and commercial bank. If you refer to the last page of the sub-pack, you'll find a breakdown of the Canadian Personal Bank, which shows around a 4% expense growth year-over-year, if I recall correctly. This pertains to the business banking side, where we see strong operating leverage. We plan to continue investing in the business, and we anticipate generating positive operating leverage consistently. There are always some fluctuations to consider. With that said, I'll pass it over to Ray to discuss additional dynamics since I've covered part of the picture.

Raymond Chun, Group Head, Wealth & Insurance

Sure, Michael. Ebrahim. It's Ray. From a wealth and insurance perspective, year-on-year expenses increased by 14%, primarily due to investments in key areas across wealth and insurance aimed at enhancing client experiences, acquiring new clients, and accelerating growth. I want to remind everyone that TD Wealth results encompass the direct investing business, which affects our reported earnings and expenses. In terms of wealth, the rise in expenses was largely driven by variable compensation resulting from higher fee-based revenue growth and a shift in our revenue mix from transactions to fee-based revenue. Consequently, wealth earnings remained stable compared to last year. Despite a 28% year-on-year decline in direct investing trading levels — a trend we expect to persist in 2022 — trades per day are still double the pre-pandemic levels. We are also investing in new products, expanding our adviser base nationally, and enhancing digital and technology to meet changing client expectations and stringent regulatory requirements in wealth management. One of our significant investments this quarter was the launch of TD Easy Trade, a mobile trading app designed to simplify investing for new and emerging investors. Since its launch in January, we have observed strong uptake in new accounts and net asset growth, indicating its appeal to emerging investors. Overall, while expenses have risen, our Q1 results highlight the robustness of our diverse wealth business. As for TD Insurance, the business continues to grow, and we are making the right investments to support our position as the number one direct-to-consumer insurer in Canada. This includes increased marketing expenditures, development of leading digital capabilities, and significant investments in our insurance advisers and contact centers to ensure we provide exceptional experiences that strengthen our customer relationships.

Ebrahim Poonawala, Analyst

That will help. And I guess, is the net of that that we should see the efficiency ratio improve year-over-year versus the 43.1 last year or unclear where that may shake out.

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

Yes, I believe it depends on the assumptions we make in the near future because, aside from volume growth, expectations regarding rates will also play a role. Additionally, if we analyze last year's performance, peak trading revenue occurred in the second quarter, so we can anticipate another strong quarter like that. Our aim is to achieve positive operating leverage over the medium term.

Operator, Operator

Following question is from John Aiken from Barclays. Please go ahead.

John Aiken, Analyst

A couple of quick questions, Kelvin, on the interest rate sensitivity. A couple of the banks have actually produced year two impacts from rising rates, are you actually able to provide any order of magnitude in terms of what the impact might be on TD state sensitivity for a year or two?

Kelvin Tran, CFO

Sure. The estimated impact of a 100 basis point increase in interest rates across the curve, assuming a static balance sheet, would be approximately $2.8 billion. However, it's important to be cautious with that figure, as it assumes a uniform increase across the entire rate curve. Generally, there is an expectation that short-term rates will rise, while long-term rates may not see as significant an increase. Additionally, it’s necessary to consider your on-off rates since as your hedges or investments mature, you should evaluate how those rates evolve compared to the new rates being applied. I hope that addresses your question.

John Aiken, Analyst

Yes. No, understood, Kelvin. And just one follow-on. I know you've been exceptionally busy over the last little while, but have you had a chance to take a look at your rate sensitivity disclosures for First Horizon and how they're calculated? And would you anticipate any major differences if you've actually been able to dive into the weeds or should we take those data sensitivities as fairly similar to how TD calculates them?

Kelvin Tran, CFO

Yes. So we looked at their interest rate sensitivity. And so we're comfortable with including those into our model. We know that they do hedge their balance sheet as well. And as we work through the integration plan, we would look at that and take into account in how we're going to operationalize it.

Operator, Operator

Following question is from Paul Holden from CIBC. Please go ahead.

Paul Holden, Analyst

First question is going back to Mike, and I really appreciate the candid answers on the residential mortgage opportunity. And I guess I want to ask you a broader question as you think about the Canadian Retail Bank as a whole. Has there been any evidence of deterioration in market share more broadly or maybe flipping out on its head, do you see broader opportunities to catch up and surpass peers?

Michael Rhodes, Group Head, Canadian Personal Banking

No, it's a good question. And actually, it's good. I mean, if I follow up and take a look overall. Look, I'd say, first of all, there are a lot of things we're very, very pleased with, what's performing the Canadian personal bank and, in fact, including share increases in some things that really matter. If you take a look at our deposit franchise, our deposit franchise share gain on a year-over-year basis is actually quite attractive and we're getting the right types of deposits. We like that. The other thing we look at, and I'm here with my friend, Ray across the table from me, is we're gaining share in deposits. At the same time, we're actually creating mutual fund referrals. In fact, the mutual fund origination we have during the quarter has been very, very strong. And so we're very pleased with that. In fact, we call our sales market-leading with a combination of both our deposit business and our mutual fund generation. If you look at the other asset classes and if you look and say that the cards business, as an example, I looked at everyone's competitive data. Everyone is in a reasonably tight range. But if you look at our spend, it's up 23% on a year-over-year basis, and it's actually definitely up over pre-pandemic periods. And we're feeling good about how we're positioned with cards, and we expect to see growth there. And overall, there's a lot to like about our retail franchise. We have the best physical network in the marketplace. We have a number one position in 79% of all markets with 500,000 people or more in the Canadian marketplace. We have more web traffic. We have number one share of voice on social channels, and we've got a great, great front line, very purpose-driven, take care of the customer every single day. And as I say, look, we have opportunities in RESL. I agree with that. And with cards, we were number one in market share. We're not right now, but you may know I have a lot of card experience in I'm looking forward to recapturing that position.

Paul Holden, Analyst

And then a question for Leo, sort of some strategic opportunity type question. I mean, arguably, TD is underpenetrated in U.S. Wealth Management, I think now $41 billion of AUA, which is relatively small given the footprint there. Any indications you can give us on the ability to grow that piece of the U.S. business? And is there anything in First Horizon that helps on that venture?

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

Paul, thank you very much for the question. As you know, I spent the last 10 years running our wealth franchise here in Canada. And I'd say we've got an enormous opportunity in the U.S. I'd say fundamentally, when you think we've got 9.5 million retail clients, the mass affluent and high net worth SKU on that is as much as 35% of the overall book. The ability to bring systematically financial planning and other mass affluent investment solutions to that client base both in the stores and via other direct digital platforms is very compelling. We've been building out that team. In fact, we added over 30 advisers just over the past 12 months, we will accelerate that pace because I believe that we need to achieve a critical mass of advisers to support our retail mass affluent clients. And likewise, I think the high net worth opportunity and the partnership with the commercial bank, making sure that we're bringing not only commercial banking solutions but bringing along the business transfer solutions and the other wealth management, investment management solutions and to do that at scale and consistently, is going to be a big priority for us. So I think as I think about trying to build out key business in the U.S., our wealth management opportunity has got to be one of the most significant levers that we're going to pull.

Paul Holden, Analyst

Great. I feel like we're going to be asking about this more often. One final question, again, Leo, for you, the U.S. Bank closed a number of stores roughly a year ago, right, early 2021. Notice that the store count though grown in each of the last two quarters. Maybe you can sort of give us a sense of what the strategy is there? I'm assuming it's into new geographies? And maybe you can just kind of clarify that.

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

That's correct. When we conduct store optimizations, we assess the entire network to identify opportunities for consolidating certain locations while keeping the client at the forefront of our decisions. We then reinvest those funds into regions that show higher growth potential and focus on densification. We're proud that 79% of our deposit base is in markets where we rank first, second, or third. Achieving this requires a deliberate approach to our distribution network, investing in specific metropolitan statistical areas, and reaching critical mass. While we've discussed our branch network extensively, the investments in digital marketing and digital acquisition are also vital for realizing the full potential of our branch network. I'm very pleased with what our U.S. team has achieved in the past couple of years. We are a leader in customer checking account acquisition in the United States. If we perfect our network model and enhance our digital marketing efforts to bolster our market presence, it will put us in an excellent position.

Operator, Operator

Thank you. Following question is from Scott Chan from Canaccord Genuity. Please go ahead.

Scott Chan, Analyst

Just a couple of follow-up questions on First Horizon. How big is your wealth management platform? Is it kind of revolved management solutions? But I don't know if you can kind of help quantify it.

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

Their total revenue base, excluding the institutional trust business, is similar to ours but slightly smaller. They operate a brokerage RIA model that closely resembles ours, with their wealth advisers closely aligned with the commercial bank, fostering effective partnerships around specific clients. They have been successful in growing their wealth business with this model. In contrast, we have traditionally utilized our retail network and the alignment aspect of retail. This connection to their model presents an opportunity for us to leverage over time. However, it’s essential to integrate these two groups and continue to invest in our wealth distribution and coverage as a priority.

Scott Chan, Analyst

And you talked about the wealth opportunity. But when I look at the AUM on the U.S. side, I sense that there's significant opportunity there. But every time I look at it, it's always declining and significantly underperforming peers in terms of assets. And maybe you can update on why that's happening. And is there anything strategic or anything or any initiatives going on with that platform?

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

Scott, there are two main points to consider regarding the AUM number. First, we operate an asset manager in the U.S. that is part of TD asset management rather than being an independent entity. This means we may shift mandates between different parts of our management structure, which can lead to fluctuations between the U.S. and Canada, but this does not affect our overall strategy in the market. The second factor is that Epoch has historically focused more on a value orientation, which has not been favored recently. However, we are encouraged by recent developments where we’re seeing clearer market differentiation, suggesting that our operating model may gain more traction in the near term. Ray, do you have anything to add?

Raymond Chun, Group Head, Wealth & Insurance

I guess you've captured it well, Leo. I think the big opportunity for us will be and have been and it's been a work in progress is really to bring Epoch and TD Asset Management together and leverage the expertise that actually is in TD Asset Management, while we grow our U.S. asset management business. So that will be the work that we'll do over the next few years on that side of it, but significant opportunities on that side also, Scott.

Scott Chan, Analyst

And just lastly, maybe for Kelvin. It seems like intra-quarter expenses has been a focus. And I think a theme on this call has been on investing and you're hiring 1,000 tech people. I wonder if it's all bank level, Kelvin, if you can offer some expense guidance kind of following your fiscal Q1.

Kelvin Tran, CFO

Yes. Previously, we mentioned that we don't view expenses in isolation. Our focus is on driving positive operating leverage. If we identify opportunities for revenue growth, we will increase our investments accordingly. As discussed earlier, we categorize our expenses into several groups. The first group includes essential expenses necessary to operate the bank. The second group consists of strategic investments made for long-term benefits. Finally, we have discretionary expenses, which are crucial. If the economy is improving and revenue opportunities arise, along with a rising interest rate environment, we will increase those investments to capture market share, as those opportunities are very conducive right now. That's my final thought on this.

Operator, Operator

Thank you. Following question is from Nigel DeSouza from Veritas Investment Research. Please go ahead.

Nigel D'Souza, Analyst

I had a question for Ajai about your allowances. You mentioned that your allowances are currently at a higher level compared to pre-COVID. I'm curious why we haven't seen a more significant release of those allowances. Looking at your forward-looking indicators, they've improved, so I'm wondering why that hasn’t resulted in a larger release. Also, based on your guidance, should we interpret that as sales being expected to be higher this year? Is there a chance that you won't be able to fully release those excess allowances before credit conditions stabilize?

Ajai Bambawale, Chief Risk Officer

I appreciate your question, so let me address it by first discussing allowances and then moving to the Provision for Credit Losses (PCL). The primary reason we haven't released our allowances is due to ongoing significant uncertainty, which continues to evolve. Bharat mentioned factors like geopolitics and inflation. We are uncertain about the ultimate economic trajectory resulting from the current war. This uncertainty is why we are gradually releasing our results. You are correct that if the macro environment improves and this uncertainty diminishes, we would likely release more reserves, though predicting the exact timing is challenging. Regarding PCLs, I anticipate a gradual increase. This expectation stems from our belief that as conditions normalize, impaired PCLs will rise. I'm not expecting a sudden increase, but rather a steady rise in impaired PCL. We mention that the numbers could be higher because the performing PCL may experience fluctuations. There are various factors influencing performing PCL, including volume, migration, parameters, and the macro environment. Therefore, while I can't guarantee we won't release reserves, it isn’t predetermined. We are cautious because the performing PCL can be unpredictable. I hope this information is helpful to you.

Nigel D'Souza, Analyst

That's very helpful. And if I could just focus on one variable here in your forward-looking indicators. When we look at your policy, Central Bank policy interest rate assumption, base case versus upside scenario, the upside scenario assumes a higher policy rate. Now can you help me understand why that is? Because I would think that an assumption of a higher policy rate would be an adverse scenario because it increases debt servicing costs. So could you just explain that?

Ajai Bambawale, Chief Risk Officer

Yes. The scenarios we've developed utilize insights from economists focusing on an overheated economy. In that scenario, inflation is high alongside elevated interest rates. We project that in Canada, rates would increase by 150 basis points and in the U.S. by 125 basis points. Our downside scenario is quite severe, depicting a global economic downturn where inflation decreases rapidly. However, in our baseline case, we also expect to see high inflation, starting around 6% for the U.S. in the fourth quarter and gradually declining from there. These assumptions for the upside scenario, reflecting an overheated economy, are what we are working with.

Nigel D'Souza, Analyst

Okay. So any comments on the stagflationary scenario if you have higher interest rates and decelerating growth, how does that affect your credit loss modeling?

Ajai Bambawale, Chief Risk Officer

Yes, good question. So what I would tell you is we're giving it a lot of thought, and we are going to be running some stagflation scenarios in CR. It is a plausible scenario. We would be concerned with that kind of a scenario, and we're doing more work on that front right now.

Operator, Operator

Thank you. Following question is from Sohrab Movahedi from BMO Capital Markets. Please go ahead.

Sohrab Movahedi, Analyst

I just wanted to ask a couple of follow-up questions. I'll start with Leo. You mentioned the opportunity, and both you and Ray discussed the potential between TD Asset Management Epoch and how to leverage the franchise in the U.S. What makes this situation unique? Is it simply a fresh perspective, or have these opportunities always existed without proper focus? Additionally, is there a specific reason why the upcoming 12 months are expected to be more favorable than the previous year?

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

Sure, I can certainly start. This is Leo. The reality is, when you look at the growth trajectory of the U.S. business over time, including expanding the footprint and adding capabilities, the U.S. has been on a journey to enhance its core capabilities for some time. We see this as a great opportunity to focus on the wealth sector. Both Ray and I have worked together for many years, and we clearly see an opportunity in the U.S. market from a demographic perspective. We have the capabilities needed. Recently, we implemented a next-generation adviser support platform that we're really excited about, which went into production just a month and a half ago. We are making the necessary investments to scale that business. After overseeing the wealth business in Canada for 10 years, I view the U.S. opportunity as larger and a significant growth contributor.

Sohrab Movahedi, Analyst

And Leo, you mentioned the addition of advisers. When these advisers come on, how long before they are productive?

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

It really depends on whether we are discussing the mass market or high net worth clients; the learning curve varies for both, especially based on whether we are developing talent internally or recruiting experienced advisers. In the mass affluent sector, we focus on leveraging our strong retail talent by guiding them through an internal investment academy to prepare them for their licensing exams, which cover both RIA and Series 7 licenses. We aim for them to deliver services based on a financial planning framework rather than a brokerage framework, and this approach has proven quite successful for us. My goal is to accelerate this process. In contrast, when it comes to high net worth clients, we usually hire seasoned professionals, which significantly shortens their learning curve. They primarily need to learn how to function within TD rather than how to meet client expectations. The key is to ensure we are identifying and recruiting top talent. For advisers considering TD, our network and presence, along with our client base, make for a highly attractive proposition for them to apply their investment skills. This is the forward-looking approach we take in our hiring process.

Ajai Bambawale, Chief Risk Officer

So I'll make a few comments. What I would tell you is that at the bank, we have a tried and tested due diligence framework. We've used it for many acquisitions. We used it here. It was detailed. It was thorough. There were teams from across the banks that have been involved in the whole process. So, this is not just risk but everyone. And including this, there were quite a few people, I don't have exact numbers with the U.S. team, the Canadian team as well were involved. So I'm quite satisfied that the process was robust. And the outcome is a good outcome for the bank. And does that address your question? In terms of files, I can give you a little bit if you want.

Sohrab Movahedi, Analyst

I would like to know if you spent 1,000 hours or 200 hours from a risk perspective. Did you review 80% of the largest accounts or 50% of the industry groups? If you have the information available, I would appreciate more details.

Ajai Bambawale, Chief Risk Officer

Well, I'll give you a little bit of color. We looked at quite a few files. I'd say approximately 20% of the plans were reviewed by us. And we were very sort of thoughtful in our approach on what files we wanted to review. And we were satisfied just on the file review that the credit quality here at First Horizon was entirely acceptable. And we just didn't do a file review. We looked at credit policies. We looked at underwriting standards. We compare them to ours. So all that led us to the conclusion that across their retail book, which is largely vessel, C&I, which is a big book, and of course, CRE as well that the underwriting standards and quality and the team, future TD colleagues, we were quite pleased with that. So I hope that helps.

Bharat Masrani, CEO

Just to add, this is a core strength of TD, how we do acquisitions. There's a whole process we follow the number of people involved, who's going to be involved, who's going to be leading each of the teams. So it's a very thorough process that has been reviewed by many, many stakeholders. So, we feel very comfortable as to how this particular due diligence was carried and what kind of results we got out of it.

Operator, Operator

Thank you. Our last question is from Mike Rizvanovic from Stifel. Please go ahead.

Mike Rizvanovic, Analyst

I want to go back to Leo on the overdraft fees. So what I'm wondering is how concerned are you that this line, and I appreciate the added color on the new guidance, but how concerned are you that this may actually end up going to zero if you're thinking one or two years out, just with respect to seeing more banks actually eliminate this fee altogether and it's just hard for you to understand how we could get this divergence where some banks charge the fee and others don't. So, how concerned are you that there's more downside here on that fee line?

Leo Salom, President and CEO, TD Bank, America's Most Convenient Bank

Mike, thank you for your question. Our goal when we introduced the TD Essential checking account was to offer clients a product with a zero overdraft option. This was intentional, and we now provide clients the choice between the TD Essential checking product and our core checking. From our perspective, having choices is essential. We will keep an eye on the market as it evolves. We need to remain competitive, and if we believe it's necessary to reassess our strategy, we will. However, at this moment, we are quite confident in the decisions we've made.

Mike Rizvanovic, Analyst

Okay. And then maybe a quick one for Ray. I just wanted to ask about the insurance revenue being so strong. Obviously, I would suspect part of that is driven by the fact that you're the only Canadian bank that underwrites P&C insurance, and you've outperformed your peers quite a bit here. I'm wondering how much of that do you think possibly comes back as driving returns to normal auto claims start to return to normal. What's the sort of downside? If you could quantify, that would be helpful.

Raymond Chun, Group Head, Wealth & Insurance

Thanks for the question, Mike. Our insurance business continues to grow and gain market share. To give you a sense of our performance, our earnings were up 15% year-on-year, with core revenue growth of 8%. This is largely due to our strong underwriting, pricing sophistication, and claims excellence. It's worth noting that Q1 experienced an unusually high level of catastrophe activity, the highest for a Q1 since 2014. We're closely monitoring the easing of COVID-19 public health restrictions nationwide, which has impacted driving behavior and continues to disrupt the supply chain, affecting new auto sales and the auto parts industry. We're also assessing how these disruptions impact claims, which can be affected by various factors, including seasonality and weather. Over the last few years, we've expanded our market-leading auto centers across the country, which will support us as driving levels return to normal. As COVID dissipates, we expect driving patterns to revert to pre-pandemic levels and claims to normalize. This year, we will have 28 auto centers managing about 40% to 50% of our auto claims, enhancing our client experience and claims management.

Operator, Operator

We have no more questions in the queue at this time. I would now like to turn the call over to Mr. Bharat Masrani for closing remarks.

Bharat Masrani, CEO

Thank you, operator. I appreciate the engagement on the questions and the team's excellent performance here at TD. Although the team members are in new roles, it's clear that they are well-prepared and eager to contribute, which is fantastic to see. From my viewpoint, it's been a strong start to the year, and I'm pleased with our performance across various sectors. You've seen our growth opportunities, and we had a productive discussion about that. I am particularly excited about the announced acquisition of First Horizon, which elevates our business in the U.S. and presents significant opportunities. I'm also pleased to share that we will be addressing some areas where we lag behind to realign with where TD typically operates. The pandemic has had a disproportionate effect on us due to our branch-centric model, especially in Canada. Before we conclude, I want to take a moment to thank Gillian Manning as she transitions to a new role with TD Asset Management. Over the past few years, Gillian has led a strong and award-winning Investor Relations team that has earned respect from our analysts and investors. I am grateful for her leadership and wish her all the best at TD Asset Management. I am also excited to introduce Brooke Hales as our new Head of Investor Relations; she has made a remarkable start, having just completed her second call in a week. Thank you for joining us, and we look forward to speaking with you all again in 90 days.

Operator, Operator

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.